Public Employment Policy and Job Training Policy for Romania Dr. Minsik Choi (Professor, Ewha Womans University)

Issues To Be Discussed Current LMPs in Romania Evolution of the Korean public employment and job training programs Korean ALMPs during the 1997 economic crisis Public employment and job training policies in advanced countries Linking employment services and job training service to provide convenient services to targeted groups : One stop service Providing services through private sectors: Enhancing effectiveness of the programs Some policy implications

Active Labor Market Programs: OECD Categories Active measures Public employment services and administration Labor market training Youth measures Subsidized employment Measures for the disabled Passive measures Unemployment pension Early retirement for labor market reasons

Participation in Education and Training Participation in Education and Training in Romania (25-64 years), 2011 Working status Romania European Union Employed 1.3 9.5 Unemployed 1.5 9.1 Inactive 2.3 6.9 Total 1.6 8.9

Employment and Unemployment Rates Employment and Unemployment Rates, by highest level of education attained (%, ISCED levels) Romania EU Employment rate (20-64 years) Pre-primary, primary and lower secondary education (levels 0-2) 50.7 53.0 Upper secondary and post-secondary non-tertiary education (levels 3 and 4) 63.2 69.9 First and second stage of tertiary education (levels 5 and 6) 82.1 Unemployment rate (25-64 years) 6.9 14.8 6.4 7.6 3.8 5.0

Persons Registered with Public Employment Services in Romania Persons Registered with Public Employment Services in Romania (PES) Registered jobseekers (total) Jobseekers aged less than 25 years 2003 702452 130119 (18.52%) 2004 625128 124976 (20%) 2005 534393 99282 (18.58%) 2006 502806 84310 (16.77%) 2007 390183 62175 (15.93%) 2008 363369 58198 (16.02%) 2009 587892 67189 (11.43%) 2010 711348 101371 (14.25%)

Activation-Support in Romania Activation-Support in Romania (LMP Participants Per 100 Persons Wanting to Work) Total LMP measures (categories 2-7) 2006 2007 2008 2009 2010 European Union (27 countries) 32,5 35,1 33,5 29,3 : Romania 6,5 6,7 3,3 3,2 Netherlands 39,2 40,6 48,7 52,5 45,4 Austria 28,2 29,4 31,8 34,3 28,0 Poland 11,6 14,7 28,6 27,4 20,1 LMP supports (categories 8-9) 2006 2007 2008 2009 2010 European Union (27 countries) 40,4 38,8 40,2 48,2 44,6 Romania 16,2 13,4 11,4 24,2 27,1

LMP Expenditure LMP Expenditure - Percentage of GDP (Total LMP: Categories 1-9) 2006 2007 2008 2009 2010 European Union (27 countries) 1.83 1.61 1.62 2.17 : Netherlands 2.86 2.47 2.31 2.88 2.91 Austria 2.12 1.92 2.35 2.27 Poland 1.16 1.01 0.91 0.96 1.04 Romania 0.42 0.34 0.27 0.46 0.61

European Union (27 countries) 0.46 0.47 0.54 : Netherlands 0.72 0.80 LMP Expenditure LMP Expenditure – Percentage of GDP (LMP: Categories 2-7) 2007 2008 2009 2010 European Union (27 countries) 0.46 0.47 0.54 : Netherlands 0.72 0.80 0.78 Austria 0.51 0.67 0.66 Poland 0.40 0.53 0.60 Romania 0.08 0.06 0.04 0.03

Expenditure by LMP Interventions Expenditure by LMP Interventions – Romania (mil. Euro) 2003 2004 2005 2006 2007 2008 2009 2010 Labour market services 20,66 23,66 30,66 40,82 46,22 47,79 37,04 34,77 Training 5,04 4,82 10,70 11,76 12,75 12,41 4,15 4,24 Employment incentives 29,10 36,34 44,08 52,10 52,29 49,93 35,69 23,11 Direct job creation 20,43 31,01 33,18 29,17 20,08 7,99 7,37 Start-up incentives 0,24 0,38 0,39 0,81 0,83 1,05 0,04 0,03 Out-of-work income maintenance and support 275,33 296,86 313,95 270,82 283,71 242,51 449,61 679,61 Total LMP (categories 1-9) 353,49 382,49 430,79 409,48 424,97 373,76 534,52 749,13 Total LMP measures (categories 2-7) 57,50 61,97 86,18 97,84 95,04 83,46 47,87 34,75 Total LMP supports (categories 8-9)

Active Labor Market Programs Active Labor Market Programs: OECD Categories Active measures Public employment services and administration Labor market training Youth measures Subsidized employment Measures for the disabled Passive measures Unemployment pension Early retirement for labor market reasons

Evolution of Korean Employment and Job Training Programs Introduction of the employment insurance system in 1995 To prevent unemployment, to promote employment, to develop and improve the vocational ability of workers Started as active measures Setting up institutional frame for employment policy by utilizing unemployment insurance funds Significant amendment in 1997 and 1998 (financial crisis period) Generous eligibility requirements for unemployment benefits Grants to promote employment of the long-term unemployed added Establishment of Employment Stabilization Program expansion

Evolution of Korean Employment and Job Training Programs Introduction of One-stop service centers in 2005 Unemployment benefit services Employment information services Job skill development services Partnerships among employers’ organization, labor unions, job training institutions, NGOs to provide one stop services

Korean Unemployment Measures Table 3-3. Budget for unemployment measures (Billion Won) 1998 1999 2000 Total budget for unemployment measures 10071 15650 5922 Memorandum items measures as a percentage of GDP 2.2 3.2 1.1 Total expenditure on labour market measures as a percentage of GDP 1.5 2.7 0.8 Share of expenditures on active measures in total expenditure on labor market programs (%) 70 45

Expenditures on Labor Market Programs Table 3-4. International comparison of expenditures on labor market programs in periods of rising unemployment Unemployment rate Government expenditures on labor market programs as a percentage of GDP a) Trough Peak Change between peak and trough Australia(1989, 1993) 6.2 10.9 1.1 2.6 1.5 Belgium(1991, 1994) 6.6 10 3.9 4.2 0.4 Canada(1989, 1992) 7.5 11.3 2.1 2.9 0.8 Finland(1989, 1993) 3.1 16.4 2.2 6.7 4.6 France(1990, 1994) 9 12.3 2.7 3.2 0.6 Germany b) (1991, 1994) 8.4 Korea(1997, 1999) 6.4 0.2 2.5 New Zealand (1989, 1992) 7.1 10.3 Spain(1990, 1994) 16.2 24.1 3.4 3.8 0.3 Sweden(1989, 1994) 9.4 5.5 United Kingdom (1990, 1993) 10.5 1.6

ALMPS: Training Programs Table 3-5. Training programs for the employed: participation and expenditures, January to June 1999 Total In-plant vocational training Number of firms providing training 23011 (100.0) 16338 (71.0) Number of trained workers (A) 266478 257069 (96.5) Program expenditures (000's of Won) (B) 44842332 27776943 (61.9) Average expenditure per participant(B/A) 168.3 108.1 Paid training leave Subsidies for Course attendance Loans for school fees 148 (0.6) .. 6525 (28.4) 1425 (0.5) 15 (0.0) 7963 (3.0) 2604783 (5.8) 13525 14447081 (32.2) 1827.9 901.7 1812.9

ALMPs: Vocational Training Programs Table 3-6. Benefits of the in-plant vocational training program, by firm size, 1999 Firm size (number of workers) Total Less than 150 150-1000 More than 1000 Construction a) Subsidized firms (A) 43511 (100.0) 30478 (70.0) 9946 (22.9) 3087 (7.1) .. Firms paying Contributions (B) 601394 569417 (94.7) 4679 (0.8) 531 (0.1) 26767 (4.5) Firms' participation rate (%) (A/B) 7.2 5.4 212.6 581.4 Subsidized workers ( C ) 781408 98479 232062 450867 (12.6) (29.7) (57.7) Insured workers (D) 6054479 3569666 1258811 1132077 93925 (59.0) (20.8) (18.7) (1.6) Workers' participation rate (%) (C/D) 12.9 2.8 18.4 39.8 Amount of subsidies (000s of Won) 82764007 11600307 (14.0) 26606676 (32.1) 44557024 (53.8)

ALMPs: Outcomes of Training Programs Table 3-7. Outcomes of training programs for the unemployed Total Reemployment training a) of the unemployed under the EIS Training programmes not financed by the EIS Employment promotion Crafts -men 3-D jobs Business start ups New labor market entrants Other programs 1998 Total number of trainees 362941 (100.0) 170096 (46.9) 101709 (28.0) 14515 (4.0) 11000 (3.0) 13598 (3.7) 43012 (11.9) 9011 (2.5) Number of trainees who Completed the course 193837 116429 37465 12942 8724 12515 5762 .. Completion rate b) 53.4 68.4 36.8 89.2 79.3 92 13.4 Found employment c) 43470 (22.4) 26193 (22.5) 7218 (19.3) 6326 (48.9) 2610 (29.9) 561 (4.5) 562 (9.8)

ALMPs: Outcomes of Training Programs Table 3-7. Outcomes of training programs for the unemployed Total Reemployment training a) of the unemployed under the EIS Training programmes not financed by the EIS Employment promotion Crafts -men 3-D jobs Business start ups New labor market entrants Other programs 1999 Total number of trainees 358351 (100.0) 226356 (63.2) 69466 (19.4) 16817 (4.7) 9122 (2.5) 7725 (2.2) 10022 (2.8) 18843 (5.3) Number of Trainees who Completed the course 131638 93268 21534 4576 936 4933 3872 2519 Completion rate b) 36.7 41.2 31 27.2 10.3 63.9 38.6 13.4 Found employment c) 48864 (37.1) 36223 (38.8) 7299 (33.9) 1672 (36.5) 517 (10.5) 1608 (41.5) 607 (24.1)

ALMPs: Employment Stabilization Programs Table 3-9. Utilizations of employment stabilization programs by firm size,1998 Number of firms receiving subsidies as a share of the total number of insured firms Firm size Total number of insured firms (A) Number of firms receiving subsidies(B) Rate of utilizations of subsidies(B/A) Total 202095 1896 0.9 5-49 180043 755 0.4 50-99 12688 366 2.9 100-299 7316 445 6.1 300-499 1055 118 11.2 500-999 670 103 15.4 1000and over 323 109 33.7 Source : KLI(1999b).

Public Employment Services Table 3-10. Public and private employment offices Ministry of Labor offices Local government offices Private employment offices 1995 1999 a) offices 52 142 285 1271 1756 staff 1000 3200 360 .. 3500 ..:Data not available a) 31st December Source L Ministry of Labor.

Public Employment Services

Public Employment Services Table 3-11. Basic PES flows, stocks and market share indicators Korea a) Belgium Den mark Fin land Germany Ire Japan Nether lands Spain United Kingdom States 1995 1998 1993 1994 1996 PES Administrative data (000s) Annual vacancy registrations b) 130 335 149 157 145 3133 45 5465 272 534 2537 6038 placements c) 12 138 109 82 76 2347 17 1448 174 495 1927 2205 Labor market data Dependent employment (000S) 12740 12190 2990 2340 1716 32093 1034 52360 5920 8626 21907 118873

Public Employment Services Table 3-11. Basic PES flows, stocks and market share indicators Korea a) Belgium Den mark Fin land Germany Ire Japan Nether lands Spain United Kingdom States 1995 1998 1993 1994 1996 Monthly Hiring rate (approximate) d) 2.7 1.7 1.1 3 2.2 1.6 2.5 .. Derived indicators(%) Placements/ registered job vacancies 9 41 73 53 52 75 38 26 64 93 76 37 Registered job vacancies/ Dependent employment 1 4 5 7 8 10 6 12 dependent 2

Public Employment Services Table 3-11. Basic PES flows, stocks and market share indicators Korea a) Belgium Den mark Fin land Germany Ire Japan Nether lands Spain United Kingdom States 1995 1998 1993 1994 1996 Registered job vacancies /hiring 3 13 39 19 32 51 22 23 .. Placements/ hiring 6 28 10 17 38 8 14 29 ..:Data not available. a) Placement and vacancy data refer to the chain of PES offices administered by the Ministry of Labor. b) Vacancies notified to the PES by employers (in Denmark, also vacant positions advertised in newspapers and used by PES). c) Countries may use different definitions, such as placements filled with the active help of the PES, or placements into vacancies notified to the PES which have been filled by PES registered job seekers. d) Monthly new hiring as a percentage of dependent employment. Estimates for OECD countries are based on a combination of data from labor force surveys (job tenure less than one year, number of job changes in the last three months), employer surveys (number of external hires, new employment contracts in the private sector) or administrative records of hiring kept by the PES. The Korean figures are based on smaller firms and that a small number of job starts consists of transfers within the same company or establishment.

Characteristics of Employment and Job Training Programs Australia : Privatization of employment service and introduction of competition system among service providers Netherlands: Division of private and public sectors for employment service programs Public sector: social welfare benefits and labor market information Private sector: assistance for active job seeking (individual level services such as counseling, planning, diagnosis, training, assisting job seeking and post management)

Characteristics of Employment and Job Training Programs United States: Workforce investment act: WIA, 1998 Improving system integration and service coordination Providing universal access (one-stop service delivery structure) Enhancing effectiveness of the service programs Partnership among federal, states, local and private sectors

Characteristics of Employment and Job Training Programs United Kingdom: Department for Work and Pensions, 2001 Social welfare services and employment services Systematic approaches for social welfare, employment, and job training services

Characteristics of Employment and Job Training Programs Germany Introduction of competition system between public and private sectors in providing employment Voucher system in assisting job seeking services (2004)

Implications for Romania Employment and Job Training Services Needs to provide comprehensive services: one stop service for employment, job training, and welfare services User friendly services Providing customer specific services Establishment of partnerships among related parties and outsourcing through private sectors Targeted group approaches Services for employers