Mr. John McKeon:

The State provides services to unemployed jobseekers using a mix of direct provision by staff employed in its own Departments and agencies and via contracted provision under commercial contracts with local development companies, LDCs, and other providers, including, for example, providers of Momentum services. In general, and with specific reference to services provided by the Department of Social Protection, staff directly employed by the Department provide services to short-term unemployed and "job ready" jobseekers, whereas services to support long-term unemployed jobseekers and jobseekers with significant barriers to employment are provided by third parties under contract.

It has been clear for some time that the combination of the Department’s direct and contracted resource capacity is insufficient to provide a high level of service to all of the people currently on the live register. In this regard, it is estimated that a total resource capacity of approximately 1,800 case workers is required to provide a systematic case management service to all of the jobseekers on the live register. This compares with the combined capacity of our contracted and our directly provided service in 2012 which consisted of approximately 450 case workers. As part of the process of rolling out Pathways reforms, the Department realised efficiency gains that enabled it to increase capacity by deploying a further 300 staff on employment service activities and to maximise client referrals under the existing contract arrangements with other providers. The purpose of JobPath is to further augment our capacity in a cost-effective manner to cope with a cyclical but diminishing peak in caseload. Towards this end, JobPath is a time limited payment by results contract model under which the cost to the Exchequer is directly linked to employment outcomes and welfare savings.

It will operate alongside and complement our existing in-house and contracted resources; it will not substitute for, or displace, any existing capacity.

Internationally, contracted models similar to JobPath were first developed in the 1980s and are now commonplace in many OECD countries. Accordingly, the Department drew on international experience in developing JobPath. In addition, the Department commissioned and took advice from experts who advised and prepared reports for the EU, the OECD, the UK Government, the UK House of Parliament select committees, the National Audit Office in the UK, the Northern Ireland Executive and the Trade Union Council, TUC, in the UK. The Department also took informal advice and input from the former Director General of Employment Policy and Services in the OECD, canvassed the opinion of Irish labour market experts in the NESC, the ESRI, the Geary Institute and the National University of Ireland in Maynooth and took input from members of the Labour Market Council. Finally, the Department held a number of public briefing events which involved participants from advocacy groups, local development companies and trade unions among others and sought feedback from participants.

Taking account of the advice and feedback received and our own analysis of the performance, benefits and risks associated with contracting models in other countries, we designed JobPath over the period 2012 to 2013. The key elements of the design are that JobPath will support people who are long-term unemployed and those newly unemployed people who are profiled as being most distant from the labour market; the Department of Social Protection will select all of the clients to be referred and will ensure that the clients referred will be a representative mix of all long-term unemployed clients on the live register; JobPath contractors will have no say in the selection of clients; the period of engagement on the programme for any individual client will be up to 52 weeks, compared to 104 weeks in Great Britain; and client referrals will be made for a period of four years with a further two year workout period giving a maximum contract duration of six years.

On average, it is expected that some 100,000 jobseekers per annum will be referred to JobPath over the four year referral period. Unlike in Great Britain, jobseekers can be referred to, and will have access to, further education and training opportunities while on JobPath and every participant on the programme is guaranteed a baseline level of service – a service guarantee. The service guarantee will ensure that all participants receive support to develop a personal progression plan, regular one-to-one and face-to-face meetings with personal advisers at a frequency of at least once per month, assistance with CV and job interview preparation, job search assistance, and in work support. Providers have flexibility in addressing whatever barriers a jobseeker may have in securing employment, for example, child care support, travel expenses, training on basic literacy skills, computer skills and other work specific skills.

JobPath is a “payment by results” model. An initial fee will be paid on the production of a personal progression plan for each client; subsequent "sustainment" payments, which will make up about 90% of the total fees for any individual client, will only be made where a person completes 13, 26, 39 and 52 weeks of sustained employment. The fees paid to contractors are tiered based on unemployment durations such that contractors are incentivised to provide an equal level of service to all clients rather than focus their attentions on the clients who are easier to place. In addition, contractors will be required, under contract, to commit to a specific level of progression to employment across all clients. Fees paid to contractors are also subject to a number of controls, including retention fees and automatic price discounts. Retention fees, which reduce the level of payments to contractors, apply if contractors fail to meet contractual performance commitments and-or if they do not deliver a satisfactory level of customer service as measured by the Department in independent customer surveys. Price discounts will be applied automatically if employment growth in the economy exceeds those levels set out in A Strategy for Growth medium-term economic strategy 2014 -2020, published in 2013.

A request for tenders, setting out these conditions and requirements, was issued in December of last year and following a detailed evaluation of tenders received two preferred bidders have been selected and contracts are currently being finalised. The two preferred bidders are Turas Nua Ltd. and Seetec Business Technology Company Ltd. Turas Nua is a new business and is a joint venture between FRS Recruitment, a large Irish co-operative recruitment company based in Roscrea. and Working Links, an established, UK based, non-profit provider of employment services to long-term unemployed people. Seetec Business Technology is a private company delivering a wide range of employability and skills programmes across both urban and rural areas of England. Turas Nua Limited will operate in the southern half of the country, including towns and cities such as Cork, Limerick, and Waterford.

Seetec will operate in the northern half of the country, including in towns and cities such as Dublin, Galway, Sligo and Dundalk. Between them the two preferred bidders envisage providing services from approximately 100 outlets, employing approximately 1,000 staff around the country. The preferred bidders have accepted all the conditions and requirements and have proposed to exceed our service and performance requirements. If successful, they will provide service from 100 outlines and employ 1,000 staff. Most importantly, they will help approximately 89,000 more long-term unemployed people move into employment than would be expected in the absence of JobPath.

The total projected cost to the State, assuming progression to employment performance commitments are met, is approximately €338 million over a six year period, These costs will be matched by gross welfare savings of approximately €505 million over the course of the contract.

It is important to note that JobPath is not replacing any existing service provision, either that provided directly by staff within the Department or that provided under existing contract arrangements. JobPath does not involve the outsourcing of any existing work, nor does it require departmental staff to transfer to external providers or to cease existing work. Its purpose is to complement and augment our core capacity and to enable the Department to adapt the total level of resourcing in a flexible manner in line with variations in demand for employment services. The use of contracting in such circumstances is provided for under Towards 2016 and the Croke Park and Haddington Road agreements, as confirmed by the findings of the independent arbitration board established under these arrangements.

It is also important to note that JobPath will not have any negative impact on the existing local employment services and job clubs. The Department intends to continue its contractual arrangements with the local employment service and job club providers following the introduction of JobPath. In fact, Job Path offers an opportunity for these providers to expand their services and increase their revenues as they are free to participate as subcontractors in JobPath. Many of the providers have already indicated their intention to do so.

Committee members may be familiar with criticisms of the model of contacting that has evolved in Great Britain. It should be noted that the JobPath contract model differs significantly from the Great Britain model and the Department is satisfied, based on the inputs and advice received, that the JobPath design addresses the perceived deficiencies of Great Britain model, in particular with regard to issues such as "cream skimming" and "parking", in other words where hard-to-place jobseekers are "parked" and contractors focus their efforts on easy-to-place clients, and also with regard to customer service obligations, employment sustainability and profiteering.

A 14-day standstill period was required under EU procurement rules to provide under-bidders with an opportunity to appeal the outcome of the procurement process; this expired on 12 October. The Department will now proceed to finalise contracts with the preferred bidders. Subject to the successful conclusion of contracts, it is expected that JobPath will go live in mid-2015.