Avoiding the rural unemployment cliff
Unemployment is falling, but many people are struggling. What can we do to help those people missing out on employment opportunities? And how can we make sure no one is left behind? Jessica Sellick investigates.
The ‘employment rate’ is measured using the Labour Force Survey and is defined as the proportion of people aged 16-64 years in work.
‘Unemployed people’ are defined as those without a job who have been actively seeking work in the past four weeks and are available to start work in the next two weeks.
This definition also includes people who are out of work but have found a job and are waiting to start it in the next two weeks.
Figures published by the Office for National Statistics (ONS) show the UK’s unemployment rate fell to 4.9% in the three months to the end of June, marking the lowest it has been since September 2005.
According to the statistics there were 1.64 million people out of work – 52,000 fewer than in the previous quarter and 207,000 fewer year-on-year; with 31.8 million in work, 172,000 more than from January until March this year. Over the same April to June 2016 period, the rate of total pay increased by 2.4%.
While many view these figures as encouraging, others wonder if they mask increases in the number of self-employed people who are barely scrapping a living or workers accepting lower wages or working fewer hours.
The figures alone do not describe the changing structure of unemployment – with unemployment up to mid-2009 accounted for by the growth in short spells compared to more recent times where the long term unemployed [defined as 12 months or more with a continuous claim] account for nearly one-in-five of all unemployed persons.
In a rural context, the figures do not always take account of ‘job jugglers’, people who have more than one work (some if it seasonal, temporary or part time leading to low pay) or people out of work and trying to get by without seeking support from Jobcentre Plus and DWP.
The Government’s drive to tackle joblessness has been characterised by labour market policies that offer training and work placements to help unemployed people re-enter the workplace. Most recently this has been through the Work Programme, a payments-for-results welfare-to-work programme that launched in June 2011.
Replacing previous initiatives such as New Deals and Employment Zones, the Work Programme was seen to represent a long term investment by Government to help more people into lasting work.
It hasn’t always gone quite to plan with underperformance highlighted around not delivering for those who need the help most, for not taking into account local labour market conditions, and for failing to align with other, more local delivery of public services.
According to a report from the National Audit Office (NAO), after a poor start the performance of the Work Programme is at similar levels to previous programmes – with 27% of people completing the programme moving into employment lasting 6 months or longer.
However, the NAO found performance for harder-to-help groups showed no improvement compared to previous schemes with ‘prime contractors’ reducing what they planned to spend on the hardest-to-help, and with overall support for these participants lower than for those with better employment prospects.
The Work and Pensions Commons Select Committee inquiry into the Work Programme describes how “DWP deserves credit for implementing a programme which, in general, produces results at least as good as before, for a greatly reduced cost per participant.
But we must not forget that nearly 70% of participants are completing the Work Programme without finding sustained employment. We must do much better.
Our recommendations aim to create an employment support system which is equipped to help into work people facing serious problems that have been distant from the labour market, and inadequately supported, for far too long.”
The Committee has called upon the Government to focus welfare-to-work post 2016 on unemployed people with challenging problems such as drug and alcohol addiction, illiteracy and innumeracy, homelessness and very weak employment histories.
From April 2017, the Work Programme and Work Choice will be replaced by the Work and Health Programme (WHP).
While the details are being finalised, it seems WHP will have a reduced budget (£130 million per year compared to the £2 billion invested over the last parliament) and a different focus (supporting people who have been unemployed for over two years and/or are facing health barriers to work).
The WHP includes a Work and health Unit which will publish a Green Paper later this year looking at how to improve support for people with disabilities and long term health conditions.
This means from April 2017 there will be no national employability support programme for those who have been unemployed for less than two years – instead this cohort will be supported by staff at Jobcentre Plus rather than referred into the programme.
Concerns have already been raised around the referral process – with Government wanting to halve the disability employment gap (which currently stands at around 33% and means a million people with a disability must be supported into employment), not everybody with a disability will be able to be referred to the new provision – will this mean only jobseekers with a reasonable chance of moving into work will be referred?
Will the assessment criteria for referral be based on the benefit they claim and/or their individual support needs?
How can the WHP and the broader work of Jobcentre Plus help prevent issues from becoming deeply entrenched? Or are we going to end up with ‘creaming and parking’ – an approach where those facing the biggest barriers are left behind and those closer to achieving the desired outcome are prioritised?
Alongside these existing and emerging national programmes, research by NISER and the Local Government Association (LGA) highlights skills and employability programmes being run by Local Authorities.
Nine Local Authorities participated in the research: Bradford, North Tyneside, Surrey, Gateshead, Haringey, Southampton, Bury, Liverpool and Cornwall.
What sets these local programmes apart is the way in which Local Authorities went beyond immediate preparation for training and employment to take account of the wider needs of individuals including their health, housing and other issues which affect their progress into work.
Local Authorities leadership and localised knowledge enabled them to map provision and identify and fill local needs and gaps. Local Authorities allocated each person they worked with a case worker to given them personalised and continues help where needed.
With many local areas drawing up devolution deals with Government, Local Authorities may play a leading role in reviewing, designing and commissioning support for people furthest from the labour market.
A group of 22 Local Authorities has called upon the Government to devolve its back-to-work programme to local levels.
In their report, the Cooperative Council Innovation Network’s Policy Commission on Community Resilience, Jobs and Growth, argues that devolving adult skills budget and employment support will help Authorities provide harder-to-help claimants – often those with disabilities and mental health issues – into work.
For me, these national and local backdrops raise three issues.
First, what can be done to address the long-term unemployment trap: the reality that once you’ve been out of work for six months or more your ability to find work becomes more difficult? Beveridge curve analysis maps unemployment and vacancy rates against each other.
The more job openings there are the less unemployment there should be. In the UK from September 2008 to May 2009 the vacancy rate fell and unemployment increased – with the labour market remaining at this state for a further three years before vacancies started to increase from mid-2013.
While this is encouraging, in the US further research by Rand Ghayad and William Dickens at Northeastern University found the Curve shifts if you haven’t worked for more than six months. Ghayad and Dickens study showed that age, ethnicity and education didn’t matter in moving out of unemployment and into employment, what mattered above all is how long you’d been out of work.
To illustrate their findings, Ghayad sent out 3,500 fictitious CVs for employed and unemployed people to apply for job openings. Ghayad found people with relevant experience who had been out of work for six months or longer received fewer responses than people without relevant experience who’d been out of work for a shorter period.
Another study – also in the US – by Liberty Street Economics found the ‘job-finding rate’ declines by 50% within eight months. They found some workers’ resumes were being dismissed even though they would have been hired if given the opportunity to interview.
How will the WHP work alongside employers to address some of these perceptions? Will the cohort of people who have been unemployed for 6, 8 or 12 months that will not be referred into the WHP be helped to avoid them becoming long term unemployed? How can we ensure the WHP delivers for rural people and places?
What is clear is how many employers consider the duration of unemployment more than the duration of employment or the relevant experience.
Yet the reality is many people who have been/are out of work really want and appreciate a job (they’re likely to be hard working and enthusiastic) and they’re likely to be loyal and stay with the company that gave them an opportunity.
Second, there is increasing currency around the concept of ‘inclusive growth’. The European Commission has been using the term since 2010 and it forms part of ‘Europe 2020’, the European Union’s ten-year growth strategy.
This contains two flagship initiatives: (1) an agenda to help people acquire new skills and jobs; and (2) an agenda to tackle poverty and help people live with dignity and integrate in the communities where they live.
The OECD uses inclusive growth in its call for economic growth to go beyond traditional monetary indicators and include people’s wellbeing. The RSA has set up an Inclusive Growth Commission to identify practical ways to make local economies across the UK more economically inclusive and prosperous.
And the Joseph Rowntree Foundation (JRF) has developed an inclusive growth monitor tool to measure the relationship between prosperity and poverty. At Rose Regeneration we’re interested in how/can inclusive growth generate more and better jobs?
In a rural context, how can inclusive growth help people find a job where they live – retaining younger people rather than losing them? Providing training and skills development locally? What kinds of jobs do we want in rural communities?
Thirdly, amid all the figures, curves and programmes, we must not forget the individual and their experiences of unemployment. At Rose Regeneration we’ve been hearing first-hand from people who are long term (and less long term) unemployed.
While they discuss structural, organisational and generational issues, you can also hear their frustration and despair. And you can see the damaging effects unemployment is having on their physical and mental health, family and community.
You can see clearly too how their lack of employment connects to housing, regeneration and leisure. Their ‘hidden’ voices are often not present in ‘official’ discussions and debates. If we are to support every unemployed person nearer to or back into work then what we do (our initiatives, programmes, interventions) need to be person centred.
What we need to do is help anyone who is unemployed and above all ensure no one becomes unemployable.
Jessica is a researcher/project manager at Rose Regeneration; an economic development business working with communities, Government and business to help them achieve their full potential. She is currently preparing two Community Led Local Development applications and working with a NHS Trust around the provision of rural health and care.
Jessica’s public services work includes research for Defra on alternative service delivery and local level rural proofing. She can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: http://www.roseregeneration.co.uk/ Twitter: @RoseRegen
