Review of Active Labour Market Programmes

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Introduction

Background

This Study is prepared by Indecon International Economic Consultants and is submitted to the Department of Enterprise Trade and Employment. It concerns a review of the Government's Active Labour Market Programmes (ALMPs).

The background to this Study is the range of measures aimed at helping the unemployed to become reintegrated into the labour market. These ALMPs can be divided into the following broad categories:

• General Training (basic training or foundation level training in general skills);
• Specific Skills Training (training in specific employable skills to meet skills in local labour markets, e.g. computer training);
• Direct Employment schemes (subsidised temporary employment, e.g. CE);
• Employment Subsidies (subsidies to the recruitment or self-employment of unemployed workers in the private sector, e.g., BTWA);
• Job Search Assistance.

A number of these interventions have been evaluated. However, according to the terms of reference for this study, the evaluations to date have been on a stand-alone basis and have not led to a rationalisation of ALMPs, nor addressed the interaction of different policy interventions from the perspective of their cumulative impact on those for whom they are targeted. Accordingly, it was considered appropriate to undertake an overall review of ALMPs.

Terms of Reference

The Terms of Reference for this Study are as follows: taking into account the recommendations and findings of all relevant reports and studies commissioned under the Partnership 2000 Agreement, those otherwise undertaken over the duration of that Agreement, and subsequently; and having regard to best international experience with regard to the use of ALMPs for the purpose of maximising the supply of labour and promoting social inclusion, the aims of the overall appraisal of ALMPs will be to consider and make recommendations on:

• Appropriate active labour market programmes that may contribute in the future to national competitiveness to the maximum extent possible, by increasing labour supply, through the integration of unemployed persons into the labour market;
• Eliminating any remaining disincentives to employment, identifying any gaps or anomalies between various interventions, and securing the fullest possible measure of rationalisation and overall consistency;
• Re-orienting ALMPs, including the development of the training component of Community Employment, so that the collective focus will be on the needs of the most marginalized and disadvantaged groups (the long-term unemployed, lone parents, people with disabilities, travellers, refugees and asylum seekers with permission to work, women, lone parents, dependent spouses, young people who are disadvantaged, ex-offenders), to ensure the emphasis is on progression to, and is relevant to the needs of the open labour market;
• Future provision to meet the needs of those who are severely disadvantaged in the open labour market for whom ALMP participation is inappropriate or who may not benefit from participation from enhanced intervention by the Employment Services under the proposed High Support Process,
• Placing the emphasis firmly on training and progression, including the enhancement of progression pathways between education, training and the workplace through specific skills training and pre-labour market programmes;
• Cost effectiveness of each programme having regard to, where appropriate, the impact of the national minimum wage;
• Arising from the review, to advise on appropriate data collection systems and benchmarking of progression with a view to effective monitoring and appraisal of the performance of ALMPs;
• The optimum approach to ensuring that all potential customers (i.e., the persons at whom the ALMPs are targeted) are made fully aware of the range of interventions and are encouraged to participate, and to develop new methods of disseminating information, if appropriate; and,
• The appraisal should take account of rural/urban and partnership /non-partnership areas differentials.

According to the background to the Study, it is envisaged that "the proposed study will consist substantially, but not totally, of a literature review of reports, studies and analyses already carried out into the subject area consisting primarily of direct employment and employment subsidy schemes. The overall approach would be to synthesise and draw conclusions from such a review under the main themes arising, including their overall effectiveness as a labour market measure, relevance to current labour market requirements, flexibility, and complexity in the current range of options. Consideration should also be given to any variations in supports and incentives, and their potential to distort choice of programme and progression to employment in the open labour market. "

Acknowledgements

Indecon would like to thank officials in the Department of Enterprise, Trade and Employment, Department of Education and Science, Department of Social and Family Affairs and FAS for their assistance with this Study. We would also like to acknowledge the inputs received from a range of organisations, agencies and individuals through face-to-face interviews and submissions sent directly to the Consultancy team.

Methodology

A number of different methodologies were used to address the Terms of Reference. A review was undertaken of the many previous studies and evaluations of ALMPs. These helped to identify the most effective policy interventions and helped in identifying the policy issues. An international review was also undertaken. ALMPs are undertaken in most countries of the OECD and a body of experience on the effectiveness of these schemes has been developed.

In addition to these reviews, the latest available programme information on ALMPs was assessed. This included data on progression rates, targeting and trends in the number of participants.

Finally, discussions were held with a number of groups and agencies. Submissions were also received and these informed the conclusions and recommendations of the Report.

Where possible, conclusions and recommendations were based on an assessment of the costs and benefits of schemes. This balanced the costs of programmes - which is relatively straight-forward to assess - and the benefits as measured by indicators of effectiveness and impact. As is documented in previous studies, measuring the benefits of schemes is difficult, thus complicating the preparation of a fully developed cost-benefit analysis. Within the Terms of Reference of this study, and given the data constraints, the costs and benefits of the schemes are assessed.