The UK public employment service 100 years on

Public employment services exist to compensate for market failure and inefficiency in the labour market. This does not make them a panacea for the problem of unemployment; indeed, when they were introduced in the UK a century ago, the rate of unemployment was approaching 8% – very similar to the one we see today.

What labour exchanges or jobcentres can do, though, is to ensure that any given level of demand for labour translates as smoothly and as quickly as possible into people in jobs, with a minimum level of unfilled vacancies. So, the labour exchanges, conceived a century ago, which were placing 3,000 people a day into work by 1913, might usefully be seen as an early policy commitment to labour market efficiency.

But they also had important social policy ambitions, orienting particularly to those individuals to whom employers and private employment agencies were least attracted, and being most active in areas where labour demand was at its weakest. It was this aspect of the labour exchanges, along with the other parts of the People’s Budget, criticised heavily at the time as a ‘socialist’ interference with market forces, which animated Lloyd George to hope that: “…before this generation has passed away, we shall have advanced a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests”.

Britain has one of the longest commitments to a public employment service in Europe, and is arguably one of the most sophisticated for three key reasons. First, the UK was a pioneer of an approach now being widely adopted in European countries, through the integration of the traditional job-broking activities with the administration of benefits.

This was achieved in 2002 when Jobcentre Plus was created from a merger of the former Employment Service and the Benefits Agency and marked a return to the original philosophy of the welfare state, with benefit provision clearly linked to a demonstrable commitment to search for work. It has also facilitated the gradual extension of the ‘work-focused’ approach to other groups of benefit recipients such as disabled people and lone parents.

Second, in recent years jobcentres have begun to engage in a regular, sustained and increasingly personalised relationship with unemployed people. They are not forgotten and ignored, but receive advice and support incrementally as their spell of unemployment lengthens. This approach is highly cost-efficient; it provides for minimal intervention with people who are likely to find work fairly quickly, and allows resources to be concentrated more productively on those who find it harder to do so.
It is likely that this approach has contributed to a greater number of people coming off unemployment benefits in the current recession, than in the recessions of the early 1980s and 1990s, although it has struggled to adapt to the growing numbers of claimants in professional and managerial occupations.

Lastly, relationships with employers have traditionally been the weak leg of the UK public employment service. Many employers preferred to pay more for what they perceived to be higher quality labour from private agencies, and avoided what they judged to be low quality and insufficiently screened referrals from the public employment service.

As a result, the public employment service has struggled to secure more than a third of the vacancy market. However, recent initiatives like Local Employment Partnerships, which can offer pre-employment training for unemployed people geared to specific jobs and a more customised recruitment service, have proved popular with many employers, and are beginning to address this typical shortcoming.

Overall, there are good reasons to celebrate the centenary of the public employment service in the UK, and to highlight its many strengths which have been visible in the current recession. Looking ahead, however, there remain challenges for the service as we emerge from the downturn, and it balances the demands of employers and skilled jobseekers on the one hand, with its social remit to mitigate disadvantage and support the hard-to-help on the other.

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