Economy

Smart and effective activation

oconnellReducing long-term unemployment should be a key objective of labour market policy, according to the ESRI’s Philip O’Connell. Labour market activation must be initiated as soon as a claim is made.

Unemployment at 14.9 per cent is “appalling”, according to co-ordinator of labour market research at the ESRI Philip O’Connell.

In order to tackle rising unemployment, policy should recognise the following key features of the current unemployed population:
•    60 per cent of the total unemployed population were long-term unemployed in January 2012;
•    two-thirds of all males who were unemployed in the first quarter of 2012 were unemployed for more than one year;
•    the majority are in the 25-44 age group; and
•    the educational composition of unemployed people has increased substantially since 2008.

“If we have smart, effective activation policies we can reduce the proportion of total unemployment and people who are long term unemployed: that’s an achievable and worthy goal,” O’Connell told an eolas Pathways to Work seminar.

Reflecting on an increasingly educated unemployed population, O’Connell notes that usually, those who went straight into work following their leaving cert featured higher in the unemployment rate than those who gained university or higher education qualifications. However, during each quarter of 2011 and quarter one of 2012, both males and females with a post-leaving cert qualification had a higher unemployment rate than their lesser qualified counterparts.

“That link between human capital and employability is not necessarily uni-directional and is not as simple as we thought. It matters not just what level of education you have but what you’ve been trained in,” he told delegates.

According to O’Connell, best practice shows that labour market activation measures (i.e. helping unemployed people back to work) should be initiated as soon as they make a claim. At the minute, labour activation “is not a service you get on the day you become unemployed.”

Job search activity and industry needs should be monitored on a regular and ongoing basis, he continues. However, the Pathways to Work policy relies too heavily on the expert group on sector skill needs and the skills and labour market research unit in FÁS. He acknowledges that they are both “very useful” sources but tend to produce infrequent reports. There is a pressing need for “ongoing and up-to-date information on an ongoing basis, outlining precisely what industry needs each month.”

An effective activation strategy should be backed up with appropriate sanctions for non-compliance, according to O’Connell. The department has indicated that such a measure will be put in place. However, he contends that sanctions should be regarded as “a last resort”.

Capacity for change

Pathways to Work, in his view, is welcome as it places the battle against unemployment as its top priority. It is committed to reducing long-term unemployment, provides 21,000 additional training places, uses statistical profiling to target resources on those most at risk, extends the employer PRSI scheme and places greater emphasis on training in community employment.

To date, 1,000 community HSE welfare officers and 700 labour services staff from FÁS have moved to the Department of Social Protection. O’Connell reflects: “Integration of income support with activation is ongoing but the pace of change in the Irish State in general is quite glacial. We are fighting a war against unemployment but it seems that we are marshalling the troops very very slowly.”

He is concerned that the department doesn’t have the capacity to run the pathways programme. He points to a 2009 OECD working paper which found “a tendency for the implementation of administrative reforms within [the Department of Social and Family Affairs] to be slow.” It also had doubts about “whether other institutions are able to adequately support these additional client groups into employment.”

Since then, the live register has grown from 290,000 to 440,000 in 2012.  The department is being asked not just to process claims but also to become actively involved in activating employment,” he told delegates. “I’m also not convinced that there’s an adequate skills development programme in place because you are bringing people in from different areas to implement new ways of working.”

The announcement of a new National Employment and Entitlements Service (NEES), to integrate the provision of employment services and benefit payment services within the department, is another step forward. However, O’Connell is concerned about the replacement of FÁS (which had a single job, to look after unemployed training) with SOLAS and local education and training boards, (which replace vocational education committees). VECs’ priorities “are all over the place” i.e. including adult and continuous education and “now they are being asked to take on a new role that they don’t have any expertise for.”

He suggests that the NEES should hold the budget and act as a broker on behalf of the unemployed person who needs training.

“Rather than sending someone over for a training course, it’s about deciding that someone needs a truck driving licence, and asking: ‘Who is the best person the deliver that service?’ Therefore the budget follows the client,” O’Connell explains.

Training programmes have been “excessively provider-driven” to date. That has to stop, O’Connell states. “There should be no attempt to ‘shoe-horn’ provision into legacy structures or to design provision around such structures,” he clarifies.

The content and quality of education and training is vital therefore education and training programmes should be demand-led, “driven by the needs of growth sectors of the economy and thus strongly connected with real jobs in the economy.”

In conclusion, he called for training content to be driven primarily by the needs of enterprises and to reflect the education profile of the unemployed. Providers should be chosen on the basis of their ability to deliver “high quality effective and relevant training.”

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