Employment Program Redesign

August 22, 2005

Employment Program Redesign

The Ministry of Employment and Income Assistance is citing contractual obligations as the reason it will take until 2009 to phase out a program that gives the average client independence from welfare only two weeks sooner than those who do their own job search. High level design plans for the new employment scheme indicate that the Ministry fails to understand key findings in the research that revealed weaknesses in the current programs.

On August 3rd the Ministry posted the summary of Victoria Consulting Network Ltd's research report on job placement and job training programs to its website. On August 5th a "request for information" from the Ministry appeared on the BC Bid® website. An appendix to the request for information states:

"The Ministry is designing new employment programming to replace the current Job Placement, Training for Jobs and Community Assistance programs. The Ministry needs to determine the best way to meet its objectives for the new employment programming. Through this Request for Information (RFI) process, the Ministry's goal is to gather additional innovative ideas on how this might be accomplished."

Although research shows that the job placement and job training programs are inefficient, the RFI says that due to contractual obligations clients will continue to be referred to them through 2009 - four more years, the same term as the government's. Isn't it amusing that the government that thought nothing of breaking union contracts uses the sanctity of contract to justify keeping ineffective programs going? The researchers wrote:

"While the Ministry's focus on referral targets is understandable, it also leads to some undesirable consequences. For example, some clients are being referred to JP even when it is clear that they are not ready or suitable for the program. They are being referred just to make up the numbers. Also, referrals to some contractors may be interrupted so that the referral targets of other contractors can be met. As a result, contractors may not have sufficient clients available when employers contact them - a situation that can undermine their relationship with those employers."

According to the Ministry, existing agreements prevent it from referring the estimated monthly maximum of 2,700 clients to any new programs which suggests the clients are much like unwilling subjects in a social experiment. Taking until 2009 to phase out the current programs shows that the early rhetoric about results based payments was a political sham. The researchers wrote:

"Contractors are paid for results not for service. In principle, this is a good idea and an improvement over paying contractors simply for providing a service, whether or not that service makes a difference. However, the current design of the 'performance-based' contracts does not guarantee that the program will generate benefits for the clients or the Ministry."

"Since contractors can select which clients to accept and can decide how best to help those clients, they have every incentive to target their efforts to the most employable client group. As a result:

Contractors are not obliged to provide all the help needed to place everybody they accept.

Contractors are paid even where clients need little or no assistance in finding and keeping work.

The size of the performance payment is not linked to the difficulty of the task of placing a person and helping them stay employed.

Contractors would still be paid even if the program showed no incremental benefit, on average, for persons accepted into the program."

In consideration of that criticism you might expect the Ministry would want to increase its control over which clients receive which service; however, the appendix to the RFI sets out a "high level employment programming process model" which makes its contracted "service providers" responsible for client intake and appraisal in addition to providing the recommended service. The proposal for removing the apparent conflicts identified by the researchers is to insist that reimbursement to contractors for post-assessment services be based on actual cost with no profit. That's a strange concept coming from the Campbell government, and one that might be unworkable in the absence of full cost accounting of every aspect of each contractor's business.

The "straw model" sounds like a pipe dream, but the amount of tax money at stake is large. The Ministry traditionally budgets around $80 million or more per year for employment programs, but it looks like that could be cut in half. The RFI states that "the total budget allocation for programs within the scope of this Request for Information is $50 million, with the total reducing to approximately $40 million per year for each of the three subsequent fiscal years, as reflected in the service plan." The history of job finding or employment programs goes back well over 30 years in BC. Many will recall Bill Vander Zalm's promotion of his favorites when he was the minister responsible in 1976. It looks like the more things change, the more they remain the same. Government needs to recognize that most people get off welfare on their own, and for those who don't programs need to be client focused, in many cases dealing with social problems and mental illness. Caseload statistics from the Ministry give an overview of the clients. In March 2005, the most recent month available, there were 46,904 temporary assistance cases of which 21,592 were expected to work; over half, 25,312, were either expected to work with a medical condition (6,933), temporarily excused (7,457), or had persistent multiple barriers (10,922). It may be a little optimistic to think that provides a sufficient pool to generate 2,700 appropriate referrals a month to employment programs. The researchers found that almost half of the referrals to the current programs were repeats. Perhaps, before government commits $50 million to its new scheme, it should expand its research and look at putting more money into addiction treatment and mental health as well as into how realistic the term "expected to work" is for older clients.