Labor market inclusion of vulnerable groups The role of Public Employment Services Matteo Morgandi Social protection and Labor Global Practice Tbilisi, October 28, 2015

Key Messages Activation Policies: ubiquitous trend to rebalance “passive” support with more “active inclusion” measures The poor face multifaceted constraints, and activation processes force institutions to figure out how to address them simultaneously PES can play a central role in activation, but in many countries these face significant challenges to serve the vulnerable. Interagency collaboration is fundamental and can be articulated in a variety of models, with some recurring elements Tools and processes to operationalize activation become key: the example of profiling

Active inclusion: an emerging priority in ECA countries (and globally) Key concerns: increasing inclusion of vulnerable work-able population in the labor market – Low employment rates among many potentially employable – Perception of “dependency” on transfers in a sub-set of the poor population – Disequilibrium in spending between “passive” and “active” social policies Response: Activation policy “Packages” – Includes both incentives and support services – Requires innovative approaches and strong cooperation across different institutions Services Tailored to Clients Labor makret Support Incentive- compatible income support Adaptation Challenge

Objective: address barriers of the vulnerable to entering productive employment Employability barriers Participation constraints Lack of Information & disincentives 4 Supply side Education / credentials Basic cognitive skills (literacy, etc) Job-specific skills Behavioral skills Care-taking duties Lack of empowerment Distance from labor markets Information deficits on opportunities, returns, misconception on interaction of benefits and employment

Interventions become more complex and likely to involve multiple actors Stylized example Registration and assessment (individual or family level) Addressing other barriers: - Health - Housing - Counselling - Legal support Addressing other barriers: - Health - Housing - Counselling - Legal support Income support Employability assessment Intermediation & job-search Active Labor Market Programs Returning to education OngoingOngoing

Public Employment Services have an important role to play …  (Public) employment services play important functions:  Reducing information gaps, improving job matches  Assessment and closure of skills gaps  Supporting labor mobility, income support for the unemployed  By providing a universal service (instead of a service focused on specific attractive groups of employers and jobseekers), PES are especially important for the low- qualified and disadvantaged jobseekers  Their level of outreach to the most vulnerable has been strengthened by stronger coordination with social policies

… But in ECA PES face several challenges to fulfil their core functions Effective tools for monitoring performance and, at the branch level, to influence performance Low resource endowment and non-targeted resources across groups and space Limited employer outreach and employer service capacity. Exacerbated by low levels of enterprise development. One-size fits all culture, limited ability to profile and prioritize customers Overburdening with administrative and registration tasks Antiquated support systems 1 2 Central Offices 3 Governance Management Program / Benefit Delivery Supporting Systems Ministries / Tripartite Governance Program and Resource Planning Administration, Finance, HR, M&E, IT-Systems (jobseekers, employers, vacancies, ALMP management, benefit payment, etc.) Jobseekers/ SA beneficiaries Employers / enterprises Local Offices 1 Benefits and Payments Labor Market Programs

PES can adopt new tools to cope with their “expanded mission”. Example of Client Profiling Objectives: – Determine level of labor market readiness of client (client segmentation) – Determine which intervention is most necessary, if any, (targeting) – Advanced uses: Enabling private provision and resource allocation (signaling risk)

Use of profiling in employment services 9     1    Distance from labor market LOW HIGH High risk group Middle risk group Low risk group Personalized Protocol of support Resurce intensive ALMPs (e.g. wage subsidies) Vocational training Self-service and job matching 2 3 Level of prioritization by caseworker LOW HIGH Caseworker assessment Reducing Information asymmetries Registration

Caseworker-based profiling (Denmark) Labor market matching model

Statistical profiling for prioritization of active labor market programs (Sweden). 11 Registration Assessment Support Tool GROUP 1 Very good employment prospects GROUP 2 Good employment prospects GROUP 3 Weak employment prospects GROUP 4 At high risk of LTU; early ALMP measures needed Caseworker likely to override regular procedures and provide early ALMP interventions Registration and initial interview Statistical profiling model Segmentation based on risk groups Final caseworker decision 1 2 3

Probability of not finding a job, sorted according to the statistical risk profiling group Probability of not finding a job, according to the case worker’s assessment of the need of early intervention (Need of early intervention, 0=No, 1=Yes) YES NO Source: F. Dahlen (2015), Sweden PES

There are a range of models in which PES can interact with other key agencies… Source: Adapted from A. Taylor (2014) Integration of ministries and policies Fully integrated system Multi service agencies in single location Structured cooperation of autonomous agencies Ad-hoc limited reactive cooperation Ireland United Kingdom, Denmark, Armenia Sweden Several countries in Eastern Europe Australia (PES delivery with private providers)

…with some recurring elements in all models Established referral protocols (social assistance employment centers specialized services) Coordinated case management, action plans, and benefit sanctions Integrated or “dialoguing” information system Profiling of the jobseekers for labor market readiness Rules for targeting and prioritization of interventions Monitoring of implementation of protocols Evaluation system of active labor market services Inter-agency Cooperation Referral protocols (SA PES specialized support services ) Coordinated case management, personal action plans Benefit coordination (sanctions) Integrated or “dialoguing” information systems Public Employment services Profiling of the jobseekers Protocols for targeting and prioritization of interventions (It is important to know both what works, and for whom) Permanent M&E system of active labor market programs

Thank you! Matteo Morgandi