The rich get richer as more redundancies fall

Recently, disturbing information fell into my hands informing me of a training provider who is intending to bring about a mass redundancy programme to their workforce. Over the years, A4e has become one of the leading welfare to work companies in the UK and prior to the introduction of the Work Programme, Emma Harrison, its founder was looking forward to this £100m company said she was "proud that the company has sustained pure organic growth at a phenomenal rate" and forecast an increase in profits to a £500 million turnover by 2014.

However, this will not save the 460 frontline staff who will shortly go onto redundancy notice. In a letter to affected personnel, Executive Director Nigel Lemmon wrote:

Colleagues, We know that we have a caring, driven and passionate team. We have a team that has helped us to develop our business over the years and we have ambitious plans to continue that growth. However, we currently face a very difficult situation with some existing Welfare to Work contracts formally ending before the new Work Programme begins. This is far from ideal. We passionately want to do the right thing for our employees and our customers, but on this occasion we have had to start the formal process of collective redundancy consultations with all our New Deal for Disabled People (NDDP) and our Pathways to Work employees. This decision has not been taken lightly, we have thought long and hard about the options available to us, but regrettably have had to start this process. Whilst some providers have already started these consultations, we made the decision to wait until we had received final confirmation from DWP, ensuring that we could retain our excellent team throughout this period and well past the time that we would have clarity around the Work Programme contracts. Our focus in the coming weeks will be on securing the best possible outcome for our employees and our customers. We want the best team, we know we have got great people and your skills will be vital to the delivery of our own Work Programme and those where we hope to secure subcontractor work. We will do everything possible to secure opportunities for our team going forward. However, you will be aware that the Department for Work and Pensions (DWP) only last week advised us that the contracts to deliver New Deal for Disabled People and Pathways to Work will not be extended beyond 31st March 2011 and 27th April (Pathways to Work Phase 2) and that a new initiative will be offered to customers by Jobcentre Plus from 1st April until the Work Programme starts. Since we were notified last week, we have been working extremely hard to challenge this position with DWP. However, senior DWP representatives have now confirmed that it is their view that TUPE (the regulations that allow for the transfer of employees from one provider to another) does not apply, either to Jobcentre Plus when the new service starts on 1st April, or to other service providers when the Work Programme goes live (between 1st June and 31st July). This is hugely disappointing and we have now had to take the decision to start formal collective redundancy consultations. This decision only affects our New Deal for Disabled People and Pathways to Work employees. Once we have been informed of the outcome of our Work Programme bids for prime and sub-contracts, we will be able to understand the wider implications across the rest of our Welfare Division. We will continue to provide you with information as and when it becomes available By starting a lengthy 90 day redundancy consultation process, we have been able to secure your colleagues employment with A4e for the next three months. Our commitment and investment reflects our passion to support our team as much as possible and the enormous value and trust we place our team. It is our absolute intention to get the best outcomes for our people and our customers and have the best team going forward. This arrangement will take us into June and importantly, well after the Work Programme contract award announcements. This approach will give us the greatest opportunities once we know where we will be delivering the Work Programme going forward. We know that A4e has the best teams in the industry with extraordinary employees. It is as a result of the friendly and caring service that you have delivered to customers over the years that has enabled us to build A4e into what it is today. I know that we will continue to live our by DNA and to passionately provide excellent service to customers. If you have any queries regarding this announcement or the process, please speak to you manager in person, the HR Shared Services Team by telephone on *************** and we will get back to you as soon as possible. Nigel Lemmon

By implication, the letter implies some kind of genuine care for its workforces, but let’s face it – a redundancy consultation period is seldom a time to renegotiate your job. These people will almost certainly find themselves unemployed within the next few weeks, unless by some stroke of good fortune they are able to find alternate employment. Most will not be so lucky and will be forced to ‘sign on’ and claim Jobseekers Allowance. In the meantime, Emma Harrison can sit in her luxury home, swanning around with her friend, Citizen Dave, the people’s toff. They are a pair well met. Harrison, like Cameron is also a millionaire, with a personal wealth estimated at £40m – not much chance Emma will be joining her colleagues on the dole then.

Interestingly, if you go to the "MyA4e" website, you will see that Emma Harrison gave Anna Gaunt the opportunity of a 12-month secondment as her assistant. prior to this, Anna had been an employment advisor on their NDDP contract. It rather begs the question of whether has a job to go to once her placement expires. For her sake, I hope she has the chance of redeployment within the company, but the promotion of this posting on their website remains a rather fine example of Emma's team shooting her in the foot.

Now, is it just me, or are there others out there who find it pretty obscene that Some people have profited from welfare to work programmes, whilst other, like the 460 at A4e are cast aside when they have served their usefulness. Because the new programme to be implemented by Jobcentre Plus is so different from Pathways to Work and New Deal for Disabled People, these folk will not be TUPE’d over to the new programme.

Over the coming weeks, as announcements are made on who are the ‘winners’ of contracts for the Work Programme, more will follow. Soon we can expect those hundreds will turn into thousands as companies ‘rationalise’ or even close.

It is a disgrace that workers who have given years to supporting unemployed people back into work should now find themselves in a position where they also face joblessness. The shame is not exclusive to A4e – other companies have profited equally well. Seetec has become one of the largest and most experienced providers of government-funded welfare to work and skills-training programmes. The company employs more than 500 people across a national network of 50 employment and training centres, and helps thousands of people each year to find work or gain qualifications through a diverse portfolio of employability or skills contracts. Last year, Seetec pulled in £21.2m in sales and profits of £2.112m. This enabled the company, which is 56 per cent owned by founder Peter Cooper, to pay total dividends of £990,608.

Or take the example of Maximus, profits in the first nine months of 2010 shot up by 19.4 percent—to £131 million. And its top boss, Richard A Montoni, grabbed a pay package worth £2 million last year.

Perhaps instead of paying out such vast dividends to a selected bunch of money-grabbing shareholders, the company should have been establishing a welfare programme to support these workers if and when contracts come to an end. But of course that is hardly an option for these commercial giants – since when does capitalism look after the working class?

Out of work? Heaven help you ....

The Big Society has had a bad week and it looks likely things are not due to improve. Matters looked bleak when Liverpool pulled out of a Big Society pilot programme and they then moved from bad to worse when its driving force, Lord Wei announced his intention to scale back his commitment.

If all this didn’t give Cameron a headache, then pronouncements by Dame Elisabeth Hoodless didn’t help. Twenty-four hours later, revelations emerged that Eric Pickles blocked proposals to protect Cameron's flagship "big society" project from the harshest of council spending cuts. By now the PM must have been feeling like the King of Kadesh at the Siege of Meggido – except for Cameron, there was no escape route.

One concern coming from the Third Sector is that they feel they are being squeezed. The Government is encouraging them to take over delivery of critical services (running of libraries, job clubs etc). Against this, they have inflicted substantial cuts to local funding in order to reduce the deficit.

Consequences of this can be found on the GB Job Clubs website. Many of their network of over 100 local clubs are strapped for cash, so they are offering the chance to ‘put their names in a hat’ for a free laptop. GB Job Clubs was set up in 2009 by Chris Neal (a retired derivatives broker with strong Tory connections) with support from the Cobden Centre. Like many charities, it is struggling financially. The organisation was initially funded by Neal with a £500 start-up budget and has since received some support from local authorities and the Church Urban Fund.

With the latest raft of austerity measures, this funding is under threat and is likely to impact on Neal’s network. If local clubs cannot secure finance for premises, equipment and day-to-day running costs, they could close – bringing an end to the amalgamation of Tory small state idealism as seen in the Big Society and localised job-hunting services.

Would they be missed? It is far too early to gauge whether they have achieved any success. Neal claims 30% of those who lose their job find another one through friends, family or contacts and his clubs provide the social networking to make this happen.

What is known is that historically, they have not been particularly successful. First opened in 1984 in the North East, a number of studies argued they were of limited value. A 1986 Guardian report into how the scheme was functioning in Dundee found that of the city's 7,100 long-term unemployed, only 147 people had been found places at job clubs and only six people on the wider Job Start scheme had actually found work.

If they fail, or are forced to close their doors, many providers will be expected to pick up the slack they leave behind. The sector has the necessary skills and experience to take over the role, but existing job club clients will be used to a service that mentors, supports and befriend. In some instances volunteers will have given many hours encouraging clients and building their self-worth whilst helping them write CVs, providing transport to interviews, or simply offering a resource to create peer self-help support groups.

These resources are expensive and providers will be hard pushed to match such intense levels of support. If they have to take over the functions of job clubs they will need to think how they will deliver this kind of service. Equally, if job clubs survive and find the funding to continue, providers will need to consider how they will make themselves an attractive and welcome alternative.

Evidence shows only 8% of clients attending programmes run by independent training providers secure full-time, sustainable employment. With statistics like this, it would suggest the jobless would probably be just as successful sat at home writing for jobs whilst watching morning TV. Indeed, this option could save the Government millions whilst offering the unemployed the chance to feel they had some say in their own future.

There has never been any kind of caring and supportive initiative designed to support the jobless and help them achieve the goals they feel are important to them. Many want the chance to work, but current and previous provisions are dominated by ‘targets’ and ‘sales figures’ that simply move the jobless off the unemployment register and into some kind of work – even if it doesn’t suit the client. Equally, others want the chance to retrain, but the current funding structure for contracts means that it is against the best interests of providers to support this option as they will not get paid if the client goes to college.

In short, the system doesn’t work, won’t work and ultimately will collapse!

Unemployment and the Great British Fob Off!

News that 97 per cent of posts created since the economy came out of recession are of limited hours will come as no shock the welfare to work sector. The statistics mean only 6,000 of the 200,000 jobs to have come up in a year pay a full-time wage.

Of further concern to providers is the fact that evidence showed the top performing provider only achieved 8% sustained job outcomes. The average caseworker will be already aware of this, but it seems the Department of Work and Pensions have chosen to ignore current labour market trends.

There is an increasingly trend emerging amongst employers to offer part-time, or ‘zero-hour’ contracts because there is often no National Insurance to pay on behalf of the employees as usually their earnings are comparatively low.

In addition, firms often do not have to pay overtime or pension contributions, unless the part-timer has worked more hours than a full time colleague. Unscrupulous employers have historically used zero-hours contracts as a means by which employees are only paid for work actually done. For example, a restaurant might employ three staff and not know how busy a particular night was going to be. The employer would therefore have staff 'on call' and unpaid, until it became busy enough to bring them out to serve.

One of the reasons employers have opted for these contracts is because they are worried about low growth levels, increasing inflation and the reluctance of banks to finance projects. This point was emphasized by David Frost, the Director-General of the British Chamber of Commerce, who said:

“Clearly there's a lot of nervousness about the future and companies are hiring people on a short-term basis in case the economy doesn't grow as expected. When there's more confidence companies will convert part-time people into full-time employees.”

This kind of uncertainty will not disappear overnight and the National Institute of Economic and Social Research (NIESR) warned it will take at least two more years before the economy claws back output lost to the crisis of 2008. In the meantime, unemployment will soar this year to a 17-year high of 2.8m - 8.8% of the workforce.

Now, let me draw an analogy. Let us assume you had a car parked outside that you needed for work. Let us also assume that every time you needed the car, it only started and ran 3 times in every 100 – would you continue to run the car? Presumably not. Yet the government adhere to a belief that the Welfare to Work sector offers the unemployed some kind of future salvation.

Clearly this is not the case and evidence shows large numbers are being referred to independent providers (who are paid handsomely for their services), only to be fobbed off with low-grade part-time work. This is hardly a solution and one can only stand in total confusion at Iain Duncan Smith’s professed allegiance to the process. Is it that he sees our future as all being employed part-time? Perhaps he doesn’t care about the unemployed and only wants to massage the statistics? Possibly it is because he sees the vast profits the Welfare to Work sector makes and thinks he can fool us whilst making companies like Serco, A4e, Working Links and others pay low rates of corporation tax.

The system is ineffective, fails to address fundamental problems within our labour market and offers no solutions to the unemployed. Rather than encouraging large corporations to bid for the new Work Programme, the government should be reviewing the entire process of how we fail those who are workless.

Morally, it is what should be done – I won’t hold my breath!

Work placements - slavery by any other name

So now the government intends to encourage young people into work by offering them eight-week work placements.

According to Indus Delta (the newswire for the welfare to work industry), they state the new scheme:

“... will now allow young people to undertake work experience for up to eight weeks rather than current paltry two weeks. Under the existing regime, if you tried to do more, you ran the risk of having your benefits docked. The new initiative will be applicable for individuals between 18 and 21 who will be matched by Jobcentre Plus with employers looking for people to do work experience.”

I am pleased the new initiative excites staff at Inclusion, or CESI by its more popular name (for those not in the know, Inclusion run the Indus Delta website), but I fear I cannot build the same level of enthusiasm. To me, this is yet another scheme to take workless young people out of the unemployment statistics and sanitise levels of worklessness.

None of these schemes offer young people any kind of vocational training or any certainty they will be offered a permanent job on completion of their placement.
Now, let’s look at this more realistically. What do you call work where you are punished if you don’t attend, you don’t get paid, there is no security of tenure, the work traditionally tends to be menial, or burdensome, you are unable to join any company pension or health scheme and you have no in-company holiday entitlement?

Isn’t this another type of slave labour – with just a floral hue to make it sound better?

According to the Oxford Dictionary Online, ‘slavery’ means “condition of having to work very hard without proper remuneration or appreciation.” Now, if work placements don’t fit this definition of slavery, then what does?

The government need to tackle the whole issue of youth unemployment far more realistically, with initiatives to encourage jobless youths to access far more apprenticeships or training courses. Those wishing to remain in education should be encouraged to do so through the Educational Maintenance Allowance. Additionally, companies could be encouraged to take on younger recruits through payment of a dividend, in the same way long-term unemployed on New Deal programmes were attractive to employers through payments from Jobcentre Plus.

Whitewashing the statistics through miserable halfhearted gestures is not the answer.