Q What advantages does the Flexible New Deal have for employers?
Ian Mulheirn, director, Social Market Foundation
The danger with state-delivered services commissioned on a flat payment to job providers is that the providers try to cram jobseekers into roles with no real concern for whether the match between employer and individual is right. So the idea of payment by results, where you only get your money if a person stays in a job, should mean private providers are a little more attuned to both sides of the market: what kind of position does a person want, and what type of person does the employer need.
Michael Sixsmith, director of employer services, A4E (a training company)
To understand the pros from an employer’s perspective, you need to understand that the Flexible New Deal is very much about delivering a personalised journey into employment. It is about spending time with an individual to get to the nitty-gritty of what their barriers to employment are and working with them over a period of time to overcome those barriers. At the same time, providers have to work very closely with employers to learn what needs they actually have and understand how to match the needs of business with the aspirations of jobseekers. It is about preparing people so they can get into work and stay there and progress, which has to be good for employers.
Q Sounds good in theory. Is this tailored recruitment likely to become a reality?
Mulheirn There is probably going to be a difference in the theory and the practice as this beds in. It is essentially subsidising employers because it should make it easier for them to find people – partly because the private providers should be knocking on their door. So, in theory it should make life easier for employers. But whether that happens or not has yet to be seen.
Sixsmith It would be naive to say this is going to be plain sailing. But, fundamentally, the different approach is going to mean the service to employers is more responsive and tailored and, hopefully, as a result, employers will see the benefit and value of developing relationships with organisations like A4E. But these are challenging times, so it won’t be easy by any means. There are jobs out there and the Flexible New Deal is a programme that is designed for the next five years, so it will hopefully be able to adapt in accordance with the prevailing economic conditions.
Q What can employers do to make sure they get the most out of the scheme?
Mulheirn Private providers are often mistaken for recruitment companies as a lot of employers also aren’t really aware of what they do or that the service comes with no costs. So employers need to realise there is a new organism in the state-funded employment market. The Flexible New Deal is also relatively free of red tape as, apart from being asked if a person is still working six months down the line, there is unlikely to be anything employers need to worry about from the Department for Work and Pensions.
Sixsmith Employers need to understand there is a lot of talent within the long-term unemployed. It’s here that HR can play a key role in educating in-house recruiters about the benefits of engaging with organisations like ours and recruiting from the ranks of the long-term unemployed because they have a lot to offer. They can help make the case that it is worth the investment in time and effort.
Q Why should firms look for candidates via the Flexible New Deal rather than traditional recruitment?
Mulheirn The payment structure of the Flexible New Deal doesn’t make it in the provider’s interest to help people who aren’t motivated, because they won’t stay in work for six months and they won’t get their money. Therefore, most providers run assessment programmes that investigate an individual’s motivation at the outset to see if people are motivated to look for a job, rather than trying to shoehorn them into a particular role. At the same time, firms are still able to assess a person on the same basis as they would assess any other recruit. The end result is that the Flexible New Deal screening doesn’t leave employers any worse off, and they are not under any obligation to keep the person. So it shouldn’t be anything other than a positive step.
Sixsmith It is our job to make sure that individuals are prepared to work within a certain industry. The Flexible New Deal also comes with in-work support for people who have been placed back into work, so a referee will be there for the employer and the individual during those all-important first few months to make sure individuals can effectively make that transition from unemployment. That’s a key difference and a kind of support you don’t get through traditional recruitment. Ultimately, the service is there to minimise the risk of taking on new recruits.
Q Will this lead to a better system for employers?
Mulheirn I think it will be a positive thing for employers. It will take time to bed down – not least because there is a lot of new stuff being tried, and some of it will fail, while some of it will run smoothly. There are bound to be some horror stories along the way but, ultimately, it will lead to a better system, and that will help oil the wheels of the labour market in a way that hasn’t been done before.
Sixsmith Absolutely. It is the result of consultation over a 10-year period. So there is a model there that is equally focused on meeting the needs of the jobseekers and employers.
“It is about preparing people so they can get into work and stay there and progress, which has to be good for employers”
The new deal
In many ways, the Flexible New Deal is building on the success of the previous New Deal arrangements:
- 3.7 million people have started a New Deal programme since it was set up in 1998. To February 2009, 2.17 million have gained a job through New Deal.
- 1.5 million have taken up the New Deal for Young People. A total of 876,000 have found jobs, with 740,000 regarded as being in sustained employment. Around 101,000 are currently on the scheme.
- School and college leavers are the most likely to find a job through the New Deal. A total of 138,000 18-year-olds and 154,000 19-year-olds have found sustained employment through the New Deal for Young People.
- 829,000 jobseekers have been on the ND25+ scheme for those aged 25 and over – 363,000 have found sustained employment.
- A further 965,000 have taken up the New Deal for Lone Parents, with 626,000 securing sustained employment.
- 326,000 people have been through the New Deal for Disabled People. Of these, 202,000 have secured sustained employment.
Off benefits and in work
The Flexible New Deal aims to get three-quarters of the million people on employment benefits off them by 2010. Here’s how:
- Work trials and work experience will be mandatory for people who have been out of work for more than six months.
- Jobseekers will be required to take up a work trial or work experience placement as a condition of receiving benefit. Thousands of jobseekers who have been out of work for a year will get tailored help from specialist organisations.
- These companies will be paid according to the number of people they get into sustainable work of longer than 13 weeks. At the same time, the Local Employment Partnerships will expand to try to find work for 500,000 people by the end of 2010.
- A £1bn Future Jobs Fund has also been created to which organisations can bid for funding to create jobs. The government is granting money to create more than 30,000 jobs between now and March 2010. Almost 55,000 jobs have been created since 29 July 2009.
Daniel Cotton, solicitor, Davies Arnold Cooper
In theory, employers will benefit from being able to recruit applicants who are receiving personalised assistance and training. But there is a possible question mark over the commitment of the applicants who are, in effect, being forced to undertake this work. Staff turnover costs may also rise if Flexible New Deal (FND) employees only stay for short periods of time or require additional support to successfully move from long-term unemployment into the workplace. At the same time, there is the potential risk of indirect discrimination claims if certain groups are under-represented among successful FND applicants.
David Whincup, partner, Hammonds
If a lack of skills is a major threat to the UK economy as reported, then the FND does at least seem to have its heart in the right place. But being cynical, it could be said to look very much like the old New Deal tarted-up for an impending election. The basic proposition that the claimant must be seen to deserve their money hasn’t changed, so it will make very little difference to employers. Its shift in emphasis from jobs to skills recognises that the old New Deal had become flawed because it pushed jobseekers towards the Jobcentre as a condition of the receipt of benefits without any consideration for their relevant skills or how these could be improved to help them once they got there.
Tom Flanagan, partner, Pinsent Masons
The four-week trial period could help employers who need a quick boost to their workforce – perhaps for the festive season. Probable delays to the implementation of new agency worker regulations may also strengthen employers’ confidence in hiring workers via the FND. Although temps won’t get the same rights as permanent staff until the new regulations come in (and then only after a period of 12 weeks), employers hiring staff via FND should ensure they comply with all employment law regulations currently in force, and be aware of any additional regulations or differences that may apply depending on the level or type of employment status FND candidates may have.
Sarah Gallon, associate, Stephenson Harwood
Employers should be conscious of any potential discrimination issues that may arise from recruiting FND applicants. To minimise the risk, a uniform approach must be taken to interviewing and application forms, and reasonable adjustments made for disabled candidates. The FND should also not be confused with the scheme run by Jobcentre Plus, which offers financial incentives for those who have been claiming Jobseeker’s Allowance for six months or more, as the FND does not offer direct financial incentives to recruit jobseekers from the scheme. At the same time, private contractors and sub-contractors who are working with the government to provide FND services should be aware that there are likely to be TUPE issues should their services change over time.