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Work experience

Paul Gregg

Work experience programmes to help get the unemployed back into regular jobs have a long and somewhat chequered past. They have two distinct and offsetting effects; first the work experience itself is valuable. It gives an opportunity for the unemployed person to signal good work habits, including turning up on time and self-motivation when at work. These are the basics that employers want, after skills and experience. A decent reference from another employer is a big plus when looking for work. Obviously this is more important for those who have been out of work for a long time, or for young people with little previous work experience. However, whilst a person is on a work experience programme job search activity diminishes. The participant is working which simply reduces time available, but it is as important that they focus on trying to impress the firm they are based in, in the hope of being kept on. This is called ‘Lock In’ in the jargon of such schemes. These two effects are clearly visible in the Figure below (taken from the CESI website http://www.cesi.org.uk/blog/2012/mar/work-experience-more-be-done). It shows the proportion of participants in the government’s current Work Experience programme who are still claiming benefits week by week once they start participating (the blue line), compared with those who do not participate (the red line). For the duration of the placement, the first eight weeks, the proportion still claiming is higher by about 5% and then they rapidly catch up. So whilst they are on the experience programme job entry falls but once it has ended the positive effects start to kick in.

In this comparison the net effect is zero. This doesn’t definitively suggest that the programme has no beneficial effects for those participating, as we can’t be certain that those joining are not those who would have found securing work harder. They could of course be the more keen participants, or those in places where more firms offer placements, we simply can’t tell. However, this story of ambiguous effects with little overall impact on people’s chances of securing jobs has been the norm of Work Experience programmes since the 1970s. Unless, the design actively tries to minimise the adverse effects on job search and maximise the positive part of the work experience.

The first key ingredient is to maintain and support job search throughout the placement. That means requiring and monitoring the participant’s job search activity, as is the case when people are on unemployment benefits. Furthermore, the support services that welfare to work providers deliver to the long-term unemployed, such as CV writing and job interview techniques need to be in place to make the most of the experience. Finally, the agents delivering the placement, both the provider and the firm, need to care about the person getting a job after the placement. The easiest way to guarantee this is a bonus payment if the person is kept on by the firm or another job is found shortly after completing the placement. Small firms especially have a lot of contacts they can use to help place someone. Hence it is generally most valuable for private or third sector firms to house the participant rather than in the public sector.

Labour’s New Deal programme launched a decade ago now, had some of these ingredients but in sequence rather than all at the same time. There was a Gateway phase before the placement for support and intense job search, and again at the end in a Follow-through phase, but not when actually on the experience part. However, it didn’t have any outcome related payment for firms or charities providing the experience. By comparing those aged 24 who joined the scheme at 6 months, with those aged 25 who had to wait until 1 year, we got a sense of its effectiveness. A study by John van Reenen (LSE) showed clear job entry gains for participants, although it didn’t assess how long the gains lasted as the older group also joined the programme.

The current Work Experience programme for under 25s starts much earlier at just 3 months, which means there are more potential participants and many more will find work quickly without help. For this reason the government is keeping costs down to a minimum. The placements are not paid and no support services are provided, no job search monitoring is in place and there are no bonus payments for firms who take participants on. Hence it should be no surprise that the scheme appears to be making little or no difference.

Labour has just launched its ideas for a more intensive, 6 month paid programme starting after 12 months on unemployment benefits. These are a much smaller group with much greater need; people who go on to have very damaged working lives well in to their 40s unless they can get attached to long-term stable employment. With signs of intelligent design, the programme has all the key ingredients for making a difference, except outcome payments for the firms. Participants will have a support service provider whilst on the programme who is only paid on the basis of getting the person into work, the work experience is part-time to leave time for job search and as when receiving benefits normally, active job search is monitored and sanctions will apply if it is not undertaken. So the scheme has a decent chance of making a sufficient difference to cover its costs. But the other issue, apart from there being no bonus payment to firms getting participants into work, is that it is drawn very narrowly. By requiring a person to be on unemployment benefits for as long as a year means that many cycling between short term jobs and unemployment are missed. Those leaving school at age 16 or 17 who don’t get work are not entitled to benefits, and will still have to wait a year (until they are 19) before help kicks in. There is also no help for the 16 and 17 year old unemployed. So, it is a good first instalment but more will be needed to end long-term youth unemployment.

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  1. March 23, 2012 at 5:00 pm

    “Whilst a person is on a work experience programme job search activity diminishes. The participant is working which simply reduces time available….”. Just over half of those changing jobs find their new job before leaving their old job according to this paper: Mattila, J P, (1974) Job Quitting and Frictional Unemployment American Economic Review, March, pp.235. That suggests that job searching while working is not too difficult. Also the average time the unemployed spend job searching is a minute proportion of the normal working week. I think it’s about 3 hours a week but I can’t give you chapter and verse on that. So I’ve got slight doubts about how seriously the fact of doing a Work Experience job would hinder job searching.

    There are a few papers I’ve listed that provide evidence on the effect of Work Experience type schemes. See:

    http://ralphanomics.blogspot.co.uk/2012/01/effect-of-temporary-subsidised.html

    The evidence from these is that subsidised work in the private sector yields better results than such work in the public sector. Plus the sort of training normally offered as an alternative to Work Experience type jobs does not yield brilliant results.

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