Regions Without Work Unemployment and Labour Market Policy in Ireland

Paper prepared for OSB Consultants (International Division) Neubaugasse 31/1/10 A-1070 Vienna Austria

Tom Ronayne WRC Social And Economic Consultants Ltd January, 1994

Introduction

Since becoming a member in 1973 of what is now the European Union (EU) Irelands unemployment rate has been among the highest in the Union. Moreover, with the exception of two brief periods during which the unemployment rate declined - 1977 to 1979 and 1988 to 1990 - there has been an underlying increase in Irelands unemployment rate - from under 7 per cent in 1973 to just over 18 per cent at present. In 1992, with an official unemployment rate of 17.8 per cent, Ireland, following Spain, had the second highest unemployment rate in the EU. It continues to occupy this position and as unemployment rates have increased during 1993 Irelands unemployment rate - based an labour force survey estimates - has risen to 18.4 per cent (Eurostat, 1993). This is 7.7 percentage points above the average for the EU. As in the EU as a whole, the increase in unemployment has been accompanied by an increase in long-term unemployment. Measured on a labour force survey basis, long-term unemployment in Ireland increased from approximately one third to two thirds of total unemployment over the 1980s. Against this general background this paper provides a descriptive overview of the main features of unemployment and interventions to combat long-term unemployment in Ireland during the 1980s and early 1990s. Trends in unemployment are reviewed and the level and nature of expenditure on labour market measures are identified. While the total level of expenditure on the latter is found to be high, this is in the main accounted for by the high proportion spent on unemployment compensation. Following this, an overview of the special measures being taken to combat unemployment and long-term unemployment is provided. As with labour market policy in general, these in the main have evolved in the context of the support of the EU structural Funds, particularly the European Social Fund. The final section identifies a number of weaknesses in planned labour market provision for the long-term unemployed in Ireland over the coming years and concludes by arguing for a radical reassessment of the role of labour market policy as it has evolved to deal with long-term unemployment.

The Labour Market: Recent Trends in Unemployment and Long-Term Unemployment

Trends in labour market aggregates during the 1980s have mirrored broader changes in economic circumstances both nationally and internationally. While a detailed analysis of the latter is beyond the scope of this paper, developments in relation to the labour market are of direct relevance to our present concerns. These can be broadly divided into three periods, the principle features of which are sketched below and the key figures are summarised in Table 1. 1980 to 1987 This can be described as a period of restructuring in the context of severe recession as evidenced by: a doubling of the number of notified redundancies during the early years of the 1980s (from 14,700 in 1980 to 31,300 in 1984); sectoral shifts in employment (decreases in agriculture, building / construction and industry and an increase in mainly nonmarketed services); a decrease of 76,000 in overall employment representing a 7 per cent reduction between 1980 and 1987; a substantial increase - albeit from a low base - in the number of people engaged in regular part-time work as well as in the number of people in temporary employment; and a consistent annual increase in the number of people unemployed - from 91,000 in 1980 to 232,000 in 1987, representing an increase in the unemployment rate from approximately 7

to 17 per cent. Reflecting the limited opportunities in the labour market in Ireland as compared with those in the traditional destinations of Irish emigrants - the UK and the US particularly - emigration rose from just 1,000 in 1982 to 28,000 during 1986 and 27,000 in 1987. 1988 to 1990 This was a brief period of recovery both in macroeconomic terms and in developments related to the labour market. The main developments of note in relation to the latter were: the annual level of notified redundancies fell from over 20,000 during 1987 and 1988 to approximately 13,000 during 1989 and 1990; reflecting the higher level of employment retention, for the first time in eight years the numbers at work increased - by 11,000 between April 1987 and April 1988 and by 35,000 between April 1988 and April 1990; sectoral trends included a continued increase in service employment and a reversal of the decline in the number employed in industry - mainly as a result of an increase in the number of people employed in non-traditional activities; and, a continued growth of part-time employment. This period saw particularly high levels of emigration (32,000 in 1988, 46,000 in 1989 and 31,000 in 1990). Unemployment decreased by just over 50,000 between April 1987 and April 1990. During this period the openness of the Irish economy to external influences became increasingly evident as did the presence of substantial weaknesses in the industrial structure: notified redundancies increased to 16,700 in 1991 and 18,207 in 1992; the number of people at work during 1991 and 1992 remained at the level prevailing in 1990 - this overall stability involved a fall in agricultural employment combined with an increase in mainly service employment; reflecting the contraction of employment prospects abroad, and in the UK particularly, emigration ceased; and, in part reflecting the latter, the number of people unemployed increased rapidly, from 179,000 in 1990 to 225,000 in 1992. By April 1993, registered unemployment had reached an unprecedented figure of almost 300,000 people. This represents a seasonally adjusted official national unemployment rate of 16.8 per cent. However, given the significant number of people not counted as unemployed in Live Register figures (e.g., 17,000 on pre-retirement schemes, 16,500 smallholders in receipt of Unemployment Assistance payments, 10,000 systematic shorttime workers), the exclusion of people on training and employment schemes from estimates of unemployment, and the substantial but difficult to quantify level of hidden unemployment among both recipients of other welfare payments (e.g., lone parent allowances) and women, this can be considered an underestimate of the unemployment rate. A less conservative estimate of the unemployment rate based on figures from administrative sources would put it at between 21.5 and 24.7 per cent. As eligibility criteria for labour market interventions are, for the most part, tied to being in receipt of an unemployment-related welfare payment, the number of people on the Live Register provides the basis for estimating the number of people who are eligible to participate in such interventions. With this in mind, Table 1 summarises the trend in unemployment and long-term unemployment on the basis of Live Register statistics since 1980.

1991 to present

Table 1 Trends in Unemployment and Long-Term Unemployment 1980 - 1993 (Live Register Basis) 1980 32,180 27,292 4,888 3,843 28,337 92,253 70,380 21,973 20,439 71,914 34.8 38.8 22.2 18.8 39.4 1987 111,000 88,477 22,523 22,865 88,135 249,762 179,605 70,157 73,919 175,843 44.4 49.5 32.1 30.9 50.1 1990 100,266 75,383 24,883 16,351 83,915 223,251 151,792 71,459 55,628 167,623 44.9 49.7 34.8 29.4 50.1 1,305 17.1 1993 132,102 95,435 36,667 27,004 105,098 297,958 197,288 100,098 85,937 212,021 44.3 48.4 36.4 31.4 49.6 1,362 21.9

Long-Term Unemployed Men Women < 25 years 25 years and over Unemployed Men Women < 25 years 25 years and over % Long-Term Unemployed % of men who are LTU % of women who are LTU % of < 25 who are LTU % of 25 and over who are LTU Labour Force (000s) Live Register / Labour Force

1,247 1,312 7.4 19.0 Source: Central Statistics Office Age by Duration Series, April figures.

In line with the trends outlined above, the main features are the rapid increase in both unemployment and long-term unemployment between 1980 and 1987, a decline in both between 1988 and 1990, followed by a sharp increase in both to levels in excess of the previous peak in 1987. The figures also show the growth of long-term unemployment as a component of overall unemployment. Currently, the proportion of the unemployed who are long-term unemployed stands at 44.3 per cent, a rise of over 9 percentage points since 1980. While this has increased among men and women and among the young and adult unemployed, it is men and those over 25 years of age that face the highest risk of long-term unemployment. This gender difference reflects the operation of eligibility criteria for unemployment assistance payments that result in women leaving the register having reached the end of their unemployment benefit entitlement. On the basis of past trends one can expect that the recent increase in unemployment will contribute to a further rise in the proportion of the unemployed who are long-term unemployed. In the absence of significant changes in the labour market, and if the trends observed during the early 1980s are repeated, the proportion of the unemployed who are long-term unemployed will rise to over 50 per cent during the mid to late 1990s. This reflects the tendency for long-term unemployment to persist once it is established. While economic explanations for this have recently focused on the limited impact of long-term unemployment on the wage setting process and hence the failure of market clearing mechanisms to operate, the role of significant structural change in displacing manual and predominantly semi and unskilled labour has been a significant factor in Ireland. Reflecting this, there is evidence of a

mismatch between the types and levels of educational qualifications and skills in demand here we are particularly thinking of demand in a dynamic and future oriented sense and not short-term skill shortages - and those possessed by the long-term unemployed. Adverse demand side factors are also operating in a more proximate manner in the form of negative views of the long-term unemployed as potential employees on the part of employers (see Cross, 1988; Maguire, 1992; Ronayne and Creedon, 1993). The severity of the labour market situation in Ireland and of the difficulties facing the longterm unemployed are particularly evident when the current figures for unemployment are placed in the context of likely developments in labour supply and labour demand. Regarding the former, and reflecting the current demographic structure of Ireland, the labour force is expected to increase between 1 and 2 per cent per annum. The main factors that will influence what the actual level of labour force growth will be are levels of net migration and the participation rate of married women. Ironically, both of these factors are dynamically affected by changes in demand. On the demand side, forecasted levels of economic growth over years to the end of the decade when coupled with the low employment intensity of economic growth in Ireland suggest that at best this has the potential to absorb increases in the labour supply. In the absence of substantial net migration, there is a likelihood that not alone will unemployment not decrease but that it will increase further over the coming years.

Aspects of the Concentration of Unemployment

Cross-cutting national unemployment figures is the concentration of unemployment along social class and spatial dimensions. With regard to the former we simply note here that the risk of becoming and remaining unemployed varies significantly with social class. Two points illustrate this. First, it has been estimated that, despite high overall levels of unemployment, 62 per cent of households nationally are unaffected by unemployment and, at the individual level, just over one quarter (28 per cent) of people in the labour force had experienced a period of unemployment since leaving full-time education (Kennedy, 1993). Second, the risk of unemployment among heads of households varies from 4.4 per cent among those from professional and managerial backgrounds to 40.4 among those from unskilled manual backgrounds (Ronayne, 1993). Given the recent introduction of an Area Based Response to Long-Term Unemployment described below - our concern here is to give an indication of the spatial dimensions of unemployment in Ireland. First, a substantial component of overall unemployment is concentrated in urban areas (see Table 2). Thus, approximately one in five of the unemployed reside in the East Region. This is a predominantly urban region and includes the capital city, Dublin. The addition of the four other major cities in Ireland brings the proportion of the unemployed residing in urban areas to just over one in two. When one includes the unemployed residing in the 12 largest towns in Ireland, the proportion of the unemployed living in urban areas comes to two thirds. A second important feature of the spatial concentration of unemployment derives from the overlapping of class and spatial dimensions. This has produced a particular concentration of unemployment in those localities in urban areas with high concentrations of public housing. In these localities unemployment rates can exceed 50 per cent. It is in these localities that the Area Based Partnership Companies - described below - in urban areas are, for the most part, currently based.

Table 2 Spatial Distribution of Unemployment and Long-Term Unemployment Unemployed 39.6 14.2 12.2 34.0 LTU 40.8 13.1 11.1 35.1

East Region 4 Cities outside Dublin 12 Largest Urban Areas All other areas

% Total 100.0 100.0 Source: Supplied by Central Statistics Office based on local Exchange figures for age by duration breakdown of their registers. Figures are for April, 1991.

The concentration of unemployment and long-term unemployment along social class and spatial dimensions presents a number of issues for the policy response to unemployment over and above those arising from the scale of unemployment per se. Formost among these is that, arising from the social class dimension, unemployment is now contributing to the social and economic exclusion of a large proportion of the population. This arises from the strong association between unemployment and poverty in Ireland (Whelan et al., 1991). Moreover, there is now evidence that unemployment is being reproduced on a social class basis such that at the lower end of the social structure an increasing proportion of people are downwardly mobile into unemployment (Breen et al., 1990). This raises the issue of the role and capacity of labour market policy to address equity issues. More specifically, given evidence of the severe labour market marginalisation of a substantial minority of the labour force and its reproduction on a social class basis there is a need to assess the extent to which labour market policy interventions can address this in their own right or whether actions are needed across a wider range of policy areas.

Labour Market Policy

The general economic and labour market context within which labour market policy has developed in Ireland over the recent past has been characterised by high levels of restructuring combined with high levels of unemployment. This has meant that not alone has policy had to address more or less simultaneously the issues of raising and adjusting the educational and skill profile of the new entrants to the labour force and the employed labour force, but that it also has had to respond to the educational, vocational training and other needs of the unemployed. While a full examination of the extent to which labour market policy and associated provision has been successful or otherwise in addressing these issues is outside the scope of this paper a few general remarks will supplement the overview of provision for the unemployed and long-term unemployed presented below. First, over the early years of the 1980s and in part reflecting the focus of European Social Fund expenditure on young people, a substantial component of labour market provision was directed toward the young unemployed. While many of the developments during this period were warranted and innovative in their own right they had the effect of detracting attention from the growing problem of long-term unemployment among adults. We would argue that this still persists and is reflected in the expenditure figures on active labour market programmes shown in Table 3 below. Second, arising from the growth of adult long-term unemployment during the early 1980s, the first major steps to combat this were taken in 1985. In that year the Social Employment

Scheme (SES) was introduced and it has remained to date the major measure directed toward the adult long-term unemployed. The SES itself is a one year part-time temporary employment programme. Participants undertake work in not-for-profit sectors such as local community and voluntary organisations, local authorities and schools. Remuneration is slightly above what they would receive in unemployment assistance payments. Evaluations of this programme show that while many participants welcome the chance to work and enjoy the social aspects of their work situations, the programme itself has only limited impact on their chances of employment subsequent to participation. Third, despite the high prevalence of severe educational disadvantage among the unemployed - approximately three quarters have no qualifications higher that the junior cycle of second level with the corresponding proportion among the employed being 50 per cent little effort has been made to address the labour market consequences of this. In this regard, two factors that compound the labour market disadvantages arising from the low level of educational qualifications possessed by the majority of the unemployed are the changing nature of employment opportunities - these are increasingly non-manual and require educational qualifications and skills not prevalent among the unemployed, particularly the long-term unemployed - and the growth of credentialism and recruitment practices based on the possession of educational qualifications. It was not until 1989 that a small programme the Vocational Training Opportunities Scheme - addressing this was introduced (see Duggan et al., 1993 for details). Targeted toward the long-term unemployed this currently caters for approximately 3,000 participants per annum, or approximately 2 per cent of the long-term unemployed. Fourth, up to the mid 1970s labour market policy in Ireland and elsewhere was predominantly oriented toward increasing the skills of the labour force in order to prevent bottlenecks to economic growth arising due to the mismatch between skill demand and supply. This was done in the context of an unproblematic concept of skill requirements, a high level of confidence at an institutional and corporate level regarding an ability to forecast these, and low levels of unemployment. Each of these factors has changed substantially during the past two decades leading to tensions in the objectives and operation of labour market policy. On the one hand, the response to adult unemployment and rising long-term unemployment was to introduce special measures targeted toward the long-term unemployed. These, in general, were introduced as temporary measures, but have since come to play a role in the containment of long-term unemployment. Moreover, a feature of their operation is their generally low level of linkage to developments in the labour market (see Duggan, 1993). On the other hand, labour market policy also continued to address the issue of supporting efficiency in the operation of the labour market and ensuring an adequate supply of suitably trained labour. However, there is now evidence that this may have led to a dual system of labour market interventions - one for the long-term unemployed and more generally those disadvantaged in the labour market and one for new entrants to the labour force and the employed. This is reflected in the structure of labour market policy in Ireland, with high quality educational and skills training interventions being directed predominantly toward younger and new entrants to the labour force and employment programmes, predominantly operated in the not-for-profit sectors, being targeted toward the long-term unemployed. Fifth, in terms of institutional arrangements, since 1988 the design and delivery of labour market programme has been predominantly the responsibility of the national Training and Employment Authority (FAS). This is a state-sponsored body. In 1992, it had a staff of approximately 2,000 and operated 49 Employment Service Offices and 20 Training Centres nationally. The total throughput of unemployed people on the training and employment programmes operated by FAS in 1992 amounted to just over 54,000. Two separate statesponsored bodies are responsible for training in the areas of catering (CERT) and agriculture

(Teagasc) with the Department of Education being responsible for measures in the area of second and third level education. This institutional division between interventions delivered under the auspices of the Department of Education and those delivered by FAS in part overlaps with the dual structure of labour market policy, or, as it is now described, human resource development policy, noted above. Sixth, it was not until 1991 with the introduction of 12 Local Area Based Partnership Companies (ABPCs) that the national focus of labour market programmes shifted to incorporate a local dimension. The brief of these companies is to devise and undertake actions aimed at combating long-term unemployment within the areas in which they are based. Each of the companies has a Board of Directors (generally 18 persons) and a Manager. Board membership is representative of the statutory sector, the community sector and the social partners. Typically six places are allocated to each sector. The objectives of these companies are:

"to work with people who are long-term unemployed and those in danger of becoming long-term unemployed in order to improve their skills and self-confidence, their involvement in the community and to increase their opportunities of getting a job or starting their own business; to promote the type of fundamental attitudinal change needed to enable individuals generate sustainable enterprise thereby creating additional employment, and to encourage a more positive attitude toward the recruitment of people who are long-term unemployed; to work at the local level to generate more jobs through sustainable enterprises and through the promotion of local economic projects and initiatives which will stimulate confidence and investment." (Guidelines for Partnerships, Department of an Taoiseach, 1991)

At a general level, these companies provide a structure to integrate the often disparate actions of a range of agencies and organisations engaged in different ways with the issue of long-term unemployment. Previously, the practice was for services for the unemployed to be delivered vertically into localities with little potential for horizontal integration at the local level or for the development of specifically local responses that were sensitive to local circumstances. One consequence of this has been that services and actions addressing unemployment tended to be scattered across a range of potential sources. The linkage between these services has generally been low and the unique role and contribution of each to meeting the needs of unemployed people was generally unrecognised. It is towards these issues as well as the enhancement of local capacity in the areas of need and resource identification that the activities of these companies are directed. More generally, the introduction of the ABPCs can be seen as part of a move towards recognising the potential of local economic development to provide a means of linking employment generation more directly to combating unemployment and long-term unemployment. In this regard, there are parallels between developments in labour market policy in Ireland and the experiences and lessons recently gained as a result of a number of EU programmes such ERGO, LEDA and Poverty III (see, for example, CEC, 1992). Expenditure: Public expenditure on labour market programmes in Ireland is shown in Table 3. Before commenting on the substance of these it is useful to place overall expenditure in a comparative perspective. The first point here is that total expenditure and expenditure on active measures was the highest in the OECD area in both 1985 and 1990. This, in part, reflects the high rate of unemployment in Ireland. When expenditure on labour market programmes is set against actual rates of unemployment, expenditure in Ireland during the years examined exceeded that which would be expected on the basis of its unemployment

rate alone. The second point of note is that, despite having the highest level of expenditure on active measures in the OECD area, the proportion of total expenditure devoted to active measures, at approximately 30 per cent, is not particularly high and is exceeded by a large number of other countries including Sweden, Finland, Norway, the UK, Germany, France, Italy, Portugal and Greece.

Table 3 Public Expenditure on Labour Market Programmes as a Percentage of GDP 1985 1 Public employment services & administration 2 Labour market training a unemployed and those at risk b employed 3 Youth measures a unemployed and disadvantaged youth b apprenticeship & general youth training 4 a b c Subsidised employment regular employment in private sector unemployed starting enterprises direct job creation (public & non-profit) 0.18 0.67 0.43 0.24 0.55 0.35 0.19 0.19 0.02 0.08 0.09 3.69 5.27 1.58 3.69 1990 0.13 0.49 0.33 0.16 0.46 0.28 0.18 0.28 0.02 0.02 0.24 0.14 2.83 0.05 4.39 1.51 2.88

5 Measures for disabled 6 Unemployment compensation 7 Early retirement Total Active measures (1-5) Passive measures (6,7)

Unemployed (Labour Force) 226,000 179,000 Unemployment Rate (Labour Force) 17.3 13.7 Unemployed (Live Register) 229,497 223,251 Unemployment Rate (Live Register) 17.6 17.1 Source: OECD, 1992 and 1993; Labour Force Survey, 1985 and 1990; Live Register, April, 1985 and 1990.

Table 3 shows that total expenditure as a proportion of GDP on labour market programmes declined between 1985 and 1990. This in part reflects the decrease in unemployment that occurred between these two years, The bulk of this decline occurred in expenditure on passive measures - from 3.69 to 2.88 per cent of GDP. Expenditure on active measures remained fairly constant at just over 1.5 per cent of GDP. When the pattern of expenditure is examined in more detail a number of additional points are evident. First, as noted above, expenditure on active measures accounted for approximately one third of total expenditure in both years. Second, the largest category of expenditure on active programmes was on labour market training. The majority of this was directed toward the unemployed and those at

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risk of unemployment with a high proportion of the beneficiaries being under the age of 25 years. Reflecting both the level of new entrants to the labour force on an annual basis and the high priority placed on provision for young people, expenditure on youth measures was the second highest component of active expenditure. Third, there has been an increase in the level of expenditure on subsidised employment - from 0.19 to 0.28 per cent of GDP. This was predominantly due to the introduction and subsequent expansion of the Social Employment Scheme described above. The final point concerns public administration and employment services. Expenditure on this declined somewhat between the two years examined and in overall terms expenditure is low. This is reflected in the very high ratio of unemployed persons per staff member in these services in Ireland. At 251:1, this ratio is the third highest in the OECD area and is only exceeded by Turkey and Greece. In contrast to this most other member states of the EU have ratios either below or in the region of 100:1. Given the potentially positive role which employment services can play in relation to achieving equity in the labour market (see Adnett, 1989) and in the delivery of information and guidance to the unemployed, the very high ratio in Ireland can be taken as an indicator of the limited capacity in this area. This has also led to a low evaluation of these services by the unemployed themselves (Ronayne and Creedon, 1991) and a growing recognition of the need for a new paradigm in the design and delivery of advice and guidance to the unemployed (Duggan and Ronayne, 1992; 1993). Overview of Special Labour Market Programmes: An overview of the main special labour market programmes for the unemployed is provided in Table 4. These programmes are provided in addition to specific skills training programmes for the unemployed and those at risk of unemployment. The latter programmes are generally oriented to meeting identified skill requirements in local labour markets (e.g., in areas of construction, clerical and sales skills, computing and electronics, printing, and engineering), last an average of 18 weeks and are administered by the national Training and Employment Authority (FAS). Participation by long-term unemployed adults on specific skills training programmes is considerably lower than unemployed youth with less than two thirds of places being taken by the adult long-term unemployed. Annual throughput on specific skills training programmes is approximately 12,500 of which between 35 and 40 per cent are women. Here we make a number of more general comments on the structure of overall provision. Despite evidence of the very limited educational qualifications possessed by the unemployed, labour market measures in Ireland have concentrated on skills training programmes and temporary employment schemes. Moreover, measures for the adult long-term unemployed have been dominated by temporary employment schemes while the higher quality skills training programmes have been targeted toward the young unemployed. For example, when all forms of training provision are considered, over two thirds (69.9%) of participants are under the age of 25 years (Ronayne, 1993). While the data do not permit detailed analysis of this by duration of unemployment, participation by the long-term unemployed is known to be lower than that of people unemployed for less than one year. The predominance of temporary employment programmes (i.e., the SES and the CEDP) as the main response to adult unemployment is shown in Table 4. In 1993, these two programmes accounted for just under half (49 per cent) of all places on special measures and two thirds (67 per cent) of places on employment programmes. Teamwork which is similar to the SES is targeted toward the young unemployed. The other types of employment programme are mainly employment subsidy schemes (i.e. EIS and ESS). The former takes the form of a subsidy (45 for persons under 25 years and 60 for those over 25 years) paid to employers for 39 weeks for new staff recruited from among the adult unemployed in receipt of an unemployment related welfare payment for over 52 weeks. Young people are eligible

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for this if they have been on a Youthreach programme (see below). The second subsidy programme - the ESS - was introduced in early 1992 for a one year period and provides a subsidy of 2,800 for each additional eligible employee recruited. Eligibility was defined as 8 weeks in receipt of an unemployment related welfare payment. Support for the establishment of new enterprises by the unemployed (EAS) accounts for only a small proportion of people assisted under special labour market measures. Under this scheme payments are made for up to 40 weeks to support people in their first year of trading. Payments are at the level of 40 per week for self-employed people without dependants and 65 per week for those with dependants.

Table 4 Special Labour Market Measures for the Unemployed and Long-Term Unemployed Target Group Employment Programmes, of which Social Employment Scheme (SES) Community Emp. Development Prog. (CEDP) Teamwork Enterprise Allowance Scheme (EAS) Employment Incentive Scheme (EIS) Employment Subsidy Scheme (ESS) Duration No. 1993 29,500 14,600 5,100 1,500 1,700 800 5,800

Adults Mainly Adults Youth Mainly Adults Youth & Adults Youth & Adults

52 52 52 40 39 NA

Development Training, of which Youthreach Community Youth Training Programme (CYTP) Alternance Second Chance Education, of which Vocational Training Opportunities Scheme (VTOS) Special Measures (Total Participants) % Employment Programmes % Development Training % Second Chance Education Source: Costello (1993) and NESC (1993)

Youth Youth Adults

104 52 26

8,900 3,000 4,700 1,200 2,000 2,000 40,400 73 22 5

Mainly Adults

variable

With the exception of the Alternance Programme - this is a six month skill sampling, training and work experience programme targeted toward the adult unemployed and women seeking to re-enter the labour force - the main focus of Development Training is on the young unemployed who leave school without formal or with only low levels of educational qualifications. The Youthreach Programme, introduced in 1989, is run jointly by FAS and the Department of Education. During the first year of this programme participants receive basic skills training, practical work experience and continue their general education. Participants who progress to a second year are provided with options in the areas of temporary employment (Teamwork), a community based vocational training programme (e.g., the CYTP) or specific skills training. The other programme under this heading - the CYTP -

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provides certified vocational training through the medium of on-the-job training in projects aimed at improving local infrastructure, amenities and services. The sole measure in the area of education is the VTOS. This was introduced in 1989 replacing the Educational Opportunities Scheme. This provides access to second chance adult education for the long-term unemployed. While on the Scheme, which can last for up to two years, participants continue to receive their unemployment related welfare entitlements. In addition to its educational focus a further factor that differentiates the VTOS from the other measures for adults described above is its emphasis on achieving transitions or progressions to further educational and training. Given the noted high levels of educational disadvantage prevalent among the adult long-term unemployed the Scheme has the potential to address the equity component of labour market policy. Some Limitations of Special Labour Market Measures: The effectiveness of the current range of labour market interventions for the adult long-term unemployed has been questioned by the results of a number of recent evaluations (see Breen 1990; Dillon et al., 1991; Ronayne, 1993; Sexton and O'Connell, 1993). These have pointed inter alia to the poor quality of training opportunities available to the adult long-term unemployed in comparison to the young unemployed and new entrants to the labour force, the limited impact of the SES on the post-Scheme employment prospects of participants, and the lack of co-ordination and integration between actions to combat long-term unemployment. More generally, there is a low level of quantitative sufficiency - defined here in terms of the ratio of places on programmes to eligible categories among the unemployed - in the level of labour market provision for the adult unemployed. Perhaps of greater importance, however, is that the quality of the programmes - defined in terms of the nature and level of the educational and skill qualifications resulting from participation - is such that it does not address the severe disadvantage the adult unemployed experience in the labour market. Among the more specific issues that can be identified are the following. 1 One of the central weaknesses of labour market interventions to date has been their failure to sufficiently raise the educational and skills profile of the adult unemployed. A consequence of this is that participants are generally poorly equipped to compete for employment against younger and better qualified entrants to the labour force and are at best prepared to compete for employment in poorly paid and often declining sectors. 2 Existing labour market interventions for the adult long-term unemployed have tended to prioritise the achievement of quantitative and short-term objectives at the expense of quality and long-term objectives. In the context of the very high level of long-term unemployment prevailing in the labour market, and the likely persistence of this in the medium term, there is now an argument for seeing investment in the educational and skill levels of the long-term unemployed in a broader and more long-term context. This broader context involves giving priority to pursuing broadly-based equity objectives in the medium term with a view to greater efficiency in the longer term. 3 In comparison to the situation that pertains regarding new entrants to the labour force, educational and training provision for adults is less developed in terms of the quantity and quality of human resources and infrastructure. This in part can be seen as a result of the comparatively high level of investment in developing interventions for young people and the young unemployed during the early and mid 1980s. Currently, it also reflects the high priority placed on providing higher education to new entrants to the labour force (see below). In this regard there is a need to recognise that the development of quality programmes for adults is likely to require both time and resources. To achieve this there is a need to engage in developing the capacity of the educational and training system to

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provide more places for the adult long-term unemployed and to ensure that they have access to such opportunities. 4 Eligibility for labour market programmes has been tied to receipt of unemployment related welfare payments. This has had the effect of limiting access to labour market programmes among people seeking access to the labour market who do not meet these eligibility criteria. The majority of these are women. 5 There is a low level of linkage between measures directed toward the adult unemployed and actions pursued in the areas of industrial and employment policy. This we would argue stems from the manner in which labour market policy has developed in response to the increase in unemployment and long-term unemployment in particular. We return to this point in the concluding section following a brief overview of planned labour market provision over the period 1994 to 1996. Human Resource And Labour Market Policy, 1994-1999: The labour market measures that will be taken over the next six years have been specified in the National Development Plan (SO, 1993). This is a national framework of development actions in Ireland that will be aided by the structural Funds of the EU. Between 1994 and 1999 it is anticipated that 10.7 billion will be spent under this Plan, approximately 65 per cent of which is to provided by the EU. Expenditure on actions with a human resource dimension will amount to just under 4 billion and will account for at least 37 per cent of total expenditure. The actions being proposed under this heading fall into three general categories: initial training and education, continuing training for the employed and the unemployed and training for people experiencing disadvantage in the labour market. It is under the latter heading that measures for the longterm unemployed mainly arise. In general terms the nature of the measures being planned under this heading does not depart significantly from those presented in Table 4. This being the case, two aspects of the NDP are of relevance to understanding likely developments in relation to dealing with adult and long-term unemployment. We briefly comment on these below. First, if both the anticipated number of beneficiaries and the quality of the measures proposed are taken as indicators of priority, then high priority is placed on improving the qualifications and skills of new entrants to the labour force. Under the heading of initial training and education we estimate that there will be approximately 500,000 beneficiaries over the period 1994 to 1999. This gives an annual average of 83,000. The training programmes proposed for these are either of a high quality (e.g., the Middle Level Technician and Higher Technical Business Skills) or targeted toward particular sectors where employment growth is anticipated (e.g., tourism), or combine elements of both. The rationale for both the nature and the high level of planned provision under this heading derives from the need to address the educational and skill requirement of a changing economic structure and as a general aid to economic growth. While this is warranted in its own right, we note below that the balance of interventions in the area of human resources investment on the supply-side of the labour market may further marginalise the existing unemployed and adults entering unemployment via redundancy. Second, provision for the long-term unemployed compares unfavourably with that for new entrants to the labour force and that targeted toward the employed labour force. As we noted in relation to existing provision, there are quantitative and qualitative aspects to this. With respect to the former, we estimate that the total number of beneficiaries on the three main measures targeted toward disadvantaged adults (i.e., the CEDP, Foundation Level Courses and the VTOS) comes to 180,000 or just 30,000 per annum. This is less than half the figure planned under initial education and training and just three quarters of the anticipated number

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of employed beneficiaries of continuing training. It is the qualitative discrepancy that deserves most attention, however. The main point in this regard is that the measures for the disadvantaged in general lead to lower levels of qualification, suffer from an ambiguity regarding certification issues, and are not sectorally or occupationally targeted.

Labour Market Policy and Long-Term Unemployment: Issues and Prospects or the Future

Among the more general lessons that can be drawn from recent and planned developments in labour market provision in Ireland is that special measures for the long-term unemployed have the potential to simply reproduce the labour market marginality of those whom such programmes are designed to assist. The evidence for this lies in the limited impact which such special measures have had in either containing the growth of long-term unemployment or providing meaningful levels of access to employment for the long-term unemployed. The reasons for the limited effectiveness of the special measures introduced include inherent flaws in the design of the measures themselves and in particular the comparative weakness especially vis a vis new entrants to the labour force - of the educational and skills qualifications that it is possible for participants to obtain and the absence of a coherent set of linkages between the measures and developments in the labour market or other actions being taken in relation to mainstream education and training actions. More fundamentally, we would argue that the limited effectiveness of the special measures adopted to deal with long-term unemployment has resulted from the operation of two interrelated factors. First, and at the most general level, it has resulted from an underlying orientation toward the containment of the political difficulties raised by unemployment and long-term unemployment during a period in which both the development model and the system of labour market regulation - in the sense in which these terms are used in the recent White Paper of the Commission of the European Communities (CEC, 1993) - are both undergoing substantial crisis and are in need of radical change in order to deal effectively with the scale of unemployment. Second, and at a more operational level, it has resulted from the fact that measures introduced on the grounds of being short-term and predominantly counter-cyclical have been retained in the face of evidence of a rapidly changing labour market situation and have become a burden in their own right to more radical policy developments. Thus, we would argue that the reliance on special measures as the predominant policy response to long-term unemployment, as is evident in planned provision over the period 1994 to 1999, is misguided and reflects a predominantly symbolic response (see Richardson and Henning, 1984) to long-term unemployment. Given the experience that has been gained with the operation of special measures for the long-term unemployed it is now time to radically review the situation. This review must recognise that the costs of economic and labour market adjustment have been disproportionately borne by those who are currently among the long-term unemployed. It must also recognise that actions in the area of labour market policy, while necessary, will not on their own be sufficient to address the situation. In this regard, there is a need to reintegrate labour market measures for the long-term unemployed into the more general framework of labour market policy and to ensure that such policy is closely linked to and coordinated with developments in the labour market and with policy actions in the areas of economic and sectoral development. With regard to the specific role of labour market policy in relation to long-term unemployment, Irelands experience with the operation of special measures provides some guidelines regarding the direction that labour market policy, and more generally human resource

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development policy, needs to take in order to more effectively address this. In terms of what not to do, it is clear that poorly designed programmes providing skills and educational qualifications below the generality prevalent among the employed labour force and poorly linked to likely patterns of sectoral and occupational demand are at best palliative. In terms of making a more positive contribution, the quality of labour market provision for the long-term unemployed will need to be at least at a level that guarantees their capacity to participate in the employment, occupational and skill structure that is currently evolving. An important aspect of this involves ensuring that the educational and training interventions available to the long-term unemployed will provide them with the qualifications and skills to enable them access employment in those sectors and occupations that are expanding rather than contracting. In general terms the former includes the services sector but notably those subsectors concerned with environmental services, tourism, and information processing. Given the growth of self-employment, the extent to which the long-term unemployed can be facilitated to access this will also have to be addressed. Failure to do this effectively will result in the long-term unemployed being excluded from what has been identified as one of the underlying and longer term changes in the structure of economic activity.

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References Adnett, N. (1989) Labour Market Policy. London: Longman. Breen, R. (1990) Manpower Policy and Unemployment in Ireland. In B. Reynolds and S. Healy (eds) Work, Unemployment and Job-Creation Policy. Dublin: Conference of Major Religious Superiors. Breen, R., Hannan, D.M., Rottman, D.B. and Whelan, C.T. (1990) Understanding Contemporary Ireland. Dublin: Gill and Macmillan. CEC (1992) ERGO Programme - Final Report. Luxembourg: Office of Official Publications of the European Community. CEC (1993) Growth, Competitiveness and Employment. Luxembourg: Office of Official Publications of the European Community. Costello, T. (1993) Employment Programmes in Ireland. Paper presented at a conference on Employment Programmes in a Changing Labour Market, Dublin Castle, 15-16 November, 1993. Cross, R. (1988) Unemployment, Hystersis and the Natural Rate Hypothesis. Oxford: Basil Blackwell. Dillon, B., Ronayne, T. and OSiochru, S. (1991) Actions to Combat Long-Term Unemployment in Ireland. Dublin: Nexus Research Co-Operative / WRC Social and Economic Consultants. Dineen, D. (1993) Employment Trends and Labour Market Issues in the 1990s. Paper presented at a conference on Employment Programmes in a Changing Labour Market, Dublin Castle, 15-16 November, 1993. Duggan, C. (1993) Employment Programmes: Prospects and Issues: Paper presented at a conference on Employment Programmes in a Changing Labour Market, Dublin Castle, 15-16 November, 1993. Duggan, C. and Ronayne, T. (1992) Eurocounsel: Services for the Unemployed in the Areas of Information, Advice, Guidance and Counselling in Ireland. Dublin: European Foundation for the Improvement of Living and Working Conditions. Duggan, C. and Ronayne, T. (1993) Developments in the Provision of Information, Advice, Guidance and Counselling to the Long-Term Unemployed in Ireland: Report of Eurocounsel, Phase II. Dublin: European Foundation for the Improvement of Living and Working Conditions. Duggan, C., Ronayne, T., McCann, N. and Corrigan C. (1993) Developing Educational and Vocational Provision for the Long-Term Unemployed: An Evaluation of the Vocational Training Opportunities Scheme. Report to the Department of Education. Kennedy, K. (1993) The Unemployment Crisis in Ireland. Cork: Cork University Press. Maguire, M. (1992) The Role of Employers in the Labour Market. In E. McLaughlin (ed) Understanding Unemployment: New Perspectives on Active Labour Market Policies. London: Routledge. NESC (1993) A Strategy for Competitiveness, Growth and Employment. Dublin: Nation Economic and Social Council.

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OECD (1992) Employment Outlook. Paris: Organisation for Economic Co-operation and Development. OECD (1993) Employment Outlook. Paris: Organisation for Economic Co-operation and Development. Richardson, J. and Henning, R. (1984) Unemployment: Policy Responses of Western Democracies. London: Sage. Ronayne, T. (1993) Too Old at 45: An Investigation of the Labour Market and Welfare Situation of the Older Unemployed. Report to the Combat Poverty Agency. Ronayne, T. and Creedon, M. (1991) Life on the Dole. Dublin: Work Research Co-Operative and Tallaght Centre for the Unemployed. Ronayne, T. and Creedon, M. (1993) When Skills are Not Enough: The Recruitment Practices, Views and Attitudes of Employers Regarding the Long-Term Unemployed. Dublin: Work Research Co-Operative and Tallaght Centre for the Unemployed. Sexton, J.J. and OConnell, P.J. (1993) Evaluation of the Operational Programme to Combat Long-Term Unemployment among Adults in Ireland (Objective 3 of the Community Support Framework). Dublin: Economic and Social Research Institute. SO (1993) Ireland National Development Plan, 1994-1999. Dublin: Stationary Office. Whelan, C.T., Hannan, D.M. and Creighton, S. (1991) Unemployment, Poverty and Psychological Distress. Dublin: Economic and Social Research Institute.

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1990 1 Public employment services & administration 2 Labour market training a unemployed and those at risk b employed 3 Youth measures a unemployed and disadvantaged youth b apprenticeship & general youth training 4 a b c Subsidised employment regular employment in private sector unemployed starting enterprises direct job creation (public & non-profit) 0.13 0.49 0.33 0.16 0.46 0.28 0.18 0.28 0.02 0.02 0.24 0.14 2.83 0.5 4.39 1.51 2.88 34.4 179,000 1,126,000 13.7 225,000 26,807

1991 0.14 0.49 0.32 0.17 0.44 0.30 0.15 0.29 0.01 0.02 0.26 0.14 2.89 0.00 4.40 1.51 2.89 34.3 209,000 1,124,000 15.7 254,000 27,765

5 Measures for disabled 6 Unemployment compensation 7 Early retirement Total Active measures (1-5) Passive measures (6,7) % of total accounted for by active measures Unemployed (Labour Force) Employed Unemployment Rate (Labour Force) Unemployed (Live Register, Annual Average) GDP (at current market prices)

Source: Derived from OECD, 1992 and 1993 (labour market expenditures); ESRI, 1993 (average annual unemployment), CSO, 1993 (GDP)..