WHAT ROLE FOR PRIVATE

EMPLOYMENT SERVICES

ON THE LABOUR MARKET?

Stefano ScarpettaDirector of Employment, Labour and Social AffairsOECD

CIETT World Employment Conference28th May 2015, Rome

KEY CHALLENGES

2

The jobs recovery remains incomplete

Note: Countries shown by ascending order of the maximum gap (country-specific trough).a) Aggregate of 15 OECD countries of the euro area.Source: OECD calculations based on OECD Economic Outlook (database), http://dx.doi.org/10.1787/data-00688-en.

Employment gap Percentage-points change in the employment rate since the onset of the crisis (Q4 2007)

POLISR

DEUAUT

AUSCHL

TURLU

XBEL

CHEKOR

CZEHUN

FRAJP

NNOR

SWEOECD

CANSVK

NLD GBR

EA15 (a

)ITA

MEXNZL

FIN USADNK

SVNPRT

EST ISLESP

GRC IRL-15

-10

-5

0

5

10

Maximum gap(country-specific trough)

Current gap (Q4 2014)

Projected gap (Q4 2016)

%

Unemployment is declining but further progress is required

Note: Countries shown by ascending order of the current unemployment rate (Q4 2014).a) Aggregate of 15 OECD countries of the euro area.Source: OECD calculations based on OECD Economic Outlook (database), http://dx.doi.org/10.1787/data-00688-en.

Unemployment ratePercentage of the labour force

KORJP

NNOR

CHEMEX

DEU ISLISR

GBRUSA

AUTNZL

CZEAUS

DNKCHL

ESTCAN

LUXOECD

NLD HUNSWE

POLBEL

FIN SVNFRA IRL

TUR

EA15 (a

)SVK ITA

PRTESP

GRC0

5

10

15

20

25

30

Current value(Q4 2014)

Start of the crisis (Q4 2007)

Projected value (Q4 2016)

%

Long-term unemployment remains persistently high

Note: Countries are shown in ascending order of the incidence of long-term unemployment in Q4 2014.a) Data are not seasonally adjusted but smoothed using three-quarter moving averages. OECD is the weighted average of 33 OECD countries excluding Chile. b) 2014 for Israel. Source: OECD calculations based on quarterly national labour force surveys.

Long-term unemployed (more than one year) as a percentage of total unemployed,a

Q4 2007-Q4 2014b

KORMEX ISR

NZL ISLCAN

TURSWE

AUSUSA

DNK FIN LUX

AUTNOR

GBR G7OECD

CHEJP

NPOL

FRANLD EST

DEUHUN

CZEEU28 BEL

EA19 ESPSVN IRL

PRT ITASVK

GRC0

10

20

30

40

50

60

70

80Q4 2007 Q4 2014

%

The NEET rate among youth has increased

Percentage of youth (aged 15-29)

a) OECD is the unweighted average of 32 countries (excluding Chile and Israel).b) 2008 for Korea.c) 2013 for Korea and the United States.Source : OECD estimates based on national labour force surveys.

A. NEET rate in 2014c, selected OECD countries B. Percentage-points change in NEET rate, 2007b – 14c, selected OECD countries

0

5

10

15

20

25

30

35

40

45

Share of youth population unemployed and not in education or training in 2014

Share of youth population inactive and not in education or training in 2014

NEET rate in 2007

%

-15

-10

-5

0

5

10

15Share of youth population unemployed and not in education or training

Share of youth population inactive and not in education or training

NEET rate

%

7

Mismatch is prevalent whether by skills, qualifications or field

Prevalence of skills, qualification and field-of-study mismatchAs a percentage of employed workers, 2012a,b

*The OECD Survey of Adult Skills only covered Flanders (BEL) and England/N. Ireland (GBR).a) Workers are classified as mismatched by qualification if they have higher or lower qualifications than required by their job; workers are classified as mismatched in terms of literacy skills if they have literacy proficiency exceeding or below that required in their job; workers are classified as mismatched by field of study if they are working in an occupation that is not related to their field of study.b) Occupation is only available at the 2-digit level in the ISCO-08 classification for Australia. It is not possible to assess the extent of field of study mismatch using the same definition used for other countries.Source: OECD calculations based on the Survey of Adult Skills (PIAAC) 2012.

Many of the jobs destroyed as a result of the crisis will not come back in the recovery

Annual percentage change, employees in the non-agricultural business sector,a Q4 2007-Q4 2014

a) Manufacturing refers to mining, manufacturing and utilities and business services to trade, transport and communication, accommodation and food services, financial services, real estate and business services.

Source: OECD calculations based on the European quarterly national accounts, on the Current Employment Statistics survey for the United States and on the labour force survey for Japan.

Manufacturing Construction Business services Non-agricultural business sector

Euro area Japan United States

Q4 200

7

Q3 200

8

Q2 200

9

Q1 201

0

Q4 201

0

Q3 201

1

Q2 201

2

Q1 201

3

Q4 201

3

Q3 201

4-5

-4

-3

-2

-1

0

1

2

3%

Q4 200

7

Q3 200

8

Q2 200

9

Q1 201

0

Q4 201

0

Q3 201

1

Q2 201

2

Q1 201

3

Q4 201

3

Q3 201

4-3

-2

-1

0

1

2%

Q4 200

7

Q3 200

8

Q2 200

9

Q1 201

0

Q4 201

0

Q3 201

1

Q2 201

2

Q1 201

3

Q4 201

3

Q3 201

4-10

-8

-6

-4

-2

0

2

4%

Changes in the composition of employment by type of contract

Annual percentage change in total employment by work status

in the euro area, Q4 2007-Q4 2014

Source: OECD calculations based on the European Labour Force Survey (EU-LFS).

Q4 200

7

Q1 200

8

Q2 200

8

Q3 200

8

Q4 200

8

Q1 200

9

Q2 200

9

Q3 200

9

Q4 200

9

Q1 201

0

Q2 201

0

Q3 201

0

Q4 201

0

Q1 201

1

Q2 201

1

Q3 201

1

Q4 201

1

Q1 201

2

Q2 201

2

Q3 201

2

Q4 201

2

Q1 201

3

Q2 201

3

Q3 201

3

Q4 201

3

Q1 201

4

Q2 201

4

Q3 201

4

Q4 201

4-3

-2

-1

0

1

2

3

Permanent Temporary Self-employed Employed

%

KEY BUILDING BLOCKS FOR FOSTERING MORE

INCLUSIVE AND RESILIENT LABOUR MARKETS

10

The central role of the Employment Service

11

Inclusive and

resilient labour

markets

Opportunities

EmployabilityMotivationEnsuring that

jobseekers have the motivation to seek

work

Intensive case management,

placement services and participation in

measures to increase employability

Addressing demand-side barriers and expanding employment opportunities for jobseekers

Effective and efficient labour market policies and institutions

12

How can the employment

services achieve more with less?

Which role can PPPs and contracted out

services play?

How to address the challenges of decentralised

systems?

How to manage performance and

ensure continuous improvement and

learning?

Effective and efficient labour market policies and institutions

13

How can the employment

services achieve more with less?

Transition to e-services as one solution

(e.g. in EU, BRA, MEX, IND, DEU)

Saving costs, while also increasing service

availability and accessibility?

E.g. though online benefit applications (e.g. in AUS, GBR, TUR, ESP, and ITA)

Far-reaching changes in NLD: 2/3 of local PES offices closed

Effective and efficient labour market policies and institutions

14

Which role can PPPs and contracted out

services play?

Experience in AUS and GBR shows …

Providers need to be paid on the basis of

outcomes they achieve

Accurate measurement of performance is key

Most-effective providers should

be able to expand

• Restrictions on private employment agencies relate to fees, types of employment, licensing by the authorities, etc. have been eased.

• Temporary work agency (TWA) assignments in OECD countries represent a fraction of total employment, but they account for large share of job starts in some countries.

Significance of TWA work for the overall employment services:- Major source of job vacancies for the unemployed - TWA assignments may convert to a permanent post, or provide

work experience that allows other placements e.g. “reverse marketing” of the hard-to-place unemployed

- There is a risk of cycling between short-term contracts and benefits

15

Private agencies in the labour market

• PES often outsource a high percentage of their budget for individual jobseeker services, e.g. job clubs, training.

• Where PES outsource the individual case management function, PrEAs tend to be one of the successful bidder.

• Outsourcing of case management is structured variably, e.g.– Targeted on all registered unemployed vs. specific groups; – Voluntary jobseeker participation and freedom to switch provider at any

time vs. assignment or multi-year commitment to the provider– Purchaser defines provider processes vs. provider autonomy (“black box”)– Fixed fees vs. payment for results; e.g. payment for 6-month job outcomes

• Since the mid-2000s, the recourse to outsourced case management has increased in some countriers, UK (Work Programme, 2011) and Ireland (JobPath, 2015). There is also some non-OECD business (Saudi Arabia).

16

Experiences with outsourcing

Effective and efficient labour market policies and institutions

17

How to address the challenges of decentralised

systems?

Usually, federal funding for unemployment benefits

Employment services managed by the

regional or local level (e.g. CAN, CHE, ESP, ITA, DNK)

CHE & DEU: comparative benchmarking of local offices

DNK: national authorities define key procedures

Effective and efficient labour market policies and institutions

18

How to manage performance and

ensure continuous improvement and

learning?Performance indicators

should show relation between inputs and

final outcomes

In OECD, expenditure on PES and ALMPs

ranges from 0.01% to 2.1% of GDP

Evaluation is crucial to ensure effective and efficient spending

Test locally and evaluate before national rollout

19

Thank you

Read more about our work

Email: stefano.scarpetta@oecd.org

Website: www.oecd.org/employment/outlook

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