I thank the committee for the invitation to respond to the Indecon report. I am accompanied by Mr. Larry O'Neill, chief executive officer, CEO, of the South County Dublin Partnership, Mr. Joe Saunders, manager of the ILDN, Ms Anne Fitzgerald, CEO of the Ballyfermot Chapelizod Partnership, and Mr. Eamonn O'Reilly, CEO of the North, East and West Kerry Development and vice chairman of the ILDN. I am CEO of the Dublin North West Area Partnership and chairman of the ILDN's employment and enterprise committee.
This paper is also part of a second paper that will set out for the Government a model for national employment services based on the not-for-profit model delivered by local development companies, LDCs. The service will be characterised by a more targeted approach, nationwide coverage and an initial focus of resources on communities in which the number of employed, underemployed and those on welfare payments remain high.
Members have received a copy of the full paper and I will read a summary version. The ILDN is the representative body for the country's 49 not-for-profit local development companies that deliver community services across the country. LDC boards comprise local, voluntary directors alongside public sector personnel and, in many cases, employers, unions and elected representatives. They link to local economic and community plans and local community development committees, ensuring wide-ranging oversight and democratic accountability.
Each year, LDCs support approximately 15,000 community groups and 173,000 individuals by delivering €330 million worth of State programmes, many for jobseekers, including the back to work enterprise allowance, Tús and the rural social scheme, RSS, local employment services, job clubs, community employment and jobs initiative. Currently ,19 LDCs manage 23 local employment service, LES, contracts. The remaining three are also managed by not-for-profit organisations. These activation supports are integrated with other social inclusion supports, facilitating jobseekers to simultaneously avail of complementary services such as training, childcare and health promotion.
In 2017 Indecon International Economic Consultants completed reviews of the local employment services and job clubs across the country.
It should be borne in mind that in 2016 the local employment service, LES, had been altered considerably from its original purpose and formulation in focusing on the long-term unemployed to a caseload and purpose reformatted for crisis times. The evaluation was not focused on the LES model as it has been designed but rather on a reformulation that had been rapidly constituted. We are now in an era more akin to what the LES had originally been designed for and this submission, while addressing the content of the evaluation, will have a focus on the employment services model required for today's operating environment, as I alluded to. The value of the LES and jobs clubs under review in 2016 was approximately €25 million. Combined, the services employ approximately 400 qualified and experienced staff. In 2016 the LES assisted 47,025 individuals, while jobs clubs assisted a further 19,663, giving a combined total of approximately 66,000 unemployed individuals in 60 separate locations across the country.
Indecon reported that the LES had achieved a placement rate of 28.8% against a target of 30% set by the Department of Employment Affairs and Social Protection. It should be noted that only employment for more than 30 hours a week is included in this figure. Excluded and not measured are jobs for less than 30 hours and placements in training, education and other necessary progression activities for those most distant from the labour market. It is against this background that the 28.8% achievement figure is independent evidence that the performance of the LES and jobs clubs is excellent when compared with similar operations nationally and internationally. Some 75% of LES clients reported that their interaction with the LES had motivated them to seek work or undertake further education or training. A further 71% of LES clients said LES supports had improved their employment prospects. Some 89% of employers surveyed reported that the LES had helped their organisation to find suitable candidates to fill vacancies. Some 83% of employers reported that the LES had provided an efficient recruitment service for their organisation. The two Indecon reports are more than 300 pages long and while there are many findings with which we could engage in more detail, the focus, rightly, is on the future. In that regard, Indecon has made seven recommendations. We will use our time to discuss their merits or otherwise.
The first recommendation is that there be a merger of jobs clubs and the local employment service. The recommendation is that, given their close relationship, consideration be given to merging jobs clubs with the local employment service. ILDN believes this recommendation would provide for a more integrated service for jobseekers.
Indecon recommends that LES and jobs clubs contractors should adhere to best practice governance. ILDN fully supports this recommendation and notes that all local development companies are registered companies with voluntary boards of directors. They are all registered charities. All local development companies with an LES or jobs club contract hold the Q Mark standard. As the companies hold contracts for several programmes across many funders, there is accountability, including to the Office of the Director of Corporate Enforcement, the Companies Registration Office, the Revenue Commissioners, the European Social Fund, the Charities Regulator and funder audits, while there is oversight through local community development committees and linkages with local economic and community plans.
On resources for the LES and jobs clubs, Indecon states: "Given the very significant reduction in the levels of unemployment, we believe this should be reflected in the overall resources provided for LES by the State". ILDN fundamentally disputes the logic of this assertion. As the level of employment recovers from the various crises, those who are most job-ready return to employment first and require the lowest levels of intervention and support. Local development companies and their LES operations work with those who are most distant from the labour market. Lack of marketable skills allied to social barriers requires deeper and longer intervention than that required in a recovering economy, with a 16% unemployment rate. At this point in the post-recession environment, the marginal cost of assisting others to access the labour market rises.
With regard to the recommendation that reads, "focus on the most disadvantaged activation and other client groups who are not currently obtaining assistance from other State-delivered/funded programmes", ILDN agrees with the configuring and resourcing of employment services in this way. Given the current buoyancy of employment creation, the support of those not currently on the live register or who are able to access what the International Labour Organization calls decent work should be an actively pursued policy objective.
The report's recommendation that the Department of Employment Affairs and Social Protection should consider multi-annual contracts in order that delivery agents can plan effectively is welcomed by the ILDN whose members already successfully operate multi-annual contracts, such as the social inclusion and community activation programme, SICAP.
On the configuration of local employment services, we would reverse the order of recommendations 6 and 7 to give more time to future services. Indecon recommends that amalgamation of services may be required to achieve greater economies of scale. The ILDN notes that there are multiple numbers of Tús, rural social scheme, RSS, and SICAP contracts While economies of scale should be explored, the grounded and local nature of Tús, RSS and SICAP by county and in agreed lots or areas in local development companies are major contributory factors to their success. The contracting Departments, the Department of Rural and Community Development and the Department of Employment Affairs and Social Protection itself, can testify to the effectiveness and efficiency of contract management by small teams in each area.
Indecon recommends that active consideration be given to an open public competitive procurement model for the future provision of services, and the Department of Employment Affairs and Social Protection has indicated it is preparing to follow this recommendation and procure for services within three months with a view to having such contracts in place for 1 January 2020. The ILDN makes the following observations. There are many good examples of State-funded programmes that are not contracted through an open procurement model, particularly in the labour activation area. If there is to be a new procurement process, it should keep the needs of jobseekers and value for the taxpayer at its core. This will require an objective assessment of all inputs and deliverables. Currently, effectiveness of employment services is evaluated by a single indicator: placement in employment of more than 30 hours per week. If commissioning is to be considered, it must take full account of the objectives of the service and the costs of delivering all parts of that service, including the elements of the journey to job readiness.
International experience in competitive contracting of employment services by a payments by results model has yielded unsatisfactory and unintended results. I refer the committee to relevant academic literature, in particular the work of Greer and others. The downsides of a privatised, pay by results model include removing experience and eliminating community organisations with a track record from competing. Local development companies, as delivery agents for Government, are generally prohibited from retaining a profit on most of their programmes, including the local employment service, LES, and thus their lack of reserves will remove them from a payment by results model. Gaming the system by creaming through prioritising the low-hanging fruit, parking those most distant from the labour market and coercion of those who wish to build a career rather than accept low-paid precarious work are among the methods identified in the research.
While open commissioning may initially appear attractive in cost terms, these are quickly offset by increased and often unclear procurement costs. More crucial, however, is the likelihood that the taxpayer will be tied into expensive, inflexible contracts often designed for a different phase of the boom-bust cycle. They compete with existing State-funded initiatives to the detriment of the latter.
The ILDN recommends that whatever procurement model is devised, it needs to take cognisance of the social inclusion aspects of delivering an employment service targeted at people most distant from economic activity, and the not-for-profit contract model operated by the Department of Rural and Community Development for SICAP. Local development companies, LDCs, given their national coverage, provide a ready-made and workable solution to the challenge of reconfiguring employment services to include large elements of social inclusion work with targeted cohorts. The success of the Tús, RSS and the back-to-work enterprise allowance schemes are current examples, offering value for money and agility to the contracting Department.
Any changes to the current model require a greater lead-in time than proposed, given the need for an ongoing service to jobseekers, the rights of employees and the proper planning and development to be undertaken by boards of local development companies.
Above all, the LDC capacity for full wrap-around service integration is required to meet the needs of today’s jobseekers. The need for such an approach is independently identified by the 2018 EU country report on Ireland.
It reads: “Some progress made, with the presentation of the Action Plan for Jobless Households, but groups furthest away from the labour market still require an integrated approach to helping them enter it."
The Irish Local Development Network recognises that public employment services need ongoing adaptation to meet the changing needs of jobseekers but points to the success of the not-for-profit community model since 1991 and its greater effectiveness over a privatised, payment by results model in addressing deep-rooted unemployment. The reconfiguring of the community-based model for current challenges offers jobseekers, employers and the State the optimum solution, which is accessible and locally based but has national coverage, is agile, has high governance standards, is linked to local democratic processes, is values-driven and has high personnel skills.
I thank the committee for the opportunity to present today. We are happy to take any questions members may have.