146,000 reasons to get employment support right in Wales

by Joshua Miles, Director for Wales at Learning and Work Institute


14 05 2024


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In our recently published report Which way now for employment support in Wales we made the case for a thorough rethink of how people are supported into work in Wales. The reason for this was straightforward; there are too many people who want to be active participants in the Welsh labour market but find themselves adrift, falling through the gaps in support.

Our research for the report suggested that there are 146,000 working-age people (or 7.7% of the working-age population) who are economically inactive because of long-term sickness or disabilities. Moreover, there are 75,000 people who are economically inactive but want to work. There’s a real missed opportunity here – if those 75,000 people made it into the labour market we’d be heading towards best in class employment rates like New Zealand (80.3%) with many more people in work, earning wages and contributing tax to support our public services. So why aren’t they getting the support they need?

As ever, the picture is complex. First of all, it’s important to understand what’s going on behind the scenes to lead us to where we are today. Wales has often had a labour market that underperforms compared to the rest to the UK. In practice, we’ve often had economic inactivity rates of around 4-5 percentage points higher than elsewhere and the current trends are sadly in the wrong direction. There’s a mix of reasons for it.

Our population tends to be older; we have a greater prevalence of disability and ill-health, and the economic pull of good employment is weaker in a country with lower average wages. But in more recent years, and certainly since the pandemic, we’ve seen an increase in people leaving the labour market for reasons of ill-health. A significant driver of this has been mental health issues."

When an individual has complex barriers that prevent them getting a job, it requires active support from employment support services. But many are often left wanting. Previous L&W research has shown that only one in ten out of work older and disabled people get help to find work each year across the UK. Universal Credit work conditionality regimes mean that many aren’t entitled to Jobcentre Plus and DWP commissioned employment support, although this is changing with the new Universal Support announced in the 2023 Spring Budget which will slowly be rolled out in coming years.

Even where Jobcentre Plus support is available, in practice it’s often not enough. Typically, Jobcentre Plus clients are allocated a 15-minute slot per month, which may be insufficient time to assess the needs and progress of clients, undertake coaching and discuss referral to other services. Add to this the fact that work coach caseloads are typically quite high (around 86 per coach for the most intensive ‘searching for work’ conditionality), it’s clear that the system struggles to support this particular demographic.

Historically, many of those not receiving DWP support helpfully found themselves on EU funded programmes often run by the Welsh Government such as Communities for Work. With the transition to the Shared Prosperity Fund (SPF) and its local authority-centred approach it’s not yet clear how successfully the gaps are being filled in core DWP provision. The current SPF scheme is due to end in March 2025, which also means a potential cliff edge in provision from the end of 2024 when services will look towards winding down.

It’s also vital to recognise that many of the interventions needed to support an individual sit outside employment support itself – childcare, housing, health, transport and skills all have a huge role to play on creating an environment that supports labour market participation.

This is where politics comes into the discussion. In effect, we’ve got UK, Welsh and local governments, as well as a wide range of community support services, all with good intentions trying to make this work. But in practice, there’s often gaps in provision, poor alignment and competing priorities.

So, at the very least, we need governments (in the plural) in Wales to come up with a shared vision of what we’re trying to achieve. Then there needs to be a mature conversation about who is best-placed to do what. The devolution of employment support is a live conversation, with some devolution to Scotland in 2016,  co-commissioning in West Midlands and Greater Manchester with a single employment and skills budget planned and a growing body of evidence to support more efforts to reflect local economies.

In an election year, there is opportunity for thinking afresh. Indeed, UK Labour has already promised to return control of the Shared Prosperity Fund to the Welsh Government which will shift the balance of responsibilities again. Indeed, Greater Manchester’s Mayor Andy Burnham has proposed going further with welfare devolution and Jobcentres turned into LiveWell centres under mayoral control in Greater Manchester.

Wales can’t be immune to this conversation, and we should be proactively exploring evidence of what works internationally. For instance, in the USA there are federal frameworks for employment support policies that give state governors a clear role in setting priorities and local authorities the responsibility for delivering them[1]. Moreover, in Germany federal government has often devolved the delivery of budgets for employment support and welfare, to create stronger incentives to improve labour market participation with the local authority keeping any savings to support their own public services.

With proper alignment, first vertically between the public sector in Wales and then horizontally between employment support and health, housing and the plethora of other services that impact on the labour market, we could start to see significant change.

[1] https://www.jrf.org.uk/welfare-to-work-devolution-in-england

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