working brief The UK in recession solutions for social justice Special Working Brief supplement starts page 5 Policy and research informing practice

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1 ISSUE 201 FEB 2009 working brief solutions for social justice The UK in recession Special Working Brief supplement starts page 5 UK in recession supplement 5-16 How high will unemployment go? 6 Claimaints, redundancies and vacancies 7-9 The recession and disadvantaged groups Nations and regions: how they are doing? Contracting out: lessons from the Netherlands 3-4 Dan Finn reports on a radical reform in welfare to work delivery A wealth of experience: valuing London s older workers 17 Lidija Mavra reports on an Inclusion co-researched report on older jobseekers Working Neighbourhood Fund areas hit hard 14 Skill levels: the impact on employment 15 Labour market statistics The claimant count has risen for the twelfth consecutive month. Lovedeep Vaid looks at the figures From the archive: looking back at recession in the early 1990s 16 Policy and research informing practice

2 2 working brief FEB 2009 ISSN Working Brief is published ten times a year by the Centre for Economic & Social Inclusion and is available by annual subscription. Rates: 85 private sector 75 public sector and academic institutions 50 charity, voluntary sector and not-for-profit Full Inclusion Subscription rates 250 private sector 225 public sector and academic institutions 125 charity, voluntary sector and not-for-profit Editor: Polly Green Production Editor: Stuart King Printed on recycled paper by: RAP Spiderweb Ltd, Commercial Centre, Clowes Street, Hollinwood, Oldham OL9 7LY Advertising in Working Brief We offer a full range of advertising inside the magazine, in full colour or mono. Inserts or flyers are also accepted. For a faster turnaround, consider advertising in our weekly e-briefing. Advertising in Working Brief provides targeted access to decision-makers in welfare to work and social inclusion. For further information on rates, please call us on Working Brief in-depth debate and analysis This month s Working Brief brings you our recession supplement, which provides an overview of the Government s current response to the slowdown, projections of unemployment levels into 2010 and a snapshot of the labour market, Jobseeker s Allowance claimants, and available vacancies. It examines the effect on the UK s nations, regions and working neighbourhood fund areas, and on disadvantaged groups. It also looks at how different skills levels affect retention and recruitment. Lastly, the supplement provides a comparison with February 1991, the midst of the last recession, in the form of an article from the time reproduced from Working Brief s archive. Dan Finn sets out lessons for UK welfare to work reform from the Netherlands, where individual reintegration agreements have been introduced to deliver a better and more personalised public service, while Lidija Mavra reports on research into helping the over-50s into work in London. Can you help us improve Working Brief and make it more useful in covering issues you would like to read about? We are seeking your views on the magazine in our online survey. Let us know why you subscribe, what changes you d like to see to the design and content of the journal, whether you think it s value for money and how you d prefer to receive Working Brief (for example, would you rather a PDF version?) Polly Green Editor The Centre for Economic & Social Inclusion is a company limited by guarantee. Registered in England and Wales number Registered address: 89 Albert Embankment, London SE1 7TP Centre for Economic & Social Inclusion, 3rd Floor, 89 Albert Embankment, London SE1 7TP The Centre for Economic and Social Inclusion is an independent, not-for-profit organisation working with business, Government, voluntary organisations and trade unions. Inclusion promotes social justice and tackles disadvantage. We want to help individuals, families and communities achieve economic independence and access more and better opportunities. tel: fax: web: Directors Dave Simmonds Mike Stewart Dr Jo Casebourne Craig Watt

3 welfare to work working brief 3 Contracting out: lessons from the Netherlands The latest phase of UK welfare reform includes the creation of a managed welfare market. Delivery of employment programmes will be through supply chains managed at the top by both for-profit and third sector organisations. The hope is that this will lead to service innovation, better job outcomes and more personalised customer service. A model that could have lessons for the UK already exists in the Netherlands. The Dutch have developed a radical approach aimed at delivering a better, more personalised public service based on individual reintegration agreements (IROs) introduced in The Dutch welfare market The Dutch welfare system has distinct markets for reintegration services. These reflect different systems of income support for working age people. The Institute for Employee Benefit Schemes (UWV), the largest sole purchaser of these services in the Netherlands, is responsible for the social insurance system, which covers most people in regular employment. Municipalities separately purchase services for those on safety net social assistance payments. Unemployed people in the Netherlands register with the public employment service, where the emphasis is on rapid labour market attachment. The UWV and the municipality are responsible for paying benefits but normally restrict reintegration services until at least six months of unemployment. UWV or municipal case managers undertake assessments and assign users to more or less intensive services on the basis of their relative distance from the labour market. When the UWV or a municipality purchases a full reintegration trajectory, this includes contracting out the case management service. Alternatively, case managers may purchase individual service components as required. Case managers monitor participants progress and may apply escalating benefit sanctions until compliance is secured. The UWV is reported to use sanctions sparingly. Criticism and reform In the 1990s, there was much criticism of the efficiency and effectiveness of employment service delivery, and in 2002 legislation required the UWV to contract out its reintegration services to private providers. Municipalities also had to contract out up to 70% of their reintegration services, although this requirement has since been dropped. Legislators sought to protect the interests of users. Services should be tailored to users needs and participants The Government is committed to contracting out welfare to work delivery. Dan Finn examines the lessons from similar reform in the Netherlands. should have freedom of choice, subject to the objective of moving into employment. There was provision that users should be actively engaged in analysis of the barriers they face in reentering the labour market, and their opinion sought on such issues as the selection of a reintegration provider. From tenders to IROs Before 2004, the UWV contracted out reintegration services only through invitations to tender. Providers were invited to submit bids to deliver trajectories targeted at particular client groups, sectors and regions. They were selected on the basis of quality and price. The aim of UWV contracts was to reward providers for placing participants in sustained employment, with outcome payments paid after placement in a job for two months, with a minimum six-month contract. There were various combinations of no cure, less pay and no cure, no pay contracts determined according to the characteristics of the group concerned. Once the contract commenced, the provider could recruit a participant for up to a year and claim an outcome should they be placed in employment within two years. The UWV emphasis on price competition reduced costs and by 2007, the price per trajectory had fallen to an average of 3,500 per unemployed participant and 4,000 for those on disability benefits. The market was dominated by a small number of providers, which enjoyed scale efficiencies and were able to absorb the transaction costs involved. By 2006, only 47 organisations had contracts with the UWV, with ten providers responsible for delivering 75% of the market. Providers and others argued that the fall in prices and focus on swiftly securing outcome payments had a negative impact on innovation and quality, with the particular loss of longer-term skills training. Official reports criticised the lack of user involvement in choosing services, inflexible and standardised contracted provision, group reintegration and poor quality of support provided by UWV staff. In response, in 2004, the UWV introduced the option of IROs and under parliamentary pressure, the Government

4 4 working brief JAN 2009 financed a separately funded skills training budget. In 2005, the UWV introduced front-line reintegration coaches, empowered to design and provide more tailored support and to purchase group or individual service elements outside regular contracts. IROs were modelled on individual social care budgets and piloted between 1998 and An evaluation found greater customisation and a higher job entry rate than for those using regular services. The IRO was initially restricted to those on disability benefits but in a nation-wide extension was made available for those receiving unemployment benefits. IROs entitle participants to negotiate their own service packages directly with providers. An IRO trajectory can last for up to two years and the usual maximum price is 5,000. For users with more significant barriers, the price may be up to 7,500 and, in exceptional circumstances, the UWV may increase this limit. The contract offers a no cure, less pay funding formula and the provider is paid 20% at the start of an agreed plan, 30% after six months participation with 50% of the agreed fee payable for sustained employment. This formula may be varied with higher service fees for those most difficult to place. Although the total amounts are maximum prices, the average reported price per IRO trajectory in 2007 was 4,500. Only half this cost is incurred should the participant fail to get employment. The individual budget was more popular than expected and within two years, more users were opting for IROs than were participating in tendered trajectories. This led to an influx of smaller providers, and the number of companies with which UWV contracted increased rapidly to over 2,000. About 1,900 of these delivered IROs only and 1,600 were micro-providers, which could be servicing as few as five to ten participants. Provider registration requirements were minimal. Evaluation of the IROs Regular evaluation reports have been submitted to the ministry and parliament. The most recent was published in 2007 alongside a report from the Inspectorate for Work and Income (IWI). Both studies found widespread approval for the IRO approach from service users, reintegration coaches and providers. In a survey, 80% of participants reported greater satisfaction with their capacity to shape their trajectory, compared with half of those who participated in tendered trajectories. This involvement and the ability to choose their services and provider increased motivation and engagement. IROs were found to have greater variety in the activities undertaken and access to more individualised barrier reduction services. The IWI study found greater customisation, flexibility and innovation. Most service users had been made aware of their ability to negotiate an IRO through the UWV and the public employment service. Reintegration coaches considered that IROs were most appropriate for those who needed individualised services not offered through regular contracts. The IRO gave coaches greater flexibility in designing a trajectory and made for more interesting work. The challenge was to respect the wishes and interests of the service user while agreeing an IRO that offered the shortest way into sustainable work. They could reject an IRO application if it was not appropriate or too expensive relative to other services on offer. Only 2% of applications had been formally refused by 2007, although other applications may have been rejected informally or an offer of other services made. Providers reported that they faced fewer barriers in entering the IRO market and were not dependent on winning large tenders. Those surveyed were also positive about the greater flexibility of IROs and their capacity to negotiate a service package with the client and case manager. They were more likely to view the service user rather than the UWV as their customer. In terms of crude cost per placement, IROs were more cost-effective for those claiming disability benefits and slightly more expensive for those claiming unemployment benefits. Durations on IROs tended to be a few months longer than for regular trajectories. The major issue highlighted in both reports involved the diminished transparency and manageability of the market. These concerns led to an overhaul of the UWV contracting system in A purchase framework was introduced for purchasing modular reintegration services and IRO trajectories. Price competition and the tender system have been abandoned. The UWV now determines prices and providers have to meet specified process and performance requirements to be placed on a UWV approved list. Within the new system the UWV reintegration coach has been given more control over the options available for service users. Many of the less disadvantaged unemployed will not have access to an IRO but the coach is likely to continue to negotiate such trajectories with those on disability benefits or those with more complex barriers. Conclusion The relative success of the IRO lies in its flexibility and the greater control given to service users, coaches and providers. It creates enhanced personalised support and user engagement within a managed and more individualised delivery of intensive employment assistance. This suggests scope for a more userdriven alternative to the constrained choice anticipated in future UK provision. Experiments with such an approach might be tested first in specialist Department for Work and Pensions disability provision and, if successful, extended to the flexible New Deal. It may be feasible also for toptier contractors themselves to experiment with such an approach. Dan Finn is professor of Social Inclusion at the University of Portsmouth and an Associate Director at Inclusion. This is an edited version of an article published in the Autumn 2008 edition of Research in Public Policy, Bulletin of the Centre for Market and Public Organisation, University of Bristol.

5 UK in recession working brief 5 Rising unemployment: the Government response In last month s Working Brief we set out the key components of the Government s response to rising unemployment. At that point this comprised of: providing additional resources for DWP and Jobcentre Plus, replacing scheduled cuts of 800 million in DWP s budget to 2011 focusing on the key role of education, training and skills, including providing additional support for apprenticeships and helping the unemployed and those facing redundancy to retrain responding more effectively to redundancies and improving employer engagement by widening access to Jobcentre Plus Rapid Response Service for any employer with 20 or more staff, and re-shaping Local Employment Partnerships to provide opportunities for the newly unemployed providing additional support to the unemployed by investing 500 million in employment subsidies for those out of work for six months or more and for benefit claimants looking to start their own businesses. In the past month, further announcements have been made including: 42.5 million of investment in the third sector to help them respond to rising unemployment. Up to 10 million of this will support a volunteer brokerage scheme for unemployed people, designed to create over 40,000 opportunities for people to learn new skills and give back to communities through volunteering. Also, a new accreditation process and independent ombudsman will be piloted for the Department for Work and Pension s (DWP s) Code of Conduct to improve protection for smaller, specialist and third sector welfare to work providers The National Employment Partnership, chaired by the Prime Minister, and including Chief Executives from Sainsbury s, the Royal Mail, Whitbread, Centrica, National Express and Travelodge, as well as from local government and the NHS, met for the first time on 11 February 2009, and agreed to advertise all non-specialist vacancies through Jobcentre Plus On the same day DWP announced its intention to use Local Employment Partnerships to move an additional 200,000 people into employment over the next year. This month s supplement provides graphic evidence of the rationale for Government s approach. Taking the Government s actions in turn we show that: Jobseeker s Allowance new claims increased by 49% between April 2008 and January 2009, while the number of people leaving JSA has increased by only 18% over the same period. Recruitment levels for people with no qualifications have fallen by 32% in a year and recruitment of people whose highest qualification is NVQ Level 2 has Damon Gibbons introduces our supplement on how the recession is biting. fallen by 25% in the same period. Recruitment has fallen in all occupations except the professions and personal services. The unemployment rate for people aged rose by 19% between March and December Redundancies (seasonally adjusted) rose by 66% in the final quarter of 2008 and affected 259,000 people. The worst affected sectors are manufacturing, construction, financial services, and distribution, hotels and restaurants. The worst affected regions were the South East, North West, and West Midlands The numbers of JSA claimants moving from three to six months unemployed to six to nine months is up by 10% (April 2008 to January 2009) and those unemployed claiming JSA for six to nine months and moving to 9-12 months is up by 11%. Vacancies in the economy are down by over 25% in the same period, and Jobcentre Plus vacancies down by slightly more at 27%. These statistics endorse the overall direction of Government s response. However, as we also reveal, there are other worrying aspects which also need to be addressed. These include: the 27% increase in the unemployment rate of people aged 50 and over the 61% increase in JSA claimants in Wales and the 56% increase in Northern Ireland the fact that the claimant count is rising faster in WNF areas that already have the highest concentrations of worklessness. The regional dimensions of the current recession and the need to maintain a focus on the most disadvantaged groups and communities, while also responding to the rise in overall unemployment, will be particularly important. There is a need now for Government to consider how it can improve the response through means other than its mainstream provision in DWP and Jobcentre Plus to address these problems. In particular, the role of the devolved administrations in Wales and Northern Ireland, of Regional Development Agencies and of local authorities will be critical.

6 6 working brief FEB 2009 How high will unemployment go? Paul Bivand presents projections for two measures of unemployment The question everyone is asking is how high will unemployment go?. Month by month, the forecasts get worse. Economic models have had a strong track record of missing turning points: very few forecasters predicted the recession happening when it did, even if some had been arguing about speculative bubbles bursting for several years beforehand. to be the case this time, if only because the work-related activities required for Employment and Support Allowance claimants and, increasingly, for lone parents on Income Support, may put them into the ILO unemployed category. The opposite happened in the last two recessions, with growth of inactive benefits. It is possible that the range of initiatives already taken will start to take effect in the period covered, this would make the lower forecasts more probable. The chances of the claimant count starting to fall through the improvement of the economy, and being seen to do so, before June 2010, are very low. It is of course possible for a number of initiatives to be taken to improve the employability of the unemployed, which also temporarily remove them from the claimant count. This has happened in previous recessions. What we know so far about the rise in unemployment is basically the speed of the rise, and something about the types of people involved. Unemployment is most unlikely to stop rising and start falling very soon, we are much more likely to see a slowing down of the rate of rise first. It is is likely there will be several false dawns with months of slowing down before fresh rises. The speed of the rise in the claimant count leads us to the forecasts shown in Chart 1. The central point forecast is for just under 2.5 million claimants by the end of December The range shown, and it is wide, given the uncertain nature of forecasting nearly two years ahead, is between just over 1.5 million and 3.3 million. The lowest forecast shows the claimant count falling from a peak of nearly 1.6 million in June/July Chart 2 shows the forecasts for unemployment on the ILO standard measure. This gives a central forecast of 3.4 million by December 2010, with a range of between 2.8 million and 4.3 million. As in previous recessions, the gap between the two measures closes. It is possible that the gap will close completely, as it did in the last two recessions. We suspect this is less likely

7 UK in recession working brief 7 Highest new claimant figure since 1997 Paul Bivand and Polly Green look at the rapid increases in Jobseeker s Allowance claimants Plus has to process the seasonally adjusted ones tell us if this is worse than expected. The rapid rise in claimants has put Jobcentres under some pressure. Mark Serwotka, the general secretary of the Public and Commercial Services Union, recently commented that 'Civil servants are working flat out in Jobcentres across the country to get people back into work,...the civil service has already suffered 80,000 job cuts which has damaged service levels and with more cuts to follow key services will remain at breaking point.' As the claimant count rises and Jobcentre Plus is required to process more claims, it will continue to be put under strain. The charts show the number of new Jobseeker s Allowance and unemployment benefit claims per week. Chart 1 displays the figures from January 1997 to January 2009 and Chart 2 looks back since records began in Since January 2008, the number of claimants per week has increased by 28,000 from 44,000 to 72,000, in January This is an increase of 31,000 from the lowest point in April 2007 of 41,000 claimants. January 2009 s figure of 72,000 is high relative to other recessions. We have not seen a new claimant figure this high since July 1997 (at 73,000). The last periods when the number of claimants per week was predominantly higher than the figure for January 2009 were between July 1983 and November 1987, and between July 1990 and November Inclusion predicts that February 2009 s figure will be worse than January s. There is normally a 15% (average) to 18% (last year s figure) rise in inflow into the February figure. The cut-off date for the January figures was earlier than usual this year (8 January) so more of the postsales new claims will fall into February (without further worsening of the position). On the basis of a normal increase, February figures will be 82,000 to 85,000 a week, right up with the last recession. The figures are raw, not seasonally adjusted and show the average over the month. Some weeks will be worse than this. The raw claims are what Jobcentre

8 8 working brief FEB 2009 Redundancies hit building and manufacturing Damon Gibbons explains why men are being made redundant at a faster rate than women. No-one can have failed to notice the steady stream of bad news in the media concerning the rapid rise in redundancies, often as a result of businesses with household names going into administration. As the Chart 1 reveals, the number of redundancies has more than doubled since April of last year, and in November this affected over a quarter of a million people (259,000). Also apparent is the fact that redundancies have increased at a faster rate for men than women, something which Chart 2 casts more light on as it reveals that the manufacturing and construction industries have been particularly badly affected during this recession. In fact, the three months between August and November 2008 saw a near tripling of the monthly number of redundancies in manufacturing, reflecting a severe crisis in that sector and prompting Government to take a number of steps to improve liquidity for businesses in the credit markets. Later figures will see whether or not those measures are having the intended impact or whether more direct help for large manufacturing companies is required. The redundancies in construction, also alarming, started earlier as a result of the initial focus of the recession on the housing market and, although running at a lower rate than the manufacturing sector, account for more lost jobs in total as indeed is the case in the banking and financial sector where the problem started.

9 UK in recession working brief 9 Vacancies in decline Danielle Whitehurst monitors the declining vacancy pool available to jobseekers. Vacancies in the economy are an indicator of the demand for labour. As the recession has taken hold, available vacancies have fallen dramatically from 691,000 in March 2008 to 479,000 in January 2009, a 27% decline (Chart 1). between April and June 2007, followed by a small decline and then another sharp increase between August and December 2007 (from 264,000 to 295,000). From February 2007 the number of vacancies started to decrease with a continual decline beginning between August 2008 to January The sharpest decline occurred in August with vacancies falling from 276,000 to 248,000 in one month. This was followed by a further sharp decline from October 2008 (248,000) to January 2009 (214,000) which clearly follows the worst months so far of the economic downturn. These figures should be looked at in the context of JSA claimant count figures which currently stand at 1,233,000. This means there is now nearly four fifths the number of JSA claimants as there are Jobcentre Plus 16 hour plus job vacancies. The decline has been sudden. In the year to January 2008 vacancies increased from 630,000 to 688,000. Between January 2008 and January 2009 there was a rapid decrease in vacancies, falling from 688,000 to 479,000. The sharpest decline has been the last quarter of 2008 with vacancies falling from 601,000 to 479,000 in four months. The ratio of vacancies to unemployment has also fallen, from 37% in January 2007 to 21% in January As with total vacancies in the economy, the ratio of vacancies to unemployment started to decline more rapidly from from the start of This fall has a big impact on jobseekers as there are now a significant number of people applying for a smaller amount of jobs and competition is intensifying. Chart 2 maps the number of 16 hour plus vacancies released by Jobcentre Plus. It is these vacancies that enable claimants to leave Jobseeker s Allowance or other workless benefits. Overall the change from January 2007 to January 2009 is not too dramatic, falling from 230,000 in January 2007 to 214,000 in January There has, however, been a lot of change within these two time points. There was a sharp increase in 16 hour plus vacancies from 234,000 to 274,000

10 10 working brief FEB 2009 The rate of people becoming long-term unemployed is now rising. But, people becoming 12-month unemployed now first signed on in February 2008 before the market turned down. At the peak in 1992, 25% of new claimants became long-term unemployed. The latest figures are still affected by 18-24s leaving the count to New Deal Options cutting the long-term rate by up to 2%. The recess disadvantage Earlier recessions have hit people hardest Employers have taken on those with higher skills and those who needed the least support in the these boxes were These charts show how groups of people wh before the recession are doing. We cover the lon claimants and disabled people, lone parent bene groups, young people an. Some of the data only covers the beginning turned down in March-April 2008, and DWP has for August 2008, still in the earliest stages of the figures with the previous major recession of the e as the recession gathers pace. Working Brief w affecting disadvantaged grou As the recession has taken hold, the rates of people becoming three and six-month unemployed have risen. The latest figures show that more than half of people under three months unemployed in October were still claiming in January This is very similar to the position in April 1990 and 16.3% of them went on to become 12-month unemployed. April 1990 was not only before New Deals but before JSA so the changes made since may cut the longterm numbers but by how much? Latest quarter shows IB claims flat no ESA figures yet. Provider-led Pathways rolled out, so no area is without Pathways from April Disabled employment rate No change between Autumn 2007 and 2008 overall employment rate fell. Gap still closing as the recession starts.

11 UK in recession working brief 11 sion and ed groups who were already disadvantaged., with the most recent work experience, workplace. People who didn t tick all left out. Employment rates falling faster for the young, down 1.8% in year This may be due to rising learning participation rates, as in earlier years Employment rate for over-50s down, but less than the overall fall ho were indentified as priority groups ng-term unemployed, Incapacity Benefit efit claimants, black and minority ethnic nd the over-50s of the recession. The labour market only just published benefits information recession. We compare some of these early 1990s. These are charts to watch will be covering how the recession is ps in future issues. Ethnic minority employment rate is slightly up in , while white and overall rates down. Still a large gap, but closed a little. Figures likely to be affected by the better London employment trend than other regions. 8 when Summer rise in lone parent claims bigger than in 2007 but smaller than No clear trend before extra conditionality for those with all children 12 or over started. DWP says 2,200 extra lone parents claiming JSA with children 12 or over since August.

12 12 working brief FEB 2009 Employment and unemployment impact on the regions unemployment, averaging at 0.4%. London and Yorkshire and Humber were the only regions in which unemployment rates decreased, with Yorkshire and Humber experiencing the highest decrease of 0.2%. The overall trend, however, is towards an increase in the unemployment across the regions. Rachel Fox looks at the figures The charts show the quarterly percentage change in the rate of employment and unemployment in the regions between September and November London has fared well in comparison with other regions, with the highest increase in employment rate, and a fall in both unemployment and inactivity rates in the last quarter. Chart 1, displays the quarterly percentage change in employment rate in the regions. London has an employment rate increase of 0.6%, while the East Midlands and the East of England showed marginal increases of 0.1%. In contrast, Yorkshire showed a 0.9% decrease in employment rate, with the North West and South West close behind with decreases of 0.7% and 0.6% respectively. The South East and North East also showed decreases in the employment rate, but not to the same extent the West Midlands showed no quarterly percentage change at all. While there have been both increases and decreases in employment rates across the regions, the decreases are far steeper than the increases. Chart 2 shows the quarterly percentage change in unemployment rate in the regions. The West Midlands experienced a steep increase in unemployment of 1.2%, with the North West and the East of England also showing increases of 0.9% and 0.8% respectively. The South West, North East, South East and East Midlands also showed increased rates of

13 UK in recession working brief 13 Scotland, Wales and N. Ireland Erin Schwarz examines the claimant count trends. How have Scotland, Wales and Northern Ireland fared in the slowdown? The chart shows the JSA claimant count relative to December 2006, across Wales, Northern Ireland, Scotland and for the UK as a whole. The number of claimants for each area showed continuous falls between December 2006 and January Claimant count figures started to rise in early 2008 and the number of JSA claimants in all areas was rising significantly towards the end of the year. Wales has seen the largest growth in the number of JSA claimants. In the year to January 2009 numbers increased by 69% has slowed to approximately 6% for both months. Between September 2007 and January 2009, the claimant count rose by approximately 66%. Scotland followed a similar pattern to Northern Ireland until September Whereas the number of claimants in Northern Ireland increased after this point, Scotland continued to experience a fall in the number of claimants until January 2008, when the claimant count was 19% cent less than in December Since February 2008, the number of claimants has been rising, although at a much slower pace than in Wales and Northern Ireland. The highest rate of increase in claimants occurred in November 2008, with a 6.8% rise in the number of claimants. Between January 2008 and January 2009, the claimant count rose by 48%. Across the UK, the JSA claimant count decreased until January 2008, when it reached its lowest index score of 85 a 15% drop in the number of claimants compared with December Since January 2008, the overall JSA claimant count in the UK has increased by roughly 54%. Wales has seen the largest growth in the numbers of JSA claimants over the period. From January 2008, the claimant count increased at a rate of roughly 2% per month until May, and at 4% per month from July to September. The largest rise in JSA claimants occurred at a rate of 10% in November Although the claimant count continued to rise in December 2008 and January 2009, the rate of increase slowed to approximately 9% and 7% per month respectively. Between January 2008 and January 2009, the number of claimants increased by 69%. reaching its highest point of 10% in November, when the index value was at 128. In December 2008 and January 2009, the number of claimants has continued to rise, but the rate of increase Northern Ireland has the secondhighest claimant count on the index, but this was not the case for the entire period. The claimant count in Northern Ireland reached its lowest point earlier than the other three areas, in September On average, the number of claimants increased by less than 1% per month between October 2007 and March The rate of increase in claimants grew to 3% in June and 5% in September,

14 14 working brief FEB 2009 Working Neighbourhood Fund areas hit hard by recession WNF areas have higher than average claimant count rises says Damon Gibbons. Unemployment is increasing more rapidly in those areas of England that already have the highest concentrations of worklessness. The JSA claimant count as a proportion of the working age population is up 0.9% across the country in the last year, but in those areas receiving transitional Working Neighbourhoods Fund (WNF), it has increased by 1% and in full WNF areas it is up by 1.1%. The WNF areas had, prior to this recession, been managing to close the gap between their employment rates and those in the rest of the country. However, rising unemployment now threatens to jeopardise this. Although this evidence will need to be monitored closely as the recession develops, it appears to indicate that those people who are most disadvantaged in the labour market will face even more intense local competition for jobs. Despite their previous successes, WNF areas also remain home to 54% of lone parents, and one in ten people living in them is claiming benefit on the basis of sickness or disability. If in-roads are to be made into these high concentrations of worklessness then a consistent and sustained effort will need to be made by local partnerships throughout the course of the recession.

15 UK in recession working brief 15 Skill levels: their impact on recruitment and employment Rosie Gloster explains how the recession is hitting people with low skill levels. The chart below shows the percentage change, between October-December 2007 and October-December 2008, in the number of employees and level of recruitment by qualification. Overall, the level of recruitment fell by 16.1% between these two time points, and the number of employees also fell slightly too, by 0.4%. These effects have been unevenly distributed across qualification levels, with recruitment levels falling sharpest for two groups: for positions that are undertaken by people with no qualifications and positions that require qualifications below Level 2 (equivalent to 5 GCSEs graded A*-C). Recruitment for positions requiring Level 4 qualifications (equivalent to first degree level), although down, has had the lowest overall decrease (-11.1%). It is only trade apprenticeships where the rate of recruitment has been positive (0.7%). apprenticeships), with a reduction of 126,000 and 73,000 employees respectively. Linked to skills levels, the positions worst affected by employment decreases are elementary and process, plant and machinery based occupations. Conversely, personal service occupations saw the greatest percentage increase in the number of employees (6.2%), with managers and senior officials increasing in number by 2.3%. If this pattern continues, then the recession is likely to disproportionately affect individuals with no and low levels of qualification. In the document World Class Apprenticeships 1 the Government set out its commitment to increasing the number of places for apprenticeships, with a view to making apprenticeships a mainstream option when the age for compulsory learning or training is raised. However, although recruitment increased slightly (by 0.7%) between October-December 2007 and the same period in 2008, the number of employees in trade apprenticeships fell by -8.7%, so that overall there was a reduction of over 128,000 apprentice employees. The recession so far has had a negative effect on the Government s aspirations for increasing apprenticeship places. Reference 1. World-class Apprenticeships: Unlocking talent, building skills for all, January 2008, Department for Innovation, Universities and Skills and Department for Work and Pensions. A similar pattern can be seen with the employment by qualification level. There have been sharper decreases in the number of employees in positions that require no qualifications (-5.8%), compared with increases in the number of employees in higher level positions, a rise of 1.8 and 0.3% for Level 3 and Level 4 positions respectively. Positions requiring no qualifications or other qualifications were also the positions for which the absolute decrease in the number of employees was largest (apart from trade

16 16 working brief FEB 2009 From the archive: looking back at 1991 The last time Britain faced such a sudden slowdown and recession was in the early 1990s under the Conservative Government of John Major. One of our predecessor organisations, the Unemployment Unit & Youthaid, analysed the impact on unemployment in its February 1991 issue of Working Brief. Massive unemployment increase makes 10-year record Unemployment rose faster in the month to 13 December 1991 than at any time since January The headline count rose by 122,300 while the underlying count (seasonally adjusted) increased by 80,400. This is the ninth consecutive month of rising unemployment each has shown the problem spiralling upwards. Only the six month period between August 1980 and January 1981 suffered worse unemployment rises. On the official figures, there are now (February 1990) 1.85 million out of work, and it now looks certain to pass the two million point by March Between November and December 1990, unemployment rose in every UK region. The worst increases were registered in the South East, where the claimant count rose by 33,800. Although the South East has only 25% of the UK claimant population, the region accounted for 42% of the monthly increase registered nationwide this month. There are now 239,100 more people out of work than in March 1990, when unemployment started to rise. Over the last nine months, seasonally adjusted unemployment has risen: December ,400 November ,300 October ,300 September ,100 August ,800 July ,400 June ,700 May ,900 April ,200 Unemployment continues to rise faster even than the Government s figures admit. The Unemployment Unit (UU) estimates that 402,100 more people are unemployed than in March 1990 because the official figures only record those unemployed people eligible for benefit. The UU s independent estimates of broader unemployment levels, unemployment increased by 106,500 last month (January 1991). The Index estimates unemployment on the pre-1982 basis and takes into account some of the 30 identified changes to benefit regulations and other similar adjustments. This now puts unemployment 995,500 higher (adjusted) than the official count. The UU Index totals are 2,839,000 (adjusted) and 2,889,500 (unadjusted). The official count gives an unemployment rate of 6.5% of the workforce in employment, while the UU Index total is 9.9%. The stock of registered vacancies has fallen again to 128,700. On average, the stock of vacancies is shrinking by over 10,000 every month. Vacancies have now fallen by 69,2000 over the last 12 months, a 35% reduction in the total stocks of vacancies. Forecasts Most economic forecasters are now expecting unemployment to average two million or more during 1991, rising in The latest Financial Times survey of economic forecasts covering 23 City institutions, academic and private-sector forecasters and inter-governmental bodies shows 16 expecting unemployment to average at least two million in The average of all forecasts is two million out of work with the average City forecast slightly higher at 2.1 million. Overall, the forecasts predict falling manufacturing output and investment in 1991, recovering in Gross Domestic Product is expected to stagnate in 1991 and grow by 2.3% in Inflation is expected to fall to 4.5% in 1992, though interest rates will remain high (the forecasts imply that base rates will fall to around 12% during 1991 and 11% during 1992). These forecasts take no regard of war in the Gulf. Its economic impact is difficult to predict, and depends critically on how long hostilities last. If on top of this, the result of the recent failure of General Agreement on Tariffs and Trade talks results in burgeoning protectionism, serious world recession might well give way to a 1930s type depression. TEC budget cuts: Despite Government assurances that Training and Enterprise Councils (TECs) would be receiving an increase in cash funding for , 1 figures obtained by the Unemployment Unit show a marked cash and real terms cut in the budgets for the main programmes they are now responsible for. A comparison of the first three blocks of TEC expenditure (which covers Youth Training, Employment Training and EAS) shows a 13% cash reduction from 1,737m in to 1,519m in If we take inflation into account, forecast at 8.5% for by Goldman Sachs, then the real terms cuts are greater than 20%. Reference 1. TEC Budgets and Funding Arrangements: , letter to TEC Chairs from Michael Howard, Secretary of State for Employment, 8 November 1990.

17 older workers working brief 17 A wealth of experience: valuing London s older workers As part of the project we drew on London data contained in eight quarterly editions of the Labour Force Survey (LFS). The published totals are based on population numbers by age-group and gender. All figures are rounded to the nearest 1,000. Key findings We found that large numbers of those aged 50 plus in London want to work, and that this number is rising. In London as a whole, this number stands at 108,000. Of these, 38,000 were found to have been actively looking for work. The remaining 71,000 had not been looking, but said they wanted to do paid work. The current recession has brought with it the need to maintain a focus on the position of vulnerable and excluded groups within the labour market and to ensure that provision is available to meet their employment and skills needs. Although the Department for Work and Pensions (DWP) has set a priority to increase the employment rate of people aged over 50, the National Indicators (NIs) for use by local authorities when setting their Local and Multi Area Agreement targets do not specifically reference over- 50s employment. Instead these focus on the general working age group, for which there are separate indicators for the employment rate (NI 151), those on out of work benefits (NI 152), and those on out of work benefits in the worst performing neighbourhoods (NI 153). As the London Development Agency is currently harnessing new powers to rechannel funding, Age Concern was interested to gain insight into the demand for work among the over-50 age group, specifically in London, to see how the needs of this group could be better met. Age Concern commissioned Inclusion in July 2008, to establish how many Londoners aged 50-plus want to work We found that large numbers of those aged 50 plus in London want to work, and that this number is rising and/or are looking for work. This research formed the basis of Age Concern s report, A wealth of experience: valuing London s older workers. Objectives The study was commissioned in response to previous evidence, which suggested that substantial numbers of people aged over 50 in London wish to work, but had not provided details concerning the scale of this demand. The key research questions were: How many people aged 50 plus in London want to work and/or are actively seeking work? What are the characteristics of this group and what barriers to work do they experience? What level of priority does employment support for the over-50s currently receive in London? Gender: 61,000 of the 108,000 looking for work were male and 48,000 female. A higher proportion of those who wanted to work in inner London are men (61%) than in outer London (54%). In the age-group, the majority of those looking for work were female, while the male proportion increased with age. Health and disability: these problems were found to be a major feature among over-fifties wanting to work 55% report either longstanding health problems or a work-limiting disability, as set out in the Disability Discrimination Act definition. Higher rates of health problems were found among the under-65s, increasing from 54% for the group. People above this age were also more likely to say they did not want to work. Ethnicity: 31% of all those wanting work in the 50+ age group were from black and minority ethnic backgrounds, rising to 35% for those aged but falling again to 27% for those aged Qualifications: The over-fifties wanting to work were recorded as having the following qualification levels: 18,000 had degree level qualifications 24,000 had no qualifications 15,000 had other qualifications 24,000 did not answer. Inclusion has helped produce a new report from Age Concern London examining problems facing the over-50s seeking employment in the capital. Lidija Mavra explains its main findings. The high proportion of people not answering is misleading as this also includes those over state pension age who were not working, who were not, in fact, asked their qualification level.

18 18 working brief FEB 2009 An important element to note here is the fact that commonly used current qualification classifications, such as GCSEs and NVQs, are inappropriate when applied to many over-fifties, since these systems were not in place at the time of respondent s main education. In addition, women were much less likely to gain qualifications because they had often worked in jobs where these tended not to be awarded. This issue is particularly significant when considering the barriers to work the over-fifties may face, as discussed below. Carers: 12,000 over-fifties in London who said they were not looking for work did so because they were a carer. 10,000 of these said they did not want to work. Barriers to work While some employers recognise that those over-fifties who have remained in work will have acquired skills and relevant experience which makes them competitive with younger people with higher formal qualifications, there are also negative perceptions that arise and low levels of qualifications will undoubtedly create barriers to employment for many. For those people aged over 50 with degree-level qualifications, there is also the danger that they can end up doing work for which they are substantially overqualified, particularly because the recession is likely to increase the numbers of people taking early retirement from their main occupations but nevertheless needing to remain in some form of employment. In particular, the interplay between qualifications specifically a lack of them and health disabilities were the key barriers to work identified for the overfifties. The overall average employment rate for Londoners between 50 and 64 who do not have work-limiting health problems is 76%, (73% for those with no qualifications). By contrast a majority of the over-fifties who are seeking or want to work have health problems or disabilities, which has an adverse relationship with their employment rate. For example, year olds with health problems had an average employment rate of just 39%, which fell sharply if qualification levels were also low those with health problems and no qualifications had an employment rate of just 23%. This is particularly significant considering that 75% of the latter group want to work. Over-fifties and employment support Mandatory provision of mainstream employment support consists of adviser interviews (for JSA claimants), or a single work-focused interview (for Incapacity Benefit claimants). Until 2006, Jobcentre Plus employment-related provision was voluntary for the over-fifties who were long-term Jobseeker s Allowance claimants. The 160 people recorded to be participating under the voluntary New Deal for Disabled People scheme included 0.13% of the 121,880 over-50 incapacity benefits claimants in London. The programme rewards providers for securing job outcomes, but the very low numbers of participating over-fifties suggests that providers may be less willing to register older people if they believe they will be less likely to secure a payable outcome. Considering the overall figures, we estimate that 21,860 of this group in London are known or believed by Jobcentre Plus to be looking for work. This, compared with the finding of 108,000 over-fifties in total wanting to work, suggests that better monitoring of the demand for work among this group is necessary, as is more extensive provision of employment support, for example through outreach projects. Key recommendations There are considerable and rising numbers of people aged over 50 who want to work in London, with many actively seeking work. The provision of mainstream employment support needs to take this into account and put in place specific responses that meet the needs of this group. This will inevitably involve work with both the individuals themselves for example in order to increase skills and work with employers to improve perceptions. For example, the qualifications that employers recognise today and that many over-fifties do not have, do not accurately reflect their skill levels and it should be recognised that non-academic aspects of education, such as life experience, have a value for many employers. In addition, there is evidence that more support is needed for those aged over 50 who also have health problems or disabilities. However, Jobcentre Plus performance management system which is a nationally set, points system based on job outcomes may not currently be capturing the challenges presented by this group or incentivising performance improvement for them. Greater local flexibility and the channelling of additional resources to meet the needs of over-fifties may therefore be required. Based on the findings of our research, Age Concern made the following recommendations in its report: Local and regional employment strategies must give high priority to employment support for the over-fifties. The worth of over-fifties life skills and experience should be valued by employers, and not just formal qualifications. Outreach should be enhanced in order to effectively identify the men and women in this group wanting to work. Multiple barriers to employment that may be experienced by the over-fifties, such as health problems, must be paid particular attention. The job outcome target-based incentive for providers should be reevaluated in light of the over-fifties so that they are not neglected. 50-plus employment support services must extend to those beyond state pension age. Further research into the effects of equalities issues (such as ethnicity and being carers) on over-fifties employment would benefit this group. References A wealth of experience: valuing London s older workers, Age Concern London, November Available at: