Flexibility in the UK

1
Flexibility in the UK the Case of Activation
Policies Professor Ronald McQuaidEmployment
Research Institute, Napier University,
Edinburgh, Scotland, UK
2
Structure of the presentation

• Background
• Flexibility in different parts of the labour
  force the case of those not working
• Flexibility in policy implementation

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

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

5
15 yr Olds Change 1960 - 2010
lt15s Total pop
USA 4 66
Japan -36 36
Canada -15 11
UK -20 15
Germany -31 12
France -7 34
Italy -42 12
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

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

8
Activity rates 1960 2010
Age 15-49 Age 50-64 Age 65
USA 64 to 79 65 to 65 21 to 9
Japan 71 to 78 70 to 70 36 to 19
Canada 61 to 82 59 to 61 18 to 5
UK 72 to 80 61 to 59 14 to 4
Germany 74 to 80 59 to 57 14 to 2
France 68 to 76 60 to 50 16 to 1
Italy 63 to 75 48 to 41 15 to 3
9
2. Flexibility in policies

• UK uses models that are flexible in different
  ways
• Work First model - the best way to improve a
  persons 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

10
Work First and Human Capital Development
approaches
Work First approaches HCD approaches
Rationale Facilitating 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
11
Work First and Human Capital Development
approaches cont.
Work First approaches HCD 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
Flexibility Increases flexibility for employers (low end of labour market) unemployed people (training in work!) Should improve longer term flexibility of labour market
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

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

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?

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

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

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

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

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 .