When the Government launched the Welfare Reform Bill in February 2010, it was heralded as the biggest shake-up of a welfare system since the New Deal was first introduced in the United States 60 years ago.
The success of the Work Programme (WP), launched in July 2011, will be critical to its success. Put simply, the programme aims to get long-term unemployed people back to work with the use of third-party suppliers. The Government will pay private companies to facilitate the process, as it says that will be cheaper than funding benefits in the long run. An estimated 605,000 people will go through the programme in 2011-12, and 565,000 in 2012-13.
On the surface, getting unemployed people back to work and cutting the benefits bill has to be a positive move. There are, however, a few caveats and unanswered questions for employers. How can providers and employers motivate and engage people who have been unwilling and unable to work for lengthy periods? Do employers really want to take on the extra risk and responsibility that might come with employing previously long-term unemployed workers?
And can suppliers really have employers’ best interests at heart when there is a fee involved? It’s certainly not a cheap option. The Government is pledging to invest between £3 billion and £5 billion in the scheme and the suppliers will sign contracts up to seven years in length. The maximum fee a provider can attract for an individual client ranges from £4,050 for a jobseeker’s allowance claimant aged 18 to 24 to £13,120 for an ex-incapacity benefit claimant in the Work Related Activity Group. But how will suppliers “job-match” people in ways that current processes don’t?
Keeping an open mind
Karen Shotbolt, HR director at LA Fitness, has been working on the programme with provider Transforming a Generation (TAG). Shotbolt says that employers need to keep an open mind when it comes to recruiting benefits claimants and the long-term unemployed. “It does also require managers to have a degree of emotional intelligence and skill to deal with the initial integration period and to build relationships within teams,” she notes.
Having clear policies in place, a structured induction scheme and taking time to initiate and encourage the new recruit into the company are also important. “It can take some time to establish the discipline and routine of work with individuals who have not worked before or have significant issues at home so there may also need to be some short-term, sensible dispensations and very rigid policies on things like timekeeping.”
Drop-out rates can also be significantly higher. Shotbolt estimates around 40% at LA Fitness, among people who have previously been out of work. “Despite training and preparation they may still find other pressures from home or peer groups more compelling,” she notes.
Apprenticeships and formal training
One way of tackling high turnover rates of WP recruits is by engaging them through apprenticeships and formal training schemes. “We’ve found the opportunity to gain a formal qualification through apprenticeships and a very real chance to make a life-changing move into a job with career potential really helps,” says Shotbolt. “We have a number of individuals who joined us through the TAG programme who are now deputy managers in our clubs.”
Abi Levitt, communications and marketing director at the employment charityTomorrow’s People, says that the effectiveness of the programme will depend on supply and demand. “The success of the Work Programme will be largely determined by the availability of job vacancies. If economic factors mean that those are not available, that could seriously compromise the programme’s effectiveness,” she notes.
Providers will have to focus on preparing participants properly so that they meet employers’ expectations. “We can work with them for up to two years to achieve this. It will then come down to the tenacity of our employer-facing staff to ‘sell’ people who are ready to move into work to employers,” Levitt says. “Also, a significant number of job placements will come from participants being given the support from us to undertake their own guided job search with many coming from speculative approaches to employers in the local area.”
Gareth Matthews, business director at Serco Welfare to Work, says that suppliers can work alongside HR managers to help develop staff and improve retention levels. “We will be supporting HR managers with company promotion, vacancy advertising, sifting applications and inviting candidates to interview. We also assist them in recruiting staff in large numbers and in developing appropriate pre-and post-employment training.”
Locally based workforces
Matthews believes that the local aspect will be key for employers. “We understand our local labour markets and actively work to address current skills and labour shortages such as those in construction, logistics, contact centre and care sectors,” he notes.
Shotbolt agrees that access to a locally based workforce, who have been given some industry training and customer service skills, will definitely be a plus for employers, especially when it comes to recruiting for entry-level roles. “The potential to raise their profile as an employer in local communities, particularly if they are a large employer in the area, is a definite advantage,” she notes.
The divide between benefits claimants and working people has, however, never been more pronounced in light of the UK riots in August. Will the programme help overcome the stigma of benefits claimants and the long-term unemployed?
The providers certainly hope so. “The programme will help employers to fulfil their recruitment needs by assisting them in finding loyal, hard-working and competent staff,” says Matthews.
Helen Hellas, director of employer solutions at provider A4e, says that, in theory, the programme should benefit both taxpayers and employers. “The benefit to the economy alone by moving people from benefits to employed taxpayers is huge, not to mention improving people’s lives. Also, not only are employers supporting people back into work but [they are] helping families and ultimately their local communities.”
However, there are concerns that the programme could be used as a way of generating cheap labour for dead-end jobs. “The programme should not be used solely as a pool of expendable and cheap front-line labour and there does need to be careful consideration of whether there are genuine, merit-based progression opportunities,” Shotbolt warns.
Ultimately, the programme will be based on payment by results, which means that third-party suppliers will do their best to ensure they get it right and get their fee. As Tony Carr, head of employer partnerships at provider Ingeus UK, points out: “We receive the majority of our funding once someone has remained in work for a sustained period of time. This means it’s in our interest to ensure a good match between candidate and employer.”
So whilst the Work Programme is undoubtedly a step in the right direction, only time will tell whether or not it will actually make any difference to the 2.4 million unemployed people in the UK and the employers that recruit them.