Willie O'Dea (Limerick City, Fianna Fail)
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48. To ask the Minister for Social Protection his views on the concerns that have been expressed regarding the moves towards increasingly using for-profit companies as opposed to not-for-profit companies for services such as employment activation services and the local employment service, his further views on the impact that this is having on the community and voluntary sector and if he will make a statement on the matter. [17860/17]

Willie O'Dea (Limerick City, Fianna Fail)
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As the Minister is aware, the move towards using private for-profit companies to deliver employment activation services and local employment services, which were previously delivered by the State and the voluntary sector, has caused a number of concerns. Is the Minister aware of these concerns and what action is being taken?

Leo Varadkar (Dublin West, Fine Gael)
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The State's public employment service is managed by my Department and delivered directly by its own Intreo service, as well as by contracted private companies such as the two JobPath companies, Seetec Limited and Turas Nua Limited, the local employment service companies and job club providers. The Department has contracts in place with in excess of 60 companies for the provision of these services. This includes two contracts with JobPath service providers.

JobPath is a new contract model whereby the providers, which are private commercial enterprises, are paid by results. In other words, they are paid when they achieve sustained employment outcomes for jobseekers. This payment model contrasts with the approach used to fund the local employment service, where the providers are paid by inputs regardless of outcomes. In other words, they are paid an amount that is agreed at the beginning of each year based on the forecast level of activity. The success or otherwise of the local employment service provider in securing employment for jobseekers does not affect the payment amount.

When JobPath was developed, fears were expressed that it would take over from or substitute for the local employment service. While I understand these concerns, this was not the intention and it has not happened. The purpose of JobPath was, and is, to complement and augment the existing service capacity of the Department through Intreo and the local employment services. There has been no reduction in the budget allocated to the local employment services.

In fact, in addition to the service capacity offered by the local employment services, more than 600 staff are employed by the JobPath providers delivering a case management and advisory service to long-term unemployed people. These people would not have had access to such a service had JobPath not been made available. In addition, the capacity introduced by JobPath has enabled the Department to reduce the workload on its own caseworkers such that each local employment service caseworker should have a caseload of no more than 120 jobseekers. This is in line with international norms. Prior to the introduction of JobPath, the caseload was more than 1,500 jobseekers per Intreo and local employment service caseworker. I am, therefore, satisfied that the development of JobPath has been, and will continue to be, positive both for jobseekers and for the local employment service.

Willie O'Dea (Limerick City, Fianna Fail)
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I understand the Minister's rationale. These jobs were previously done by the community and voluntary sector and the State. One could get the figures regarding the number of jobseekers per case officer etc., if one expanded the State's resources. Is it more cost-efficient to bring those private companies on board? Is it a cost saving measure? Is the Minister aware of a number of allegations of cherry-picking by those companies where people who are likely to succeed are preferred to those who will require more intensive supervision or attention?

Leo Varadkar (Dublin West, Fine Gael)
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I am certainly aware of allegations of cherry-picking but they do not stack up because it is my Department that decides who is referred to JobPath. This is very different to the model used in the UK, which has been much criticised and where cherry-picking was possible. We decide who is referred and we make sure it is a decent spread of people with different types of needs.

I do not really mind whether the service is provided by a private for-profit company, a private not-for-profit company or any other body. What I am interested in is value for the taxpayer and results for the people receiving the service. One of the advantages of Seetec and Turas Nua in respect of JobPath is that they covered all the set-up costs themselves. There would have been a considerable expense for the taxpayer had the Department had to set up all those offices around the country. Another advantage is payment by results. These companies are paid for the results they get whereas under different models, people are paid for the activity they do regardless of whether they get any results. There are pitfalls and perverse incentives in any system one uses. That is inevitable, which is why they need to be monitored closely. I do not think we will really know which model is the best for a number of years but I think we should continue to use both.

Willie O'Dea (Limerick City, Fianna Fail)
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I take the Minister's point but has analysis been done or is any planned regarding the impact of those reforms?

Is there any independent evidence as yet that they represent the best outcomes for the State and the individual?

Leo Varadkar (Dublin West, Fine Gael)
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The evidence that exists, which is there in the first quarterly report on the Department of Social Protection website, and there will be another quarterly report out in the next couple of weeks, shows very high levels of customer satisfaction. It also shows that people who have been referred to Seetec and Turas Nua are more likely to be in employment and to gain employment than a similar profile of people who were not referred. This is especially true of people who are longer-term unemployed. These are only initial results and I would not be writing about them in the OECD Journal just yet. We are going to need to see this develop over another year before we can be certain that these results are as good as they appear. An independent econometric analysis will be done also to see what sort of results and outcomes we are getting.