Significant regional variations" in new-deal outcomes

Citation

(2002), "Significant regional variations" in new-deal outcomes", Education + Training, Vol. 44 No. 7. https://doi.org/10.1108/et.2002.00444gab.004

"Significant regional variations" in new-deal outcomes

The effectiveness of the new deal in tackling youth unemployment has varied significantly across different parts of the country, depending on local labour-market conditions. In cities and regions with low labour demand and a lack of employment growth, the new deal has been far less successful at getting young people into work and keeping them there.

This is the main conclusion of research funded by the Economic and Social Research Council and carried out by Dr Peter Sunley and Professor Ron Martin. The research is based on an analysis of the core performance measures produced by the Employment Service for the first two years of the new deal's operation, plus more than 200 interviews with Employment Service officials, local programme-delivery partners, option providers, employers and new-deal participants in five areas.

The research reveals that, in terms of the proportion of the young unemployed moved into unsubsidised jobs, the new deal has been most effective in rural and semi-rural local labour markets, particularly in southern England, where more than 50 per cent of clients have typically gained jobs. Some areas of northern England, such as Cheshire and North Yorkshire, have also witnessed high rates of job placement.

But in the inner areas of the large industrial cities, the rates of unsubsidised job attainment have been significantly lower – typically 30-40 per cent. The placement of clients into subsidised new-deal jobs has not been sufficient to compensate for this unevenness of outcome.

Despite the national fall in youth unemployment, there has been little evidence of a convergence across different types of local labour market in the relative severity of youth-unemployment problems. Employment rates for the 18-24 age group in 2000 were roughly twice as high in dynamic and expanding local areas as in structurally depressed localities.

The proportion of jobs attained under the new deal and retained for six months has also been highest in the tight local labour markets of southern and central England, at over 58 per cent. It has been considerably lower in much of northern England, Cornwall, Wales and central Scotland, at below 46 per cent. Most of the conurbations have had low retention rates, although the experience within London has been variable.

The rates of "recycling" of clients through the programme and back into benefit claiming have been highest in northern industrial cities, such as Newcastle, Tayside, Sheffield and Barnsley, and in some coastal areas.

The research shows that the new deal has encountered very different problems in different types of local labour market. While in general it has worked best in tight labour markets, employers here are often disappointed by the lack of young people referred to them. In such areas, there is a widespread concern with skill shortages, but employers express reluctance to invest heavily in training young people because of high labour mobility.

In depressed local labour markets with large numbers of clients, new-deal personal advisers are under greater pressure and are often unable to get to know their clients well and provide a better service in terms of referrals and support. The pressure to provide jobs means that there is less selection and vetting of those jobs that are subsidised.

Many of the employers who have been involved in the subsidy scheme represent very small firms that cannot afford to provide proper supervision and training. The compulsion of young people to move into low-wage, insecure jobs, with few development or training opportunities, results in low retention rates.

Several agencies have suggested that the job expectations imparted by parents and local communities tend to deter young men, in particular, from accepting service-sector opportunities, especially in hospitality, catering and retail.

The authors conclude: "The stubbornness of the problems faced in depressed labour markets, even during a period of national economic expansion, suggests that such labour markets should be more strongly targeted by future youth-employment policy. The imperatives should be to create more job opportunities in such labour markets, and also to address the problem of low job retention, both by providing more support to clients and by increasing employers' incentives to retain and develop their new-deal recruits."

For further information, contact Peter Sunley. Tel: +44 131 650 2544; E-mail: pjs@geo.ed.ac.uk