Partnerships for jobs

A global crisis of long-term unemployment is looming. How can public-private partnerships help?

With unemployment in the OECD area expected to rise throughout much of 2010, and possibly reach a post-war high of 10% by the end of the year, stakeholders are working together across all sectors to find ways to address this jobs crisis. One example of this co-operation is the Global Jobs Pact, adopted by the International Labour Organization (ILO) in 2009, which puts a strong focus on accelerated employment generation, sustainable social protection systems, respect for labour standards and social dialogue. While such global initiatives are extremely important, national-level action is also crucial.

But the truth is, investment in active labour market policies–a vital tool for tackling unemployment–has been underwhelming since the beginning of the crisis. The OECD has long advocated such policies, as part of a long-term focus on strengthening economic performance. Put simply, governments should be focusing on developing labour market policies that will support and encourage practical initiatives and ultimately help people re-enter the labour market over the long term.

Public-private partnerships (also known as PPPs) in the employment sector can help. Our experience shows that co-operation between public employment services and private employment agencies enhances labour market participation and increases the rate of transition from unemployment to work. These partnerships invest jointly in vocational training and skills enhancement for the unemployed. With the right skills, people improve their chances of re-entering the labour market. Partnerships also help ensure that the right people are getting the right jobs– supporting both workers and businesses during the recovery.

The need to encourage PPPs in this sector has been recognised at both European and international levels. The European Commission has welcomed co-operation between public and private employment services, and the ILO also encourages national co-operation between Public Employment Services (PES) and Private Employment Agencies (PrEAs), notably in its Convention 88 on PES and Convention 181 on PrEAs. As part of its drive to increase ratification of ILO Convention 181, which provides legal recognition and support to the development of the activities of PrEAs while ensuring that the rights of workers are respected, the ILO calls on its members to formulate, establish and review conditions to promote cooperation between the public and private employment services.

Developing public-private partnerships in employment is crucial for a number of reasons. Labour markets are no longer efficient enough to cope with increasing demands due to the impact of the crisis, demographic changes and limited geographical mobility. Today’s labour market challenges demand that we share tools, expertise and know-how, and provide complimentary services to unemployed people and companies. Co-operation will also maximise the effectiveness of the services provided to job-seekers, as both public and private employment services serve similar groups and have the same fi nal objective: bring as many persons as possible to the labour market.

The real question though is not why, but how to co-operate. These partnerships can take a number of forms: exchange of information, pooling of data on the labour market, sourcing candidates, sharing candidates and job vacancies, managing skills, assessing and creating skills through training and providing outplacement services to reintegrate the long-term unemployed. They generally function within one of three different frameworks, depending on the support required by the PES and the needs of the market. There is the traditional public model, where governments use outsourcing to gain specifi c expertise to compliment the services provided by the PES; the tendering model, which sees all of the services being bid for by relevant actors under a public contract; and the voucher model, whereby public funds are allocated to private service providers, though the job-seeker is free to choose his/her own private service provider.

The fruits of public-private partnerships in the employment sector are visible in several countries. In the Netherlands, for example, a range of fi nancial arrangements were established between 1988 and 1995 to help target groups enter the labour market and were made available to private employment agencies. These included wage-cost subsidies, funding for mediation and guidance, and projectbased grants. From 1995 to 2008, private employment agencies co-operated with user companies in need during a period of mass dismissals. Since then, public private-partnerships have been anchored in almost all policy reports on solutions to labour market problems.

Such partnerships have also existed in France since 1994, when a co-operation agreement was signed for the fi rst time between the French PES (Pôle emploi) and PRISME, the national federation of private employment agencies. The main objective was to work together to reduce unemployment by exchanging information on labour trends and sharing job vacancies and candidates. In 2008, 623,900 job vacancies were sent by private agencies to Pôle emploi and 9,600 skill assessments were conducted by private agencies on behalf of the PES. Though the global crisis has caused unemployment to rise, these efforts no doubt contributed to a decline in unemployment at that time.

No wonder the French government has recently facilitated a tendering process aimed at outsourcing 320,000 job-seekers. The fi rst group to be placed with the successful private sector agencies will include 150,000 people who were let go from their positions due to economic reasons. The second group will include 170,000 unemployed people from sectors in decline and who have personal diffi culties–these are most at risk of falling into long-term unemployment. This work will cost €1,100 per person, which will be doubled in the case of permanent reintegration into the labour market. The overall cost of the project is estimated at €100 million in 2010 and €200 million for the duration of the project, which is expected to last through 2011.

In the UK, 15% of all jobs advertised by JobCentre Plus, the UK public employment service, come from the private recruitment industry and 24% of JobCentre Plus offi ces receive support from private employment agencies for the placement of target groups. Some other countries, like Australia, have used tender procedures instead of a public model to support job-seekers, meaning that the public service is outsourced to private operators in order to gain effi ciency and effectiveness.

Private employment services provide job-seekers, particularly disadvantaged job-seekers, with a stepping stone to the labour market. Initiatives as simple as sharing resources not only maximise effi ciencies but are crucial in dealing with the fallout from the fi nancial crisis. Governments need to build on existing partnership models and encourage greater co-operation in this area if we are to avert long-term unemployment.

References

Burger, P. and I. Hawkesworth (forthcoming), “How to Attain Value for Money: Comparing PPP and Traditional Infrastructure Public Procurement”, working paper, OECD, Paris.

European Commission (2009), “A Shared Commitment for Employment”, available at http://ec.europa.eu

Hawkesworth, Ian (2010), “Public-Private Partnerships”, in OECD Observer No 278, March.

OECD (2008), Public-Private Partnerships: In Pursuit of Risk Sharing and Value for Money, Paris.

OECD (forthcoming 2010), Dedicated Public-Private Partnership Units: A Survey of Institutional and Governance Architectures, Paris.

©OECD Observer No 279 May 2010




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