PES recruitment services for employers

PES to PES Dialogue The European Commission Mutual Learning Programme for Public Employment Services DG Employment, Social Affairs and Inclusion PES recruitment services for employers Discussion paper Belgium, Brussels (March, 2014)

This publication is commissioned by the European Community Programme for Employment and Social Solidarity (2007-2013). This programme is implemented by the European Commission. It was established to financially support the implementation of the objectives of the European Union in the employment, social affairs and equal opportunities area, and thereby contribute to the achievement of the EU2020 goals in these fields. The seven-year programme targets all stakeholders who can help shape the development of appropriate and effective employment and social legislation and policies, across the EU-28, EFTA-EEA and EU candidate and pre-candidate countries. For more information see: http://ec.europa.eu/progress For more information on the PES to PES Dialogue programme, please refer to: http://ec.europa.eu/social/pes-to-pes Acknowledgements We want to thank the managers in the Public Employment Services of Austria, Bulgaria, Germany, Slovenia and Sweden for their participation in the interviews and their cooperation. Editor: Susanne Kraatz, DG Employment, Social Affairs and Inclusion, Unit C.3 - Skills, Mobility and Employment Services, European Commission. Authors Martin Dietz, Holger Bähr, Christopher Osiander, Institut für Arbeitsmarktund Berufsforschung In collaboration with ICF GHK and the Budapest Institute Please cite this publication as: European Commission (2014), PES recruitment services for employers, Brussels, Authors: Martin Dietz, Holger Bähr, Christopher Osiander The information contained in this publication does not necessarily reflect the position or opinion of the European Commission March 2014

Table of Contents Executive Summary... 1 1. Introduction... 3 2. Strategic orientation: similar goals, different national characteristics 5 3. Challenges: unfavourable economic situation and mismatch on the labour market... 7 4. Segmentation: building long-term relationships with financial incentives and advisory services... 9 5. Channels of delivery... 15 6. Challenges for the PES and its staff... 20 7. Conclusion... 22 Bibliography... 24 Annex 1... 26 Annex 2... 32 March 2014

Executive Summary Public Employment Services (PES) are important actors in the labour market, increasingly focusing on the demand side in order to achieve an improved match between supply and demand. Therefore, they provide recruitment services to enterprises of different sizes and in different ways. This paper deals with two questions: How are the organised? And how are the recruitment services delivered to employers? The first question covers approaches to the segmentation of recruitment services, the second question addresses the use of different delivery channels. We build on the existing literature on the work of the PES and use detailed information from five countries. We conducted telephone interviews with managers of the PES from Austria, Bulgaria, Germany, Slovenia and Sweden and asked them to complete a short written questionnaire. The matching process takes place against the background of quite diverse national labour market conditions that lead to different challenges for the PES. We analytically distinguish between two groups of countries: Those with quite unfavourable economic conditions and rising unemployment (Bulgaria, Slovenia) and those with better economic conditions (Austria, Germany, Sweden). In the former countries, PES face the danger of being neglected by employers due to a sufficient number of jobseekers on the market and shift resources away from the demand side to the support of jobseekers. Nevertheless, it is clear that even in these situations, significant skills mismatches can remain. In the latter countries, PES have to cope with increasing mismatch and a rising share of disadvantaged jobseekers. Therefore, the PES might not be able to fulfil employers desire for a best match. PES react to these challenges by offering (additional) services to satisfy employers like financial incentives or special advisory services, e.g. with respect to other appropriate recruitment channels (e.g. job fairs or agency work). Core matching services (e.g. vacancy registration, matching with jobseekers having an appropriate profile) are delivered universally, i.e. to all employers regardless of size, type, sector and region. A segmentation of recruitment services offered by PES which only address specific groups of firms represents only an exceptional case. Services for employers may be adapted strongly to the needs of specific employers. Some PES are able to offer special advisory services to those employers that face important medium or long-term issues, like labour shortages due to demographic change or skills developments and training needs of the firm s staff. Qualification counselling in Austria and Germany is a case in point. Furthermore, the Austrian and German PES plan to shift resources away from larger enterprises that generally have well resourced HR departments to SMEs that often lack these resources. All PES use multi-channel strategies in order to deliver services for employers. These combine face-to-face contacts with telephone calls and different e-channels. Whether a channel is appropriate to the delivery of a specific service depends on the type of service and the firm s preferences. Personal contact is still most important. This is especially true with respect to more complex and firm-specific (advisory) services. Face-to-face contacts also foster long-term relations with employers and the acquisition of new employers. Instead, experienced users like large companies will prefer standardised systems like e-mails, e-platforms or internet to reduce costs. Cost-benefit-considerations and the desire to allocate resources efficiently are important for the PES when actively promoting certain channels. PES intend to foster the use of e-channels, as this enables to shift resources from administrative tasks to more resource intensive services. Most of the channels do not substitute each other, but serve different purposes or act in a complementary way. Interestingly, March 2014 1

PES differentiate the use of their channels with respect to the firm size only in few cases (e.g. e-account in Germany). For the PES and their staff, the increasing use of e-channels may result in new job descriptions or training requirements but does not constitute a general problem for the organisation. The will to promote new channels to employers is considered to be as important as professional skills. In contrast, human resource consulting remains a challenge for the PES because employers do not consider this service as a PES core competence and PES staff members have to build up skills in order to act at eye level with the companies. March 2014 2

1. Introduction Ageing populations, technological innovations, an increasing mismatch between jobseekers and the job requirements and PES budget contraints as a result of the financial crisis (e.g. increase in the demand for PES services, unemployment, shorttime work) are some of the most prominent factors that characterise labour markets of European countries. As a consequence, employees are confronted with less stable employment relationships and new social risks, whereas employers require a greater flexibility of the production process and, in specific sectors and regions, face particular skills shortages. Therefore transitions between jobs and between different periods of the life cycle gain relevance (Council of the European Union 2010; Public Employment Services 2011). Public Employment Services (PES) are important actors in the labour market, balancing labour supply and demand, i.e. jobseekers and employer vacancies. In recent years, they have increasingly focused on the demand side of the labour market. PES are contributing to the objectives of the Council of the European Union (2010) by implementing or co-ordinating the delivery of active labour market policies (ALMPs), focusing on work careers during the life cycle and engaging in coaching jobseekers. However, these supply side measures are considered as insufficient in order to enhance employment and fulfil the recruitment needs of employers. In their Strategy Output Paper, Member State PES indeed advocate a shift towards a more labour demand-oriented service package (Public Employment Services 2011: p.4, emphasis omitted). Both jobseekers and companies are supposed to profit from this new orientation and a PES strategy of this kind can contribute to a smart, sustainable and inclusive growth within the single market (European Commission 2010). PES may provide services for employers either universally or in a segmented way. Universal services are provided to all enterprises regardless of their size, their type, the sector they operate in and the region in which they are situated. Segmented services are restricted in at least one of the dimensions just mentioned. In a comparative study commissioned by the British Department for Work and Pensions, Bukowski, Jenkings and Roberts (2010) analyse the PES in four countries and one private sector company that delivers employment programmes in the UK. The authors observe an increasing relevance of employer-led approaches. Furthermore, they describe how the services PES provide for employers may be directed at specific target groups, e.g. large companies or small-and-medium-sized enterprises (SMEs). To focus on large enterprises may be reasonable as they offer a higher number of vacancies per company and thus may be an important strategic partner for the PES. However, the group of SMEs constitute a larger share of all companies and provide many vacancies. Moreover, they struggle with specific problems because they often do not have a systematic human resources management (Bukowski et al. 2010). In this paper, we will deal with two questions: How are the PES recruitment services for employers organised? And how are the recruitment services delivered to employers? Throughout the paper we define recruitment services as the PES core activities of matching jobseekers and vacancies. This includes advisory services directly related to the recruitment process and the use of ALMP to achieve secondbest matches. We also consider a wider range of employers services like additional advice for enterprises, e.g. with regard to the use of other recruitment channels like job fairs and agency work or with respect to the training of the firms staff. Of course these actions do serve their own purposes. But as we will see they also contribute to the overall objective of matching supply and demand and bringing the unemployed back into work. Recruitment services and further employers services are deeply intertwined. Regular counselling, for example, may deepen the relation- March 2014 3

ship between PES and employers and as a consequence the employer may be satisfied with a second-best match offered by the PES, if an optimal recruitment is not possible due to labour market conditions. Nevertheless, in order to clarify the argumentation, we will analytically separate the recruitment services in a narrow sense from the broad range of services for employers, albeit both types of services are empirically interwoven. Our first question covers approaches to the segmentation of recruitment services, examining both the cause and effect of universal and segmented services for employers. The second question addresses the use of different delivery channels, like face-to-face contact, telephone, e-mail or internet, for different purposes and in different situations. The argumentation is based on interviews with experts in the PES of five selected countries, a questionnaire answered by PES managers of these countries, documents made available by the PES to PES Dialogue programme (AMS Austria 2011; Arbetsförmedlingen Sweden 2011; Bundesagentur für Arbeit 2011; Employment Agency Bulgaria 2011; Employment Service of Slovenia 2011) and labour market research on the work of the PES. PES in the Member States agree on the general strategy for providing recruitment services for employers. However, their services for employers face different labour market conditions and are organised in various ways. To cover this variety in our analysis, we decided to look at five countries that differ in size as well as relevant labour market features, namely Austria, Bulgaria, Germany, Slovenia and Sweden. Unemployment is low in Austria and Germany, while Bulgaria s unemployment rate lies above the EU-average. Slovenia and Sweden range between these three countries, albeit unemployment is higher in Slovenia than in Sweden. Similarly, the share of SMEs varies (Eurostat 2011). 1 Sweden and Slovenia have higher shares of micro-enterprises (94.7% in Sweden, 92.4% in Slovenia) than Bulgaria (88.7%), Austria (87.2%) or Germany (83.0%). In contrast, the share of small enterprises is higher in Germany (14.1%) and Austria (10.8%) than in Bulgaria (9.2%), Slovenia (6.1%) and Sweden (4.4%). The differences between the countries are smaller when it comes to large enterprises, where the shares range from 0.2% in Sweden to 0.5% in Germany. The following section 2 describes the goals and strategic orientations of the PES in the selected countries. Section 3 deals with the current labour market situation in these countries and the challenges to the national PES. The strategic orientation and the labour market situation constitute the background to the organisation of employers services and its segmentation, which is the subject of section 4. The different channels of service delivery are discussed in section 5. In section 6, the challenges for the PES and its staff are analysed. Finally, section 7 contains some concluding remarks. 1 For statistical purposes, Eurostat defines SMEs with respect to their number of employees. Large enterprises have 250 or more employees, medium-sized 50 to 249, small 10 to 49, and micro enterprises less than 10. Micro, small and medium-sized enterprises are collectively referred to as SMEs. March 2014 4

2. Strategic orientation: similar goals, different national characteristics PES consider job brokering and filling of vacancies as their main objectives. Overall, European PES have quite similar strategic objectives. According to de Koning and Gravesteijn (2012), almost every PES aims at matching demand and supply and filling vacancies in the labour market, serving both jobseekers and employers. In this respect most countries implicitly or explicitly state that a close connection to the local and regional labour markets is very important in order to work successfully with both jobseekers and employers. Labour market advice is an additional service. Some PES, for example in Germany, stress the fact that they see themselves as advisors in the labour market. To illustrate this point, we have summarised the results of de Koning and Gravesteijn (2012) in figure 1. PES of 15 countries were asked to rate the importance of their key functions on a scale from 1 to 5, the former indicating the lowest importance, the latter the highest. Four out of five PES in our sample consider themselves first and foremost as job brokers and fillers of vacancies. On average, the other functions are rated quite similar, in the following order: Labour market advice, being a partner in addressing the needs of jobseekers and human resource consultancy. Moreover, the results in our sample of five countries are very similar to the entire sample of 15 countries. Figure 1: How does the PES view its role vis-à-vis employers? Legend: Own figure based on data from de Koning/Gravesteijn (2012). Matching supply and demand is a main objective. These findings correspond with the results of our own interviews. In the Austrian, German and Swedish cases, the PES managers explicitly stated that matching supply and demand is the main objective, also highlighting the fact that there is currently a significant skills mismatch. Other general goals in line with the objectives mentioned before, are increasing employment (Bulgaria, Sweden), reducing unem- March 2014 5

ployment (Bulgaria) and supporting employers in finding suitable workers (Germany, Slovenia). Some countries highlight special objectives, for example the inclusion of vulnerable or disadvantaged groups in the labour market (Bulgaria, Slovenia, Sweden), measures for newly arrived immigrants (Sweden), people with health problems (Austria, Sweden), younger jobseekers (Austria, Bulgaria) or the elderly (Austria). The Bulgarian PES mentions that securing and improving the quality of the workforce should be considered when it comes to the reduction of unemployment. In general, as Hake (2011) as well as Düll and Vogler-Ludwig (2011) argue, the cooperation between PES and employers represents a means to foster the labour market integration of groups that encounter severe difficulties of getting a job. Focusing on SMEs is ambivalent. The analysis of our small standardised questionnaire clarifies some other topics. Although this does not allow to draw generalised conclusions for all European PES, it is remarkable that four PES ranked the goal of increasing their market share as very important or important on a five-point scale, with the exception of Sweden where it is regarded a less important goal. Contacts to SMEs are also considered necessary, both because these enterprises need specific support and post many vacancies (see also section 1). Thus, the PES recognise the importance of SMEs on the labour market although they notice that the acquisition of vacancies from SMEs is time consuming and therefore costly. This trade-off has to be considered by each PES when deciding about the most efficient allocation of resources. Legal and political frameworks affect the goals and strategic considerations of PES. The legal and political framework plays an important role when defining strategic goals and PES actions which is especially emphasised in some of the countries in our sample. In Sweden, for example, topics on the political agenda, like the inclusion of various disadvantaged groups or immigrants, seem to be taken into account when discussing the PES objectives (Arbetsförmedlingen Sweden 2011). 2 In Slovenia, the Ministry of Labour defines the design of ALMP measures and their financial endowment, which clearly goes to the core of PES business activities. Furthermore, some major changes in the legal framework may have substantially influenced strategic considerations. Until April 2013, Slovenia was one of very few countries where a registration of vacancies at the PES was compulsory for enterprises 3. Since the law was amended, the Slovenian PES has to cope with an imperfect transparency of the market. This does not only cause increased effort when reporting statistical data about the labour demand it also means that the PES has to engage more intensely in active acquisition where the firms had been legally obligated to submit information on vacancies before. 2 In addition to that, the national legal definitions of unemployment vary. In Germany and Sweden, for example, there are quite broad definitions of employability. In Sweden, a jobseeker employable when he or she is able to work for at least three hours every working day and on average at least 17 hours a week (Arbetsförmedlingen Sweden 2013). In Germany the same standard of three hours of work a day applies (Bundesagentur für Arbeit 2014). 3 Nevertheless, there are other countries that have similar regulations with another scope: in Bulgaria, only public-sector enterprises are obliged to register every vacancy at the PES. In Germany, many largescale enterprises recently have begun to register every vacancy due to developments in the jurisdiction. They are legally obliged to check if a vacancy can be filled by a disabled person qualified as a nondisabled person which can be done by registering the vacancy at the PES. March 2014 6

3. Challenges: unfavourable economic situation and mismatch on the labour market Although the main objectives of the PES resemble each other in many ways it is important to notice that activities of PES take place against the background of quite diverse national labour market conditions. For our sample, we can analytically distinguish between two groups of countries where the PES are working under differing labour market conditions and are therefore encountering different challenges. Austria, Germany and Sweden face favourable labour market conditions, whereas Bulgaria and Slovenia still suffer from the recent economic crisis. On the one hand, Slovenia and Bulgaria like a few other Central and Eastern European countries, but also France, Spain or Italy face quite unfavourable economic conditions. Those countries are still suffering from the recent economic crisis. The economic situation includes a more or less sharp decrease in the GDP and, consequently, in the demand for labour. This is coupled with rising unemployment rates and an increase of skilled jobseekers in the stock of unemployed people. The Key Indicators of the Labour Market (KILM) provided by the International Labour Organization (ILO) (2013) show that in Bulgaria the unemployment rate has more than doubled from 5.3% in 2008 to 12.3% in 2012. 4 In Slovenia, the pattern is quite similar: the unemployment rate has increased from 4.4% to 8.8% during the same period. As a consequence, the PES has to handle many jobseekers with an increasing risk of long-term unemployment, especially the low-skilled, on the one hand, and the danger of being neglected by employers due to a sufficient number of candidates for most vacancies, on the other hand. So, the PES have to convince employers to cooperate, although they do not necessarily rely on their services. With regard to the unfavourable labour market situation, PES might also have to shift resources from the demand side to the supply side of the labour market in order to deal with the increasing number of jobseekers. Administrative issues regarding the financial support and counselling of the unemployed also require a high level of resources. This restricts PES opportunities to engage in activities for employers. Major challenges for the Slovenian PES The Slovenian PES has faced particular challenges in the last years. The economic conditions drastically deteriorated during the economic and financial crisis in 2008 and 2009 and have not recovered yet. Negative growth rates led to decreasing employment and rising unemployment. At that time the PES had to engage strongly in consulting firms facing the risk of insolvency or mass redundancies. For the Slovenian PES this required a stronger focus on the needs of jobseekers and a shift of resources away from the services for employers while at the same time it faced staff cuts imposed by the government. Within this environment it became more difficult to reach the goals of balancing demand and supply and satisfy the needs of the employers. The problems have even aggravated as the compulsory registration of job vacancies was abolished in April 2013 (see section 2). Since then the PES has to apply more resources to the acquisition of vacancies in order to reach market transparency and achieve the goal of balancing supply and demand. All in all, the Slovenian PES operates near full capacity to secure the core services for jobseekers and employers. Resources for additional services for employers that play a major role for the work of the PES are lacking. 4 Unless specified differently, the statistical data used in this section is provided by the KILM of the ILO, see also http://www.ilo.org/empelm/what/wcms_114240/lang--en/index.htm. March 2014 7

On the other hand, there is a handful of European countries including Austria, Germany and Sweden that have been able to cope with the crisis quite successfully and have faced only slightly increasing or even decreasing unemployment rates. In Germany, the unemployment rate has fallen from 7.5% to 5.4% since 2008, in Austria it has slightly increased from 3.8% to 4.3%, in Sweden from 6.3% to 8.0%. The core challenge for the PES in these countries is quite different from that facing the PES in countries with poor economic conditions: they have to cope with an increasing mismatch between the jobseekers characteristics and the requirements of employers. A successful integration of unemployed people results in a rising share of disadvantaged jobseekers in the stock of unemployed and therefore contributes to the increased mismatch. Germany and Sweden explicitly mention the unfavourable demographic development of an ageing and shrinking workforce as an additional factor that affects the future structure of labour supply. 5 On the demand side, the PES face at least constant or increasing requirements of enterprises concerning the skills of candidates, due to structural economic developments and skills-based technological change. Taken together these developments mean that the PES expect that they will have to deal with a growing mismatch on the labour market in the future. PES are supposed to develop incentives for employers in order to keep up cooperation. All in all, employers often might either not depend on the PES services or they might be dissatisfied because the PES are not able to fulfil employers desire for a best match as many unemployed people do not fit to their job profiles (Larsen/Vesan 2012). Since losing contact because of unsatisfied employers is not an option in both labour market situations, it seems reasonable to develop incentives for employers to stay in contact and use the services of the PES. These may supplement the core recruitment process or offer some added value for the enterprises going beyond specific recruitment processes. One objective of these services may be the development of long-term relationships with firms. These can be seen as a strategy to mitigate against the above-mentioned disturbances interrupting the contact between PES and employers leading to a decrease in registered vacancies. In this regard long-term relationships may be a supportive framework in order to achieve the objectives with respect to the matching process. We will return to these aspects in Chapter 4. 5 PES seem to react and adapt to these challenges in quite different ways. Sweden and Bulgaria explicitly try to promote labour market participation for ensuring the labour supply in the long run, for example by activating people considered inactive so far. Austria tries to increase the factual retirement age by keeping older workers in the labour market. Both strategies focus on the supply side of the market, assuming that there is a substantial potential of skilled labour among these previously neglected groups. March 2014 8

4. Segmentation: building long-term relationships with financial incentives and advisory services Universal service provision is the rule, segmentation an exception. As de Koning and Gravesteijn (2012) summarise in their comparative analysis of 15 countries, most services are provided universally. Universal services are provided to all enterprises regardless of their size, their type, the sector they operate in and the region in which they are situated. In contrast, services are segmented if they are restricted in at least one of the dimensions. Several PES do not offer services in any segmented way at all in our small sample this is the case for Bulgaria, Slovenia and Sweden. In contrast, in Austria and Germany, some services are segmented. However, our small survey shows that the segmentation of services also plays a minor role in these countries. Besides these exceptional cases of purposeful segmentation of services, there may be an (unintended) factual segmentation resulting from a specific demand of certain types of emloyers, e.g. SMEs or large companies. PES might be convinced that specific services will be particularly useful or effective for certain types of enterprises and thus actively offer these services to specific firms (without excluding others from their receipt). We explain the general use of universal services, specify the exceptional use of targeted segmentation and describe the emergence of factual segmentation in this section. Labour market information is provided as a universal service. There are a number of services for employers contributing to the PES objectives. PES deliver labour market information to employers. They inform them about current ALMP and their range of employer services. Delivering this kind of information is an important pre-condition for matching supply and demand and may also attract the attention of employers that are no longer in contact with the PES or have never been in contact. Thus, it does not come as a surprise that these services are provided universally. Matching jobseekers and vacancies is provided as a universal service. Matching jobseekers and vacancies constitutes a core activity of the PES that is delivered universally. Matching activities can be supported by ALMP, for example by offering advisory services, training measures or job subsidies. With respect to the firm-specific use of ALMP, PES are also deeply involved in advisory activities and in administrating the implementation of these measures. In addition to the core activities, some PES provide special advisory services, e.g. with respect to the use of other appropriate recruitment channels. For example, there is a growing focus on cross-border recruiting and PES offer information and support within the EURESnetwork. All of these services are also delivered universally or are at least not restricted to employers with specific characteristics. When best matches between jobseekers and vacancies become rare, PES need to identify ways to reach second-best matches. If the PES is not capable of achieving a best match in the eyes of an employer, the services of the PES may be seen as incentives to accept a second-best match. Especially the Austrian and German PES state that firms are obviously most happy with a best match, but they also appreciate the fact that the PES tries hard to find solutions in times of general recruitment problems. One PES manager explicitly states: Our customer surveys show that our employer clients are satisfied when they get what they wanted [ ] But they are even more satisfied if they do not get what they want, but recognise that we are considering alternatives and making proposals for further activities. Thus, customer-oriented advice and support to find March 2014 9

alternatives may be adequate ways to deal with a mismatch and to achieve customer satisfaction. PES offers to reach a second-best match often include a financial component, e.g. grants for training or recruitment subsidies for hard-to-place people. By offering these measures the PES may satisfy employers and at the same time achieve the goal of integrating disadvantaged people. In our short written survey we asked the PES under which circumstances or by which measures employers can be convinced to hire jobseekers that are not closely attached to the labour market. The most suitable financial instrument seems to be on-the-job training which can improve the matching between the two sides of the labour market by addressing the problem of mismatch. 6 Interestingly, in Austria and Germany both countries with better labour market conditions financial incentives are considered less helpful. Employers might be sceptical if low-skilled workers are able to fulfil the job requirements. Therefore, compensation for lower productivity is not a panacea. In countries with a worse economic situation one might also ask if financial incentives really compensate for workers deficits instead of creating substantial deadweight losses. It is remarkable that the demographic change does not seem to play a major role for enterprises when thinking about hiring workers with deficits, although this is a main labour market trend influencing the firms recruitment processes. Enhancing employment of disadvantaged people in Sweden The Swedish Arbetsförmedlingen puts emphasis on the needs of jobseekers (cf. figure 1). In particular, the Arbetsförmedlingen focuses on the inclusion of disadvantaged people into the labour market. There are various measures to support immigrants, young people, long-term unemployed and disabled people. Enterprises that hire those people may get tax reductions or wage subsidies. Furthermore, the Arbetsförmedlingen provides education and training programmes and backs onthe-job-training. A public campaign drew attention to the skills of disabled people in order to encourage enterprises to employ disabled people (Arbetsförmedlingen Sweden 2011). Different means of enhancing employment are used thoroughly and are adapted to specific situations; financial incentives to employers are only one way to foster the labour market integration of disadvantaged people. Recently, the Arbeitsförmedlingen identified larger companies for a more structured cooperation. In a written agreement, the companies promise to hire disadvantaged people, while the Arbetsförmedlingen guarantees individual support to the enterprises. By the end of 2013, about 50 companies had signed such a contract. All in all, it does not necessarily lead to a firm s dissatisfaction when best matches will not be achieved if the PES services are applied properly. Revealing own activities and offering alternatives to employers might be an important way to secure employers satisfaction and establish long-term relationships. Mutual trust and regular communication are necessary conditions for a long-term relationship between PES and employers. Long-term cooperations and mutual trust are important factors for achieving a high market share. Regardless of their differing labour market situations, all PES in our sample emphasise that it is important for their work to establish long-term relationships with employers. Our interviews with PES experts reveal a consensus about the positive impact of long-term relationships on the matching process. The investment in these partnerships does not only pay off in terms of increasing transparency and market penetration but may also influence employers willingness to accept the hiring of second-best workers from time to time which via multiplier 6 Classroom trainings are also considered useful, albeit not to the same degree as on-the-job training. March 2014 10

effects might improve both the popularity and the reputation of PES in the labour market. Thus, the long-term strategy contributes to a good performance with respect to the core activities of the PES. Building up long-term partnership between PES and firms in Slovenia In Slovenia, training programmes for unemployed are designed within a strong cooperation with the firms. The training programmes provide an opportunity for mutual contact. The PES gain information about the firms and may develop training programmes that fit their needs. The training programmes may contribute to job security and increase productivity. Thus, the unemployed, the PES and the employers may profit from the cooperation. Furthermore, these services do not only serve a short-run objective with regard to the specific inquiry, but can also be seen as an investment in the reputation of the PES and in building up long-term partnerships with firms. During the last economic crisis, recruitment services were deeply engaged in dealing with the prevention and cushioning of mass redundancies, e.g. through shortterm work schemes, like in Austria, Germany or Slovenia. Besides the goal of avoiding redundancies and offering immediate support to the unemployed, this was also an opportunity to strengthen the relationships with enterprises, acting as a partner. In order to prevent mass redundancies, PES should put emphasis on a closer cooperation with employers, as de Koning and Gravesteijn (2011) argue. They advocate a more prominent role of consultancy services. As a consequence, long-term cooperation would gain relevance in relation to short-term matching, albeit the latter will remain a core activity of PES. To establish long-term relationships, incentives for firms will be necessary we have already mentioned different types of services which might be suitable. But most of these measures are costly and time consuming. This is especially true with respect to additional advisory activities. Obviously, it will be easier to implement such programmes facing a positive labour market situation with less pressure on the PES with regard to administrative issues and financial resources. In these cases, it is easier to shift resources to other activities. In contrast, countries with less favourable labour market situations would need additional resources to implement new programmes for employers. However, it will be a big challenge to convince politicians to invest more in the relationships between PES and employers in times of high unemployment and financial scarcities. PES react to labour market conditions by providing specific services. Although a legal segmentation of services represents the exception to the rule of a universal service provision, the demand and supply of services lead to a factual segmentation because different types of enterprises will use different types of services more often or more intensely. This factual segmentation can be triggered by the demand side (firms needs), as well as by the supply side (PES actively offering special services to certain groups of firms). The PES are quite clear with respect to this aspect of segmentation. As they are interested in good relationships with the enterprises in order to achieve a broad knowledge of vacancies, they concentrate on the firms specific needs. Under consideration of their financial endowment, some PES are able to offer special advisory services delivered to those employers that respond to important medium or long-term issues, like labour shortages due to demographic change or skills developments and training needs of the firm s staff. These services might be directly tied to a certain recruitment process in order to show the expertise and competence to work on other solutions. Since they represent an added value to the enterprises, they are also used as a marketing device in order to get or stay in contact March 2014 11

with employers. As these services require a lot of resources and may refer to specific structural needs of enterprises, they sometimes are restricted to special types of firms. Specific services in Austria and Germany: Qualification counselling and flexibility advice The demographic change, shortages of skilled labour and a need of further education and training represent challenges to a number of enterprises. While large companies are usually prepared for these changing conditions by own human resource strategies, smaller enterprises more frequently lack resources to deal with these challenges. Austria and Germany both are good examples for countries where the national PES supplements recruitment services with additional counselling. Although there no legal segmentation of core services with respect to certain employers, both PES offer advice regarding further training ( Qualifizierungsberatung ). Both PES offers their advisory services to enterprises with less than 50 employees that often do not have many resources for human resource development systems and are on average less engaged in further training (see Hake 2011 and Leber/Stegmaier 2013 for Germany). 7 The Austrian PES helps enterprises to check training requirements, to clarify employer s needs and to choose appropriate suppliers of further training. This advice adds up to a maximum of three days. The German PES supports enterprises in analysing the characteristics of the work force, identifying needs for further training and planning measures and networking with other firms. In Austria, there is also a special advisory service for larger enterprises focusing on measures of a flexible use of human resource ( Flexibilitätsberatung ). It is aimed at enterprises with more than 50 employees that have to deal with volatile workloads, many search processes or larger layoffs. The PES offers different forms of advice that add up to a maximum of nine days and include, for example, services like re-alignment of organisational structures facilitating of employees job mobility within or between firms higher flexibility of working hours diversity management Moreover, the Austrian PES supports all kinds of employers with respect to job rotation. There are also qualification networks where some enterprises co-ordinate their activities to ensure that common training programmes are established and provided. In both countries, there is also a special scheme that supports further training measures for groups of workers which are well-known to be less involved in further training, e.g. women, low-skilled and older workers. In addition, the German scheme focuses on support for SMEs. Thus, advisory needs and investment in the human capital of workers with less advanta-geous employment perspectives may be good reasons for segmenting certain services or ALMP. These specific services for selected enterprises underline the PES objective to become a partner for certain employers with regard to human resources issues instead of being just a service provider for filling vacancies. Again, these activities can be seen as investments in long-term relationships leading to a good market 7 While the size of the enterprise is a rather soft criterion of exclusion in Germany, it is clear-cut in Austria. March 2014 12

penetration of the PES. It is obvious, but nevertheless important to state, that the ability to offer programmes going beyond the core business of the PES but contributing to a good performance and a high reputation depends on the PES endowment with financial and personal resources. As the Slovenian PES is confronted with high and rising unemployment and a cut in human resources they are not able to offer any additional advisory services at all. PES focus on firms with a high number of vacancies. Another form of segmentation can be observed with respect to the acquisition of new enterprises and customer loyalty. As we stated before, it is vital for the PES that they have good knowledge of the vacancies. Therefore, it is especially important to get or stay in contact with firms possessing a high potential of job postings. Austria applies a customer segmentation in order to identify firms with a high number of vacancies. They added the share of successfully filled vacancies as another indicator for the intensity of cooperation and developed three categories of firms with the highest significance for the work of the PES (A-, B- and C- categories). The most relevant enterprises attracted special attention with respect to the intensity and content of the contacts between the PES and the firms. A similar focus on the most relevant enterprises occurs in Slovenia, where 80% of visits to enterprises are dedicated to firms with a high potential of job postings half of them to enterprises with an established customer relationship, half of them to firms that have not used the PES services before. As a consequence, larger companies are visited more often because they have a higher hiring potential than smaller enterprises. In Bulgaria, the PES has established cooperations with key employers on a local level. The German PES considers large companies also as highly relevant partners. In particular, it is argued that large companies are an important factor for building up reputation in the market and getting in contact with SMEs using their supply chains. Finally, the German and the Austrian PES provide special structures for the cooperation with enterprises acting nationwide. A single contact person ( key account manager ) ensures standardised procedures irrespective of the region, eases communication and reduces transaction costs for the enterprises and the PES. PES consider both large enterprises and SMEs as main addressees of their services. A clear focus on the number of vacancies might lead to a concentration on large key-account employers with a high hiring potential and a focus on fast labour market integrations. However, the characteristics of a vacancy (easy vs. difficult to fill), the sustainability of the integration or the firms characteristics (large-scale enterprise vs. SMEs) are also relevant indicators of the performance of the PES. In Sweden, the PES pays attention to those companies that offer a certain number of vacancies or are prone to mass redundancies. However, the Swedish PES also considers SMEs as core clients. Similarly, the consideration of the Slovenian PES ranges between the high number of vacancies of large companies on the one hand and the demand of SMEs for information and consultation on the other hand. In addition to the number of vacancies and the enterprises needs, large enterprises and SMEs differ with respect to the resources PES have to place on the recruitment service. When PES deliver services to large companies, resources are distributed to several vacancies. In contrast, some SMEs use the PES services only once within a couple of years. Furthermore, services to SMEs are mainly delivered by personal contact that requires more resources than e-channels, which are more frequently used with respect to large enterprises (see section 5). The Austrian and German PES plan to shift resources away from enterprises that are well endowed with human resource expertise in order to use these resources for SMEs. For example the German PES states that they were lowering the comprehen- March 2014 13

sive services for temporary work agencies formerly treated as premium customers to a standard level. It also emphasises that it is both the legal duty of the organisation and a reasonable strategy to find vacancies among employers that a. might have problems hiring workers due to a lack of strategic recruitment policy or b. previously disregarded the PES as a partner. Moreover, German PES has changed its target system by taking into consideration the share of vacancies registered by SMEs and the quality of matches with regard to their duration. This replenishes quantitative measures with qualitative measures. Local agencies will have an incentive to allocate more resources to SMEs, while the old target system focused strongly on the number of labour market integrations ( successfully filled vacancies ) and thus set incentives to concentrate on the cooperation with larger companies or enterprises with a high number of vacancies like temporary work agencies. 8 As the new target system has just been introduced it has not been subject to an evaluation yet. Thus it remains an open question how and to what extent local agencies will handle these partly contradicting goals. 8 For example, executive managers of the local employment agencies receive performance-related salaries that refer to the target agreements with the organisation. March 2014 14

5. Channels of delivery PES apply different channels of delivering their services to jobseekers and enterprises: electronic channels like e-mails, e-platforms, e-accounts or internet, call centres, personal contacts to advisors via telephone or face-to-face, visits to firms and print media. In order to choose the appropriate channel the PES primarily consider the type of service and the firm s needs which may vary by certain characteristics like firm size, job requirements or the number of vacancies per year. Obviously cost-benefit-considerations and the desire to allocate resources efficiently within the organisation are important for the PES when actively promoting certain channels. All in all, the use of the appropriate channel can be regarded a part of the service as it affects the cost-benefit-relation both for the PES and the customer. Which channels of delivery do the PES choose with regard to their range of services for employers and does the decision depend on the size of the firm? In addition to our PES interviews we asked the PES to evaluate the importance of different channels for the delivery of different services. With respect to the services we distinguished between seven tasks: labour market information, vacancy registration, technical matching (services directly connected to the matching of jobseekers and vacancies), advisory services with respect to the matching process, administration of measures of ALMP, additional advisory services and the acquisition of new employers. We named seven channels (internet, e-mail, e-platforms, personal visits, telephone contact, call centre and postal contact) and asked the PES to indicate which channels are used and to highlight the (two) most important channel for each activity. PES apply multi-channel strategies. The results of our survey confirm the findings of Pieterson (2011) that PES use multi-channel strategies offering a high degree of flexibility and openness with respect to the preferences of the firms. First of all, it is notable that PES differentiate the use of their channels with respect to the firm size only in exceptional cases. In this respect, the use of the channels is universal, too, although there are differences in the importance of certain channels for SMEs or large-scale enterprises. For example SMEs are often less experienced in using PES services, thus a personal contact to the local office is most important for all kind of services. However, experienced users like large companies or enterprises with a high turnover prefer standardised systems like e-mails, e-platforms or internet instead. As the use of channels only marginally varies between firm sizes within three of the five national PES, figure 2 depicts the use of channels for medium-size enterprises only. As the figure shows, personal visits represent the most widespread delivery channel. In Austria, Bulgaria and Germany, all services are delivered by personal visits. In Slovenia and Sweden, personal visits still apply to the majority of services. Telephone contacts occur relatively often, while postal contacts via letters and print media are only used for a few services in the four countries. The use of the internet and e-platforms varies between the countries to a great extent. The details with respect to the specific services and firm size can be found in annex 1. Figure 3 illustrates how different channels are used for delivering services. As already shown in figure 2, the PES use personal visits and telephone contacts intensely to deliver a variety of different services. Technical matching, `counselling with respect to matching and additional councelling are services that are not provided by personal visits by the all five PES. Four of five PES use the internet to deliver labour market information and conduct technical matching. E-mails are an instrument to both administrate measures of ALMP and acquire new employers. Postal contact is only important for administrative tasks. A further chart about the delivery channels in rela- March 2014 15

tion to specific services is provided in annex 2. It shows how different services are delivered. Figure 2: Which channels do PES use to which extent? The example of mediumsized firms. Legend: The x-axis shows the number of services the respective channel is used for (up to a maximum of 7 services). Figure 3: Service provision by delivery channel: How are different channels used for delivering services? March 2014 16

Legend: The x-axis shows the number of PES that use the given channel for a specific service; further information: Germany does not use call centres at all. Slovenia does not provide additional counselling. Austria and Germany use e-platforms, Slovenia partly Regarding the average of all countries we observe that all channels are used for at least one purpose. Regarding the average of the five countries personal visits are the most important channel followed by personal telephone contact and e-mails while postal contacts are least important. Since each channel is characterised by specific (dis-)advantages, the use of multichannel strategies seems reasonable (Weber 2011). Although there might be favoured channels with regard to certain combinations of services and firms characteristics, the PES state that it is most important to act in a customer-friendly way. The primary goal is to accept the employers needs and to offer a fast and easy access to the services of the PES. Turning away from the averages and looking at the country-specific results reveals some differences in implementing multi-channel strategies. While Austria uses all channels in an extensive way, there is more segmentation of channels in the other countries. Country patterns of delivery channels In Bulgaria, personal visits and telephone contacts are considered most important while call centre and postal contact is only used for single purposes and online accounts do not yet exist. Personal visits are especially important for technical matching, administration of ALMP and new acquisitions, telephone contacts for vacancy registration, counselling with respect to matching or additional advisory services. Labour market information and technical matching are executed mainly via internet. There is just one difference in the use of channels between firm size because e-mails are not used for the administration of ALMP for small firms while it is an important channel for medium and large companies. The Slovenian PES is currently developing an e-account which is not yet active. Except for postal contact, the other channels are used widely. Special emphasis is placed on the role of personal visits and the internet. The internet is mainly used for administrative tasks like labour market information, vacancy registration, technical matching and the administration of ALMP, while personal visits allow counselling with respect to matching and acquisition of new employers. The Slovenian PES hardly differentiates the use of its channels with respect to the firm size. There is just a slightly lower number of channels that is judged as being important for large enterprises. The Slovenian PES also points out that personal visits relatively are more important for the cooperation with small enterprises. The Austrian PES uses the same channels for each kind of enterprise and also does not highlight differences in the importance of specific channels between firm sizes. It also focuses strongly on personal contacts but also highlight the importance of the newly introduced e-accounts. This platform is used for administrative processes like vacancy registration, technical matching or administration of ALMP, but also for counselling activities regarding the matching process. Personal visits are used for all purposes in comparison to e-accounts they are also important for new acquisitions and additional advisory services. In Germany, the differences between services for SMEs and large-scale enterprises are stronger than in the other countries. Personal visits are regarded as very important for every kind of interaction between PES and small firms, but the relevance declines with increasing size of the enterprise. Vice versa, online accounts are considered as useful instruments for medium and especially for larger enterprises but as less important for small firms. While e-mails and telephone contacts are also used for several purposes, call centre activities are no means of communi- March 2014 17

cation with enterprises at all. The internet and postal contacts are merely used for distributing labour market information. In Sweden, different delivery channels are used with respect to enterprises of different size. The Swedish PES considers personal contact very important for small and medium-sized enterprises. It also highlights the use of telephone contacts when it comes to technical matching or counselling with respect to matching in small enterprises. Online channels are more important for larger enterprises: e- mails are used for all services except additional counselling and online accounts provide labour market information, the opportunity for vacancy registration and technical matching. In contrast, online accounts are seen as irrelevant to small enterprises. Face-to-face contacts are important if PES deliver complex and firmspecific services, contact new employers and foster long-term relations. Our interviews reveal the strength of personal interaction with respect to more complex and firm-specific services like advisory services with a strong link to personal interaction. Here, face-to-face-contacts are especially important, but also telephone contacts and e-mails are channels with a certain degree of personal interaction. These channels are frequently used for counselling services with respect to the vacancy requirements and the matching process. To a lesser extent, call centres offer a personal interaction for employers who have administrative or routine questions that do not require firm-specific knowledge. In other cases, the call centre may be a first step towards a more personal contact in order to discuss the firm s requests in greater detail. These findings are in line with an empirical analysis of Behncke, Frölich and Lechner (2008), who argue that the chance of labour market integration increases if caseworkers engage in direct contact with employers. In addition, face-to-face contacts or visits are most suitable for the acquisition of new employers, although the first contact may be initialised by other channels, like e-mails, call centre activities, job fairs or promotion tours. New employers can also be attracted by offering new (e-)services like a data-bank, bringing together all vacancies, unemployed and people employed, but searching for a job which is a future project in Austria. Finally, a personal contact is also an important factor for customer care. Again, personal contact may take different forms with regard to the service needed. While firm-specific solutions and an exchange on future job requirements will need a personal contact there are routine tasks like the posting of vacancies that can be provided via e-channels. As far as the size of enterprises is concerned, PES in Germany, Slovenia and Sweden use direct contacts by personal visits and telephone calls slightly more often when they deliver services to SMEs. Sweden uses e-mail and online-accounts more often for larger enterprises. Some administrative services, like vacancy registration in Slovenia and technical matching in Germany, are provided for large companies by e-accounts, while they are delivered to SMEs by personal visits. Moreover, the German and the Swedish PES consider personal visits an important channel when they interact with SMEs. However, in an overall perspective the differences are quite small. Austria and Bulgaria even do not make any difference between SMEs and large enterprises with respect to the delivery channels of specific services (see annex 1). E-channels may increase efficiency with respect to the provision of information, the execution of routine tasks and the permanent contact between partners. The internet is the main channel for delivering labour market information. This seems reasonable as it offers free access to all information. Therefore, the marginal March 2014 18

costs of informing an additional employer are zero. E-channels also provide the opportunity to execute routine or administrate tasks in an efficient way and are thereby reducing costs of the PES and of the firms. This is especially true for frequent users of the PES services who do not need a personal contact because they know the basic procedures. In this context, the size of the enterprises and the hiring potential clearly matter. Bukowski, Jenkins and Roberts (2010) describe the Swedish PES as an advanced case of service delivery by e-channels. Employers may submit vacancies and look for jobseekers CVs via internet. There are online accounts that can be used by both employers and jobseekers. Swedish PES managers have the impression that these services are often used by enterprises from the service sector, by private service providers for personal assistance, recruiting sales persons and temporary work services. The development of new channels like e-platforms with own accounts for employers may be a good instrument for customer care as it collects all relevant information about a firm s activities and gives the opportunity to execute routine tasks efficiently. E-accounts offer individual access to the PES and constitute a permanent tie between the partners. Nevertheless, especially advisory services still require personal contacts in the future, provided either face-to-face, by telephone calls or at least by an exchange of e-mails with a personal advisor. With an increasing use of e-channels, resources may be shifted to tasks that require intensive face-to-face contacts. All of the PES in our sample state that e-channels have gained importance because efficiency gains can be achieved. So they aim at strengthening these channels for administrative services. This allows to shift human resources to services that are more complex and need a personal contact between advisors and the enterprise, e.g. in advising with respect to tailor-made solutions for vacancies that are hard to fill or HR consulting. Also, the acquisition of new enterprises is time consuming but nevertheless crucial for a good performance with regard to the core objectives of the PES. In a similar vein, this argumentation is put forward by Pieterson and Johnson (2011). They argue that ambiguous and complex services are best delivered by face-to-face contacts, whereas e-channels are appropriate and efficient if services are characterised by a low degree of both ambiguity and complexity. Thus, the more efficient provision of routine services is one requirement in order to reallocate resources. Channels may be applied in a complementary way. Finally it is important to understand that many channels do not substitute each other but serve different purposes. They may act in a complementary way within the course of a customer relationship in building trust, supplying information as well as in counselling and facilitating administrative processes for both employers and PES (de Koning/Gravesteijn 2011). Another example is the use of various channels for the registration of vacancies that can be used by the firms preferences. E-tools offer a fast and easy way to post vacancies for experienced enterprises. Especially in the case of numerous job postings of large companies or temporary work agencies e-channels save resources for both sides. Nevertheless, in many cases the need for advisory services on a personal level still remains, e.g. in order to define the job requirements correctly or to explain the use of ALMP measures. March 2014 19

6. Challenges for the PES and its staff The skills and qualifications of the PES employees are a crucial factor for the implementation of labour market policies at the national, regional or local level. The management representatives in the European PES consider high qualification and both professional and social skills as important prerequisites for successful job counselling for employers. Four of five countries in our sample have special advisors for employers (Germany, Austria, Slovenia, Bulgaria), with respect to the complex issues these advisors have to handle. 9 Only in Sweden, caseworkers are supposed to focus both on jobseekers and employers, like brokers in the real estate market. 10 High qualification and IT-affinity ensure a competent way of handling the challenges of e-channels. Do we face new developments that significantly influence the organisational structure or skill requirements? One trend is the more intense use of e-channels during the last few years. However, although the increasing use of e-channels may result in new job descriptions or training requirements most PES do not regard this technical change as a general problem for the organisation or its staff with respect to their e-skills. The recruitment strategy of PES should ensure that their employees have a high formal qualification or at least sufficient IT-affinity 11 which should enable them to learn and adapt quickly to the new work environment. Thus, skills in using these technologies do not have to be trained intensively. Interestingly, the inner conviction of employees to use online channels and to recommend these technologies to employers is judged to be even more important as the skills themselves. In the German case, PES managers consider it essential to convince their own employees to promote online services actively to employers. This might be due to the fear of PES employees becoming redundant and unemployed themselves. On the one hand, the more intense use off e-tools is one way to increase efficiency and may indeed contribute to a restructuring of the organisation. On the other hand, it ensures that in times of scarcity, public resources can be used for other objectives like more intense advisory services. 12 Professional and soft skills: Customer orientation, flexibility, communication skills and detailed knowledge Thorough employment advisors face increasingly complex tasks that require various skills and competencies. As stated in 2012 by the European Commission, job profiles of employment advisors are slightly less standardised compared to the profiles of counsellors for jobseekers. As far as work placement is concerned, they have to be familiar with employers needs and employees skills, human resources management and administrative and organisational processes. Furthermore, customer orientation, communication skills and detailed knowledge about PES services and labour market programmes are essential to an effective cooperation with employers (European Commission 2012, author: L. Sienkiewicz). Many PES are engaging more deeply in advisory activities, also with respect to specific HR topics like general recruitment strategies, flexibility counselling or qualification counsel- 9 In Slovenia and Bulgaria this specialisation is less clear-cut in small local offices with few employees. 10 Interestingly, there are also some local offices in Sweden who have specialised advisors like in other countries. The Swedish PES estimates that they use 25-30% of their personal resources directly for work with employers (Arbetsförmedlingen Sweden 2010). 11 Sweden states that new employees do need a university degree. German PES hires people with a variety of qualifications, but also has an own University of Applied Science to train young applicants. 12 The Slovenian PES states that they will have to use efficiency gains achieved by a stronger use of e- channels to to maintain the quantity and quality of their core services. March 2014 20

ling. To be treated by employers at eye level is a new challenge for the organisation and its staff. Thus, PES consider it essential to empower their own employees to cope with qualitative changes with respect to the personal contacts with employers, e.g. qualification with respect to business and personal administration or negotiation skills. The German PES mentions a clear focus on the needs of the customer and flexibility. Some countries (Bulgaria, Germany, Sweden) also highlight communication skills, especially when establishing long-term relationships or convincing employers to hire jobseekers with individual shortcomings. In Slovenia, key competences include the skill to cooperate with employers at (personal) visits, negotiations with employers, competence-based interviews for selection procedures and job analyses. Furthermore, knowledge of the legislative framework and the local labour market conditions is of relevance. It is also regarded as advantageous to have at least some advisors on the local level who have working experience in the private sector to ensure that a substantial amount of the aforementioned skills exists. This may also contribute to the objective to become a partner at eye level. Discretion at the regional level and target systems are core challenges. In decentralised organisations like PES, an important challenge seems to be the local implementation of organisational guidelines. In Bulgaria, so called sales teams have been established. They collect and provide regional labour market information and take care of employers individual needs. By expanding direct contacts with employers, the Bulgarian Employment Agency was able to increase the registered job vacancies (HoPES-Working Group, 2013). With respect to its decentralised organisation, the Swedish PES explicitly mentions the challenge of providing its services in the same way all over the country. Certain services and delivery channels, e.g. the use of e-channels are introduced in a quite differing quantity and quality in the local units. This is partly due to recent changes in the organisational structure of the Swedish PES, shifting power to the central headquarter, but maintaining the regional offices. Another example is the use of target systems within the organisation. The PES is able to set incentives by introducing, modifying or abolishing target indicators. This influences behaviour and might lead to conflicts when central objectives collide with local practices or regional characteristics that might need different treatments. In Germany, the PES reforms the target system by replenishing quantitative figures with quality-measures. This may lead to conflicts at least when one allows for a certain level of local discretion. As the use of local labour market knowledge is a basic principle within all PES in our sample, there might be a trade-off between the definition of central goals and the use of local expertise. Adjustments of the organisational strategy may again lead to changes in skill requirements. This becomes obvious within the German system. The strong sales strategy ( Vertriebsorientierung ) meaning that advisors are supposed to clearly focus on getting tangible results (i.e. getting in contact with new employers, acquiring vacancies, filling a vacancy) is supplemented with advisory services, directing resources more to SMEs and achieving stable employment relationships activities that need more intense personal interaction. March 2014 21

7. Conclusion The matching process the PES are engaged in takes place against the background of quite diverse national labour market conditions that lead to different challenges. In general, the PES have to convince employers to cooperate when firms do not have to rely on their services or there is a mismatch between job requirements and jobseekers leading to dissatisfaction of enterprises with the PES services. One important way to react to these challenges is offering additional services for employers. These include financial incentives like wage subsidies for hard-to-place jobseekers, training schemes or special advisory services in order to establish partnerships at eye level. PES consider long-term relationships with firms as a supportive framework in order to achieve their main objectives with respect to matching supply and demand. Mutual trust and regular communication are necessary conditions for a long-term relationship between PES and employers. Advisory services represent a means to both offer an added value and stay in contact with employers. Furthermore, employers may occasionally accept the hiring of second-best workers if best matches are not possible and they consider the PES activities as adequate. All in all, core recruitment services and additional (advisory) services are closely intertwined. The PES in our sample state that almost all services are delivered universally, i.e. they are not restricted to employers of any size or type nor in any sector or region. However, they may be adapted strongly to specific needs as customer orientation is a very important means to achieve the PES objectives. Thus, the use of recruitment services varies by specific needs of enterprises and may result in an unintended factual segmentation of services. PES regard large companies with a high potential of vacancies as important partners but also try to strengthen their relationship to SMEs as this group represents a large share of overall employment. Only in exceptional cases services are used in a segmented way and exclusively address specific groups of firms. The Austrian and German PES, for example, plan to shift (advisory) resources away from larger enterprises that are well endowed with human resource expertise to SMEs that lack these resources. All PES in our sample apply multi-channel strategies offering a high degree of flexibility and openness with respect to the preferences of the firms. Within these multichannel strategy e-channels gain importance because technological change renders routine and administrative transactions more efficient. Especially experienced users like large companies prefer standardised systems like e-mails, e-platforms or internet to reduce costs. PES intend to foster the use of e-channels because it allows to shift human resources to other important services needing personal contact, e.g. complex and firm-specific (advisory) services or investment in long-term relations with employers. In spite of the ongoing technological progress all PES emphasised that personal contacts are still most important for interacting with the enterprises. Although there are certain adjustments between channels, most of them do not substitute each other, but serve different purposes or act in a complementary way. Again, PES differentiate the use of their channels with respect to the firm size only in few cases, but there may be a factual segmentation, e.g. as SMEs need more personal advice within the whole recruitment process. PES state that the shift to an increasing use of e-channels does not constitute a problem for the organisation or the skills of the staff as IT skills are taken into account when recruiting own employees. However, the strategy of becoming a partner at eye level with respect to human resource topics ties up a substantial amount of the staff and requires complex skills from PES employees. This is seen as a bigger challenge with regard to human resource development. Finally we would like to sketch some fields that may require further research: March 2014 22

1. Which limitations exist, when PES use public funds for supporting enterprises within their recruitment processes? When do PES support firms in an appropriate way and when do they subsidise core functions of firms and therefore create deadweight losses? 2. Should PES focus on SMEs or on larger companies? How should resources be divided between both groups? Which risks may result from cutting services for larger employers and devoting the resources to SMEs? How can resources for SMEs be used in an efficient way? 3. How may PES best deal with a possible conflict of interest between quantity and quality of matches? On the one hand a concentration on employers with high numbers of vacancies seems reasonable. It seems also reasonable to aim at fast integrations in order to reduce unemployment and fill vacancies. On the other hand there might be negative consequences as PES will not consider the needs of SMEs adequately and integrations may be only short-run and non-sustainable. 4. How should PES deal with possible conflicts of interest between overall organisational objectives and their implementation in the local job centers? How can headquarters ensure that its strategies are followed without imposing too much restrictions on the local units as some discretion will be necessary to react to local labour market characteristics? How can target systems be designed to achieve an optimum outcome of the whole organisation? All of these proposals for further research deal with the challenges of adjusting PES goals and strategies and with developing adequate actions to achieve the objectives in a decentralised organisation. With regard to a changing labour market environment and the development of new requirements of firms and jobseekers this coordination effort will be a major challenge for the future. March 2014 23

Bibliography European Commission (2011), Effective Services for Employers,Austria Peer Country Paper, Brussels, Authors: AMS Austria European Commission (2011), Effective Services for Employers, Sweden Peer Country Paper, Brussels, Authors: Arbetsförmedlingen Sweden Arbetsförmedlingen Sweden, 2013: Ersättning vid arbetslöshet. Information om arbetslöshetsförsäkringen (German version: Entgeltersatzleistungen bei Arbeitslosigkeit. Informationen über die Arbeitslosenversicherung) Behncke, Stefanie/Frölich, Markus/Lechner, Michael, 2008: Public Employment Services and Employers: How Important Are Networks with Firms? In: Zeitschrift für Betriebswirtschaft, Special Issue 1/2008, 151-178. Bukowski, Graham/Jenkins, Sarah/Roberts, Hazel, 2010: A Qualitative Overview of Vacancy Filling Services for Employers: Target Setting and Performance Management, Department for Work and Pensions, Norwich: Her Majesty s Stationery Office. European Commission (2011), Effective Services for Employers, Germany Peer Country Paper, Brussels, Authors: Bundesagentur für Arbeit Bundesagentur für Arbeit, 2014: Merkblatt für Arbeitslose 1 Ihre Rechte Ihre Pflichten. Council of the Europan Union, 2010: Making Transition Pay EMCO Opinion, The Employment Committee, Brussels, 14479/10. European Commission (2011), How to best structure services for employers?, Brussels, Authors: José Gravesteijn, and Jaap de Koning. European Commission (2012), Effective Services for Employers, Brussels, Authors: José Gravesteijn, and Jaap de Koning. Dietz, Martin/Kubis, Alexander/Leber, Ute/Müller, Anne/Stegmaier, Jens (2013): Personalsuche in Deutschland: Kleine und mittlere Betriebe im Wettbewerb um Fachkräfte, IAB-Kurzbericht, 10/2013. European Commission (2011), The Role of Public Employment Services in Youth Integration, A Review of European Good Practice, Brussels, Authors: Kurt Düll, Nicola/Vogler-Ludwig European Commission (2011), Effective Services for Employers, Bulgaria Peer Country Paper, Brussels, Authors: Employment Agency Bulgaria European Commission (2011), Effective Services for Employers, Solvenia Peer Country Paper, Brussels, Authors: Employment Service of Slovenia European Commission, 2010: Europe 2020: A Strategy for Smart, Sustainable and Inclusive Growth, Communication from the Commission, Brussels, COM (2010) 2020 final. European Commission, 2012: European Vacancy and Recruitment Report 2012, Luxembourg: Publications Office of the European Union. Eurostat, 2011: Key Figures on European Business with a Special Feature on SMEs, Luxembourg: Publications Office of the European Union. European Commission (2011), The Role of Public Employment Services in Extending Working Lives: Sustainable Employability for Older Workers, Brussels, Author: Barry J Hake March 2014 24

HoPES-Working Group, 2013: PES Efficiency Working Group: Final Report, European Network of Heads of Public Employment Services (HoPES). International Labour Organization, 2013: Key Indicators of the Labour Market, KILM 8 th Edition Software [http://www.ilo.org/empelm/what/wcms_114240/lang-- en/index.htm]. Larsen, Christian Albrekt/Vesan, Patrik, 2012, Why Public Employment Services Always Fail. Double-Sided Asymmetric Information and the Placement of Low-Skilled Workers in Six European Countries, Public Administration Review, 90 (2), 466 479. Leber, Ute/Stegmaier, Jens, 2013: Aus- und Weiterbildung in Ost und West: Stufe um Stufe mehren Betriebe das Wissen ihrer Beschäftigten, IAB-Forum 1/2013, 12 17. European Commission (2011), Comparative Paper on Integrated Multi-Channelling, Input to Peer Review Antwerp, Brussels, Author: Willem Pieterson European Commission (2011), Multi-Channel Management: Recent Developments in PES and E-Government, Brussels, Authors: Willem Pieterson, Zachary Johnson HoPES Working Group, 2011: Public Employment Services Contribution to EU 2020, PES 2020 Strategy Output Paper, European Network of Heads of Public Employment Services (HoPES). European Commission (2012), Job Profiles and Training for Employment Counsellors, Brussels, Author: Łukasz Sienkiewicz European Commission (2011), : Integrated Multi-Channeling in PES Services: Finding the Right Mix, Brussels, Author: Tina Weber March 2014 25

Annex 1 How important are different channels for the delivery of different services with respect to the size of enterprises? Please fill in - nothing or 0 if a channel has no or hardly any relevance or - X if a channel is relevant Please also highlight the most important channel(s), for example like this: X (please indicate a maximum of two most important channels). Austria Small enterprises Medium-sized enterprises Large enterprises Services Channels Channels Channels 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Labour market information Vacancy registration Technical matching Counselling with respect to matching Administration of measures of ALMP X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X March 2014 26

Additional counselling Acquisition of new employers X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Legend: Channel 1 = Internet, 2 = e-mail, 3 = e-account, 4 = personal visit, 5 = telephone contact, 6 = call centre, 7 = postal contact / letters / print media March 2014 27

Bulgaria Small enterprises Medium-sized enterprises Large enterprises Services Channels Channels Channels 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Labour market information Vacancy registration Technical matching Counselling with respect to matching Administration of measures of ALMP Additional counselling Acquisition of new employers X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Legend: Channel 1 = Internet, 2 = e-mail, 3 = e-account, 4 = personal visit, 5 = telephone contact, 6 = call centre, 7 = postal contact / letters / print media March 2014 28

Germany Small enterprises Medium-sized enterprises Large enterprises Services Channels Channels Channels 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Labour market information Vacancy registration Technical matching Counselling with respect to matching Administration of measures of ALMP Additional counselling Acquisition of new employers X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Legend: Channel 1 = Internet, 2 = e-mail, 3 = e-account, 4 = personal visit, 5 = telephone contact, 6 = call centre, 7 = postal contact / letters / print media March 2014 29

Slovenia Small enterprises Medium-sized enterprises Large enterprises Services Channels Channels Channels 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Labour market information X X X X X X X X X X X X X X X Vacancy registration X X X X X X X X X X X X Technical matching Counselling with respect to matching Administration of measures of ALMP X X X X X X X X X X X X X X X X X X X X(PARTLY) X X X X X X X(PARTLY) X X X X X X X(PARTLY) X X X X Additional counselling Acquisition of new employers X X X X X X X X X X X X Legend: Channel 1 = Internet, 2 = e-mail, 3 = e-account, 4 = personal visit, 5 = telephone contact, 6 = call centre, 7 = postal contact / letters / print media March 2014 30

Sweden Small enterprises Medium-sized enterprises Large enterprises Services Channels Channels Channels 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Labour market information Vacancy registration Technical matching Counselling with respect to matching Administration of measures of ALMP X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Additional counselling Acquisition of new employers X X X X X X X X Legend: Channel 1 = Internet, 2 = e-mail, 3 = e-account, 4 = personal visit, 5 = telephone contact, 6 = call centre, 7 = postal contact / letters / print media March 2014 31

Annex 2 How are different services delivered? Legend: The x-axis shows the number of PES that provide the given service by using the respective channel; further information: Germany does not use call centres at all. Slovenia and Sweden do not provide additional counselling. Austria and Germany use e-platforms, Slovenia partly March 2014 32