I thank the joint committee for giving me the opportunity to appear before it for the discussion on JobPath. I am joined by my colleagues, Mr. Chris Kane who is the principal officer with responsibility for contracted employment services, including the local employment service, LES, and JobPath, and Mr. Jim Lynch who is principal officer with responsibility for operations in the south west.
I am aware that the committee and its predecessor, the Joint Committee on Education and Social Protection, received numerous presentations on JobPath from the Department and others. I am also conscious that the main purpose of the meeting is to give committee members an opportunity to hear directly from JobPath providers. However, I would like to make some comments on activation in general. I will also address a number of issues which were raised by committee members at the meeting on 8 March.
Many, if not most, developed states provide an integrated public employment and welfare service. The purpose of the service is to provide an income support for persons who are unfortunate enough to be unemployed and, in addition, employment services to assist people in securing and sustaining employment. Typically, employment services, sometimes known as active labour market programmes, ALMPs, are categorised in four groups: job advisory and job search assistance services such as are provided by Intreo, the LES and JobPath; employment and recruitment incentives such as JobsPlus; access to and support during training and education programmes such as those facilitated via the education and training boards, ETBs, and the back to education allowance; and placement in State employment schemes such as the community employment scheme and Tús.
There is a considerable body of research that examines the effectiveness of these programmes. In general, their effectiveness is assessed in terms of whether they reduce the overall rate of unemployment at the macro level and, at the micro level, by the extent to which they reduce the duration of unemployment and improve the progression into employment of individuals. It is fair to say the results of these evaluations are mixed. In general, the research shows no or only a modest impact on unemployment at the macro level. However, when the evidence from Ireland in recent years is reviewed in years to come, it will show a more significant effect.
At the micro level the research is somewhat more positive. In most studies active labour market measures are shown to contribute to improved employment outcomes and reduced unemployment durations for individuals. Employment advice, job search assistance and employment incentives are shown to have the most positive impact, particularly where receipt of welfare payments is contingent on participation in such activities. The impact of training and education appears to depend on the duration of the programmes and the linkages between them and employers. Generally, short job-specific programmes have positive outcomes. The research indicates that participation in education programmes of long duration and State employment schemes can, owing to what is known as the "lock-in" effect, have a negative impact on employment outcomes.
Although these results should not be interpreted in a simplistic manner, they suggest the State should ensure all unemployed jobseekers have access to and receive tailored employment advice and that this advice should inform both job search and the selection of other interventions such as referral to training and State employment programmes. Unfortunately, in the past that was not the case. As demonstrated in studies conducted by bodies such as the OECD and the Economic and Social Research Institute of Ireland, Ireland’s public employment service was, prior to the recession, under-resourced and overly focused on referring people to training programmes. This position became particularly acute during the recession when the ratio of jobseekers to case officers, or caseload, exceeded over 1,000:1 compared with international norms of 200:1 for unemployed persons generally and 100:1 for long-term unemployed persons. As a result, many jobseekers, in particular, long-term unemployed jobseekers, never received the advice and support of a case officer.
It was for this reason that it was decided to increase significantly the capacity of the public employment service as part of the Pathways to Work strategy, both by doubling the number of case officers directly employed by the Department and increasing its contracted resource capacity. The use of contracting as a method of providing additional resources is in line with approaches adopted in most other countries. It reflects the requirement to have a flexible resourcing component that enables the Department to adjust capacity in response to variations in demand levels over a medium-term time horizon. The contracting model used which we termed JobPath was designed following an extensive process of research and consultation. Its key feature is that it is a payment-by-results model. This ensures some of the risk associated with expanding the service is borne by the service providers and that costs incurred are directly linked with employment outcomes.
It was also decided that the service would focus on providing support for long-term unemployed persons. In this way it complements the work of the Department’s Intreo staff which is focused on short-term unemployed persons, as the best approach to reducing the level of long-term unemployment is to reduce the rate at which people who are short-term unemployed transition into long-term unemployment. Focusing JobPath on long-term unemployed persons also augmented the activities of local employment service providers, enabling those providers to reduce their caseloads and, together with JobPath, expand coverage in order that those long-term unemployed persons who never had access to an employment adviser or case worker would, in time, receive a referral to a case worker. That is important. Contrary to what some commentators have suggested, JobPath does not compete with the Department’s Intreo service or the local employment service; expenditure on and staffing in those services have not been reduced. The introduction of JobPath has augmented our resource capacity, reduced pressure on Intreo and the local employment service and enabled both services to provide an improved service for their clients.
The Department has provided the committee, under separate cover, with further information on some matters where information was not to hand or could not be covered in the time available at the last committee meeting. I hope the information addresses the questions of interest to the committee, but I will be pleased to take further questions or follow up with further clarification, if required. There are a number of points I would like to address.
At the last meeting committee members inquired, based on the data available to them, if it was accurate to say JobPath cost €13,000 to €14,000 per job. It was not. JobPath is not a job creation initiative that is to be assessed on a basis similar to Enterprise Ireland, for example. It is, as I stated, an advisory and support service to help unemployed jobseekers to compete for the job opportunities available in the labour market. Therefore, the correct metric to use is the cost per jobseeker supported by the service. To the end of December 2017, approximately 150,000 people had accessed the service at a cost of €84 million. This equates to a cost of approximately €600 per client. This compares more than favourably with the costs of the Department’s Intreo service and those of the local employment service. For example, the local employment service has been contracted to serve 20,000 clients in 2018 with a budget just short of €20 million. This gives an average cost per client served of approximately €1,000.
Committee members also expressed an interest in the contractual arrangements and individual fees paid to each of the two service providers.
The Department has not disclosed this level of detail as to do so would breach the confidentiality of the agreements with the service providers and place the State at a disadvantage in any future procurement that may be undertaken. I can confirm, however, that fees are paid on client registration and on successful and sustained job outcomes. Sustainment fees account for approximately 90% of the total fees paid in respect of any individual jobseeker who secures employment.
A sustained job outcome is one which involves employment of at least 30 hours per week for a period of at least 13 weeks. Up to four job sustainment fees may be made over a 12-month or 52-week period. The level of the sustainment fee paid varies depending on the prior duration of unemployment of the jobseeker concerned and the contract year in which he or she was referred to the JobPath provider. As part of the tendering process, bidders were asked to bid separate prices against 120 price points, that is, registration fees plus a separate fee for each year of the contract against six different client cohorts based on the duration of unemployment and for each period of sustainment, namely, 13, 26, 39 and 52 weeks, respectively. It was suggested at the most recent meeting that as the Department had published the overall cost of the JobPath service, each provider could reverse engineer the fees charged by the other provider and fee confidentiality was not, therefore, an issue. Given the fee structure I described, the reverse engineering of fees is not possible using the information provided.
I emphasise that to protect the interests of the State and of jobseekers and protect against an excessive level of profits, the fees paid to the service providers are subject to downward adjustment only, based on the level of employment growth in the wider economy. Prices have been reduced by 8% on this basis. Fee reductions can also be applied if providers do not achieve performance targets with respect to the level of employment outcomes or achieve a satisfactory score in independent surveys of customer experience. To date, providers have exceeded their performance targets and scored highly in customer satisfaction research. As such, the question of retention fees has not arisen.
The joint committee also queried how effective the JobPath service was in helping people secure sustained employment. It was suggested that the published performance data were not impressive. In fact, job outcomes among jobseekers referred to JobPath are significantly higher than job outcomes of jobseekers of similar unemployment duration who were not referred to JobPath. They are up to 59% higher for people who have been unemployed for three years or more. While these data are not controlled for factors other than unemployment duration, the fact that referral to JobPath is random suggests the inclusion of other control variables should not significantly alter the results. A full econometric review of the service has commenced and will be completed later this year.
Members also inquired as to the nature of the research carried out in developing the contract model. Internationally, contracted models similar to JobPath were first developed in the 1980s and are now commonplace in many OECD countries. Accordingly, the Department drew on international experience in developing JobPath. In addition, the Department commissioned and took advice from experts who advised and prepared reports for the European Union, the OECD, the United Kingdom Government, the UK Houses of Parliament select committees, the National Audit Office in the UK, the Northern Ireland Government and the Trade Union Council, TUC. The Department also took informal advice and input from the former director general of employment policy and services in the OECD, canvassed the opinion of Irish labour market experts in the NESC, the ESRI, the Geary Institute in UCD, and the National University of Ireland in Maynooth, and took input from members of the Labour Market Council. Finally, the Department held a number of public briefing events which involved participants from advocacy groups, local development companies and trade unions, among others, and sought feedback from participants. There is further detail on the research approach taken in the material provided under separate cover.
Members also queried if personal progression plans were a type of service contract that must be signed by jobseekers. A personal progression plan is a structured document which seeks to assist people in identifying barriers to employment and the steps that need to be taken to achieve their employment goals. It is developed by the case officer and the jobseeker working together. It is not fixed but is updated and revised over the course of the engagement period. A personal progression plan is used in all of the Department's activation services – Intreo, local employment schemes and JobPath - and is also a standard feature in all other public employment services in developed countries. A similar plan is also used in all community employment engagements.
We ask all jobseekers to sign the personal progression plan as a means of ensuring that it is an agreed document. The customer signature is also an important control feature in determining whether registration fees are due to be paid under the JobPath contracts. Therefore, we strongly encourage all jobseekers to sign the form. For most people this is non-contentious, with the number of jobseekers who refuse to sign assessed as being less than 1%.
With regard to community employment and Tús, members will be aware of the Minister's recent announcement that customers who are engaged with the JobPath service and those who may be referred in future will, from 1 June 2018, have the option of applying for community employment and Tús placement while continuing to engage with JobPath. We hope this addresses the concerns raised by members, among others, regarding access to community employment and Tús.
I am conscious that some of the discussion at the last committee meeting seemed to suggest JobPath was an unnecessary imposition on jobseekers and that most participants in the service felt oppressed. I dispute that contention strongly. The Department and its staff work with unemployed jobseekers every day. We come from and live and work among the communities we serve. I believe we are more sensitive to and aware of the needs of these citizens - our clients - than any other service organisation in the country. Our customer feedback and research indicate that the overwhelming majority of customers value and approve of the service we provide. They believe they are treated in a friendly, respectful and considerate manner. They also believe the service improves their employment prospects. The same is true of research into customers of the local employment service. I do not suggest our service is perfect. Neither the JobPath service nor the local employment service is perfect. There will be process failures, individual lapses and system failures. In any service in which eligibility and selection are determined of necessity by the use of thresholds and bands there will be people on either side of the thresholds and bands who feel disadvantaged.
Like the public representatives who are present at this meeting, as Secretary General of the Department, I hear about failures more often than I hear about the vast majority of positive examples of good service and outcomes. We should be open to these challenges. We should constantly look for ways by which we could do better. In correctly highlighting the flaws we should not lose sight of the good. To use a cliché, we should not let the pursuit of the perfect get in the way of the good. This is a balance that needs to be struck. As Accounting Officer for the Department, I am acutely conscious that all commercial contracts carry risk. I know that these risks are of concern to the committee. I contend that the existence of risk should not inhibit action. We need to seek ways to manage and mitigate risk. In JobPath we have learned from the experience of other jurisdictions and are seeking to limit risk through careful contract design that incorporates price discounting, payment penalties, customer satisfaction tracking, on-site inspections and tight performance targets and monitoring. I will not refrain from taking the appropriate action if these control mechanisms indicate that any provider is not delivering the service in the manner or to the standard required.
It is notable that in its recent country report on Ireland the European Union commented favourably on JobPath, which it identified as the main reason for the faster than anticipated reduction in the level of long-term unemployment. Long-term unemployment rates in Ireland have decreased faster than short-term unemployment rates. This is a notable exception to the trend in all other countries. As the European Union has observed, this is at least partly attributable to the reforms undertaken by the Department, including the development of Intreo and JobPath. With my colleagues, I will be happy to address questions committee members may have.