Economy

Payment by results

G-FlynnPrivate sector job activation specialists are needed to help claimants search for jobs more effectively, according to employment and business specialist Gerald Flynn.

It’s time for the Government to consider setting up a ‘payment by results’ model aimed at getting people back to work, similar to Britain’s Work Programme, according to Gerald Flynn.

In his view, “unemployed people have been let down badly” by the current system. Long-term unemployment has grown from 27 per cent of the total unemployed population to 61 per cent between 2007 and 2011. “The State obviously doesn’t have the resources to address [rising unemployment] so we need to think differently and get specialists in to work on it,” he contends.

The Government reform programme promotes external service delivery (see pages 34-37). In addition, the Croke Park Agreement included provisions encouraging outsourcing. Those provisions “were initially designed [by public service unions] to ensure outsourcing was done very fairly and doesn’t disadvantage any public sector employees but it does allow for a certain amount of flexibility,” Flynn points out.

The policy focus must be on outcome and not output, he believes. To date, training courses have not been provider-driven; he claims that they have been “bums-on-seats exercises.” Flynn recommends a renewed focus “on skills and preparedness and making sure that people don’t get de-moralised because after a while you get course fatigue, especially when people are being sent on irrelevant courses.”

Courses must be tailored for the individual’s motivation and learning capacity. In addition, there must be a bridge between training courses and job activation. Vocational education committees (VECs) helped people with training and adult education courses but “have absolutely no experience in making that bridge [therefore] we need outside inputs to make that bridge between training programmes and employment activation programmes.”

Direct support for job seekers has also been absent, he tells eolas. Flynn points out that the Minister for Social Protection has admitted that correspondence has been sent to people who have since changed their address or phone number. “That speaks volumes in that no-one had been in regular touch with these people,” Flynn states. “Would you take money out of your pocket and give it to someone if you didn’t know where they lived?”

Private companies must be considered and pilot projects undertaken, Flynn suggests. “What you need is someone to manage the linkages so that when someone finishes a course, there’s follow-up so that they can actually go out and look for jobs. But you’ve got to be careful that you’re not forcing them to look for jobs that don’t exist.”

In his experience, outsourcing results in initial apprehension from stakeholders about “anything that will be new and innovative”. Private providers would have to “make a rational case for what [they] want to do and must communicate it effectively to the stakeholders.”

Ultimately, the Government needs to:
•    address literacy and numeracy through VECs and the National Adult Literacy Agency;
•    initiate and manage work experience with local employers; and
•    ensure that every participant has an employment support adviser whom they meet at least monthly.

A payment by results model meets three key elements of reform: customer service, innovative service delivery, and better value and working in new ways.

Flynn suggests that payment by results would work as follows:
•    €2,900 (15 weeks’ unemployment benefit) would be given in staged payments to a payment by results provider;
•    the provider would be given a €500 start fee;
•    a training and support programme would be run by the provider (they would be free to design their own programme);
•    once a person has been on a work placement or a job start programme for 26 weeks, the provider would get a second payment e.g. €1,200;
•    sustained payments e.g. €100 per month would be given to the provider as long as they keep that person in the job;
•    a concierge-type service would be provided so that if the employed person has problems, they can come to the provider or the employment adviser allocated to them; and
•    higher payments would be given for harder to help participants.

Flynn explains that this is similar to the model being used in Britain. However, he acknowledges that it’s not always prudent to plant a British model in Ireland. “We have to design our own activation but clearly the State needs new partners to support 450,000 seeking work,” he says.

Potential providers must consider that they will need a strong balance sheet to absorb financial risk aspects (and possibly to initially fund their sub-contractors) and a good track record in order to raise finance and working capital. They will also have to assure investors that they will get pay-back within 24 months.

“Some people say payment by results is novel,” Flynn comments. “I don’t think it’s novel. People have done it in the past [e.g. the East India Company and Wells Fargo].”

To be successful, these specialists will have to build local links with IBEC, the Irish Small and Medium Sized Enterprise Association, chambers of commerce, the Chartered Institute of Personnel and Development and Retail Ireland. They will also need to be monitored by organisations such as the Irish National Organisation of the Unemployed.

Reviews from Britain show that the more successful courses operated by the 600 sub-contractors have been those where the focus is not on providing training or courses but on the needs of the beneficiaries.

“Because of the tripling of unemployment, the number of people in long-term unemployment rising by seven times over the last four years, the Department of Social Protection can’t do it on their own,” Flynn concludes. They need outside providers in the short term and “hopefully those outside providers won’t need to be used once we get unemployment down below 100,000,” he claims.

A payment by results model is “quite possible under Croke Park if it is communicated well and managers clearly state their outcomes in advance.”

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