Active labour market policies

From Wikipedia, the free encyclopedia

Active labour market policies (ALMPs) are government programmes that intervene in the labour market to help the unemployed find work. Many of these programmes grew out of earlier public works projects, in the United States particularly those implemented under the New Deal, designed to combat widespread unemployment in the developed world during the interwar period. Today, academic analysis of ALMPs is associated with economists such as Lars Calmfors and Richard Layard.[1][2] Demand-side policies are policies used by the government to control the level of Aggregate demand (AD).

Active labour market policies are prominent in the economic policy of the Scandinavian countries, although over the 1990s they grew in popularity across Europe. Notable examples include the New Deal in the UK and many welfare-to-work programmes in the US.

Origins of ALMPs[]

The first active labour market policy measures date back to 1951 with the creation of the Rehn-Meidner model in Sweden developed by two economists from the social democratic trade union movement to modernise post-war Swedish industry and enhance productivity by combining a unified wage policy of solidarity which, as it progressed centrally, eliminated the least competitive industries among the country while offering a substantial retraining package to the workers thus laid off so that they could join the more modern and efficient industries.[3]

Attempts at active labour market policies were also made in Italy in the 1950s to train low-skilled workers in the south to join dynamic factories in the north.

Concept of Social Investment[]

Active labour market policies are based on the concept of social investment, which rests on the idea of basing decision-making on the welfare of society in quantifiable terms, by increasing the employability, incomes and productivity of economic agents, so this approach interprets state expenditure not as consumption but as an investment that will produce returns on the welfare of individuals. The adoption of this concept has thus added to the traditional task of social policy to maintain income levels that of promoting labour market integration by removing barriers to entry through state intervention.[4]

Program types[]

According to Giulano Bonolli, there are four main categories of ALMPs:[3]

  • Incentive reinforcement: refers to measures aimed at increasing the work incentives of social benefit recipients. It consists of a negative incentive component which aims to shift people from welfare to work by reducing the amount and duration of passive benefits such as unemployment benefits in order to exert a stimulating pressure and accelerate the job search process. This is an approach particularly applied in liberal Anglo-Saxon countries such as the United States or the United Kingdom and more recently applied in Germany with the Hartz laws of 2003-2005 which considerably weakened the level of social assistance for long-term job seekers. A variant of this category takes the form of in-work benefits, which aim to encourage the acceptance by the recipient of low-wage work in order to eliminate the poverty trap phenomenon, which can lead recipients to prefer to live on social assistance, even if it is low when the difference between the passive and in-work benefit level is not sufficient. Thanks to this additional assistance the market income level is compensated by social transfers.
  • Public employment services, such as job centres and labour exchanges, help the unemployed improve their job search effort by disseminating information on vacancies and by providing assistance with interview skills and writing a curriculum vitae.
  • Upskilling : This category is based on a human capital investment approach, which aims to adapt workers' skills to labour market requirements through measures that may take the form of state-subsidised classes and apprenticeships helping the unemployed improve their vocational skills as a way to promote access to the labour market for workers with outdated skills or from certain disadvantaged groups such as early school leavers with few qualifications. It is widely applied in the Nordic countries and particularly in Denmark where it forms the core of the flexi security model which focuses on the empowerment of jobseekers by funding extensive training programmes which are accessible or even compulsory after one year of unemployment. The provision of basic education services can also play a role in improving human capital for certain categories such as recently arrived immigrant workers, Germany thus provided in the past few years German language skills courses that concerned 170 000 people, most asylum seekers in 2017 with efforts made to involve them into preparatory traineeship,[5] These measures have had  the effect of increasing their productivity, reflected in the fact that immigrants with good German writing skills see their wage gap with natives reduced by 10%[6]
  • Employment subsidies, either in the public or private sector, directly create jobs for the unemployed. These are typically short-term measures which are designed to allow the unemployed to build up work experience and prevent skill atrophy.

The politics of ALMPs[]

A number of authors[7] have argued that countries with stronger left wing political parties and trade unions have more developed ALMP. On the other hand, social democratic parties may not promote ALMP if their constituents are well protected workers and hence face little risk of being unemployed.[8] More recently, the notion that different types of ALMP have similar political determinants has been contested.[3]In the United States and Great Britain, fragmented and under-resourced ALMPs have been attributed as a factor in the rise of populist backlash politics in the Rust Belt and post-industrial northern England during the mid-2010s.[9][10][11]

Levels of Implementation[]

Active labour market policies in general are mainly prevalent in the Nordic countries (with the exception of Norway), notably in Denmark where such expenditure represented almost 2% of GDP in 2017 compared to an OECD average of 0.52%[12] this same year whereas on the contrary, Eastern European countries invest less in these policies. (with the exception of Hungary).

See also[]

References[]

  1. ^ Calmfors, L. Active labour market policy and unemployment: a framework for the analysis of crucial design features, OECD Economic Studies, 1994
  2. ^ Layard, R., S. Nickell and R. Jackman, Unemployment: macroeconomic performance and the labour market, Oxford University Press, 1991
  3. ^ a b c Bonoli, G.The political economy of active labour market policy, Politics & Society 38(4): 435-457, 2010
  4. ^ Giuliano., Bonoli (2013). The origins of active social policy : labour market and childcare policies in a comparative perspective. Oxford University Press. ISBN 978-0-19-164853-3. OCLC 834401920.
  5. ^ Degler, Eva; Liebig, Thomas; Senner, Anne-Sophie (2017) : Integrating Refugees into the Labour Market - Where Does Germany Stand?, ifo DICE Report, ISSN 2511-7823, ifo Institut - Leibniz-Institut für Wirtschaftsforschung an der Universität München, München, Vol. 15, Iss. 3, pp. 6-10
  6. ^ Beyer, Robert (2016). "The Labor Market Performance of Immigrants in Germany". IMF Working Papers. 16 (6): 1. doi:10.5089/9781498376112.001. ISSN 1018-5941. S2CID 89604494.
  7. ^ Boix, C. Political parties, growth and equality : conservative and social democratic economic strategies in the world economy, Cambridge, Cambridge University Press, 1998
    Esping-Andersen, G. The three worlds of welfare capitalism, Cambridge, Polity, 1990
    Huo, J., M. Nelson, and J. Stephens, Decommodification and activation in social democratic policy: resolving the paradox, Journal of European Social policy 18: 5-20, 2008
  8. ^ Rueda, D. Social democracy inside out. Partisanship and labour market policy in industrialised democracies, Oxford University Press, 2007
  9. ^ Dennis Snower (2016-11-08). "The US' failure to provide vocational training is a massive policy failure which supports Donald Trump". London School of Economics US Centre.
  10. ^ Pacific Standard staff (2017-01-24). "This chart helps explain why people in the Rust Belt are fed up". Pacific Standard.
  11. ^ "Conference report: Brexit and the economics of populism" (PDF). Centre for European reform. 2016-12-05. p. 11.
  12. ^ "Active Labour Market Policies: Connecting People with Jobs - OECD". www.oecd.org. Retrieved 2021-04-30.

Further reading[]

External links[]

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