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SSH perspectives on the new policy initiative for the Long-Term Unemployed

Interview with Prof. Martin Heidenreich, FP7 projects coordinator

Photo of the Interviewee
Martin Heidenreich
On September 17 the European Commission adopted a proposal for a Council Recommendation on the integration of the Long-Term Unemployed (LTU) into the labour market. Long-term unemployment is one of the key challenges of the jobs and growth agenda set out in the Commission’s Annual Growth Survey 2015 . President Juncker’s Political Guidelines identify the toll of unemployment as a key political challenge and the initiative is in line with the President's vision for a "Social Triple A".

The objective of the Recommendation is to provide Member States with guidance on service delivery in order to increase the rate of transition from long-term unemployment to employment. Specific challenges addressed include: a lack of support for the long-term unemployed to obtain work, which lowers the registration with the Public Employment Services (PES) in some Member States; ensuring that support is relevant to employers' needs and suited to the individual; and the discontinuity in the delivery of services when unemployment benefits end.

DG RTD contributed to the preparation of this policy initiative with scientific evidence provided by projects funded under the 7th Framework Programme for Research and Technological Development (projects: COPE, LOCALISE, INSPIRES).

Martin Heidenreich was the coordinator of FP7 projects Combating Poverty in Europe (COPE), Local Worlds of Social Cohesion (LOCALISE). He is Professor of Sociology with special attention to Social Stratification at the Carl von Ossietzky University Oldenburg, Germany. He is Jean-Monnet Chair for European Studies and founding director of the Jean Monnet Centre for Europeanisation and Transnational Regulations (CETRO).

 

The Commission's initiative for integrating the Long-Term Unemployed (LTU) in the labour market is based on the principle of inclusive activation. You have been the coordinator of two FP7 (COPE, LOCALISE) projects which analysed such public policy approaches in a (European) comparative perspective.
So what are the elements of inclusive activation? And what improvements do they aim to make in the lives of vulnerable citizens (not only LTU)?

Active inclusion, the combination of an adequate income support, inclusive labour markets and the access to quality services, is a well-reasoned strategy which the Commission proposed in 2008. Politically, it implies the extension of activation principles to social assistance recipients (long-term unemployed and other groups), who are more distant from the labour market and who are often characterised by multiple employment barriers (such as low qualifications, health problems, alcoholism, addiction etc.). Therefore, a broad array of social, educational, health and rehabilitation services in addition to classic employment measures (such as training and placement and standard income support) is an indispensable element of the strategy. Social services may comprise provision of care (to children, the sick, the disabled or the elderly), assistance in carrying out daily tasks, rehabilitation programmes, mobility support, assistance with moving houses, vocational training, placement services and job-search assistance, housing benefits, social housing, rehabilitation support for alcohol and drug abusers, counselling, day shelters etc., which focus on the ‘people furthest from the labour market’. These services make – in addition to the necessary income maintenance function which for example does not exist in Italy or Greece – an important contribution to the lives of vulnerable citizens (not only LTU) by supporting their (re-) integration into work or very often also into some kind of assisted social activity which can break their isolation – even if it does not have an explicit employment focus.

A crucial element in the Job Integration Agreements foreseen by the initiative is the closer coordination of social and employment services? How can we make sure that this is going to be implemented?

The administrative competencies and resources required for activating the most disadvantaged groups are highly fragmented. This is a result of the heterogeneous problems faced by the unemployed as well as the varied service responses needed to mitigate them (such as placement services, financial support, education and training, health and psychosocial support, child and elderly care, housing and counselling). Consequently, the following is required:

  • inter-organisational coordination among public, private and third-sector actors driven by different logics (rule-driven, profit-driven and solidarity-driven) and modes of operation (hierarchy, market, network)
  • inter-organisational coordination among service agencies operating in different policy fields through national coordination, (decentralised) organisational integration in one-stop shops, or decentralised, network-based forms of collaboration
  • inter-organisational coordination among different political and administrative levels and their respective resources and competencies

The question is: What are the necessary and sufficient conditions for a successful reintegration of the LTU in the labour market and society?

  1. In general, it is much easier to point out what does not work than to point to what works. Examples of dysfunctional approaches are the French millefeuille approach where many different organisations deal in an uncoordinated way with different problems of the socially excluded. Also the strong reliance of the Italian and Polish system on families and charity organisations for the inclusion of the people most distant from the labour market are not a promising solution to active inclusion.
  2. Decentralisation: Surprisingly, also the decentralisation of competencies to the local level is not a magic bullet against the challenges of fragmented competences and heterogeneous services. On the contrary, empirical observations in two countries with a decentralised implementation system (Italy and Poland) show that decentralisation may even create additional problems. In Italy, responsibilities for the implementation of labour market policies are mostly situated at the provincial level while responsibilities for social services are located at the municipal level. A similar separation can be observed in Poland, where labour offices (responsible for benefit payment, placement services and vocational counselling) are situated at the local county (powiat) level while social services are provided by Social Assistance Centres (SACs) at the lower district (gmina) level. In both cases, the coordination of decentralised social and employment policies has proven very difficult or even non-existent due to multilevel power struggles. Therefore, decentralisation provides a context rather than a solution to the fragmentation and complexity of competences in the field of activation policies.
  3. One-stop shops: One-stop shops that deliver not only active labour market policies but also other employment and social services, such as the British or German jobcentres are attempts at ‘systemic coordination’. Sometimes, these one-stop shops aim at a clear, performance indicator-based integration of the socially excluded. This however might result in "creaming" effects, because only the groups closer to the labour market might receive meaningful support. Therefore, the targets of one-stop shops should include not only labour market reintegration aims, but also social aims focusing on the pre-labour market inclusion of the persons furthest from the labour market.
  4. Even more surprisingly, there exist functionally equivalent solutions to the close coordination between employment and social services: The most successful case in our sample, the Swedish one, is characterised by universal access to social and employment services in combination with a high level of decentralisation and local discretion in the fields of income provision and local activation. Social workers have high discretionary powers in assessing to which extent a person is entitled to social assistance. However, the dual structure of Active Labour Market Policy (AMLP) provision between the Public Employment Services (PES) at the national level and the municipalities at the local level comes along with a lack of coordination and cooperation. Especially the services of the PES are difficult to access for those beneficiaries farthest from the labour market. Nonetheless, although social services are not directly linked to social assistance, they are broadly accessible to all citizens. Therefore, a universalist policy might be a functional alternative to a systemic coordination of employment and social services.

It is thus hard to formulate general policy conclusion out of this. Coordination, decentralisation, one-stop shops, the techniques of new public management and marketisation are convincing organisational solutions to the problem of integrating the most disadvantaged groups. But the application of these organisational strategies requires a deliberate focus on the needs, handicaps and capabilities of precisely the most disadvantaged groups in order to avoid exclusion and creaming processes.

Concerning actual implementation I cannot give a definitive answer. I would suggest the development of a paper on organisational strategies which discusses in detail the opportunities and potential risks of the five governance principles just mentioned. In any case, they require a farewell to a solely economically driven activation concept since the cost-benefit analysis of activating the most disadvantaged persons will often be negative.

The initiative aims to establish a better link to the labour market e.g. by better services to employers. In what ways will this assist the integration of the LTU?

A fundamental problem affecting cooperation with employers in relation to reintegrating the long-term unemployed into work is that LTU persons very often have complex problems besides unemployment (e.g. depression, ill health, substance abuse, childcare or other family-related problems, lacking mobility, low or obsolete skills etc. – which is why they remain long-term unemployed in the first place). Hence, employers generally prefer recently unemployed job applicants over long-term unemployed ones (at least whenever they have a choice, i.e. when there is no shortage of labour). According to our interviewees not even wage subsidies are likely to significantly alter these preferences, with the exception perhaps of very low-skilled positions where employers might be incentivised to grant temporary employment contracts to a string of LTU persons, thus benefitting from consecutive wage subsidies but not actually providing sustainable employment. So it would seem that conventional approaches to employer-cooperation cannot help many LTU back into sustainable employment – the gap between the professional/social capacities of long-term unemployed persons and employers’ needs is often simply too large.

Furthermore, it might even be detrimental to the relationship between public employment agencies and employers if the former do not honestly inform the latter about the shortcomings of their LTU clients. As a German caseworker told us: “Some of them are burnt children, they no longer want to take on our long-term unemployed clients”. Hence, when it comes to the specific group of the LTU, we believe that an employer strategy that builds on the following elements would be more promising than conventional job placement strategies:

  • the creation of personal networks between employment agency staff and employers
  • honesty towards employers about clients’ shortcomings but also emphasis on individual clients’ strengths, skills and motivation
  • appeal to employers’ social consciousness and willingness to “do something good for society”, possibly supported by public initiatives that promise publicity to employers who willingly take on long-term unemployed persons. Surprisingly, employers often discover hidden capabilities and strengths in the long-term unemployed
  • flexible support measures for employers that take on LTU clients, i.e. not only wage subsidies but also training budgets, on-the-job mentors, cultural coaches that can accustom immigrant clients to the domestic work culture, etc

COPE and LOCALISE have extensively studied potential barriers to the implementation of such innovations in Europe but also success factors.
What are the lessons for European policy makers? And how can we avoid extrapolating from only a small number of success cases?

To begin with your second question, we can unfortunately not guarantee that our findings from 18 European cities/regions in six countries in the LOCALISE project, and five European cities/regions and countries in the COPE project, can be fully generalised. However, the fact that certain policy coordination/implementation problems were evident in various cities and countries indicates that these issues may be of a more general nature and should therefore be tackled not only by national policy-makers but also at the European level. In any case, the idea of representative results based on a high number of cases is misleading in our case. The analysed cities are not independent of each other since the national context has an overarching importance for the local organisation of active inclusion strategies. Therefore, we are confident that our analyses give a good impression of the situation in at least France, Germany, Italy, Poland, Sweden and the UK.

In particular, we found that the link between employment services and social services – the latter of which are vital for the job insertion of LTU – is insufficient in practice; apart maybe from Sweden where universalist social services offer almost everyone access to employment and social services despite the lack of a formal policy link. Hence, a main policy recommendation emanating from LOCALISE and COPE is that employment and social services should be integrated more closely in Europe, not only in policy terms but also, and especially, at the implementation level. For this, new organisational forms (such as decentralisation, one-stop shops, inter-ministerial links, centrally-induced coordination among public, private and/or third-sector local actors etc.) are necessary - apart from sufficient service budgets and flexible funding mechanisms/data-security rules which allow the pooling of resources and the sharing of client information across organisational boundaries. Also a sufficient degree of local discretion in developing holistic services for the LTU may be helpful, possibly assisted by measures that facilitate the development and dissemination of integrated service measures at the local level (e.g. the central evaluation and dissemination of “best practices”, special performance targets for the labour market or societal integration of LTU, etc).

Another important point is that unemployed persons with multiple social problems need tailor-made, personalised services that focus not only on labour market integration, but also on other social problems. Personalisation was, at least in the five local entities under study in the COPE project, most successful in those cases where social workers were involved in the process, in addition to (or even instead of) caseworkers from the employment services. However, personalisation must not only be a question of personal resources and individual commitment, but should also be enabled by institutional structures such as good qualifications, clear competence structures, stable employment conditions for caseworkers/social workers, and sufficient financial resources (especially in order to ensure a good client/caseworker ratio and a broad portfolio of “enabling” social and employment services).

Finally, at the European level policy-makers should ensure that EU policy initiatives and ESF funds trigger sustainable service integration structures down to the local level. This might be achieved by establishing local multi-stakeholder observatories that serve not only as policy development platforms but also as communication channels between policy practitioners and the EU.

In your experience as coordinator of two FP7 SSH projects what can the social sciences teach policy makers about inclusive activation? What is their value-added when it comes to designing policies for the vulnerable?

One possible lesson would be that there is no “one best way” to the labour market and societal integration of the most vulnerable groups. We have tried to show this by identifying five components of an “ideal” active inclusion strategy: Coordination, decentralisation, one-stop shops, the techniques of new public management and marketisation. All these strategies may be effectively and sometimes even efficiently used for the integration of the most disadvantaged groups, but it is also always possible to use these organisational strategies or governance instruments in a way that leads to exclusion and creaming processes.

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