What Works? Active labour market policies as pathways to decent work

Decent work is a cornerstone for escaping poverty, yet significant barriers remain. In 2022, 203 million individuals remained unemployed, and 585 million were working yet still living in poverty. Our research explores how Active Labour Market Policies (ALMPs) can help overcome these multifaceted barriers and improve employment outcomes. Barriers to decent work include poverty, resource inadequacy, skills mismatches, limited work experience, and informational gaps, all of which hinder access to quality jobs and living wages.

Active Labour Market Policies (ALMPs) are government policies aimed at providing assistance and incentives for people to look actively for jobs and ultimately (and as soon as possible) find suitable employment. They include policies that promote access to higher quality and more sustainable income-generating activities. The main categories of ALMPs considered in the What Works: Promoting Pathways to Decent Work report are:

Training Programmes: These initiatives aim to improve employability and enhance future career paths through acquisition of skills.

Public works: Compensate shortcomings in private sector job creation in order to alleviate poverty and promote community development.

Employmentsubsidies: Provide incentives for hiring new staff and maintaining jobs by reducing labour costs.

Self-employment and micro-enterprise creation: Provide both financial and logistic support for self-employment or micro-entrepreneurship.

Labour market services: Connect jobseekers with employers through career advice, job-search assistance and other measures promoting reintegration into the labour market.
The findings from our multi-year research are presented in two interrelated reports. The first report examines the effectiveness of ALMPs for different groups, emphasizing among other things that effectiveness hinges on implementation aspects, and pinpointing which aspects matter. The second report delves deeper into these implementation matters, particularly exploring how the joint provision of ALMPs with income support can enhance participation thereby improving the effects. Income support sustains workers’ incomes, preventing them from falling into poverty and giving them the opportunity to take part in ALMPs.

Together, the research highlights how strategic design and joint implementation of ALMPs and income support can address multifaceted barriers to decent work, especially in the context of temporary economic shocks and environmental crises, paving the way toward sustainable employment opportunities and improved life trajectories for workers, particularly in emerging and developing countries.

News

Latin America is characterized by being one of the regions with the highest levels of labour informality. Governments in the region have implemented a set of interventions aimed at promoting the transition from the informal economy to formalization. While there have been attempts in the literature to analyse their overall impact, there assessment has not been systematic, failing to take into account several policy types that are central in the fight against informality. To fill this gap in research, we are carrying out a meta-analysis considering all available publications that have evaluated the impact of the various public policies on business or worker formalization. The study takes a broad approach to define labour formalization policies following ILO Recommendation No. 204. Preliminary results suggest that interventions related to labour inspections and regulatory changes are the least effective in terms of achieving greater formalization of workers and productive units. Conversely, reducing employer contributions, simplifying registration, and providing training and labour intermediation are interventions particularly effective in achieving this objective. Based on the findings, this document also proposes policy recommendations.
Although skills development programmes are often used as a tool to improve individuals’ labour market outcomes, there is a lack of understanding regarding their effectiveness in various contexts for different population groups. To fill this gap in knowledge, we are currently carrying out a meta-analysis structured according to the types of skills development programmes and targeted populations. The results of this study will provide a better understanding of how skills development policies should be implemented in order to be the most effective in improving workers’ employment outcomes.

Reports

What works: Promoting pathways to decent work

What works: Promoting pathways to decent work

This report analyses how income support and ALMPs can come together to tackle a significant set of barriers limiting access to decent work in emerging and developing countries.

Active labour market policies in Latin America and the Caribbean

Active labour market policies in Latin America and the Caribbean

Latin America and the Caribbean region achieved significant economic, labour market and social progress over the past decade while implementing an increasing number of active labour market policies.

Working Papers and Articles

Why should we integrate income and employment support? A conceptual and empirical investigation

Why should we integrate income and employment support? A conceptual and empirical investigation

18 July 2022

Welfare Effects of Unemployment Benefits when Informality is High

Welfare Effects of Unemployment Benefits when Informality is High

5 August 2021

Joint provision of income and employment support: Evidence from a crisis response in Uruguay

16 January 2019

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Research Briefs

Combating Extreme Poverty by Providing Active Support as Part of a Conditional Cash Transfer Schemes

ILO What Works Research Brief No. 15

Combating Extreme Poverty by Providing Active Support as Part of a Conditional Cash Transfer Schemes

16 October 2019

Expanding Access To Unemployment Benefits And Active Support To Cover Informal Workers

ILO What Works Research Brief No. 14

Expanding Access To Unemployment Benefits And Active Support To Cover Informal Workers

16 October 2019

Meeting The Challenges of a Changing World Of Work by Combining Income Support and Active Labour Market Policies

ILO What Works Research Brief No. 13

Meeting The Challenges of a Changing World Of Work by Combining Income Support and Active Labour Market Policies

16 October 2019

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Compendium of Labour Market Policies

The policy compendium collects information on labour market policies implemented in a range of LAC countries since the 1990s. Among other information, for each intervention it provides a description of the programme, the target group of beneficiaries, the number of participants and the level of public expenditures. The entire policy compendium can be assessed electronically . Its main results and trends are also presented in the report (Chapter 2).

Discover now the Compendium of Labour Market Policies

Based on a summary and analysis of labour market policies over the last two decades undertaken as part of the project, the research project concludes that many countries in Latin America do not have an integrated system of active labour market policies, even if evidence resulting from the implemented programmes in the region show that these policies have positive impacts.

The research project also highlights that training programmes, employment subsidies and programmes to support self-employment and micro-entrepreneurship have shown positive results in the region, but that these policies still represent an untapped potential in the region. In fact, despite the increased prevalence of ALMPs in the region, only in few a countries like Argentina, Brazil and Chile, is the level of investment in active labour market policies (ALMPs) comparable to the levels registered in high income countries. In other countries of Latin America and the Caribbean there are either no such policies or spending levels are very low.

Aside from putting a major emphasis on these active labour market policies, the research project highlights the need to improve the ALMPs in the region so that countries can take full advantage of their positive effects. It goes on to propose a series of improvements in the design and implementation of ALMPs, such as creating incentives to increase the number of beneficiaries, adapting the policies to the specific context and making sure that programmes benefit all of the target population.

Presentations and conferences

What works: Promoting pathways to decent work

17 October 2019

An urgent policy reorientation for Latin America and the Caribbean

1 June 2016

Contact

Verónica Escudero

Senior Economist and Chief, Active Labour Market Policies and Policy Evaluation Team, ILO Research Department

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Hannah Liepmann

Economist, Skills, Active Labour Market Policies and Policy Evaluation Team, ILO Research Department

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Isaure Delaporte

Economist, Skills, Active Labour Market Policies and Policy Evaluation Team, ILO Research Department

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