To overcome the insufficiency of information and evidence about the impact these measures produce, in 2012, the International Labour Organization in cooperation with the Ministry of Labour and Social Policy and the Employment Service Agency, conducted an external evaluation of the ALMPs, a performance evaluation. The survey conducted a performance measurement of three active programs: self-employment program, training for known employer and wage subsidies (Corbanese, 2012). In 2012, an evaluation has been conducted of the self-employment program (2008-2011) implemented by the UNDP (O’Higgins and Kirevska, 2012). According to this research, the self-employment program operates efficiently and effectively, has a net positive impact on the Macedonian economy and contributed to the reductions in long-term unemployment. However, there are some areas that require additional improvements: better regional distribution because grant awards do not necessarily go to those regions in most need; better understanding of the positive role of the impact evaluation that can play a constructive role in a number of ways; and decreased tendency in understanding the problem with unemployment only in terms of reduced registered unemployed persons, because a reduction in registered unemployment does not necessarily correspond to an increase in employment or to a reduction in unemployment as measured by the internationally accepted ILO criteria.
There is another political economy issue which comes to the fore when activation ap- proaches are extended to recipients of disability benefits: is there general public support for such a move? The evidence shows that public opinion is usually favourable to acti- vation policies targeted to the unemployed. However, there is much less public support for extending benefit conditionality and activation approaches to people with health problems. The disabled, in particular, have very active lobby groups in all countries, and these lobbies are very reticent about activation. The UK provides a very clear example of such reticence. Since 2008, the attempt to activate ESA recipients has been a continual source of public concern, often focalising around the use (or abuse as the lobbies tend to argue) of the WCA in order to shift people off disability benefit and on to JSA. Attempts have been made to refine the WCA to remedy deficiencies, but assessments are often challenged and overturned on appeal. Nor is this problem of lack of public support for activating people with health problems confined to the UK, such reticence also exists in other countries too, e.g., Australia, Switzerland and Norway.
The skill level and structure of the labour force is a concern in an immediate and medium-term perspective. While the average educational level remains relatively low it increases since the mid 1990s; the qualifications held by many workers will not meet the requirements of the new jobs; the participation rate of young people in the education system is low at tertiary level, a certain group does not continue beyond compulsory education All these features represent a major challenge given the important restructuring ahead and the need to support economic transformation by a stronger development of new sectors.
The total number of unemployed people registered by public employment services in Kosovo at the end of 2015 was 112,179 persons, of which 48,960 were women and 63,219 men (MLSW, 2016). Unemployment continues to be a major challenge, and based on the analysis it is shown that there is a large discrepancy between revenue and labourmarket outcomes. Although, according to Ministry of Labour and Social Welfare, during year 2015 there were 11,506 vacancies registered, but this number is still small if compared to the number of people entering the labourmarket which in Kosovo is about 25,000 people per year (Bellaqa, B., 2016). Understandably, the high level of unemployment in Kosovo is an inherited issue of Kosovo's economic development, so one of the key issues is creating a productive and efficient policy at the country level. The drafting of labourmarketpolicies for the reduction of youth unemployment should be oriented to the net income in the labourmarket in Kosovo, as the revenues are much higher when compared to the labourmarket outcomes (Bellaqa, B., 2012).
As one of the definitions states that economics is a science on how to allocate scarce resources among alternative uses, in this paper we observe expendi‐ ture on activelabourmarketpolicies as a government investment, and con‐ sider financial funds available to the government to be scarce. We are analys‐ ing whether those „investments“, from the economic point of view, are bene‐ ficial to the Governments (and tax returns), while at the same time taking into account opportunity costs of such „investments“. Just like the firm max‐ imizes its profits by selecting the level of output, alternative technologies and deciding on how much input to introduce; like the government seeks to max‐ imize its returns to investments in ALMPs along with minimizing the levels of unemployment. The returns in this paper are considered to be any type of tax (or similar) returns to the budget, created as a result of new employment created by the interventions in different types of ALMPs. In order to assess the returns from public expenditures, economists and other scientists have long relied on social cost‐benefit analysis.
The penultimate reform introduced by the 43/2006 Act was preceded by the 2004 “Declaration for Social Dialogue on Competitiveness, Stable Employment and Social Cohesion”, endorsed by the CEOE, CEPIME, UGT, CC.OO and the President of the Government. In line with European employment strategy directives, its purpose was to tackle the two biggest problems afflicting the labourmarket in Spain since the transition: the low rate of employment (insufficient volume of employment) and the high degree of temporariness. A limit was set for the size of temporary contract chains, whereby only two or more temporary contracts signed by the same company with the same worker for the same job were allowed. In addition, when an employee had worked in the same company for more than 24 months in a period of 30 months, he or she would automatically be made per- manent. Measures were also set up to boost active employment policies and the capacity of the national em- ployment system to act and improve worker protection as a response to the lack of jobs. Incentives to take on staff covered women in general, women taken on within 24 months of their date of confinement or adoption, women going back to work after 5 years outside the labourmarket, the over-45s, young people aged 16 to 30, people who had been unemployed continuously for 6 months, and people with a disability. Improvements were also made to the Wage Guarantee Fund from which workers were paid if their company went bankrupt, taking charge of redundancies. Social integration contracts were eliminated (Gorelli, 2007).
whether it achieves sufficiently large net social benefits (macro-evaluation). Finally, it should answer the question whether this is the best outcome that could be achieved for the funds spent. Since there has been a great progress in the IT sector in the past fifteen years, such as databases and various state institutions and the associated improved, there cam an opportunity for adding a fourth step - to evaluate the net social gains from policy implementation. This fourth step is based on Harrella and Razik principle with a difference that at macroeconomic level we do not assume that the increase in the level of employment is the main goal of active measures. It is necessary to conduct the evaluation coverted into monetary value, where the input parameters - the amount of funds allocated to ALMP, should be compared with output parameters - the value of increased gross value of work of new employees for the time spent at work over time.
It should be noted that the three-year preparatory period is too long and indicates that the institutions have not had sufficient preparation in the elaboration of programs. They act sluggishly during the process of their approbation. The necessary institutional infrastructure (legal basis) and labour capacity for conducting policies develops slowly. Another specific characteristic is the existing mismatch between the actual needs of the labourmarket and the envisioned policies. This creates an attitude of “absorbing some funds” and an insufficiently accurate assessment of long- term goals. In the conditions of strict financial restrictions, the resources from ESF constitute the main source of support provision for policies, including anti-crisis ones. This approach of transferring activepolicies from the State budget towards co- financing by ESF does not contribute for further restructuring of the labourmarket. The policies for encouraging employment and labor productivity comprise 21% and 18% respectively of the resources allocated within the framework of the program. BGN 216 million have been allocated for encouraging economic activity and BGN 185 million for increasing labour productivity, making a total of EUR 402,4 million which is 39% of total funding for human resource development for the period 2007- 2013.
In Ireland unemployment averaged around 4.5 per cent between 2004 and 2008 but spending on passive income support was higher than that on active measures. The share of spending on active measures as a proportion of total unemployment-related public spending actually declined during this period, from 42.6 per cent to 40.5 per cent. Perhaps this goes some way to explaining the persistence of unemployment in Ireland over this period of rapid economic growth, labour shortages and the successful absorption of large numbers of migrant workers into the Irish labourmarket. Given the buoyant macroeconomic conditions apparent during the middle of the last decade, the level of unemployment could arguably have been reduced below the 4.5 per cent mark 1 . The provision of income support is essential during an economic downturn; however, in most countries the emphasis appears not to shift in the direction of active measures during periods of low unemployment. Obviously unemployment rates within any particular country will depend on both activation measures and a range of other macroeconomic factors.
In the end of 2008 the international crisis began to manifest in Bulgaria. The crisis is characterized by an increase in unemployment and the interests of the state should logically be focused on preserving jobs and preventing a “boom” in unemployment. This did not happen because of prioritization of strict fiscal restrictions, implemented as a tool for combating the crisis. Fiscal restrictions were implemented in the field of activelabourmarket policy (ALMP) as well. The financial restrictions in all channels of the economic system caused the loss of jobs, bankruptcies of the small- and medium-sized businesses and naturally limited job opportunities for the unemployed. I.e. excessive fiscal discipline restricted employment policy to a minimal number of participants in employment programs. The decrease in the number of employed individuals had a positive impact over the productivity of labour; however, this did not occur as a result of a restructuring of employment and of the lines of manufacturing, but rather predominantly as result of the decrease in employment.
Available data from the AISO show a substantially stable redeployment mar- ket with few variations over the years. From 2008 to 2015, the average number of redeployed workers was around 6577, of an average total of 8000 people assisted per year, with a rate and average relocation time of 82% and 6 months, respec- tively . This trend could begin to grow thanks to recent legislative action, greater awareness of the law, the new attitude of the social partners towards ac- tive policies and a general framework aimed at disincentives for passive policies. There are various effects of outplacement on recruitment. A survey by ACF-Europe, conducted on a sample of almost 100 decision makers working in the field of human resources in Germany, has identified three significant effects: 1) avoiding legal action related to company downsizing plans; 2) giving a sign of social responsibility to the employees who remain in the company; 3) giving dismissed workers a demonstration of fairness . But there are also others: 4) the presence of incentives and concessions to employers who hire workers regis- tered in mobility, unemployed or income support lists and enrolled in out- placement programs; 5) programs to actively assist workers expelled from pro- duction processes before retirement age to remain employed until they reach that age 6 ; 6) the assisted management of company employee turnover; 7) in-
Clausen et al. (2009) analysed effects for newly arrived immigrants in Denmark using the same methods as in this paper and found significant effects for subsidized employment (a reduction in the restricted mean duration to employment of about four months over a four-year period), but not for direct employment programmes or other programmes. There may be several explanations for the large ALMP effects which we estimate in this paper compared to Clausen et al. (2009). The effects in Table 3 are calculated over a longer time horizon (5 years instead of 4), but more importantly, the two samples of immigrants are very different. The group studied in the present paper is a much more selective group of immigrants, the majority of whom had been living in Denmark for many years and at the same time with very limited working experience in Denmark, who were older, and who had more health problems (measured by GP visits). Thus, this group of immigrants have a very weak attachment to the labourmarket and their basic hazard rate to employment is very low (see Figure 1). Given this weak back- ground, ALMPs may help these immigrants to obtain more basic knowledge of the Danish labourmarket (and society in general) and provide contacts to firms. This is of course a general purpose of ALMPs, but it may be particularly important for groups with a very weak position in the labourmarket and a very limited network. In particular, this may be one of the reasons why we find positive in-programme effects and positive effects of direct employment programmes (which are often found to have small and insignificant effects for natives). The earlier study by Clausen et al. (2009) focused on all newly arrived immigrants who arrived later (from 1999 onwards) than the group studied in the present paper and received a more comprehensive ‘ introduction programme ’ including extensive courses in the Danish language and society, and regular meetings with case workers, and in addition more extensive offers of ALMPs. Therefore, the marginal effect of ALMPs may be smaller for this group which also includes a larger share with a strong commitment and ability to work (because it is not selected in terms of labourmarket success in the host country).
unemployment is not a good enough definition of the disadvantaged group. Because of the severe lack of vacancies people of all ages and human capital levels may well drift into long-term unemployment. Many of the long-term unemployed would be considered for a vacancy, especially in a recovery period and this group would not reduce the effective supply of labour. We would argue that the group out of the effective labour force is comprised of people with minimal human capital levels and very long unemployment spells. It is this smaller group only, a subset of the long-term unemployed, which could be a source of hysteresis. Secondly, vacancies remained at very low levels through most of the eighties. For the given vacancies there was a plentiful effective supply of labour. Hence, the existence of a disadvantaged group cannot be a major source of wage pressure and therefore hysteresis. However, in times of a recovery, if the ES have failed to reintegrate the disadvantaged group into the effective labour force, the human capital explanation of hysteresis will become relevant. To evaluate the ES is also to see whether they can prevent hysteresis of this type, fulfilling their longer-term economic function. By the end of the eighties the government’s activelabourmarketpolicies were mainly targetting all the long-term unemployed. As explained above we feel, however, that the truly disadvantaged group is only a subset of the long-term unemployed. If placement officers take the best of the long-term unemployed5, they might not be reintegrating the truly disadvantaged group. We, therefore, feel that the ES may not achieve their longer-term economic function.
Although elements of activelabourmarket programmes concerned with availability and job-search conditions and sanctions are generally not considered social investment (Bonoli 2012; Garritzmann et al. 2017), it has been argued that such eligibility criteria and sanctions (or ‘incentive reinforcement’, Bonoli 2010) are effective in activating jobseekers. Recently, a dataset on unemployment conditionality and sanctions has become available (Knotz and Nelson 2015), which makes it possible to examine the role of activation measures. Despite the fact that such elements are more likely to affect unemployment rather than employment and, additionally, are not considered social investment we decided to include them in one of our models as we do not yet know of any comparative analyses using the newly available data. Currently, Knotz and Nelson (2015) only provide three average scores related to unemployment benefit conditions and sanctions (see for more details: Knotz 2018). When using an unweighted mean of scores on availability requirements, job-search and reporting requirements, and sanctions rules, we find that stricter eligibility criteria and sanctions are associated with lower employment (not presented here). This could suggest that these criteria lead some jobseekers to prefer inactivity over unemployment, thereby leading to a lower job finding rate and hence less employment. While the positive estimate for ALMPs is replicated, several other variables are affected by the inclusion of this variable. Effort on care for the elderly and frail and maternity and parental leave are no longer statistically significant, whereas we suddenly obtain a statistically significant, negative, estimate for effort on early childhood policies.
With respect to the flexicurity triangle, ALMPs’ motivational effects (pre-program effects) have therefore proved to be more effective than qualification effects (post- program effects) in reducing the duration of unemployment. Treatment effects have mainly been investigated in terms of employability and transitions to work. However, within the scope of the European Employment Strategy further analyses are needed about ALMPs long-term effects on qualitative variables such as wages, employment duration and extent of working time. There is little compelling evidence that ALMPs in Europe have had a positive impact on participants’ wages (Heckman & al., 1999). Results stated in the literature remain controversial compared to the effects on employment probabilities. Consistent and positive effects have been found in Norway (Raaum & Torp, 2002). As for Denmark and Sweden results are very sensitive to the time period used and the methodology applied. Using fixed effects models Jensen & al. (1993) find small wage effects as regards labourmarket training programs whereas Westergaard and Nielsen (1993), based on a bigger cohort of participants found positive impacts. As regards labourmarket histories, common findings show that the duration of subsequent employment spells after participation increase for private job training, decrease for public job training while classroom training has no effect (Bonnal, 1997; Ham & Lalonde, 1996; Eberwin & al., 1997, Munch & Skipper, 2008).
In the empirical literature of unemployment rate characteristics, one can ﬁnd a number of diﬀeren- tiated approaches towards the unemployment rate dynamics and persistence as well as distribution (cfr. Decressin and Fatas (1995), Obstfeld and Peri (1998) or more recently Armstrong and Taylor (2000)). Perugini, Polinori and Signorelli (2005) use NUTS2 level data and inquire the regional diﬀerentiation of Poland and Italy. Marelli (2004) focuses on specialisation for NUTS2 EU regions with tripartite desaggre- gation (industrial, agricultural and service sectors) reaching the conclusion that convergence in economic structures occurs, while income does not. However, Marelli (2004) analyses predominantly income and economic convergence and not explicitly the underlying fundamentals (like, for example, labour markets performance). Overman and Puga (2002) perform conditional kernel density analyses of European un- employment rates taking into account the distributions of underlying fundamentals (eg. the skills, the regional specialisation as well as the growth rates of population and the labour force).
for employment, while in a severe slump more core workers enter. Does this call for a different level or type of ALMP programmes? Thirdly, is the effect of ALMP policies business cycle dependent? There are two sides to this question since ALMP serves both to strengthen search incentives and to improve qualifications to enhance job finding possibilities. A slump may at the same time reduce the importance of the incentive problem and increase the importance of the qualification problem. The former because unemployment benefits may be less distortionary in a slump and hence the need to maintain search incentives via ALMP is accordingly smaller. The latter because a deep recession is associated with structural changes and therefore some core workers may find that their human capital to some degree becomes obsolete. Finally, the political support for ALMP may be business cycle dependent. It may seem more reasonable to have tight ALMP conditions when unemployment is low and job finding rates are high, and the opposite with high unemployment and low job finding rates.
The EiE report 2006 recognises that while a flexicurity strategy essentially calls for a loosening of EPL and greater expenditure on ALMP, such an approach can not only face popular opposition but also impose high fiscal costs, particularly at times of economic decline and high unem- ployment. Such policies may therefore be difficult to implement at Member State level. It is emphasised that any calculation of potential costs must also take into account the social and economic cost of a lack of ALMP intervention (e.g. in terms of UB and welfare payments). The report goes on to attempt a classification of EU coun- tries into a number of flexicurity models using the dimen- sions of spending on active and passive LMP (on the secu- rity axis) and EPL and LLL (on the flexibility and employa- bility axis). ‘The major fact emerging from this analysis is that the dimensions of flexibility and security in the labourmarket are complementary...’ However, it is acknowledged that such results are ‘tentative and prelim- inary’ and further investigation is necessary. At the same time it is essential for consensus building to take place between governmental actors, social partners and the wider public to generate acceptance for a flexicurity approach. With respect to this, systems with a long tradi- tion of corporatist interest intermediation between social partners and the government tend to show more success- ful outcomes in this respect. At the same time this, as well as the complex policy interaction of flexicurity policies, show that successful national approaches are not easily transferable into other institutional and policy set-ups.
specialisation too. 4 Such restricted flexibility in the short run will have to be followed by adequate institution building in the medium run. However, such institutions are to be built up not through State legislations solely. A major reason of the present disorder is that the present legislations have been imposed from above and not followed through labour organisations and labour struggles. So, the policies and legislations should emerge from consultations among, discussions with, and active participation of the workers themselves. The relatively better position of agricultural workers, especially in West Bengal and Kerala, bear testimony to the necessity of organising the unorganised workers before passing laws for them. Efforts made in this direction by VV Giri National Labour Institute in Madhya Pradesh, Rajasthan, Tamil Nadu, and Uttar Pradesh have also borne fruits (NLI, 2000). Institutions that require State sponsorship and guidance are those that would impart retraining and assistance in job search. The institutions conceived under the NRF are Employee Resource Centres, Employee Assistance Centres, and Area Regeneration Councils. These should not be restricted to retrenched workers only, but should be extended to all workers presently positioned or intending to join unorganised sector. Also, the programmes must be directed more towards self-employment rather than wage employment. Additional support to these workers in form of smooth and cheap credit, scientific and technical consultancy, incentive to form cooperatives, preference in purchase of materials would also go a long way in improving the conditions of unorganised workers. Ideal situation would see an integrated network of institutions, managed jointly by the government, trade unions and employers’ organizations functioning in a mutually interactive and supportive manner. In addition, it must be noted that investment, employment creation and growth are significantly affected by infrastructural availability, credit flow, and human resource embedded in the workers, along with labour costs. Improving the endowment of those other factors would also help in creating a more job-friendly environment. The State should understand that reforming labour legislations in a piecemeal manner would only deteriorate the already vulnerable position of workers countrywide.
Job insecurity is relatively low in Denmark, whether this is measured objectively by the risk and economic consequences of unemployment or perceived cognitive and affective job insecurity. The Danes score lowest among the six countries on the OECD labourmarket insecurity index (see Hijzen and Menyhert, 2016; Kalleberg, 2018), though this was due more to the relatively generous unemployment insurance provisions in Denmark than to the actual risk of job loss. That the risk of unemployment is not particularly low in Denmark is consistent both with the relatively low employer tenure and the prominent role played by flexicurity policies in that country. Denmark’s activelabourmarketpolicies provide support to those who lose their jobs by helping them to receive additional job- related training and placement services that facilitate their re-entry into the workforce, and by generous labourmarketpolicies that offer an economic cushion that enables the unemployed to maintain a reasonable standard of living while searching for a new job. The results for Denmark also reiterate the importance of workers’ institutional and associational power, such as the higher union density and collective bargaining coverage in Denmark, which in conjunction with the policies of Social Democratic political parties led to the social welfare protection and labourmarketpolicies that reduce job insecurity.