The Active Labour Market Policy Reform Statements and Comments Steven Groenez HIVA, K.U. Leuven 1. Policy context, economic circumstances and institutional/legal background After a long era dominated by a Christian-democratic - socialist coalition, the first purple-green coalition has been established in Belgium in 1999. The active welfare state strategy has become the flagship of the government programme and combines measures to eliminate inactivity traps - in systems of unemployment as well as sickness, disability and early retirement benefits - with personalised services and activated benefits to move benefit recipients into work. As a consequence, Belgium has perceptibly diversified its policy mix within its active labour market policy: where previously it relied to a large extent on direct job creation and labour cost reduction, in recent years much has been invested in route counselling, training, the social economy and the activation of benefits. Influenced by the European Employment Strategy, a gradual shift has occurred from curative to preventive measures. In the past two years however, the overall situation on the Belgian labour market has considerably worsened. The Belgian economy has been sluggish throughout 2002 and the first half of 2003. In 2004, the employment rate should stabilize at 61.3%, after declining for two years. The employment rate of the +55 is still by far the lowest of the EU. Unemployment rose faster than on average in the EU to 7.3% in 2002 and 8.0% in 2003. This year, unemployment will still increase slightly to 8.2%. Upon decomposing the most recent 2004 unemployment figures, a first observation is that shortterm (<1 year) unemployment is decreasing (-4.3% on an annual basis). Youth unemployment on the contrary has risen by 7.4% on an annual basis and amounts 125,079 people. Most worryingly, the increase in unemployment in 2002 has been translated in a sharp increase in the number of long term unemployed (1 year or more). At the end of february 2004, 259,615 people were longterm unemployed (annual rise of 15.8%), of which 167,767 were unemployed for more than 2 years (11,5% rise). Moreover, Long-term unemployment (LTU) represents almost half of total unemployment. Longstanding regional employment disparities persist. Within the institutional framework, competence in employment policy in Belgium has been apportioned between federal and regional authorities. The federal authority retains responsibility for social security (unemployment insurance and social welfare) and labour law. The regional authorities are responsible for labour mediation, vocational training and lifelong learning. The Public Employment Service (PES), as the main public agent in the field of active labour market policy, operates under the auspices of the Regions (Flanders, Brussels, Wallonia), with a limited degree of internal decentralisation to sub-regional level. The services provided by the PES consist of traditional mediation services (registration, information, etc.) and route services (specialist counselling, vocational training, job clubs, etc.). Until recently, the PES had a (quasi) monopolistic 1
position in terms of mediation. At the beginning of 1999, this monopoly position was abolished as private actors were allowed to organise mediation services. 2. Transferability of policy measures Discussing policy innovations in all three regional PES services would not fit the framework of this peer review. Therefore, I have chosen to discuss innovations in the Flemish region as the economic context and policy reforms are most similar to those in Finland. Improving the overall functioning of the PES in a multi-stakeholder and complex network environment is at the core of the modernisation proces of the Flemish PES (VDAB). The recent upsurge in youth and long-term unemployment has more than offset the employment impact of the Belgian active welfare state strategy. This has put under pressure the goal of a systematic intake of all unemployed, as the ratio of unemployed clients to counsellers goes increasing. Moreover, the focus on the preventive approach holds the risk of shrinking training and counselling opportunities for the curative target group of the long-term unemployed. The fact that Belgium (as does Finland) has already met the new benchmark of activating 25% of the long-term unemployed highlights the fact that curative measures still play an important role in employment policy. 1. e-services The Flemish PES can be considered one of the leading organisations in the use of information technology in Belgium and Europe. It has done a great deal of work in the field of e-government over the years. In the mid-90s the modernistation of the PES involved the development of e-based services in the registration and monitoring system. Over the years the use of modern information technology has gradually expanded and has developed into a genuine service channel to job seekers as well as employers. PES modernisation has led to a model of three client oriented complementary service-channels: 1) e-services, 2) call centres and 3) face to face contact and guidance services. Starting from the day of registration, the VDAB encourages job-seekers and employers to do things independently by offering them a range of self-management tools: file manager, training guide, WIS vacancy bank, KISS application bank, VDAB has extended its online services by creating an on-line recruitment tool for employers and jobseekers. Job-seekers have a virtual application space My VDAB where they can manage their CVs, vacancy selections and applications. They can analyse their CVs and compare them with similar CVs or test them against the skills and selection criteria set by employers. At the same time, 'My VDAB' allows employers to manage their job vacancies and CV selections. Job vacancies that are added can be automatically matched with CVs in the KISS database. They can analyse their vacancy and compare them with similar vacancies or test them against the skills and wishes of the applicants. Another innovation since May 1999, is Weblearning, or the offer of training programs through the network or on the Internet, a kind of virtual open and distance learning. Web-learning tutors are trained to provide synchronous support. In 2002, 10,175 course participants followed 508,750 hours of weblearning. 2
These e-services are complemented by a central telephone and e-mail service which is used both for information purposes and for referring jobseekers to the appropriate service counter. This differentiation in service delivery can be seen as a proponent of the two-pronged approach of self-services for the easy-to-mediate on the one hand and individualised approaches to guidance of hard-to-place jobseekers on the other hand. Until now, no evaluation of this policy in terms of effectiveness and efficiciency has been made. 2. Structural employment and integrated service provision (Local Job Shops) The development of Local Job Shops in the Flemish region is rather similar to the development of LAFOS centres in the Finnish case. The reform of the Flemish public employment service (VDAB) has also led to more focus on the subregional and local needs and the establishment of local job shops. Currently 122 job shops have been installed, the Flemish government aims to have a total of 140 of these local job shops all over Flanders by the end of 2004. These one-stop-job-shops have a double function: to provide integrated basic services to all job-seekers and employers under the direction of the VDAB (one-stop job shops); to develop and support local service employment under the direction of the local authorities (develop the demand side). This development must also be seen as a reaction to the observation that increasing numbers of actors were joining forces in providing integrated approaches to jobseekers. These spontaneous forms of co-operation were fairly varied, ranging from occasional negotiations over regular, joint consultations to close co-operation governed by an agreement. From 1998 onwards, the Flemish government has used employment covenants to strengthen existing co-operation initiatives and to promote the development of local employment policy. In a first stage, local employment counters (LEC s) were established. The LEC s were distinctive in that the municipalities could voluntarily choose to take part in the project. Integration was actually put on the back burner given that only a number of services were combined under one roof but one single file was not used, an integrated approach was not assumed and no integration of basic services took place. The LEC s merely offered a front-line service where the job-seeker could register and be referred on to existing local facilities (VDAB, Public Welfare Centres (PWCs), third parties, etc.). As it is mentioned in the Finnish papers, the potential breakdown of service delivery in route counselling deserves special attention. Crucial in the application of the one-stop shop model is the development of an on-line customer monitoring system (1 file per client). The ESF Objective 3 programme has been an important catalyst in the development of pathway guidance/route counselling as a new guidance concept for the unemployed and the development of an appropriate customer monitoring system. In this monitoring system it is the duty of the PES to monitor the process of route counselling. The individual jobseeker can be tracked from entry into the register until successful out-flow. All different actors involved in providing services to the client can register which actions have started (early diagnosis of individual needs, different tailor-made services). As the service process extends over time, the PES periodically checks the progress made. As a result, the PES can identify individual stand-still or dropout. Special attention has been given to privacy issues and PES can block access to a number of history fields. 3
Supporting job creation in the local economy and in the third sector is increasingly stressed in current policy development as it has an important role in providing a pathway to work for the longterm unemployed. Job creation in neighbourhood services is encouraged using a service voucher system. A service voucher is a subsidized, simple instrument used to pay domestic assistance. Next to job creation, the aim of this measure is to combat moonlighting and to respond to the demand for reasonably priced personal services. This policy has also a very important gender dimension as 70% of the activated unemployed are women. The organization of the matching of the demand and supply of these services is one of the main tasks of the 'local job shops'. Compared to the Finnish LAFOS centres, the Flemish local job shops only provide integrated services directly related to employment. As is clearly stated in the Finnish papers, the increased heterogeneity amongst the long term unemployed and the multidimensionality of the problems these people face asks for a more holistic approach to activation. Thus, a major area of attention for the local job shops is to fit in welfare organisations which are not themselves part of the joint venture. However, the present discussion is heavily focused on the mutual relationship between VDAB and local governments. As a result, the debate concentrates too much on the division of labour, which rapidly boils down to a splitting up of tasks. The integration of these services on the local level is hindered by two factors: 1) the institutional division in labour market mediation for the unemployed (by PES) on the one hand and welfare recipients (by PWC) on the other hand. The Belgian unemployment system and the social assistance system are rather autonomous, with their own policy strategies, policy delivery institutions, activation instruments and financing. The second obstacle is that different objectives and expectations exist in the two systems. Activation towards the labour market is not a priority objective for every PWC as it propagates a more welfare oriented approach to integration. Hitherto the central government has been pursuing a two-track policy: on the one hand the federal authorities have further strengthened the employment-oriented instruments available to the PWCs, and on the other hand the regional governments are taking more and more initiatives aiming to coordinate the competent institutions (PES and public welfare centres). As a result, coordination remains an important issue. 3. Policy issues and future developments Another feature of the PES modernization process has been the seperation between the commercial activities of the public employment service and its public services. The result was the creation of the T-group corporation, that consists of temporary agencies and consulting- and outsourcing services of the public employment service. The PES clearly wants to remain the key player in labour market mediation, but it is faced with problems of capacity and a stock of long term unemployed. Partly due to the shift to a more preventive policy, the Flemish PES is developing the gateway model in which possibilities of tendering for the long term unemployed (starting with the + 5 year unemployed) are examined. As mentioned before, an important particularity in the Belgian case is the fact that unemployment benefit delivery (federal level) and labour market mediation (regional level) are separated. In February 2004, the Belgian Minister for Employment and the social partners reached an agreement on a reform of the unemployment benefit system. The reform aims at activating the unemployed as well as preventing long-term unemployment by linking the receipt of unemployment benefit more strictly to active job-seeking. The unemployed will be checked more frequently on labour market 4
availability and receive intensive counselling. The new system will be implemented in three stages according to the capacity of the regional unemployment offices to organise a sufficient supply of personalised action plans and the capacity of the federal unemployment office to organise the screenings. 5