Employability

The Impact of Activation Measures: Arguably, the most innovative element of Irish policy in recent years has been the implementation under the NEAP of a process of engaging systematically with persons at an early stage of unemployment. Targeted groups of unemployed people are referred by the Department of Social, Community and Family Affairs to FAS with a view to offering them a job or access to an employment or training programme. The process commenced in 1998 with all those under 25 years of age who were six months on the Live Register were referred for interview. Over time the process has been progressively expanded to include additional groups crossing specified thresholds of unemployment duration. Our analysis of monitoring data generated from the NEAP process suggests it has been successful in achieving a substantial movement off the Live Register. This conclusion is tentative since the process has not been subject to a rigorous impact evaluation. However, it is very likely that at least some of the outflow from the register was indeed related to the NEAP process. In light of projections of some increase in the inflow to unemployment and a decline in labour market demand, it can be expected that the numbers being referred under the NEAP process will expand. Under these circumstances it will be essential to ensure adequate provision of high quality and effective education and training programmes to ensure that clients can take advantage of the anticipated upturn in labour demand. Ireland has a history of strong commitment to the provision of active labour market programmes (ALMPs). ALMPs are a core element in the NEAP process. Moreover, effective ALMPs can reduce social exclusion, mobilise labour supply and contribute to skills formation. At a time of labour shortages, it is also argued that there is a greater need for provision of skills training programmes. Unemployment Transitions: Our analysis of transitions out of unemployment, based on longitudinal data from the Living in Ireland Survey, shows that there was a substantial increase in the rate of transitions from unemployment to work between 1996-97, before the implementation of the NEAP, and 1998-99, after its implementation. Further analysis of that data suggests that, in a context of a smaller stock of unemployed, and with increasing average rates of transition to employment, the probability of escaping unemployment became more strongly related to individual capacity to compete in the labour market. After 1998, those more likely to exit unemployment to work were younger people, those with educational qualifications, those who had recently participated in vocational training, those with previous work experience, and those who began the period with a spell of short- rather than long-term unemployment. In this sense, the nature of the transition regime after the introduction of the NEAP, suggests a more efficiently functioning labour market which entailed higher rates of transition from unemployment to work, and which rewarded labour market capacities such as education and previous work experience. Such an efficiently functioning labour market may, however, do little to narrow the gap between those possessing market capacities and those suffering disadvantages in the labour market. This interpretation would be consistent with our finding that there was no shift over the late 1995-2001 period in the gap in survival rates in unemployment between the short versus the long-term unemployed. It also calls into question the effectiveness of ALMPs in assisting the more disadvantaged to reintegrate into the labour market. Trends in Employment and Unemployment: Between 1993 and 2000, total unemployment fell by 70%, long-term unemployment by 84% and short-term unemployment by 47%. Long-term unemployment can fall either because the long-term unemployed are exiting (to employment or to economic inactivity) or because the short-term unemployed are exiting before they become long-term unemployed. Our analysis of administrative data on unemployment duration from the Live Register shows that survival rates in unemployment declined throughout the period form 1995 to 2001. The data suggest that the decline in long term unemployment since 1995 has been due both to a reduction in the inflow to long-term unemployment and an increase in the exit rate. The reduction in the inflow to long-term unemployment is a function of both reduced inflows to short-term unemployment and a steady reduction in the exit rate from short- to long-term unemployment. With regard to the NEAP activation strategy implemented since September 1998, it appears that the combined effects the strategy of contacting individuals and referring them for interview with FS, combined with increased labour demand, led to a significant increase in exits from unemployment. To the extent that the reduction in exit rates can be attributed to the activation strategy, this should be counted as a success of the approach. However, there is little evidence to suggest that the activation measures have contributed to a reduction in the substantial gap in exit rates between the short- and the long-term unemployed.