Half a billion a year spent on job creation schemes with ‘limited evidence’ for effectiveness

The State is spending half a billion a year on job creation schemes where there is “limited evidence” they are effective at promoting progression to employment, Government papers show.

A paper by the Department of Public Expenditure and Reform (DPER) also finds that active labour market programmes can become “institutionalised to the extent where reform is difficult” as “interest groups form around certain schemes”.

Direct job creation schemes like Community Employment or the Tús scheme account for €532 million in spending by the Department of Social Protection.

The finding is contained in the latest tranche of spending review papers by DPER, which analyse the performance of different aspects of publicly funded schemes and services.

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Some 42 per cent of almost 100,000 current jobseekers are on active labour market programmes classified as direct job creation schemes.

Schemes such as Community Employment offer work to long-term unemployed or otherwise disadvantaged people, where a sponsoring organisation is paid a wages grant by the State, with similar schemes like Tús and the Rural Social Scheme targeted at the community sector and or low-income agricultural workers.

All told, they account for 68 per cent of spending on active labour market supports, but the paper finds that there is “currently limited evidence that they are effective interventions to promote progression to employment”, with short-term training in specific sought-after skills and job search assistance associated with the best rates of progression to full employment.

The review suggests that referrals to the direct job creation schemes should be tightly targeted at clients “who are most distant from the labour market” where they will represent more progression for jobseekers.

[ Job growth in Dublin falls behind rest of State for first time in two years ]

The paper also contains a warning about the difficulty of reforming active labour market programmes, which include the job creation programmes but also extend to traditional Intreo office programmes, some training and education schemes, and job search programmes like JobPath.

It outlines how, once established, these programmes “can become institutions themselves” and that while policymakers can in principle end them, the international evidence suggests a “path dependence emerges” where programmes remain open even where there is evidence of poor outcomes in terms of progression in employment “as interest groups form around each programme who seek to obstruct reform”.

It warns of the need for caution when setting up new schemes so that the “portfolio of programmes does not mushroom”.

A separate paper analysing trends in the disability allowance finds that about half the growth in recipients of the payment in the last decade is due to “unquantifiable” drivers. The number of recipients of the allowance has grown from 101,784 in 2012 to 157,807 last year, outstripping predictions of what would be driven by demographics and the prevalence of disability, which predicted the number of recipients would grow to a little more than 130,500.

“Other factors such as increased awareness in the population, clinician behaviour and individual behaviour may be at play,” the authors suggest. It also finds that there was a shift in the distribution of recipients towards the under-20s, which grew by three percentage points between 2016 and 2022.

Expenditure on the disability allowance has increased from €158 million in 1996 to €2 billion in 2022. This is driven by increases in recipient numbers, as well as changes to the weekly payment rate and qualified dependent payments. Last year, the analysis shows that 37 per cent of recipients had been on the scheme for 10 years or more.