The Future Jobs Fund: One of the most ineffective job schemes there’s been?

The Future Jobs Fund (FJF) was an employment subsidy brought in by the last Labour Government at the height of the recession to help tackle youth unemployment. It provided sufficient funds to create 100,000 6 month jobs for long term unemployed 18-24 year olds, paying minimum wage for 25 hours per week.

In September 2009, when the first young people started FJF posts, there were 99,000 18-24 years who had been claiming Job Seeker’s Allowance for over 6 months. When applications for the FJF closed in March 2011, this had fallen to 78,000. Today, 18 months later, there are almost 145,000 18-24 year old long term claimants of Job Seeker’s Allowance (source here). One of the Coalition’s first acts was to scrap the FJF. David Cameron had this to say about the decision:

“The Future Jobs Fund has been one of the most ineffective job schemes there’s been… The really damning evidence is that it’s a six-month programme, but one month after the programme [has finished] half the people that were on it are back on the dole. It failed.”

David Cameron, 17 March 2011

At the point he made that statement, no evaluation had been done on the efficacy of the programme, so there was really no basis for the PM’s pronouncement. To their credit though, the DWP did do an evaluation of the FJF and last week it was published (or sneaked out on a Friday with no press release if you are cynical like me). So now the results are in, was the FJF “one of the most ineffective job schemes there’s been”?

Jonathan Portes has written a very good blog post on the evaluation here, and his organisation NIESR peer-reviewed DWP’s work on this. He writes:

The bottom line is that the impact of the Future Jobs Fund (FJF) on the chances of participants being employed and/or off benefit was substantial, significant and positive. 2 years after starting the progamme (so long after the programme itself had ended, so the participants were back in the open labour market), participants were 11 percentage points more likely to be in unsubsidised employment.  

This is a very large impact for an active labour market programme (considerably larger than that found for New Deal for Young People, for example) suggesting that the programme had a large and lasting impact on participants’ attachment to and ability to succeed in the labour market. 

The FJF  programme is estimated to result in:

  • a net benefit to participants of approximately £4,000 per participant; 
  • a net benefit to employers of approximately £6,850 per participant; 
  • a net cost to the Exchequer of  approximately £3,100 per participant; 
  • and a net benefit to society of approximately £7,750 per participant.

…we know now; the Prime Minister was wrong.”

Not for the first time then, David Cameron has said something, based on no evidence, only to be subsequently proved wrong. So much for evidence-based policy. Contrast this with the Mandatory Work Activity. A similar evaluation concluded that this programme generated no impact on employment. How did the Government respond to this finding? It extended the programme! Ideology trumps facts again.

Back to the FJF. I had some peripheral involvement in the programme in my local area. The majority of the job placements were with local community and voluntary organisations. It was win win. The organisations were able to increase their capacity (very Big Society!), and the individuals were given a chance to try something new and get into the workplace (in some cases for the first time). The key benefit of FJF was that participants were actually in a job – they were being paid. They felt that someone had finally given them a chance after months of rejection. The increase in their self-confidence should not be underestimated, and this seems to be reflected in the evaluation results. After the 6 months were up, participants were much more capable of securing further work than would otherwise have been the case. You cannot replicate this feeling of self-worth with unemployed work experience placements at Poundland.

The FJF has been replaced by the Work Programme and the Youth Contract. The fact that long term youth unemployment has doubled since the FJF was scrapped, suggests these new programmes are not working.

The FJF showed that government can create jobs, and when it does the private sector and wider society benefit. The FJF was quite a modest programme. We could, and should be much more ambitious. The intervention I favour is the MMT Job Guarantee, which I have tried to outline here.

Advertisements

5 thoughts on “The Future Jobs Fund: One of the most ineffective job schemes there’s been?

  1. You might be interested (or not) in a paper of mine which looks at JG / workfare / WPA type schemes from a purely theoretical point of view:
    http://mpra.ub.uni-muenchen.de/19094/

    My basic argument is that as unemployment declines, the marginal product of labour declines till it hits the minimum wage / union wage / going wage. At which point employers cease hiring from the dole queue, and instead start poaching each other’s labour.

    Ergo if we subsidised those “low marginal product” potential employees, employment could be raised. I also claim that there is no reason to make a distinction between public and private sector. So I’m glad to see the Jobs Fund and the Work Programme included some private sector jobs.

    Finally, why do you think the Work Programme seems to have failed? Was it primarily because running it was delegated to private sector entities which ripped it off?

    1. Ralph,

      Thanks for your comment. I’ve read your blog before and found it interesting, so am aware of your argument re. employment subsidies. I agree that you could raise employment in the way you state, but I disagree with widening the subsidy to the private sector. To use your language, I think unemployed people should be given in-work training in the non-profit sector to raise the marginal product of these employees to the point they become attractive to private sector employers.

      On the Work Programme, in my opinion it was doomed from the start. No matter how much ’employability’ training providers give to the unemployed, if there are not enough jobs being created, the best we can hope for is a shuffling of the unemployed. Private sector entities do seem to be ripping us off. In a way though, that’s built into the payment structure. This is not unique to the Work Programme. In many ways Labour’s New Deal was the same.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s