Implementation and Second-Year Impacts for New Deal 25 Plus Customers in the UK Employment Retention and Advancement (ERA) Demonstration
Published by the UK Department for Work and Pensions
This report presents new findings on how an innovative post-employment programme in Great Britain is affecting the employment, earnings and benefits receipt of long-term unemployed individuals. This initiative, called the Employment Retention and Advancement (ERA) demonstration programme, is being evaluated though a large-scale randomised control trial. While a companion report presents effects for lone parents, this report focuses on the experiences of the long-term unemployed group, most of whom are men.
The long-term unemployed group consists of recipients of Jobseeker’s Allowance (JSA) mandated to participate in the New Deal 25 Plus (ND25+) programme. An earlier report published in 2007 showed that, despite positive effects for lone parents, ERA’s effects for the ND25+ group were mixed and uncertain after one year of follow-up. The programme had shown no effects overall on employment or earnings but there were suggestions of positive effects in some districts. The new evidence presented here continues to show that the programme’s effects were limited. Although ERA increased employment rates and reduced benefits receipt in year 2, these effects were small. However, final assessment of ERA’s effectiveness for this group must await longer-term follow-up.
Advancement in work can take several years to unfold and this is likely to be particularly true for the ND25+ target group. More than half of this group did not work during the period observed and thus could not benefit from ERA’s post-employment services, and many of those who did work did not do so until the second year of follow-up. Furthermore, because ERA customers had yet not completed their 33-month term of enrolment, most of them had not had an opportunity to take full advantage of the programme’s offer of at least two years of in-work guidance and incentives, and many had not yet completed their training activities. Although the operational phase of the ERA programme has ended, the evaluation will continue to track the work and benefits outcomes of the study’s participants for several more years.
What Is the ERA Demonstration?
ERA built on Britain’s New Deal welfare-to-work programme, operated by Jobcentre Plus, the Government agency which offers job placement and other pre-employment assistance to out-of-work recipients of benefits. In addition to existing pre-employment New Deal services, ERA added a new set of financial incentives and job advisory services following customers’ entry into work designed to help them sustain employment and advance in the labour market. The demonstration was aimed at: (1) lone parents (mostly women) who receive Income Support and volunteer for the New Deal for Lone Parents (NDLP) programme; (2) longer-term unemployed people over the age of 25 (largely men) who receive JSA and are mandated to enter the ND25+ programme; and (3) lone parents who are already working part-time (between 16 and 29 hours a week) and are receiving Working Tax Credit (WTC).
For the two New Deal customer groups, ERA began with up to nine months of job placement and other pre-employment assistance, largely following the same procedures as the regular New Deal programme. ERA then continued into a unique post-employment phase, expected to last for at least two years. ERA’s job coaches, known as Advancement Support Advisers (ASAs), were expected to help customers avoid the pitfalls that can cause new jobs to be short-lived, and to help them advance to positions of greater job security and better pay and conditions, at their current employer or a new one. ERA also offered cash incentives and other resources to promote these goals, including: an employment retention bonus of £400 three times a year for two years for staying in full-time work (at least 30 hours per week for 13 out of every 17 weeks); training tuition assistance (up to £1,000) and a bonus (also up to £1,000) for completing training while employed; and access to emergency payments to overcome short-term barriers to staying in work.
ERA operated in six Jobcentre Plus districts in six regions of the UK: East Midlands, London, North East England, North West England, Scotland, and Wales. Within these districts, qualifying members of the three target groups were invited to volunteer for a limited number of ERA openings. After completing an informed consent process, half the volunteers were assigned randomly to the ERA programme group, and the remainder to a control group. The control group continued to receive the Jobcentre Plus services they were normally entitled to. ERA’s success is determined by comparing the programme group’s outcomes (e.g. future average earnings) with that of the control group. Any statistically significant difference in these outcomes can be attributed, with confidence, to ERA. Intake into the study took place from October 2003 to April 2005. Over 16,000 people were randomly assigned, making this study one of the largest randomised social policy trials ever undertaken in Britain.
- ERA’s implementation, which faced difficulties in the first year of operation, improved over time, as staff grew more skilled and confident in delivering a post-employment intervention.
The biggest challenge for ERA staff was learning how to help working customers meet employment and job retention goals after they took jobs, when all of their previous training and experience, as well as the organisational and programmatic focus of the Jobcentre Plus systems that housed the programme, was focused on helping customers find jobs. Indeed, job placement was the primary measure of staff and office performance. In the programme’s early days, staff were unfamiliar with the process of providing post-employment support. Over time, the programme grew stronger as technical assistance, staff training and DWP’s oversight and accountability mechanisms were improved. However, in the third year of operations, as the demonstration began to wind down, the continuity and intensity of in-work assistance suffered for some customers. Several indicators suggest that ERA reached its peak performance level in most districts in late 2005 and in the first half of 2006, near the end of the two-year follow-up period covered by the impact analysis presented in this report.
- Working ND25+ customers in ERA were much more likely than those in the control group to receive retention-related and advancement-related help or advice.
Customers in the ERA group who worked at some point during the two-year follow-up period received a substantial post-employment intervention that differed from what they would have experienced had ERA not existed. Among ND25+ customers in ERA who got jobs, 47 per cent reported that, while they were employed, they had received help or advice from Jobcentre Plus (meaning primarily through ERA) that was related to staying employed or advancing. The rate for the control group was only 12 per cent. The most common types of ERA support received were help finding an education or training course, developing long-term career goals and finding a better job. Many working customers had temporary work contracts and sought assistance finding new work as these contracts ended.
Although most working ERA customers had some contact with their ASAs, the nature of the support they received ranged from the simple processing of bonuses and perfunctory interactions to specialist advancement action planning. The advisers also differed in how proactive they were in reaching out to their customers, in keeping participants engaged in the programme, in their capacity to provide guidance on advancement issues and in marketing the financial incentives. Over time, though, advisers became more skilled in delivering in-work support and administering ERA’s incentives.
- There were particular challenges in serving ND25+ customers, relative to lone parents, owing to their lower employment rates and rates of re-engagement with the programme once they were in work.
Over the two-year period, less than half of ND25+ customers entered work. Therefore, the majority of this target group was never eligible for ERA’s post-employment supports, the part of the programme that distinguished it from the services typically available through Jobcentre Plus. In addition, relative to serving the two lone parent groups, staff reported that they had greater difficulty engaging ND25+ customers in services once they were in work. According to staff, some customers wished to be independent of Jobcentre Plus, which they associated with claiming benefits; others had a greater ethos of self-reliance, lower awareness of available in-work supports or less interest in advancement, as they viewed obtaining a steady job as accomplishment enough.
- Most ND25+ ERA customers were aware of ERA’s financial incentives, although many did not meet the conditions for receiving them.
When interviewed 24 months after entering the study, most ND25+ customers in ERA said that they knew about the programme’s employment retention bonus. Yet, only about one-third had received any bonuses, largely because they did not meet the conditions for the reward. However, among those who ever worked full-time during the follow-up period, about 70 per cent received at least one bonus payment and about 50 per cent received two or more payments. Although awareness of the bonus for completing an ERA-approved training course while employed was also fairly high among the ERA group as a whole, take-up rates were low. Sixty-two per cent of the ERA group knew of this bonus, while only four per cent received a payment. In addition, only six per cent received ERA payments to help with training fees or tuition during this period.
- Within their second year in ERA, ND25+ customers were somewhat more likely to work than they would have been without the programme. However, ERA had no effect on their earnings.
Overall, during the full two-year period, 44.2 per cent of ND25+ customers in ERA were employed, compared with 42.2 per cent of the control group. This effect over the full period is driven by effects that began to emerge in year 2. The effect in year 2 is quite small, however, and longer follow-up will be needed to assess whether it increases or fades over time. ERA had no effect on earnings over the 2005/06 tax year.
A district-level analysis was conducted to assess whether the general conclusions reached for the pooled sample hold across all districts. The results suggest some variation by district, due, in large part, to oddly negative effects in Wales that appear to stem, in part, from staff shortages in delivering ERA’s pre-employment services. As a result, the control group were more likely to receive more intensive pre-employment assistance and had higher rates of job entry. The results highlight the importance of not losing sight of pre-employment services, even within a programme that is largely directed towards post-employment services. This is particularly relevant for ND25+ customers, for whom retention and advancement depend on receiving adequate support to find employment in the first place.
- ERA increased employment in year 2 by encouraging job entry during that period, rather than by increasing employment retention.
Among ND25+ customers who entered work during the first year of follow-up, half worked for less than 12 consecutive months. ERA had no effect on this or on other measures of retention. Instead, ERA’s effect on employment rates was attained by increasing and speeding up entry into work and not by prolonging employment for people who obtained jobs earlier on. In other words, ERA encouraged more customers who would not have otherwise worked during the two-year period to enter work during the second year.
- ERA produced small savings in payments for JSA in year 2 and somewhat reduced the use of Incapacity Benefit (IB).
ERA produced some savings in benefits payments. At the end of year 2, 42.2 per cent of the programme group were receiving JSA, a statistically significant 2.6 percentage points lower than the control group’s rate. The average total amount of JSA payments in year 2 was five per cent lower for the ERA group. In addition, ERA produced statistically significant, albeit small, reductions in the proportion of ND25+ customers receiving IB over the two-year period.
Although ERA had no effect on earnings, it did lead to a small increase in employment rates in year 2. Still, the findings after two years for the ND25+ group are discouraging, especially when compared with those for lone parents. Less than half of the ND25+ customers in ERA worked at all during the two-year period. Thus, fewer of them were able to benefit from ERA’s in-work supports. This may help to explain the programme’s limited effects for this group. It also highlights the importance of pre-employment support. ERA was not designed to provide more pre-employment support than that typically offered, which may not be enough for many of these individuals. In addition, staff found it relatively difficult to engage working ND25+ customers in the programme. Longer-term follow-up is needed to understand how ERA influences customers’ advancement. Current plans call for the evaluation to continue tracking outcomes for the programme and control groups for five years from the time they entered the study. The next set of evaluation results is due to be published in early 2009.
 See Riccio, J.A., Bewley,H., Campbell-Barr, V., Dorsett, R., Hamilton, G., Hoggart, L., Marsh, A., Miller, C., Ray, K., and Vegeris, S. (2008) Implementation and second-year impacts for lone parents in the UK Employment Retention and Advancement (ERA) demonstration, DWP Research Report No 489, Leeds, Corporate Document Services.
 The Department for Work and Pensions managed the overall implementation of ERA and is overseeing the evaluation. The study is being conducted by a research consortium that includes the Policy Studies Institute, the Institute for Fiscal Studies, the Office for National Statistics and MDRC (a New York City-based research organisation experienced in conducting large-scale random assignment tests of new social policies).