Amidst labour market disruption and fear of mass joblessness arising from the COVID-19 crisis, in the last two years employment services have been in receipt of renewed attention and funding.

While a trend towards digitalisation in the employment services sector was evident prior to the pandemic, the constraints of social distancing necessitated and normalised new ways of working at a distance, primarily through the use of digital tools.

But how exactly is digitalisation unfolding in the sector?

Amongst other things, digitalisation in employment services involves client management, using online meeting tools for meeting job-hunters, digital platforms for advertising jobs, and using webinars to offer online skills training. To date, the literature within this space has focussed on the implications of digitalisation for clients’ encounters with employment services, for example in terms of people’s capacity to exercise their rights, transparency of process, the advent of ‘screen-level bureaucracy’, and risks of exclusion, bias, and surveillance. But how is the digitalisation of employment services actually unfolding? In our research, we have focused instead on the types of tools that are emerging.

We are interested in understanding the factors influencing the adoption or non-adoption of employment service digital tools, how tools reflect employment services markets, and whether tools help to overcome, or simply replicate existing challenges of employment services use and access.

In undertaking our research, we conducted surveys with employment services providers and conducted interviews with software developers (a missing element of employment services research to date), providers and technical experts operating within the sector, in both the UK and Australia. These are two countries often regarded as being at the forefront of employment services digitalisation.

Yet the providers that we surveyed and interviewed were of the opinion that trends towards digitalisation were more driven by the demands of social distancing and a desire to develop existing models of service delivery, rather than a strategy to push the frontiers of digitalisation in the sector. This was reflected in the ubiquitous use of popular communication platforms such as Teams and Zoom.

While a range of innovative digital tools were under development for the sector, it was by no means clear that these would be mainstreamed in the near future.

Despite what was ostensibly a supportive context for digitalisation, barriers to the sustainable adoption of digital tools were at the forefront of our interviewees’ minds.

Barriers to investment

Some of our interviewees related that investment in the development of digital tools for the sector was hampered by the fluctuating nature of unemployment itself.

“When it’s cyclical, that mitigates against long-term investment because investors will always be wary about that, you know, ‘So I’ve spent all this money, built it, and then you’re telling me the market is gone.’” (Developer, 2 UK).

The contracting regime also hampered investment in digitalisation, with relatively short windows between contract awards and their implementation, this limits time available for the development and adoption of new tools. Service model designs might be ambitious, but there was a gap between this and actual delivery. Smaller providers especially could be risk averse towards paying for bespoke products, with off-the-shelf products often adapted instead from adjacent sectors, where demand was less prone to fluctuation.

Quasi-market operational barriers

The operation of the employment services quasi-market was also seen to be a barrier to the adoption of digital tools. At the contracting stage, an emphasis was placed upon evidencing prior performance and value for money, while performance management after implementation maintained an outcome-focus:

“…the biggest barrier fundamentally is there is not a market imperative to do this.  Or at least to do it to improve outcomes.  There is clearly an imperative to do it to reduce costs because if you can deliver your service more cheaply than somebody else, you’re more likely to win it” (Expert 2, UK).

Some interviewees related a sense of ‘imperfectly-aligned’ silos of commissioners, providers, sub-contractors and developers with quite different organisational orientations. Others mentioned a ‘co-opetition’ (collaboration amidst competition) challenge whereby it was difficult to see how the best digital innovations would be shared across the sector by organisations operating in an intensely competitive market that reduces the incentives for collaboration.

Fears that digitalisation will reduce access for the long-term unemployed

Another key barrier is a long-standing and ongoing challenge for contracted-out employment services – how to incentivise providers to work with those furthest from the labour market. Historically, programmes have seen providers focus their attention on working with the most job-ready claimants (‘creaming’), while longer-term unemployed people with greater barriers to employment are given far less attention (‘parking’).

Some of our interviewees shared the opinion that digital innovation in employment services was constrained by the legacy of focusing on the most job-ready. We anticipated that we would hear concerns about the potential of digital tools to exclude clients without data, access or skills, but alongside this, some were of the view that digital tools were under-developed for fear that they could be used to ‘park’ certain groups of jobseekers.

“I think there was a kind of resistance to things being digital, because they didn’t want to think you just parked somebody over there with a digital offer whilst you worked on the low-hanging fruit who you could get into work” (Expert 3, UK)

In Australia, in the New Employment Services Model from mid-2022, the most ‘job-ready’ jobseekers will digitally self-serve for one year and contracted provision will focus on the hardest to help. In our research, both providers and tech experts voiced concern that this approach risked individuals falling through the cracks and/or becoming further removed from the labour market.

“It does concern me that every other country that has gone in and done digital, have immediately come back to, ‘it’s got to be blended’…digital stand alone, sounds really sexy and sounds really fancy. It’s a people-based service being delivered by an app…digital is a great tool to deliver services but digital in itself is not the service.” (Provider 11, Australia)

This speaks to a critical commonality between the data in the two countries, voiced by providers and tech experts alike. In employment services, digital cannot replace the human in what is considered to be a critical human social service.

The future will therefore continue to be hybrid, with a key challenge being how to create a digital experience with a human connection and how to balance the digital and in-person elements.