Active Labour Market Policies Research Articles

Active Labor Market Policies in a Context of High Informality: The Effect of PAE in Bolivia

Information asymmetries and limited skills are two main factors affecting job seekers’ chances to access quality jobs in developing countries. This paper evaluates the effectiveness of a program combining job intermediation and wage subsidy in Bolivia, a country with one of the highest levels of informality in Latin-America. Using administrative and survey data, we find that the program substantially increases employment and formality. These effects are heterogeneous across different subsamples of interest. Our results suggest that Active Labor Market Policies might be an effective solution for improving access to quality jobs in the context of high informality.

Subsidised Start-Ups for the Unemployed in Less Developed Region: Effects Behind Efficiency

One of the tools that governments use to support entrepreneurship is to support entrepreneurship through subsidised start-ups for the unemployed. This tool attempts to solve two problems at once. It acts as an active labour market policy tool to reduce unemployment. On the other hand, as an economic policy measure, it seeks to promote the development of entrepreneurship. Most existing studies focus mainly on measuring the sustainability or effectiveness of this tool.
 The aim of this article is to identify the pros and cons of this tool from the perspective of the beneficiaries of this support themselves. The research was conducted through interviews with the beneficiaries of the support as well as those institutions that are in some way involved in the process of this support. The interviews took place in the years 2019 -2020 in the Banská Bystrica Region in the Slovak Republic, which is one of the most underdeveloped regions in the European Union.
 The results of the research show that the support itself also has a positive impact on other aspects of life than the business itself. A large proportion of respondents reported that they are happier in life than before and that their business is much more fulfilling than their previous job. At the same time, however, they point to a distinct form of inefficiency of the support as a tool for entrepreneurship support, with many beneficiaries not using this tool with the primary goal of starting a business. Some of the supported start-ups started their business only as a cover for black and dependent work or as a form of part-time work.

Implementation of the European Youth Guarantee and the Right to Work: A Comparative Analysis of Traineeship Programmes Under the EU Active Labour Market Policy

This article analyses the consistency between the implementation of the EU Youth Guarantee and the fundamental right to work. Focusing on the use of traineeships as an implementation instrument, it explores various types of national Active Labour Market Policies (ALMP) for young unemployed people in Italy, Spain, the Netherlands and Poland. The case studies show that it remains to be seen whether the traineeships considered in this research comply with the right to work. The authors argue for the need to strengthen the Youth Guarantee to accord with the right to work, so that in addition to the right to a first job, it ensures that work-related instruments include the provision of effective training, as well as the right to equal pay for work of equal value, and decent working conditions. This is particularly important in view of the Coronavirus disease 2019 (COVID-19) pandemic, that has had an unprecedented economic impact in the EU and is likely to result in another dramatic upsurge in the number of young unemployed. Youth Guarantee, Right to Work, NEETs, Traineeships, Decent Work, Equal Pay, Active Labour Market Policies

Government Welfare Policy Under a Skilled-Biased Technological Change

In a world where machines replace unskilled work, an active labor market policy—represented by the combination of an optimal Earned Income Tax Credit (EITC) and income maintenance for the unemployed—provides incentives to increase participation in the labor market and depresses wages for unskilled employees. In this paper, this policy is tested against the alternative of allowing unskilled workers to receive a means-tested basic income (MTBI), as recently adopted by Spain. For a liberal social planner (i.e., includes consumption and leisure in individual utility), the MTBI dominates the active labor market policy. For a conservative social planner (i.e., evaluates social welfare based on individual utility from consumption), the active labor market policy dominates the MTBI. The potential dynamic effects of active labor policy on labor supply were considered in a simulation using updated empirical estimates; it shows that this policy becomes preferable for both types of the social planner.

“What innovations would enable the tourism and hospitality industry in the European Union to re-build?”

PurposeThe aim of this paper is to discuss innovations in response to the COVID-19 pandemic, major investments and reforms required to realize transformation in the tourism and hospitality industry of the European Union.Design/methodology/approachA remedial literature study approach is used to analyze innovations put in place by governments and industry and to determine best practices including new innovations that could help to strengthen hospitality and tourism operations.FindingsThe COVID-19 outbreak and border closures had a significant impact on the tourism and travel sectors. During the pandemic, innovations were needed to address challenges brought on by the border closures, vaccine passports and stricter health and safety requirements. While these innovations helped organizations survive and reinvent themselves, they are not enough for long term sustainability. The need for resilience, effective and well-designed active labor market policies and social protection systems including investment in education and skills training will become basic foundations for sustainability. In order to address these issues, collaboration between government, academia and industry is essential.Originality/valueThe outbreak of COVID-19 and border closures in 2020 created turmoil in the travel and tourism sector. Small- and medium-sized enterprises were damaged and many did not survive. That said, the crisis has given the tourism and hospitality industry an opportunity to rethink the future.

The COVID-crisis as an opportunity for welfare recalibration? Panel-data evidence on the effect of the COVID-crisis on welfare preferences in Spain, Germany, and Sweden

ABSTRACT The reform capacity of welfare states to adapt to the needs of post-industrial labour markets has been a key question of the welfare literature for the last two decades. In a context of austerity, such adaptations (retrenchment or recalibration) are notoriously difficult because of extremely high levels of support for existing policies, particularly old age pensions. We investigate how the recent economic shock caused by the COVID-pandemic has changed social policy preferences in three West European countries (Germany, Sweden, Spain). Relying on original panel data observing the relative support for social policies before and during the crisis, we show that support for old age pensions has dropped substantially relative to other social policies. This drop can be observed in all three countries and among all ideological and age groups. The drop is strongest among current and soon-to-be pensioners who in turn increased support for benefits to the working-age population. At the expense of pensions, the economic shock has especially boosted support for active labour market policies and (in Germany) childcare services. This shift of support from pensions to social investment policies might have opened up a window of opportunity for recalibrating welfare reforms.

Employment Generation Challenges and Strategies for Pakistan: A Diagnostic Analysis

The employment challenges are getting more complex and worse because youth under the age of 30 constitute 64 percent of the total population. The gradual increase in labor force participation is adding more pressure to the labor market to generate employment opportunities. Hence, the growth in employment generation is essential to match the unprecedented number of young people entering working age in Pakistan. Moreover, the structural transition process involving labor movement from low-to-high productive activities has been much slower in Pakistan than in other Asian countries like China. This study identifies all major concerns regarding employment challenges in Pakistan and identifies various strategies and policies while adopting a diagnostic approach to employment policy. The reason for adopting the diagnostic approach/framework is to develop an understanding of the factors which are responsible for the slow growth of employment in formal sectors and significant constraints for generating more employment. It attempts to assess various elements that may find a place in developing strategies and policies. While designing effective policies for employment, policymakers must consider all aspects like population, demographics, types of unemployment, economic condition, social structure, and development stage of a country. Meanwhile, the role of entrepreneurial activities and the private sector, technological changes, development of labor-intensive industries and SMEs, improving skills and knowledge, youth employment programs, active labor market policies (ALMPs), and macroeconomic policies are core elements that should be considered to design effectual policies for employment generation.

What Role Does EPL Play in Wage Determination under Segmented Labour Markets? A State-level Analysis from India’s Formal Manufacturing Sector

This study explores the role of employment protection legislation (EPL) in wage determination using a state-level panel dataset for India’s formal manufacturing sector. Unlike previous studies, we create a quantitative indicator of EPL using state-wise court judgements (on labour disputes), citing various sections of Chapters 5A and 5B of the Industrial Disputes Act, 1947, particularly those dealing with employment and wage-related legislations. Our findings suggest that pro-worker court judgements specifically on wage-related issues lead to an increase in the share of wages in industrial output. The findings are robust to alternative model specifications. However, we find that the share of wages responds negatively to an increase in pro-worker strictness in the overall EPL. We also analyse the consequences of labour market dualism, which is increasingly becoming a norm even in formal sectors. Using insights from labour market segmentation theory, we argue that a divergence in the regulation between regular and contract labour has a potential to undermine the success of active labour market policies in curbing the ill-effects of market segmentation. JEL Codes: J21, K31

ACTIVE LABOUR MARKET POLICY AS A COMPONENT OF FLEXICURITY

Active labor market policy includes measures to facilitate the return to work (training courses for the unemployed, incentives for unemployed to return to work, support for creating new jobs, etc.). Within the EU countries, we can observe some convergence in the activation of the unemployed. On the other hand, there are also significant differences resulting from the different performance of their labour markets as well as the heterogeneity of their institutional environments. The current paper aims to analyse these tendencies in the example of the following countries: Austria, France, United Kingdom and Spain. The results show that despite some differences, the most significant common factor of the active labour market policy in the selected EU member states is tightening the program participation criteria.

Active Labor market policies and Lifelong Learning in Greece

The main goal of the present paper is to discuss how and under what circumstances, active labor market policies and adult education could assist staff to cope with stress and enhance skills and abilities to achieve employment. The high numbers of unemployed in Greece together with the long-term ineffective austerity measures and policies imposed in the country and the reduction of the social welfare state, created many multiple and complex issues that deteriorated after the pandemic. The present paper suggests that specific active labor market policies must be employed together with lifelong learning policies and programmes to ensure future developments. Greece, more than any other modern European country, was faced for several years with extreme austerity measures that affected the social, economic, and personal level. The working population and especially young people had to cope with prolonged unemployment, limited options for reentering the job market and the associated stress that follows exposure to adverse experiences. The phenomena of brain drain and brain waste, are well documented in Greek research and literature. Covid-19 pandemic was another stroke in an already unbalance economy. Lifelong learning programmes, that are meant to assist not only the working but also the general population to increase social and other skills, as a way of ensuring access to the labour market, are addressed to only a small portion of the population and usually to those who need them the least. The current paper presents the challenges that Active labor market and Lifelong policies in Greece must face in the process of coping with prolonged unemployment, brain drain and brain waste.

Linking active labour market policies to digitalisation–a review between remote and automated possibilities

PurposeThe purpose of this article is to develop a conceptual framework that sets out the linkages that exist between digitalisation and active labour market policies (ALMPs).Design/methodology/approachBased on a narrative literature review, this article seeks to connect two research streams, namely that relating to ALMPs and that relating to digitalisation in the public sector. This exercise requires an understanding of both how the context of digitalisation in the public sector has evolved in relation to technological change and the identification of specific ALMPs that are more sensitive to digitalisation.FindingsStarting from the identification of ideal-types of ALMPs, “employment assistance” can be considered the type of policies most sensitive to digitalisation, looking at main forms of interventions as career guidance, profiling and job-matching tools. The first tool is closer to a technological domain of “remotisation”, while the second is closer to that of “automatisation”.Practical implicationsAchieving an understanding of the different degrees of sensitivity to digitalisation for various types of ALMPs is relevant for policy-making purposes to identify potential priority areas of strategic investment to enhance this sector.Originality/valueThe authors present an understanding of the current state of the digitalisation of public employment services. The literature review itself allowed the authors to conclude that, despite the interests in the public and academic debate, the existing research relating to the digitalisation of public employment services remains scant. At the same time, the article points towards fertile areas for further analysis.

“You have to work…but you can’t!”: Contradictions of the Active Labour Market Policies for Refugees and Asylum Seekers in the UK

AbstractThe discourse of deservingness has been mobilised against certain groups in the UK society navigating UK labour markets, among them refugees and asylum seekers. These discourses, leading to the stigmatisation of the unemployed are coupled with an emphasis on the importance of individuals taking responsibility to develop their ‘employability’. Little attention has been paid to scrutinise the contrast between the deservingness rhetoric and policy making with the actual conditions newcomers, and in particular refugees and asylum seekers, are confronted with when seeking employment. Our paper fills such a gap by indicating key contradictions at the heart of labour market integration in the UK. On the one hand, the emphasis on deservingness is coupled with policy discourses that construct an environment shaped by welfare and labour market chauvinism. On the other hand, the policy architecture is fundamentally flawed in a number of ways in terms of the support mechanisms necessary to ensure that newcomers can successfully integrate into the labour market.

Jobcenters’ strategies to promoting the inclusion of immigrant and native job seekers: a comparative analysis based on PASS survey data

This paper comparatively analyzes strategies of German Jobcenters to bring native and immigrant job seekers into employment. It focuses on clients who receive means-tested basic income for the unemployed, based on data from the Panel Study Labour Market and Social Security (PASS) from year 2015 to 2020. By way of logistic regression, the study identifies the impact of being an immigrant on the clients’ probability of reporting different kinds of offers like job referrals or courses, controlling for a number of other influential factors. The study also looks deeper into the effects of immigrant-specific attributes, such as heterogeneous German language skills. We found that the likelihood of offers by Jobcenters largely depends on the amount of time since immigration. Recent immigrants have the lowest chance of reporting most of the studied measures of active labor market policies. For immigrants having stayed more than 4 years in Germany, however, we do not find a disadvantage, and some measures out of Jobcenters’ toolbox are even more often offered to the longer-settled immigrants than to native clients. A possible explanation for the moderately under-average support of recent immigrants in terms of Jobcenters’ measures could be an institutional focus on improving German language skills prior to approaching the labor market.

Effectiveness of Active Labour Market Policies in the EU Countries for the Young Unemployed People and Implications for the Post-pandemic Period

The Covid-19 pandemic has exposed vulnerability of young people in the labour market. Young people are faced with risks and an uncertain future, as well as changing the nature of labour markets. Active labour market policies are addressed as the main instrument to improve employment possibilities of young people in the light of the Covid-19 pandemic situation and its aftermath. This paper analyses the effectiveness of active labour market policies in reducing youth unemployment for the EU-26 Member States using aggregate data. Based on dynamic generalised methods of moments-GMM panel data approach, we find that active labour market policies do not support reduction of youth unemployment. Moreover, unfavourable prospects in the formal sector push young people into the informal sector. Considering the multiple shocks with which young people are being faced with, and the long-term pandemic impact, it suggests the scarring effect for young people. The analysis of the effectiveness of active labour market policy in reducing youth unemployment is of particular policy relevance, as the negative effects of the pandemic COVID-19 crisis are imminent, and the labour market situation is expected to worsen due to the fall in economic activity. Different measures of success would bring societal benefits not only from the public health perspective, but also from the perspective of well-being of young people. Moreover, OECD & European Commission (2022), in their joint policy brief, argue that investing in the growth sectors such as the circular economy, digital economy and the green economy would have the potential to employ young job seekers.

Which Active Labor Market Policies Work for Male Refugees? Evidence from Germany

AbstractIn this paper, we estimate the causal effects of a set of active labor market programs for male unemployed refugees on welfare who entered Germany between, 2013 and September, 2016. Using rich administrative data, we employ covariate balancing propensity scores combined with inverse probability weighting to estimate effects up to 33 months after the start of treatment. Our results show that relatively short-term training in the form of Schemes by Providers and In-Firm Training, as well as longer-term Further Vocational Training programs have a positive impact on both the employment chances as well as labor market earnings of refugees in the medium run. So-called “One Euro Jobs”, a public employment program, does not yield positive effects on employment or earnings. Sensitivity analyses confirm that our results are unlikely to be driven by unobserved confounding.

Wishing for More: Technological Change, the Rise of Involuntary Part-Time Employment and the Role of Active Labour Market Policies

AbstractTechnological change has squeezed the demand for middle-skill jobs, which typically involve routine-intense tasks. This squeeze has coincided with an increase in the number of part-time working individuals who wish to work more hours. We argue that these two trends are linked. Due to the decline of middle-skill employment, medium-educated workers shift into low-skill employment, increasing the supply of labour for jobs in this segment of the labour market. This pushes those dependent on these jobs to accept part-time jobs, even if these involve fewer hours than they prefer. To empirically assess this claim, we analyse involuntary part-time employment across 16 European countries between 1999 and 2010. Our analysis confirms that a decline in middle-skill employment is associated with an increase in involuntary part-time employment at the bottom end of the labour market. This finding implies that the automation of routine-intense labour worsens employment possibilities in this segment of the labour market. However, we show that training and job creation schemes mitigate this effect. These programmes cushion competition either by providing medium-educated workers with the necessary skills to shift into high-skill jobs or by increasing employment possibilities. Thus, governments have the tools to support workers facing challenges in the knowledge economy.

Jobs against poverty: a fixed-effects analysis on the link between gaining employment and exiting poverty in Europe

ABSTRACT This article analyses the role of gaining employment in escaping poverty at the individual level by using EU-SILC pooled panel data for 2010–2017 for 30 European countries. We assess this in a dynamic research setting using individual fixed effects that take into account unobserved time-invariant heterogeneity between individuals. We focus on the type and intensity of employment and the role of gender, education, and age. Overall, gaining employment increased the chances of exiting poverty by 33 percentage points among men and 30 percentage points among women. Shorter employment spells and part-time employment were less effective routes out of poverty. The results also suggest that poor individuals with higher education were more likely to benefit from employment to exit poverty. We found substantial cross-country variation. However, the unemployment rate, prevalence of precarious employment or spending on active labour market policies did not moderate the association between gaining employment and exiting poverty. Further analysis is needed on the institutional factors supporting poor people’s employment and its effectiveness in significantly improving income level.

Suicide among Older People in Different European Welfare Regimes: Does Economic (in)Security Have Implications for Suicide Prevention?

Older adult suicide rates vary widely within Europe, and differential welfare policies might contribute to this. We studied variations in economic indicators and suicide rates of people 65+ across 28 European countries and examined the effects of these indicators on suicide rates, grouping countries according to their socio-political systems and welfare regimes. Suicide data was obtained from the WHO European Mortality Database. The European Union Statistics on Income and Living Conditions and the European Union Labour Force Survey provided data on economic indicators. Linear mixed models were applied. Suicide rates ranged from 4.22/100,000 (Cyprus) to 36.37/100,000 (Hungary). Material deprivation was related to elevated suicide rates in both genders in the pooled data set and in men but not women in the Continental and Island countries. Higher ratio of median income (65+/under 65) was associated with lower likelihood of suicide in women in the South-Eastern European countries. In the Nordic region, the 65+ employment rate was associated with a decreased likelihood of suicide in men. These factors to some extent show economic insecurity against older people, which influences the likelihood of suicide. Active labor market policies and inclusive social environment may contribute to suicide prevention in this age group.

Activation programs for unemployment benefit recipients in Slovenia

Abstract Activation of the unemployed has been an important topic among policymakers during the last decades. This paper reviews the current measures in Slovenia in the area of activation of unemployment benefit recipients and it compares its formal requirements related to activation against the international background. The paper focuses on five activation areas: adjustment of unemployment benefit eligibility, improving employment services, participation in active labour market policies, monitoring and sanctions. The review lists several recommendations Slovenia should apply to activate unemployment benefit recipients, including introducing more demanding job search requirements and increased monitoring of the compliance with these requirements, introducing compulsory participation in active labour market programs, checking the consistency and effectiveness of the current profiling system, and strengthening the ex-ante effect of sanctions.

Unemployment and labour market recovery policies

Evidence shows long-term unemployment (LTU) can have life-long scarring impacts on the future employment and earning prospects of individuals and lead to an overall deterioration in the wellbeing of communities. This article examines long-term unemployment in India, providing some of the first estimates from a panel of individuals before and during the pandemic. It shows that LTU makes up a substantial proportion of unemployment among the working-age population, particularly among young workers who have fared even worse since the pandemic. Existing benefits have proven inadequate in addressing long-term unemployment and young workers have a strong desire for active labour market policies from the government to address the worklessness crisis. A national-level commitment to active labour market policies could prevent a lost generation of young workers from falling into long-term unemployment and the ills that accompany it.