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Risk of privatising youth employment services too high

23 February 2012

Risk of privatising youth employment services too high, say Greens

The Green Party has called on the Government to abandon plans to privatise the Ministry of Social Development’s youth employment services, following the release of a Cabinet paper which reveals Treasury has significant concerns about the plan.

The Cabinet paper, released under the Official Information Act, proposes targeting privatised employment services to those aged 16 and 17 who are not in employment, education, or training.

However, Treasury advise that there is significant risk of private providers gaming the system, for example by classifying young people at a higher risk of long term unemployment than might actually be the case. Treasury also advises the complexity of case management will make it very difficult for the Ministry of Social Development to audit the private contracts and compare their outcomes with the Ministry’s own service delivery.

“Our young people deserve better than being treated as guinea pigs in a risky ideological experiment that has already failed overseas,” Green Party Co-leader Metiria Turei said.

“John Key’s Government should learn from the United Kingdom, where a similar privatisation of employment services proved to be a disaster.

“In 2010, the Public Accounts Committee of the UK House of Commons reported the performance by the private sector providers of employment services in that country had been universally poor by comparison with that of public providers, that targets agreed with providers were over-optimistic, and that they underestimated the difficulty of supporting their clients.

“Private provision of youth employment services is nothing less than corporate welfare which will feather the nests of the providers’ executives and shareholders, while putting our young people at even greater risk of long-term unemployment.

“John Key’s Government also needs to be reminded that no amount of employment service provision, whether private or public, will get young people into employment if there are no jobs for them to go to,” Mrs Turei said.

”The Green Party has a plan to create those jobs. National does not.”

Report of UK House of Commons Public Accounts Committee: http://www.publications.parliament.uk/pa/cm201011/cmselect/cmpubacc/404/40402.htm:

ENDS

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