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Employment Zones

Country of implementation
United Kingdom
General short description of the innovation
The Employment Zones, which started as a pilot project and were rolled out in certain areas until 2000, focused on long-term unemployed, especially those with complex social issues and more difficulties in finding a job. The project emphasised policy performance rather than process and included the use of quasi-markets driven by outcome-based payments with strong incentives to deliver work-first support for JSA claimants. It was used to test the utility of market forces through private sector delivery and competition for the transition of unemployed into work. The programme targeted communities with a high share of unemployed people compared to the rest of the UK. Main focus of the project was labour market inclusion; there was little emphasis on training. / / Originally, participation was voluntary and mainly focussed on local partnership and the involvement of community-based organisations for better meeting peoples? needs. However, shortly afterwards (2003) the programme became mandatory for eligible 25+ who reached their 18 months unemployment mark as well as for New Deal for Young People (NDYP) returner customers reaching their sixth month of unemployment. Lone parent participation is voluntary and customers may choose to join or leave the EZ at any time. / / The programme consisted of three stages: In Stage 1(four weeks), the private case manager and the jobseeker had to agree on an action plan. In Stage 2, the private providers completely took over employment services for the jobseeker for 26 weeks (including benefit payments and sanction decision). After Stage 2, jobseekers for whom no placement was achieved return to Jobcentre Plus and were eligible for another Employment Zone period only after another 18 months of unemployment. However, for a period of 22 weeks following Stage 2, private providers could still work together with the jobseeker in a ?Follow-On? phase. If they managed to place the jobseeker during this period they coud still claim the outcome fees.
Target group
Total Population
Policy Field
  • employment
  • social
Type of Policy
  • public
  • public-private partnership
Duration of the policy
2000-2009
Scope of innovation
  • Scope: temporary
  • Number of intended beneficiaries: Between 2000 and 2007 the system counted over 215,000 programme starters
  • Spatial coverage: operated in 15 areas in the UK
General description of (intended) objectives and strategies
The initiative is an active labour market policy with a śwork-firstś approach that incorporated private providers into the delivery of employment re-integration services. The pilot was to find whether the EZ model could serve as a critical test case for a large-scale privatisation of re-integration services (Finn 2005, Bruttel 2005), and help downsize the budget for public employees.
Type of ideal-typical strategy for the innovation
  • liberalisation
Type of innovation
  • new form of policy implementation/delivery
  • new policy, practice or measure
New outputs
  • benefit eligibility
  • services
Clarification of intended mechanisms, outputs and outcomes (optional)
At the beginning, mandatory clients in multiple provider areas had no choice of provider and were randomly assigned by Jobcentre Plus advisers using a Random Allocation Tool. Choice of provider for mandatory customers was only implemented in April 2007. / / The programme started contracting out welfare-to-work measures with weighted payments by result and tested their performance. Originally contracting single organisations who held the monopoly for a certain area, the pilot project increasingly established quasi-markets for multiple providers from 2004 onwards. Apart from several minimum requirements (black-box method), the design of labour market re-integration services was left to providers? choices and control. At the beginning, contractors received up-front service fees of 20% of anticipated full payment per customer in addition to bonus payments of achieving job outcomes and sustaining these employment periods for 13 weeks. Some research indicated a systematic approach in which the provider paid clients if they found a job within the first four weeks of attachment to a provider and kept it for certain periods of time (Bruttel 2005:376). / / In several cases, this payment mechanism was changed to giving contractors half of the JSA recipient?s annual benefit entitlement (26 weeks) in addition to bonus payments. As a consequence, private operators tried to move JSA recipients very quickly into employment to be able to retain most of the money transferred to them. This incentivising created effects known as ?creaming? and ?parking? of JSA recipients and lead to rather perverse outcomes in terms of job quality and job sustainability. To avoid unsustainability, providers were required to cover the costs of a person returning to JSA receipt after 26 weeks. However, also in the weighted payments, there was some evidence from qualitative research that creaming takes place. Hirst et al. (2002) reported that some case managers informally ?fagged? clients into ?job ready?, ?near job ready?, ?not job ready? or ?unemployable?. Around 25?40% of EZ clients were in the last group.
Intended target group
long-term unemployed people, including single parents, young people that had unsuccessfully been through NDYP as well as long-term unemployed in receipt of JSA for 12 or 18 months
Working age population
  • employment situation (unemployed)
  • main source of income: social protection (social assistance (Jobseekers Allowance))
Actors involved in policy-making/implementation and/or evaluation
  • agency or national social insurance body
  • central state
  • private for-profit organisations (commercial)
  • private not-for-profit organisations (e.g. Third Sector organisation or NGO)
Intended output
  • benefit eligibility
  • governance
  • services
Clarification of outcomes in terms of impacting resilience and labour market inclusion
About 40% of the participants are placed in employment, of which around 80% achieve a 13-week job-outcome (Bruttel 2005:399). This would be a total re-integration rate for 13-weeks placements of 32% (DWP 2003). Hales et al. (2003) identified the EZ to be more effective than the Jobcentre Plus job placement services with job outcomes and highly significant for jobs with 16 hours and more. However, job outcomes achieved through the EZ had a low qualification profile therefore Hales et al. assumed that there were probably few opportunities for those in work to progress towards better jobs. Positive job outcomes were also identified by Hasluck et al. (2003). Their research namely suggests that the shorter the duration of unemployment the more likely programme participants could be transferred into employment. They also found evidence that participants in EZs are less likely to return to unemployment than participants of the New Deal 25+. This is confirmed by Griffith and Durkin (2007) who found EZ significantly outerperform comparative New Deals for all mandatory customer groups, including those with multiple employment barriers. ?For NDYP returners, EZs better performance appears to work by moving then into work more quickly and, through providing continuity of support and incentives, keeping them employed for longer than would have been the case had they participated in NDYP? (2007:3). For the customers aged 25+ the success seems to be the result of a tailored support in addition to financial assistance and job preparation. Customers also seem to be more satisfied with the support provided compared to New Deal programmes. / / Sources: / Bruttel, O. (2005). Are Employment Zones Successful? Evidence from the first four years, in: Local Economy, 20(4), 389-403. / DWP (2003). Employment Zones: Statistics to End-June 2003, London/Sheffield. / Finn, D. (2005). The role of contracts and the private sector in delivering Britain?s ?Employment First? welfare state, in: E. Sol & M. Westerveld (eds.) Contractualism in Employment Services: A New Form of Welfare Governance, 101?117, The Hague. / Griffith, R. and Durkin, S. (2007). Synthesising te evidence on Employment Zones, DWP Research Reprt No. 449, Leeds. / Hales, J., Taylor, R., Mandy, W. and Miller, M. (2003). Evaluation of Employment Zones: Report on a Cohort Survey of Long-Term Unemployed People in the Zones and a Matched Set of Comparison Areas, National Centre for Social Research, DWP Report No. 176, London. / Hasluck, C., Elias, P. and Green, A. (2003). The Wider Labour Market Impact of Employment Zones, Warwick Institute for Employment Studies, DWP Report No. 175, London/Sheffield. / Hirst, A. et al. (2002). Employment Zones: A Study of Local Delivery Agents and Case Studies, DWP Report WAE 124. / Joyce, L. and Pettigrew, N. (2002). Personal Advisers in New Deal 25? and Employment Zones, DWP Report No. 139, London/Sheffield.
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