Recruiting long-term unemployed people
A hard copy of this report summary can be obtained by contacting Paul Noakes [E-Mail: Paul.Noakes@dwp.gsi.gov.uk] or by writing to him at the 'Social Research Division, Department for Work and Pensions, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 76
By Dawn Snape
This report presents findings from research commissioned by the Department to examine the value to employers of the National Insurance Contributions (NIC) Holiday and to determine how the scheme may influence recruitment practices. The research, carried out by Social and Community Planning Research (SCPR), involved depth interviews with a range of employers.
The main findings are:
- Awareness of the NIC Holiday scheme was low, and the level of understanding of the scheme varied within employing organisations. Payroll staff were generally better informed than those directly involved in recruitment but tended not to pass on the information until after an eligible employee had been recruited.
- For larger firms the Holiday was too small to make much difference financially, while for small firms the risk of taking on someone who might not stay, or prove to be unreliable, was not offset by the Holiday.
- The most important thing for employers when recruiting was to find the right person for the job. An applicant's being unemployed did not itself matter - what they needed were the right skills, experience and attitude for the job. The circumstances of unemployment did matter to employers, however. It was important that the recruit had been doing something "worthwhile" during unemployment. This included a range of activities such as caring, voluntary work, training or travelling abroad. Employers also looked for evidence of appropriate work attitudes.
- As the emphasis for employers is on 'the right person for the job' the NIC Holiday is not a major influence on recruitment. It only tips the balance between otherwise equal candidates. The Holiday was seen less as an incentive and more as a bonus after recruitment. Thus the impetus for take-up generally arose after recruitment of an eligible employee.
- Generally employers did seem willing to think more about recruiting long-term unemployed people in future, but did not feel that they could change or relax their recruitment criteria on the basis of the NIC Holiday.
Introduction
The National Insurance Contributions (NIC) Holiday was introduced in April 1996. It enables employers who recruit an employee who has been out of work and in receipt of benefit for at least two years to claim back an amount equal to their share of National Insurance for up to a year. Despite wide publicity about the scheme, both before and after its introduction, take-up of the scheme has been much lower than expected. As part of the evaluation of the NIC Holiday, the Department of Social Security commissioned Social and Community Planning Research to undertake a qualitative study to investigate in detail employers' views of the NIC Holiday scheme.
The study, comprising 40 in-depth interviews, was conducted in 1997, amongst: (i) employers currently or formerly in receipt of a NIC Holiday; (ii) employers who had recruited an eligible employee but had not claimed a NIC Holiday; and, (iii) employers who saw themselves as potential recruiters of long-term unemployed people but who, since the scheme started in April 1996, had not recruited an eligible employee. Employers of different sizes from the public, private and not-for-profit sectors were included in the study. Where national companies took part in the research both locally based workplaces and headquarters were covered.
Employers' perspectives on recruitment
Candidates for jobs are vetted at various points in the recruitment process, but getting past the initial hurdle is crucial for unemployed applicants. During the interview stage employers are more likely or able to consider the candidate as an individual with specific merits than simply as a potential 'risk'. Employers described factors relating to the job and the organisation which they looked for in candidates. Relevant to unemployed people were: filling in applications completely and neatly; and, demonstrating that they are both motivated to work and had been involved in worthwhile pursuits while unemployed.
Employers had not always had favourable experiences with recruitment through Jobcentres and did not necessarily use advertising methods which drew a response from long-term unemployed people. This led to a perception that it is difficult to find suitable long-term unemployed people to recruit. Long-term unemployed people were commonly believed to lack skills and to be unaccustomed to work routines. These perceptions were reflected in the type of jobs deemed most appropriate for them - low skilled jobs where extensive training and support is provided.
Employers looked more favourably on some circumstances of and reasons for long-term unemployment than others. They were more positive about those unemployed people they considered had used their time productively - for example, by caring, or undertaking voluntary work, training or travel abroad. They were also more favourably inclined towards those they saw as actively searching for and motivated to work, and who had been unemployed for less than five years.
The degree to which employers were disposed to recruiting long-term unemployed can be seen as a continuum. Those most favourably inclined viewed themselves as 'socially responsible' employers and wanted to give unemployed people a 'chance'. Those less favourably disposed tended to have less sympathetic stances and viewed long-term unemployed people as a high risk with potentially detrimental commercial implications.
Factors influencing take-up of the NIC Holiday
Employers require information about schemes like the NIC Holiday at the time they are recruiting. Some information sources, such as Jobcentre and TEC staff, appeared able to provide the required information at strategic moments i.e. when the employer was in the process of recruiting a long-term unemployed person. Such intermediaries may be more effective in disseminating the information than more generalised methods of publicity alone.
Payroll staff usually remembered seeing information about the NIC Holiday, but tended not to share it with staff involved in recruitment until after an eligible employee had been recruited. This precluded effective use of the scheme as an incentive to recruit long-term unemployed people, at least until after employers had used it once already. Payroll staff also tended to be more aware to the value of the scheme, while recruitment staff were vaguer about the savings involved. Thus those making the recruitment decisions were less aware of the benefits which could be associated with recruiting a long-term unemployed person.
Some employers lacked a clear understanding of the scheme and had mistaken impressions of how it operated which discouraged them from taking part. Employers also stressed the importance of getting the right person for the job and were unwilling to lower standards to obtain the benefits of the scheme.
While employers viewed the financial savings to be gained from the Holiday as beneficial, they were wary of potential disadvantages which they felt were not compensated for by the savings. The disadvantages included: time and effort associated with claiming back the money; difficulty meeting the eligibility requirements; and difficulty in gaining access to suitable long-term unemployed candidates.
NIC Holiday experiences and plans
Three groups of employers were identified who had different perspectives on whether the NIC holiday 'tipped the balance' on their recruitment decisions. One group was unaware of the Holiday when they last recruited and so it had no impact on their decision. Another group knew about the scheme but did not view it as a key factor in their recruitment decision. A third group said it did 'tip the balance' in their decision, but only where the job candidates were otherwise suitable for the job.
Employers were generally unwilling to alter their recruitment practices substantially to obtain the NIC Holiday. They emphasised the importance of getting the right person for the job over the opportunity to save some money on labour costs. The Holiday was viewed by employers largely as a 'bonus' for having recruited a long-term unemployed person rather than as an incentive to doing so.
While the NIC Holiday generally did not directly encourage employers to recruit long-term unemployed people, it did appear to have a positive impact on whether long-term unemployed people were invited to interviews. It did thus help unemployed people to be considered on their individual merits and gave them a better opportunity to `sell themselves' to employers.
Employers commonly reported little or no difficulty with the process of applying for the Holiday, although those without experience of the scheme expressed worries that applying could be an onerous task.
What employers want: creating the right incentives
Employers felt that schemes like the NIC Holiday should be marketed more effectively to make employers more widely aware of them. The benefits of the scheme should be clearly presented as must the message that participation is 'hassle-free'.
Employers suggested that some of the scheme's requirements could be changed to encourage more employers to take part. This included broadening the definition of long-term unemployment to one year and making access to long-term unemployed people easier. Employers also emphasised the importance of reducing the risks for them of recruiting long-term unemployed people. They suggested that trial periods with potential employees to determine their suitability, or providing customised training, might help.
In addition to off-setting the costs of re-skilling people who have been unemployed for long periods by providing financial assistance or training, it was also suggested that interviewing skills of unemployed people could be refined to make them more attractive to employers. Lastly, employers felt that there should be easier access to information about the NIC Holiday and other `back-to-work' schemes. One-stop-shops for employers to obtain information, support and advice about the range of schemes available, and how they can be used in combination, were suggested.
Relevant publications
Bunt, K., Marwaha, S. and Moulton, V. (1997) “Employers' Awareness of the NIC Holiday Scheme.” London: DSS In-house Report No. 24.
Bottomley, D., McKay, S. and Walker, R. (1997) “Unemployment and Jobseeking. ”London: DSS Research Report No. 62 HMSO.
Elam, G. and Thomas, A. (1997) “Stepping Stones to Employment. ” London:DSS Research Report No. 71 TSO
McKay, S., Walker, R. and Youngs, R. (1997) “Unemployment and Jobseeking before Jobseeker's Allowance.” London: DSS Research Report No. 73 TSO
DSS Research Report No. 76: Recruiting long-term unemployed people by Dawn Snape. London, The Stationery Office. £27