The severity of the economic crisis, coupled with rising unemployment figures, has exerted considerable pressure on stretched social welfare provisions, raising questions on the efficacies of the welfare systems of the state. In particular, it has been queried whether a more proactive approach in returning unemployed jobseekers to the active labour market ought be taken in light of the high proportion of long-term unemployed on the live register, accounting for 40.9 per cent of the entire unemployment rate in 2010 (CSO 2010; Dukelow, 2011, p. 421).
In this context, the pursuit of Active Labour Market Policies (ALMPs) has become relevant to the wider economic discussion in Ireland. This article discusses the activation policy approaches adopted in post Celtic Tiger Ireland in relation to the adoption of retrenchment and upskilling measures. While also focusing on the previous development of activation policies in Ireland, this article will also conclude with an evaluation of ALMPs at the present time, and consider the possible future developments in activation measures in a post-recession Ireland.
Activation in the Irish Context
Activation can best be defined in relation to methods of public expenditure employed in the provision of supports and services for the unemployed, with such expenditure taking on either ‘active’ or ‘passive’ approaches. Active approaches focus spending on measures intended at directly supporting the finding, preparation for or retaining of employment through the provision of public training, incentives and direct employment services (NESC, 2011, p. 36). In contrast, passive measures provide income transfers with the purpose of maintaining a guaranteed standard of living among the unemployed (Ibid., p. 36).
While Ireland’s spending on active labour market measures in the years immediately prior to the 2007 economic downturn may have been proportionately higher than in other English-speaking countries, Ireland remained a relatively low spender by Nordic and Continental European norms (NESC, 2011, p. 36). In many regards, the Irish welfare state shares many traditional institutional traits with its British counterpart, most notably in the inherent belief of welfare maximizing potential of freely operating markets, with welfare state priorities based primarily on the provision of supports for those in ‘dire need’ (Hemerijck, 2012, p. 157). Indeed, the traditional Irish approach to social protection has been targeted more towards the alleviation of poverty as opposed to income replacement, with passive and means-tested assistance the preferred methods to the extent that Ireland, as of 2013, had the the highest proportion means-tested social protection payments in the EU15 (Dukelow and Considine, 2014, p. 62; Hardiman and Regan, 2013, p. 12).
A noticeably increased emphasis on Active Labour Market Policies (ALMPs) has entered Irish policy discourse in recent times however, with the necessity of a shift towards activation in the light of increasing Live Register figures further instigated by the structural reform agenda of the EU/IMF Programme of Financial Support for Ireland (NESC. 2011, p. 55). Prior to the economic downturn, the implementation of ALMPs did not form a major part of the official discourse on social welfare provisions, with a passive approach appearing to be the preferred method of assistance. Some programme developments, such as the introduction of the National Employment Action Plan (NEAP) in 2004 and the launch of the ‘Towards 2016’ programme in 2006, can be regarded as an initial step away from this traditionally passive approach in favour of an activation centred one, with the programmes initiated in an attempt to activate members of society, such as lone parents and recipients of disability payments, who traditionally would be less active in the labour market (Ibid., p. 55).
Fitzgerald (2012, p. 1372, quoted in Dukelow and Considine, 2014, p. 60) wrote that “when money was abundant, such structural change in programmes was generally off the agenda”, and the post 2007 economic contraction can be regarded as the main initiator of active labour market policies in Ireland. Despite wide scale retrenchment of social welfare expenditure, the increase of unemployment levels from under 4.5 per cent in 2007 to 14.8 per cent by 2012 stretched the social welfare resources at a point in time when resources were at their most limited. While immigration has provided a safety valve on unemployment figures in Ireland, and the state has not experienced the unemployment levels evident in Spain and Greece, unemployment particularly among young adults and the low skilled have rocketed, with a worryingly large proportion of live register figures being made up of the long term unemployed (Dukelow, 2011, p. 421).
‘Making Work Pay’: Disincentive approach and supply-side reform
While the shrinking of the economy led to a wide scale decline in employment opportunities for jobseekers, the policy approach initiated by Irish political discourse heavily favours supply-side reforms intended at increasing workplace activation despite the high levels of unemployment largely being the result of a collapse in domestic workforce demand (Hardiman and Regan, 2013, p. 12). Initial attempts at stimulating employment focused on removing barriers to employment, which included reducing the costs associated with labour, as well as eliminating any disincentive effects tied with Jobseekers Benefit and Jobseekers Allowance. Reducing labour costs through the dropping of the minimum wage by 15 per cent in 2009 (restored to €8.65 in 2011) was one attempt of encouraging the creation of employment, particularly in the low skill sector which experienced disproportionate job-losses (Hardiman and Regan, 2013, p. 11; NESC, 2011, p. 12). This was justified not only in terms of making it more affordable to maintain employees during the economic downturn, but as also lowering an artificial barrier which could potentially lock unemployed jobseekers out of the labour market (NESC, 2011, p. 63).
While decreasing the minimum wage was argued to be reducing barriers to job creation, the high minimum wage also played a major role as an incentive for employment (NESC, 2011, p. 64). Maintaining the desirability of employment in lieu of declining minimum wage levels required the implementation of significant cutbacks to social welfare provisions, with then Taoiseach Brian Cowen stressing the need to keep the unemployed “as close to the labor market as possible” (Cowen, 2010, quoted in Dukelow and Considine, 2014, p. 61). While retrenchment measures, influenced by the Report of the Special Group on Public Service Number and Expenditure Programmes (McCarthy, 2009) affected all aspects of government expenditure, the retrenchment approach can clearly be seen in the provision of social welfare. What can best be described as a ‘carrot’ and ‘stick’ approach to work activation was adopted in order to ‘make work pay’, with an attempted pairing back of the disincentive effect of social welfare enacted through a 51 per cent reduction of Jobseekers Allowance for 18 to 21 year olds, a 30 per cent cut for under 24 year olds, and a further 30 per cent reduction of benefits if claimants refused to partake in activation measures (Dukelow and Considine, 2014, p. 63; Kuhner, 2012).
As of 2007, payment rates of long-term social welfare in Ireland compared well to OECD averages, but underwent wide scale cuts over the ensuing years (NESC, 2011, p. xix). The large scale cuts, outlined above, were justified by ministers in the extent that they were part of an highly ‘generous system’ which compared ‘very well internationally, particularly with payment in Britain and Northern Ireland’ (Lenihan, 2009, quoted in Dukelow, 2011, p. 423), as well as the fact that by upholding high benefit levels, while intended at maintaining living standards, could also pose the risk of becoming a disincentive to work despite the lack of employment available (Dukelow, 2011, p. 423; NESC, 2011, p. xx). While the perceived generosity of social welfare provisions has not gone uncontested, this has not stopped a policy of retrenchment being continued by the current administration, largely influenced by the supply-side leanings of the EU/IMF Programme of Financial Support for Ireland (Dukelow, 2011, p. 423). Indeed, while the results of such supply-side activation measures may arguably have decreased the burden on the Irish social welfare system, the developments have also led to some of the steepest declines in living standards across the EU for those who became unemployed in the current recession (NESC, 2011, p. xxi). One of the targets of traditional ALMPs, lone-parents, have faced significant welfare changes, with eligibility of One Parent Family Payments being reduced on a phased basis from 18 years old as of 2011 to 7 years in 2015 (Dukelow and Considine, 2014, p. 64). While the current government have maintained that headline social welfare rates will not be cut further, significant cuts have been made in the payment of ‘child benefits, carers’ allowances, single parent supplements, and other transfers and services targeted at vulnerable groups’ (Hardiman and Regan, 2013, p. 12; NESC, 2011, p. xii).
Prior to the economic crisis, it was evident that an appreciation for activation policies to reduce welfare dependency, a policy being actively pursued in other northern European countries, was not shared in the Irish context (NESC, 2011, p. 54). While programmes such as the National Employment Action Plan (NEAP) of 2004 outlined an approach to increasing ALMPs, a largely passive approach comparable in manner to the ‘inactivity trap’ evident in some continental European states (Hemerijk, 2012, p. 180) continued in Ireland in the lead up to the crisis, with the provision of benefits and of employment services largely being delivered through parallel systems (NESC, 2011, p. xvii). Indeed, it was not until 2010 that the Public Employment Services and benefit functions were streamlined together after a series of reforms, enabling activation services to be relevantly tied to the benefits being received by the individual (Grubb et al., 2009; McGuinness et al., 2014, p. 427). The National Employment and Entitlements Service (NEES), founded in 2011 under the aegis of the Department of Social Protection, now equips the department with the ability to better integrate benefit provision with direct employment programmes, while the creation of SOLAS under the remit of the Department of Education and Skills compliments the NEES in workforce training (NESC, 2011, pp. xi, xii, 52).
Despite the initial parallel approach that was adopted in the provision of benefits and the upskilling of individuals, significant efforts have been made to increase the number of unemployed people in courses and third level education, with innovative strategies such as more part-time, flexible or internet based courses intended to increase the opportunities for jobseekers to upgrade their skills (NESC, 2011, pp. xxi, 53). Further barriers to upskilling have also been removed, with the amount of time required for people to be on the Live Register prior to being entitled to return to education and still retain their social welfare payments having been reduced (Ibid., p. xii). The task of upskilling jobseekers was largely placed under the remit of what was previously known as the FÁS Employment Services, which provided training and employment programmes, as well as being a referral point to guidance, placement, employment, education and training services provided by other entities (Ibid., p. 67). While FÁS no longer exists as an entity, the establishment of SOLAS is intended to further improve the training of and further education opportunities afforded to jobseekers, assisting the work of the NEES in institutionalising a more integrated approach to activation (Ibid., p. 55). Concerted efforts have also been taken in an attempt to increase the role of ‘market-led’ activation measures (PA, 2011, p. ii), most evident in the formation of the Labour Market Activation Fund (LMAF), intended at encouraging providers to innovate in course content and provision in an attempt to entice and retain more participants, specifically unemployed and those with fewer skills to start with (NESC, 2011, p. 53). Apart from market-led activation measures, ‘employment first’ approaches that incorporate ‘on-the-job’ training are being encouraged, the most publicly evident aspect of which being the JobBridge internship programme (Ibid., p. xviii). In light of the ban on recruitment within the public service, such ‘market-led’ and ‘on-the-job’ training strategies play a significant part in the wider activation programmes being pursued, accelerating the decline of low-skill sectors of the economy, while also making ‘a large number of formerly employed low-skilled workers available for education and training (in a perverse way)’ (Ibid., p. xvii).
Effectiveness of ALMPs in Ireland
In light of the significant economic challenges facing the country in the recent past, it is hard to comprehensively evaluate the success of ALMPs in returning jobseekers to employment. The policy paper written by McGuinness et al. on the impact training programmes have on unemployment in Ireland holds some mixed findings, with the success of such programmes correlated to aspects such as the third-level qualifications of the participants, the presence of dependent children, a history of unemployment, access to their own transport and the earnings of their spouse (McGuinness et al., 2014, p. 436).
The analysis of McGuinness et al. would suggest that ALMPs in Ireland do play a part in helping individuals out of unemployment, with job search training and high-level market specific skills training being the most beneficial, while the move towards short duration programmes also appears to be more effective in improving the employability of jobseekers (Ibid., pp. 443, 447). Yet while the overall evaluation is positive, other aspects of training, in particular low-level skills training, appeared to have little to no positive impact in improving the short-term employment prospects of trainees, with some aspects of the NEAP, such as its job search assistance process, not only completely ineffective in improving employment opportunities, but actually serving to negatively interfere with participants return to employment (Ibid., p. 425).
Future Policy Directions
It is clear that the significant pursuit of ALMPs has been adopted largely in light of the substantial financial problems facing the state, induced perhaps more in realisation of the need to lower live register figures than necessarily as an attempt to improve jobseekers economic self-realisation. With the economy seemingly on a path to recovery and live register figures falling, it will be of interest to see whether approaches to active labour market policies change in recognition of the improving economic climate.
While the Public Employment Service assists jobseekers with employment guidance and career trajectories, the activation approach seen so far in Ireland appears to be less targeted in nature than in other Northern European states (NESC, 2011, p. xiv). The initiation of the social protection and activation service Intreo gives an insight into a possibly more targeted approach being developed with regards ALMPs. Modelled on the UK system, Intreo is an attempt to adopt a more individualised case management approach, creating a new single point of contact for employment and income supports, with intervention measures being tailored on the participants’ employability and risk of long-term unemployment (Dukelow and Considine, 2014, p. 64; Intreo).
Intreo appears to form a part of a concerted effort to directly link benefit provision with employment programmes. This could perhaps be further streamlined by providing access to Jobseekers Benefit and Jobseekers Allowance only through the NEES, as argued in the NESC report, thereby providing greater awareness to those on the Live Register of ‘the range of supports available to them, the conditionality of their welfare benefits and the inevitability of intensifying engagement with employment services the longer their unemployment lasted’, while also encouraging employers to recruit potential employees directly through the NEES (NESC, 2011, p. 79).
‘Contracting out’ of activation services are increasingly emerging in a number of states as a desired method of reducing the state’s role in ALMPs, with Australia and the Netherlands in particular pioneering the use of quasi-market solutions for the provision of activation services (NESC, 2011, p. 75). In Ireland, the initiation of quasi-market approaches to activation can be identified in the LMAF which was intended to stimulate the provision of market based activation services (Ibid., p. 53). While such measures may have proved to be significantly useful in the pursuit of ALMPs at a time of a ban on recruitment within the public service, the advocating of the further adoption of quasi-market activation measures should only be done with caution. The creation and outsourcing of ALMPs to private parties can generate perverse incentives such as ‘parking’, where more difficult to help clients receive more limited services than cherry-picked or ‘creamed’ clients who are easier to place in opportunities of employment. Likewise, an overt focus on short-term placement rates can be done at the expense of long term sustainability and suitability of employment for the client (Kvist et al., 2008; NESC, 2011, p. 76). Indeed, should quasi-market provision of ALMPs be continued, it should only be done in realisation of what could be termed as the potential ‘knavish’ motivations of such service providers (Le Grand, 2003).
Active Labour Market Policies remain a relatively new phenomenon in the Irish welfare state, and their arrival in Irish policy discourse has more to do with the economic downturn than a concerted effort to overhaul the traditional passive approach to welfare. With the ALMPs initiated during the economic crisis reaching their full functionality in present times, it remains important to fully evaluate the effectiveness of such programmes in the Irish context.
Central Statistics Office (CSO) (2010) Quarterly National Household Survey, Quarter 1, 2010. Dublin: Stationery Office.
Dukelow, F. (2011) ‘Economic Crisis and Welfare Retrenchment: Comparing Irish Policy Responses in the 1970s and 1980s with the Present’. Social Policy & Administration, 45(4), pp. 408-429.
Dukelow, F. and M. Considine (2014) ‘Between Retrenchment and Recalibration: The Impact of Austerity on the Irish Social Protection System’. Journal of Sociology and Social Welfare, XLI(2), pp. 55-72.
Grubb, D., S. Singh and P. Tergeist (2009) ‘Activation Policies in Ireland’. OECD Social, Employment and Migration Working Papers, No. 75, OECD Publishing. Available at: http://dx.doi.org/10.1787/227626803333 (Accessed: 7 April 2015).
Hardiman, N. and A. Regan (2013) ‘The Politics of Austerity in Ireland’. Intereconomics, 48(1), pp. 9-14.
Hemerijk, A. (2012) Changing Welfare States. Oxford: Oxford University Press.
Intreo (no date) Intreo – A new name and a better service. Available at: http://www.welfare.ie/en/Pages/Intreo_home.aspx (Accessed: 7 April 2015).
Kuhner, S. (2012) ‘Welfare retrenchment under left and right government leadership: Towards a consolidated framework of analysis?’ In M. Kilkey, G. Ramia, and K. Farnsworth (Eds.), Social Policy Review 24 (pp. 137-163). Bristol: The Policy Press.
Kvist, J., L. Pederson and P. A. Kohler (2008) ‘Making all Persons Work: Modern Danish Labour Market Policies’ In Eichhorst, W., O. Kaufmann and R. Konle-Seidl (Eds.), Bringing the Jobless into Work? Experiences with Activation in Europe and the US (pp. 221-255). Berlin: Springer.
Le Grand, J. (2003) Motivation, Agency, and Public Policy. Oxford: Oxford University Press.
McCarthy, C. (2009) Report of the Special Group on Public Service Number and Expenditure Programmes. Dublin: Government Publications Sales Office.
McGuinness, S., P. J. O’Connell, and E. Kelly (2014) ‘The Impact of Training Programme Type and Duration on the Employment Chances of the Unemployed in Ireland’. The Economic and Social Review, 45(3), pp. 425-450.
National Economic & Social Council (NESC) (2011) Supports and Services for Unemployed Jobseekers: Challenges and Opportunities in a Time of Recession. Dublin: National Economic & Social Development Office, NESDO.
PA Consulting Group (PA) (2011) ‘Evaluation of the Labour Market Activation Fund (LMAF) 2010’. Available at: https://www.education.ie/en/Publications/Corporate-Reports/Financial-Reports-List/lmaf_report.pdf (Accessed: 7 April 2015).
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