I thank the Chairman and members for the invitation to discuss the Indecon reports we published earlier this year. I am looking forward to the questions of committee members arising from the presentation of the Irish Local Development Network.
Before discussing the reports, it would be useful to give a brief overview of the evolution of policy and practice in the area of activation and the direction these reforms have taken. The period from 2011 to 2019 has seen significant reforms to the Government’s approach to supporting people who are unemployed in their return to the labour market. The changes have included streamlining and reorganisation of the services on offer from the Department through Intreo; the introduction of new services and schemes, including recruitment subsidies such as JobsPlus; work placements under JobBridge; tailored training under MOMENTUM and conversion education under Springboard; an increase in the number of case officers directly employed and indirectly provided via contract; the tailoring of the Department's approach to jobseekers using the model developed by the ESRI; and increasing the number of places on, and adjusting the approach taken within, State employment schemes, such as community employment, Tús and the rural social scheme. The Department has also developed an employer engagement strategy and a team to work very closely with employers on initiatives such as JobsPlus and national jobs week, which ran very successfully last week. I pay tribute to all of the organisers and participants as it really was a success.
In all of these initiatives, we applied the principle of rights and responsibilities to encourage people in receipt of payments for jobseeking to actively engage with all or some of our services.
All of these changes were developed and implemented as part of the pathways to work strategy based on expert research and advice from bodies such as the OECD, ESRI and NESC. Of particular relevance is the 2009 OECD report on activation policies in Ireland, the 2010 ESRI report on employment services and the 2011 report from NESC on services and supports for jobseekers.
The changes were overseen and guided by the Labour Market Council comprised of experts such as Dr. John Martin, former head of employment and social affairs at the OECD, Professor Philip O’Connell of UCD, Ms Bríd O’Brien of the Irish National Organisation of the Unemployed, INOU, Dr. John Sweeney of National Economic and Social Council, NESC, Dr. Peter Rigney of ICTU, and Mr. Tony Donohoe of IBEC together with senior leaders from a number of large employers
These changes have not only borne fruit but have been, in the main, warmly welcomed, by the jobseekers we serve. The evidence for this can be seen in the reductions in unemployment and, in particular, long-term unemployment as we emerged from the recession that lasted from 2009 to 2013. This labour market recovery differs markedly from that witnessed in Ireland following previous recessions or what was witnessed in other countries affected by that global crisis. In previous recessions, it took more than six years of sustained economic growth for unemployment to respond and even longer for long-term unemployment to fall. This time around the experience has been different.
Although it is difficult to attribute this performance in a quantitative way to specific actions and measures, there is some evidence the committee should consider. Econometric studies of JobBridge, the back to work education allowance and JobPath, together with a value for money review of JobsPlus, all indicate a positive impact on employment outcomes for participants compared to non-participants. The recently published ESRI econometric assessment of the streamlined Intreo process commissioned by my Department indicates that the reforms improved exits from the live register.
Furthermore, external commentary on the economy by the OECD, EU and IMF have singled out our activation reforms as being particularly effective in contributing to reducing unemployment. Reviews of the Intreo process reforms by the INOU and by the European network of Public Employment Services have also been positive. Perhaps most important, our customer satisfaction tracking research, commissioned externally and conducted independently, indicates high levels of customer satisfaction with the service and the services offered.
All of this evidence suggests that we do not need to implement major reforms of our approach to activation. We now operate in line with best practice internationally. That is not to say that we cannot do better and, in particular, that there are not changes that we need to make to adjust to our improving economic situation. It is in this context that the two Indecon reviews on local employment services, LES, and job clubs were published last January will be considered. Members will agree that the reviews are broadly positive regarding the impacts of the LES and job clubs, recognising the role the LES play in engaging with those furthest from the labour market as well as the useful role of job clubs in working with more job-ready clients. Nonetheless, the Indecon reviews make several useful recommendations that are being considered by my Department.
Transitioning to multi-annual contracts from the current annual contracts, as suggested in the reviews, would enable contractors to plan for the medium term while the enhanced use of performance metrics would enable my Department to ensure that the performance of contracted employment services are of benefit to jobseekers and of value to taxpayers.
On procurement, the Indecon reviews suggest that open or public competitive procurement be actively considered. A move to competitive procurement is also consistent with legal advice my Department has received with regard to its obligations under EU procurement legislation. Accordingly, this is a matter that is currently receiving active consideration.
In December, I had the privilege of addressing the Irish Local Development Network, ILDN, conference where I informed the delegates that the Indecon reports would be published in early 2019. There were naturally some concerns and nervousness due to delegates not having seen the reviews but we assured them they had nothing to be nervous about and that once the reviews were published, we would meet them and discuss the reports.
Senior officials from my Department met representatives of the LES and job clubs on 25 January last, shortly after the publication of the reviews. They were joined by a partner from Indecon responsible for drafting the reviews who presented his findings and took questions. The LES and job clubs have broadly welcomed the Indecon reviews and I am happy that they are positively engaging with my Department, as they always have. The continued longevity and success of LES and job clubs cannot be based on standing still or an assumption that contracts will be renewed irrespective of legal requirements or service performance considerations. From our discussions it is clear that the LES and job clubs understand that they need to adapt to changing circumstances. It is encouraging to see their openness to change and reform and I am optimistic that we will continue to benefit from their services for years to come.
An econometric review of the JobPath service by the Department's statistics unit, led by a senior statistician on secondment from the CSO with support and input from the OECD, is nearing completion and I expect that the results will be published next week.
Some commentators have sought to present the service procured via JobPath as being somehow in competition with that procured via the LES and job clubs. This simplistic presentation which has been put to me on numerous occasions is also misplaced. To be clear, it is my view, and that of my Department, including people who were there long before me, that these services complement rather than compete with each other.
The evidence in Ireland, just as in every other labour market around the world, is that people who are long-term unemployed face significant challenges in securing employment opportunities. For some long-term unemployed people, the period of unemployment is prolonged; this requires that there is a mix of services and service providers available to them over this period. That is why we have LES and job clubs, JobPath, State-employment schemes such as community employment and Tús and a mix of education and training schemes via SOLAS and its contracted service providers.
Services can at different stages of unemployment offer different opportunities and supports to unemployed jobseekers. Currently, with approximately 77,000 long-term unemployed people on the live register and a further 45,000 engaged in programmes such as community employment, CE, there is more than enough work for all of our service providers. There may be a fear that a particular mindset is present but unfortunately there are more than enough unemployed people for all our services to help. We would not be able to do what we need to support those people without the support of all our services.
Looking at the future, the development of our service strategy will be driven by the twin purposes at the core of all public employment services. First, the activation function of Public Employment Services, PES, is to facilitate the smooth functioning of the labour market by encouraging labour market participation and reducing what economists call "friction" as people enter, leave or move within the workforce. It does this by trying to ensure that unemployed workers are matched through advice, counselling, work experience and training to job opportunities and to ensure that the job opportunities are in fact notified to, and made available to jobseekers. Activation also means working with employers to make it easy for them to take on workers and specifically to encourage them to give unemployed workers, whom they might not otherwise consider, the opportunity to prove their worth and continue to work in the organisations where they get work experience.
The second core purpose of PES is social inclusion. To ensure that unemployed workers are not disenfranchised by not having the social or family capital or network that gives them access to employment opportunities. It is not simply enough for the State to passively provide income supports and then leave people to figure out on their own how best to find and sustain employment. We have a duty to offer supports in the form of advice, work experience opportunities, training and education and occupational activities to all jobseekers. In doing this, we provide a social capital or a public network to all unemployed workers that can help redress any inequality arising from differences in social and family capital.
This twin purpose of activation and social inclusion applies regardless of the economic backdrop. However the challenges faced in delivering on this purpose changes as employment conditions vary.
We are, at this stage, moving from a position of having an excess supply of labour to one where labour supply is tightening. This challenges us to create opportunities to bring more people into the labour market and to extend our services to other groups of people whom we could not reach, given constrained resources, during recessionary times. This includes improving and expanding services for women not currently active in the workplace, but who want to be, and similarly for people with disabilities. We are also moving from a position where many unemployed people had a strong record of prior employment to one where those people who are now long-term unemployed are increasingly characterised by weak labour market attachment and significant employment barriers.
This group of people requires more intensive support, delivered via a mixture of services and service providers, as I have outlined.
The Department is currently reviewing how it will adapt its services to address these challenges. This is unlikely to require a major overhaul of service provision. However, it will require a refocusing of effort and it is more than likely to require some redesign of our services to attune them to the needs of people facing significant barriers to taking up employment. We are in the process of designing the activation and support services for the next generation. At the moment we are lucky enough for our unemployment numbers to be coming down but these programmes need to be scalable. If anything happens to employment in this country again, God forbid, we need to be able to scale them up easily. The changes we have made to the design of the youth employment support scheme, YESS, which helps young people with significant barriers to employment to gain valuable workplace experience, are an example of the redesign of schemes that were working but can have a much more positive impact with a small number of tweaks.
One thing that I will not do is make the mistake made by previous administrations, with all due respect to them. In periods of economic growth the State's PES were effectively allowed to wind down and wither through disuse because we did not need them. This happened without any acknowledgement that we would need to be able to turn on the tap again. In any future downturn in the economic cycle we do not want to have to rebuild the PES from scratch, as we unfortunately did between 2011 and 2015. Although we have had major success, there is no doubt that we lost too much time in rebuilding the service. This led to a situation where we entered the recession with far more people unemployed than would have been the case if the public employment service had been operating effectively for the previous several years.
A 2009 estimate from the OECD suggested the number on the live register was approximately 100,000 higher than it would have been if the PES were operating to best practice levels in those years. In refocusing our efforts I will not countenance any reduction in capacity. Between Intreo, LES and JobPath staff, we have approximately 800 case officers at present. At a minimum I intend to maintain that capacity to the extent that I can, given available resources. I also intend to extend the Department’s service offerings to help other groups to access employment opportunities; people with disabilities and people, mainly women, who left employment to mind our children.
I believe that these are objectives on which we can all agree. I look forward to hearing the committee's views and answering any questions.