Tag Archive | unemployment

Fact-checking FactCheck

Fact-checking fact-check

 

Firms get up to £13 720 for getting a person into a job.  Currently there is a small attachment fee of £400, which is to be phased out over the next few years as companies build up their success and therefore can afford to take people on at their own cost.  The biggest single payment is for a job outcome, paid when a person on JSA has been in employment for 6 months or a person on ESA has been in employment for 3 months.  However the money really starts coming in when people have stayed in jobs beyond the outcome period, as the companies then get between £117 and £370 every four weeks up to one or two years.  Presumably these people are no longer getting support from the Work Provider, so the Provider can just wait for the money to come in every four weeks.

Poor performance of the Work Programme has been linked to the state of the economy, which is worse than was expected when the WP started.  However CESI said the target of 5.5% should be revised down by only 15%, to just under 5%.  The headline figure of 3.4% getting a job is still too small.

However, whilst headline figures look poor, they mask the fact that with each month more people join the programme, without an equal number leaving because their allotted time (2 years) is up.  The appropriate figure is not the percentage with a job outcome out of all who have been referred, but the percentage with an outcome within a set period – not including people who have not been on the programme for that length of time.

So to know how well the programme is doing, we first need to decide how quickly we think they should find jobs for people attached to it.  Assuming that taking up to 12 months is acceptable, then the success rate is around 8.4%.

Fact check does mention this, but not until near the end of the report.  By this time, there has been a lot of comparison of the 3.5% figure to the DWP target of 5.5% and suggestion that the WP is worse than nothing.  ESA figures were submitted to the same incorrect use of maths to get 1.5% finding work; the reality is that 4.1% of those who joined the programme in June-Aug 2011 had work a year later.

Fact check does not provide any data on whether the WP is worse than nothing.  To know this, we would need to know what percentage of jobseekers who had been out of work for 6 months prior to Jun-Jul 2011 and who were not placed on the WP got jobs within a year.

Keeping a job is not just about job outcomes, it is also about staying in work after that time.  For people from ESA, 2000 sustainment payments were paid out.  This works out as the average ESA referral not staying in work for more than six months (otherwise there would have been more sustainment payments).  I haven’t done the equivalent calculations for Jobseeker referrals, but the length of time people stay in work after reaching a job outcome is a crucial piece of information that the government has rather disappointingly not given us,

 

Cost wise, fact check has neglected sum important figures.

Until a person gets a job, Work Providers receive only £400 (attachment fee).  It is therefore not very expensive to have a lot of people on the programme, if being on the programme was all that mattered.  However the key thing is that for the Work Programme to be counted a success, people need to get into and stay in work.  This rapidly raises the costs.

At the lowest end, a Work Provider gets a £400 attachment fee, £1200 job outcome fee and 13 sets of sustainment payments at £170 each – a total of £3810.  At the highest end, the figures are £400, £3500 (all but ESA ex-IB claimants are £1200) and 26 sets of £370 – a total of £13720.

The first thing fact check has forgotten is that sustainment payments occur every four weeks for either 52, 80 or 104 weeks (1, 1 ½ and 2 years).  So most of the money that a Work Provider will get for getting a person into a job hasn’t been paid yet.

Secondly, so far only 8.4% of people got jobs within a year.  That’s approximately 9 people not getting a job to every 1 person that does.  The cost of that one person’s job includes the attachment fee for the other 9 who didn’t got jobs (although if people get jobs in their second year on the programme, the ratio of attachment fees to jobs will decrease; also this fee won’t continue to occur after the first few years of the WP).

All of this means that one job found this year costs between £7410 and £19120.

This means the WP is currently more expensive than the Flexible New Deal, Employment Zones, New Deal for Young People and New Deal for 25+.

 

So the key facts are:

WP success is 8.4%, not the 3.5% used by Fact-Check to compare to the 5.5% target

For ESA claimants, success is 4.1% not 1.2%

The WP is currently more expensive than the other programmes considered by Fact-Check

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Does the Work Programme Work?

Back on wordpress because I can’t get my website to work…

Today (27th november) the government released data on the first year of its work programme.  This programme is open to people on ESA and JSA.  People are mandated to this programme when they have been on JSA or ESA for a set number of months; the number of months depends on the category into which a person falls.  For people moved on to JSA from Incapacity Benefit, this is three months.  People placed in WRAG can be referred to the work programme at any time, in general when they are considered to be within three months of recovering enough to return to work.  Jobseeker’s are given six months before referral if they are 18-24, and 12 if they are over 25.

The Work Programme was started in June 2011.  Since then, there have been 878 000 referrals to the Programme and 837 000 attachments.  Of these, 91% were from JSA and 9%, 79 000 people, were from ESA.  Most ESA referrals are from new ESA claims who are mandated to the programme from WRAG; these form 52 100 people or 66%.  The next biggest is voluntary referrals at 22% (17k), and the smallest is ESA claimants who were previously on IB, at 12% (9.4k).

Out of all referrals, 200 000 people started jobs.  However most left within six months: only 31 000 people have been in work long enough for the Work Programme Providers (WPPs) to get job outcome payments.  Of these 31 000, only 1 000 are people from ESA.

To get an idea of how well the WPP are performing, ideally we would need to know how long it took people to find a job and have data for 2 years, the amount of time WPP are given to find people a job.  Because the WP has only been going for 14 months, the best we can do is to use the first three months to work out what percentage of people are found a job in 12 months.  We also can’t easily compare it to Jobcentre data, as Jobcentre data will include people who are able to find jobs more quickly.  There is also little data on how will the WP performs compared with previous schems, although Alex Hurn does a good comparison here. (basically, WP is not very, if at all, effective, and the Future Job Fund was effective)

For ESA groups, this gives the data in Table 1 for how many and what percentage found work within one year of referral to the WP.  Note that the September 2011 cohort is just under one year, as figures for August 2012 are not available yet.  Over all ESA groups, 475 people found jobs within one year of joining the Work Programme out of 11 488 referred from June-Aug 2011.  That’s a success rate of 4.1%.  This is much lower than the figure for all people on the WP, which has an 8.3% success rate over the first two months of the programme.

Note that there is some incorrect use of statistics.  For all WP participants, 31 000 of 878 000 referrals got jobs: this is 3.5%, the figure that is being most quoted.  However, this includes people referred who weren’t attached (don’t ask, I don’t know what that means, unless it is that people voluntarily left the benefit) and therefore understates the percentage.  It also includes people who have joined the programme very recently and therefore can’t be expected to have yet found work.

This graph shows the percentage that have a job outcome (i.e. stay in work for 6 mths) for each month after joining, up to ten months.  It is not cumulative.  The big jump between 6 and 7 months suggests that most people are likely to take at least 6 mths to be found a job.  Therefore, to include people who joined the WP in the last 6 mths (i.e. Feb to Jul 2012) will inappropriately raise the caseload relative to job outcome rate.

This is why the government uses the figure of 8.1% and 8.6%.  These are the percentages who found work within one year of joining, for June and July 2011 cohorts respectively.  These graph use 10 months, to allow more cohorts to be included.

The use of the figure 3.5% is inappropriate.  To know whether the WP is successful, we need to have an agreement on how long we think it should take a WPP to find a job for a person.   If we think it should be 6 months, then the figure is 1.2%; at 9 months it is 4.6% and at 12 (not shown on these graphs) it is 8.35%.

It is worth bearing in mind that for people mandated from JSA, another 6 months has to be added to the time out of work, and for ESA it is another three.  So if the total amount of time acceptable for a person to be out of work, including time before joining the WP, is 12 months, only 1.2% get a job in this time.

ESA ex-IB ESA New IB/IS voluntary ESA voluntary JSA ex-IB
% referred no. jobs % referred no. jobs % referred no. jobs % referred no. jobs % referred no. jobs
Jun-11 0 90 0 3.9 1800 70 6 170 10 7 300 21 5.6 150 8
Jul-11 8.3 120 10 3.2 3400 109 7 290 20 6 500 30 8.1 370 30
Aug-11 0 130 0 3.3 3290 109 5 210 11 7 460 32 7.1 208 15
Sep-11 0 180 0 3.7 3550 131 4.3 230 10 6.3 480 30 8.3 240 20
Jun-Aug 2.9 340 10 3.4 8490 288 6.1 670 41 6.6 1260 83 7.3 728 53

Job outcome rate varies by group.  In particular, people who are on ESA and have been mandated to the Work Programme are unlikely to find work, at 3.4% across both groups.  However, people moved on to JSA from Incapacity Benefit or who volunteer for the programme from IB or ESA are twice as likely to find work, at 6.7% across all three groups.  It may be that this occurs because those who are mandated to the WP are less healthy than those found fit for work (although bear in mind these people are not necessarily either well or fit for work) or those who self-select for the WP.  People who self-select for the WP may feel that their health condition or disability need not be a barrier to work, if appropriate work and support can be found.

The key issue however is whether or not these people stay in work.  And the results say that they do not.   1000 people from ESA found work.  But only 2000 sustainment payments occurred for people on ESA.  Sustainment payments are lump sums given to WPP for every four weeks an ESA claimant spends in employment above the first three months.  Given how long the work programme has been running, and the number of people reaching a job outcome (3months in work) there was potential for 3000 payments to be made.  Such a small sum means very few people stayed in work for more than 3 months.  Because the number of job outcomes per month has been increasing, most of the potential sustainment payments occur for people who reached job outcomes in Feb-Jun 2012.  This skew also means that the average person who got a job kept it for only 6 months (3 months to job outcome, plus 3 months of sustainment payments).

The data suggest two things.

First is that small numbers of people are being helped into long-term employment.

Second is that a large percentage of people who reach 3 months employment don’t stay in that employment.  They may not leave right away, but the data suggests the average person does not get past 6 months.

The numbers can be cooked in different ways.  You can consider how many got a job out of all who have been referred to the WP, but this makes it look worse than it is – it includes people who only recently joined.  You can consider how many got a job within a year of being on the WP, but this makes it look better than it is – it forgets that people have already been unemployed for three or six months, and ignores that the majority do not stay in employment for six months.  You can also find inappropriate data to compare it with: bearing in mind that these are people who have been unemployed for six months (three for ESA), it is not correct to compare this with all jobseekers who find employment, because some will find employment within six months of signing on.

But however the numbers are cooked, one thing is clear: the Work Programme is not working well.

Key Figures:

All:

837 000 people joined the Work Programme

200 000 people started a job

8.3% of people got a job within a year of being on the WP.[1]

1.2% of people got a job within a year of being on JSA, or 9 mths of being on ESA

31 000 people kept a job for six months (three for ESA recipients)

20 000 people kept a job for more than six months (three for ESA recipients)

£58 000 was spent as sustainment payments for the 20 000 people in work for more than six months (three for ESA recipients)

ESA:

1 000 people had a job for three months

4.1% of people got a job within a year

Most of these people did not stay in employment for more than six months


[1] This data is only available for people who started the WP in June or July 2011

Culture of Worklessness

This is an extract from a book I am writing that didn’t make it through the editing process.  The book, on disability and welfare in the UK, should be published at the beginning of December.  This extract uses quotes from Iain Duncan Smith’s speech to the US Congress as a starting point for an analysis of the government’s belief in a ‘Culture of Worklessness.’

“Not everyone is starting from the same place. There is no point assuming, for example, that everyone understands the intrinsic benefits of work, the feelings of self-worth, or the opportunity to build self-esteem. If you are dealing with someone from a family where no one has ever held work, or no one in their circle of peers has ever held work, there is no point in simply lecturing them about the moral purpose of work.  What you must tackle is the biggest demotivating factor that many people face – the fact that the complexity of the system and the way it is set up creates the clear perception that work simply does not pay. Thus, after generations in key communities, worklessness has become ingrained into everyday life. The cultural pressure to conform to this lifestyle is enormous, underscored by the easy perception that taking a job is a mug’s game. It is this factor which can stop someone’s journey back to work in its tracks…

“Take some of the figures we were confronted with when we came into office: 5 million people – some 12% of the working age population – on out of work benefits, 1 million of them stuck there for a decade or more. 1 in every 5 UK households had no one working, and almost 2 million children were growing up in workless families. This was the cultural challenge we faced – entrenched and intergenerational worklessness and welfare dependency…”

Iain Duncan Smith is misleading on several points.  The “1 in every 5 UK households [that] had no-one working” means 3.9m households at the end of 2011 compared to 3.5m before the recession.  Of adults who are out of work, and of households with no-one working, only 10% have never worked.  Over half of these 500k adults (370k households) are under-25 – that is more than 250k adults and 185k households.  73k of these are student households; of the remaining 113k some will have left education and be looking for, but not yet found, a job.  1/6th are over 25 and disabled or long-term sick.  Of the remaining third, some are seeking work but unable to find it whilst others have caring roles.  A mere 10% – that is 1% of the unemployed – have no obvious reason for not working.  “It is a serious mistake to proceed as if this 1% is somehow the essence of the problem of worklessness.”[1]

The “1 million of them stuck there for a decade or more” includes people who have worked in the past, and people who are receiving Incapacity Benefit/Employment and Support Allowance.  Given that only 500k adults have never worked, of whom 125k are under 25, it is clear that 725k of this 1 million have worked in the past.  What is not clear is how many of these have been unemployed from ‘lifestyle choice’ rather than because of caring roles or long-term disability or sickness.

The 2 million children in workless families is again going to refer to some children whose parents are not unemployed through choice.  Most of these – approximately 1.25m – are in lone parent households; it is difficult for lone parents to bring up children, particularly those still at primary school, whilst holding down a full-time job, and part-time jobs do not always fit easily with school hours.  Childcare costs are high, with the result that having a job and paying for child care may result only in the children not seeing much of their parent.  Only half of lone parents are able to hold down a job as well as raise children.  If the government wants to discuss workless families, it needs to do more to help lone parents, or simply recognise that it is valid for a lone parent to commit most of her (or his) time to raising children.

As for “entrenched and intergenerational worklessness and welfare dependency” – this is not just misleading, it is all but untrue.  Two-generational worklessness is rare – just 0.9% of households consist of workless parents with adult children.  Only 0.1% are households where neither parents nor adult children have ever worked.  That is 15 530 households, and in many of these younger generation has been out of education not even a year.  Inter-generational worklessness includes cases where the parents and children are not cohabiting, but sons with workless fathers are only 3% more likely to have never been in employment from 16-23[2].   And some of these will be households where there are good reasons for the parents or children to be out of work, such as for health reasons.  But even in these households, it is not necessarily “entrenched and intergenerational.”  These children will have extended family members who work, peers who work and peer’s parents who work.  It is fact of statistics that some people who are unemployed will also have parent’s who are unemployed; there are many reasons why two generations are unemployed other than a culture of worklessness.

“There is also nothing in these official statistics to suggest that households that have never worked deserve to be seen, or treated, differently from other workless households.”[3]

 

“They [workfare companies] are given complete freedom to deliver support, without Government dictating what they must do, through what we call the “black box”. That means trusting that these organisations are best placed to know what works.”   This trust seems to be misplaced.  Mr Hutchinson, then head of internal audit at A4e, spoke of multiple instances of fraud in A4e and in Working Links, with whom he had been previously employed.  Mr Hutchinson claims that, “Where I made recommendations to tighten controls, or strengthen policies and procedures, my advice was not heeded,” and questions whether “significant enhancements” were introduced when A4e won a government contract to provide the new Work Programme. “If this had been the case, I would have found it extremely odd that the numbers of suspected frauds and irregularities should continue to prevail and increase, as was the case at the time of my departure from A4e in 2011.”[4] A4e has since been investigated and found to have significant weaknesses in its work relating to Mandatory Work Activity in the South-East, whilst several of its employees are under police investigation for fraud.[5]   The National Audit Office also concluded that the DWP missed vital evidence in its investigation of fraud in A4e.[6]

“Work Programme service users cannot judge whether they are getting the level of service the Department intends because standards are not set out in one place… There is a risk that providers are less clear about how to abide by the terms and spirit of delivering a programme and that claimants have less clarity about the level of service they should expect to receive.”[7]

 

“We are already seeing positive signs that this cultural change is beginning to happen. Though the overall economic outlook is still poor, the jobs figures for the last 3 consecutive months in the UK showed some encouraging signs of stability, particularly stronger than expected growth in jobs from the private sector.”

However, this was all in part-time jobs, taken largely by people who want full-time but are unable to get it; the total number of full-time jobs fell.  “Virtually all employment growth is coming from part-time and temporary jobs but most of the people taking them want and need permanent, full-time work.”[8]  Much of the growth came from self-employment, but it is dangerous to consider exchanging one form of vulnerable There are reasons to be concerned that the large rise in self-employment, given the weak state of the economy, may reflect disguised under-employment rather than burst of entrepreneurial zeal.[9]  The number of people in involuntary part-time work (i.e. they want, but can’t find, full-time work) has risen to 1.41m, a record high.  There are also 607k workers in temporary positions who want permanent work.  Real wage continues to fall.  This, combined with the rise in underemployment, “suggests that the labour market is not tightening as much as the headline figures suggest.”


[1] Joseph Rowntree Foundation (JRF), Monitoring Poverty and Social Exclusion 2011

[2] Intergenerational Worklessness

[3] Joseph Rowntree Foundation (JRF), Monitoring Poverty and Social Exclusion 2011

[6] National Audit Office

[7] National Audit Office

[8] TUC, Male under-employment has doubled over the last four years. 15th May 2012 http://www.tuc.org.uk/economy/tuc-21009-f0.cfm

[9] TUC, Labour Market Report no. 27 2nd July 2012 http://www.tuc.org.uk/economy/tuc-21162-f0.cfm