Personalised Action Programme for a New Start: France Statements and Comments

Transcription

1 Personalised Action Programme for a New Start: Statements and Comments Peter Galasi Budapest Corvinus University Part 1: Brief assessment of the Hungarian labour market problems relevant to the personalised action plan for a new start (PAP-ND) Hungary is a rather small, open economy with low levels of unemployment (5.5 per cent in 2003) and employment (51 per cent in 2003) (KSH 2004). Despite the continuous and relatively high-level growth of the GDP in the second half of the nineties and at the beginning of this century, Hungary lags by about 10 per cent behind the EU average in terms of labour force participation rate (59.6 per cent in 2002) that affects mainly the youth (aged 15 to 24) and the elderly (55 to 64 years of age). Unemployment is, as in many EU countries, highly structural. Some 76 per cent of the unemployed stock consists of persons having 6 months or longer unemployment spells in 2002 (the EU average is 59 per cent) (Fazekas and Koltay 2003, OECD 2003). In addition a large number of the registered unemployed are recurrently unemployed. In 2003 the proportion of the unemployed with repeated spells among the registered unemployed was 80 per cent. The prevalence of both long-term and recurrent unemployment seems to hold true of the French labour market as well (Mizrahi 2004 p.4). Recent labour market developments have shown mixed results in terms of employment and participation rates. Although the dynamic growth of the GDP (almost 14 per cent between ) indicates that the Hungarian economy is in a good shape, forces leading to net job-creation appear to be still relatively weak, resulting in a quite slow increase in the level of employment (Kézdi Horváth Hudomiet, 2004). The Hungarian government took several steps over the period in consideration that might have affected both the supply of and the demand for labour. Retirement age was gradually increased to 62 years both in the case of men and women, from the previous 60 and 55 years, respectively. The new retirement age was reached by men in 2001, women will reach that only by Since the employment of those aged has definitely increased, this measure might have increased the supply of labour. The Hungarian government doubled the minimum wage twice (in 2001 and 2002), and introduced the so-called minimum wage for employees with higher education diploma, and these also might have increased the supply of labour. The net impact is however ambiguous. We only know that the hike significantly increased labour costs and reduced employment in the small-firm sector, and adversely affected the job-retention and job-finding probabilities of low-wage workers (Kertesi and Köllő 2003). After several cuts of UI entitlement periods and amounts of UA (unemployment assistance) benefit available for UI exhausters on a means-tested basis, at the beginning of 2000 the maximum duration of UI was shortened from 12 to 9 months and the UA benefit was replaced by a SB (social benefit) administered by local governments. The new eligibility conditions of SB (participation in public works whenever called) led to a two-digit fall in the benefit receipt among UI exhausters without any effect on job-finding rates. Likewise the cutting of UI eligibility had no measurable impact on the exit-to-job rate of recipients (Galasi and Nagy 2002a, 2002b). These measures might have contributed to a decline in October 18-19, 2004 Peer Review Personalised Action Programme for a new start: 1

2 labour supply and help explain the weak willingness to search for a job among inactive persons as reflected in the low rate of unemployment. Some four/fifth years ago the Hungarian PES started to move from administering benefits and organising traditional ALMPs to becoming a labour market information gathering and providing institution and establishing a whole battery of services tailored to the individuals needs. The new National Development Plan and the Human Resource Development Operative Programme (HDNP 2003, HRDOP 2003) consider the PES as the most important institution of implementing employment policies (HRDOP 2003 p.18). The Hungarian PES, however, can hardly accomplish its tasks without substantial changes both in their human resource capacity and material conditions. There are some signs that at present the PES can reach only a small fraction of the former UI benefit recipients, not to mention other job-seekers and inactive persons. As we can read in the NDP (HNDP 2003, p. 79): despite the growing importance of active policies, the services provided by the PES reach only certain groups unemployed, constituting a heterogeneous group concerning their skills, qualities and social background. People unable to get a job usually loose touch with the labour organisations once the unemployment benefits expire and therefore their chances of returning to the labour market are further reduced. In addition to a further increase in the number of unemployed participating in active programmes, the effectiveness and quality of these services should be improved. The same problem can be detected if we study changes in the composition of the stock of the registered unemployed, that is, persons regularly visiting/contacting PES offices. It seems that the proportion of job-seekers among the registered unemployed has been diminishing. Labour Force Surveys data show that, for example, the proportion of job- seekers among the registered unemployed went down from 64 to 42 per cent between 1993 and 2003, and that the same figures are 69 and 55 per cent for UI benefitrecipients, respectively. It is worth noting that actual retirement rules and practices (especially those regarding early retirement and disability pensions) might also contribute to the decrease in the proportion of job-seekers among the jobless. In Hungary 58 per cent of the non-student inactive able-bodied population (aged 15 to 64) benefit from some form of pensions (2003). Finally, Labour Force Surveys data hint that there are some problems with the regulation or/and organisation of work within the PES offices, that might affect the number of people reached and their job-finding rates. For example, in 1999 some 72 per cent of UI benefit recipients re-visited PES offices within a month, and the value of the same indicator is substantially lower (56-58 per cent) for 2000/ The same holds true of SB (social benefit) recipients; they are characterised by a 30 per cent high re-visiting rate in 2002 which represents a 20 percentage-point decline from the 2000 s value. Although no final evaluation regarding its results has been carried out as yet, the French PAP-ND programme seems highly relevant to the Hungarian PES, for it offers a quite intensive treatment for a great number of jobseekers and an apparently more attractive benefit regime. As the French government paper states, preliminary programme evaluations suggest that the programme leads to higher outflow rates despite the deterioration of the general economic conditions (slowing down of GDP growth) and the simultaneous introduction of the new unemployment benefit scheme (a new nondegressive benefit regime) that might have had disincentive effects on exit to job. Moreover, the French government paper (FGP 2004 pp 16-18) suggests that the impact of the programme might be positive in terms of filling job-vacancies and satisfying job-seekers needs, as well. The Hungarian PES would benefit from this experience because, as we could see this from the French papers, it increases the 2 Peer Review Personalised Action Programme for a new start: October 18-19, 2004

3 number of jobseekers and possibly results in the reinforcement of PES-job-seeker contacts. As it has been indicated above, Hungarian data exhibit unfavourable time-patterns in respect of both willingness to job-search and the frequency of visiting PES offices. Part 2: Potential transferability of the policy and of the likely conditions for its application An important feature of the French PAP-ND programme is its universality, that is, that it targets all the categories of jobseekers. The financial consequences of such a programme are clear. It requires the mobilisation of considerable additional resources 1 both in terms of PES staff and benefit expenditures. Potential problems with the cost efficiency of programmes of such a magnitude putting aside, the Hungarian government is not in the position of introducing such a universal project due to the actual state- budget deficit 2, and even if there would not be severe financial constraints the Hungarian PES is hardly prepared for handling it properly. Achieving the goals of a project like this requires intensive information flows among the parties involved both on the supply and demand side of the labour market and close day-to-day cooperation between different agencies dealing with job-seekers. One of the precondition of realising this is the availability of a comprehensive, modern and efficient system of information technology. Another one is a properly trained staff capable of working with IT. The programme is partly based on an extensive use of self-assistance in job-search on the part of the jobseekers implying that most clients are able to cope with the tools available in PES offices. These conditions have been unmet in Hungary, as yet. The obstacles are many from unsatisfactory provision of PES offices with IT to the lack of well-trained staff mastering IT. The country has low internet and PC penetration that would make it difficult to reach the relevant groups of the population, especially low-income families by services based on IT. Self-assistance is problematic for hard-to-place individuals, especially the Roma (5-7 per cent of the population according to recent estimations) having high rate of functional illiteracy and low level of schooling. The Hungarian PES is, however, expected to gradually move in this direction. Measure 1.1 of the HRDOP states that labour market programmes implemented under this measure will ensure that the participants are offered a 'new start' before reaching 6 months of unemployment in the case of young people and 12 months of unemployment in the case of adults. Based on an assessment and identification of needs, personalised action plans will be developed which will include training, vocational training or re-training and other employment services (such as counselling and guidance, assistance in job seeking, work practice, etc.). Developing IT knowledge and skills will be considered as a 'crosscutting' activity for each target group (HRDOP 2003 p.18). These statements indicate that the Hungarian labour market authority (now it is called Ministry of Employment Policy and Labour) is determined to modernise the Hungarian PES in line with the intentions behind the French programme. Although it is unclear why the Hungarian programmes would focus on inactive persons (i. e. those not employed and not searching for a job) in addition to the unemployed, and their target groups are more restricted than in the case of the French programme - they primarily target young people aged 16-30, the long-term-unemployed and persons aged 45 and more, lessons from the French programme will undoubtedly contribute to a more successful implementation of this measure. 1 4,650 additional ANPE employees were taken on, and the available credits package was increased from 180 million (2001 budget before the PAP) to over 500 million in 2002 and 2003 (including 267 million for services financed by the UNEDIC). (FAP 2004, p 13.) 2 It is expected to amount to some 6 per cent of the GDP by the end of this year. October 18-19, 2004 Peer Review Personalised Action Programme for a new start: 3

4 A large number of activities are designed in order to achieve the goals. To a large extent these are similar to those outlined in the French PAP-ND programme: Development of individual action plans Training programmes - Personal development and motivation trainings. - Education of basic skills required to start the vocational training. - Close-the-gap training. - Vocational training (preparatory training for specific jobs, Training in ICT, Development of entrepreneurial knowledge and skills, etc.). The Hungarian programmes include some specially targeted services and subsidies, as well: Services and subsidies promoting employment and employability. Tailor made information and counselling services (career orientation, training counselling, counselling for jobseekers, jobseekers club, training in job seeking techniques). Support facilitating the regional mobility of labour (e. g. reimburse for justified travel expenses etc.). Employment aid, assistance for part-time employment, assistance for obtaining on-the-job experience. These services and subsidies might traditionally be part of the French PES activity but they are quite new in Hungary. The objectives of the measure are planned to be achieved through central programmes by targeted support to individuals. The first step in this direction is to develop a new service model and introduce it at 20 employment offices This is then a pilot project trying to implement a model radically different from the one being in effect in Hungary. The pilot phase of the implementation of the model started in February 2004 with the gradual introduction of the elements of the new service model. The deadline of completing the project is the end of Since Hungarian employment offices are characterised by poor equipment, most of the resources to be spent on the pilot project are and will be devoted to creating an adequate infrastructural basis for the new service model. The Hungarian project seems then different from the French programme in this respect. Another difference of considerable importance is that the Hungarian project lays special emphasis on staff training. As the operational manual of the pilot project states, one of its main objectives is to develop the human resources of PES with regular internal training, and to prepare for new tasks originating from the accession to the European Union (Manual 2004 p.10) 3. The Hungarian pilot project has some goals that supposedly have already been achieved in. These concern, among others, the analytical tools needed for the PES offices in order to successfully orient and guide job-seekers in their search activities (preparation of medium- and long-term forecast with reference to the national, regional and local labour market and to companies; carrying out economic/labour research; preparation of short-term surveys in order to find out employers needs and 3 For example, staff members need to learn on the operation, contents and structure of the PES Portal; the methods of assessing certain pieces of information; the use of the necessary programmes (software); and the new data management system, etc. 4 Peer Review Personalised Action Programme for a new start: October 18-19, 2004

5 to increase the efficiency of job brokering; development of labour force planning / projections). Given that the Hungarian government intends to extend the new service model to more and more unemployment offices (the actual target is 60 offices by the end of 2006), it would be highly beneficial for experts and institutions involved in the modernisation of the Hungarian PES to have reliable information on the (net) impact of the French programme. One of the important features of the French programme is the close cooperation between the different agencies involved in its operation. Unfortunately this is not the case in Hungary, and hopefully the French example would induce Hungarian authorities to reconsider the relationship between institutions dealing with the unemployed. This activity is highly fragmented in the sense that no daily/regular cooperation exists between the different agencies either at the strategic (Ministry) or the local levels. The local PES offices have some regular work-relationships with local municipalities because public work and SB (social benefit for UI exhausters) are organised/administered by the municipalities, and participants and potential benefit-recipients have to be registered with the local PES. This institutional setting has some unintended negative side effects as regards the efficiency of the employment policy in terms of, say, re-employment probabilities or reduction of the number of long-term unemployed, for a significant number of the some 3000 Hungarian municipalities lack the proper staff and other conditions for handling hard-to-place cases properly, and at the same time many of the SB recipients and publicwork participants break contact with the local PES (except for the simple act of registration). In addition more and more unemployed exhaust their unemployment insurance benefits and receive social benefits, and the share of long-term unemployed has been growing over time in the unemployment stock. As regards the (net) effects of the French programme on the labour market, especially the exit-to-job rate, the French independent expert s paper emphasises the lack of well-founded knowledge on the subject (Mizrahi 2004 p. 13). One can hope that this is only a temporary state of affairs and studies on the final evaluation of the programme would be available in the near future. Another important problem is the enforceability of the contract made as a condition for participating in the programme and the sanctions to be applied in case of non-compliance. In addition, the question arises whether the contract and its enforcement constitute a kind of threat effect influencing the outcome of the treatment. It would be instructive for the Hungarian peer to learn something about the number or proportion of contracts terminated attributable to non-compliance on the part of the job-seekers and the severity of sanctions applied. The new Hungarian service model envisages the introduction of new tools and methods of assessment in order to contribute to a better understanding of the job-seeker s position and speeding up his/her exit to a job. One of them is profiling that might be promising especially in case of long-term unemployment. It would be useful to know whether profiling is used or not in the French programme, what is the French experience if it is, and what are the reasons if it is not. October 18-19, 2004 Peer Review Personalised Action Programme for a new start: 5

6 References FGP (2004) The personalised action programme for a new start: Activation of the demand to facilitate job hunting, Peer-Review Seminar, October 2004 (the French government paper). Fazekas, K. and Koltay, J. (eds) (2003) The Hungarian Labour Market. Review and Analysis 2003, Institute of Economics and Hungarian Employment Foundation, Budapest, 2003, (Statistical Data). Galasi, P. and Nagy, G. (2002a) Criteria for Benefit Entitlement and Chances of Re-employment, in: Fazekas, K. and Koltay, J. (eds) The Hungarian Labour Market. Review and Analysis 2002, Institute of Economics and Hungarian Employment Foundation, Budapest, 2002, pp Galasi, P. and Nagy, G. (2002b) Assistance of Recipients and Re-employment Following the Exhaustion of Unemployment Insurance Entitlement, in: Fazekas, K. and Koltay, J. (eds) The Hungarian Labour Market. Review and Analysis 2002, Institute of Economics and Hungarian Employment Foundation, Budapest, 2002, pp HNDP (2003) Hungarian National Development Plan Republic of Hungary, 2003, Prime Minister s Office, Office for the National Development. HRDOP (2003) Human Resource Development Operational Programme , Budapest, 2003 Kertesi, G. and Köllő, J. (2003) The Employment Effects of Nearly Doubling the Minimum Wage - The Case of Hungary, Budapest Working Papers on the Labour Market, Institute of Economics and Hungarian Employment Foundation, Budapest, BWP. 2003/6. Kézdi, G Horváth, H. Hudomiet, P. (2004) Munkaerő-piaci folyamatok , in: Kolosi, T. Tóth, I. G Vukovich, G. (eds.) Társadalmi riport, TÁRKI, Budapest, 2004, pp KSH (2004) Munkaerő-felmérés, 2003, Budapest, Manual (2004) Modernisation Manual of the Public Employment Service, Public Employment Service and Ministry of Employment Policy and Labour, Budapest, January Mizrahi, R. (2004) Peer Review, (the French independent expert s paper). OECD (2003) Employment outlook 2003, OECD, Paris. 6 Peer Review Personalised Action Programme for a new start: October 18-19, 2004