Terms and Conditions of Employment (Hansard, 12 May 1987)

§ The Parliamentary Under-Secretary of State for Employment (Mr. John Lee)

I beg to move, That the draft Employment Subsidies Act 1978 (Renewal) (Great Britain) Order 1987, which was laid before this House on 6 May, be approved. This is the sixth occasion on which the House has been asked to extend the powers of the Employment Subsidies Act 1978 which are due to expire on 30 June 1987. The order extends the provisions for a further 18 months, which is the maximum length permitted by the Act.

Three schemes are currently operated under the Act—the young workers scheme, the new workers scheme and jobshare, formerly the job splitting scheme. However, the young workers scheme closed for applications on 31 March 1986 and it is expected that all payments due to employers under this scheme will have ceased by 30 June 1987 when this order expires. The new workers scheme, which is a replacement for, and a development of, the young workers scheme, was announced by the Chancellor in his Budget statement on 18 March 1986 and commenced on 1 April that year.

If this order is not approved, my Department will be unable to accept new applications under the new workers scheme or jobshare after 30 June 1987.

The new workers scheme has two important and related aims—to encourage more job opportunities for under-21-year-olds at realistic rates of pay, and to complement YTS. We believe that young inexperienced people will continue to be at a disadvantage in securing jobs if their pay is not only consistent with that paid to a more experienced, older worker, but moreover represents an inordinate progression from YTS training allowances.

By encouraging employers to pay realistic rates of pay to young people we can contribute to the reduction of labour costs and so help employers to improve their competitiveness. In this way, employers will be better able to expand their businesses and create more job opportunities for both young and older workers.

For jobs starting on or after 1 June this year, the new scheme conditions announced on 6 May will apply. The scheme will only be open to 18, 19 and 20-year-olds who are in their first year of employment. In addition, the wage ceiling for 18 and 19-year-olds will be raised by £5 to £60 gross a week. The wage ceiling for 20-year-olds will remain at £65 gross a week. Proof of YTS completion will no longer be necessary and we believe that this will remove what was a major source of discontent to users in the first year of the scheme.

Where all the conditions of the scheme are met. Employers will continue to receive £15 a week for up to 52 weeks in respect of every full-time permanent job supported. We anticipate that these important changes will encourage employers who are already using the scheme to use it again, and those who have previously been unable or unwilling to take advantage of the scheme to look at it afresh. In this financial year we hope to support well over 25,000 jobs for young people under the scheme.

The job splitting scheme was introduced in January 1983 to help employers provide part-time job opportunities for unemployed people by encouraging more flexible working arrangements. From 1 April 1987 the scheme was relaunched by me in Manchester as jobshare 242 and some changes were made to the eligibility rules and to the grant given to employers. Those changes were announced to the House on 6 April 1987.

Jobshare allows employers to create new part-time jobs by three methods. First, it divides an existing full-time job, in addition to the holder of the full-time job being split. Those eligible to be recruited are people claiming at unemployment benefit office, under notice of redundancy or leaving a particular Government scheme but who have not been employed since. The second method is to create two new part-time jobs. Eligibility in this case is confined to people leaving particular Government schemes who have not been employed since. The third and final method is to combine regular overtime hours of up to 10 employees to create a new part-job. Those who can be recruited under this method are the same as for the first method that I have described.

Under the job-splitting scheme, the Department of Employment provided a grant of £840 to meet an employer's administrative and training costs. The Department has increased this grant to £1,000 for those employers participating in jobshare. The grant is paid in three instalments—£500 when the application is approved, £200 at the end of 26 weeks and £300 at the end of the year.

We continue to believe that jobshare can provide a number of potential long-term benefits to participants. For example, higher productivity, particularly in areas of routine work, more flexible use of working time, improved job satisfaction, lower staff turnover and absences, and cover for off-the-job training. It encourages employers to devise more flexible working patterns through a better utilisation of manpower, greater efficiency and improved competitiveness, thereby helping to reduce unemployment. It also offers employers an opportunity to build up a pool of trained labour to meet the future expansion of their companies.

The advantages of jobshare for individuals will, of course vary according to their circumstances. Not everyone necessarily wants a full-time job and this scheme provides scope to tailor part-time jobs to an individual's needs.

Although a job splitting scheme ran for over four years, its take-up was limited and only about 250 people were on the scheme at any one time. Recent research showed a lack of awareness amongst employers about the scheme. It is hoped that the changes that have been made under jobshare, combined with increased marketing, will achieve more positive results. My Department expects to approve 1,000 application under jobshare this year.

I commend the Order to the House.