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Steps to Work – New Deal Recontracting Seminar:

Limavady, 24 January 2008

The Northern Ireland Labour Market

Dave Rogers, Analytical Services, DEL

What I am going to cover

1. Northern Ireland Labour Market in Context 2. What matters – employment, unemployment, inactivity 3. Reconnecting people with the labour market – DEL’s Skills Strategy 4. What Research tells us

The NI Labour Market - GOOD NEWS

   Fifteen Years ago - unemployment 100,000 plus: today less than one third of that Fifteen Years ago - 50,000 long-term unemployed: today less than one third of that Fifteen Years ago - 600,000 jobs in NI: now more than 770,00 - up by well over 150,000   Most net expansion in private sector services GVA (formerly GDP) per head up by more than a third (faster than UK as a whole)

NI has a relatively healthy labour market in an international context 80% 70% 60% 50% 40% 30% 20% 10% 0% UK Ja pa n U SA Ita N ly Ire la nd F ra nce G erma ny UK Ja pa n U SA Ita N ly Ire la nd F ra nce G erma ny 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%

The NI Labour Market – Unemployment

    NI unemployment rate – 4.3% UK – 5.2% Austria – 4.3% Italy – 5.9%     France – 8.1% Poland – 8.8% Republic of Ireland – 4.4% EU27 – 7.0%; Eurozone – 7.2% Data at Autumn 2007 Source: DETI

Claimant Unemployment – Limavady

Northern Ireland 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1998 1999 2000 2001 2002 2003 Limavady DC 2004 2005

The NI Labour Market - Employment

         NI employment rate 67% (Eurostat definition) UK – 71% Austria – 72% Italy - 59% Germany – 69% France - 64% Poland – 57% Republic of Ireland – 69% EU27 – 65%; Eurozone – 66% Lisbon Target – 70% (2010) Data at Apr-Jun 2007.

Source: DETI

  The NI Labour Market – NOT SO GOOD NEWS NI still has lowest employment rate in UK (70% vs 75%) This means we have proportionately fewer people in work than the rest of the UK: if we matched the average, we would have 60,000 more people in jobs    The employment rate is a key government target – high employment rates are a sign of a healthy economy – and the UK has an aspiration of an 80% employment rate NI Programme for Government has target of 75% by 2020 Unemployment is low – but many of those who are unemployed have either never worked or have not had sustained employment for a long time and have been on programmes such as New Deal two or more times

        

NI Labour Market – Challenges

Unemployment is low, and therefore increasing the labour force must look to other sources.

Unemployment in other UK regions has begun to rise: could this happen here?

High level of economic inactivity Sickness-related benefit claimants up by 14,000 since 1999 Low wages (= benefit trap) Still high dependence on public sector (c 32% of employment cf 20% in UK as a whole) Still relatively weak Private Sector. Median private sector wages only 83% of UK. Risen faster than rest of UK in recent years – but slowdown last year – possibly suggesting weaker demand side?

Some evidence of buoyancy (house prices) but many economists beginning to be more pessimistic at global, UK, RoI, and NI level Recession??

Issue - Economic Inactivity

 The economically inactive comprise those who are out of the labour market altogether – not working and not looking for work  NI has the highest Economic Inactivity rate in the UK – 27% of our working age population is inactive (cf UK 21%)  We have nearly 300,000 people of working age who are inactive  Thus we have ten times more inactive people than we have unemployed

JSA and IB Claimants; 1971-2007

140 120 100 80 60 40 20 0 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 '01 '03 '05 '07 JSA Claimants IB Claimants

Reasons for Economic Inactivity, Spring 2005

Other, 13,000, 4% Retired, 14,000, 5% Student, 84,000, 28% Sick/disabled, 101,000, 34% Family/home, 87,000, 29%

The big problem is inactivity, not unemployment 70% 60% 50% 40% 30% 20% 10% 0%

ILO unemployment Inactivity

Disabled No Qualifications Lone Parents Older Workers Total

Economic Inactivity by District Council, 2006

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% C A S TL E R E C AG A R H A R N TR IC K IM FE B R AL G U LY S M O N E Y LA B N R AL E N E LY W M TO E W N A N A BB E LI Y S BU R A N R M A G H N O A R R D TH S D C O R W AI N G A V O N D O W M N O A M G A H G E H R A FE LT B AN NI BR N E ID C O W G R E LE R Y & A IN M E O U R N E B EL D FA U N S G T A N N O N D E S R R TR Y A C BA O O N E KS TO LI W M N AV FE A R D M Y A N A G H No data for Moyle DC due to small sample size

Persistence of Economic Inactivity (?) 50. 0% 40. 0% 30. 0% 20. 0% 10. 0% 0. 0% 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 Total Male Female

Focus on Inactive

  These figures explain why there is increased focus on the inactive, especially (but not entirely) those on benefit This translates in policy terms largely to those claiming Incapacity Benefit – of whom there are more than 110,000 in Northern Ireland  UK target – to reduce IB claimants by 1 million (long term goal)  The NI equivalent to this target would be to reduce IB claimant numbers by around 45,000 to about 65,000

Other Factors

    Economic Inactivity is not always “bad” eg students Many people are inactive by choice or decision Around 10-15% of the inactive would like to work Many inactive have been out of the labour market for a long time, have no or poor qualifications and are operating at low levels of literacy and numeracy  but not all of them – the inactive also contain a proportion of well qualified people

Percent 40 35 30 25 20 15 10 5 0

Action is more important than desire: it’s more important to look for work than to want it

Flows from inactivity in one quarter into employment in the next quarter ILO unemployed Inactive; not seeking, wanting work Inactive; actively seeking Inactive; not seeking, not wanting work ws93 sa93 ws94 sa94 ws95 sa95 ws96 sa96 ws97 sa97 ws98 sa98 ws99 sa99 ws00 sa00 ws01 sa01 ws02 sa02 ws03

DEL’s Skills Strategy: “Success Through Skills”

Aim

To help people progress up the skills ladder in order to: lift the skills levels of the whole workforce; raise productivity; improve competitiveness; and enhance the employability of those currently excluded from the labour market.

DEL’s Skills Strategy

Target Groups

New entrants to the labour force;

Those already in the workforce; and

Those who are inactive but could be re-engaged.

Future Employment Trends - Summary

  Occupations: managerial/supervisory occupations will increase – elementary occupations to decrease  Sectors: services will continue to increase – manufacturing to decrease There will be increasing demand for workers with high levels of skills and qualifications  On the other hand, the demand for workers with few or no skills and low levels of qualifications will fall  This understanding is one of the drivers of the new NI Skills Strategy: hence importance of re-engaging those who are disconnected from labour market

Future Employment Trends: Projected Employment Change by Qualification, 2002-2012

Issue – Literacy and Numeracy   One key issue for many of those out of the labour market is lack of essential skills of literacy and numeracy We know from the Adult Literacy Survey (dated – 1996 – but still likely to be indicatively correct)    18% of those employed are operating at lowest literacy level 30% of those unemployed 41% of those economically inactive   21% of those with some sort of qualifications are at the lowest literacy level compared to 46% of those with no qualifications

Research

  There also exists a considerable body of evidence from elsewhere  DEL has carried out a considerable programme of research into JSA and IB claimants and the effectiveness of interventions in this area This has been used in order to shape the design of Steps and also other, related programmes   Research projects in NI include a study of New Deal Returners; a New Deal Leavers Survey; and research into IB claimants Summaries will be published shortly in DEL’s Labour Market Bulletin

Some Findings

     Reality check – research confirms that many clients in this group will be very difficult to help… … but not all. Significant minority really want to work and also think that they will work at some time in the future Many differences between clients (especially in older age group) suggesting a more tailored approach needed (“Anna Karenina” syndrome - "All happy families are alike; each unhappy family is unhappy in its own way.“) Fairly high levels of satisfaction with New Deal (eg in 25+, 63% either very or fairly satisfied ) – so need to build on this “goodwill” Perceptions of the labour market are very important clients – and for those trying to help them – and tend to be negative (arguably, too negative). This is an important area for

Overview

 Background  Customer Base  Approach  Provision

Background

  NEW DEAL - Introduced 1998

Mainstream New Deals

18 to 24 25+ 

Voluntary New Deals

Lone Parents Partners Disabled Persons 50+

New Approach

 Building on New Deal (BoND) Local solutions meeting individual needs  Delayed until 2009

Steps to Work (Pilot)

Aim To test a Flexible Menu-based approach with existing and extended customer base

Steps to Work (Pilot)

 Pilot commenced 2 April 2007  Introduced Menu-based approach  Extended Customer Base Economically Inactive -(Incapacity Benefit, Income Support clients and those on other benefits or none)  Open to customers aged 25 or over

Trends

 Increase in Voluntary participation  Increase in Economically Inactive participation  Increase in numbers entering Employment

Steps to Work (Roll out)

-

Replaces New Deals

18 to 24 25+ Lone Parents Partners Musicians Self-Employed

Steps to Work (Roll-out)

 Fresh

approach

to delivery of Provision  Available to all age groups (18+)  Flexibility central to success with both Advisers and Providers key players in assessing and identifying client’s barriers to employment

Steps to Work – Key Features

 Modular based provision  Tailored to individual needs using a “pick ‘n mix” and variable length approach  Voluntary participation (non-sanctionable)

Steps to Work – Key Features

(cont’d)  Mandatory clients

must

participate or risk benefit sanctions  IB/IS participants remain on benefit  Training Premium for all participants  Focus on Employment Outcome

Structure

Step 1

Short duration intervention aimed at those closest to the labour market

Step 2

Relevant to those who are further from the labour market who require additional help in finding work

Step 3

Follow-up support and advice for those who have not found work after participating in Step Two provision

Eligibility

Step 1

- day one of unemployment/economic inactivity 

Step 2

- unemployed in receipt of benefit for 13 weeks - in receipt of benefit (IB/IS) - economically inactive and out of work for 6 months

Step 1

Provision Gateway

 Short Accredited Courses  Basic Self Employment Awareness  Start a Business Programme  Music Industry Adviser

Step 1

(cont’d) Core Gateway Course

 Essential Skills Assessment       CV Building Employability Skills Interview Skills Jobsearch Skills Intensive Jobsearch for Returners (mandatory 3 days) Confidence/Motivation Building

Step 2

Provision

   Back to Work (inc Work Exp., VRQs) Essential Skills Qualifications NVQs (26 wks to complete) NVQs (52 wks Full)    Self-employment Test Trading Subsidised Employment (up to £100 p.w.) Enhanced Support

Enhanced Support

      Mentoring one-to-one support improve prospects of gaining and sustaining employment Pre employment (12 weeks) In-Work settings (12 weeks) Only available in conjunction with provision

Step 3

Follow-up

 Adviser review Interview/s  6 weeks duration  Avail of Step 1 provision not accessed during the Gateway process ( e.g. Short Accredited Courses, Core Gateway modules )

Summary

 Builds on New Deal ( Delivered under New Deal legislation )  Accessible to a wider customer group  Introduces greater flexibility  Single menu approach

Steps to Work Delivery Arrangements

Brian McVey Programme Management and Development Branch

Overview

 Model of Delivery – How will provision be delivered?

 Contractual Areas – Number and scale of contract areas  Tendering Arrangements – Planning and Timescales

Background to the Re-contracting process

 Expiry of existing contracts  Stakeholder feedback  Approval and extensions  Mitigating Factors

Review Process

 Composition of Working group  Wider considerations  Ministerial Clearances

DELIVERY MODEL

Existing model

Consortium based

Issues

Historical influence

• • • • •

Management of consortia Membership Referrals Clarity of roles Legal dimension

Developing a Delivery Model

Options considered

Consortia Model

Single Contractor Model

Prime Contractor Model

Hybrid Model

Option Chosen

Prime Contractor

Single Contract Provider

or Partnership with a nominated Prime Contractor

PRIME CONTRACTOR MODEL

“Prime Contractor” describes an arrangement where DEL contracts with a single service provider: (a) to provide directly a substantial proportion of services (b) to sub-contract some service delivery; and (c) to manage the performance of the sub contractors.

The prime contractor model can also include an arrangement where one organisation acts as lead contractor on behalf of a number of providers in partnership / consortium

Contracting Areas Review

OBJECTIVES

Reduce the Number of Contract Areas.

Reduce the Administration burden.

Create a viable package for the delivery and maintenance of services.

Ensure longer term sustainability of the contracts.

Existing Contracting Environment

  26 Consortia A Number of Core Gateway Providers  NDSE, NDLP, NDP and NDfM contract holders  Review of Public Administration – 26 District councils reducing to “Super Councils” – 12 HSS Trusts reducing to 7 Local Commissioning Groups – 16 F.E. Colleges merging into 6 “Super Colleges”

Options available

        26 District Councils 18 Parliamentary Constituencies 35 Jobs and Benefits Offices / JobCentres 7 DEL Districts 3 DEL Regions 6 Social Security Agency Districts 6 Counties 5 Cities

Considerations

New Local Government Boundaries

Financially viable

Retain a strong local identity

Equitable spread of numbers

Mapping Processes

Decision

  Parliamentary Constituencies 10 Contract Areas  Issue – Contract Areas do not always coincide with DEL office catchment areas

Parliamentary Constituencies

Contract Areas

Re-Contracting Timeline

      Mid January - Information Sessions Early March Late April May June – Issue Invitation to Tender – Deadline for return of Tenders – Evaluation of Tenders – Award of contracts 1 st September - Contract renewal date

Steps to Work – Funding

 Increased focus on job outcomes.

 Steps to Work is not about putting numbers through a Welfare to Work programme.

 Streamlined funding model.

 Unified funding model.

 Shift balance of funding towards results.

 Subject to DFP approval.

Steps to Work – Gateway Funding

 Core Gateway £40 per day (maximum 10 days)  Short Accredited Training Courses £30 per day plus actual travel costs (maximum 10 days)  Self-employment support Basic awareness session £25 Additional Support on SABP £150  Advice and guidance – music industry employment £150

Steps to Work – Funding

Back to Work Provision 3/4 weeks 5/6 weeks 7/8 weeks 9/10 weeks 11/12/13 weeks Start Fee * Week 6 ** Fee £ 420 420 1,000 £ 550 550 1,000 £ 550 140 690 1,000 £ 550 320 870 1,000 £ 550 550 1,100 1,000 ORF – Job (13 weeks) ORF – Job (26 weeks) Total Funding Available 500 1,920 500 2,050 500 2,190 500 2,370 500 2,600

* payable subject to minimum of 2 weeks attendance.

** payable following 6 weeks attendance.

Note: No further funding where participation extends beyond 13 weeks (up to a maximum of 13 weeks). Participant continues to receive BBTA and Provider remains responsible for ongoing review/management.

Start Fee * Week 13 Fee Week 20 Fee

Steps to Work – Funding

ORF – Qualification ORF – Job (13 weeks) ORF – Job (26 weeks) Total Funding Available NVQ Units ** (up to 26 weeks) £ 1,100 500 1,600 400 2,000 1,000 500 3,500 Essential Skills (up to 26 weeks) £ 1,100 750 1,850 500 2,350 1,000 500 3,850 NVQs (up to 52 weeks) £ 1,100 1,000 2,100 600 2,700 1,000 500 4,200

* payable subject to minimum of 4 weeks attendance.

** also payable for support with self employment (excluding qualification ORF element of £400).

Steps to Work – Funding

Enhanced Support on provision (pre-employment) Start fee on production of LDP

£300

Week 6 Fee

Payable after 6 weeks attendance on provision.

Week 12 Fee

Payable after 12 weeks attendance on provision.

£150 £150  Above funding model also applicable for specialist support to participants interested in music industry employment opportunities.

Extension of up to 6 weeks (where appropriate)

Not applicable to music industry support element.

Enhanced Support (in employment) fees from

£150 £150 to £600

Quality Improvement

Department for Employment and Learning Quality Improvement Strategy

Background and Scope

 Department seeks to ensure funded provision is of excellent quality;  Provision incorporates all providers within the NI further education and training system;  Department is committed to improved strategic approach to quality and performance; and  Enhanced emphasis and priority given to its role relating to monitoring of funding and contracting.

The Vision

An excellent further education and training system that is:  Responsive to meeting the needs of learners, employers, the wider community and ultimately providers;  Committed to continuous self-improvement through well-embedded, and rigorous self-assessment and development planning; and  Able to access easily a coherent framework of support and guidance that focuses on self-improvement, high quality leadership and management, and continuous professional development (CPD).

Principles

• Develop and embed culture of

self-improvement

(continuous self development and excellence); • Development of clear and coherent systems of

support

to ensure that inspection findings are addressed effectively and efficiently; • Ensure that the

national standards for lifelong learning

meet the needs of teachers, trainers, and tutors; • Develop

strong, innovative and creative leadership and management

; • Align the programmes of work, protocols, procedures and standards of

key partners (ETI, LSDA(NI) and LLUK);

and  Establish a

Quality and Performance Branch

. The branch will provide advice to the funding divisions of the Department’s business areas on how to improve or remove poor quality provision.

Contract Management Function

 Quality and Performance Branch – ensure consistent and centralised approach to management and monitoring of contracts focusing on high quality and improved performance  Holistic vieof quality improvement and contract management – advice to business areas regarding improving or removing poor quality provision  Take appropriate follow-up action in line with ETI & FAST findings and recommendations

Conclusion

    Improving quality and performance is Department’s top priority.

Strategy is aimed at developing capacity for all providers to become successful self-improving organisations.

Quality Improvement cannot be imposed.

The Strategy outlines the key actions that need to be achieved by all key partners including the Department to ensure its success.

 Focus on the best processes, programmes of support and resources that will improve teaching, training and learning, and leadership and management, and provide professional development opportunities for all staff.