Activation Strategies and the Performance of Employment Services Peter Tergeist, in Germany, David Grubb the Netherlands and the United Kingdom
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OECD Social, Employment and Migration Working Papers No. 42 Activation Strategies and the Performance of Employment Services Peter Tergeist, in Germany, David Grubb the Netherlands and the United Kingdom https://dx.doi.org/10.1787/341116536484 DELSA/ELSA/WD/SEM(2006)11 Activation Strategies and the Performance of Employment Services in Germany, the Netherlands and the United Kingdom Peter Tergeist and David Grubb 42 OECD SOCIAL, EMPLOYMENT AND MIGRATION WORKING PAPERS Unclassified DELSA/ELSA/WD/SEM(2006)11 Organisation de Coopération et de Développement Economiques Organisation for Economic Co-operation and Development 08-Dec-2006 ___________________________________________________________________________________________ English text only DIRECTORATE FOR EMPLOYMENT, LABOUR AND SOCIAL AFFAIRS EMPLOYMENT, LABOUR AND SOCIAL AFFAIRS COMMITTEE Unclassified DELSA/ELSA/WD/SEM(2006)11 OECD SOCIAL, EMPLOYMENT AND MIGRATION WORKING PAPERS NO. 42 ACTIVATION STRATEGIES AND THE PERFORMANCE OF EMPLOYMENT SERVICES IN GERMANY, THE NETHERLANDS AND THE UNITED KINGDOM Peter Tergeist and David Grubb JEL Classification: J20, J60, J63, J64 and J68 All Social, Employment and Migration Working Papers are now available through OECD's Internet website at http://www.oecd.org/els text only English JT03219448 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format DELSA/ELSA/WD/SEM(2006)11 DIRECTORATE FOR EMPLOYMENT, LABOUR AND SOCIAL AFFAIRS http://www.oecd.org/els OECD SOCIAL, EMPLOYMENT AND MIGRATION WORKING PAPERS http://www.oecd.org/els/workingpapers This series is designed to make available to a wider readership selected labour market, social policy and migration studies prepared for use within the OECD. Authorship is usually collective, but principal writers are named. The papers are generally available only in their original language – English or French – with a summary in the other. Comment on the series is welcome, and should be sent to the Directorate for Employment, Labour and Social Affairs, 2, rue André-Pascal, 75775 PARIS CEDEX 16, France. The opinions expressed and arguments employed here are the responsibility of the author(s) and do not necessarily reflect those of the OECD Applications for permission to reproduce or translate all or part of this material should be made to: Head of Publications Service OECD 2, rue André-Pascal 75775 Paris, CEDEX 16 France Copyright OECD 2006 2 DELSA/ELSA/WD/SEM(2006)11 ACKNOWLEDGEMENTS Peter Tergeist and David Grubb are economists in the Employment Analysis and Policy Division at the OECD Directorate for Employment, Labour and Social Affairs. This paper is based in large part on visits to public and private employment service providers in Germany, the Netherlands and the United Kingdom during August and September, 2005. An earlier draft served as background for discussions at a seminar organised by the Dutch Ministry of Social Affairs and Employment and the OECD Employment, Labour and Social Affairs Directorate in The Hague on March 29th, 2006. The authors wish to thank all interlocutors during the 2005 missions to the three review countries, as well as the participants in the seminar, for their valuable information and thoughtful discussions on issues relating to the “activation” of unemployment and other benefit recipients, and current practices around the subcontracting of employment services. The views expressed in this paper are those of the authors, and do not necessarily reflect those of the OECD or of its member countries. 3 DELSA/ELSA/WD/SEM(2006)11 SUMMARY Strategies to “activate” the unemployed with the help of high-quality employment services have continuously gained importance in the policy debate. The purpose of this report is to examine how activation strategies and the performance of employment services are addressed in three countries which have undertaken considerable reforms in recent years, namely Germany, the Netherlands and the United Kingdom. All three review countries have implemented a “mutual obligations” approach, under which benefit recipients are expected to engage in active job search and improve their employability, in exchange for receiving efficient employment services and benefit payment. The strategies used in the review countries – albeit with different emphasis – include options for returning to work from the very first contact with a newly registered unemployed client; the set-up of back- to-work agreements and individual action plans; regular confirmation of unemployment status; monitoring and review of clients’ job-search efforts; and direct referrals to vacant jobs to speed up the matching process and reduce unemployment spell durations. There is also an increased emphasis on benefit eligibility criteria, suitable-job requirements and the targeted use of benefit sanctions. For activation strategies to work, the management framework for employment services (whether public or private) must be appropriate. In this regard, the introduction of contestability and quasi-market mechanisms in all three countries has been a novel feature designed to facilitate the reintegration of benefit recipients through more intensive interventions. The three countries pursue different outsourcing strategies of their employment services. The Netherlands has been, within Europe, the first country to implement a full “reintegration market” where private sector organisations compete for tenders to supply employment services. However, owing to continuing changes in policy and to the multiplicity of actors involved at local level, statistical comparisons of provider performance are not well developed. In the United Kingdom, only a relatively small proportion of local areas are designated as Employment Zones -- where private providers operate – but evaluations have reported relatively favourable short-term placement outcomes as compared with areas managed by the public (Jobcentre Plus) provider. Following the Hartz reforms, Germany’s contracting-out programmes are currently more ambitious than the UK’s. Initial results have been relatively disappointing, but the reforms have not been operating for long enough to draw definitive conclusions about their effectiveness. The activation approach is also increasingly applied to recipients of “non-employment” benefits. Reversing the growth in non-employment benefit caseloads and associated expenditures through activation policies is indeed a major challenge for public policy – for example, in the Netherlands and the United Kingdom, the percentage of the working-age population reliant on non-employment benefits is several times the percentage on unemployment benefits. The experience of the review countries shows that i) poorly-controlled access to such benefits can undermine the impact of activation measures, as some of the long-term unemployed enter benefit schemes that facilitate inactivity; and ii) there is considerable scope to apply activation strategies to persons receiving non-employment benefits, albeit with appropriate modifications for the specific characteristics of each group. 4 DELSA/ELSA/WD/SEM(2006)11 RÉSUMÉ La question des stratégies pour « activer » les chômeurs avec l’aide de services de l’emploi compétents a continuellement pris de l’importance dans le débat politique. L’objet de ce rapport est d’examiner comment les stratégies d’activation et la performance des services de l’emploi sont formulées dans trois pays qui ont entrepris des réformes considérables ces dernières années : l’Allemagne, les Pays-Bas et le Royaume-Uni. Les trois pays examinés ont mis en place une approche dite « d’obligation mutuelle » selon laquelle les personnes recevant des prestations doivent s’engager dans une recherche active d’emploi et améliorer leur employabilité, en échange de services de l’emploi efficaces et de l’attribution de prestations. Les stratégies utilisées dans les pays considérés – bien que de façon et d’intensité différentes – incluent des options pour le retour au travail dès le premier contact avec le chômeur nouvellement inscrit ; la mise en place d’accords favorisants le retour au travail et de plans d’action individuels ; la confirmation régulière du statut de chômeur ; le contrôle et le suivi des efforts du chômeur dans la recherche d’emploi ; et l’orientation directe vers les offres d’emploi pour accélérer le processus d’appariement et réduire la durée du chômage. L’accent est aussi mis sur les critères d’éligibilité à recevoir des prestations, la définition d’un emploi « convenable » et l’utilisation ciblée de sanctions. Pour que les stratégies d’activation fonctionnent, le cadre institutionnel des services de l’emploi (qu’ils soient privés ou publics) doit être approprié. A cet égard, l’introduction d’éléments de concurrence et de « quasi-marchés » dans les trois pays est une innovation qui vise à faciliter la re-intégration des bénéficiaires des prestations à travers des interventions plus intenses et complètes. Les trois pays suivent des stratégies différentes d’externalisation de leurs services d’emploi. Les Pays- Bas sont le premier pays en Europe a avoir instauré un « marché de réintégration » complet dans lequel des organismes privés rivalisent pour répondre aux appels d’offre pour fournir des services d’emploi. Cependant, à cause des changements politiques constants et de la multiplicité des acteurs impliqués au niveau local, il n’est pas facile de comparer statistiquement les performances des différents fournisseurs de ces services. Au Royaume-Uni,