The creeping marketisation of welfare and employment services


Michael McGann12/07/2021

The issue of unemployment, and the hundreds of thousands of people who are out of work, has rightly been a focus of much media and policy attention over recent months. This week, we heard the Irish Plant Contractors Association complain to Government of labour force shortages in the construction sector seemingly created by the Pandemic Unemployment Payment. Yet amidst all the focus on PUP claimants, the people who were already excluded from employment before the pandemic hit, such as lone parents, people with disability, and the very long-term unemployed are at risk of being left further behind. These are the people who need the most support to transition back into work facing, as they do, a range of personal, complex, and often structural barriers.

As I write this blog, the Department of Social Protection is evaluating bids submitted in response to its recent Request for Tender for four new proposed Regional Employment Services (RES). These are additional job search assistance services to supplement the existing network of public employment services (PES) in parts of the country (Donegal, Leitrim, Sligo, Offaly, Laois, Longford and Westmeath) currently under-served by community-based employment services. Successful bidders will be awarded four-year contracts, and they will be paid via a combination of client registration payments and performance payments for job outcomes. What the value of these fees and payments will be remains the subject of competition and negotiation. Organisations tendering for RES contracts have been asked to submit price-bids on the level of payments they will deliver RES for, and these cost considerations will inform 25% of how their overall bid is evaluated by the DSP.  

At a time of historically high unemployment, this additional investment in employment services is very much to be welcomed. However, the commissioning approach that the DSP has taken raises critical questions about the kind of public employment services (PES) system we will be left with at the end of the pandemic. Indeed, it has sent shockwaves through the community sector, with the local development companies and other grassroots community organisations that have been part of the fabric of PES since the 90s now fearing for their survival.

What future for community-based employment services?

Today, Ireland has a ‘mixed-economy’ of PES. Some services (Intreo) are delivered directly by the state. Others, including Jobs Club, Employability (for people with disability and health issues), and Local Employment Services (for long-term unemployed claimants), are delivered by community organisations on a costs-met basis, and others (JobPath) are operated by private agencies under Payment-by-Results contracts. The commissioning of JobPath was one of the first times that PES had been commissioned in Ireland through competitive tendering for Payment-by-Results contracts, and the DSP’s decision to procure RES in a similar fashion is indicative of what is to come later this year.

All existing PES contracts (JobPath, Jobs Club, LES, and Employability) will expire in December. Minister Humphries has made it openly known in Oireachtas committee hearings that a second wave of PES commissioning for the replacement services will soon follow the RES tender, which is being used almost as a pilot for a much wider process of marketisation. Some services (e.g. Jobs Club and LES) will likely be amalgamated and packaged into larger contract areas, following the blueprint of the RES tender (where each contract covers multiple counties as opposed to the existing Jobs Club and LES contracts which cover much smaller areas). What is almost certain is that any future procurement will be via competitive tendering and some degree of Payment-by-Results. Whether that will mean performance payments accounting for up to 90% of potential payments, as under JobPath, or 37% of total potential payments per, as proposed for the RES, is unclear. But there can be no doubt that the Government has been bitten by the payment-for-performance bug.

International experiences of marketisation

If the experience of other countries—and our own recent history of marketisation—is any guide, this intensification of marketisation is likely to have major implications for the types of organisations and people providing support services to jobseekers in Ireland.

Experience from other countries tells us that when PES are procured through performance-based contracting, community-sector organisations lose out to ‘large, cash-rich firms’. One reason why is that they don’t have the cash reserves or borrowing capacity needed to deliver Payment-by-Results contracts. These contracts call for organisations to invest in offices, staff, and other service delivery infrastructure upfront (before receiving payment from the government) in the hope of recovering their investment (and profiting) from future job placement and job sustainment payments. In short, simply managing a Payment-by-Results contract calls for organisations to have a ready (and voluminous) flow of cash and to assume much financial risk. Smaller not-for-profit organisations then become locked-out of the market because their boards aren’t prepared to incur those financial risks or they don’t have the level of cashflow needed to tender for contracts. So it was no surprise that when the British government intensified its use of Payment-by-Results to commission PES under its Work Programme, the overall share of contracted PES delivered by community organisations more than halved from 44% to just 19%. Australia saw a similar pattern when it used performance-based contracting to commission its Jobactive programme in 2015, with the share of PES delivered by community-organisations reducing from 70 to 55%.  

Indeed, the longer history of marketisation in Australia carries important lessons about the political effects of using market-based instruments to organize welfare and employment services. A University of Melbourne research team has been tracking the evolution of PES marketisation, and its effects on frontline service delivery, since the late 1990s. What they have consistently found is that marketisation tends to produce standardization rather than innovation. We see this in frontline work becoming more and more routinised over time through the increasing reliance of service delivery staff on computerised case management systems and other highly standardized tools. But we also see it in terms of the organisations that remain in the market looking more and more alike, and following more or less the same approaches. So, it’s not just that marketisation pressures community-sector providers to stop delivering PES. Those that manage to survive and remain in the market end up becoming much like the private agencies they are competing against. For instance, when we last surveyed Australia’s frontline employment services workforce in 2016, we found that there were no longer any discernable differences in people’s responses, regardless of whether they worked for a for-profit or not-for-profit organization, on over 90%  of the items we asked them about. My colleagues use the term ‘herding’ to describe how marketisation tends towards the erosion of diversity and ‘mission drift’ among the community sector as providers gravitate towards risk-averse and low-cost ‘work-first’ strategies.

Ireland’s experience of marketisation

‘Herding’ is not something we yet see here. My own research on frontline workers delivering JobPath and LES shows that very significant differences remain between the PES procured from private agencies via the market, and those delivered by community organisations. The most notable are the profile of the people who work in the two programmes. The JobPath workforce is entirely de-collectivised, only 38%  report having studied a university degree, and one in four come from low-paid sectors such as retail, hospitality and sales. Conversely, the LES workforce (which work with many of the same clients as JobPath staff) are predominantly unionised, two-thirds have completed university degrees, and they come from previous professional backgrounds in areas such as education, health, social work, or community development.

Why does this matter? Because these differences in workers’ backgrounds and professional experiences inform the stance they take towards jobseekers and the mentality they bring to their work. This is borne out in the differences we find between JobPath and LES’ staff perspectives on unemployment and the degree to which they focus on training and re-skilling. For instance, when asked whether there should be more government spending on benefits for the unemployed than now, over 60% of JobPath staff disagree. This is almost double the proportion of LES staff (32%) who disagree with raising spending on benefits for the unemployed. Likewise, JobPath staff are also more likely to attribute being on welfare to jobseekers’ own lack of effort, whereas LES staff are more likely to say that it has to do with circumstances beyond people’s control. In other words, they endorse the kinds of individualistic problem figurations of unemployment that underly the policy emphasis on motivating the unemployed to move from welfare-to-work through threats of sanctions and other behavioural policy tools.

Again, when asked which is the more important agency goal, to get jobs as quickly as possible or to raise clients’ skills-levels so that they can get they job they want in the future, 66% of LES staff say that the raising skills-levels is the more important goal of their agency. Among JobPath staff, this proportion is only 41% while JobPath staff are also more likely to respond that their decisions are determined by standard programme rules and standardised assessment questions.

All this suggests, as Evelyn Brodkin argues, that ‘the practical is political’. That is, seemingly technical and, on the face of it, pure administrative reforms such as the introduction of performance-based contracting, have lasting political effects in terms of changing the substance of what’s delivered to citizens on the ground. We have not yet reached the tipping point of provider ‘herding’ observed in Australia and elsewhere, but the move towards cost-bidding and widening use of performance-based contracting under the RES tender is very worrying. These are among the key dynamics that have propelled the de-collectivisation, de-skilling, and routinisation of frontline PES workforces in other countries. To win contracts, bidders reduce their costs. And when the guidance provided to jobseekers at the frontline is the key input, the easiest way to keep costs low is to reduce staff, lower wages, and standardise as much of the service experience as possible. Despite the repeated attempts of governments to financially incentivise organisations to tailor their services, performance-based contracting and personalised services seldom coincide

Posted in: Labour marketWelfare

Michael McGann

Dr Michael McGann

Michael McGann is a Marie Sklodowska-Curie fellow at Maynooth University Social Sciences Institute, where he researches and writes about the marketisation of public employment services. He is currently undertaking a study on 'Governing Activation in Ireland', funded by the EU’s Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie grant agreement no. 841477. He is also the co-author (with Siobhan O’Sullivan and Mark Considine) of a forthcoming book, Buying and selling the poor: inside Australia’s privatised welfare-to-work market (Sydney University Press). The views expressed are those of the author alone. Neither Maynooth University nor the European Commission are responsible for any use that may be made of the information in this article.



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