Insights
Universal Credit (UC) – which hit the headlines again in recent months – means an increased focus from DWP to help individuals stay in employment and, where appropriate, support and encourage them to increase their earnings. A range of local initiatives also have similar objectives (and some new approaches are being tested as part of the ongoing employment support pilots).
Against a backdrop of in-work poverty and low productivity growth, the government’s single biggest policy reform has prompted greater interest in in-work progression. Yet relatively little is known about what works to improve it.
As local partners experiment with new initiatives to support in-work progression and think about how these types of policy might form part of local industrial strategies, we have produced two new toolkits that summarise the best available evaluation evidence in this space.The first of the two toolkits examines evaluations looking at in-work support. These types of intervention typically involve financial incentives (wage subsidies or subsidies for transport and childcare costs), careers advice and training.
All eight programmes included in the our toolkit generate some positive effects on employment and wages – but the strength of the effect varies by programme. For example, the effects on employment and progression are larger in programmes that have larger financial incentives or that encouraged job moves.
It appears to be difficult to sustain these effects over the longer term though. For most evaluations, there was no sustained effect once financial incentives ceased to be paid. Evidence from two programmes suggests that combining financial incentives with employment services produces larger gains than incentives alone and may help to sustain effects.
The second toolkit focuses on management practices that seek to increase employee involvement in management decision-making and equip them with the skills and autonomy to identify improvements in firm processes (collectively named High Involvement Management Practices or HIMPs). The rationale from the employer’s point of view is that this can increase employee job satisfaction, effort and commitment. This in turn may make employers more willing to invest in training and internal promotion – and increase progression.
The evidence suggests that these types of practices may have a positive impact on wages and other job-related outcomes, such as job satisfaction, security and productivity. There is also some evidence of effects varying across different types of practices – one study finding that training has the largest premium and autonomy the smallest, for example – and that the effects increase with the number of practices being implemented.
There’s still plenty to learn about what works to support in-work progression. While certain types of management practice can have a positive impact, we don’t know very much about whether and how policy can encourage firms to adopt them. There are plenty of options: from information sharing to public procurement to integration with other business support. But any taken forward should be piloted and tested to understand the impact on firm take-up and whether these practices have the same effect when they’re policy-induced. On in-work support, there still lots we don’t know about what types of in-work support are more effective and what more can be done to support low wage workers in general, as opposed to just the recently unemployed.
Creating more space for experimentation – and opening up access to data that can tell us how successful different approaches have been – would help policy-makers more effectively address what is becoming an increasingly important issue.
