Youth Employment Scotland Fund (YESF): evaluation report

3 The Youth Employment Scotland Fund

Introduction

3.1 This chapter describes the policy context in which the YESF was developed, and gives an overview of the YESF including details of its purpose, target, evolution, funding and delivery.

Policy overview

3.2 The Scottish Government is committed to tackling youth unemployment as part of its wider commitment to increasing sustainable economic growth. Scotland's Economic Strategy ^{[ 3]} states:

"Scotland's economic prosperity depends upon the strengths and talents of our people".

3.3 Flowing from this, economic policies have been targeted to strengthen and develop the skills of Scottish people and the local economy. It specifically addresses the long term impacts which this can have on individuals and the economy. The Scottish Government, through its Youth Employment Strategy ^{[ 4]} set a target to reduce youth unemployment by 40% by 2021 and increase the number of employers to 35% who are recruiting young people directly from education by 2018.

3.4 These commitments were set following the recommendations produced by the Commission for Developing Scotland's Young Workforce (the Wood Commission). This was established in January 2013, during a time of high youth unemployment levels, to consider how to achieve better connectivity and co-operation between education and the world of work, alongside the development of the intermediate vocational education and training system. The aim was to ensure young people at all levels of education understand the expectations of employers, and that employers are properly engaged. The report, published in June 2014 over a year after the YESF programme had started, produced 39 recommendations, some of which are targeted to improve Scotland's young workforce such as better preparing school leavers for the world of work and encouraging more employers to engage with education and recruit more young people. It included a recommendation on re-examining financial recruitment incentives, and carefully targeting them to secure the most benefit in providing sustainable employment for young people.

The YESF

Overview

3.5 Launched in June 2013, the YESF provided a £25m package of support with the aim of supporting up to 10,000 young people (aged 16-29 years) into jobs across Scotland. It contributed to the wider policy objectives described above by preparing young people for employment. YESF was introduced at a time of high youth unemployment in Scotland (almost 19%) as a response to the fact that young people, including graduates were facing particular barriers to entering employment during the recession.

3.6 The fund provided a wage incentive Employer Recruitment Incentive ( ERI) to employers in the private sector and social enterprises to take on young people between the ages of 16 and 29 (initially 24). At the time, ERIs were being used in other parts of Europe to address unemployment. The YESF was later extended to also include Local Authorities providing jobs to vulnerable young people, Modern Apprentices and graduates as an interim measure, with the objective of moving them in to sustainable employment in the private sector. Our research indicated that 18 of the 32 Local Authorities provided Modern Apprenticeships, work experience or jobs to vulnerable young people through the YESF. A further two indicated that they did not provide such jobs, whilst 12 Local Authorities did not provide any information either way. Of the Local Authorities who said they provided MAs and graduate opportunities to young people through the YESF, at the time of the evaluation robust data on the numbers and proportions supported was not available.

3.7 The YESF was delivered by Local Authorities and provided ERIs to employers for a minimum of 26 weeks. It provided half of the salary costs of an employee at the National Minimum Wage (based on the relevant minimum wage for the young person employed on maximum 40 hours per week), which ensured that employers were also making an investment in the young person. Some Local Authorities also provided additional support or enhanced the offer.

3.8 The YESF was based on the premise that all jobs created by employers were to be additional and permanent. Any references in the report that suggest that either the young person or the employer did not see the period of the ERI as a permanent job may reflect some misperception and miscommunication between Local Authorities and beneficiaries.

Evolution of the Fund

3.9 The YESF funding was a co-investment between the Scottish Government and the European Social Fund. The value of the programme was enhanced by the involvement of the Local Authorities who provided front line delivery, administration and management.

Initial phase of YESF

3.10 The YESF used a co-funding model to support jobs. For Phase 1, which ran from 1 ^st April 2013 to 31 ^st March 2014 for job starts, 50% of each job was funded by the employer. Of the remaining half, the Scottish Government covered 60% of the cost, with the balance of 40% funded through ESF.

Subsequent phases and funding change

3.11 For Phase 2, the funding balance between Scottish Government and ESF changed to 55% and 45% respectively. This ran from 1 ^st April 2014 to 31 ^st December 2014 for job starts. The Local Authority paid work experience element in Phase 2 also changed, and was split 55% Scottish Government and 45% ESF.

3.12 For the Phase 2 extension (which covered job starts from 1 ^st January 2015 to 31 ^st March 2015) and Phase 3 (which covered job starts from 1 ^st April 2015 to 30 ^th June 2015), the funding arrangements changed, due to the end of the 2007-13 ESF Operational Programme. For these phases, a co-investment model between the Scottish Government (60%) and Local Authorities (40%) was adopted, and employers continued to fund 50% of each job. Here, the Local Authority paid work experience element was funded 80% by the Scottish Government, and 20% by Local Authorities.

Criteria changes

3.13 Six months from the inception of the YESF, an apparent slow uptake of jobs along with calls from stakeholders and the Wood Commission recommendations prompted a change in the eligibility criteria. This decision was taken through negotiation between the Scottish Government and SLAED. Key changes were:

• Expanding the age range from 16-24 to 16-29;
• Extending eligibility criteria to include larger employers, with an employee threshold of 400, plus further flexibility around this in rural areas;
• Introducing a flexible part-time option for vulnerable young people, plus a Paid Work Experience element at Local Authorities for vulnerable young people; and
• Giving Local Authorities the option to take on young people in graduate and Modern Apprenticeship as an interim measure, before private sector employment.

The Highlands and Islands

3.14 Because of differences in ESF arrangements in the Highlands and Islands - the Highlands and Islands have a different Operational Programme compared to the rest of Scotland (Lowlands and Uplands Operational Programme) - ESF funding was not available for YESF delivery in Highlands and Islands. Instead, the employer paid 50% of the eligible costs with Scottish Government funding the remaining 50%. As part of Moray is within the Highlands and Islands ESF Programme area, Moray delivered its YESF using separate models for each area.

Flexibility in local delivery

3.15 Local Authorities were given some flexibility in YESF delivery at a local level. Councils were able to brand the YESF in any way they saw fit, although it had to include Scottish Government and ESF logos. Local Authorities were able to decide whether to offer funding to young people from out with the area who were in jobs with employers in the area, and also for young people from the area in jobs with employers outside. They also had flexibility to use YESF alongside other schemes to offer additional support, for example local employability initiatives which employers in the study noted as being beneficial for example, help to find an appropriate young person to employ.