ESPN Thematic Report on integrated support for the long-term unemployed

Transcription

1 ESPN Thematic Report on integrated support for the long-term unemployed 2015 Daniel Fredriksson, Sebastian Sirén, Johan Fritzell May 2015

2 EUROPEAN COMMISSION Directorate-General for Employment, Social Affairs and Inclusion Directorate D Europe 2020: Social Policies Unit D.3 Social Protection and Activation Systems Contact: Valdis ZAGORSKIS Valdis.ZAGORSKIS@ec.europa.eu European Commission B-1049 Brussels

3 EUROPEAN COMMISSION EUROPEAN SOCIAL POLICY NETWORK (ESPN) ESPN Thematic Report on integrated support for the long-term unemployed 2015 Daniel Fredriksson, Sebastian Sirén, Johan Fritzell 2015 Directorate-General for Employment, Social Affairs and Inclusion

4 The European Social Policy Network (ESPN) was established in July 2014 on the initiative of the European Commission to provide high-quality and timely independent information, advice, analysis and expertise on social policy issues in the European Union and neighbouring countries. The ESPN brings together into a single network the work that used to be carried out by the European Network of Independent Experts on Social Inclusion, the Network for the Analytical Support on the Socio-Economic Impact of Social Protection Reforms (ASISP) and the MISSOC (Mutual Information Systems on Social Protection) secretariat. The ESPN is managed by LISER and APPLICA, with the support of OSE - European Social Observatory. For more information on the ESPN, see: Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission, however it reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available on the Internet ( European Union, 2015 Reproduction is authorised provided the source is acknowledged.

5 Contents SUMMARY BENEFITS AND SERVICES SUPPORTING THE LONG-TERM UNEMPLOYED Cash benefits for the long-term unemployed Services for the long-term unemployed COORDINATION BETWEEN SERVICES TOWARDS A ONE-STOP SHOP APPROACH Autonomy and coordination within Swedish public administration Coordination around services to the long-term unemployed INDIVIDUALISED APPROACHES OVERVIEW TABLE REFERENCES

6 Summary The most common benefit for the long-term unemployed (LTU) is an activation grant, which is a taxable benefit set at 65% of previous earnings. The benefit is subject to a ceiling set at SEK 680 (~ 73) per day, and a minimum amount of SEK 320 (~ 34) per day. The most common service for the LTU is the job and development guarantee. During the first phase it consists of screening, job search activities and coaching during at most six months; in phase two these activities may be complemented with job training and similar measures; and in phase three, which commences after 450 days, the LTU may be placed with a designated employer. The Public Employment Services is responsible for the activities but the activation grant is paid by the Social Insurance Agency. Swedish municipalities have a fairly high degree of autonomy and responsibility. They are for example responsible for social services and social assistance. Simultaneously, largely autonomous national authorities are responsible for general labour market policies. There has been much effort put into strengthening the coordination between municipalities, county councils and state authorities in their support for the LTU and other socially vulnerable persons. Despite such efforts, significant coordination problems remain. As an example, authorities are generally obliged to exchange relevant data; however this can be difficult, due to factors like differences in routines and computer systems. Individualisation of the services offered to the LTU is primarily carried out through the individual back-to-work plan which the LTU is supposed to set up in collaboration with a designated case-worker when first coming in contact with the Public Employment Services (PES). However, strict adherence to rules and regulations concerning participation in different types of labour market programmes that aim to increase chances of employment are here thought of as a hindrance to actual individualisation. Also, a heavy workload and strict guidelines currently placed on the case-workers in the PES probably impede truly individualised approaches. These difficulties reflect the delicate balance between the need for legal certainty and the ability to get tailor-made solutions for individual needs. 1 Benefits and services supporting the long-term unemployed 1.1 Cash benefits for the long-term unemployed has a two-tiered unemployment insurance system, with a universal flat-rate benefit programme complemented by voluntary state-subsidised unemployment insurance funds administered by the labour unions. Membership in an unemployment insurance fund is a precondition for entitlement to earnings related benefits, paid at 80 per cent of previous earnings up to a ceiling. These rules are applicable during the first 200 regular working days (five days a week) of unemployment; thereafter the benefit is reduced to 70 per cent. Unemployed persons who fulfil the legislated requirements regarding previous employment are entitled to insurance benefits during a maximum of 300 working days. For parents that have children under the age of 18, insurance benefits are payable during an additional 150 days. Those who remain unemployed for a longer time-period are thereafter referred to participation in labour market programmes. Participants aged 25 or older thereby become entitled to an activity grant (aktivitetsstöd). This benefit is taxable and is set at 65 per cent of previous wages in case the beneficiary fulfils the requirements for unemployment insurance benefits. The benefit is subject to a ceiling set at SEK 680 (~ 73) per day, and a minimum amount of SEK 320 (~ 34) per day, if benefits are paid on a full-time basis. For participants who do not meet the stipulated requirements regarding previous employment and membership in an unemployment fund, a flat-rate benefit is paid, currently set at SEK 223 (~ 24) per day. The activity grant is paid by the Swedish Social Insurance Agency (Försäkringskassan). If an unemployed individual is aged between 18 and 25, they areeligible for a development grant 6

7 (utvecklingsersättning), instead of the activity grant, when participating in a labour market programme. This benefit is non-taxable but paid at a lower level than the activity grant. Swedish unemployment insurance was subject to a number of changes that, in conjunction with structural changes on the labour market and a lack of uprating of the nominal amounts of the unemployment benefit, have entailed that both income replacement and the number of unemployed who are effectively protected have decreased over the last decades. In particular, the earnings ceilings have remained unchanged since Research has shown that the Swedish replacement rate was still, in 2005, the second most generous unemployment insurance programme among the OECD countries. Only Switzerland had higher unemployment insurance replacement rates. Five years later, in 2010, the Swedish unemployment insurance replacement rate was below the average of the OECD countries (Ferrarini et al. 2012; Fritzell et al. 2014). The declining share of the unemployed with access to insurance benefits can be explained by an increasing share of the unemployed with little work experience and a larger share of the long-term unemployed who have exhausted their right to insurance benefits. Take-up rates are especially low among groups with little footing on the labour market. Large shares of the long-term unemployed who exhaust their rights to insurance benefits are nowadays shifted to benefits paid by the Social Insurance Agency, such as the activity grant. Previously there were possibilities to requalify for additional periods with unemployment insurance benefits, but this possibility has now been abolished. The last decades have also seen significant decline in the unemployment insurance fund s membership rates. Instead of relying on unemployment insurance to uphold a reasonable standard of living when unemployed, there are now also significant shares of the unemployed that receive municipal social assistance benefits. Out of the total number of social assistance recipients, 46% listed unemployment as the main reason for their claims. 1 The need for social assistance due to unemployment is a development that can arise due to the failure to access other benefits, but may also be caused by insufficient unemployment benefit levels in relation to minimum income standards. 1.2 Services for the long-term unemployed has a long history of active labour market policies and services for the longterm unemployed consisting of a wide array of policies and programmes. However, the last decades have seen a number of changes to labour market policies targeted at recipients of unemployment benefits. In 2000, important legislative changes were introduced that reinforced demands on the unemployed to actively seek employment. This was coupled with the introduction of the so-called activity guarantee, which was aimed at registered unemployed 20 years and older who were at risk of becoming long-term unemployed. In 2001 it also became mandatory to draw up a back-towork-plan with the local employment office to be eligible for benefits. Possible benefit reduction was also introduced as a possible sanction towards recipients not complying with the requirement to take up suitable employment or participate in activation programmes. In 2008, the activity guarantee was replaced by the job and development guarantee. As can be seen in figure 1, the job and development guarantee is the most common programme for the long-term unemployed in The job and development guarantee has three phases: phase one includes screening, job search activities and coaching during at most six months; in phase two these activities may be complemented with job training and similar measures; and in phase three, which commences after 450 days, the unemployed may be placed with a designated employer. Figure 1 also shows the number of participants in other types of labour market programmes. It should be noted that there might be some overlap in terms of content 1 Socialstyrelsen (2014). 7

8 between these different types of policies. Preparatory measures, for example, include similar activities as the first phase of the job and development guarantee, but have a more explicit focus on preparing the unemployed for participation in labour market programmes or work. There are also other types of subsidised employment that are not included in Figure 1 since participants are no longer registered as unemployed. The so-called New-start-jobs (nystartsjobb) that were introduced in 2008 are an example of this. New-start-jobs are primarily concerned with the long-term unemployed. Within this programme, employers receive compensation corresponding to a normal employer s social security contribution (31.42%, and double this amount if the unemployed person had been without work for 12 months or more), whereas the formerly unemployed receive a wage in line with collective agreements. According to statistics from Arbetsförmedlingen, there were approximately 45,000 individuals within the programme in the beginning of A special programme for young people, the job guarantee for youths was also introduced in 2008, composed of a range of different measures, including job search activities and study and career counselling for the first three months, and thereafter work practice, education and support for setting up one s own business, i.e. self-employment. While there are also other types of programmes and services, some of which can be seen in figure 1, the programmes described above arguably cover the lion s share of the long-term unemployed. It can be noted that most individuals that participate in programmes or receive services have been unemployed between 5-26 weeks before entering a programme, which can be seen in figure 2. There is, however, also a large group of individuals that have been unemployed for more than 26 weeks. This is also the national definition of long-term unemployment. Figure 1. Number of participants in different types of LMPs (2013) Source: Statistics (2014). 8

9 Figure 2. Number of people in any type of LMP by time in unemployment (2013) Source: Statistics (2014). 2 Coordination between services towards a one-stop shop approach 2.1 Autonomy and coordination within Swedish public administration Partly autonomous municipalities are a fundamental component of Swedish political administration. Municipalities have a large degree of autonomy, including the right to tax their inhabitants. Among other services to citizens, social services and social assistance are legally mandated municipal responsibilities. Other parts of the social protection mechanisms available to the long-term unemployed, such as active labour market policies and the payment of unemployment support benefits are the responsibility of national authorities, also with significant autonomy. These were subject to important decentralisation efforts during the 1980s and 90s, when increased authority was given to local branches. However, this trend has been reversed and since the late 1990s state authorities have been centralised to an increasing extent. This is true also for the, in the present context very relevant, Public Employment Services and the Social Insurance Agency, which both changed their organisation from one based on regional boards to a more centralised structure. Cooperation is inscribed in the law on public administration, in which it is stated that public authorities are responsible, within their field of responsibility, to assist other authorities. Despite this, coordination is limited in practice. There has been much effort put into strengthening the coordination between municipalities, counties and state authorities in their support for the socially vulnerable. Despite such efforts, significant coordination problems remain. As an example, authorities are generally obliged to exchange relevant data, as in the case of payment of the activity grant to participants in labour market programs, long term sickness benefits, and social assistance benefits; which all require regular coordination between national, and in the latter two cases also regional and local, authorities. However such data exchange is 9

10 sometimes difficult, due to differences in routines, computer systems, delays, or unclear guidelines for example. 2 Within the area of rehabilitation, which may be medical, psycho-social or workoriented rehabilitation, local and national authorities have the possibility to form associations for coordination (samordningsförbund) on a voluntary basis. These are formed locally between one or several municipalities, counties, the Public Employment Services and the Social Insurance Agency, with the purpose of coordinating interventions intended to support individuals in need of rehabilitation back into employment. At the end of 2014 there were 85 such associations, which incorporate 240 of s 290 local municipalities and all counties Coordination around services to the long-term unemployed Labour market interventions have traditionally been regarded as a national responsibility and a main task of the Public Employment Services. After some tendencies towards decentralisation, especially with the transfer of responsibility for unemployed young people to the municipalities during the 1990s, much of the authority has been reinstated at the national level during the last decade. Today young unemployed people are assigned to the job guarantee for youth programme organised by the PES. Additionally, the responsibility for unemployed newly arrived immigrants, which also previously was in the hands of the municipalities, have recently been taken over by the PES. 4 Another aspect worth mentioning is that the national government sets the guidelines for the national labour market policy, but both quality and the service offer has historically been subject to local variations. Over the last decades there have been increased efforts to set common standards and uniform services across the country. The PES, responsible for the active labour market policies, and the Social Insurance Agency, responsible for paying out benefits to participants in labour market programmes but also for sickness benefits, cooperate on a regular basis, although much of this cooperation is carried out in particular forms, separate from the authorities regular activities. Since 2005 there is a formalised cooperation between the two agencies meant to coordinate activities towards unemployed persons with health problems. The purpose of this coordination is to strengthen the support to individuals in order to promote their transition into employment following a period of sickness and is targeted at unemployed persons with sickness benefits, unemployed young persons on activity grants as well as persons who are unable to return to their previous employment following a period of ill-health. Activities mostly include workoriented rehabilitation. 5 Another interface, which demands contact between the PES and the Social insurance Agency, but also with the Unemployment Insurance Funds administered by the labour unions relates to participants in active labour market programmes. The PES assigns participants to programmes and transfers information about participants to the unemployment insurance funds for assessment of whether or not they qualify for insurance based benefits. The Funds thereafter inform the Social Insurance Agency about the participant s work history and previous benefit payments. The Social Insurance Agency then sets the amount of the activity grant based on the information 2 Riksrevisionen (2010) 3 Försäkringskassan (2015) 4 Minas (2012) 5 Arbetsförmedlingen och Försäkringskassan (2011) 10

11 provided by the funds, and pays out the benefit. The PES also receives information from the funds about the number of days with activity grant that have been consumed. Prior to payment of the benefit, the Social Insurance Agency collects information from other authorities regarding any other benefit payments received by the participant. 6 Municipalities are responsible for organising activities for unemployed persons who do not receive activity support or unemployment benefits (particularly young people), and who instead rely on social assistance. The municipalities and the PES should coordinate these activities. There are examples of local attempts to organise one-stopshop solutions involving both municipal and national authorities. 7 Municipalities have been pushing to strengthen and broaden such efforts, but the centralised and sectoral organisation of national public administration and a lack of political initiatives at the national level have generally inhibited the development of initiatives that would further strengthen the coordination with actors. The last decade has also been marked by the introduction of complementary actors, in the form of private providers of certain employment services under the auspices of the PES. Since 2007, the PES is able to make agreements with private actors on delivery of services through tendering. Some of these services are delivered through a consumer choice system. The main actors working within this framework are for-profit enterprises. After approval by the PES a private actor can compete over unemployed clients in offering some of the services that fall under the responsibility of the PES. The purpose of this reform was to increase the efficiency of, and individualise, the employment service and thereby shorten the unemployment spells. Shorter interventions by the private actors are funded with reference to the number of participants and scope of their activities, while in the case of long-term interventions funds are partly conditional on the transition of participants into employment or education. However, so far there is no evidence of that these initiatives towards privatisation have increased the effectiveness of the services traditionally provided by the PES. 8 3 Individualised approaches To some degree it is difficult to easily assess the extent of individualised approaches for the long-term unemployed. Since individuals often have a designated case-worker and are supposed to create a back-to-work plan in collaboration with them within 30 days from first coming in contact with the PES, this should entail at least some degree of individualisation. The back-to-work plan is mandated, by law, for all unemployed persons and contains details on the rights and duties of the unemployed individual. The law also allows the PES to decide more detailed criteria concerning actual content. Some examples include that job-seekers are required to list available jobs in specific sectors or produce a CV, but may also include identification of suitable training programmes. 9 In 2009 only 70% of job-seekers actually had a plan after 30 days. The screening process has also been assessed as lacking in transparency. The Swedish National Audit Office has, in relation to this, issued criticism towards the lacking opportunities for adopting more individualised approaches. 10 While this criticism was issued in the context of unemployed youth, the conclusions also pertain to unemployed people of other age groups. The strict adherence to rules and regulations 6 Riksrevisionen (2010) 7 Minas (2012) 8 Karlsson et al. (2014) 9 Arbetsförmedlingen (2011) 10 Riksrevisionen (2013) 11

12 concerning participation in different types of labour market programmes that aim to increase opportunities for employment are here thought of as a hindrance. An individual in need of a particular type of education or who is thought to benefit from a particular programme might be unable to participate due to being too young or too old, for example. However, while this criticism might be taken as an argument to increase decentralisation and increase the discretionary power of PES personnel, it should also be noted that discretion might also be conceived as problematic if the decisions vary too much between different case-workers, PES-offices or even geographically. There is a delicate balance between legal certainty and the ability to get tailor-made solutions for individual needs. The extent of the problems described so far - i.e. too much or too little discretion - is difficult to assess within this report. More detailed statistics on both the different groups of unemployed and the workings of the PES on different levels is clearly needed to draw any definite conclusions. However, the heavy workload and strict guidelines currently placed on the case-workers in the PES probably impedes truly individualised. A more pressing issue is the fact that some parts of the labour market policy system are not thoroughly evaluated. Some have argued that the government has had no interest in evaluating, for example, the effects of preparatory measures that are supposed to provide a first guidance for the unemployed individual and administrative personnel. The same has also been argued in relation to perhaps the largest programme, the job and development guarantee Sohlman (2012) and Sohlman (2007) 12

13 4 Overview table Please put an X in the column that best represents the situation in your country Please summarise in a few words and in order of priority the 3 key gaps that need to be addressed to improve effectiveness (if only one gap just complete one column) Very good Medium Weak Gap 1 Gap 2 Gap 3 Effectiveness of benefits & services supporting the long-term unemployed Income benefits Social services Activation services Effectiveness of coordination between employment, social assistance and social services X X X X Doesn t uphold reasonable standard of living Inadequate control of private service providers Centralisation of certain services has hindered coordination. Low coverage of insurance. Social assistance is increasingly used. The balance between topdown rules and autonomy for caseworkers must be balanced. Heavy workload on caseworkers. Low interest in coordination from national level. Involvement of employers has been identified as lacking Low legitimacy Directive to focus on those farthest from the labour market. Extent of individualised support X Subject for discretion, which may lead to inequalities Caseworkers room for manoeuvring might be limited 13

14 References Arbetsförmedlingen (2011) Arbetsförmedlingens individuella handlingsplaner - vem som får och när. URA 2011:3 Stockholm: Arbetsförmedlingen Ferrarini, T., Nelson, K., Palme, J. and Sjöberg, O. (2012) Sveriges socialförsäkringar i jämförande perspektiv. En institutionell analys av sjuk-, arbetsskade- och arbetslöshetsförsäkringarna i 18 OECD-länder 1930 till 2010 (S 2010:04) Stockholm: Swedish Ministry of Health and Social Affairs. Fritzell, J.; Bacchus Hertzman, J.; Bäckman, O.; Borg, I.; Ferrarini, T. and Nelson, K. (2014). : Increasing income inequalities and changing social relations in Nolan, B et al.(eds.). Changing Inequalities and Societal Impacts in Rich Countries: Thirty Countries Experiences. Oxford: Oxford University Press. Försäkringskassan and Arbetsförmedlingen (2011). Samverkan mellan Arbetsförmedlingen och Försäkringskassan under 2000-talet. (S 2010:04) Stockholm: Swedish Ministry of Health and Social Affairs. Karlsson, J; Szulkin, R; Lindblom, C and Bygren, M (2014). Nya aktörer inom arbetsmarknadspolitiken. Forskningsrapport 2014/4. Stockholm: Institute for Future Studies. Minas, R (2012). One-Stop Shops I Europa - Samordning av sociala och arbetsmarknadspolitiska åtgärder utifrån ett organisations- och arbetsmarknadspolitiskt perspektiv. (S 2010:04). Stockholm: Swedish Ministry of Health and Social Affairs. Riksrevisionen (2010). Informationsutbyte mellan myndigheter med ansvar för trygghetssystem. RiR 2010:18. Stockholm: Riksrevisionen. Riksrevisionen (2013). Ungdomars väg till arbete - individuellt stöd och matchning mot arbetsgivare. RiR 2013:6. Stockholm: Riksrevisionen. Statistics (2014) "I och utanför arbetskraften" _ xls (accessed ) Socialstyrelsen (2014). Statistik över försörjningshinder och ändamål med Ekonomiskt Bistånd Stockholm: Socialstyrelsen. Sohlman, Åsa (2012). Den svenska regeringen och användningen av utvärderingar en fallstudie baserade på budgetpropositionerna för 2011 och Scores Rapportserie 2012:2. Stockhoolm: Score.. SOU 2007:112. Nya förutsättningar för arbetsmarknadsutbildning. Stockholm: Fritze. 14

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