Mutual Learning Programme

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1 Mutual Learning Programme DG Employment, Social Affairs and Inclusion Host Country Comments Paper- Spain A NEW STRATEGY FOR EMPLOYMENT ACTIVATION SPAIN 2014 Peer Review on Strategies for Employment Policy reform. Implementation challenges in decentralised countries Madrid (Spain), 5-6 October 2015 Written by Sara de la Rica July 2015

2 EUROPEAN COMMISSION Directorate-General for Employment, Social Affairs and Inclusion Unit C1 Contact: Emilio Castrillejo Web site:

3 European Commission B-1049 Brussels

4 EUROPEAN COMMISSION Mutual Learning Programme DG Employment, Social Affairs and Inclusion Directorate-General for Employment, Social Affairs and Inclusion Peer Review on Strategies for Employment Policy reform. Implementation challenges in decentralised countries Madrid (Spain), 5-6 October 2015

5 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 The information contained in this publication does not necessarily reflect the official position of the European Commission This document has received financial support from the European Union Programme for Employment and Social Innovation "EaSI" ( ). For further information please consult: European Union, Reproduction is authorised provided the source is acknowledged.

6 Table of Contents 1 Summary The Labour Market Background Policy Measure the Strategy for Employment Activation The background to the development of the SEA Key features of the Strategy for Employment Activation (SEA ) (751/2014 Law): Results of the SEA Outcome-based partial allocation of funds Best-Practice Program Single Job Portal Difficulties and Constraints faced by the SEA Outcome-based allocation of funds: Information on the market needs Staff competences and training in regional and central PES Financial framework Timing Issues Success Factors and Transferability References...15 Annex Figures and Tables...16

7 1 Summary Active Labour Market Policies (henceforth ALMPs) including job search assistance, labour market training or wage subsidies to the private sector, are important tools of the European Employment Strategy since the end of the 1990s. Since then, the term ALMPs has been part of the permanent agenda of this European Employment Strategy. However, in practice, its implementation has been very unequal across the EU Member States. By the beginning of the 21 st century, ALMP expenditure in Spain was one of the lowest in the EU. However, since then, Spain has increased its expenditure in ALMPs relatively more than the others and by 2012 the expenditure in ALMPs was around 0.55% of GDP 1. This is higher than in other southern European countries, such as Italy, Portugal or Greece, although lower than others such as Sweden or Denmark, where it is above 1% of their GDP. However, Spain s expenditure on active labour market policies has related mainly to wage subsidies to the private sector, and not so much on other aspects of activation, such as job search assistance or access to training for the unemployed. By 2012, the Great Recession led unemployment in Spain to increase from 8% (in 2008) to 24%, with65% of all unemployed workers being long-term unemployed. In this framework, the urgent need of a new strategy for employment activation emerged, and the new Strategy for Employment Activation (henceforth SEA), finally approved in September 2014, was designed. One specific feature of the Spanish institutional setting is that the 1978 Constitutional Law gives the legislative competence in employment issues as well as the passive employment policies to the central state whereas the decisions and implementation of Employment Services belongs to the Spanish Regions. Hence, the new model for activation requires a new normative and institutional framework based on close coordination of Public Employment Services (PES) in order to improve capacity and modernise the provision of employment services. The new SEA is not a specific active policy intervention design, but a comprehensive set of strategic reforms introduced to redesign the entire institutional framework of activation policies. It shapes all policy interventions regarding ALMPs and PES. It is based on new principles, such as coordination between the central and regional PES, payment by results, and increased monitoring and evaluation. In July 2015, most of the overall strategic framework development is almost finished, and the practical implementation is underway. Hence, although some preliminary evidence is emerging, no clear results are yet available at this stage, given that the Strategy success will depend very much on how the new framework is implemented on the ground. 1 See &language=en July,

8 2 The Labour Market Background Key labour market trends As mentioned before, although the new SEA was finally approved in September 2014, the whole new model for activation started to be designed in By that time, the dramatic situation of the Spanish labour market clearly advocated for a profound change in the activation strategy for the unemployed. In this section we provide some information on the situation of the Spanish Labour Market, which reinforces the need to develop new efforts on ALMPs, given the spectacular increase in job losses, the difficulty of unemployed workers to access jobs and the disparities across regional labour markets. Figure 1 represents net employment loss (%) in Spain in the last three recessions since the first quarter the recession is dated (quarter 0). The green line represents the % of net employment losses in the actual recession, which started in 2008, and shows that 18% of total employment was lost after 21 terms, i.e., after 5 years of recession (by 2012). Employment loss in this recession is huge when compared with the two previous ones. Figure 1 Source: Spanish Current Population Sample The second key element which advocated for a profound change in the activation strategy is the difficulties that unemployed workers faced when trying to find a job. De la Rica and Rebollo (2015) simulate unemployment survival rates for male and female unemployed workers and show that in the actual recession period, , for about half of unemployed workers, it takes more than two years to find a job 2. Moreover, De la Rica and Rebollo (2015) show that the highest difficulty for job access are found for long-term unemployed. And this takes us to the third element of concern, the incidence of long-term unemployment, i.e., unemployment duration higher than 12 months, reaching 54% of all unemployed. However, the situation is not consistent across all Spanish regions. Table A1 (Annex) presents the distribution of unemployment across regions by age, educational level and unemployment duration at the time the new SEA was being designed. The following issues are worth pointing out: On average, the unemployment rate is 25% but the regional disparities are high, ranging from 14.9% in the Basque Country to higher than 30% in other regions, such as Andalusia, Canary Island, Extremadura or Ceuta. The distribution of unemployment by age presents notable differences across regions. In particular, the proportion of young workers among the unemployed is lower than 17% in some regions, such as Madrid, Galicia or Cantabria, 2 The figure displaying estimated survival rates is presented in the Annex figure A1. July,

9 whereas in others, such as Balearic Islands, it reaches 24%. Similar disparities can be found with respect to the proportion of over 45s among the unemployed. Finally, the unemployment distribution across regions by unemployment duration reveals that long-term unemployment, more strictly, VERY long-term unemployment duration (higher than 24 months unemployed), is THE toughest problem that the Spanish Labour Market faces. By 2012, on average 42% of all unemployed workers are unemployed for more than two years. Again the regional disparities are clear; with very long-term unemployment amongst the unemployed ranging from 31.7% in the Balearic Islands to almost 46% in Valencia. These disparities suggest the need to focus on different demographic groups and different strategies across the different regions to help unemployed workers to reintegrate into the labour market. In addition, the fact that each region has exclusive competency for the implementation of their ALMPs whereas the Central Government is responsible for the legislation and for passive policies indicates the need of flexibility in the implementation but also the need for some coordination between regions and Central Government. This is particularly important to ensure that the framework as well as passive and active labour market policies evolve together in a consistent and efficient way. Before getting into the details of the new SEA that is the focus of the Peer Review, we describe the situation of the ALMPs in Spain before ALMPs in Spain before the new Activation Strategy At the beginning of the 1990s, expenditure in Spain in ALMPs was one of the lowest of the whole European Union. However, since then, Spain has increased its expenditure in ALMPs relatively more than the others. By 2012, the expenditure in ALMPs was around 0.5% of GDP, which was higher than in other Southern European countries, such as Italy, Portugal or Greece, although lower than others such as Sweden or Denmark, where it was above 1% of their GDP. However, the expenditure in Spain in passive labour market policies (primarily Unemployment Benefits) is by far the largest of all European Union, amounting to 3.1% of GDP. Besides the amount of total expenditure it is interesting to point out the distribution of the expenditure across types of ALMPs. In this regard, the Spanish expenditure profile in ALMPs shows a relatively high share in the incentives to the private sector (42% compared to 23% in EU-28 as a whole) 3. This was primarily the bonus for the promotion of workers to permanent contracts and on start-up incentives. On the other hand, Spain shows a relatively low share in training (22% compared to 41% in EU-28 as a whole) 4. With respect to training, in 2011, the Tripartite Foundation for Employment 5 was in charge of the Training Offer. Although at that time more than 90,000 training courses had been given and almost half million of firms had participated, the lack of evaluation and of sufficient coordination reinforced the need to move towards a new model of Training for Employment, which is also designed under the SEA. 3 For the exact distribution of expenditure in ALMPs by type of activation, see &language=en 4 For a thorough detail of ALMPs in European Countries, as well as a review of their evaluation, see Kluve et al (2007). 5 For more details, see July,

10 3 Policy Measure the Strategy for Employment Activation 2014 The main goal of this section is to describe a new SEA, approved in September This is not a specific active policy intervention design, but a comprehensive set of strategic reforms introduced to redesign the entire institutional framework of activation policies. The aim is to improve performance of Regional PES through increased coordination and evaluation. Although the design of the new framework is basically done, its development and implementation is at present under way, and hence, it is too early to identify any serious evaluation of its results. At most, we will be able to show some preliminary indications. 3.1 The background to the development of the SEA In order to understand the main aspects of the SEA, it is important to contextualize the Spanish institutional framework. In order to do so, the first key aspect to take into account is that Article of the Spanish Constitution (approved in 1978), establishes that the legislative competence in Employment issues as well as the Passive Employment Policies belongs to the central state whereas the decisions and implementation of Employment Services belongs to the regions (17 Autonomous Communities). By the end of the 1990s, most Spanish regions already had the competence to implement their Regional Active Employment Policies. The first need that regions detected was to be able to share the information about unemployment registration in each of the different regions. This was particularly important for those unemployed workers moving from one region to another looking for employment. This led to the emergence of the so-called SISPE, Information System for Employment Public Services. It was created with the aim to seek the compatibility of information used in the different regions once the employment policy competences are transferred to them. Hence, SISPE must be seen as the first tool created to promote the coordination and cooperation among the different regional PES, finally approved with the passing of the 56/2003 law. The 56/2003 Law 6 also established that the annual objectives of the Spanish Employment Strategy must be detailed and approved in the Annual Employment Plan. The law established that regional aims, and indicators proposed to measure the degree of compliance of such objectives, must be detailed in this Annual Plan. However, although such Annual Plans emerged as a key tool for the coordination and development of actions aimed at managing PES, it was not until July 2012 (8 years later) that the first Annual Employment Plan was approved. By that time, the recession had led to an unprecedented rise in the unemployment rate from 9.6% in the first term of 2008 to 24.4% by the first term of An improvement of the coordination of the different Regional and Central Administrations seemed essential to implement concrete activation measures for the unemployed to reduce the alarming increase in the unemployment rate. In this context, the 2012 Annual Employment Plan is seen as the first pillar towards the development of the new SEA. By the time the 2012 Annual Employment Plan was signed a new broad Labour Market Reform 7 (in March 2012) had been launched. This reform included elements to enhance the implementation of ALMPs but also a wide array of labour market measures to enhance flexibility at company level as well as changes in the collective bargaining procedures. 6 Full details (in Spanish) can be found in: 7 Full details of the Spanish Labour Reform in 2012 can be found in: July,

11 Hence, aligned with the March 2012 broad Labour Market Reform, the 2012 Employment Plan contained specific measures and actions, proposed by the different regions, to attain the following structural objectives: (i) improve the employability of youth, (ii) improve the employability of other vulnerable groups (such as long-term unemployed, older workers, low skilled, etc), (iii) enhance self-employment, (iv) improve the collaboration between PES and Private Employment Agencies, and (v) fight against fiscal fraud. The spirit of the Annual Employment Plan, which will be later reinforced in the SEA, is to share common objectives but allow regions to use different instruments to attain them. This is the basis for the better coordination between Central and Regional PES. The financial endowment of each of the Annual Employment Plans, provided by the Central Government, must be approved every year. To give an idea of the magnitude, the 2014 Employment Plan was funded with thousand Euros (about 0,3% of Spanish GDP), partially funded by the Spanish General Budget, by Social Security fees for Employment Training and by the European Social Fund. In addition, some regions may obtain additional funds from their regional budgets. Although during the last few years in most regions, given the fiscal consolidation process, most of their funds depended solely on the funds provided by the Central Government. 3.2 Key features of the Strategy for Employment Activation (SEA ) (751/2014 Law) 8 : The 2012 Employment Plan served as a tool to develop the SEA, which constitutes the first normative development towards the implementation of ALMPs in Spain. Main Goal Ultimately, the main goal of this strategy is to modernize the PES in the decentralised setting. This modernisation entails developing actions directed at: 1. Improving the coordination and modernisation of the Regional/Central Activation activities, and 2. Improving the quality of ALMPs. Main Actions We will now describe the actions directed to achieve each of these two axis separately, as well as the institutional/normative setting developed to achieve each of them. (i) Actions to improve the coordination and modernization of activation activities: To improve the coordination of Regional Activation Actions, the new Strategy proposes to define and agree upon common objectives for activation for all regions but allowing for different actions and measures to implement them. However, to reduce disparities on the implementation of regional actions, a set of minimum common services and programmes has also been established. In addition, outcome-based reallocation of funds emerges as a main tool to modernise activation activities; to achieve this it is key that Regional PES monitor and evaluate the results from the 8 Full details of this decree law: July,

12 activation measures implemented in each region. Given that all regions are immersed in similar situations, the SEA aims to develop a programme of sharing best-practice sharing (Best-Practice Programme for PES) among the different regional PES, inspired by the Mutual Learning Programme of DG EMPL. We proceed now to describe each of these elements in detail: Common Objectives: These are divided into two types: Strategic and Structural Objectives. We proceed to list them, firstly because it helps understand which of the final goals are underlying the whole strategy, and secondly because evaluation is based on compliance of these objectives: Strategic Objectives (4) Structural Objectives (6) Improve employability of young workers and enhance selfemployment (40%) Improve employability of other vulnerable groups (long-term unemployed, older workers, disabled workers, etc (25%) Improve the quality of training for employment (15%) Improve the connection between active and passive labour market policies (10%). Guidance (25%): This axis comprises actions towards improving information, development of individual itineraries, manage the employment offers, help to establish relation with the potential firms, etc. Training (25%): This axis comprises actions directed to improve the quality of training, to enhance dual apprenticeship as well as to improve the recognition of professional competences. Improve Employment Opportunities (15%): This axis comprises actions to enhance hiring of workers in vulnerable situations, in emergent sectors and try to diminish underground hiring. Improve Equality of Employment Opportunities (10%): This axis comprises actions devoted to remove employment barriers, enhance geographic and job mobility and help conciliate work and family. Self-Employment (15%): This axis comprises actions directed to help unemployed workers to become self-employed workers. Modernise the institutional setting (10%): This axis comprises all actions directed to improve the management, coordination and communication with the National Employment System, enhance the collaboration with private agencies and in general, improve the quality of their Regional Services. As mentioned before, these common objectives can be achieved through different services and programmes, which are proposed and implemented by each of the different regions. The detailed specification of the services and programmes offered annually by each region is described and approved in the Annual Employment Plan. To reduce disparity among the different actions taken by each region, some are common to all regions, whereas others are allowed to be tailored to the needs of the region. The Set of Common Services for Activation: This has been approved very recently, in January 2015 (decree law 7/2015) 9. This delineates the specific contents to be provided in the Common Services and Programmes directed to these specific aims: (i) 9 Full details can be found in: July,

13 Professional Orientation, (ii) Re-integration of workers and firm orientation, (iii) Training for re-integration and (iv) Guidance for self-employment. For each of these different types of activation, the decree established the minimum services which must be provided to unemployed workers as well as to companies seeking workers. This set of minimum services clearly decreases heterogeneity in the treatment of unemployed workers. Furthermore, the Central PES is at the moment trying to reach agreements about the specific protocols which must be followed in each of these different types of activation. These protocols specify in great detail the content of the different services and programmes, in particular, with respect to professional guidance, reintegration of workers and guidance for self-employment. The improvements for services for training is described in the next subsection, as it has been regulated under a very recent specific decree law. Evaluation of results: As said before, a crucial aspect of the development of these common objectives but different Services and Programmes is that they are ultimately directed to modernise the PES. A key element of this modernisation, is to monitor and EVALUATE the different practices in terms of their achievements. More specifically, the SEA establishes that fund distribution will gradually be based on the conditionality from the Evaluation results. This led to an agreement between the Central and Regional PES 10 on the construction of 26 indicators: one for each of the four strategic objectives and a different number of indicators for each of the six structural objectives 11. Box 1: Two Examples of indicator construction To give an example, for the compliance of the first axis of structural objectives Guidance, there are 5 indicators. Indicator 1 is computed to measure the degree of information received by unemployed workers about the labour market as well as on the services and programmes offered by the PES. The specific indicator is computed as the ratio between the unemployed workers who have received any service of professional information about employment and self-employment in a particular period and the total number of unemployed workers registered in such a period. Some indicators have more than an angle (component) to measure. For instance, Indicator 1 of Training, which is created to measure the improvement on the effort on training for employment wants to capture not only intensity of training but also coverage. To do this, the indicator is constructed as a weighted average of two subindicators: the first one, which would focus on intensity, is computed as the ratio of total hours-participant in training activities in a period and the hours-participant in training in the previous period. The second one, which is focused on coverage, is the ratio of total number of participants in training activities in a particular period divided by the total active population 12. Given the existence of the Integrated System Information (SISPE), staff from the regional PES must introduce the computation of each of the 26 indicators describing the degree of compliance of the strategic and structural objectives. Even though regions develop different services and programmes to guide and train unemployed workers, they use these different tools to attain the same objectives. It is the compliance with these objectives and not the particular services and programmes which regional PES 10 These agreements, discussion of other initiatives, as well as approval of the Annual Employment Plan take place at the Employment and Labour Affairs Sectorial Conference, which is the body which brings together representatives of the regional and Central Government periodically. 11 The number of indicators may vary slightly by year. In 2013 there were 26 indicators, but by 2014, they increased to 29. These are ultimately approved yearly in the Sectorial Employment Conference. 12 A full description of the 26 indicators is detailed in Annex 5 of the decree law 24/07/2014 Annual Plan of Employment Policy, published in BOE 232, September 24 th, July,

14 ultimately evaluate. This information is shared among the Regional and Central PES so all regions know the value of the different indicators attained by others. In this sense, there is transparency, although not complete, given the lack of individual tracking. Finally, every region obtains an average indicator value, between 0 and 1, which is obtained as a weighted average of the indicator values computed to measure compliance on strategic objectives (weight = 50%) and structural objectives (weight = 50%). With this information at hand, the SEA aim was to gradually redistribute ALMPs on the basis of the results of the indicators. In 2016, 70% of the funds will be subject to the results achieved (in 2013, 2014 and 2015, the figure was 15%, 40% and 50%, respectively). The remaining funds are allocated on the basis of the number of unemployed workers registered in the regional PES. For the percentage subject to conditionality, the unemployment rate is also considered, but the value of the indicator is used to increase or diminish such amount depending on the deviation of their results with respect to their mean values. Although the procedure does not imply huge changes in the funding allocation from one year to the next, to ensure some continuity, the procedure clearly places an emphasis on the improvement of the indicator values in order to increase final funds. This has been observed during the three years that the process has been underway. The question that remains unanswered, in our view, is whether a better compliance of these objectives leads to improving employability, which should be the ultimate goal for every ALMP. Best practice programme for PES: The final action promoted by the SEA to enhance coordination and to modernize the PES is the organization of the Best-Practice Programme for PES introduced in These seminars have started to take place in 2015 and so far have covered topics such as profiling, the implementation of a training voucher scheme and certifying competences that have been acquired via work experience. (ii) Actions to improve the Quality of ALMPs Stronger links with Labour Market Needs The second axis of SEA relies on improving the quality of ALMPs. This axis addresses several aspects: it focuses on the need to reform the Training System for workers, better collaboration with private employment agencies, and the provision of a Single Employment Portal which facilitates information for unemployed workers. Towards a new model of the Training System for Employment As noted above, one of the strategic objectives of the SEA is to improve the quality of training for employment. This need has led the government to approve, very recently (April 2015) a new normative framework - decree law (4/2015), which basically tries to change the content, procedures and redistribution of funds for training. At the moment, the normative setting has to be developed. : The main objective of this decree law is develop a more integrated model for Training for Employment, trying to ensure an adequate training for workers as well as linking more strongly company needs with training. To achieve this, the decree is based on four different pillars (chapters), each of them focusing on different issues to achieve a better training model: (i) actions to anticipate skill needs, (ii) actions to change training initiatives, in particular, giving companies a much higher weight in such initiatives (before the decree, social partners were responsible for training initiatives): (iii) actions to develop a better control in the training mechanisms as well as designing sanctions for those who implement bad practices; (iv) actions to create an integrated system of information which guarantees supervision of such actions as well as coherence and permanent updating of all information regarding training. To develop this integrated system, three tools were created: On the one hand, a Training Account that each worker will have to accredit his/her training history; this Account is linked to the worker s social security number and contains full details of training undertaken, thereby facilitating accreditation of knowledge and skills; secondly, a Catalogue of Training Specialities, which will be permanently updated, and finally, the State Registry of Training Providers, July,

15 which will be continuously audited. (v) Actions to improve governance of the whole Training System. The success of this new model depends very much on the successful implementation of all measures directed to improve the efficiency and efficacy of the system, and ultimately, to achieve the goal of continuing training for workers, either unemployed or not, in a permanently changing employment context. Increase collaboration with Private Employment Agencies The goal of a stronger collaboration with private employment agencies follows the spirit of the broad Spanish Labour Market Reform approved in To achieve it, in July 2013 the government launched a tender for all Private Employment Agencies who wanted to participate in an agreement of collaboration with particular rules. These rules basically established specific economic, technical and functional conditions for all contracts signed with unemployed workers coming from the Public Employment System. To date, 80 Intermediate Agencies have signed this agreement in 14 different regions. The most interesting element is that Private Employment Agencies are paid by results (employing unemployed workers for at least 6 months) which vary depending on the age and length of unemployment. In the next section we will give more details on the emerging results of this initiative. Single Job Portal - Before 2012 there were two central Job Portals, and seven regions had their own. This clearly constitutes a dysfunction for unemployed workers that a Single Job Portal tries to avoid, bringing all relevant information and job vacancies together. Hence, in April 2013 the Employment and Labour Affairs Sectorial Conference approved the constitution of a commission directed to create a single portal, which was finally implemented in June The Single Job Portal has two main goals: first, to reinforce transparency and support better job matching and secondly, to facilitate a more efficient job search for the unemployed. July,

16 4 Results of the SEA-2014 Given that the normative and institutional implementation of the main actions developed from the SEA has taken place very recently, it is too soon to reach any definite conclusion with respect to the quantitative and qualitative results of the whole Activation Strategy. However, some of the tools are fully developed and the aim of this section is to provide quantitative and/or qualitative preliminary evidence of its scope and use so far. In particular, we present preliminary results of the following tools 13 : 1. Outcome-based partial allocation of funds 2. Best-Practice Program 3. Single Portal Jobs 4.1 Outcome-based partial allocation of funds At present, the funding of regional ALMPs based on performance results has taken place in 2014 and As indicated previously, it has been a gradual process by which a percentage of all funds are redistributed on the basis of performance against a set of indicators. Each region obtains a final score as the average indicator. Funding is distributed to the regions taking into account not only the number of unemployed workers in each respective region, but also the final score. Although we cannot compare the results for 2014 and 2015, as the latter is still not public, it has been reported that in general, all regions have improved the value of their respective indicators. In addition, stakeholders confirmed that improving the scores was an issue not only to obtain more funds, but also as a reputation issue. Hence, it looks like this procedure is raising performance of regional PES in relation to those agreed indicators. It still remains to be tested whether improving the indicator scores unambiguously means improving the quality of the services and programmes for the unemployed particularly in increasing their employability. 4.2 Best-Practice Programme This tool was first implemented in The 2013 Employment and Labour Affairs Sectorial Conference approved the organization of three Best-Practice Seminars in 2014 in Madrid, Zaragoza and Santander, respectively. In each of them, a concrete good practice in the implementation of new activation tools was presented by a particular region. In the first seminar in Madrid, the Catalonian Employment Service presented a computer-based profiling tool, which was subsequently transferred to those regions interested in improving the quality of guidance and profiling of unemployed workers. In the seminar organized in Zaragoza, good practices for the training for employment in ICTs were presented by the Regional Employment Service of Aragón. Finally, the seminar in Cantabria focused on good practices to improve self-employment. For 2015, two types of Seminars under the Good-Practice Programme are scheduled: One focusing on the implementation of a training voucher for the unemployed and another one on the long-term unemployed. We must say that from qualitative interviews, all interviewees consider these seminars as very helpful to enhance new actions and services as well as to improve some of the tools already implemented. 4.3 Single Job Portal As of December 2014, the Job Portal has posted vacancies, corresponding to different job offers (each job offer usually contains more than one vacancy). On average, the Single Portal posts around new vacancies every month. 13 Collaboration with private agencies in intermediation seems to be already taking place in some regions but unfortunately we have not been able to get precise information on this so we do not include it under this section. July,

17 Employers can post their vacancies and workers can post their job applications either directly or through the regional PES. This is a useful tool to provide the unemployed with information on job offers from other regions. Young workers who normally exhibit greater geographic mobility can benefit most from this initiative. July,

18 5 Difficulties and Constraints faced by the SEA 2014 The SEA has implemented the use of some tools which clearly supports a better coordination between Central and Regional PES, a way to modernise PES, as well as measures to improve the quality of activating actions. In this section, we discuss some issues for debate in a constructive way. Some of the issues raised here express our own viewpoints, whereas others have been raised by regional PES themselves. 5.1 Outcome-based allocation of funds: The first issue refers to the strategy of providing funding on the basis of agreed indicators. The co-funding in terms of Good Practice in Activation Strategy is a great step towards to improve quality of ALMPs. However, our view on using the set of indicators proposed to determine the distribution of a percentage of the funds is that it might serve, at best, to encourage regional PES to register information on their activating actions (use and coverage), but not to extract any conclusion with regards to the performance of ALMPs in each region. The use of the type of indicators proposed here is not an evaluation procedure per se, as it prevents from disentangling the real impact of any intervention from the general economic and labour market context. Indeed, figure 2 of the Annex shows that the correlation of the 2013 indicator values (the last ones which are public) and the regional unemployment rate of the same year is strongly negative. Such high correlation indicates that some regions might be delivering good services and practices in activating unemployed workers but given the slack demand, success in reducing the numbers of unemployed may be more difficult to attain. Furthermore, the fact that funding is based on the value of these indicators may generate incentives to focus on actions which clearly raise the value of the indicators, but not necessarily the quality of the activating actions. Given that implementation of good quality activation policies is a dynamic process, we would like to suggest some options for improvement: First, SISPE should be improved in order to become the main tool to extract information about the development of all the different activating actions followed by each individual. To achieve this, it is essential that the system tracks every action followed by each person, either based on guidance, intermediation or training. This information is crucial to correctly evaluate the different actions that individuals go through. Secondly, evaluation should not be done exclusively by the same actors that implement the actions, i.e., PES. It would benefit from the involvement of independent experts. If SISPE tracks all actions taken by the unemployed individual and if monthly information on contracts can be merged with this information, then there is enough data to do rigorous evaluations on the effectiveness of different types of ALMPs. There are specific methodologies to be used depending on the available data, but all of them aim to examine the real impact of the policy in the activating strategy, disentangling the policy from other issues which might be affecting the success rate 14. Moreover, to achieve progress in the implementation of activating actions, it is crucial to know which particular actions led to positive impacts and which not. But distribution of funds should rely on the compromise to engage in effective practices in activating workers, which may be specific to each region given their specific characteristics, but not necessarily on the particular results of specific actions. In summary, payment by results is a good practice, but it is crucial to ensure that we are assessing the practices against the relevant indicators and this might be open to debate. 5.2 Information on the market needs Regional PES need very precise information on the labour market needs and company requirements in order to provide effective guidance, labour market intermediation and 14 See chapter 3 of Kluve et al (2007) for an excellent review on the methodology of Policy Program Evaluation. July,

19 training. The SEA focuses mainly on the supply side of the market (the worker) and very little on the demand side. However, without an exhaustive and up to date knowledge of regional labour market needs, it is really difficult to activate the unemployed workers to quickly re-enter the labour market. More focus should be directed to obtain a profound knowledge of the needs of the companies, so as to direct guidance, labour market intermediation and training to fulfil those needs. The tools to obtain relevant information may be also open to debate. 5.3 Staff competences and training in regional and central PES Supporting individual action planning, employment counselling and the provision of labour intermediation services by the PES requires specific skills and levels of professionalism. Case workers within the PES must be able to make use of profiling systems and tools to identify the employability needs of the unemployed, and then provide individualised guidance and pathways which should be followed for a quick reemployment. This requires that such staff are trained in these activities and that information on labour market needs is available to them. This aspect is not present in the actual state of the SEA and we think that it is crucial to improve the quality of the activating actions. 5.4 Financial framework Timing Issues There is a timing constraint which prevents Regional PES from adequately designing their specific measures: Funds for 2015, for example, are partially distributed in terms of the values of the indicators obtained in However, such results are not known until mid-year (e.g. June 2015). Given that for many regions Central Government Funds account for the vast majority of the endowment for each region, it is really difficult first to plan adequately the activating actions they can engage in every year, and secondly to pay for such actions. Decisions on the allocation of funds should be reached earlier so that regions could better plan and finance their activation actions. July,

20 6 Success Factors and Transferability The development of ALMPs in Spain has only recently focused on addressing the high unemployment and long-term unemployment rates. Long-term unemployed face, in most cases, structural employability problems, and without adequate guidance, training and labour market intermediation help, effectively supporting their re-employment is highly implausible. By 2012 the SEA started to be designed to modernise the whole of PES, and in particular, the activation strategies. Such an overall Strategy encompasses a variety of new normative and institutional settings to establish a new framework for activation activities, including procedures to improve guidance, training and labour market intermediation for the unemployed. All these new procedures take into account that in Spain the implementation of ALMPS is a regional competence, and hence, the coordination with the regional PES is a key factor to improve and modernise activation actions. At present, most of the strategic developments are already finished, but their implementation is still underway. Some tools, such as the Best-Practice Programme, the Single Job Portal and an incipient collaboration with private Employment Agencies seem to be progressing on track while others, such as the new training model or the protocols for the Minimum Services and Programmes, are still in their initial phase. We need more time to test whether this whole new framework delivers the expected results in terms of modernising PES practices and procedures. In any case, activation strategies must be seen as a dynamic model and hence, the most important thing is at least to start building the new framework. Some issues may be open to debate, especially: Outcome-based allocation of funds in terms of indicators may not be an adequate way to evaluate good practices and services. Indeed, it might lead to counter-productive actions from regions to improve the value of indicators but not necessarily improve the quality of activation. The SEA enhances a degree of homogeneity across regions with regards to the nature of activating actions and programs. Some of the actions developed, such as the Set of Common Services and the specification of the same protocols to implement them, clearly advocates for a higher degree of homogeneity. However, one might wonder whether enhancing more homogeneity in such heterogeneous regional framework is the best way to improve efficiency and efficacy of the regional activating actions. It would be interesting to discuss, as part of the PR, other possible settings which might enrich the debate. July,

21 7 References De la Rica, S. and R. Rebollo (2015), Gender Differentials in Unemployment Ins and Outs during the Great Recession in Spain, IZA Discussion paper, num Kluve et al (2007), Active Labor Market Policies in Europe, Springer-Verlag Berlin Heidelberg July,

22 Annex Figures and Tables Figure A1: Estimated Unemployment Survival Rates along 12 Quarters Observed and Simulated for different Scenarios Females % % Unemployment Rate Unemployment Dynamics: Survival Probabilities -simulated 12 Quarters- Referece Sample: Pool of unemployed (All) Males n-quarters Counterfactual 1 Counterfactual n-quarters Counterfactual 1 Counterfactual 2 Counterfactual 1= Recession using B= ; Counterfactual 2= Recession using B= Source: De la Rica and Rebollo (2015) Figure A2: Correlation between Indicator Values (2013) and Regional Unemployment Rates (2013) Correlation Between Indicators and Unemployment Rate (2013) Andalusia Balearic Islands Castille-La Mancha Valensia Murcia Galisia Catalonia Canary I. La Rioja Castille-León Asturias Extremadura Aragón Cantabria Madrid Navarre Basque C Value of Indicators 2013 Source: Own construction based on Indicator Values and Regional Unemployment Rates obtained from The Spanish Statistics Institute (INE) July,

23 Table 1: Descriptive Statistics on the Distribution of Regional Unemployment Rates 2012 Unemployment Rate Distribution By Age By Education By Unemployment Duration (months) Region (Community) < >55 Primary Secondary University < >24 Andalucía 34,59% 20,46% 50,45% 20,56% 8,53% 28,96% 53,34% 17,69% 18,10% 28,58% 10,72% 42,59% Aragón 18,58% 20,11% 55,40% 16,92% 7,57% 19,41% 50,15% 30,43% 19,10% 22,55% 13,41% 44,93% Asturias (Principado de) 21,76% 17,26% 55,02% 19,55% 8,18% 13,54% 55,78% 30,68% 20,09% 24,82% 13,78% 41,31% Baleares (Islas) 23,17% 24,12% 47,35% 20,57% 7,96% 24,39% 61,54% 14,07% 23,76% 33,08% 11,44% 31,72% Canarias 33,00% 20,64% 48,46% 21,17% 9,72% 24,27% 55,08% 20,65% 13,55% 33,35% 10,36% 42,73% Cantabria 17,73% 16,95% 54,64% 19,87% 8,54% 10,91% 59,55% 29,54% 19,22% 32,52% 14,54% 33,72% Castilla-León 19,74% 18,71% 50,83% 21,31% 9,15% 20,63% 52,37% 27,00% 17,77% 29,73% 11,78% 40,72% Castilla-La Mancha 28,47% 19,82% 52,55% 19,63% 8,01% 27,55% 55,48% 16,97% 13,60% 28,46% 12,96% 44,98% Cataluña 22,65% 21,12% 52,22% 17,52% 9,14% 18,43% 60,12% 21,45% 17,17% 28,98% 12,99% 40,86% Comunidad Valenciana 27,65% 19,33% 55,08% 18,16% 7,44% 20,36% 57,53% 22,11% 15,52% 27,07% 11,48% 45,94% Extremadura 33,04% 22,40% 45,65% 22,59% 9,36% 29,05% 52,65% 18,30% 16,25% 25,16% 17,27% 41,32% Galicia 20,66% 15,99% 54,81% 18,87% 10,33% 16,77% 55,82% 27,41% 18,88% 31,36% 11,14% 38,63% Madrid 18,99% 16,84% 52,02% 22,32% 8,83% 18,39% 53,42% 28,19% 15,25% 27,38% 14,78% 42,59% Murcia 27,88% 23,14% 52,99% 16,28% 7,58% 27,93% 54,25% 17,83% 22,65% 29,80% 10,59% 36,96% Navarra 16,21% 17,35% 50,94% 24,65% 7,05% 11,31% 51,90% 36,79% 23,19% 25,70% 14,27% 36,84% País Vasco 14,87% 19,91% 50,45% 19,12% 10,52% 9,94% 53,39% 36,67% 22,48% 28,55% 9,31% 39,66% Rioja (La) 20,48% 18,90% 44,45% 25,81% 10,84% 23,74% 53,89% 22,37% 13,63% 30,36% 19,28% 36,74% Ceuta 42,44% 20,56% 57,77% 18,02% 3,65% 33,27% 42,88% 23,86% 17,12% 28,30% 12,18% 42,40% Melilla 24,89% 16,45% 41,68% 23,03% 18,84% 32,89% 53,13% 13,99% 19,43% 16,35% 23,96% 40,26% TOTAL 25,03% 19,81% 51,71% 19,79% 8,69% 22,48% 55,35% 22,17% 17,30% 28,66% 12,15% 41,89% July,

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