Second Vienna conference on Western Balkan labor markets An overview of labor market services and measures in the Western Balkans Second Vienna conference on Western Balkan labor markets Vienna 19-20 March 2018 Mihail Arandarenko

Monitoring of labor market policy in EU LMP statistics covers public interventions in the labor market carried out with the goal to Achieve efficient functioning of labor market by correcting disequillibria (e.g. information defficiences, skill mismatches) Assist vulnerable groups (distinguishing LMP from general employment policy) Primary but not only target group – persons registered with PES LMP is increasingly concerned with Persons at risk of job loss, Persons requiring support to remain in employment, Formally inactive persons attempting to join or reintegrate into labor force

Labor market policy statistics Eurostat defines the scope of data collection, statistical unit and coverage, classification system and guidelines on the data to be submitted Methodology is available to all at the Eurostat / DG Employment website For each intervention a separate questionnaire is filled – because each intervention is one unit of observation National interventions are classified based on the joint EU classification to secure consistency and comparability at the EU level LMP interventions are classified by the type of action There are three broad groups of intervention – services, measures and supports, comprising the total of 8 categories Services and measures together make active labor market policy (ALMP)

Services within LMP Organized within a single Category 1 - Services Information on vacancies Job search training and other related services Career development services Other similar activities

LMP measures Category 2 – Training Category 4 – Employment incentives Category 5 – Sheltered employment and rehabilitation Category 6 – Direct job creation Category 7 – Start-up incentives

Main benefits from ’europeanization’ of monitoring labor market services and measures (ALMPs) Well developed and ready to use statistical methodology applied in most EU countries and in OECD Detailed methodological instructions, easy to use software, standardized questionnaire Harmonized methodology makes it possible to compare the comparable, in relation to EU averages and benchmark countries Currently, each Western Balkan country has its own methodology (typically implicit and incomplete) that deviates significantly from Eurostat

National vs. Eurostat classification of LMP National classifications No single criterion – mostly by the type of action, but also target groups, or their combinations (e.g. Youth packages) Not standardized (implicit) and not systematized, with frequent changes Sometimes mechanical reliance on the title of measure (e.g. if ’training’ in title, goes to category Training) Not fully comprehensive (often omits measures to sustain employment, job rotation, job sharing, tax subsidies etc.) Eurostat classification Single basic criterion – by type of action Clear and detailed definitions ensure comparability Full coverage (beyond PES activities) – based on detailed guidelines what is to be considered LMP intervention

RCC/ESAP sub-project on ALMPs in WB6 November 2016 – March 2017 Use for the first time Eurostat classification of LMP – need to re- classify existing documentation Insert missing programs that are not typically part of national ALMP statistics – such as supported employment, rehabilitation, LMP measures outside PES Provide statistics that is more comparable within the region and with the EU on Total expenditures on ALMPs and their structure by categories and individual measures Total number of participants and their structure by categories and target groups

RCC/ESAP sub-project on ALMPs in WB6 November 2016 – March 2017 – cont’d Some important limitations Expenditures on services could not be calculated in accordance with Eurostat rules (include costs of staff time), but were simply taken from national statistics, which have either completely ignored costs of staff time, or have not fully accounted for it Number of participants could not be re-calculated following the Eurostat procedure, but was taken at face value. Both things combined make services look unrealistically efficient and effective, underestimate the true costs and overestimate the number of participants

Expenditures on ALMP as share of GDP – Western Balkans vs. EU countries

Albania – spending and participants

Albania – allocation of expenditures across categories

Kosovo – spending and participants

Kosovo* – allocation of expenditures across categories

FYR Macedonia – spending and participants

FYR Macedonia – allocation of expenditures across categories

Montenegro – spending and participants

Montenegro – allocation of expenditures across categories

Serbia – spending and participants

Serbia – allocation of expenditures across categories

BiH: Federation BiH – allocation of measures across categories

BiH: Republic of Srpska, allocation of measures across categories

Some tentative conclusions Expenditures on ALMP well below CEE average and far below EU average, even if upwardly corrected for underestimation of services Montenegro is the only country with ALMP expenditures close to CEE/EU average, other below 0.2% of GDP Two sub-groups – with relatively balanced (Serbia, FYR Macedonia, BiH - Federation BiH) and with unbalanced expenditures across categories (Albania, Kosovo*, Montenegro, BiH: Republic of Srpska)

ALMP statistics - way forward Switching to Eurostat LMP statistics is relatively easy – Serbia has tried and is about to implement it Still, it requires Re-classification of LMP services and measures Centralised monitoring of all ALMP (Ministry or PES?) Revision of expenditures (accounting for staff time, allocation rules) Revision of participants (definitions of entrants and exiters, weighting the number by the time spent in the measure etc.) New monitoring methodology will be much better base for Net impact evaluations of ALMPs and Cost-benefit analysis