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Policy experimentation in response to major job losses is difficult but worthwhile

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We’ve launched a new toolkit today looking at the support provided to workers affected by major job losses. Major job losses may occur when large firms close, downsize or restructure in a single town or city; or when structural change has a big impact on communities as a result of the geographical concentration of affected industries. The problems faced by the steel industry provide a recent example. And for all that Brexit may bring new opportunities, it has also rightly raised fears that some industries and areas will soon face similar challenges.

We looked at evidence on support provided to workers in the form of education and training; re-employment services; support for entrepreneurship; and counselling and psychological assistance. We also looked for evidence on responses to major job losses that take the form of policy to support particular industrial sectors or local areas.

As with all our toolkits, we focused on summarising the available ex-post (i.e. after introduction) evaluations of the effect of support for displaced workers. That is, on evaluations that identify effects which can be attributed, with some degree of certainty, to the support provided.

So what did we find? The first thing to note is that there aren’t a lot of studies out there that meet our pretty basic criteria (we found 11 studies). I’ll return to this below.

One of the big issues in this area is whether support should be provided pre- or post-redundancy. The studies we found raised some doubts about the effectiveness of outplacement services (i.e. support provided pre-redundancy). In contrast, results were generally more positive for retraining post-displacement.

Only one study looks at large, area-specific support schemes, finding positive employment and earnings effects that generally look larger than those for more traditional schemes. However, costs for these schemes are also considerably larger. As with many area-based interventions it would be nice to see much more ex-post evaluation that could help tell us whether these approaches are cost-effective.

Some of the studies also looked at differences by age and by gender. For the former in particular, there were some distinct differences with younger workers benefiting more than older workers. That’s perhaps not surprising – not least because younger workers will (hopefully) have longer working lives ahead of them. But it still raises the question what to do about older workers. Differences by gender were scheme specific – sometimes men did better, sometimes women. Again, this raises a question about whether the kind of support offered might need to vary.

Our toolkit discusses a few other aspects of programme design (e.g. whether vocational orientated courses do better than non-vocational; whether length of course matters) but it’s fair to say that there is not a huge body of evidence out there to help inform these kind of policy design decisions. In other areas – such as employment training and business advice we’ve tended to find more evidence.

This brings me to a final point. Given the importance of supporting workers and communities affected by major job losses there are a lot of questions that remain unanswered. In some instances, the evaluation evidence that we review seems to go against the case study evidence focusing, for example, on a small number of workers and their perceptions around the effectiveness of support.

We’d like to see more consideration given to how we might effectively experiment with different kinds of support. Given the nature of these economic shocks, there’s a degree of crisis management about policy interventions. And of course, some aspects of the response may well need to be context specific. But when we step back and take a look at the bigger picture, we tend to see the same kind of interventions rolled out again and again. While acknowledging the difficulties, we could begin to fix the gaps in our knowledge if work could be done to think about how we might test and evaluate different approaches in the way we respond to the next crisis. It’s arguably a bigger challenge here than in many of our other policy areas but it’s a challenge we should rise to if we want to better help those workers and communities struggling to adapt to big job losses as a result of economic shocks.