Invest in employability

Ingeus Centre for Policy and Research

Respond to the needs of the newly unemployed while continuing to engage with people who are disadvantaged within the labour market: this is the major challenge facing employment ministers today.

Unemployment is rising sharply in many countries, and with pressure growing on social assistance bodies, employment services and broader public finances, there are difficult questions for governments to answer in terms of where to invest scarce resources and how to ensure value for money. Renewed commitment to employment support underpinned by improved analysis of how this can be most effectively delivered must be central to the discussion.

Here are some key elements to help ministers build an effective response to the crisis.

First, maintain focus on the long-term goal of sustainable employment for all.
It is critical to learn the lessons of previous downturns. Mitigating the current rise in unemployment by increasing rates of early retirement or take-up of disability or health benefits will lead to dysfunctions in the labour market over the long term. With the workforce ageing and the trend towards tightening labour markets, it is important to invest in keeping older people and those with health conditions engaged with the labour market.

There has been considerable focus in recent years on increasing the conditions attached to receiving benefits and bringing those people who were previously far from the labour market, particularly single parents and those with disabilities and health conditions, closer to it. This has resulted in innovation and success in policy, better procurement and better delivery of services.

But when public finances are stretched as they are now, and with fewer job opportunities for everyone, there is a danger that the quality and comprehensiveness of employment services for these groups will suffer as priorities and resources shift to support for the newly unemployed. The effects can be both serious and long-lasting. In fact, labour market exclusion can become inter-generational.

Second, target support on those most at risk of labour-market exclusion.
Many governments are concerned about the impact of the current crisis on the employment opportunities for young people. There are fears about potentially "scarring" a whole generation. There have been a range of responses, including guaranteeing training, extending apprenticeships and subsidising employment.

Governments should monitor the impact of the downturn on other groups who may be disproportionately affected by the crisis or at risk of long-term exclusion. The tightening labour market may affect migrant workers or refugees, whose knowledge of the local language or labour market may be limited, not to mention those people with disabilities or health conditions. For all these groups, it is critical to invest in their employability and skills levels so that they can compete effectively in the labour market.

Labour market monitoring and analysis will help ensure that resources are effectively targeted. For example, research commissioned by the Department for Work and Pensions in the UK has highlighted that young people with the lowest level of qualifications and living in deprived areas are most at risk of labour market exclusion. Public employment services and social assistance bodies are trying to strengthen their analytical capacity so that they can use such evidence in deciding about resource use.

A personalised employment service should also be considered. This not only maintains a strong work focus, but, when skills-training is linked to future employment, has been shown both to help the most disadvantaged find work and be cost-effective.

In the current labour market, people with limited employment history are finding it diffi cult to compete with the newly unemployed, and it may be necessary to look for new tools to complement existing programmes. Work trial schemes or intermediate labour market opportunities could give participants a step up to labour market participation.

Third, governments must innovate.
Despite the current atmosphere of doom and gloom, opportunities will present themselves to innovate and develop more effective approaches to supporting those excluded from the labour market. This can already be seen in many countries, where higher demand for services has spurred innovation in delivery. In the UK, one response to the crisis was to increase the number of public employment service staff. As the new staff could not be accommodated within existing premises, they had to be located in partner organisations, including private sector and voluntary providers. This has created a more seamless service for clients and will potentially boost productivity.

Also, many countries have seen an increase in "light-touch" support provided by telephone or Internet as effi cient alternatives to faceto- face contact for those who are newly unemployed or close to the labour market.

Fourth, bring in the local level.
Ministers will inevitably discuss how to maximise the return on their investment in active labour market policies and promote efficient resource use. At the local level there can often be opportunities to enhance the effectiveness of programmes by improving the alignment and targeting of employment support and complementary interventions, such as skills training. This can help scarce resources go further.

In the Netherlands, the government has decided to establish a network of local mobility centres to promote co-operation among companies, trade unions and jobfi nding organisations-an initiative that is strongly supported by unions and other social partners.

Bringing employers and trade unions into discussions about the local/regional labour market can help to plan for the longer term and bridge gaps between supply and demand. Local partnerships can also help to ensure that investment in skills and training for unemployed people matches local labour market needs or predictions of future skills needs.

The message is simple. In the current climate, individuals have to invest more to secure employment-they must look harder to find vacancies, apply for more jobs and secure more interviews than in better times. Governments must also invest more in employment services at a time when it is harder to support the transition into work and off social assistance. Only then will the newly unemployed not become permanently excluded from work and will those people who are further from the labour market improve their employability and move into sustainable employment.

References

EUROFOUND (2009), "Tackling the Recession: Employment-related public initiatives in the EU Member States and Norway", http://www.eurofound.europa.eu/emcc/erm/studies/tn0907020s/tn0907020s.htm

European Commission (2009), "Labour Market Institutions in Times of Crisis: Challenges and Experiences", Final report of the European Commission Conference, http://ec.europa.eu/social/main.jsp?catId=105&langId=en&eventsId=198&furtherEvents=yes

Stafford, Bruce and Deirdre Duffy (2009), "Review of evidence on the impact of economic downturn on disadvantaged groups", Department for Work and Pensions, UK, http://www.dwp.gov.uk/publications/dwp/2009/monitoring-impact-recession-demographic-groups.pdf

Hasluck, Chris and Anne E. Green (2007), "Active Labour Market Policies in International Context: What works best?" Lessons for the UK Department for Work and Pensions Research Report 407, http://research.dwp.gov.uk/asd/asd5/report_abstracts/rr_abstracts/rra_407.asp

Carcillo, Stéphane and David Grubb (2006), "From Inactivity to Work: The Role of Active Labour Market Policies", ELS working paper no.36, OECD, Paris, www.oecd.org/dataoecd/44/8/36945194.pdf

©OECD Observer No 274, October 2009




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