2. Employment Research Institute 1 Flexibility in the UK – the Case of Activation Policies Professor Ronald McQuaid Employment Research Institute, Napier University, Edinburgh, Scotland, UK

3. Employment Research Institute 2 Structure of the presentation Background Flexibility in different parts of the labour force – the case of those not working Flexibility in policy implementation

4. Employment Research Institute 3 1. Background Current high UK labour demand, but productivity still too low (GDP/capita & quasi-fixed exchange rates) Flexibility of those in work – hire/fire; unions (55% in 1979 – 29% in 2005); wages (collective bargaining and local variation); health provision (does not inhibit labour mobility) But also some flexibility by employers – e.g. work life balance and wider debates

5. Employment Research Institute 4 ‘Tight’ Labour Market High employment and labour market Activity rates Relatively low unemployment (although high ‘sickness’ rates) Relatively high level of in-migration from A8 (Eastern Europe) Demographic ageing of the working population

6. Employment Research Institute 5 15 yr Olds % Change 1960 - 2010 <15sTotal pop USA+4+66 Japan-36+36 Canada-15+11 UK-20+15 Germany-31+12 France-7+34 Italy-42+12

7. Employment Research Institute 6 Number 15-29 year olds in Scotland 1927 – 1,369,915 (28% of pop) 1952 – 1,258,378 (25% of pop) 1977 – 1,186,595 (23% of pop) 2002 – 938,223 (18% of pop) 2027 – 770,661 (15% of pop) 1977-2002 -21%; 2002-27 -18%; 1977-2027 -35% So we have been through high decline in past– BUT that was during working population growth period TOTAL 15-64 YEAR OLDS 1977-2002 +2%; 2002- 2027 –12.5%

8. Employment Research Institute 7 How to increase the labour supply (quantity and quality) & flexibility? Limited possibilities to change population numbers - increase birth rates, retirement ages, migration (too small), ‘Guest Workers’ …. so… Increased flexibility of those in ‘working age’, especially those not in work

9. Employment Research Institute 8 Activity rates % 1960 & 2010 Age 15-49Age 50- 64 Age 65+ USA64% to 79%65 to 6521 to 9 Japan71 to 7870 to 7036 to 19 Canada61 to 8259 to 6118 to 5 UK72 to 8061 to 5914 to 4 Germany74 to 8059 to 5714 to 2 France68 to 7660 to 5016 to 1 Italy63 to 7548 to 4115 to 3

10. Employment Research Institute 9 2. Flexibility in policies UK uses models that are ‘flexible’ in different ways – ‘Work First’ model - the best way to improve a person’s labour market outcomes is for them to move quickly into work (any work): policy programmes focus mainly on compulsory job search and short- term interventions to facilitate a quick return to work Human Capital Development model – for long term improvements, and sustainability, in work you need better skills etc.: policy programmes tailor services to promote longer-term skills and personal development

11. Employment Research Institute 10 ‘Work First’ and Human Capital Development approaches Work First approachesHCD approaches RationaleFacilitating quick return to labour market by job search and work- focused training Improving long-term employability through improved education, skills, health, and personal development Programme targets Immediate emphasis on job entry; focus on getting people into work quickly Sustainable transitions; improvements in level & range of skill; progression routes once in work Intervention model Job search central and constant; short-term training; focus on immediate activity Long-term training; integrated with social care, education and health; high quality Personal Adviser support

12. Employment Research Institute 11 ‘Work First’ and Human Capital Development approaches cont. Work First approachesHCD approaches Relationship to labour market Demand-responsive – seeks to insert job seekers into available opportunities Up-skills job seeker to expand range of opportunities; encourages and supports progression in workplace Relationship with individuals Use of sanctions and/or financial top- ups to encourage job entry Encourages participation by demonstrating benefits of high quality opportunities FlexibilityIncreases flexibility for employers (low end of labour market); unemployed people (training in work!) Should improve longer term flexibility of labour market

13. Employment Research Institute 12 UK – background and policy Long history of ‘conditionality’ of benefits 1986-97 – ‘stricter benefits regime’; JSA 1996 1987-97 – retreat from investment in training; strong compulsion on job seeking; poor quality (private) services (Contradiction with increased productivity?) Key policies: central government/PES lead as funder and provider of advisory services ‘Work First’ emphasis: job search and short training, retreat from Human Capital Development

14. Employment Research Institute 13 UK policy since 1997 1997: New government: concern over young and long-term unemployment 1998 Government policy called the ‘New Deal’: ‘Gateway’/Personal Adviser - client-centred approach; choice of training options; employment option/subsidy - more flexibility in support and in choice for unemployed (within limits!) With both ‘Work First’ and Human Capital Development, but mostly ‘Work First’

15. Employment Research Institute 14 Pathways to Work – Flexibility & HCD Targeting 2.5M people (2003) on ‘incapacity’ benefits Piloted 22 areas 2003-6; 30 further areas from 2007 Combines Personal Adviser services, training and health services ‘Condition Management Programme’ (Cognitive Behavioural Therapy elements) developed with National Health Service Credibility, expertise and capacity of health service Flexible funding rather than payment for ‘quick wins’ Shared governance/ownership not rigid contracts However, main streaming different?

16. Employment Research Institute 15 3. Flexibility in policy delivery Governments increasingly deploying inter-agency approaches to activation Problem of persistent unemployment/inactivity in certain areas and among particular groups (the ‘easy to employ’ people are increasing in work, so those left often have multiple issues) Multi-dimensional problems = multi-agency response Wider agenda – Policy makers seeking efficiency/dynamism of private sector European Employment Strategy focus on local partnerships and Public Employment Service reform

17. Employment Research Institute 16 European Employment Strategy and flexibility in the implementation of policies Guidelines since 2000: modernisation of Public Employment Services (PES); inclusion of a range of actors, social partners EES 2001: Strengthening the local dimension EES 2003: strengthening of PES institutions and partnerships to combat Long Term Unemployed and promote activation EU/EEA PES Network statement 2006: greater efficiency in systems, partnership with providers

18. Employment Research Institute 17 Summary of European Employment Strategy themes – flexibility? ‘Progressive de-monopolisation’ and liberalisation of service market: add to service quality and range Contracting out of services and Public Employment Services (PES) functions ‘Closer links between the management of (welfare) benefits and the delivery of employability services’ Co-ordinating service delivery and policy – drive to an ‘integrated jobcentre’ model in many countries ‘Flexibility’ in PES staff

19. Employment Research Institute 18 UK – models of co-operation Amalgamation of jobs and benefits in one agency – personal advisers and work-focused interviews Contracting out of training services to local authorities and private, public and voluntary sector Rigid contractual model; focus on job entries Unions marginalised; employer voluntarism 2003: Pathways to Work: partnership with National Health Service/others to assist inactive groups Pathways: more flexible funding and governance

20. Employment Research Institute 19 Conclusions UK shows some Flexibility – in work Flexibility – those out of work Flexibility – policy development and delivery But there are pros and cons with each ….