Session 2: Active restructuring approachesThe financing and operation of ALMPs during the crisis ....

Session 2: Active restructuring approaches

Chair: by Marc DE VOS, Ghent University and Itinera Institute (Belgium)John HURLEY - Eurofound

Frank TROS - University of Amsterdam, The NetherlandsLieve DE LATHOUWER - Flemish Age and Employment resource centreRoger BLANPAIN - K.U. Leuven, Belgium and University of Tilburg, The

Netherlands

The financing and operation of ALMPs during The financing and operation of ALMPs during the crisisthe crisis

Presentation at ALMPPresentation at ALMP--2020, Antwerp, 28 Oct 20102020, Antwerp, 28 Oct 2010

John HurleyJohn Hurley

Research Officer, EurofoundResearch Officer, Eurofound

Presentation

• Summary report: “Financing and operation of ALMPs during the crisis”

• Request to Eurofound from EESC-LMO in May 2010• Involve Eurofound’s national correspondent network

on an adhoc basis to submit information updates on ALMP developments in their countries– BG, DE, DK, ES, IE, LT, PL, SE, SK, UK

• Finalised in August and presented Sep 1st 2010

Active labour market policies

• Job matching, guidance and counselling (services)• Training• Specific policies targeting risk groups• Employment subsidies• Public employment

But distinctions between PLMP and ALMP not always clear (services/sanctions, short-time working …)

Change in emp levels in manuf / construction 2008Q1-2010Q1 (2008Q1=100)

20

40

60

80

100

120

LV IE EE LT ES DK BG UK LU PT GR HU AT CY NL FI SISE RO FR CZ DE IT PL SK MT BE

Construction Manufacturing

Expenditure on labour market policies

Expenditure on LMPs as % of GDP, 2008

0.00.5

1.01.5

2.02.5

3.03.5

Estonia

Malta

United

Kingdo

mRom

ania

Cyprus

Latvi

aSlov

enia

Czech

Rep

ublic

Greece

Lithu

ania

Slovakia

Hunga

ryBulg

aria

Luxe

mbourg Ita

lyPort

ugal

EU27Pola

ndAus

triaGerm

any

Spain

Irelan

dFranc

eSwed

enFinl

and

Netherl

ands

Denmark

Belgium

Supports (PLMP)

PES services

Measures (ALMP)

Within ALMPs, training attracted nearly 40% of total funding in 2008 and employment incentives nearly 25%.

Recent developments in spending Shifts from ALMP to PLMP: Lithuania

59,1

64,4

61,5

65,9

70,2

52,8

22

40,9

35,6

38,5

34,1

29,8

47,2

78

0% 20% 40% 60% 80% 100%

2003

2004

2005

2006

2007

2008

2009

Active LMP Passive LMP

In some CEEC member states, important role of ESF in ALMP funding ..

0

20

40

60

80

100

120

140

160

2008 2009 2008 2009

SK (m Euro) LT (m LTL)

State

ESF

Denmark: stable share of ALMP spending

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2007 2008 2009 2010

Activation measures (inc introduction to w ork measures)

Incapacity / rehabilitation benefits

Cash / unemployment benefits

Poland: rising share of ALMP spending

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

8,000.00

2004 2005 2006 2007 2008

PLMPALMP

Funding developments

• Partial evidence of shift to PLMP funding in those countries where unemployment has risen rapidly – especially the CEEC countries– Crowding out?

• … but ALMP spending has held up in Denmark, Sweden, Germany and Poland

• Training: receives c.40% of ALMP funding. Costly. Evaluations of employment impacts are lukewarm … but obvious advantages in a downturn.

Declining effectiveness of (A)LMPs in a recession: outflow rates in Sweden

ALMPs: measures

• General shift to ‘services and sanctions’ measures– Relatively inexpensive, positively evaluated– More conditionality, more supervision, more sanctions

• Youth measures– Accelerated activation– Redirect to education if f/t education incomplete (NL, DK)

• Long-term unemployed– DK: screening of basic competences, additional funding of

mentoring / business networks– SE: “Work and development guarantee”. 3-phase programme

ALMP delivery

• Decentralisation• Integrated programming – response to fragmentation

of existing instruments, and of political/administrative control

• Private sector involvement• Extending scope of ALMP measures to cover the ‘at-

risk employed’ as well as the inactive• Declining differentiation between insured and non-

insured unemployed

Summary conclusions..

ALMP funding• There is some evidence – from a limited sample of countries –

that unemployment benefits have been accompanied by reduced active labour market measure expenditure in member states where unemployment has increased more rapidly during the economic crisis.

• The importance of the European Social Fund as a source for ALMP funding has increased during the crisis.

• Active labour market policy expenditure held up well or increased in countries where the employment impacts of the crisis have been less marked, ie. Germany and Poland

Summary conclusions

ALMP operation• Trend towards conditionality of benefit entitlements,

greater supervision, • Immediate or accelerated activation has become

commonplace especially for younger unemployed. • Fragmentation of ALMP measures -- moves to

integrate• Activate the inactive, at risk employed and not just the

unemployed

Background report: reference

Financing and operating Active Labour Market Policy during the recession

Link: www.eurofound.europa.eu/publications/htmlfiles/ef1066.htm

Thank you!

Summary conclusions..

ALMP evaluation• Recent evaluations of ALMP effectiveness tend to favour

general ‘sanctions and services’ measures from a point of view of cost-effectiveness as well as positive employment impacts.

• Training and subsidised employment in private firms are generally evaluated positively though often with small positive effects

• Public job creation measures tend to have little if any positive employment effect.

• ALMP effectiveness is likely to diminish during a downturn as job placement possibilities dwindle.

Frank TROS University of Amsterdam, The Netherlands

Restructuring and job-to-job policies in the NetherlandsDr. Frank Tros, University of Amsterdam

ALMP EU-2020 Congress, Antwerp, october 28th, 2010

Typ hier de footer 21

Focus/criteria restructuring and (good) job-to-job policies

1. Not just flexibility/mobility, but also security in employability/transition/employment

2. Early risk intervention and anticipating employability policies in case of restructuring

3. Involvement of workers’ representatives and private parties and incentives for employers

Typ hier de footer 22

Anticipation

No concrete risks

HRM / CLA

Prevention

Threat dismissal

Reorganisation/ Social plansMobility centres

Curative(Old’ employer)

In dismissal procedureExtended notice period

Social plansMobility Centres

Curative(Unemployed)

No link with employer

UWV (PES)Private org.

Typ hier de footer 24

Anticipation

No concrete risks

HRM / CLA

Prevention

Threat dismissal

Reorganisation/ Social plansMobility centres

Curative(Old’ employer)

In dismissal procedureExtended notice period

Social plansMobility Centres

Curative(Unemployed)

No link with employer

UWV (PES)Private org.

Typ hier de footer 25

Characteristics / collective dismissals in NL

Unemployment rate: 5.6% (EU 9.5%)

Strictness EPL collective dismissals: 3.00 (OECD avg 2.98)

Permission system PES

Selection individuals: reflection of age-composition work force

Obligation to involve trade unions to negotiate about social plan

Knegt&Tros, 2007; UWV, 2010) 26

Dismissal law in discussion

High dismissal costs for employers (research HSI):25.000 E each case (coll + ind dismissals)3.5-4.0 billion E yearly on national level

Passive character of these costs (see following slide)

28% of Dutch workers is flexible (excl. part-time)! Outside jobprotection; first victims of the crisis!

Knegt & Tros, 2007, HSI 27

Average compensation by dismissal in the NL (incl. cases without any compensation, N=1.044)

0

2000

4000

6000

8000

10000

12000

Severance payments Outplacement Education

Typ hier de footer 28

Integrating dismissals with employability?

A. Flexibilisation/deregulation dismissal law (where is compensating security?)

B. Invest severance payments in employability individual learning accountseducation and job-to-job facilities in social plansseverance pay depending on employability investments/labour market position/C. Transition period: extension employment contract after dismissal till new job

All not (yet) solved in Polder Model: no consensus

Typ hier de footer 29

Dutch ALMP measures after financial crisisKeeping people in their jobs

Tempory working time reduction / Part time Unemployment Insurance Act (condition of training).90% stay employed, rather low training investments.Introduction local Labour Mobility Centres

Facilitating work-to-work transitionsLocal projects Labour Mobility Centres to support job-to-job policiesTemporary 650 extra ‘work coaches’ PESRetraining bonus, recognition-of-obtained-competences trajectory

Typ hier de footer 30

Labour Mobility Centres/‘work coaches’

Top-down installation MC’sBottom-up inspiration (Automotive / sectoral initiatives)Bottom-up functioning (33 local MC’s)

Approach: public-private networks at local levelProject-based ‘quick response service’ / more preventionFast outplacement trajects

Some monitoring, but not really evaluation studies

March 2009 – may 2010 (total PES, incl. ‘zelfredzamen’ ):

18.000 preventive work-to-work placements

141.000 placements withing 3 months after dismissal

Agreements with 1350 companies

Low use of retraining bonus and other education subsidies; difficulties companies with training condition parttime unemployment

Source: UWV/MinSZW

De Kok et al, 2007 (RWI) 32

Towards activating social plans in case of collective dismissal and restructuring ?

All social partners: ‘priority for job-to-job policies’Permissive legislation: no judicial review of plans½ of plans agree on extension period of notice for outplacement: average 9 months.2/3 of social plans agree on educational budgetsEmployability paragraphs in CLA’s (prevention)Bottlenecks: only 100+ companies; no trade-off between (high) severance payments and employabily investmentsGrowing employability paragraphs in CLA’s (prevention)

Typ hier de footer 33

Case Internal Mobility Centre in prevention phase

4800 external job-to-job transitions in 4 yearsCoaching, training courses, education for inter sectoral mobility‘Job-to-job trajects are 1/3 to ½ costs of dismissal procedure’CLA: guarantees on employment security depend on number of external placements‘Voluntary mobility gives better motivation workers then during dismissal procedure’

Typ hier de footer 34

Case Internal Mobility Centre (following)

Individual mobility budgets depending on seniority/age, also forfinance salary-gaps (but extra budgets for training/education)Premium for early leaversConditions in negotiating/consulting trade unions (trust!)Cooperation with PES and use of subsidies

This is a best-case. Estimation: 50% employers don’t help dismissed towards new jobs!

Typ hier de footer 35

Conclusions

Overall NL: priority job security, if not severance paymentsHigh amounts of flexible workers outside protectionPolicy shift towards transition/employability security,but not widespread practisesInteresting projects on local level (public-private, private)Risk of flexibilisation: lack of employability security (less incentives for employers to invest in it as prevention/compensation dismissals)Lack of good evaluation studies job-to-job policies

Thanks for your attention!

Dank u wel!

Comments always welcome:

F.H.Tros@uva.nl

Frank Tros

Active restructuring policies and older workers: The Flemish case

Lieve De Lathouwer, Department of Work

Active labour market policies for Europe 2020 –Ways to move forward

Flemish policy seminar 28-29 october 2010

Structure

1. Some figures2. An active restructuring approach:

I. Preventive policy: anticipation to restructuringWorking time buffers (temporary layoffs)Worksecurity versus jobsecurity

II. Curative policy: support for dismissed workersEmployment units & OutplacementSocial intervention advisors within PES (first line towards firmsApproval regional/federal Minister on activation measuresSocial intervention Fund

3. Conclusions

% of jobloss and number of operations of restructuring, 1 january 2002- 15 july 2010

Belgium Europe

Number of jobloss

Number of operations

Number of jobloss

Number of operations

Downsizing (internal restructuring)

69,5 57,9 73,2 62,7

Bankruptcy/closure

18,4 28,3 17,0 24,5

Delocalisation 7,4 9,1 4,8 7,5Fusion/acquisition 3,9 3,1 3,8 3,9Outsourcing 0,9 1,3 0,9 0,8Others 0,0 0,3 0,4 0,6Total 100,0 100,0 100,0 100,0Numbers 109.615 318 3.864.900 7.590

Source: European monitoring centre on change EMCC, based on Conseil Supérieur de l’Emploi, Restructurations, Note d’information préliminaire

Numbers of collective lay-offs and temporary layoffs (temporary unemployment benefits) Flanders 2007-2010

Source: collective layoffs: PES (VDAB); temporary layoffs: RVA

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

I II III IV I II III IV I II III IV I II III

2007 2008 2009 2010

# em

ploy

ees

affe

cted

0

10.000

20.000

30.000

40.000

50.000

60.000

Collective redundancies (left axis) Temporary unemployment (fte) (right axis)

Definition collective layoffs

All workers “at risk for restructuring”

who are registered by PES –

subject to procedure collective lay offs Definition= dismissal for economic and technical reasons (not for

individual reasons) in period of 60 days firms with at least•

> 300 workers: 30 dismissals•

100-299 workers: 10% of dismissed workers•

>20-99 workers: 10 dismissals–

other collective dismissals

Numbers of collective lay-offs according to age: older workers are victims of restructuring!

TOTAL 50+ 50-2007 5.041 4.554 4872008 4.973 3.395 1.5782009 15.616 12.653 2.9632010 1e 9.070 8.419 6512010 2e 803 265 5382010 3e 1.123 224 899

Source: PES

Employment rates for 55-64, 2009

0%

10%

20%

30%

40%

50%

60%

70%

80%

Zwed

enDen

emar

ken VK

Duits

land

Finl

and

Neder

land

Ierla

ndPo

rtuga

lTs

jechi

ë

EU-2

7Sp

anje

Bruss

els H

. Gew

est

Grieke

nlan

dOos

tenr

ijkSl

ovak

ijeFr

ankr

ijk

VLAAMS

GEWES

T

Italië

België

Waa

ls Gew

est

Source: European

commission,

An active restructuring approach

•

Preventive policy= anticipation to restructuring→ How to prevent jobloss ?

•

Curative policy= Support after jobloss→ How to support work-work transitions ?

Institutional Context: Division of competences between the federal level and the 3 regions may create inefficiencies

•

Regional Minister of Work–

Guidance of unemployed–

Job placement–

Vocational

training–

Special employement

programs

•

Federal Minister of Work–

Labor law (also collective dismissal)–

Collective labor agreements–

Social security (eg..early

retirement schemes/ “brugpensioen”)

–

Employment programs ( (labor cost reductions; repayment of outplacement costs)

I. Preventive policy: anticipation to restructuring

1. Main instrument used by firms =Working time buffers-> temporary layoffs (“Short-time allowances):

•

Federal schemes:–

federal temporary layoffs for blue collar workers–

temporary working time reductions for crisis reasons (untill end 2010):»

Federal temporary layoffs for white collar workers»

Collective reductions of working hours •

Flemish transition allowance (“overbruggingspremie”) (untill end 2010)

Advantages (compared to dismissals): –

fast flexible adjustment to demand fluctuations–

avoiding high dismissal and recruitment costs for employers•

During last crisis saved about 41 500 (full&parttime) jobs compared to a net-loss of jobs of 17 500 (Steunpunt WSE)

–

jobsecurity for employeesDisadvantages (compared to dismissals):

–

unreasonably extend U-benefits/ high cost for tax payer–

maintain non-competitive industrial structures–

low incentives for training (passive character)•

Only 1% in training for federal schemes; 4% for Flemish transition allowance

I. Preventive policy: anticipation to restructuring

I. Preventive policy: anticipation to restructuring

2. Work security vs jobsecurityStimulation of internal and external mutations

-> jobmobility

is low in Belgium/Flanders

Making transitions within employment pay by supporting employability:•

Lifelong learning in Flanders: 7,4% of workers in permanent learning, only 5% of 50+workers (fig. 2009)

•

job-(re)orientation

(in Flanders 19 joborientation

centres+PES, can be paid by ‘vouchers’: between 2005-

2009: 23.671 workers, 48% of riskgroups

3. More pro-active and earlier consultation between employer and trade unions ?

-> See proposal federal minister during conference 18-19 October 2010 on Restructuring

•

Improving the information and consultation procedure•

more pro-active role of social negotiators•

Monitoring: which firms are at risk for restructuring

I. Preventive policy: anticipation to restructuring

II. Curative policy measures: Support after job loss

•

Implementation of active restructuring policies in Flanders1. Employment units and outplacement2. Social intervention advisors within PES (first line towards

firms)3. Approval of the Regional Minister on activation measures4. Social intervention Fund5. Financial incentives to re-employ laid off workers (labour costs

subsidies, financial support for outplacement )

II. Curative policy measures: Support after job loss

“generation pact law” (23/12/2005)->royal decree (9/3/2006 & 3/5/2007)

“Economic recovery law” (27/3/2009)->royal decree 22/4/ 2009

Scope Firms applying for early retirement at reduced age

firms with at least 20 workers

Targetgroup Workers 45+ Workers -45 and 45+

Support Employment units+outplacement+replacementsubsidies

Employment units+outplacement+replacementsubsidies

1) Employment units & outplacement

–

Role:•

Stimulating work-to-work transitions and prevention of benefit dependency

•

Coordination of all actions to reintegrate collective dismissed workers (follow up outplacement, job offers, training opportunities)

•

Cooperation between all partners involved: employer; trade unions, outplacement office, sectoral training fund, chair=local director of PES;

–

Duration of participation of dismissed workers in employment unit:

•

45+ : 6 months, min.60 hours outplacement•

45- : 3 months, min.30 hours outplacement

–

Status of dismissed workers in employment unit: •

No contract anymore with employer•

Registered unemployed •

Activation allowance during employment unit (may continue afterwards)

= redundancy payments= independent of finding a job (no incentive for quick work-work

transitions)

–

In Flanders: “Firm specific” employment units and 15 “permanent” employment units (for small sized firms)

–

Outplacement offer approved by regional and federal Minister

–

Outplacement: paid by employers and managed by private providers

•

But also intervention of UI (repayment of outplacement cost :no re- employment: -45: 500€;+45:1000€/ re-employment: -45: 1000€;+45: 2000€ ) and intervention of sectors

–

Outplacement comes in place of PES -> quality control by•

approval of outplacement by regional and federal minister + follow- up in employment units

•

self-regulation: CERTO, quality label from January 2011 in operation

–

When successful reintegration after employment unit -> reduction of social contributions for new employer and for employee (“verminderingskaart”)

2) Social intervention advisors (first line aid)

•

30 social intervention advisors in 5 provinces within the PES•

Role: information for employers and social partners on rules and procedures

•

Before social dialogue (providing information)•

During social dialogue: no interventions, only information on request•

After social dialogue –

to support with legal procedures–

to erect and coordination of the employment unit •

Managing the Social intervention Fund

Participation in employment unit &outplacement Flanders 2009

Employmentunit

Of which in outplacement (OP)

Share agegroup in OP

n % % %

<45 3.053 51% 76% 46%

45-50 1.090 18% 93% 20%

50+ 1.832 31% 95% 34%

all 5.975 100% 85% 100%Source: PES

Impact of reform royal decree april 2009 on age structure in employment units: number of participants

After “generation pact law”/royal decree 2006

2008

After “Economic recovery law”/royal decree 2009

2009n % n %

<45 1.524 35% 3.053 51%

45-50 703 16% 1.090 18%

50+ 2.128 49% 1.832 31%Source: PES

% of collective dismissed workers found work 6 months after registration with PES

2008 2009

<45 63% 54%

45-50 62% 55%

50+ 24% 27%

50+ (in companies with early retirement)

12% 12%

Source: PES

3) Approval of Regional Minister on outplacement offer and activation measures in social plans

•

Screening of outplacement contract:–

Number of hours outplacement–

Good balance individual approach-collective sessions–

Actions on job placements (not only counselling)–

Analysis of competences and actions for training–

Approach towards older workers: informing on employment measures; follow-up of searching behaviour; jobdating/jobhunting; cooperation with all actors necessary

–

Reporting to PES•

Screening collective agreements (on training budget, preventive measures)

Some observations: based on screenings of 185 firms related to 10.488 blue collar and 6.046 white collar workers (total:16.534).

•

Shift from counselling towards job placement•

Few attention on training in outplacement contracts •

Minority of firms do have training budgets (22%) and financial incentives for re-integration (9%)

•

Extensive use of early retirement for:–

33% of blue collar workers; of which 65% at the age of 50-52 years.

–

33% of white collar workers; of which 57% at the age of 50- 52 years

Number of beneficiaries of early retirement according to age

2009 2000-2009 2008-2009

(n) (%) (%)

50-54 974 -78,9 -36,8

55-59 26.180 +4,1 -2,6

60+ 52.564 +13,9 +5,1

60- 27.154 -8,8 -4,5

total 79.718 +5,1 +1,6

4) Social intervention Fund

•

Since decree of 18th may 1999, managed by PES•

Aim: Payment of outplacement and support to lay offs after bankruptcy–

Employees working 1 year in firm before bankruptcy–

Bankrupt Self-employed–

Helpers of Bankrupt Self-employed•

Payment of outplacement if employer can not pay: –

2.290€/person +57€/person administration cost–

Training budget: 575 €/person (maximum)•

Obligation of an employment unit + social plan•

2009: 379 dossiers

Some conclusions

•

Passive compensations payments take up main part of resources in companies leaving little for reintegration initiatives

•

Need for more investments in employability (support for internal and external job mobility)

•

Good results of employment-cells on reintegration except for older workers -> several barriers (early retirement; seniority wages; weak guidance/activation; lack competences, lack of job mobility; behaviour of employers)

•

Public-private mix in outplacement: need for (self)regulation and accountability of private providers (cfr. government subsidies)

•

Need for impact evaluations.

Collective redundancies Active restructuring policies

Roger BLANPAINK.U. Leuven, Belgium

University of Tilburg, The Netherlands

Restructuring

• Restructuring– Not if, but how– Rigidity – a positive element in times of crisis?

– Trade unions– Job – a medieval castle?

– Prepare for a new job– Prepension a curse not a cure ??

Active restructuring policies

• In case of collective redundancies:– Try to provide dismissed workers with a new job

– Establishment of an Employment Unit

– Offer of outplacement

– Reinsertion idemnity

Collective redundancies

• A question of numbers : – 10 % if at least 100 employees

– 10 employees if more than 20 and less than 100

– ….– Two years seniority

Information and Consultation

• Representatives of the employees ‐

employees– Intention of collective dismissals

– Decision– Social consequences– In writing (number, criteria, calculation of compensation, when..)

• Multinational– Decision by headquarters– Role of the EWC

Information ‐

Government

• A copy of the announcement of the intention of the 

collective redundanies to– Ministry of Labour

– Sub regional employment service

• The Ministry of Labour determines the date of the 

collective redundancies

Employment Unit

• More than 20 employees• Less than 20 if 

– Prepension at lower age than normal– Recognition as enterprise in difficulties or in restructuring

• Composed of– Employer– Representative(s) trade union– Sectoral training fund– Official employment agencies are responsible for establishment, 

organisation and coordination

Employment Unit

• Umbrella employment unit (more enterprises)

• Functioning– Aim: active measures

– Registration of workers (some exceptions)

– Minimum = outplacement offer (approved by both Ministers)

Procedure

• Individual information and consultation at the work place.  

Information:– Services of the employment unit– Consequence of registration with the unit

• Reinsertion Indemnity• Prepension

• Worker indicates if he wants to register or not• Dismissal• Registration for six months (at least 45 years of age); three 

monhts if less 

Reinsertion indemnity

• One year of seniority– 6 months ( 45 years)

– 3 months, if younger

• Equal to the remuneration, paid monthly

• Replaces the term of notice

• If indemnity is higher than dismissal compension (term of 

notice) Government pays back

Outplacement

• Compensation by Government if– Card of diminishing – restucturing

• Less social security contributions

• At least 30 hours of outplacement.

Conclusion

• Employment participation = Lisbon target of 75%

• Active employment policies should start earlier –

change of 

mentality, both individual and collective

• Basic education• Discrimination

• We can do better.

Q & A

Coffee breakFoyer

Active Labour market policies for the EUROPE 2020-strategy

Ways to move Forward