ALMP · The Effect of Active Labour Market Policies on the Behaviour and Employability of Benefit Claimants

The Effect of Active Labour Market Policies on the Behaviour and Employability of Benefit Claimants

Unemployment is dramatic both at the individual level and for society. Long-term unemployment can lead to a permanent reduction of mental and physical health, can reduce earnings potential and a high unemployment rate is a burden for public finances. Moreover, we know that a long unemployment spell sends a very bad signal to potential employers, even if one remains motivated to look for a job. Employers are less likely to invite an applicant for an interview who has been unemployed for a year than a similar applicant who has only been unemployed for a short time. It is hence important to find effective strategies to get people back into work and to detect those who are at risk of becoming long-term unemployed as soon as possible. While the literature has shown mixed evidence on the effectiveness of resource-consuming government policies to help the unemployed into work (Active Labour Market Policies), this project found that cheap and light-touch counselling programmes right at the start of the unemployment spell are effective to improve job finding rates. This is of societal interest as in times of austerity, governments are looking for cost-effective strategies to reach their policy goals. The project also adds to the debate, embedded in the era of austerity, on substituting human coaching with self-service online platforms: while the latter might be useful, a minimum of human face-to-face interactions can be very cost-effective. This project also found ways to better predict which people are at risk of becoming long-term unemployed, which can help to better target such groups right from the beginning. Public Employment Services are increasingly interested in profiling their unemployed using big data. Usually they rely on available administrative data, and socioeconomic variables such as age, education, and work experience have proven to be good predictors of one’s success on the labour market. We found that beyond all these factors, measures of people’s cognitive skills (notably numeracy skills) can predict how well people will fare on the job market. These skills can be measured with simple survey questions that are not time-consuming: one can ask interviewees to perform a few small calculations, for example. Since conducting surveys has become much easier thanks to online tools, we are hopeful for employment offices to include such questions in their surveys in order to refine their profiling models as to be able to target their clients more effectively.

Data: CORDIS, © European Union