Employment Thematic Network

Tackling Long-Term Unemployment:

The Role of Integrated Services

White Paper 1

February 2017

This paper is written by Mike Campbell and Allen Mercer, experts to the Employment Thematic network, with the valuable assistance of the network’s leader, Caroline Meyers of the Flemish ESF Agency.

© Copyright European Union, 2017. Reproduction is authorised provided the source is acknowledged.

Contents

Contents

1. Introduction

2. The EU policy framework and the ETN

3. Tackling long-term unemployment: what works

4. Good practices: criteria and lessons from the literature

5. Case studies of good practice

5.1 Case Study 1: ESF–PES Cooperation on data exchange: Mijn Loopbaan voor Partners – MLP (Belgium)

5.2 Case study 2: A new name and a better service: Intreo (Ireland)

5.3 Case study 3: An innovative partnership model: Cité des Métiers (France)

6. Reflections on the activities

6.1 Learning from experience

6.2 Cooperation with the PESs

References

1. Introduction

This white paper aims to distil what is known about how better to tackle long-term unemployment (LTU) by improving services to long-term unemployed people. It considers the content of such services, the measures needed, and their delivery – through greater service integration. It concludes with a series of recommendations for actions to improve service provision to the LTU and to tackle long-term unemployment more effectively.

It is based on:

  • A series of four meetings of the transnational ESF Employment Thematic Network (ETN). At its first meeting in December 2015 the ETN decided to concentrate on two transitions: that between LTU and employment, and work-to-work transition or career development. However given the current unemployment situation it decided to focus immediately on LTU. At a second smaller meeting in Brussels in April 2016, a Flemish project spoke about its “one-stop shop” to prepare young people with disabilities for the labour market. Apart from the one-stop shop approach, this presentation also raised the possibility of closer cooperation between the ESF and the Public Employment Services’ Network. Thus, the ETN’s meeting in Rome during the summer of 2016 and the meeting in December in Paris explored both of these issues. The findings are reported later in this document;
  • A review of recent literature and materials with regard to what is known about what works.

We first briefly set out the European policy framework on employment, with particular reference to long-term unemployment, and situate the work of the ETN within it. We then provide an outline of the policy agenda together with a consideration of ‘what works’ in getting the LTU back into sustainable employment. The following section sets out a range of known good practices which, together with the next section setting out a number of detailed case studies of good practice, informs the ETN's lessons and recommendations in the final section.

2. The EU policy framework and the ETN

Figure 1 outlines theEU policy framework in respect of the employment agenda and the ETN’s role in it. The two Europe 2020 headline targets most closely connected to the ETN’s work are the 75% employment rate (currently the EU rate is 68%, with some 24 million people unemployed) and the aim to ensure that 20 million fewer people will be at risk of poverty (because boththe unemployed and those in work are at risk of poverty). Currently 80 million people are living on less than 60% of their country’s average household income.

The European Employment Strategy, with its series of guidelines and targets, supports these objectives through annual Member State reports on progress, on the basis of which the Commission proposes sets of country-specific recommendations and national reform programmes.

Recent relevant further developmentsin Commission thinking, proposals and recommendations include especially: the New Skills Agenda, with its series of 10 actions including the Skills Guarantee for low-skilled adults; and the consultation on a European Pillar of Social Rights, including equal opportunities, access to the labour market, working conditions and social protection, which will ultimately ensure the development of a reference framework to screen the employment and social performance of Member States and drive appropriate reform.

Of particular importance however is the Council Recommendation on Long-term Unemployment Integration Measures. This calls on Member States to:

  • encourage the LTU to register with the public employment service (PES) and develop active support for them
  • provide an individual assessment of needs within 18 months (at the most) of their becoming unemployed
  • offer a job integration agreement (JIA) including a service offer of the same duration

The recommendation also recognises:

  • the risk of the LTU falling into inactivity
  • the importance of a preventative approach
  • the importance of employer engagement

The main points of the Council Recommendation are set out in the box below:

European Council Recommendations on LTU: main points
Registration
  1. Encourage the registration of the long-term unemployed with an employment service, in particular through improved provision of information on the support available.
Individual assessment and approach
  1. All long-term unemployed are offered in-depth individual assessments and guidance at the latest when they reach 18 months of unemployment. The assessment should cover their employability prospects, barriers to employment and previous job-search efforts.
  2. Inform the long-term unemployed about job offers and available support in different sectors of the economy and, where appropriate, in different regions and other Member States, in particular through the European Employment Services (EURES)
Job Integration Agreement
The registered long-term unemployed not covered by the Youth Guarantee are offered a job integration agreement at the latest when they have reached 18 months of unemployment:
  1. Target the specific needs of registered long-term unemployed persons by means of a job-integration agreement which combines relevant services and measures provided by different organisations (with: (a) explicit goals and obligations; (b) detail on the service provider's or service providers' offer to the long-term unemployed person, that may include job-search assistance and in-work assistance; the validation of non-formal and informal learning; rehabilitation, counselling and guidance; education; vocational education and training; work experience; social support; early childhood education and care; health and long-term care services; debt-counselling; and housing and transport support; and (c) regular monitoring)
  2. Put in place needed institutional and legal arrangements for continuity of service delivery through single points of contact (by: (a) smooth and secure transmission of relevant information concerning registered long-term unemployed persons; and (b) better dissemination of relevant information on job vacancies and training opportunities
  3. Monitor JIAs regularly in view of change in individuals’ situations
Closer links with employers
  1. Establish partnerships between employers, social partners, employment services, government authorities and social services to ensure that the offers are targeted to the real needs of enterprises and employees.
  2. Develop services for employers such as the screening of job vacancies, placement support, workplace mentoring and training and post-placement support.
  3. Focus financial incentives on schemes supporting direct integration into the labour market, such as recruitment subsidies and exemptions from payment of social insurance contributions.

Such actions reflect the EC’s recent analysis of ‘what works’ in tackling LTU (European Commission, 2016; European Commission SWD, 2015) which points to three particular issues:

  • Limited coverage of activation support:

Registration with the PES is declining and varies widely across countries. On average, only 73% of the LTU are registered with the PES, and in several countries, such as Italy, UK, Bulgaria and especially Romania, it is around 50% or less – yet in Germany and Finland it is 90% or more. Low registration is associated with limited participation in active labour market policies (ALMPs), which achieve higher transition rates into employment (see fig. 7 in EC SWD 2015). Participation also reflects the priority given to ALMP for the LTU, and coverage may also be low because of weak benefits conditionality. Indeed, the EC has recently shown that the two policies with the largest impact on LTU (apart from training/human capital development) are: PES registration and coverage of receipt of benefits. With regard to the latter, fewer than 25% of LTU in the EU receive unemployment benefits, though again this varies from almost none in Poland and the Czech Republic to between 80% and 90% in Germany and Finland.

  • Discontinuities and lack of co-ordination in service delivery:

The PESs primarily focus on those unemployed people who are eligible for unemployment benefits, so as eligibility declines with duration, the PES focus on the LTU may decline or be removed to other bodies or benefits. This can cause problems of lack of co-ordination and ambiguity in service coverage and delivery as PES responsibility for the LTU changes (see table 3 in EC SWD 2015).

  • The design and thus the effectiveness of activation support:

Effective design combines individual services to the LTU with those for employers, as well as a tailored ALMP offer to meet both sets of needs. The LTU are a heterogeneous group with a range of groups particularly affected e.g. in terms of skill level, work experience, health condition, nationality and childcare responsibilities. Services thus need to be tailored to individual needs. A prerequisite for this is client profiling so that barriers to employment can be identified and addressed. In at least seven EU countries, (e.g. the Czech Republic, Italy and Romania) such profiling and subsequent segmentation are absent, and in a further nine they are less than fully developed.

With regard to establishing a job integration agreement (JIA),10 countries do not offer a JIA to all registered unemployed (see table 5 in EC SWD 2015). There is also evidence of low levels of employer engagement, which is so crucial to employer buy-in, in activation design, as well as of a degree of ineffectiveness in ALMP design per se, for example in respect of employability training, basic skills and start-up support. The design and delivery of these services are seen as crucial to success, and their impact varies by target group.[1]

It is also worth noting that the ESF plays a major role in supporting activation measures across the EU countries: it accounts for around 20% of total ALMP expenditure in the EU over the 2007-13 period. Over the period 2014-20, investment priority 8i on ALMP has €11 billion programmed (especially high in Finland, Ireland and Slovakia) whilst 8viion increasing the capacity of labour market actors has €980 million programmed (especially high in Italy and Romania) and 9i on social inclusion has €13 billion (especially high in Belgium, France, Ireland and Netherlands).

The ESFis the EU’s key financial tool to assist in this process. Around €86 billion will be invested over the 2014-20 period. Member States develop operational programmes to address key national priorities within the framework of ESF priorities, which are:

  • increasing worker adaptability
  • improving access to employment and pathways to/through work
  • vocational training
  • increasing labour market participation
  • focus on disadvantaged groups and areas at most risk of exclusion

Some 15 million people per year, 10 million unemployed or inactive and 5 million employed, benefit from these ESF programmes.

Transnational co-operation has a key role to play here, through thematic networks, mutual learning and expert input, in developing more effective employment and social policies by learning through the experience of other countries. The ESF Transnational Platform operates on 9 themes through a series of thematic networks: employment, youth, skills, inclusion, governance, migration, social economy, partnerships and simplification. It is also important to note that both gender and social innovation are mainstreamed. This White Paper is a product of the Employment Thematic Network (ETN).

Figure 1: The EU employment policy framework and
long-term unemployment

3. Tackling long-term unemployment: what works

There are currently around 10.9 million long-term unemployed people in the EU, accounting for nearly half (48%) of all the unemployed. Prior to the 2009 economic crisis, the proportion was 37%. However this proportion of the unemployed who are long-term, often referred to as the incidence of LTU, varies from less than 20% in Denmark, Finland, Sweden and the UK to more than 50% in Belgium, Bulgaria, Ireland, Italy, Slovenia and Spain, and more than 60% in Croatia, Greece and Slovakia.

The long-term unemployment rate itself (the proportion of the whole workforce that is LTU) stands at 5.1% for the EU as a whole but varies enormously from lows of less than 2% in Austria, Denmark, Finland, Germany, Netherlands, Sweden and the UK to highs of 19.5% in Greece, 12% in Spain and 10% in Croatia.

Across the EU as a whole it is the low-skilled and third country migrants who face the highest risk of becoming LTU, whereas it is older workers (especially those losing their jobs in declining sectors and occupations) and the low-skilled who have the least chance of getting back into work once they are LTU. On average men are also more likely to be LTU than women. However, these characteristics of the LTU do vary considerably across countries. For example, the mid-level skilled are equally prone to LTU as the low-skilled in Lithuania and Slovakia.

The duration of unemployment is of considerable importance. Overall, the LTU have around half the chance of finding work than the short-term unemployed. This transition rate from LTU into employment (rather than into even longer-term unemployment or inactivity) is crucial. Across the EU as a whole, 44% of those unemployed for 1 month find a job within the next 3 months, but this proportion declines to 23% for those unemployed for a year and to 12% for those unemployed for 4 years or more (Bertelsmann Stiftung, 2016; European Commission SWD, 2015). It also varies considerably across countries. For example, in the final quarter of 2015 the proportion of the unemployed who moved into employment varied from highs of 40% in Denmark and 30% in Estonia and Sweden to lows of around 10% or less in Bulgaria and Greece.

Figure 2 below sets out a framework within which to understand and develop effective action to tackle LTU. It provides a map of how this agenda can be addressed effectively. Based on a wide range of work, literature, recent reviews and expert experience, there are three major sets of components of such successful action (OECD 2015; Bertelsmann Stiftung 2016; European Commission 2015; IZA 2015; Campbell 2013, 2000)

First, action is required to increase the employability of the long-term unemployed. A range of such supply-side measures are needed, in particular recovery measures so as to improve the capacity of the LTU, since they are some distance from the jobs market and are at a disadvantage relative to other job seekers. Action here will likely include that on physical and mental health as well as on confidence building and attitudes to work. It may also need to address migrant integration, debt counselling and other support services. Additional action will be needed to provide work experience, including through public programmes, work trials and placements, as recent participation in paid work will not have occurred. Furthermore, action will be required to raise skill levels and adapt existing skills to the current requirements of the jobs market, through training and vocational programmes. In addition to job-specific skills, work will often be needed on ‘basic’ skills and a relevant range of transferable skills. Such measures are also important in helping to prevent the LTU from slipping into economic inactivity.

Second, action is needed to enable the LTU to access the employment opportunities available, so connecting them to the available jobs. This involves encouraging effective job search. Information, advice and guidance have an important role to play here. It is also essential to make work worthwhile, so that earnings are sufficiently greater than benefits paid to the LTU and that there is a positive incentive to work. Support with housing, transport and childcare services may also be important here in many cases. Crucial, too, are job matching services so that the abilities of the LTU are appropriate to the needs of employers. All such actions focus on the LTU as a ‘stock’, as it were. Action can also be taken to reduce the ‘flow’ of the unemployed into LTU in the first place by taking preventative action. Such measures include the early targeting of action on those groups or characteristics most likely to be at risk of experiencing LTU, for example, their identification through profiling. Prevention is better than cure.

Third, there is a need to ensure that there are sufficient jobs available that are open to the LTU. More jobs are an essential component of tackling LTU if such actions are not to lead to substitution and the redistribution of a given stock of jobs. As well as (although this is outside the scope of this paper) policies to generate employment in general through a wide range of economic policies, action can be taken to increase the jobs that are open to the LTU, thus increasing the demand for LTU workers. Such actions include: vacancy notification to the PES and other networks; recruitment subsidies and other financial incentives; and adapting the recruitment behaviour, criteria and attitudes of employers. It is also not only a question of more jobs but also ‘better’ jobs: accessing sustainable jobs and permanent and full-time jobs, which will help prevent churn and the re-entry to spells of unemployment.