Flexibility and dynamism are central to how the UK labour market works: relatively low levels of labour market regulation and taxation mean that firms have incentives to create new jobs alongside new business opportunities, and can offer flexible working arrangements. Above average employment rates, in OECD and EU terms, are coupled with lower than average unemployment.

Youth unemployment isa particular concern, the proportion of individuals living in workless households was one of the highest in the EU when the Work Programme was introduced.

• Employment was 31.1 million in 2015, up 424,000 compared to the previous year, up 2 million since 2010.
• The unemployment rate presented by the ILO was 1.81 million in 2015, down 349,000 compared to the previous year. This figure is down 696,000 since 2010.
• In 2015 165,000 persons aged 16-24 years old were unemployed for over a year, down 77,000 compared to the previous year. This figure is down from 51,000 since 2010.
• Claimant count (including Universal Credit UC) was 791,800 in 2015, down 6,500 compared to the previous month, 290,900 compared to the previous year and 703,000 since 2010.
• Claimant count rate (including UC) was 2.3% in 2015 – the lowest since 1975.
• Claimant count in the main inactive benefits– Employment Support Allowance/Incapacity Benefit or Income Support Lone Parent – is 2.97 million, down by over 300,000 since 2010.

Labour Force Survey (Feb-Apr 2015)

The overall aim of the current programme is to move participants into sustained employment which is defined as 6 months for most claimants or 3 months for the hardest to help. In the framework of the programme, 6 months represents the point at which a participant becomes more likely to retain employment. A 3 month time period provides a more achievable outcome for those harder to help. Providers are also paid additional sustainment payments for each 4 week period that the participant stays in work. A maximum number of sustainment payments are made dependent on the payment group, with more payments being available for those considered harder to help. Providers are expected to achieve a sustained job outcome rate which is calculated using the estimated non-intervention rate plus a stretch target.

The programme was designed to tackle high unemployment following the 2008 recession focussing on the long term unemployed in order to combat entrenched worklessness.

The Work Programme uses a prime-provider approach; where a single provider, the ‘prime’, in turn commissions and manages a supply chain of sub-contracted providers to deliver the contract. The prime can also deliver support itself.

Providers are expected to deliver an individually-tailored service for each participant, regardless of their benefit category. The nature of that service and how it varies between participants and between participant groups is not specified by the DWP. This is known as a ‘black box’ approach. Payment-by-results is an outcome-based approach with an emphasis on sustained outcomes.

Providers are paid different rates for outcomes achieved by different target groups (outcomes for harder-to-help groups are paid at higher rates than those for groups closer to the labour market).

When tendering for the Work Programme, prime providers indicated the level and nature of the support that they would offer each participant group. These minimum service standards were specified in their contracts and their delivery is monitored by the DWP. Any revisions to the standards are made publicly available through the DWP website. Jobcentre Plus work coaches also explain the minimum service standards to participants upon referral to the programme. The rationale is that both the DWP and participants will be able to hold the providers to these standards.

The Work Programme combines the ‘black box’ approach with payment-by-results. Contracted providers are paid for getting people into work and are free to design their own support provision, with minimal intervention from the Department.

There is on-going performance competition. This means that better performing providers are rewarded with an increased volume of future referrals, where there is a clear differential in performance.

The contracts are larger and longer than under previous programmes. Work Programme contracts include nearly 6 years of referrals. The greater market stability this offers aims to facilitate the development of provider capacity and expertise, as well as encourage investment to support service delivery innovation.

Participation is mandatory or voluntary depending on the benefit received. Failure to participate without good cause can result in a benefit sanction. Claimants on Jobseekers Allowance (who must be available for and actively seeking work) and Employment and Support Allowance (who have a health condition or disability, and who are currently subject to lower conditionality) are referred onto the programme.

Outputs: From June 2011 to the end of June 2015 the total number of referrals and attachments to the Work Programme are 1.76 million and 1.72 million respectively.

Of these, 1.7 million have been on the Work Programme long enough to achieve a job outcome (usually 6 months or three months for the hardest to help). 26.9% of these have achieved a job outcome. Furthermore, according to industry figures for the same period, around 731,000 people have started a job but have not been in work long enough to be captured by the statistics. In total, 459,370 people have been in work long enough to generate a job outcome payment.

Of the most recent participants to spend 12 months on the programme:

• 1 in 6 found lasting work – above the expected level of over 1 in 9.
• 1 in 4 of those JSA claimants aged 18-24 years old found lasting work – above the expected level of over 1 in 7.
• 1 in 5 JSA claimants aged 25 and over found lasting work above the expected level of over 1 in 9.
• Nearly 1 in 13 ESA new claimants found lasting work – well above the expected level of around 1 in 14.

Statistics are published quarterly (see appropriate box for links)