Select Committee on Education and Employment Third Report


Main Stream Intermediaries

The role of the Employment Service/Working Age Agency

36. In previous Reports we have consistently argued that the Employment Service should endeavour to expand the number and range of employers that use its services.[68] The Employment Service has implemented a number of initiatives since 1997 which address this issue in particular. It has:

      (a)  established a Head Office Division specifically charged with improving services to employers;

        (b)  developed an account management service for major national and regional employers;

        (c)  undertaken a number of initiatives with industry organisations to improve its service to businesses in those areas;

        (d)  set in hand a programme to raise understanding on the part of Employment Service staff of occupational and business requirements; and

        (e)  developed and set explicit service standards for employers.

    In addition, in the summer of 2000 a new employer service delivery target was introduced as part of the Annual Performance Agreement for the Employment Service which measures performance against the standards set out in the 'Employer Service Commitment'.[69]

    37. Given the breadth and diversity of these initiatives it is disappointing that the Director General of the British Chambers of Commerce's view is that, despite real improvements on the part of the Employment Service over the last three years, "there is still not a real recognition of the employer as one of the customers" and that it was endorsed by some other witnesses.[70] He argued that moving employers up the list of Employment Service priorities would result in a better understanding of employers and therefore increase the likelihood of placing clients in sustainable positions.[71] The Institute of Employment Research went further, stating that the Employment Service should consistently "regard the employer as their principal customer".[72] Mr Chris Hasluck said that as a result of the intense competition that it faces, or will face, from PEAs, "the Employment Service will be forced to become a provider of service to employers and make employers their main customer focus", whether the Government wishes it to or not.[73]

    38. Evidence from the British Chambers of Commerce's survey of employers suggests that one cause of employers feeling that the Employment Service is not addressing their needs satisfactorily is the low level of vacancies it attracts and fills at the professional and managerial level.[74] This meant, according to Mr Humphries, that although employers recognised the Employment Service's strong capacity in relation to vacancies for unskilled and semi-skilled staff, they were not receiving a complete service. The Employment Service acknowledged that with only 7 per cent of its vacancies for managerial or professional positions, it had weakness in this area.[75]

    39. Improving performance in this regard will be a tough challenge for the Employment Service. It is understandably unwilling to market itself to employers seeking to fill managerial and professional positions because it cannot be confident of supplying suitably qualified candidates as few seeking positions of that sort use the Employment Service. In turn, it is difficult for the Employment Service to encourage job seekers at the higher end of the labour market to use its services because it attracts so few vacancies in that field. Both the Employment Service and the Minister stated their desire to see an increase in the number of managerial and professional vacancies advertised through job centres. One possible means of achieving that is currently being piloted in the South West, where Employment Service-plus On-line is offering comprehensive advice to job seekers at the higher end of the job market and bringing together managerial and professional vacancies from the Employment Service and participating PEAs on one internet site.[76] We congratulate the Employment Service on the Employment Service-plus On-line pilot. We encourage it to investigate further means of attracting more professional and managerial vacancies and more clients seeking jobs in those fields.

    40. It can take time to change perceptions (particularly intractable perhaps are those employers most set against the Employment Service and therefore unlikely to use its services) and it may be that the result of the Employment Service's efforts over the last three years to focus more on the needs of employers has not filtered through to all employers. Even so, the Employment Service accepts that its service to employers is not "as good as it could or should be".[77] It added that the "the biggest problem we face remains the inconsistency of our service levels to employers".[78] In this context we welcome the work of the Employment Service's Large Organisations Unit, which is developing close links with a number of sector-based employer organisations "to improve both recruitment and retention in their areas".[79]

    41. The more substantive criticism that the Employment Service was failing to place adequate emphasis on meeting the needs of employers, and the consequent suggestion that employers should become the Service's main customer, were respectively described as unfair and rejected by both the Employment Service and the Minister.[80] Mr Leigh Lewis, Chief Executive of the Employment Service, stated that the Employment Service had to see employers and job seekers as equally important customers if was to be able to perform effectively: "this is actually a false dichotomy".[81] "As the Employment Service's overall aim makes clear, our key role, as a public employment service, is to maximise the number of jobs available to unemployed people and improve their chances of competing successfully for those jobs. But in practical terms we cannot achieve this successfully without developing strong relationships with employers, understanding their needs and working with them to recruit from the people available in the labour market, many of whom are unemployed".[82] We support fully the Employment Service's efforts to become a demand-led service, which is able to promote new job opportunities and assist unemployed people to meet those opportunities if both employers and job seekers are treated with equal importance.

    Disadvantaged Job Seekers

    42. There are groups of job seekers who need more help than others to overcome barriers to employment. For instance, unemployed people from the ethnic minorities can face discrimination from employers not only because they are unemployed but also because of their ethnic background. A higher proportion of people from black communities are in low-level and low-paid jobs and they experience significantly more unemployment and poverty than those from white communities.[83] The particular problems of job seekers from ethnic backgrounds was acknowledged in the design of New Deal and, when appearing before the Employment Sub-committee, the Minister repeated her determination to see New Deal achieve parity in outcome for ethnic minorities and white job seekers.[84] New Deal is still some way from achieving that goal. Research shows that New Deal participants from the ethnic minorities gain employment at around 80 per cent of their white counterparts. That proportion is however higher than in the labour market as a whole.[85]

    43. There are some recent initiatives which specifically address the barriers to employment faced by those from the ethnic minorities. Three quarters of Action Teams for Jobs have increasing job entries for people from the ethnic minorities as one of their priorities.[86] Part II of the Innovation Fund (see paras 55 to 58) is also specifically designed to test out new ways of offering assistance to them. The Employment Service's Ethnic Minority Strategy for New Deal contains guidance on undertaking outreach work with local ethnic minority employers and job seekers. These developments are a practical demonstration of the ways in which the Employment Service can and does provide assistance to those with particular disadvantages in the labour market.

    44. To focus on employers alone as principal customers would risk losing the Employment Service's distinctive role in helping the most disadvantaged job seekers. Moreover, a narrow focus on the needs of employers would be increasingly difficult to sustain as the cohort of people for whom the Working Age Agency provides a work-focussed service becomes more diverse. We recommend that the Employment Service should continue to improve the services it provides to employers both now and as it evolves into the Working Age Agency. It should not be diverted from its gradual evolution to a demand-led organisation. We recommend that Government should ensure that, in the approaching merger, the needs of employers are considered to be as important as the needs of job seekers and other claimants. The attractiveness of a demand-led approach is that the closer the Employment Service is to understanding and targeting employers' needs, the better it will be able to serve those seeking employment.

    Private employment agencies

    45. Many employers recruit through private employment agencies (PEAs), choosing to do so on the assumption that combining the agency's specialisation, their selection processes and the quality of candidates attracted will deliver a field of suitable candidates from whom to choose. Twenty-three per cent of unemployed people who are looking for a job as an employee are registered with a PEA. Unsurprisingly, unemployed people who are most active in their job search are most likely to be registered with a PEA. The longer the duration of unemployment the less likely it is that a person will be registered with a PEA. Job seekers in the South are more likely to be registered with a PEA, as are those with higher qualifications.[87]

    46. Atkinson and Meager argued that private agencies will not be able to improve on the performance of Jobcentres, because of the attitudes of employers to long-term unemployed candidates.[88] Nevertheless, although they acknowledge the difficulties of placing long-term unemployed people into employment,[89] several of the PEAs from whom we received evidence pointed out that PEAs can provide a route back to sustained employment through the provision of temporary work. Blue Arrow said that "once a person has been out of work for more than year it becomes much harder to place them in a permanent assignment. However, there are normally a range of opportunities for them to perform temporary work which will provide them with a regular income stream and, if desired, a springboard into permanent employment".[90] One approach to this has been to place a job seeker in a temporary position which the employer may then make permanent. Most PEAs have traditionally charged a fee, a temp-to-perm fee, when the appointment has been made permanent, but under recent Government proposals, this would no longer be possible. We acknowledge the important role that temporary work can play in moving people closer to sustained employment. We recommend that the Government should consider carefully the potential impact of abolishing temp-to-perm fees for PEAs on encouraging PEAs to provide this service. We also recognise that the benefit reforms suggested by the Policy Action Team on Jobs[91] would encourage more benefit recipients to contemplate this route into employment, potentially increasing the role of PEAs in placing the unemployed.[92]

    47. Many PEAs have developed partnerships with the Employment Service which, in best practice examples, have been effective in improving the employment opportunities of unemployed job seekers. For example, the good relations forged between the Employment Service and some PEAs have enabled the creation of the Job Bank, an on-line database covering vacancies from both PEAs and job centres. The Employment Service argued that the Job Bank would "substantially improve" the range of employment opportunities available to job seekers. In turn it will also give the PEAs greater access to people seeking employment.

    48. There may be even greater scope for PEAs to expand their role in assisting unemployed job seekers. In addition to sharing vacancy information Atkinson and Meager argue that PEAs could:

    • provide advice on the training needs in the local area;

    • help with broking work placements (trials); and

    • publicise vacancies for course graduates.[93]

    68  See for example The Fourth Report from the Education and Employment Committee, Session 1999-2000, Employability and Jobs: Is there a Jobs Gap?, HC 60-I, paras 18-20. Back

    69  Employment Service Annual Report and Accounts 1999-00, p. 41. Back

    70  Q. 87. See also Q. 18. Back

    71  QQ. 87-90. Back

    72  Q. 18. See also Ev. p. 7. Back

    73  Q. 44. Back

    74  Q. 89. Back

    75  Q. 239. Back

    76  Q. 283. Back

    77  Q. 253. Back

    78  Ev. p. 75. Back

    79  Ev. p. 78. Back

    80  QQ. 243, 252; QQ. 299, 304. Back

    81  Q. 252. Back

    82  Ev. p. 73. Back

    83  Appendix 24, Ev. p. 190. Back

    84  Q. 291. Back

    85  Q. 155. Back

    86  Q. 291. Back

    87  Appendix 7, Ev. p. 132-3. Back

    88  Ev. p. 4. Back

    89  Appendix 20, Ev. p. 180; Appendix 10, Ev. pp. 150-1; Appendix 23, Ev. pp. 187-8. Back

    90  Appendix 23, Ev. p. 189. Back

    91  The Policy Action Team for Jobs recommended a continuation of Housing Benefit and Council Tax Benefit to those gaining employment for a short period and the restoration of benefits, for those returning to the register soon after taking employment, at pre-existing levels until re-assessment could be performed. Back

    92  Jobs for All, Recommendation 52, para 6.12  Back

    93  Ev. p. 7. Back

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    Prepared 7 February 2001