1. Federal Departement of Economic Affairs FDEA State Secretariat for Economic Affairs SECO Labour Directorate Labour Market / Unemployment Insurance From centralized to decentralized steering The Performance Management System of the Swiss unemployment insurance WAPES Conference Moscow, Russia - September 2014 Olivier Nussbaum - SECO

2. Moscow - September 2014 2 Some facts and figures about Switzerland and the Swiss labour market  Population:8.1 million, 23.8% of whom are foreign nationals  National languages:German (65%), French (23%), Italian (8%), Rumantsch (0.5%), other (21%)  Net activity rate (15 - 64 age range): 83.5%  Unemployment rate by ILO standards: 4.4% Youth unemployment rate : 7.7%  Liberal Labour Market policy  Structure: - primary sector 3.5% - secondary sector22.3% - tertiary sector74.2%

3. Moscow - September 2014 3 Registered Unemployment: Regional differences (July 2014)

4. Moscow - September 2014 4 Since 1995: active labour market policy Objective: rapid and durable reinsertion of jobseekers into labour market Means:- Regional Employment Centres REC - Labour market programms LMP - Strict definition of a ‘reasonable job’

5. Moscow - September 2014 5 Rights and duties of job seekers  Rights:- Receive unemployment benefits - Get help from job centres to find a new job  Duties: - Actively search for a new job (own initiative) - Respect control regulations - Respect instructions from the job centres

6. Moscow - September 2014 6 From centralized steering… Pilot REC in two cantons 1995-1996 Evaluation in 1996 Decision of general implementation in 1996 Deployment in 1997  All cantons had to establish REC and increase LMP  Number of counsellors per jobseeker  Number of administrative staff per jobseeker  Number of managers per counsellors  Number of interviews per jobseekers  Minimal offer of LMP and of counselling Steering over input / output (resources and activities)

7. Moscow - September 2014 7 … to decentralized steering Evaluation of the deployment phase in 1999 The system being established, decision to switch to outcome oriented steering from 2000  Benchmark over outcome oriented indicators  Global budget: maximal budget, but more freedom for the cantons when it comes to input (resources) and outputs (activities) Two very important aspects of the way we do things:  Pilot before general implementation  PLAN – DO – CHECK – ACT

8. Moscow - September 2014 8 Management system – paradigm shift 3’000 local employment offices unprofessional 120-150 regional employment centres professional Input/output-oriented New agreements professional outcome-oriented 1996 2000

9. Moscow - September 2014 9 Management by results Steering no longer via inputs, but via results achieved on reinsertion of unemployed persons Confederation sets out objectives for the cantons. The Confederation forgoes imposing detailed regulations. No longer tells cantons how to reach objectives. Results-oriented agreement between cantonal governments and Federal Department of Economic Affairs first agreement in 2000, renewed 2003, 2006 and 2010 Budget allowed to the cantons depending on cantonal jobseeking rate and cantonal number of jobseekers paradigm shift (NPM)

10. Moscow - September 2014 10 Preconditions for implementing PMS Political framework: Commitment Stability in goals / patience Evaluation / no over-steering Accept not to control everything centrally and accept local differences in implementation Legal framework: Stable legal basis (law), also for financing Contracts between parties defining the modalities of PMS Technical framework: Data availability and quality Resources: Planning possible at regional level Process / Development of PES: Some processes must already be implemented

11. Moscow - September 2014 11 “Global budget” Budget of Regional Employment Centres depends on two parameters: cantonal job seeking rate and cantonal number of jobseekers (decreasing scale) Effective costs refunded Greater scope for the cantons regarding: - Staff - Investments - Processes - Active labour market measures

12. Moscow - September 2014 12 Labour Market Authorities of Switzerland SECO – Directorate of Labour Labour Market / Unemployment insurance Public employment services PES Unemployment funds Regional Employment Centres REC EmployersJobseekers Disability Insurance Agency Social Security Services Private Employment Agencies Career Counselling Labour Market Measures Federal Cantonal Labour Market Cooperation

13. Moscow - September 2014 13 SECO – Directorate of Labour Responsible for instruments of Swiss labour market policy (Unemployment Insurance Act AVIG and Employment Services Act AVG) Administration of unemployment insurance fund Supports cantons in strategic management Responsible for European agreement on the free movement of persons

14. Moscow - September 2014 14 Public Employment Services of the Cantons Responsible for: Implementing relevant legal acts Organising different public employment services: Regional Employment Centres, unemployment funds, Logistical Centres for Labour Market Measures Implementing labour market measures Most operative work delegated to public employment services

15. Moscow - September 2014 15 Regional Employment Centres REC More than 120 Regional Employment Centres in 26 cantons More than 1,500 counsellors 4 instruments: - counselling - job placement - training / labour market measures - controls and sanctions

16. Moscow - September 2014 Federal Ministry (SECO) Regulatory framework Agreement between cantonal governments and federal ministry Steering Committee Cantonal governments Federal act / ordinance - AVIG - AVIV - AVG Financing - operating cost - vocational training Steering tool (benchmark)Activity of cantons Measurement of efficiency (Result indicators) Communication of results Process and output indicators Review of the situation Exchange of best practices Transfer of best practices Competition Activity according to the law: - Counselling - Job placement - Training - Controls and sanctions Outcome measurement 4 results indicators: - Rapid reintegration - Reduce long-term unempl. - Reduce exhaustion of benefits - Reduce re-registrations Continuous improvement process

17. Moscow - September 2014 17 Objectives and indicators ObjectivesIndicatorWeight. 12341234 Rapid reintegration Prevent/reduce long- term unemployment Prevent/reduce exhaustion of benefits Prevent/reduce re- registrations Rapid and sustainable reintegration Avg. no. of benefit days drawn by former beneficiaries. Entrants to long-term unemployment divided by the # of persons who entered a new framework period 13 months earlier. # of exhaustions of benefits in the reporting month, divided by the # of persons who entered a new framework period 2 years earlier. Proportion of benefit recipients who re- register within 4 months. Global indicator 50% 20% 10% 100%

18. Moscow - September 2014 18 Management by results : The econometric model Purpose:Enable comparisons between cantons How: By setting off the influence of special regional features (exogenous factors): - Labour market situation - Seasonality - Nationality - Frontier workers (persons living abroad and working in Switzerland) - Size of agglomeration Calculated and made public once a year, at the beginning of June of the following year.

19. Moscow - September 2014 19 Measure of performance: publication of results Benchmark using the econometric model calculated and made public once a year Relative benchmark. Average = 100. Published at the beginning of June of the following year.

20. Moscow - September 2014 20 Example of relative Benchmark result Total index unadjusted Total index adjusted

21. Moscow - September 2014 21 Some Lessons learned (1) Management by results is tried, tested and accepted Strong incentive for improvement (competition, reputation effect) Incentive to reintegrate jobseekers as fast as possible (social security is financed by cantonal and local authorities) Incentive to cooperate with private employment services and any other partner Better possibilities to act on part of cantons by introducing global budgets Political shield

22. Moscow - September 2014 22 Some Lessons learned (2) Too strong competition and monetary incentives lead to demotivation Relation between inputs, outputs and impacts can not be modelled Strong focus on rapid reintegration may lead to neglect of sustainability of reintegration Focus on benefit recipients may lead to a trade off with non benefit recipients, the later being less taken care of Econometric model considered by cantons to be too complicated / a black box

23. Moscow - September 2014 23 Thank you for your attention Olivier Nussbaum Federal Department of Economic Affairs, Education and Research - EAER State Secretariat for Economic Affairs – SECO Labour Directorate Labour Market and Unemployment Insurance Holzikofenweg 36, 3003 Berne, Switzerland Phone ++ 41 58 464 15 78 Cellular ++ 41 79 875 34 77 olivier.nussbaum@seco.admin.ch www.seco.admin.ch