Wage incentives schemes are payments made to employers from the Government designed to incentivise the recruitment of young unemployed people. It is proposed that they will account for up to 160,000 of the total 430,000 potential additional opportunities for young people and possibly around a third of the total £1 billion budget.
Over three years from April 2012, the Youth Contract will offer wage incentive payments of up to £2,275 per employee to employers when they recruit an 18-24 year-old from the Work Programme. The full payment is available when young people are placed into full-time jobs.
However, there is a lack of conclusive evidence for the efficacy of wage incentives. Iain Walsh, head of labour market intervention strategy at the department for work and pensions (DWP), noted that the evidence for the cost-effectiveness of wage incentives was "varied" and the previous minister for employment, Chris Grayling, acknowledged that the international evidence was "patchy".
The Government has a target of 160,000 wage incentives over the next three years and the committee thinks this will significantly exceed anything achieved by comparable schemes in the past.
According to the report, business organisations appear ready to play an increased role in the provision of work-related learning and careers information, advice and guidance. They have welcomed the support from the current examples of innovative measures, which link schools with local employers.
They recommend that the Government play an active role in facilitating a national infrastructure, which allows such initiatives to flourish.
The committee claims there is a plethora of services and funding streams aimed at increasing young people's participation in education and employment. However, it is not convinced that public money is being used in the most cost-effective way and the scale of duplication must be contributing to waste as well as complexity and confusion for young people and employers.
The Government seemed reluctant to tackle this by appointing a single minister or delivery agency, according to the committee.
It recommends that, in response to this report, the Government sets out how it plans to deliver a more streamlined and cost-efficient system for providing youth employment and skills services, both in the short and longer-term.
