One of the first schemes the coalition government had in their firing line upon assuming office, was the Future Jobs Fund. The fund primarily protected 18-24 year olds who had been unemployed for six months or longer through offers of real jobs, together with a salary, training and support, and crucially, genuine opportunities at securing sustainable work post-placement. The government terminated the programme on the basis it was largely ineffective and too costly. In truth though, their real gripe lay in its Keynesian fiscal nature.
But with new independent research demonstrating the efficacy and real benefits of the scheme, the case for the Future Jobs Fund must be reinstated. A jobs guarantee should be at the heart of our welfare system, and learning the lessons from the FJF experience will prove vital in successfully making that offer once again.
Today’s parlous economic situation could not be a more opportune moment for its comeback. Youth unemployment is creeping higher and higher, and coming very close to the politically toxic one million mark. The latest figures have it standing at 973,000 16-24 year olds, or 20.8 per cent, out of work.
And with the number of vacancies in the economy shrinking and the increasing slack in the labour market (there are now 1.28 million people involuntarily working part-time or self-employed), the case for intermediate labour markets has never been stronger. Indeed, according to a new CIPD survey, young people can now expect to find themselves shunned by employers in favour of migrant workers. These are desperately anxious times for many young people.
In their decision to abolish the FJF, the government cited its high costs as a principal concern. They were wrong to assume this position. In their report into youth unemployment and the Future Jobs Fund, the Work and Pensions Select Committee found, ‘that insufficient information was available to allow the Department to make a decision to terminate the FJF if this decision was based on its relative cost-effectiveness’.
The government subsequently used sparse and pre-mature data from the programme (outcomes data from the first two months of the scheme) to defend their decision. They concluded that 50 per cent of all participants returned to benefits straight after their placement, and that on this basis, each job outcome cost the taxpayer £13,000 (it should be noted this particular analysis was not available when the government decided to terminate the programme).
However, Inclusion’s extensive national evaluation and the first major independent report into the Future Jobs Fund, found this not to be the case. Their analysis shows the actual cost per participant is £5,600 (it is lower than the allocated £6,500 because not all placement’s lasted the full 26 weeks, as many secured work earlier). Gross benefits totaled £5,072 per individual, with a net benefit (less deadweight) amounting to £1,654. And with a 43 per cent job outcome rate for the programme, the basic calculable cost is £9,176 per successful job outcome.
Yes, this is still a high figure, but it only accounts for direct benefits resulting from the programme (like savings in benefit payments during and post-placement, revenue from income taxes and NI contributions). Inclusion’s figures have not quantified the substantial benefit from indirect taxes resulting from higher incomes and increased consumption. Additionally, it has not accounted for the fiscal multiplier effect of having more people off benefits and in paid work and the significant value of breaking down long-term worklessness.
The FJF has also strengthened labour markets and made them more inclusive. One of the greatest aspects to the programme, was that it offered real opportunities at paid and valued work. At its peak, it took 44 per cent of young long-term JSA claimants off benefits and into work and achieved a job outcome rate of 43 per cent (the government ludicrously took the view that post-FJF ‘in almost all cases-there is no job’).
Participants benefited from gaining quality professional experience (many for the first time), undertaking training and securing qualifications, and acquiring a whole set of new social skills and attitudes. One survey from Greater Manchester found 99 per cent of participants feeling more employable post-FJF. Many young people have said the scheme has opened their eyes to what they can achieve in life and given them the confidence to pursue their ambitions.
Employers too have benefited immeasurably from the programme. The ‘community benefit’ that was a stipulation of each placement, was a major boon for the third and voluntary sector. It allowed them to increase capacity and pursue new ventures. Many organisations were able to directly engage their client groups and disadvantaged young people, engaging them in a two-way relationship allowing each to reciprocate in their support.
In the last few years, businesses and other organisations, particularly small ones, have struggled to recruit new employee’s. The FJF made a real difference in this regard, as employers were able to take on people temporarily before committing or using the fund as a six month job subsidy in supporting new permanent positions. Inclusion’s research found of all those with successful job outcomes, 66 per cent were with their FJF employer. But perhaps most importantly of all, the programme has significantly reduced the barriers of prejudice and bias that prevent many young people from challenging backgrounds, getting into work.
A considerable number of employers have admitted they would not have considered FJF participants under regular recruitment practices. For instance, Jaguar Land Rover took on 120 FJF workers. 100 were subsequently offered permanent positions. But under normal practices, only 2 would have been successful. The whole experience should awaken employers to what more needs to be done in making recruitment fairer and more inclusive.
There is also a valuable social impact to the FJF scheme (this has not been included in Inclusion’s cost-benefit calculations referred to earlier). Tackling a culture of worklessness and getting young people into work, reduces public expenditure on health, social services and law enforcement.
So now that we know the FJF worked, how can it be brought back? Under the government’s Work Programme there are opportunities for temporary labour markets courtesy of the ‘black box’ approach, but not on the scale of the FJF experience. Given the fiscal constraints, any jobs guarantee in the immediate future should follow these principles:
1. Targeted at young people between the ages of 18-21, offering minimum wage jobs for up to six months. To qualify, a claimant must have been unemployed for twelve months or longer. These stricter conditions would reduce deadweight costs and really target support at the most disadvantaged. It would also give Work Programme providers a three month window to secure non-FJF jobs (young JSA claimants enter the Work Programme at nine months).
2. Not to relinquish the ‘community benefit’ requirement, but loosen it, so more jobs can be offered through the private sector, where sustainable outcomes are higher. Paul Gregg and Graeme Cooke have both argued that outcomes can be enhanced through bonus payments and withholding funds for the last three months of the placement until successful job outcomes are achieved. Both these measures should be considered.
A new programme along these lines would come closer to being cost neutral (in direct costs and benefits). But our ambition should be to extend this support to those aged up to 24. A jobs guarantee must be at the heart of our welfare offer. Without it, we risk losing an entire generation to the throes of unemployment. We simply cannot let that happen. So let’s make the Future Jobs Fund the policy comeback of 2011.
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Rayhan Haque is a welfare researcher
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