What is the current approach to tackling worklessness?

Jo Casebourne - 01.10.2012

Worklessness may not seem an obvious area of interest for Nesta, which like most innovation agencies has tended to focus in the past on technologies or topics like education.

Our past work has addressed some issues of employment, in particular: statistical analysis of high growth firms and job creation by place and sector; practical innovation programmes in fields such as coaching and mentoring; and direct investment in early stage companies. Some of our existing programmes also have obvious relevance to employment in the future, for example our work on ageing and digital literacy. However, we think that it is a field where innovation methods and approaches could be harnessed. It is clearly an area, given current levels of unemployment and worklessness, where innovative thinking is much needed. We have therefore been examining current approaches tackling worklessness and we can inject more innovation into the labour market system.

Following on from Geoff's recent blog 'where will the jobs come from', and in the run up to publication of our report on innovation in worklessness at the end of October, this four-part blog series lays out our thinking on how to inject more innovation into the labour market.

Current approaches to tackling worklessness
Innovation in labour market programmes
Innovation in the Work Programme
The lack of innovation thinking in the mainstream system

So firstly, what are the current approaches to tackling worklessness? In broad terms, current approaches can focus on:

Increasing the aggregate demand for labour. This can take the form of monetary and fiscal policies, financial incentives for individuals or consumers, or supply-side reforms (e.g. to regulation and infrastructure) that make it easier for companies to improve productivity, expand and create well-paid jobs.
Increasing or improving the supply of labour. This can be done, for example, through the benefits and tax credits system to make work pay, or by increasing skills and employability, through labour market programmes or as part of education or training.
Improving the efficiency of the labour market, through better matching of demand and supply. This has been an integral feature of labour market reform in the UK, including the introduction of Jobcentre Plus. The use of technology, often through intermediaries, can be important in this area, in making efficiencies in search costs and administration costs.

Demand side measures aim to boost aggregate demand for labour. Integral to recent government policy in maximising labour demand has been macro-economic stability, with a stable economy based on low taxes, low inflation and low interest rates. The UK's growth strategy includes a range of measures to stimulate macro-demand such as finance for start-ups and business expansion, simplification of the tax system, encouraging investment, decreasing regulation, and sector-specific strategies for growth sectors. Nesta has recently published Plan I: The case for innovation-led growth. which argues for a number of measures to boost the demand-side through adopting innovation.

However, in recent years, policy on jobs has overwhelmingly focused on supply-side measures. In particular, the UK has had an extensive policy offering on supply-side active labour market programmes to help the unemployed and economically inactive back to work that has evolved over the last decade and a half. These programmes have been based on a work-first approach where job search support is combined with a focus on basic skills and work placements, rather than long-term investment in training and human capital development. Employment support for the more disadvantaged (long-term unemployed) is now largely contracted out and delivered by new supply-chains of private, public and voluntary sector organisations.

Bridging demand and supply-side measures are efforts to improve the efficiency of individual job-matching. To some extent, this has been integral to government policy for many years. The introduction of Jobcentre Plus in 2001 was intended to bring together jobsearch, job matching and brokerage within the benefits system.

However, there is scope for intermediaries to play a more active role in shaping employment opportunities, beyond the traditional job matching role. For example, intermediaries may help individuals to piece together small packages of work with multiple employers. Private and third sector intermediaries may also directly employ an individual on behalf of one, or a number of, employer(s). In this model they take on the legal responsibilities of the employer and may pool pieces of work together for the individual with multiple organisations that need workers. Alongside intermediaries that link individuals to employers there has also been a growth in new intermediaries who connect individuals directly with work through technology-based platforms.

Next week, in the second part in this blog series, we'll explore what innovation has occurred in past labour market programmes.