ILDN were invited to the Joint Oireachtas Committee on Employment Affairs & Social Protection on April 2nd 2019 to discuss the recent Indecon Reports on Local Emplyment Services and Jobs Clubs. The following Opening Statment was presetned. the full transcript of the proceddings is avialable here
Opening Statement April 2nd, 2019
Irish Local Development Network CLG (ILDN) is the representative body for the country’s 49 Local Development Companies (LDCs). These are not-for-profit, multi-sectoral partnerships that deliver community and rural development, labour market activation, social inclusion and social enterprise services across the country. LDC boards comprise of local, voluntary directors alongside public-sector personnel and in many cases employers, unions and elected representatives. They link to Local Economic & Community Plans and Local Community Development Committees, ensuring wide-ranging oversight and democratic accountability.
Last year, LDCs supported more than 15,000 communities and community groups and 173,000 individuals by delivering approximately €330 million worth of programmes on behalf of Government Departments and state agencies. Examples include the Social Inclusion Community Activation Programme (known as SICAP), LEADER, education, childcare, public health and social enterprise programmes and employment supports.
The latter include the Back to Work Enterprise Allowance, Tús, Rural Social Scheme, Local Employment Service, Jobs Clubs, Community Employment and Jobs Initiative. Currently 19 Local Development Companies manage 23 Local Employment Service (LES) Contracts. The remaining 3 are also managed by not for profit companies. These activation supports are integrated with other social inclusion supports, facilitating jobseekers to simultaneously avail of complementary services such as training, childcare and health promotion.
Indecon Review of Local Employment Service and Job Clubs
In 2017 Indecon International Economic Consultants completed reviews of the Local Employment Services and Job Clubs across the country. It should be borne in mind that in 2016, the LES service had been considerably altered from its original purpose and formulation focussing on long-term unemployed to a caseload and purpose reformatted for crisis times. Hence, the evaluation was not focussed on the LES model as it was designed but rather a reformulation that was rapidly constituted. We are now in an era more akin to what the LES was originally designed and this submission, whilst addressing the content of evaluation, will have a later focus on the employment services model required for today’s operating environment.
The value of the initiatives under review in 2016 was circa 25 million euro. Combined the services employ circa 400 qualified and experienced staff. In 2016 the Local Employment Services assisted 47,025 individuals and Job Clubs assisted a further 19,663 a combined total of circa 66,000 unemployed individuals in 60 separate locations.
Indecon Main Findings
Indecon reviewed three main areas of performance for both reviews. 1) Placement into employment 2) Client satisfaction with services provided and 3) employers satisfaction with services provided.
Indecon reported that LES achieved a placement rate of 28.8% against a target of 30% set by DEASP. It should be noted that only employment over 30 hours is included in this figure. Excluded from this calculation were the following
• Jobs placement under 30 hours (automatically excluding part time work, females returning to the workforce via part time work.
• Placements of unemployed people on CE or TUS
• Unemployed people who returned to education.
It is against this background that the 28.8% achievement is independent evidence that the LES performance is excellent when compared with like operations nationally and internationally. Similarly, the Job Clubs performance of placing 30% of one-to-one clients into employment is an excellent result in the context of the above measurements.
75% of LES clients reported that their interaction with LES had motivated them to seek work or undertake further education or training. A further 71% of LES clients said that the LES supports had improved their employment prospects. 79% of Job Clubs clients reported their interaction with Job Clubs had motivated them to seek work and 80% said their employment prospects improved as a direct result of Job Clubs interactions.
89% of employers surveyed reported that the LES had helped their organisation find suitable candidates for vacancies. 83% of employers reported that LES had provided an efficient recruitment service for their organisation and that employees provided by LES were reliable and performed well. In relation to Job Clubs, employers were equally positive regarding the performance and quality of the relationship they had with their local Job Clubs. 79% of employers said the Job Club helped then find suitable candidates and 75% reported that those referred by Job Club performed well and are reliable.
The two Indecon reports total over 300 pages and whilst there are many findings which we could engage with in more detail, the focus is rightly on the future. In that regard, Indecon have made seven recommendations and we will use our time to discuss the merits or otherwise of these
1 Merger of Jobs Clubs and Local Employment Services
The first recommendation is that given their close relationship consideration should be given to merging Job Clubs with Local Employment services.
ILDN believe this recommendation would provide for a more integrated service to jobseekers.
Indecon recommends that LES/Job Clubs contractors should adhere to Best Practice Governance.
ILDN fully supports this recommendation and notes currently that all LDCs are all registered companies with voluntary Board of Directors. They are all not for profit organisations and are all registered charities. All LDCs with an LES Contract hold the Q Mark standard. As the companies hold contracts for several programmes across many funders, there are multiple accountabilities in place including to ODCE, CRO, Revenue Commissioners, ESF, funder audits as well as oversight through LCDCs and linkage to Local Economic and Community Plans.
3 Overall Resources for LES and Jobs Clubs
Indecon states that “Given the very significant reduction in the levels of unemployment, we believe that this should be reflected in the overall resources provided for LES and Jobs Club by the state.”
ILDN and its member companies fundamentally dispute the logic of this assertion. As employment recovers from crises, those who are most job-ready return to employment first and they require the lowest levels of intervention and support. The ESRI this year noted that “As employment increases, those who are remain unemployed are likely to experience multiple barriers to labour market participation meaning that employment is far from an immediate realistic prospect for many of them.” (ESRI, 2019, Proposal for Evaluation of SICAP Pre-Employment Supports p.4).
For this reason, “job creation alone is not sufficient in ensuring full employment’ (ibid p.1) and there is a difference in the services needed between activation in a time of recession and activation in a time of recovery and growth (cf. DEASP, 2016, Pathways to Work, 2016 – 2020).
At this point, the marginal cost of assisting others to access the labour market rises. Local Development Companies and their LES operations work with those most distant to the labour market. Lack of marketable skills allied to social barriers require deeper and longer intervention than that required when unemployment rises to 16 or 17 % followed by radical state action to increase competitiveness.
In addition to the varying costs of intervention for people of different job skill levels, there are additional costs associated with the policy objective of assisting the extra groups of unemployed and underemployed who are not on the Live Register e.g. those in receipt of other DEASP payments, those in precarious employment and those whose jobs are at risk from automation and other new technologies. Employment support services should be assisting people toward job sustainability and productive or ‘Decent Work’ to use the International Labour Organisation’s description and which is an integral element, (Goal 8), of the UN Agenda for Sustainable Development.
Therefore, whilst budget headings must be reviewed for current needs, the claim that a decrease in Live Register numbers in a post-crisis environment should lead to a decreased budget for Employment Services is deeply-flawed and not arise from any of the evidence collected.
4 Focus on “the most disadvantaged and other activation groups who are not currently obtaining assistance from other state delivered/funded programmes.”
ILDN agrees with the configuring and resourcing of employment services in this way. Given the buoyancy of employment creation currently, the support of those groups not currently able to access Decent Work should be an actively-pursued policy objective. These groups include those with the following barriers:
5 Multi Annual Contracts
The reports recommend that DEASP should consider multi annual contracts in order that delivery agents can plan effectively.
This recommendation is welcomed by ILDN whose members already successfully operate Multi-Annual contracts such as the Social Inclusion Community Activation Programme (SICAP).
6 Configuration of Local Employment Services
We will reverse the order of Recommendations 6 and 7 in order to give more time to Future Services. On configuration, Indecon recommends that amalgamation of services may be required in order to achieve greater economies of scale and efficiencies in services particularly in areas where there are very low numbers of unemployed.
ILDN note that there are multiple numbers of TUS/RSS contracts, multiple numbers of SICAP contracts and while economies of scale should be explored, the grounded and local nature of TUS/RSS and SICAP are major contributory factors in the success of both these programmes. One is managed by the Department of Rural and Community Development, the other by DEASP itself. Both Departments can testify to the effectiveness and efficiency of contract management by small teams in each.
Indecon recommends that active consideration is given to an open/public competitive procurement model for future provision of services and DEASP has indicated that that it is preparing to follow this recommendation and procure for services within three months with a view to having such contracts in place for January 1st, 2020. ILDN makes the following observations:
Firstly, there are many current examples of Government funded programmes that are not contracted by Government Departments through an open procurement model, particularly in the labour activation area. In fact, successive governments have decided that the large majority of activation programmes are not suitable for procurement in this way.
Secondly, if there is to be a new procurement process, it should keep the needs of job-seekers and value for the taxpayer at its core. This will require an objective assessment of all inputs and deliverables. Currently, effectiveness of employment services is evaluated by a single indicator – placement in employment of 30+ hours per week. Whilst successive DPER reports (e.g. 2018 and previous Spending Reviews) and the Indecon Report have rightly sought to ensure value-for-money in changed employment circumstances, they have ignored the higher costs of interventions on the journey to employment of those most distant from the labour market. The Institute of Employment Studies emphasises the importance of assessing soft outcomes that focus on individuals facing particular barriers - “target groups that are facing multiple barriers to employment may be a long way from being able to acquire a qualification or employment. Consideration of soft outcomes for such groups is a crucial indicator of success”. (IES, 2000). The current approach used in LES companies is an adult guidance and mediation model. Staff have been recruited for their skills and experience in this area and they participate in ongoing professional development. Given the complexity of barriers faced by the remaining unemployed cohort, a sustainable model to promote the progress of all jobseekers must take the ‘distance travelled’ into account.
If commissioning is to be considered, it must fully take into account the objectives of the service and the costs of delivering all parts of that service including the elements of the journey to job-readiness and job-placements. The pre-qualification criteria to enter a commissioning process should therefore include extensive track record in supporting the target group, specialized staff skills in career guidance and job mediation, accessible linkage and reputation amongst the target group, established linkage to referral to ancillary services, employer linkage, commitment to combatting social exclusion as evidenced by mission statement.
There is a range of quantitative and qualitative indicators that can be used to more effectively design, fund and monitor employment services than the current single indicator and we would welcome the deployment of a framework appropriate to the current challenges.
Thirdly, international experience in competitive contracting of employment services by payments-by-results model has yielded unsatisfactory and unintended results including: I refer the committee to relevant academic literature, in particular the work of Greer and others. The downsides of a privatised, pay-by-result model include
• It removes experience – the upfront investment required eliminates community organisations (i.e. those with a track record) from competing. Local Development Companies, as delivery agent for government, are generally prohibited from retaining a profit on most of their programmes including LES and thus, their lack of reserves will remove them from a payment-by-results model.
• Gaming the system by Creaming (prioritising the low-hanging fruit), Parking those most distant from labour market and Coercion of those who wish to build a career rather than accept low-pay, precarious work are among the methods identified by the literature whereby a payment-by-results model offers poor service to jobseekers and the state.
• Whilst open commissioning may initially appear attractive in cost terms, these are quickly offset by increased and often unclear commissioning costs. More crucially, however, is the likelihood that taxpayer will be tied into expensive, inflexible contracts often designed for a different phase of the boom/bust cycle. It prohibits the service from adapting to the inevitable changes in the operational environment over the duration of the contract. In practical terms, a competition can only be run every three to six years, locking all parties into pricing and services that may be more appropriate to a different time.
ILDN recommend that whatever procurement model is devised it needs to take cognisance of:
• The social inclusion aspects of delivering a local employment service targeted at people most distant from economic activity.
• The Not for Profit contract model operated by the Department of Community and Rural Affairs for the SICAP. A Not for Profit model of service provision routed through LDCs will result in value for money for Government, provide efficient quality wrap around services for individuals, offer effective deployment of resources and give high levels of governance.
• LDCs, given their national coverage provide a readymade and workable solution to the challenges facing DEASP in regard to expanding services to include large elements of Social Inclusion work with targeted cohorts. The success of the TUS, RSS and the BTWEA schemes are current examples, offering value-for-money and agility to the contracting Department.
• Any changes to the current model require a greater lead-in time than 8 months given the need for an ongoing service to jobseekers, the rights of current employees, the proper planning and development by local boards and the requirement for political and value-for-money assessment arising from such fundamental changes to arrangements in place for almost a quarter of a century.
Benefits of a Community – Based Not-for-Profit Provision
Irish Local Development Network recognises that Public Employment Services need ongoing adaptation to meet the changing needs of jobseekers but points to the success of the not-for profit community model since 1991 and its greater effectiveness over a privatised, payment-by-results model in addressing deep-rooted unemployment. The reconfiguring of the community-based model for the current challenges offers jobseekers and the state the optimum solution.
LDCs deliver integrated services seamlessly to jobseekers on all parts of the employment journey and can extend to offer a national employment service for all who need it. Such an integrated approach is identified as necessary by the EÚ’ Country Report on Ireland, 2018
“Some progress made, with the presentation of the Action Plan for Jobless Households, but groups furthest away from the labour market still require an integrated approach to helping them enter it”.
The added value of the integrated LDC approach includes:
• It builds on SICAP pre-employment supports as well as with other initiatives designed by LDCs to “assist disadvantaged individuals to reintegrate into the labour market outside of these formal programmes.” (ESRI, 2019).
• Area-based but national coverage already in place, accessible/acceptable to local people
• It builds on and integrates with Tús, BTWEA etc
• Agility – proven capacity to put services in place quickly cf. creation of Tús programme at full quota within 12 months.
• 89% Employer approval – employers know that LDCs have no financial interest in an unsuitable match.
• Can give ongoing supports to those in work
• Multi-sectoral links - employer orgs, SOLAS/ETB, HSE, Tusla, childcare, CIC, DATFs etc
• Robust governance, already reporting through multiple public accounting procedures
• Values driven – social inclusion
• High skills of LDC/LES staff – mediators, counsellors etc
ILDN is of the view that the two Indecon reviews clearly indicate that the LDC provision of Local Employment Services and Job Clubs has been a major success. ILDN recognises the need for change to best address the current operational environment – we can accommodate such change with the same agility with which we responded to the growth of the Live Register with changing caseloads and the creation of the Tús scheme. LDCs are adaptable and will support change in order that services on offer are in line with the changed economic environment. While it may seem attractive to reduce the number of LES contracts while at the same time increasing the coverage of services, ILDN would highlight the fact that local wraparound services are an important factor in the success as reported by Indecon and evidenced as needed by the EU Country Report, 2018.
Finally, ILDN considers that a not for profit model of procurement, open or confined, is the option that offers the client a holistic and fruitful level of services, offers employers an economic recruitment model that has meaningful and positive impacts in every community around the country and offers the state best value for money.
Irish Local Development Network,Tait Business Centre, Dominic St, Limerick
061 404923 firstname.lastname@example.org www.ildn.ie