Britain's New Labour Government has radically shifted its policy aims away from securing traditional full employment towards the improvement of``employability''. This paper briefly assesses what is meant by employability and how the Government has integrated its`s upply side'' approach to the unemployed with the stricter benefit regime it inherited from its Conservative predecessor. It describes the various New Deal and area-based employment programmes that have been introduced during an intense phase of policy development and experimentation and outlines the immediate impact they have had. The Government's long-term aim is to build on this experience and create a``work-based welfare state'' for all those of working age who receive state benefits. In conclusion, the paper highlights some of the weaknesses of the new strategy and draws out the implications that existing evaluations of active labour market programmes have for the likely impact of the New Deals.

Welfare systems in the European Union and in other OECD countries are under pressure. In response, governments have embarked on major reforms aimed at creating work-based welfare systems. The new approaches involve radical changes in traditional welfare and employment agency bureaucracies. In most countries this has been coupled with decentralization and the increased use of local partnerships and organizations in designing and implementing new 'Welfare to Work' programmes. This article assesses these broad developments and describes the implementation of recent Welfare to Work strategies in three countries – Great Britain, the United States, and the Netherlands. The article compares and contrasts the approach of each country and outlines some of the key developments and implementation problems that have emerged. It briefly assesses the evaluation evidence so far available and analyses the potential and problems that more flexible local delivery arrangements are likely to generate.

New Labour is constructing an “employment‐first” welfare state. It plans through Jobcentre Plus to transform the passive culture of the benefit system by creating more explicit links between individual behaviour and engagement with labour market programmes. The New Deal for Young People (NDYP) has been at the forefront of these changes. This paper reports on the findings from four case studies that explored how the NDYP has changed young people's experience of the welfare state. It establishes that NDYP offers a mixture of employment assistance and “pressure” and has made progress in developing front‐line services and helping young long‐term unemployed people into work. NDYP does not, however, work for all. In areas of high unemployment and for some disadvantaged groups intermediate labour markets could enhance the New Deal and make real the offer of “employment opportunities for all”.

In many countries employment services and labour market programmes, whether delivered by public agencies or contracted providers, are found to be less effective in meeting the needs of more disadvantaged job seekers compared to other unemployed people. This article reviews evidence on how countries that outsource employment programmes design outcome-based payments, contracts and differential prices to ensure more equitable outcomes. It considers the extent to which such mechanisms have mitigated the risks of ‘parking’ and ‘creaming’ which are commonly associated with contracted out employment services.

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