8 Employer Recruitment Incentives
8.1 This chapter examines the effectiveness of a wage incentive Employer Recruitment Incentive ( ERI) in helping young people into sustained employment. It draws on the findings gathered through the research with employers, Local Authorities and strategic stakeholders.
8.2 The YESF ERI paid half of the young person's pay for six months, based on the national minimum wage (the financial support to employers covers a minimum of half the salary costs based on NMW for a period of at least 26 weeks).
Effectiveness of ERIs
8.3 There was overwhelming support for Employer Recruitment Incentives as an effective mechanism for assisting young people to move in to a job and from there, sustained employment. As reported in Chapter 6, 96% of employers responding to the survey reported that ERIs are effective and this reflects the views of both the Local Authority consultees and the stakeholders.
8.4 There was a view amongst stakeholders and Local Authorities that ERIs are particularly effective during periods of recession and that they encourage and enable employers to take on someone when, without the ERI, they may not do so. Supporting this view, 31% of employers in the survey said that they definitely would not have provide the job without the ERI, which when scaled up (based on the data available) means that over 3,000 young people would not have secured a job through the YESF without the ERI. A further 38% of employers said they may not have provided a job and the remaining 31% said they would have provided the job, even without the ERI.
8.5 Three stakeholders commented that ERIs could be more effective in helping young people in to sustained employment if training provision was wrapped around it. This would mean that the young person was combining work experience with skills-based training and so further enhancing their employability. A number of Local Authorities reported that this wrap-around provision was already in place in their area. Having said that, 30% of the employers reported that the ERI meant that they could provide training, which is a positive outcome, and others provided training as part of their usual working practices.
8.6 The point was also made that to maximise their effectiveness, ERIs should be more than a simple wage subsidy and as well as training, should be provided alongside other support, particularly for young people who are further from the labour market and face particular barriers. This includes pre-employment training, in-work employability support, through-care and where relevant aftercare to help young people make successful transitions at key points e.g. from unemployment to work.
8.7 The stakeholders broadly agreed that ERIs are particularly useful in encouraging micro and small businesses to provide a job to a young person as it reduces the risk of recruiting someone and makes it more affordable in the first six months. That is not to say that these benefits are not felt by larger businesses, but it was felt that due to scale, ERIs are most successful in reducing barriers amongst these smaller employers.
8.8 A representative of the third sector noted that ERIs are very useful for third sector organisations, particularly when budgets are being squeezed as it increases their capacity but at a reduced cost to them. Whilst this is not the main aim of the YESF, it is a valuable outcome for voluntary organisations. However, two stakeholders raised the fact that the YESF ERIs were sometimes viewed as a benefit to employers (including third sector employers) as the funding is linked to the job rather the young person. They pointed out that ERIs should not be viewed as a business development tool, rather, they are a young peoples' support measure. They strongly believe that they must be focused on the needs and outcomes of young people rather than the needs and outcomes for employers.
Fit with other initiatives
8.9 Overall, there was agreement that ERIs fit well with other local and national initiatives. At local level, the ERIs provided through the YESF were used in conjunction with Employability Fund activities by helping to provide jobs and in-work employability support with the aim of leading to sustained employment. Some Local Authorities in the study reported that they provided ERIs following the YESF ERI to extend the job with the aim of giving the young person more work experience, more chance to develop skills and enhance the likelihood of sustained employment.
8.10 The effectiveness of the YESF ERIs meant that many young people were able to access Modern Apprenticeships and so gain a qualification but in the absence of the ERI, they would not have had this opportunity.
8.11 It also complemented Community Jobs Scotland as it allowed young people with a CJS placement to move in to a YESF job and so further enhance their employability. In total, 64 young people in Scotland moved from CJS to YESF whilst staying with the same third sector employer. It was reported during the study that of these 64, 51 are in sustained employment (80%) and out of this 51, 31 are in sustained employment with the employer who provided the YESF job. Anecdotally, it was reported that without the additional ERI provided through the YESF, a sizeable proportion of these young people would not have been in such a strong position to move in to sustained employment.
Email: Sharon Hamilton, Sharon.Hamilton@gov.scot