6. Resultados del Proceso de Descentralización
6.2. El Modelo de Gestión Urbana en el Distrito Federal Mexicano
Theoretical and empirical findings (see Nickell 1998; Elmeskov et al. 1998; Krueger and Meyer 2002; Grubb 2005) indicate that generous benefits for the unemployed lower their motivation to look for a job and increase their reservation wage, which, in turn, exert nega- tive influence on employment rate.11 Hence, one method of stimulating employment is by limiting the availability of social assistance. However, unemployment benefits work as an insurance, they smooth out fluctuations in income and thus provide the safety net for the unemployed during the job search process. As emphasised by Acemoglu and Shimer (2000), unemployment benefits prevent the situation where unemployed individuals accept every job offer they receive, even if it does not match their abilities and skills and therefore it does not maximise their productivity.
The role of social assistance has recently become a subject of an extensive public debate. At times of rapid economic changes and increasing global competition, more and more employers postulate the need for flexible labour code (rules on hiring and firing work- ers) and promoting atypical forms of employment. On the other hand, employees demand extended safety net and social support. It is in this context that the concept of so-called flexicurity – combining flexibility and security of both employees and employers, came into being (see Lang 2006, Andersen 2005). Activation strategies, together with flexible labour code, ALMP and promotion of life-long learning, play a central role in the flexicurity model. They are based on the principle of mutual obligations – the unemployed can re- ceive generous support but only on condition that they undertake real actions intended to bring them back to work.12 Well-designed activation programmes may mitigate the de-activating impact of generous benefits and at the same time help to achieve certain social objectives.
One important element of activation strategies is compelling benefit recipients to reconfirm, on a regular basis, their ability and willing- ness to undertake employment and monitoring their job-search activity. Currently, in approx. half of all OECD countries (see Table IV.4.) the unemployed are required to report back regularly – usually every two or four weeks – on all actions intended to bring them back to work. Empirical literature indicates that imposing on the unemployed the obligation to stay in regular contact with employment services may significantly lower the unemployment levels. Dolton and O’Neill (1997) point out that personalised job search assistance and monitoring may constitute an effective method of diminishing long-term unemployment among the youth.13
11 As suggested by Cahuc and Zylberberg (2004), the strength of the deactivating impact of benefits depends on the coverage rate. Growth in replacement rate lowers the intensity of job
search activity among the unemployed entitled to the benefit but the effect on those who are ineligible is the opposite – they maximise job-seeking efforts in order to find employment and gain the right to (more generous) unemployment benefits in the future. The direction of influence exerted by the replacement rate growth on the aggregate unemployment level is not unequivocal and remains an empirical issue.
12 Activation strategies are targeted towards unemployment benefit-recipients but more and more often towards a broader group of benefit-takers (recipients of social and family allowan-
ces, early retirement pensions, etc.). Hence, a coherent activation strategy requires that labour market and social policies be integrated into one system.
Table IV.4. Job search monitoring – verification frequency
Country Job search reporting frequency Minimum number of job seeking actions per month
Australia every 2 weeks from 8 to 20
Austria every month not set
Belgium varying requirements not set
Canada varying requirements not set
Czech Republic every 2 weeks not set
Denmark every 3 months varying requirements
Finland between 1 week to 1 month varying requirements
France every month varying requirements
Greece no reporting requirement no reporting requirement
Germany varying requirements: 6 times a year on average not set
Hungary every month varying requirements
Ireland varying requirements not set
Italy varying requirements, in practice rarely not set
Japan every 4 weeks 2
Korea varying requirements: from 1 to 4 weeks 2
Luxembourg varying requirements not set
Netherlands every 4 weeks 4
New Zealand every 6 weeks varying requirements
Norway every 3 months not set
Poland no reporting requirement no reporting requirement
Portugal varying requirements varying requirements
Slovakia varying requirements: from 1 to 4 weeks varying requirements (1 action per contact with public employment services)
Spain every 2 months not set
Sweden every 6 weeks on average not set
Switzerland every month from 4 to 10
Turkey no reporting requirement no reporting requirement
Great Britain every 2 weeks 10
USA every 2 weeks 10
Source: OECD 2007.
Those unemployed who fail to fulfil the obligations imposed on them must bear in mind that they could be subject to sanctions such as reducing the amount of benefit, withholding it or even losing the right to it. As demonstrated by Abbring et al. (1998), in the Neth- erlands, for instance, punishment inflicted upon the unemployed who fail to fulfil the said obligations almost doubles transitions from unemployment to employment and it is not so much the range of sanction that matters but the mere fact of it being imposed. Also in Switzerland (see Lalive et al. 2002) only warnings about potential sanctions increase the intensity of such transitions by 28 percent. Another element of activation strategies is steering benefit-takers to ALMP programmes that match their needs. From the activation strategies perspective, active labour market policies are not only aimed to increase participants’ chances of finding a job – ALMP should also serve as a test of their actual readiness to take up work. Some unemployed, i.e. those whose motivation to engage in employment
is not actually very strong, when faced with the obligation to participate in a training programme or internship, choose to give up their right to benefit rather than give their time to active forms of support. Moreover, the obligation to participate in ALMP after a certain period of being unemployed motivates them to set on a job search early and eventually to find a job. This is so because a large share of them want to avoid the obligatory and time-consuming dealings with public employment services. Numerous empirical studies in- dicate that this “threat effect” contributes significantly to the reduction of unemployment. Based on data for the USA, Black et al. (1999) prove that the obligation to participate in ALMP shortens the length of unemployment even more than the programmes themselves. Rosholm and Svarer (2004), in turn, estimate that in Denmark, as a result of the “threat effect” the period of unemployment is shorter by an average of approx. 8 percent (3 weeks).
To sum up, applying a combination of passive and active policies boosts their effectiveness in terms of their impact on the labour market situation as well as of wise use of public funds devoted to these purposes. There is no doubt that OECD countries give more and more attention to designing consistent activation strategies, although the tools used in a bid to activate the unemployed (such as ways of verifying their actual labour market status, job searching methods, personalised action plans, profiling, sanctions, etc.) vary significantly across countries. International experience suggests that effective activation strategies should include:
•
ścisłe thorough monitoring of the unemployed, their frequent contacts with public employment services (job search controls, work readiness re-assessments) and imposing sanctions against non-fulfilment of imposed obligations (where the fact of imposing sanctions seems to matter more than their actual amount). It ought to be emphasized that having the unemployed either search a job very intensively or accept the first job offer might lower the quality of matching in the labour market, which subsequently reduces the productivity and stability of created jobs;•
short job-searching courses which are aimed especially at people with relatively good chances of finding a job. It is a cheap and effective form of motivating the unemployed to take up independent job-searching attempts;•
unemployed profiling and designing individual action plans – selection of people who are at high risk of lasting unemployment and social exclusion from the group of all people registered in labour offices and offering them personalised assistance matching their actual needs (to reduce the dead-weight loss effect);•
obligatory participation in ALMP after a certain period of unemployment – using active labour market policies also in order to verify the readiness of the unemployed to undertake employment and achieve positive external effects (e.g. “threat” effect);•
imposing upon the unemployed the obligation to look for jobs even when participating in ALMP (in order to minimise the negative lock-in effect);•
insisting on the evaluation of actions taken and improving the organisation and management of public employment services.1.5. Active labour market policies in selected OECD countries – case studies
The diversity of conclusions drawn from the analysis of AMLP effectiveness in selected countries reveal on one hand a multitude of actions taken as well as a series of methodological problems and lack of appropriate data making their evaluation difficult, but on the other hand they also prove that there is no universal programme which would always boost employment levels. International experi- ence shows that ALMP effectiveness depends on the design of the entire institutional system – social security system, tax system and law stringency. Furthermore, the way of implementing active labour market policies seems to have been of utter importance. Hence, this Chapter touches on several problems in the area of designing and implementing ALMP. We focus on the experiences of Great Brit- ain, Denmark and the Netherlands in the aforementioned field. The example of Great Britain indicates that even relatively inexpensive youth measures may prove effective if they are well designed and implemented (see point 1.5.1.). Danish experience shows that ALMP effectiveness may be augmented through their accurate targeting, particularly when supported by systems allowing for early identifi- cation of people at highest risk of lasting unemployment (see point 1.5.2.). The example of the Netherlands demonstrates, in turn, that the effectiveness of employment services could be amplified by deregulation of their market (see point 1.5.3.).