Guest post by Jonathan Arlow.
In 2013 the Department of Social Protection commissioned a report by Indecon International Economic Consultants to evaluate the effectiveness of the JobBridge internship programme. Given that the minister for Social Protection, Leo Varadkar, has publicly criticised JobBridge and announced that he is expecting a second review by Indecon into the scheme; it may be useful to ask how effective the original Indecon report was at assessing JobBridge as a labour activation measure?
Indecon and the 61% JobBridge success rate
When evaluating labour activation measures, such as JobBridge, the three main issues of concern according to the International Labour Organisation (ILO) should be the following:
Deadweight Loss- this is the participation of young people in the scheme who would have found paid employment without it
Substitution- this is companies replacing paid staff with the unpaid interns
Displacement- this is the loss of jobs in other enterprises due to the competitive advantage given to organisations using the internship programme[i]
The Indecon report did not deal with the issue of displacement at all, not even briefly mentioning it. The potential problem of substitution was dealt with, but Indecon largely relied on employers’ self-reporting of these abuses, with their data showing that it was admitted by only 3 per cent of employer respondents. This means that in effect, nobody actually knows the real number of jobs that have been replaced with internships or has any empirical data on the competitive advantage that companies gain by embracing this free labour scheme over companies that choose not to use it. This ad hoc approach to both policy design and evaluation is shocking when you consider that at its height in 2014 JobBridge internships employed over 8,000 young workers in our economy.
The most publicised finding of the report was the claim that 61.4% of participants found employment within five months of leaving the internship. This seems impressive, but a more detailed examination shows some significant problems with this headline figure. For instance, it seems obvious that people using JobBridge would have a higher employment rate than the live register average due to their age, education and obvious motivation to seek work. Also the figure includes all those who left the programme, even those who finished early citing dissatisfaction with the placement. But most importantly the much vaunted figure of 61.4% of interns who secured work has to be tempered by the deadweight loss figures that were detailed (or buried) at the back of the report. These showed that anywhere from 59.1% to 64.8% of those who secured work through the scheme would have gained employment without it. Therefore the net benefit to unemployed youth partaking in the scheme as opposed to staying on the live register is much smaller than advertised (possibly nil), and is potentially outweighed by the negative aspects; such as loss of revenue to the state (from foregone tax and PRSI) and distortions to the entry level labour market.
JobBridge: Who benefits? JobBridge was advertised as a chance for young people to gain career experience in quality work placements, thus easing the transition from education to work. Internships have become a normal rite of passage in many middle class professions; such as the media, law, publishing, advertising and almost all of the “creative” industries. So a state funded internship scheme has actually been of serious benefit to the middle class families of young adults who wish to pursue careers in these areas. The costs of supporting them while doing their unpaid internship has passed from the family to the state, the industries themselves still do not pick up the tab. However, in practice for every ‘professional’ internship, there are multiple low skilled jobs offered in retail and other service industries, that even to a cursory inspection cannot be justified through internship work placements or training. These kinds of jobs were once entry level positions, and open to workers with little skills or no experience but are now somehow deserving of state funded placements. It is when the scheme starts to impact on these low skill positions that it most resembles a welfare-to-work programme.
It is possible to read JobBridge as a gift to employers, who at best could be said to be provided with a 6 to 9 month state-funded interview process or at worst a direct state subsidy to their labour costs. In reality it was probably just a panicked response to the youth unemployment crisis. The government had no money in 2011 but knew they had to be seen to be doing something about the problem and they gave little thought to the effect their ill-thought-out policies would have on unemployed youth or the wider labour market.
What comes next? Leo Varadkar has spoken about the need for a more “targeted” scheme and this coincides with the recommendations from Impact’s report into JobBridge. While this stance is supported by the literature on labour activation, in the Irish context these “targeted” recommendations may just lead to the continuation of the worst aspects of the programme. Effectively JobBridge is likely to be divided and repackaged into one scheme for early school leavers and another scheme for graduates. Leading to an outcome where the state is subsidising the period of free work now obligated by many middle class professions, while at the same time coercing working class youth into low skilled jobs in their local Spar, all for fifty euro more than their welfare entitlements.
Jonathan Arlow is a PhD student at the School of Law and Government, Dublin City University.
[i] The Indecon report uses the term “Displacement” when referring to the process of substitution, but this work uses the common ILO definitions as detailed above in reference to these concepts.