A study by the Economic and Social Research
Institute (ESRI), published today, shows that Irish return-to-work schemes for the
unemployed, including FÁS programmes, are generally useless.
Last October, the board of FÁS, the State
training agency, announced a planned rebranding as a
“new world-class skills organisation” following abuse
of its €1bn budget -- even the aspiration to be bog-standard class should
be welcome.
The ESRI says that under the National
Employment Action Plan (NEAP), people in receipt of
Jobseeker's Benefit (JB) or Jobseeker's Allowance
(JA) who reach three months duration on the Live
Register are identified by the Department of Social
Protection (DSP) and referred to FÁS, for an activation
interview. During this interview process, clients
may be provided with job search assistance, and some
may be referred to employment or training
opportunities. The study is based on Live Register
administrative data recorded from September 2006 to
July 2008, so the evaluation refers to the impact of
the NEAP over that time period.
The
study (pdf) says many of those who become long-term unemployed suffer
particular labour market disadvantages, such as skill erosion and scarring,
leading to difficulty in re-entering employment. In addition, long-term
unemployed individuals are more likely to suffer from social exclusion and poor
health. From the perspective of the wider economy, long-term unemployment
entails substantial financial costs in both welfare payments and lost revenue,
as well as in lost production.
With respect to the FÁS activation referral plus interview
component of the NEAP, the ESRI found that individuals who participated in this
aspect of the process actually had a 17% lower probability of exiting the Live
Register to employment, both in the short and medium-term, compared to a control
group of individuals who were not referred for a NEAP interview. Furthermore,
when the researchers compared current NEAP clients, who were either referred or
interviewed and referred, with an alternative control group of clients who had
been referred to a NEAP interview in the past - - during a previous unemployment
spell - - they found that the current NEAP group fared no better than those who
had been referred some years previously.
The findings with respect to shorter duration FÁS training
programmes were more positive.
Overall, the study says that those who are
assisted by the State while unemployed were less likely to return to work than
the average welfare recipient. The researchers say that welfare recipients may
have learned “as a consequence of the process, that
they were unlikely to face monitoring or sanctions as a result of failure to
search actively for, or obtain, employment, leading to some decline in job
search intensity.”
The main findings
of the study are:
1. There were
problems of access to NEAP programmes: not all those
who should have participated in an activation
measure did so:
- A substantial group of jobseekers, about
25%, who were eligible for assistance under the
NEAP were not identified and referred.
- Another group, over 25%, were not eligible
for NEAP referral because they had received some
form of assistance in a previous unemployment
spell. The authors note that “this practice of
excluding those who went through the NEAP
process during a previous period of unemployment
would appear to run counter to the underlying
rationale of activation policies, namely, to
assist those most likely to encounter
difficulties in finding work.
2. Those who
participated in the NEAP activation interview were
less likely to become employed:
- Comparing the outcomes of those who were
referred for a FÁS interview under the NEAP,
including both those who attended and those who
did not attend the interview, with a control
group of those who were not referred, it was
found that the NEAP was associated with a
negative impact, with the chances of
entering employment being about 17%
lower for those who went through the interview
process. This suggests that the interview
element of the NEAP was an ineffective route to
employment.
These two findings
suggest the need for an overhaul of existing NEAP
eligibility and administration, as well as provision
of more intensive job search assistance. They also
point to the potential benefits of Ireland following
best practice in most European countries by
developing a fully compulsory activation programme
with effective monitoring and sanction mechanisms.
3. FÁS training
programmes increased participants' employment
prospects:
- Compared to a control group of individuals
participating in a NEAP referral plus activation
interview only, participation in FÁS training
was found to increase an unemployed person's
likelihood of exiting the Live Register by
between 10 and 14%. However, the
cumulative effect of training plus activation
interview was either zero, or at best, weakly
positive, due to the negative impact associated
with the NEAP referral process.
The recent
reorganisation of government departments with
responsibility for unemployment is a potentially
positive development. A number of important reforms
have been implemented:
1. From January 2011,
the DSP is to take a greater role in providing
activation services for the unemployed, as well as
for its more traditional role in paying benefits.
This combination of income support and activation
policies is similar to the role adopted by social
welfare authorities in other countries.
2. The DSP is
implementing a new case management system with a
strong focus on activation, rather than just income
support.
3. The Social Welfare
Act 2010 provides for sanctions to be applied to
unemployed persons on the Live Register unreasonably
refusing to participate in training, education and
employment offered by FÁS or DSP facilitators.
4. The DSP is
introducing a profiling system for the unemployed,
developed in collaboration between the Department
and ESRI researchers. Profiling is a
state-of-the-art statistically-based system for the
early identification of those with a high
probability of becoming long-term unemployed at the
time they first become unemployed. This will
facilitate the DSP and FÁS in delivering appropriate
and necessary interventions with jobseekers
according to their likelihood of becoming long-term
unemployed, and provides the capacity to target
resources on those who most need, and can benefit
most from, activation measures.
5. The Department of
Education and Skills (DES) is to take responsibility
for education and training of the unemployed. A
crucial issue in this reorganisation will be which
Department assumes control over services to the
unemployed.
The authors comment
that “we need to shift from a provider-driven
system, as has been implemented by FÁS as well as
other training and education bodies up to the
present, to a system that puts the unemployed client
at the centre and responds to his or her specific
education or training needs. A strong case can be
made for the DSP to act as the broker to acquire
high quality, appropriate and effective education
and training from the market on behalf of its
clients.”