Examples of active labour market policies Celine Peyron Bista 20 October 2015 Malacca Unemployment Protection Course, Module 1.2
Content of the presentation The difference between active and passive policies Objectives and types of active labour market programmes Functioning of ALMPs in developed and developing economies Benazir Income Support Programme, Pakistan Expanded Public Works Programme, South Africa
ILO standards Employment Policy Convention, 1964 (No. 122): With a view to stimulating economic growth and development, raising levels of living, meeting manpower requirements and overcoming unemployment and underemployment, each Member shall declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment. Protection against unemployment and employment Promotion Convention, 1988 (No.168)
Background Definition: Government programmes that intervene in the labour market to help the unemployed find work. They are part of policy and practice: ILO s Decent Work Agenda, adopted in 1999 Combination of ALMPs and UI exist in Europe, America and some countries of Asia
Active and passive policies Active labour market policies Passive labour market policies Provide active support for labour market integration Contingent upon participation in training and work programmes Typical measures include training, PWPs, enterprise creation, employment subsidies May target special vulnerable groups who are hard to place, e.g. the youth, women, long-term unemployed, elderly, disabled Provide income replacement during periods of unemployment or job search Not contingent upon participation in training and work programmes (though job search is usually included) Typical programmes include unemployment insurance, unemployment assistance, early retirement For everyone
Objectives of ALMPs To improve the functioning of the labour market by matching demand and supply; To encourage decent work, improve employability of the unemployed, underemployed, poor and vulnerable groups; To provide goods and services, such as public infrastructure in rural areas. Labour market and its functioning are not homogeneous. ALMPs intervene to address such gaps, match demand and supply.
Types Public employment services, such as job centres and labour exchanges, assist people with their job search effort by disseminating labour market information, providing assistance with interview skills and CVs Training and retraining measures, such as classes and apprenticeships, help people improve vocational skills and thereby, increase employability Enterprise creation and self-employment measures Public works and community works programmes Employment subsidies to enterprises to maintain their employees and even hire new jobseekers
Types Measure Objectives Pro Con Public employment services Training Enterprise creation Public works programmes Employment subsidies Job matching, market information, short training Develop skills to help compete for jobs Cheap Gatekeeper role Improves skills of workforce Promote SMEs Provides access to credit Income source during temporary unemployment Compensate firms for employing lowproductivity workers May be only income source Develops public goods Avoid unemployment Deadweight Ineffective if there is job shortage May distort competition May develop social stigma May distort the hiring scenario
Advantages Employment creation: directly by creating jobs and indirectly by improving employability Security: address adverse effects (reallocation of labour force, lay-offs) of structural changes (due to globalisation, technological progress, privatisation) Equity: focus on vulnerable groups e.g. youth, elderly, disabled, low-skilled, women Poverty alleviation: create jobs and enterprises, provide income support and training Indirect spill-over effects: create public infrastructure
Functioning in developed and developing economies Developing economies: vast informal economy consumes many new labour market entrants directly Developed economies: greater role in placing job-seekers in formal enterprises Developed economies: protect workers exiting from shrinking private sector enterprises
Benazir Income Support Programme Pakistan
Benazir Income Support Programme Pakistan Provides a cash transfer (US$10 / month) & integrated package: Waseela-e-Haq: interest-free loans of up to US$ 3,000 to women for self-ventures Waseela-e-Rozgar: 1 year of vocational training to women Waseela-e-Sehat: life insurance coverage of about US$1,000, family health insurance up to US$250 / year Waseela-e-Taleem: monthly cash transfer of US$2 / child, conditional on primary school enrolment and 70% attendance
Benazir Income Support Programme Pakistan Targets women, very poor households, remote areas To empower households, improve living standards, invest in human capital formation, especially among women and children Complementary interventions to help families graduate out of poverty Movement from unconditional to co-responsibility cash transfers (with linkages to training, entrepreneurship) Women are central focus of cash transfers and benefits
Expanded Public Works Programme South Africa
Expanded Public Works Programme Growing labour force, high unemployment South Africa Challenges: reduce unemployment, alleviate poverty, strengthen skills, improve social services An element of the government strategy to reduce poverty through temporary work, provide work exposure Wages set lower than minimum formal sector wages No UI obligated, 2 days of training / 22 days of work, OSH standards, compensation for work-related injuries, sickness and maternity leaves
Expanded Public Works Programme South Africa Provides labour-intensive work to unemployed, unskilled, people not receiving social grants, women, poor, disabled, youth Four sectors of work (expanding traditional focus of PWPs): Civil infrastructure: labour-intensive activities like excavation, loading, offloading, spreading, stone-pitching Environment: wetland conservation, land rehabilitation, wild fire management, coastal care Social: community care workers for early childhood development, home-based care Economic: venture creation and cooperative development