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 Luana Pop 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 Luana Pop 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 ACRONYMS... 6 SUMMARY BENEFITS AND SERVICES SUPPORTING THE LONG-TERM UNEMPLOYED Monetary and in-kind benefits available to the LTU Services available to the LTU Conditionality linked to activation measures and benefits COORDINATION BETWEEN SERVICES TOWARDS A ONE-STOP SHOP APPROACH INDIVIDUALISED APPROACHES OVERVIEW TABLE ANNEX

6 Acronyms CEA County level Employment Agency ESF European Social Fund LMP Labour market policy LTU long-term unemployed MIG Minimum Income Guarantee MLSPFE Ministry of Labour, Social Protection, Family and the Elderly NEA National Employment Agency OPHRD Operational Programme in Human Resources Development SRI Social Reference Index UB Unemployment Benefits 6

7 Summary Registered unemployment is relatively low in compared to other European countries; however, this apparently positive outcome masks a structural problem related to the LMPs and their implementation. lacks integrated activation policies, and its employment programmes while diversified are biased towards more passive ones, due to a lack of administrative and institutional capacity and to an unfavourable budget allocation. The only recurrent benefit available to the unemployed, the unemployment benefit, ceased to offer an effective protection and since 2010 its coverage and level decreased dramatically. Means-tested social benefits are the only complementary benefits available, but they are not limited to the unemployed. The economic crisis potentiated the effects of these institutional shortcomings, leading to a substantial increase in the poverty level of all the unemployed (registered or not see Figure 3), an increase in the proportion of the long-term unemployed (see Table 1), especially among the older unemployed, and a polarization of long-term unemployment (with an increasing, and overwhelmingly high proportion unemployed longer than 27 months among the LTU). As a general conclusion, the unemployment system had little capacity to protect the unemployed during the economic crisis and its effectiveness in skill building and enhancing employability of vulnerable groups, especially of the most vulnerable groups (Roma, persons with long periods of inactivity) is still low. In fact, despite its efforts to address vulnerability over the last two years, the unemployment protection system lacks the capacity to reach out to the most vulnerable groups in the labour market. Low unemployment registration is also due to a lack of trust in employment services (Figure 2). Very few monetary and in-kind benefits are available to the unemployed in addition to, or after the termination of the unemployment benefit, and none is specially targeted towards LTU. These are basically limited to some mobility premiums if a remote job is taken up, payment of expenses for participating in trainings and paid health and social insurance. The only benefit available to the unemployed is the minimum income guarantee (MIG), the only social assistance income support mechanism. However, this failed to offer effective protection during the crisis. While the MIG scheme includes a few incipient activation elements, the weak institutional cooperation between the local public social assistance services (in charge of MIG) and the county level employment agencies (CEAs) is still an impediment to reaching out to vulnerable groups. Prevention of LTU is explicitly formulated as an objective in many strategic documents (National Strategy on Employment, Management Performance contract, annual employment plan); yet the only identifiable measure towards meeting this objective is the obligation of the county level employment agencies (CEAs) to apply an active measure to all the unemployed during the first 6 months of unemployment, or 4 months for young graduates. While mediation, information and job counselling proved to be most effective, the role of skill building/ employability enhancing measures remained marginal, with a low overall impact of professional training/ qualification courses and business development support. This holds especially true for the LTU, the older unemployed and Roma. Subsidizing employment was the second most utilised strategy for increasing employment opportunities for young graduates, vulnerable groups and youth with high risk of marginalization during the crisis. Its impact was sizeable for young graduates and, to some extent, for the unemployed over 45, yet it failed to effectively address LTU, the unemployed with few years until pensionable age, the disabled and Roma. has no generalised activation programmes in place; the only individualised activation programme available is for youth with a high risk of marginalisation (a very restrictive category, see Table 4), and it is based on a solidarity contract between beneficiaries and CEAs. Social assistance services are not directly involved, and the limited number of contracts (331 in 2014) makes it a marginal measure. However, the national strategy draft on social inclusion acknowledges the need to adopt an integrated approach to activation and puts in place the pre-requisites for this. While at the moment there is no one-stop shop in place to address the (low-income) 7

8 unemployed, cooperation between the local PSASs and the CEAs improved up to a point and the new strategy promises to put in place inter-disciplinary community worker teams to create the connection between different agencies involved in ensuring individuals welfare. 8

9 1 Benefits and services supporting the long-term unemployed 1.1 Monetary and in-kind benefits available to the LTU n legislation does not stipulate any specific benefits for the LTU (see Table 1 for the definition of LTU in and Table 2 and 3 for available unemployment benefits). However, some monetary and in-kind benefits are offered to all those unemployed during or after their unemployment benefit (UB) entitlement period. The monetary benefits - offered to all the unemployed - are limited to: (a) paid contributions for social insurance pensions and health insurance; (b) some expenditure related to attending (re)qualification courses/professional training 1, which are offered free of charge to all the unemployed, including rural residents, with a work-related income of less than 1 social reference index (SRI)/month) (c) mobility premiums (non-taxable) offered to the unemployed receiving UB benefits and, since 2013, to the LTU as well 2. This latter benefit takes either (1) the form of an employment/job insertion premium ( prima de incadrare ) a one-time flat premium of 2 times the social reference index SRI (see Table 1) - offered to those who take up a job located at least 50km from their residence, or (2) the form of a relocation premium ( prima de instalare ) - a onetime flat premium of 7 times the SRI - offered to those who move to another city to take up a job. It is offered one time, and the benefits cannot be cumulated. In addition to these, some in-kind benefits are offered, such as free (re)qualification courses/ trainings and free accreditation of informally obtained professional skills/ competencies. Other important benefits available to, but not restricted to the unemployed, are the targeted social assistance benefits the minimum income guarantee (MIG), family support allowance and heating aids (during the cold season). The unemployed who benefit from the Minimum Income Guarantee (MIG) also benefit from the compulsory house/ dwelling insurance premium, paid from the state budget. Coverage and effectiveness. The LTU proportion of the total unemployed almost doubled since 2010, reaching a peak in 2013 (Table 5). At the end of the third quarter of 2014, about 30% of the total unemployed were long-term unemployed of over one year, a proportion that varies between 12% for the young unemployed under 25 years and 39% for the unemployed over 55 years. However, the proportion of the unemployed not receiving any unemployment benefit (either because the entitlement period ended or because they are not eligible for it) increased from 42% in 2010 to 72% in September 2014 (Table 5). The proportion increases to 84% for the poorly educated unemployed (with less than a high school degree) and 94% for the poorly educated young unemployed. Evidence suggests that a significant proportion of the LTU, and especially of the rural unemployed (who make up 65% of all LTU 3 ) continue to update their registration after the termination of their unemployment benefit (UB) entitlement period, solely in order to access the MIG or other means-tested social assistance benefits. However, data about the proportion of LTU receiving MIG are not available; the NEA estimated, for the first quarter of 2014, that about 20% of the new registrants were MIG applicants as well. 1 Transportation costs, accommodation and food expenditure if the participant s home is further than 50km, supplies needed for the course, medical screenings if needed 2 The 2013 law on unemployment benefits and employment policies (L250/2013, amending L76/2002) includes the LTU among the beneficiaries of a mobility premium, previously offered (until the end of 2013) only to the unemployed receiving unemployment benefits. The initial intention of this latter amendment was to introduce more benefits for the LTU, including a sort of professional allowance of ½ of the social reference index (SRI) for LTU participating in training courses. However, these additional measures did not pass, leaving the mobility premium as the only additional benefit extended to the LTU 3 Statistical bulletins on employment, MLSPFE 9

10 Both the coverage and the level of unemployment benefits have been decreasing dramatically since By September 2014, 72% of all unemployed did not receive any unemployment support (Table 5) while at the end of 2013 the unemployment benefit represented about 81% of the relative poverty threshold for one person and 47% of the minimum wage for an unemployed person who worked at least one year, and 54% of the relative poverty threshold and 31% of the minimum wage for young graduates, (Table 3). Despite this, no other compensatory income support has been put in place. Despite the fact that many of the LTU receive social assistance benefits, in the risk of poverty for the unemployed 4 increased by 6 p.p. during , reaching 51% in 2013 (see Figure 3). A contributing factor was also the depreciation and decrease in coverage of the MIG benefit for the period The impact of all other monetary benefits for the unemployed is rather insignificant. The proportion of LTU who received mobility premiums is less than 1% (Table 6), while the proportion of unemployed entering the labour market due to training or qualification courses is less than 5% of those who were employed through the Employment programme. The only protection provided to the unemployed, and particularly the LTU, is ensuring continuity of health and social insurance. 1.2 Services available to the LTU There are no specific services or programmes directed towards the LTU, beyond those aimed at the vulnerable unemployed (disabled, over 45 years of age, with less than 5 years until pensionable age, single parents, Roma) or marginalised youth (see Table 4). Among the programmes and measures aimed at increasing employment prospects, the most frequently used are passive ones such as information, mediation and counselling, particularly the certification of professional competencies obtained other than through formal education - while professional training or business consultancy and assistance are rather marginal, and their effectiveness is low. Only about 5.5% of those employed during 2014 (until September 30 th ) have been employed as a result of participating in a training course, while the number of business consultancy cases is around 100 (Table 6). Stimulating employers to hire the unemployed through subsidised work and other fiscal benefits has been an important strategy for the employment of young people and especially graduates during the last two years. The strategy is also used to enhance employment opportunities for unemployed marginalised youth and other vulnerable unemployed categories; among these, the older unemployed over 45 years old. The measure will grant employers the equivalent of 1 social reference index i.e. RON 500 in per month for 12 months, on condition that the employee unemployed over 45 years old, single parent or disabled will be kept on for at least 18 months after the subsidy ends. The conditional length of employment was reduced in 2013 from 2 years to 18 months. In 2013, only around 7% of the unemployed over 45 years old benefited from subsidised work. Overall, a proportion of 6.6% of those employed through the employment programme benefited from subsidised work. Granting favourable credits with a reduced interest rate to new businesses that draw at least 60% of their workforce from the ranks of the unemployed has not proved to be a high impact strategy, with long-term positive results. The reduced rate amounted to 50% of the reference interest rate established by the National Central Bank for up to 3 years for businesses with less than 249 employees - 25% for regions with a higher than average unemployment rate. Many of the businesses created to address vulnerable segments of the labour market, mostly through social economy structures, failed to become self-sufficient after subsidies were progressively withdrawn. 4 The AROP is calculated by using survey data, thus the population assessed is broader than the registered unemployed. 10

11 The coverage and effectiveness of subsidised work and active measures is low (in September 2014, 8.7% of those employed benefited from subsidised work and 3.9% were employed after attending a qualification/training course, see Table 6). The most effective measures proved to be those requiring less professional involvement of the EA such as information, mediation, standard counselling, work subsidizing. Active measures addressing employability and skill formation still play a marginal role and the proportion of the unemployed who entered the labour market as a result of active measures is still low. Employment programmes perform poorly when it comes to vulnerable groups and especially the long-term unemployed. Firstly, mediation and counselling the most frequently and effectively used programmes - are more suited to the hiring of employable and eventually the skilled unemployed; secondly, the effort of CEAs is concentrated mostly during the first months of unemployment, leaving all those hard to reach and LTU not covered by special programmes. This is a reason for the systematic increase in the proportion of very long-term unemployed: those unemployed for over 27 months make up over 60% of the total LTU (Table 6). While the LTU are considered among the most vulnerable groups with regards to the labour market, the number of LTU projected to participate in professional training programmes is extremely low (see the National Professional Training Plan approved by the National Employment Agency for ) a mere 5,700, less than 4% of the total average number of LTU in. Another category that the CEAs failed to address properly (thus not reaching the annual targets established in the annual Employment Plan) are the unemployed close to retirement age (Figure 4). The proportion of older unemployed among those employed through the employment programme increased. Despite this, their take-up by active measures (such as trainings/ requalification courses) was extremely low. While the more employable older workers are more likely to take advantage of the financial stimuli for entering the labour market before the UB entitlement period ends, the less employable increase the proportion of the very-long unemployed, thus leading to a strong polarization with regards to unemployment duration, which is significantly higher among the older unemployed. Exact data regarding the number of private accredited agencies delivering support programs to the LTU or the number of partnerships with employers are not publicly available. Overall, the exits from the unemployment system (see Figure 2) seem to indicate a rather high distrust of employment programmes, as a significant proportion of the unemployed (over 50%) for whom the unemployment benefit entitlement ends opt out of the system without entering the labour market. The steadily decreasing share of the state budget allocated 6 to labour market and employment programmes supports these conclusions. 1.3 Conditionality linked to activation measures and benefits Conditionality linked to unemployment is limited to not refusing any job offer, to participating in mediation activities and to participating in professional training, if proposed by the EA. Any further conditionality refers to the unemployed who are also beneficiaries of Minimum Income Guarantee (MIG). These have to complete a monthly number of hours of community work, proportional to the benefit granted, and in accordance with the minimum salary regulations. Timely payment of all local property taxes are also a condition for receiving the benefit. While systematic 5 National Plan for Professional Training, National Employment and Labor Agency, (accessed May 15 th, 2015) 6 has by far the lowest expenditure on unemployment among all European countries (with a more than 10 times lower % of GDP for active measures compared to the European average), which has been steadily decreasing over the last years; this holds true especially when it comes to employment services and active measures (see Eurostat, lmp_expsumm). Activation support, measured as the number of persons covered by LMP per 100 persons wanting to work, is also among the lowest across Europe (see Eurostat, lmp_ind_actsup) 11

12 data is not available on the enforcement of conditionality, anecdotal evidence seems to suggest that enforcement of conditionality linked to unemployment can become a formality in the case of the less employable MIG beneficiaries. On the other hand, many city halls charged with organizing community work found it difficult to provide a lucrative and legal framework for these activities and to enforce community work. However, since 2011 all city halls try to enforce conditionality regarding community work, and some municipalities report a significant number of beneficiaries who preferred to give up the benefit rather than work 7. 2 Coordination between services towards a one-stop shop approach While has no integrated activation services yet, the National Social Inclusion Strategy draft foresees a one-stop shop approach to activation. This is projected to happen over a 5-6 year period, starting with the unification of all meanstested social assistance benefits under the social insertion benefit and with the employment/ training of multi-disciplinary teams of community workers at the local level. Yet the draft strategy draws on a World Bank study 8 to highlight the low administrative capacity and the high shortage of social assistance personnel at the local level, especially in small cities and rural communities (which make up 96% of total municipalities in ). However, at the moment, individualised action plans are conceived only for a very restricted category of youth considered at high risk of social marginalization; these are part of a solidarity contract signed by the beneficiary and the CEA, but it does not involve the local social assistance services. The county level Employment Agencies (CEA decentralised organisations of the National Employment Agency, under the MLSPFE), along with accredited private and public regional centres for professional formation (with responsibilities that overlap to some extent with those assumed by the CEAs), are in charge of the unemployed, particularly the LTU. The CEA delivers unemployment benefits, provides mediation and counselling services, refers the LTU for professional training and decides on work subsidies; however, if they are also eligible for MIG or other means-tested benefits, they apply for the benefit at the local (municipality level) public social assistance service (PSAS), who are in charge of the social inquiry and the application process (see further for more details regarding the relationship between CEAs and PSASs). Partnerships between private employment service providers and CEAs do exist; no synthetic data on their number, covered activities, geographical coverage and scope of activities is yet available. The only indication of their activities is provided by the applicants guides published by the European Funds ministry, since most of these apply for European funds (priority axis 5, OPHRD, ESF). Private service providers are encouraged to develop integrated services (training, competency certification, job mediation, counselling, support for dependent persons in the unemployed s families etc.) to address vulnerable groups. Among these, the LTU play an important role, especially the young and the older LTU and those residing in rural areas 9. 7 The municipality of Brasov, for example, reported in 2014 that the MIG has been suspended for almost half of the persons who had to complete community service, as they did not show up for work or decided not to claim the benefit as a consequence. 8 Draft national strategy on social inclusion, 9 Evaluation report OPHRD, pp , the National Strategy on Employment also acknowledges the importance of addressing ruralurban disparities, and to broadening the context of tailoring interventions for rural unemployment, underemployment and inactivity ( Romana.pdf) 12

13 Partnerships between CEAs and employers are signed in the framework of addressing marginalised youth, for which solidarity contracts are signed and insertion employers identified. The number of solidarity contracts, particularly insertion contracts with employers, is not high. It increased in 2011 to 1,874 (a 127% increase compared to 2010) and has been steadily decreasing since, dropping to 331 at the end of September In addition to this type of contract, the CEAs sign conventions with employers for different types of subsidised employment forms (for graduates, the older unemployed, the disabled, single parents) and apprenticeship contracts. 6.6% of all those employed during 2014 by September 30 benefited from subsidised work contracts, almost three quarters of whom are over 45 years old and 24% young graduates (see Table 6). The National Strategy on Employment (adopted in 2014) represents the strategic framework for all the employment programmes in. MLSPFE signs - on an annual basis - a management performance contract with the National Employment Agency through which the main responsibilities, objectives and performance indicators are established 10. The contract emphasises the need to support youth and the vulnerable unemployed and prevent long-term unemployment. The preventive component boils down to applying an active measure within 4 month of unemployment to young graduates, or 6 months for adults. These annual management performance contracts convert into the annual employment programmes, elaborated by the NEA, which establish the minimum number of expected beneficiaries for each service and measure performed by the agencies, along with the associated budget. The 2015 annual employment programme stipulates the employment of 10,870 LTU, of which 40% under 25 years of age and 60% over This represents about 3% of the estimated total employed through the programme during 2015 and less than 10% of the registered LTU. Performance standards refer mostly to the coverage of various vulnerable groups of the unemployed with different types of services and programmes. What kind of active measures are to be delivered remains rather open, and subject to administrative capacity. Minimum quality standards for delivered services, and minimum standards in regard to the competencies of those delivering the services are not yet available. The operational programme for the development of human resources (European Social Fund), , had a special component regarding the modernization of public employment services. Within these European funded projects, a higher emphasis was placed on the strengthening of the capacity of employment services to deliver programmes, and on training of personnel 12. Some guides to various types of services have been also developed, but more as conceptual compendiums, limited to defining the steps or specific activities to be undertaken, rather than a detailed methodological guide to implementation and evaluation 13. The accreditation procedure of private (non-profit and profit) agencies delivering employment services (from work mediation, to counselling for business development and professional guidance) includes mostly regulations regarding the necessary infrastructure and qualification of personnel (organizational indicators) rather than performance and quality indicators for services to be delivered. 14 With regards to professional training activities (re-qualification, qualification, specialization courses See and 12 Activity report for the operational programme regarding the development of human resources ( ), see 13 For example, an operational manual for labour force and work mediation, elaborated within the operational programme of human resource development (OPHRD) , see 14 See the governmental decisions on accreditation procedure of agencies who deliver employment services (HG 277/2002, amended by HG790/2004), 13

14 etc.) a competency focused approach is predominant, yet competencies are only generally defined. Additional actors involved wih unemployed MIG beneficiaries are the local public social assistance services (at the mayoralty level) and the Regional Agency for Payments and Social Inspection, who make the benefit payments. The local (municipality level) public social assistance service and CEAs exchange information wirh regards to MIG applicants, particularly the unemployed. In accordance with the methodological norms established for the revisited MIG legislation 15, the county level employment office is responsible for sending - monthly - data to city halls regarding registered unemployed, job seekers or participants in various employment programmes. During the last two years, as the emphasis on reaching out to vulnerable groups increased, this approach changed, in favour of a more effective bi-directional communication flow 16. The city halls, particularly the local public social assistance services, have to send monthly information regarding social assistance beneficiaries, which are of working age, able to work but unemployed or inactive, the level of benefit received by them and the action plan for community work approved by the city hall for these beneficiaries. The information is sent to the Regional Employment Agency, Work Inspectorate and Regional Payment and Social Inspection Agency. Regional employment agencies transmit any change in the occupational status of these persons to the National Employment Agency, which informs the National Payment and Social Inspection Agency. However, these regulations do not include inactive persons who are not eligible for social assistance benefits. Despite the fact that the bi-directional information flow has been legally re-enforced in 2013, data regarding the proportion of unemployed, particularly the LTU, who receive MIG and the proportion of MIG recipients, including family members, who are registered as unemployed, is still not systematically produced and available. In this context, some municipalities sign annual partnership contracts 17 with the CEAs in order to improve the chances of local unemployed/ inactive adults accessing employment services. Municipalities with higher administrative and financial capacity go far beyond this and sign protocols for stimulating local labour market opportunities 18. But despite this incipient cooperation the exchange of information is still not effective and the beneficiary has to deal with two different agencies the social assistance public service at the local level and the county employment agency, in order to update information and prove job searching. Anecdotal evidence suggests that often the two agencies treat beneficiaries differently: local public social assistance services try to identify local job opportunities for the unemployed beneficiaries, while CEAs usually regard MIG beneficiaries as hopeless or as only seeking formal proof of job searching, not a job per se. Many stereotypes regarding MIG beneficiaries still persist, and these do not always support an activation approach. 3 Individualised approaches has no generalised form of integration contract. The only form of integration contract is targeted to youth (15-25 years) considered to be at high risk of social marginalization: victims of trafficking, children growing up in social assistance institutions, youth with children, children coming from families without any means of supporting them, youth released from prison etc. The solidarity contract covering 15 HG 50/2011 for establishing the methodological norms for the implementation of the MIG, rantat.php 16 The amendment of the implementation methodologies of means-tested benefits in, through HG 778/2013, 17 See for example the protocol between Santana (Arad), a small city of less than 15,000 inhabitants and the territorial Employment agency, 18 The example of Cluj municipality s ability to attract local investors is illustrative. 14

15 a period of 1 to 3 years 19 - assumes an individualised approach to activation, but does not involve at all the local public social assistance services. The contract is signed by the beneficiary and the CEA, and includes, eventually, an additional contract between the CEA and the so-called insertion employers. While the legal framework has been in place for over 10 years, the number of contracts is very low (331 in 2014, September 30, i.e. 0.1% of those employed through the employment programme). does not yet have the institutional arrangements and the local administrative capacity to adopt an individualised approach towards activation. The national social inclusion strategy draft sets up the framework for an integrated, individualised approach, yet this is not expected to become functional in the short term. Despite an incipient form of cooperation between municipalities and CEAs, responsibilities are still scattered, and most often the perspectives from which beneficiaries are viewed and processed are different. This is mostly the case of those unemployed who are also eligible for social assistance benefits. In fact there is no clear image yet of who are those who should be addressed through activation policies. Last year an important awareness campaign was initiated for those unemployed, under-employed or informally employed, who do not register with the CEAs. The NEA initiated in 2014 a pilot-project in five counties, aiming to map all those who would benefit from employment services but are not registered with the CEAs 20. One of the outcomes of the project should also be a better understanding of who are the vulnerable groups on the labour market. While systematic data is still missing, what the evidence seems to suggest is that most of the LTU are over 50 years old (33% compared to only 10% less than 25 years old, in September ) and about 60% of them have been unemployed for over 27 months. Many of these are rural residents, with low employment opportunities, low education 22 and low employability and many are subject to means-tested benefits. Data on MIG beneficiary seems to support this conclusion as well. Over 70% of these are rural, and about 40% of them are singles or couples without dependent children. Therefore, one of the most vulnerable groups to reach out to are the unemployed over years, with a low level of education and who live in rural areas or small urban areas with less employment opportunities. In addition to this former group, which is more or less visible through the meanstested social assistance benefits system, there is a relatively significant proportion of inactive people, especially housewives, among the poorer segments who are not usually captured by the unemployment system. The draft of the national strategy on social inclusion 23 points out to the analysis undertaken by the World Bank experts with regards to the poorest 20%. Data seem to acknowledge around 26% of these as inactive or unemployed, alongside another 35% employed in subsistence agriculture, without a formal employment contract. The high rate of inactivity among rural residents, especially among middle-aged women, is of most concern and started to become an issue for many municipalities, yet without visible results. 19 Legislation regulating this contract: L116/2002 on preventing and combating social marginalization and L76/2002 on unemployment, both amended through L250/ Bihor county has been part of the project, see arii+ajofm+bihor+ 21 Statistical bulletin on employment, MLSPFE, see Table 6 22 The proportion of rural unemployed out of the total unemployed is higher than the proportion of rural population in the overall population, indicating a significant population segment active in subsistence agriculture, with low income, and eligible to social assistance support. While no data on the education level of the LTU are available, the extremely high proportion of low educated unemployed not receiving any UB (Table 2) seems to support this conclusion. 23 available for public debate at and published December

16 At the moment the LTU are not addressed as a particular vulnerable group, despite the fact that there is a certain emphasis in all the strategic documents on preventing LTU. The groups considered vulnerable are the unemployed over 45 years of age, and especially those who have less than 5 years until the pensionable age, single parents, the disabled and youth considered to be at high risk of social marginalization (institutionalised youth, former convicted, youth without support etc.). As stipulated in the management performance agreement signed between the NEA and the MLSPFE, the intensity of the effort seems to be highest at the beginning of the unemployment period, when all registered unemployed are offered mediation services. If these are not successful, the unemployed are processed, yet at a slower pace, through counselling activities and professional training. The intensity of the effort is reduced due to the low administrative capacity, to a certain lack of coherence when it comes to professional training, and to the inadequacy of minimum standards and performance indicators for these services. The result is a dramatic polarization of unemployment duration, associated with an increase in the proportion of the LTU with the duration of unemployment exceeding 27 months. 16

17 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 Income benefits X No income support provided for LTU Effectiveness of benefits & services supporting the long-term unemployed Social services Activation services Effectiveness of coordination between employment, social assistance and social services Extent of individualised support X X X X Low effectiveness of services requiring high administrative capacity Almost non-existent, in an incipient form available for youth with high risk of marginalization and MIG recipients Still highly discretionary, depending on the local administrative capacity Offered highly restrictively, only to youth with high risk of marginalization Inability of CEAs to reach out to most vulnerable groups No systematic publicly available data produced within the information exchange process between the two actors In its restrictive form, it does not involve actively local social assistance services Inability to increase registration of inactive, underemployed or formally employed segments No common understanding of goals in regard to activation 17

18 Annex Table 1 Registered and ILO unemployment in Definition of long-term unemployed (LTU) and unemployment benefit eligibility Under the n unemployment system long-term unemployment is defined as an unemployed person who has been out of work for at least: o 6 months, if under 25 years o 12 months, if over 25 years The definition of LTU introduced by the n law (L76/2002, amended by L250/2013) only partially overlaps with the definition used for the purpose of this report, as it does not take into account, as an alternative to the length of unemployment, the exhaustion of the unemployment benefit (UB). Technically, in LTU is considered when the maximum period of granting UB ends. Methodological note: Most studies regarding unemployment in (including the analysis on which the National Strategy for Employment and the draft strategy on Social Inclusion are based), as well as Eurostat data are based on survey data (i.e. Labour Force survey) and consider ILO unemployment. This slightly skews the results, especially in, where employment rates are swollen by persons employed informally in subsistence agriculture. Many of these, if eligible for MIG, will register as unemployed. On the other hand, the registered unemployed are fewer than the ILO unemployed, due to a lack of incentives to register as unemployed, particularly a lack of trust in public employment services, in the absence of any unemployment benefit entitlement. And this is mostly the case for the long-term unemployed. Table 2: Unemployment benefit eligibility criteria and level of benefit Unemployment benefit L 76/2002, amended by L250/2013 In 2011, the unemployment benefit switched from a percentage of the minimum wage to a percentage of the Social Reference Index (SRI). While the minimum wage increased significantly during the last years, the SRI has not increased since The benefit is granted for a period of 6 to 12 months, depending on the contribution period (a minimum of one year, up to 10 or more) For a person who contributed at least one year to the social insurance system Level of benefit: 75% of the SRI % of the average monthly income of the last 12 months, depending on the contribution period (a minimum of 3 to at least 20) In December % of the SRI represented about RON 375 ( 84) and 42% of the minimum gross wage Young graduates Duration of entitlement: 6 months for 1-5 years of contribution to the unemployment fund 9 months for 5-10 years of contribution to the unemployment fund 12 months for more than 10 years of contribution 50% of the SRI/ month, for 6 months In December 2014 the benefit represented RON 250 (approx. 56) and 28% of the minimum gross wage 18

19 Table 3: Dynamic of the unemployment benefit level as a proportion of the minimum wage and relative poverty threshold Unemployment benefit: 50% of the SRI Sept 2014 % of minimum wage 37% 36% 31% 28% % Relative poverty threshold (60% of the median equivalised disposable income per month) Unemployment benefit: 75% of SRI 56% 56% 54% % of minimum wage 56% 54% 47% 42% % of relative poverty threshold (60% of the median 84% 84% 81% equivalised disposable income per month) Source: n legislation and Eurostat database for the relative poverty threshold Table 4 Benefits granted to employers (subsidised work) for stimulating the employment of vulnerable categories - Targeted unemployment categories Lower secondary education and vocational schools Upper secondary education and posthigh-school educational forms University education Over 45 years Less than 5 years until the pensionable age but with no conditions met for a partial early retirement Single parent Disabled (over the compulsory quota set for the enterprise) Residing in, or graduating from a social assistance institution Exiting penitentiaries Youth with children Youth with disabilities Youth without a family or with a family that cannot support them Youth victims of trafficking Conditionality for employers Benefit level and length Graduates of various educational cycles Undetermined work contract Has the obligation to keep the person for at least 18 months after the benefit ends 1 SRI/ month 12 months 1.2 SRI/ month 12 months 1.5 SRI/ month 12 months Vulnerable unemployed Undetermined work contract Has the obligation to keep the person for at least 18 months after the benefit ends Has the obligation to keep the person for at least 24 months after the benefit ends Marginalised youth Undetermined work contract Has the obligation to keep the employment relation for the entire duration of the solidarity contract Employers become insertion employers 1 SRI/month 12 months 1 SRI/ month 12 months Other benefits If the person is still employed after the expiration of the minimum 18 months (after the expiration of benefits), employers can obtain a benefit in the amount of the social insurance contributions due for that person, for up to 2 additional years The monthly base salary for which the youth is employed It cannot exceed 2 times the SRI The benefit is granted for the entire period of the solidarity contract (between 1 and 3 years) 19

20 Table 5 : Number and proportion of unemployed, by unemployment benefits entitlement, education level and unemployment length Sep- 14 Total number of unemployed 629, , , , ,822 With indemnity 329, , , , ,195 Without unemployment indemnity 297, , , , ,627 Proportion of unemployed without unemployment indemnity Maximum proportion of unemployed without indemnity across counties 47% 60% 61% 61% 72% 65% 77% 77% 78% 84% Proportion of unemployed without indemnity, by educational level Low education (at most lower secondary education) Medium (at most higher upper education) 60% 74% 75% 75% 84% 19% 30% 28% 27% 42% High (tertiary education) 18% 28% 27% 26% 45% Long-term unemployed* Number of Long-term unemployed 101, , , , ,559 Long-term unemployed as a proportion of all unemployed 16.2% 29.8% 31.4% 31.6% 29.8% LTU over 50 years old, as a proportion of all LTU 30.2% 33.2% 33.5% 33.6% 33.4% Long-term unemployed less than 25 years old, as a proportion of the unemployed less than 25 LTU years as a proportion of unemployed of the same age group LTU over 55 years as a proportion of the unemployed over 55 years 15.6% 19.7% 20.8% 22.1% 18.7% 36.2% 37.1% 36.3% 34.87% 22.1% 43.3% 44.6% 43.4% 38.98% LTU over 27 months, as a proportion of total LTU All LTU over 27 months 39% 51% 54% 58% 54% LTU years old 43% 54% 58% 62% 59% LTU over 55 years 43% 56% 60% 65% 60% * Note: LTU are considered here as all those with an unemployment duration of over 12 months, irrespective of their age. The n legislation considers LTU youth under 25 with a duration of unemployment exceeding 6 month. Source: Statistical Bulletin on employment , Ministry of Labor, Social Protection, Family and Elderly, 20

21 Figure 1 Proportion of unemployed not receiving any unemployment benefit, end benefit, of each respec year vely of LTU at the end of the year 2014, September % 72.2% % 32.6% 31.2% 61.0% 60.6% 60.4% long-term unemployed as a propor on of all unemployed Propor on of unemployed without unemployment indemnity % 47.2% 0.0% 20.0% 40.0% 60.0% 80.0% Source: MLSPFE, Statistical bulletin on employment Figure 2 Exits from the formal unemployment system due to work and nonrenewal of registration, non-renewal end of registra of each on, year 30-Sep , , , , , , , ,240 non-renewal of registra on by unpaid unemployed or who just ended their en telment period , ,551 entering the labour market (open-ended and fixed term contract) , , , , , , , , , , , , ,000 Source: Statistical Bulletin on employment , Ministry of Labor, Social Protection, Family and Elderly, 21

22 Figure 3 AROP by most frequent activity in the previous year, 2013 AROP by most frequent ac vity in the previous year (Eurostat, SILC, ilc_li04) EU(28) total Employed persons Employees Employed persons except employees Not employed persons Unemployed persons Re red persons Other inac ve persons Source: Eurostat, EU-SILC, ilc_li04 Figure 4 Work subsidies granted to unemployed approaching retirement as a percentage of the planned work subsidies Source: MLSPFE, Statistical Bulletin on employment , Table 6 Number and proportion of the unemployed who have been employed through the Employment Programme ( ) Employed through the Employment Programme Total, of which (%): Sep , , , , , , ,371 Residents of rural areas % 40.2% 40.6% 39.5% 40.8% 43.1% Under 25 years old % 18.2% 20.0% 21.2% 20.3% 18.2% Long-term unemployed 4.7% 4.2% 6.9% 4.0% 2.7% 3.3% 3.0% Disabled persons 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% Roma 3.2% 2.5% 1.8% 1.5% 1.6% 1.4% 1.4% Unemployed over 45 years old Proportion of the unemployed who have been employed through the Employment Programmes, as a proportion of all entries % 27.2% 27.0% 28.6% 44.4% 44.9% 28.5% 36.6% 44.3% 43.6% 39.7% 53.4% 22

23 during the year Proportion of LTU employed through the programme, in the total LTU population at the end of the year Proportion of unemployed over 45 years who have been employed through the employment programme (in the 45 and over unemployed population) Employment programme - % of employed through: Sep % 10.1% 5.4% 6.4% 4.2% % - Mediation 77.6% 78.8% 80.8% 83.6% 83.9% 86.5% 86.7% Information/ counselling 16.0% 17.6% 17.1% 16.7% 17.6% 17.8% 17.0% Professional qualification/ requalification courses Financial stimuli for the unemployed, who get employed before the financial entitlement period ends 4.7% 5.0% 4.5% 4.0% 3.8% 3.9% 3.9% 4.5% 6.9% 7.7% 5.3% 4.9% 5.6% 4.8% Subsidised work 7.2% 2.8% 5.4% 7.5% 6.7% 5.9% 8.7% Employment programme number by type of employment measure Total employed Mediation Information and professional counselling Training and professional courses Consultation to new businesses Solidarity contracts: youth at high risk of marginalization 377, , , , , , , , , ,741 64,784 61,254 56,950 58,335 49,664 16,818 14,773 12,179 12,660 13, ,874 1, Subsidised work, of which: 20,222 27,385 21,741 17,683 19,228 Unemployed over 45 13,843 19,817 15,587 12,221 13,982 Single parents People 3 years (5 since 2013) before pensionable age Young graduates 5,568 6,574 5,421 4,826 4,526 Disabled Mobility premiums, of which for those who: Take up a job at a higher distance than 50 km from home 3,410 3,179 1,922 1,955 1,183 1,557 1,