Active labour market policies in the EU
At a public hearing in the European Parliament, Steven Tobin discussed some key considerations for implementing effective active labour market policies (ALMPs) in the EU.
3 December 2015
At a hearing organized by the Employment and Social Affairs Committee of the European Parliament, Steven Tobin, Team leader Policy Assessment Unit at the ILO Research Department, discussed good practices with regard to ALMPs in EU Member States.
At a time when ALMPs were most needed to keep jobseekers attached to the labour market and upskill them for new emerging jobs, governments often drastically cut expenditure on ALMPs to balance their budget. For instance, between 2011 and 2013, governments in the EU reduced spending on ALMPs as a share of GDP despite a twofold increase in the share of long-term unemployed. However, such a fiscal consolidation strategy often proves detrimental to long-term growth as it reduces the employment prospects of the labour force. “If well designed”, Mr Tobin explained, “Active labour market policies can be fiscally neutral in the medium-term as they help people back to work and halt the skills erosion that leads to lower future earnings.”
To be effective, ALMPs need to address the barriers which impede jobseekers to return to productive employment. Hence the need for effective public employment services to detect which specific obstacles to reintegration jobseekers face and how they can be overcome by tailor-made interventions. Social partners have a crucial role to play in this as the relevance and the take-up of activation measures can only be enhanced if all concerned parties work together.
Intervening early in the job separation process can also increase the likelihood of re-employment. Longer unemployment spells enhance skills erosion and increase the risk of abandoning the job search, which makes a transition to inactivity more likely. Training can smooth the transition between unemployment and employment spells by protecting skills levels and providing incentives to keep people attached to the labour market.
Mr Tobin also pointed to the importance of life-long learning. The skills required in the labour market change so rapidly, that the gap between supply and demand can exacerbate very quickly. It is therefore crucial to ensure that skills are constantly upgraded, which also improves one’s chances of re-employment.
Supply-side measures are only part of the equation, however. For labour markets to generate sufficient employment opportunities, additional investment is needed to boost labour demand. Hence the importance of the Investment Plan for the EU, which by reducing risk for private actors, aims to boost investment and create jobs. Importantly, the employment impact of this Plan – as evidenced by ILO research – will be greater and more equitable if funds are allocated with consideration to unemployment levels and if complementary support is provided in the form of ALMPs.
All of these considerations require sufficient government and institutional capacity, a culture of evaluation of what works well, and a smooth interaction between demand and supply side interventions.
At a time when ALMPs were most needed to keep jobseekers attached to the labour market and upskill them for new emerging jobs, governments often drastically cut expenditure on ALMPs to balance their budget. For instance, between 2011 and 2013, governments in the EU reduced spending on ALMPs as a share of GDP despite a twofold increase in the share of long-term unemployed. However, such a fiscal consolidation strategy often proves detrimental to long-term growth as it reduces the employment prospects of the labour force. “If well designed”, Mr Tobin explained, “Active labour market policies can be fiscally neutral in the medium-term as they help people back to work and halt the skills erosion that leads to lower future earnings.”
To be effective, ALMPs need to address the barriers which impede jobseekers to return to productive employment. Hence the need for effective public employment services to detect which specific obstacles to reintegration jobseekers face and how they can be overcome by tailor-made interventions. Social partners have a crucial role to play in this as the relevance and the take-up of activation measures can only be enhanced if all concerned parties work together.
Intervening early in the job separation process can also increase the likelihood of re-employment. Longer unemployment spells enhance skills erosion and increase the risk of abandoning the job search, which makes a transition to inactivity more likely. Training can smooth the transition between unemployment and employment spells by protecting skills levels and providing incentives to keep people attached to the labour market.
Mr Tobin also pointed to the importance of life-long learning. The skills required in the labour market change so rapidly, that the gap between supply and demand can exacerbate very quickly. It is therefore crucial to ensure that skills are constantly upgraded, which also improves one’s chances of re-employment.
Supply-side measures are only part of the equation, however. For labour markets to generate sufficient employment opportunities, additional investment is needed to boost labour demand. Hence the importance of the Investment Plan for the EU, which by reducing risk for private actors, aims to boost investment and create jobs. Importantly, the employment impact of this Plan – as evidenced by ILO research – will be greater and more equitable if funds are allocated with consideration to unemployment levels and if complementary support is provided in the form of ALMPs.
All of these considerations require sufficient government and institutional capacity, a culture of evaluation of what works well, and a smooth interaction between demand and supply side interventions.