Can employers make the New Deal work?

John Griffiths


Posted in: Employees, Policy & Research

Can employers make the New Deal work?

February 01, 1999

New Deal, the cornerstone of the UK government’s welfare reform, is approaching its first birthday. But few employers seem to be celebrating. Here John Griffiths shows how some large companies are using the scheme successfully and recommends action to take.

p>In economic jargon, the New Deal is a supply-side measure. Originally targeting 18-24 year olds at least 6-months out of work and now extended to those over 25 out of work more than 2 years, single parents and disabled people, the New Deal concentrates on making the unemployed employable. A combination of personal advice and guidance, vocational training and work experience has been packaged, and heavily subsidised, in order to match those without jobs to employers with vacancies.

In the early months, employers were keen to pledge support. Breakfasts at Number Eleven, an employer-led Task Force chaired by Sir Peter Davis of the Prudential, prime-time television advertisements prominently displaying the banners of corporate supporters – all generated the sense of a public-private crusade against the twin scourges of unemployment and welfare dependency. Big names like Cadbury Schweppes, Marks and Spencer, Tesco, Whitbread and Sainsbury’s became headline news by offering New Deal jobs.

Many companies have since found that, although suitable New Deal vacancies were notified to the Employment Service months ago, only a tiny proportion of them have been filled. Travel Dundee, part of National Express, whose chief executive starred in the first New Deal TV ads, were stymied in their efforts to recruit 15 bus drivers. New Deal regulations require candidates to have at least 6 months’ training; bus drivers can be trained in 6 weeks. It took the Employment Service four months to agree to bend the rules by which time the company only had three vacancies left.

Simon Ward, Corporate Affairs Director of Whitbread echoes the opinions of a number of large companies, that government efforts have been too focused on getting companies to sign up, and insufficiently on getting people into jobs. Ministers have been swift to retort that there is no quick fix for long-term unemployment and have invited employers to contribute to the bureaucratic-sounding process of New Deal’s continuous improvement.

What jobs are available?

Whitbread is precisely the type of company which should be recruiting through New Deal. One of the UK’s largest hotel, leisure and hospitality groups, Whitbread’s brands include Marriott Hotels and Comfort Inns, TGI Fridays, Pizza Hut, Costa Coffee – in a service sector which is expanding. Senior managers from the Group have been closely involved in implementing New Deal. Yet, to date Whitbread has recruited fewer than 10 New Dealers.

Alan Sinclair, chief executive of Glasgow’s Wise Group, says eight out of ten jobs which are potentially available to long-term unemployed people are in the service sector and involve customer care skills. “As manager of a trendy coffee shop, who would you employ, an itinerant Aussie, or someone from a big housing scheme whose experience of customer care is signing on for their giro?” Jobs which are available are not well matched to the skills, or aspirations of many of the longer-term unemployed. This might sound defeatist; it merely emphasises the magnitude of the task of meeting supply with demand.

Corporate involvement

One of employers’ loudest gripes about New Deal has been the length of time which potential recruits are spending on the Gateway (up to four months of preparation for work). If New Deal concentrates on supplying clients, at the expense of meeting a demand for labour, then employers need to become more involved in redressing the balance.

Employers are prepared to facilitate clients (re)entry into the labour market. Sainsbury’s has provided every Job Centre with a booklet of guidelines which will assist the New Deal Personal Advisers in their role of matching suitable clients with vacancies. This contains information on the company’s recruitment criteria and processes, information on job roles and tasks involved, pay scales, benefits and also a basic person specification. Companies like Marks and Spencer, Asda and Midland have established in-house buddying or mentoring schemes to support new staff.

Other companies such as Unipart, Tesco and Barclays, have chosen to manage New Deal recruitment at arms length through the offices of employment agencies or training providers. In Unipart’s case this is extended to include suppliers and subcontractors. The Oxford-based group buys into a New Deal recruitment and client-preparation service provided by Tomorrow’s People (formerly GrandMet Trust), tailored to the company’s needs. Using an intermediary relieves the employer of the bureaucracy and resource-intensive administration.

Some large employers with extensive regional supply networks have been reluctant to lean on suppliers and sub-contractors to recruit under New Deal, preferring informal influence instead. Lloyds Bank encourages its Business Advisers to clients about the New Deal when they are known to be recruiting. BT is supporting a telemarketing trial for the Employment Service, aimed at getting more SMEs involved.

Other are helping charities and voluntary organisations to participate, both under the employment option and the voluntary/environmental options. Barclays has seconded staff to selected charities and is also putting forward its SiteSavers project, run by Groundwork, as a model for the environmental task force. Unilever has chosen to partner the Prince’s Youth Business Trust. Sainsbury’s is considering extending its Fareshare food-distribution partnership with the homelessness charity, Crisis, to employ New Deal clients.

Managing New Deal involvement

Employability has become a theme of this government as enterprise was the leitmotif for the Conservatives. The New Deal, Action Zones for education and employment, the Learning Age and the University for Industry are all new employability measures demanding private sector input.

Many companies have chosen to manage their involvement from their community affairs departments. The danger with this approach is that businesses are exposed to public accusations of inconsistency as other parts of the company pursue goals which are at odds with the government’s employability agenda. Some of the same companies which publicly signed up to New Deal appear simultaneously to be contributing to job insecurity by lobbying for greater deregulation and labour market flexibility, opposing minimum wage legislation, continuing to downsize and only ever achieving jobless economic growth.

The case for more integration of companies community affairs with core-business activities is even more compelling given the new secretary of state for trade and industry’s recent comment that wealth creation is more important than wealth redistribution. The government talks repeated about rights and responsibilities and the tacit quid pro quo of its pro-business agenda is that private enterprise must create jobs which deliver greater social and economic inclusion.

Things can only get better

The business-led New Deal Task Force and regionally-based Employers Coalitions have been busy helping the Employment Service to improve the impact of welfare-to-work initiatives. One working party, led by Stephanie Monk, human resources director at Granada, is focusing on client retention. The drop-out rate of New Deal placements has been alarmingly high.

Other ways employers can help make a success of New Deal include:

sharing best practice on how to work with Employment Service staff, eg tailoring company recruitment literature and practices for New Deal; using these tools to interest other businesses (suppliers and subcontractors) and show how New Deal can be adapted to meet their specific needs;

integrating New Deal with other workforce development programmes, including upskilling existing staff through NVQs and Investors in People; joined-up working between the training/HR and the enterprise functions of TECs/Business Links (employment sectors most likely to offer opportunities for New Deal clients generally have low levels of Investors in People recognitions);

developing opportunities for Employment Service New Deal Advisers to shadow company personnel/HR managers, as well as for business secondees to work alongside ES staff on the front-line at Jobcentres;

negotiating a number of employer-specific Gateways/New Deal programmes using specialist intermediaries (along the lines of the Tomorrow’s People/Unipart Corporate Workroute).

The Labour government’s choice of name for its flagship employment programme, echoing President Roosevelt’s New Deal, was no accident. The state is again offering a new deal as part of a radical redefinition of citizens rights and responsibilities. In 1930s America, Roosevelt’s New Deal developed a safety net for people in need. Sixty-five years on, Tony Blair’s New Deal aims to use state benefits not to stretch the net, but to build ladders with which people may reenter the world of work. This effort to change the welfare state from a passive to an active agency cannot be achieved by government alone; the involvement of our corporate citizens will be critical to its success.

John Griffiths, a consultant in corporate community involvement, is Policy Adviser to the London Enterprise Agency’s companies on New Deal (0171 236 3000).

Corporate Citizenship Briefing, issue no: 44 – February, 1999