The initiative - to be piloted in four areas from this summer - forms part of the most innovative, albeit small-scale, package of measures introduced by the Employment Department in recent years. If the experiment is to prove worthwhile, however, the four pilot schemes must be allowed to operate with a considerable amount of flexibility.
The proposed level of subsidy to be offered to employers - starting at pounds 60 per week but falling gradually during the period of employment - is, as you point out, much less generous than the pounds 150 per week proposed by Professor Dennis Snower whose original idea provided the germ for Workstart.
From what we know about employers' reluctance to hire the long-term unemployed it is likely that only a generous subsidy would prove attractive. But abstract debate about precise levels of subsidy is somewhat futile.
What is surprising is simply that the pilot Workstart schemes will be subject to a single limit of pounds 60 at all. It would surely be much better if the pilot exercise were used to test different levels of subsidy in order to assess employer response.
Similarly, rather than restrict the pilot exercise to targeting people unemployed either for more than two years or more than four years there should be some experimentation with subsidies to employers hiring people unemployed for between nine and 12 months. The experience of low unemployment countries suggests that it is far more cost-effective to prevent people becoming long-term unemployed than to deal with them once they have been demoralised by years on the dole.
Moreover, such experience also suggests that subsidies prove most effective when allied to other job-search support measures. It would seem worthwhile therefore to experiment with integrating Workstart with the Employment Service's successful Job Interview Guarantee Scheme (JIG), in particular that element of JIG which aims to build the confidence of jobseekers before they are brought into contact with employers.
Workstart represents a refreshing break with much of the narrow thinking that has for too long conditioned the approach to employment policy in Britain. It must be given every chance of proving its worth.
Employment Policy Institute