Memorandum from Prof R. Martin, University
of Cambridge, and Dr C. Nativel and Dr P. Sunley, University of
The degree of variation in local labour market
conditions and the significance of the possible effects of such
local variations on the operation and outcomes of the New Deal
for the Young Unemployed have become contentious issues. On the
one hand, some economists and the Government itself have downplayed
the extent of differences between local labour markets, and have
argued that geographical variations in youth unemployment and
job vacancies are relatively small and declining, and that any
such variations are easily overcome by local scale labour mobility
(Education and Employment Committee, 1997; HM Treasury, 2000).
On the other hand, early critics of the New Deal argued that its
success would vary considerably across the country and be least
effective in precisely those localities where unemployment is
most acute. In this view, the supply-side focus of the Programme
would mean that it is unable to cope with the variability of employment
demand across local labour markets (eg see Turok and Webster,
Subsequent research on the NDYP's target group
highlighted two features of the geography of youth unemployment.
The first was that a broad "North-South divide" exists
is the severity of youth unemployment, namely that youth unemployment
accounted for a higher proportion of total unemployment in those
New Deal Units of Delivery north of a line between the Severn
and the Wash than in those south of that line. The area north
of this line contained virtually all of those programme areas
with youth unemployment ratios of more than 30 per cent. In contrast,
areas south of this line tended to have youth unemployment ratios
of less than 20 per cent. Thus the relative incidence of youth
unemployment was highest in industrial middle and northern England,
and in much of Wales and Central Scotland (Martin, Nativel and
Sunley, forthcoming). Second, the incidence of long-term unemployment
for both all age groups and for the under-25s is more spatially
uneven than the general incidence of unemployment. The long-term
unemployed are concentrated in the major metropolitan and urban
industrial centres (London, Birmingham, Black Country, Sheffield
Liverpool-Merseyside, Manchester, Tyneside and Glasgow). As the
New Deal Programme was established, four local authority districts
(Birmingham, Liverpool, Glasgow and Manchester) accounted for
ten per cent of the long-term unemployed under 25, and another
seven for another ten per cent (Halsuck, 1999).
In this context, it is clearly important that
the New Deal for the Young Unemployed provided sufficient local
autonomy and flexibility, as well as an adequate distribution
of resources, to allow Units of Delivery to respond effectively
to their specific local labour market conditions. As the OECD
(1999) points out, to be most effective welfare-to-work policies
need to be able to respond to local circumstances, since by their
very nature local labour markets are bound to differ both in terms
of the scale and nature of the unemployment problem on the one
hand and the ability of employers to create jobs on the other.
Our research has been focused on the extent
to which this has actually been the case, and it has included
mapping the core performance measures provided by the Employment
Service. Figure 1 shows the percentage of the programme's first
seven cohorts (ie those entering the Programme between April 1998
and December 1999) who had obtained unsubsidised jobs by April
2000 (using the Employment Service's Core performance Measure
A). While this measure will no doubt partly reflect local variations
in Programme implementation and management, it is also likely
to be strongly shaped by the availability of entry-level job opportunities
and hence the growth of employment demand. A clear geographical
difference stands out from the map. On this measure, the NDYP
is performing much better in many rural areas than in the major
conurbations. All the major inner-city Units of Delivery (with
the exception of City Pride Manchester) have the lowest rates
of unsubsidised job placement. In contrast, many rural Units have
rates of unsubsidised job placement of over 50 per cent.
There are also some worrying regional features
to this map. For example, in Wales and in the industrial Midlands
the Programme has evidently been less successful. In the North
of England it has been most successful in areas such as North
Yorkshire and East Lancashire which had a low incidence of youth
long-term unemployment (as a proportion of total long-term unemployment)
at the Programme's inception. In Scotland, the reported high rates
of job placement in the Highlands must be qualified by an awareness
of the small numbers of young people involved. Both here and in
West Lothian, the Units of Delivery faced a relatively low initial
incidence of youth long-term unemployment. In general, there is
a substantial difference between the inner cities where the youth
unemployment problem is concentrated and most severe, and other
rural and semi-rural labour markets where youth unemployment has
been much less visible.
Figure Two shows the proportion of the first
seven cohorts, who had by April 2000 obtained either an unsubsidised
job or a subsidised job under the Programme. To some extent, the
addition of subsidised jobs clearly changes the pattern of relative
success. Some large rural Units of Delivery especially in Wales
and Scotland, Cumberland and the West Country appear to have had
more success in finding subsidised job placements for Programme
Participants. On the other hand, in much of the Midlands and Central
Southern England, including parts of Oxfordshire and Bedfordshire,
the jobs subsidy appears to have made much less of an impact on
job outcomes. However, what is again consistent in the pattern
of relative job success between the two maps, is the relatively
poor performance of the major conurbations, together with other
major cities such as Leeds, Bradford, Sheffield and Nottingham.
Further support for this conclusion is provided by Figures 3 and
4 which show the mean percentages of each cohort obtaining both
unsubsidised and "all jobs" by the seven types of New
Deal "Cluster" defined by the Employment Service. Assuming
that the recorded performance measures are correct, there is a
trend for these means to decline. The reasons for this are not
entirely clear, although it may reflect that the earlier cohorts
have had more time to find jobs. However, this decline has not
involved a convergence between the majority of the Cluster Types
and the inner-city, high unemployment Cluster (G). The Programme
has clearly been least effective in this particular group of labour
markets. Table 1 also shows that there are variations in the balance
of Options taken by participants in different types of New Deals
areas. Not surprisingly, participation in the employment option
has been lowest, and take-up of the Education and Training option
highest, in the inner city areas (Cluster G).
BALANCE OF OPTIONS BY CLUSTER TYPE, FIRST
SEVEN COHORTS AT APRIL 2000
|Environmental Task Force
Note: Figures show mean percentages of all Options
Source: ES CPMB.
Figure 5 maps another key performance indicator: the proportion
of those obtaining jobs via the Programme and not returning to
claiming benefits after 26 weeks (this measure relates to the
first six cohorts only). It is a measure of job retention and
provides some indication of whether participants are experiencing
a "revolving door" or high turnover between work placements
and benefits. This map appears to reflect local labour market
conditions quite closely, as the majority of Units of Delivery
in the highest categories are found in South and Central England.
Job retention is more of a problem in labour markets elsewhere,
especially in Northern England, but also in Cornwall, parts of
Wales and Central Scotland.
Finally, Figure 6 shows the proportion of participants in
Cohorts 4 to 7 who have left for destinations unknown to the Employment
Service. In general, these rates are surprisingly high and other
research findings have suggested that most of these untraced movements
are participants leaving to take up work (Hales and Collins, 1999).
While this may be true in some of the Units near London, it is
noticeable that this criterion tends show a correlation with a
relatively poor performance on the job measures. For instance,
it again shows a relatively poor performance in London, Birmingham
and parts of the Midlands, Leeds, Bradford, and parts of the South
Coast. In such areas, therefore, the unknown destinations figure
may well include many participants who have become disillusioned
with the Programme and leave without proper record.
It is not the intention of this paper to comment on the aggregate
success of the NDYP. Rather, we have focused on its local impact,
on the geographical variations in some of its key outcomes. There
is clear evidence that, even in the context of a highly favourable
macro-economic climate, the Programme has been least effective
in many of the major industrial conurbations and localities dependent
on manufacturing industry. Hence, there has been an inverse relation
between need and relative effectiveness. The primary reason for
this appears to have been the constraints on the Programme represented
by local labour market conditions and dynamics, as well as by
the path-dependent character of local labour supply.
For instance, the geography of employment growth in recent
years has been highly uneven and biased against many Northern
cities and manufacturing areas (Figure 7; see also Turok and Edge,
1999; Employment Policy Institute, 2000). While the Government
may be correct in arguing that it cannot create jobs, it is clear
that increasing the employability of the young unemployed may
not of itself be sufficient to guarantee their (re)entry into
active employment. In many of the country's older inner cities
and industrial areas, there is simply a lack of suitable jobs.
It cannot be assumed that in such areas, supply (of young New
Deal participants) will automatically create its own demand (by
There has been some welcome evidence in recent Government
announcements that it is now treating this issue more seriously.
However, it seems unlikely that the improvements made to date
to the New Deal programme, and related initiatives such as Action
Teams, will be adequate to address these urban unemployment concentrations.
If the unevenness in outcomes is to be addressed then the future
development of the Programme will have to supplement its supply-side
focus and consider more fully how Government can raise, stimulate
and encourage employment demand in areas of low employment growth.
Professor R Martin,University of Cambridge, and Dr C Nativel
and Dr P Sunley, University of Edinburgh
Education and Employment Committee, (1997) Second Report:
The New Deal, Volume 1 and Volume 2, Minutes of Evidence.
Employment Policy Institute (2000) Tackling the Regional
Jobs Gap, London: EPI.
Hales, J and Collins, D (1999) New Deal for Young People
Leavers with Unknown Destinations, London: Employment Service
Research and Development Report ES-21.
Hasluck, C (1999) Employers, Young People and the Unemployed:
A Review of Research, London: Employment Service Research
and Development Report ES-12.
HM Treasury (2000) The Goal of Full Employment: Employment
Opportunity for All Throughout Britain, London: HMSO.
Martin, R, Nativel, C and Sunley, P (Forthcoming) The Local
Impact of the New Deal: Does Geography Make a Difference? In R
Martin and P Morrison, (Eds.) Local labour Markets: Processes,
Problems and Policies. London: TSO.
OECD (1999) The Local Dimension of Welfare-to-Work: An International
Survey, Paris: OECD.
Turok, I And Webster, D (1998) The New Deal: Jeopardised
by the Geography of Unemployment? Local Economy, 1-20.
Turok. I and Edge, N (1999) The Jobs Gap in Britain's
Cities, Bristol: The Policy Press.
This submission is based on research carried out for the project
"Geography of Workfare: Local Labour Markets and the New
Deal", funded by the ESRC (Research contract R00023 7866). Back