Was the Future Jobs Fund really a failure?
Today at PMQs the Prime Minister claimed that the Future Jobs Fund didn’t work because “it lasted for six months and within one month 50% of those taking part were back on benefits”. The claim seems to be based on this analysis, recently published by DWP. The research is full of caveats (about which more below) but it does seem that David Cameron has chosen to give its conclusions a particularly negative spin – our reading is that while the study only represents very early data, it demonstrates that FJF significantly increased disadvantaged young people’s chances of moving into work.
The analysis is only based on the very first cohort of FJF participants (those who started in October and November 2009) and faces various other methodolgical limitations (e.g. merging slightly different datasets to match participants with claimant data, only being able to track young people for seven months and not being able to account for young people who started more than one FJF job). But overall it does reach one key finding: only half of FJF participants in the sample were claiming benefit seven months after they started their FJF job, with the remainder leaving benefits and many therefore entering work in the wider labour market. In addition, the paper points out that the number claiming benefits after their FJF placement is completed may be even lower, as FJF participants often claim JSA for a short period after FJF before securing unsubsidised work.
The FJF is a scheme intended to provide disadvantaged young people, who would be otherwise unlikely to find a job on the open labour market, with an increased chance of moving into paid work. For 50 per cent of these young people to have moved off benefits after their placement is a considerable success, which will, presuming that off-flow levels would otherwise have been far lower, bring the Government considerable longer-term savings. And as the DWP conclude, over future months as it becomes possible to track young people’s progress after seven months (and as it becomes possible to track a larger cohort of participants) it may turn out that success rates are even higher.
The difficulty, as ever, is calculating what proportion of this success can be accounted for by the FJF and what would have been achieved without it. The DWP have attempted to do this by comparing outcomes for FJF participants with outcomes for other young people who have been unemployed for 6-9 months and have found jobs on the open labour market (finding that the latter group have a 35 per cent chance of remaining on benefits seven months after starting a paid job). But this is not a fair comparison: as the analysis notes “the policy intent of FJF was to target those disadvantaged young people who would not have found employment without the policy, whereas the comparison group had obtained employment in the open labour market.” Comparing FJF participants with other unemployed young people who may will have far more work experience and qualifications is no way to work out the impacts of the programme – a better method would be to look at a group with comparable characteristics to FJF participants and the most methodologically sound would have been to set up a randomised control trial (which would not have been ethically sound for FJF). But we do know that the longer young people spend out of the labour market the lower their chances of moving into jobs are, and as Paul Bivand at Inclusion shows, after 9-12 months out of work claimants overall have a 65 per cent chance of remaining unemployed, which rises to over 70 per cent after 12 months unemployment. Given that young people’s labour market prospects are generally poorer than average, it seems that FJF has had a positive impact on reducing young people’s chances of prolonged worklessness.
FJF jobs were never intended (despite what the Prime Minister may believe) to provide permanent employment. They are transitional jobs which provide young people with real work experience, a reference, increased skills, motivation and confidence therefore increasing their chances of finding a permenant post compared to what their chances would be if they spent an additional six months unemployed. Today’s evidence suggests that they were working – and makes it an even greater shame that the scheme will be completely discontinued in March.