1. Benchmarking the efficiency of Public Employment Services: Vertical Functional Reviews
Sara Johansson de Silva, World Bank
Alexander Schnabl and Hannes Zenz, Institute for Advanced Studies (IHS)
Vienna, March 20, 2017
Presenting ongoing work on Vertical Functional Reviews of the Public Employment Services in Western Balkans, This is work done by the Institute for Advanced Studies here in Vienna together with the World Bank, Alexander and Hannes are here.

2. Vertical Functional Review (DEA Analysis)
Objectives
Help improve the services of PES
Analyses for five Western Balkan countries
Approach
Vertical Functional Review – regional branch offices
Data envelopment analysis (DEA): a benchmarking exercise used to evaluate efficiency in organizational units (multiple inputs and multiple outputs possible)
Bench marking within countries
DEA defines best practice within countries: best possible combination of inputs/outputs defined by existing branch offices
Vertical Functional Review (DEA Analysis)
The objective of these reviews – the theme of this session namely to help rationalize and improve the services of National Employment Services
Analyzing five WB countries

3. DEA of the Public Employment Services Effectivness depends on efficiency, impact, environment
ENVIRONMENTAL
Outside the purview of office, e.g.:
Number of unemployed in area, formal jobs in area, geographic size, average wages, skill levels of unemployed
EFFECTIVENESS
INPUTS
Resources used by offices, e.g.:
Expenditures
Number of staff (counselors, registrars, admin)
EFFICIENCY
OUTPUTS
Activities by offices, e.g.:
Number of employers contacted
Number of vacancies registered
IMPACT
OUTCOMES
Final goal:
Number of registered unemployed transitioning into formal jobs
The conceptual framework is that officues use resources to produce outcomes in the form of jobs placements, and that this process can be split up into two stages: First how offices use inputs to produce activities/outputs. Second, how these activities translate into our final goal. The impact and outcomes in particular is also shaped by environmental factors beyond the control of offices.
Compare only to the best in Albania, not to good practice
Much environmental / context data lacking

4. What is the DEA method? Productivity Frontier (CRS)
To be 100% efficient is to be on the Productivity Frontier
(here: offices P1-P4)
What is the DEA method?
Productivity Frontier (VRS)
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5. The DEA in two dimensions: Case load matters, but there are efficiency gains to be made
The method establishes a set of offices that define best practice, for any input there is no other office that does etter. Exampple here (two dimensions): The higher the number of counselors the more jobs placements – which is logical. BUT the office in the circle is not efficient – if it were B C

6. What can we learn from the analysis? For example…
Did overall efficiency improve or worsen over time?
Why? ”technical development”, or catch-up?
Are there large variations between different offices?
Which ones perform well, which ones don’t?
Would geographical reorganization change efficiency?
Where do problems (if any) arise?
How efficiently inputs produce activities?
To what extent these activities result in jobs placements?
Potential gains from improving overall effectiveness to ”best office level”
How many more jobs placements with same input or activities?
What would be the effect on jobs placements of increasing input or activities
What offices could serve as peer model offices for others?
Taking into account the office-specific combination of inputs/outputs
What can we learn from the analysis? For example…
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7. Did overall efficiency improve?
Inputs in the case of Serbia: The NES became more efficient overall in The result was increasingly due to catch-up.

8. Are there large variations between offices?
In Albania, significant variation between offices
In Serbia, less so
Are there large variations between offices?
Large variations – suggesting very different approaches, low labor mobility internally, etc. Here two examples that differ. The charts explain how many offices are fully efficient, how many are between 80 and 100% efficient, 60-80, and so on.

9. Where do problems (if any) arise?
Shkodër
Devoll
Where do problems (if any) arise?
Devoll, southeast
Shkoder, northwest

10. Potential gains from improving efficiency
Improving outcomes
Reducing resources

11. Take-aways for branch offices
Check office results for activity efficiency, impact, and effectiveness over time
What is going well? Where are the weaknesses (if any)?
Could any changes depend on changes in resource use/mix and quality of activities/external factors?
Reflect on composition of input (e.g. staff) and activities
How to best adapt the mix of activities and increase quality given the environment
Learn from relevant peers
Recall – best practice within countries only!
Take-aways for branch offices