Participation in labour market programmes: A positive or negative signal of employability?

Abstract

Active labour market policies (ALMPs) are widely diffused measures aiming to re-integrate jobseekers into the labour market. Despite their crucial role in acting as gatekeepers to employment, the literature scarcely considers the employer’s perspective of these measures. We analysed whether and how employers consider ALMP participation in the hiring process as a signal that helps explain the labour market outcomes of jobseekers. We developed a theoretical argument regarding how employers interpret ALMP participation and identify assumed agency, that is, whether employers believe that the agency for initiating ALMP participation lies with the jobseeker (voluntary participation) or the job centre (mandatory participation), as a crucial factor determining whether their evaluation of ALMPs is positive or negative. To examine our expectations, we conducted qualitative interviews with employers hiring for low-skilled occupations in Switzerland and Sweden, representing two countries with comprehensive ALMP systems. As expected, the interpretation of ALMP programmes differs depending on the assumed agency. Employers who believe that participation is voluntary interpret participation as a signal of motivation; however, employers who believe that participation is mandatory interpret participation as a signal of lower productivity, which reduces the chances of a successful labour market access.