Access to jobs after COVID-19

Scaling up policies that provide access to jobs during the post-COVID-19 recovery

In the analytical review, the OECD looks at the actions of governments that have adjusted the performance of public (or private publicly funded) employment services (PES) to cope with the pandemic and prepare for recovery. 

The survey is based on the responses of 46 countries and regions to the OECD / European Commission (EC) questionnaire "Active Labour Market Policies to Mitigate the growth of (long-term) unemployment" at the end of 2020. The report examines the possibilities for policy formulation to ensure the rapid reintegration of laid-off workers into the labour market with the skills needed in an inclusive and dynamic post-pandemic society.

An active labor market policy (ALMP) that provides access to jobs will help ensure a sustainable recovery from the COVID-19 crisis. As early as 2020, many governments responded quickly to the crisis by increasing funding for the PES, training programmes and measures to increase demand for labour. This allowed the PES to hire additional staff and provide remote access for continuous service.

However, additional resources will be needed in 2021 and in the coming years to ensure that high-quality services and employment programmes can be effective in facilitating rapid reintegration into the labour market. This is especially true for vulnerable groups of the population. 

Goal:

As part of the recovery process from the COVID-19 pandemic, Governments will need to shift their focus from short-term income and employment support to facilitating the return to work of large numbers of the unemployed in the context of fundamental structural changes in demand for goods and labor. Achieving this goal will require a well-designed active labour market policy (ALMP) to anticipate the changing needs of the labour market; facilitate the reallocation of displaced workers; promote the development of suitable skills; and support the most vulnerable groups through targeted support.

ALMP funding

Increasing effective spending on ALMP can help reduce the unemployment rate and prevent a rise in long-term unemployment. Many countries have responded quickly to the current downturn by making adjustments to their ALMP. While some of these adjustments did not require additional funding (through staff reassignment), most countries increased ALMP funding during 2020 and are planning further changes in 2021, both in the area of labour market services and in the area of active labour market measures.

Active Labor Market Policy (ALMP):

1.        Services in the labor market. Public (or private with the participation of the state) provision of employment services and administration of benefits:

• consulting services;
• financing of job search expenses;
• brokerage services and related services for employers
• benefits management (unemployment benefits, job retention schemes, compensation payments).

2.        Active measures in the labor market are aimed at the unemployed or employed who are at risk of losing their jobs:

• training;
• employment incentives;
• protected and supported employment and rehabilitation;
• direct job creation;
• incentives for startups

In many countries, resources were used to recruit additional PES staff. In Australia, additional funding has been used to expand digital services for candidates. Canada has more than doubled its funding compared to the 2018/19 fiscal year. Hungary increased spending on active measures in the labor market by 21% compared to 2018, Portugal-by 30% compared to 2018, and Switzerland estimated an increase of about 20%. 

In 2021, half of the countries surveyed plan to increase funding for both labor market services and active labor market measures compared to 2020. Hungary, Poland and the Slovak Republic expect spending to return to its previous level in 2021.

Mexico has reported budget cuts in 2020 for active labor market services and a redirection of spending to address priorities and address the health crisis caused by COVID 19. In Spain, spending on other measures fell in 2020 to cover the increased cost of unemployment benefits.

In Denmark, the Netherlands and Switzerland, the budget for employment measures automatically increases as unemployment increases.

More than half of all PES staff hired additional staff in 2020. Reallocation of staff was often not enough to ensure continuity of service, and so 54% of respondents hired additional staff during 2020 to process more applications for unemployment benefits, provide consulting services.  New positions in the PES were created on an urgent basis, and staff from other government agencies were also transferred.

Public employment services are likely to need additional staff in 2021.  For example, the PESs in France, and the United Kingdom, Luxembourg plan to hire additional staff to work with employment programs for young people. Turkish PES plans to hire additional software developers and IT specialists to expand its online services. 

Short-term measures

About 90% of countries identified changes in PES operating models as the most important element of their short-term response to the COVID-19 crisis. In particular, the key changes included: 

1. digitalization, expansion of remote channels, automation of processes for clients and back office;
2. simplify processes for customers and staff; 
3. adaptation in accordance with health recommendations; 
4. introduction of new tools to improve the quality and timeliness of statistical and management information; 
5. adapting staff and customer communication; 
6. reallocating staff, increasing staff numbers and training staff to increase the capacity of the PES. 

About one-third of countries have made more significant changes to the structure of the ALMP already in their short-term strategies in 2020.

The rise of digitalization of services has helped PES mitigate the impact in several ways:

• Remote work mechanisms for employees ensured continuity of service.
• Remote channels for providing ALMP allowed to continue consulting, career guidance, job selection and training through online channels.
• Remote benefit applications and candidates registration (user interfaces that allow candidates to send or upload their data to IT systems) protected customers by limiting the risk of social impact and facilitating speedy processing.

The progress made in expanding remote and digital access through the PES in less than a year almost exceeds the entire amount of digital access that was created before the pandemic. An important element of digital strategies will be the introduction of the use of electronic services as the default mode for transactions such as registration and administration of benefits. It is important that customers without digital skills continue to receive appropriate support, including basic IT training.

The PES has expanded remote access to services during the pandemic: group sessions, accepting applications under job retention schemes, counselling, job fairs, job search assistance, PES registration, jobless claims.

Medium - and long-term strategies

All countries that have adopted a long-term strategy by October 2020 have identified ALMP development and targeting as key components of their plans for 2021 and beyond. 

For example, Brussels (Belgium) aims to pay more attention to the most vulnerable groups that are more affected by the COVID 19 crisis, and to apply an industry-specific approach to employers to better meet industry needs. Wallonia (Belgium)intends to continue to prioritize an individualized approach to candidates, especially those who have recently been laid off, in its new "instant support" model, focusing more on coaching and quick solutions. 

Greece pays particular attention to supporting candidates from sectors that have been most affected by the current crisis, such as tourism and culture. Slovenia is expanding cooperation with social service providers to facilitate the employment of low-income individuals (including support through interviews). Colombia plans to address the challenges of integrating vulnerable groups into the labor market, such as women, youth, older workers, job seekers from sectors that have been hit harder by COVID-19, as well as people working informally. 

Most ALMP systems were not prepared for the COVID 19 crisis   

Of all the OECD and EU countries, only Israel and Switzerland had programs in place before the COVID 19 outbreak to deal with a potential labor market crisis, which proved useful in early 2020. 

More than half of the countries surveyed identify cooperation as one of the main factors in the response to the consequences of the pandemic. 

The establishment of an autonomous PES at the national level, with a supervisory authority and the participation of social partners, is seen by some countries as a tool for rapid policy responses. These include Austria, Croatia, Estonia, France, Germany and Iceland. In countries where most employment services are outsourced, a mature and trusting relationship between the Ministry and service providers has played a key role in adapting to the new situation (Australia and the United Kingdom).

Sweden has amended the ALMP budget in response to COVID-19 faster than other countries, because according to state regulations, the increase in long-term unemployment automatically increases the funds available for both benefits and ALMP. Denmark and the Netherlands also have automatic PES funding mechanisms. In Flanders (Belgium), most ALMP use an open budget: additional funds are automatically provided when demand exceeds expectations. About half of the countries increased the number of PES staff in 2020 in response to the crisis, and two-thirds of the countries reallocated staff. 

Recommendations:

• Active labour market policies (ALMP) play a key role in supporting the rapid return to work of laid-off workers as health conditions improve and economic conditions normalize;

• The PES, which already offered comprehensive e-services to customers before the pandemic, was well positioned to serve customers without the need for face-to-face interaction, and retained its ability to provide ALMP. Further efforts to simplify and improve the efficiency of PES processes, including through increased digitalization, will continue to be important in the near future. Countries should make good use of the significant investments that have been made in this area;

• Further investment in the PES and active labour market programmes will be needed in the future to ensure that more people who have lost their jobs continue to be adequately supported and to facilitate the reallocation of the workforce from declining to growing sectors. It will also address the growing inequality in the labour market, as sectors hit hard by the pandemic disproportionately employ certain vulnerable groups, such as women, young people and low-skilled workers;

• Few countries have mechanisms for automatic financial adjustment of the ALMP. The introduction of such mechanisms in the future would make their systems more susceptible to changes in the needs of the labor market;

• Translating increased funding into effective implementation of the ALMP requires addressing structural constraints, including adjusting the ALMP rules, adapting th.organizational structure of employment services, and promoting collaboration among all stakeholders.;

• Countries are now moving from short-term responses to the crisis, which mainly involve changes in the operational models of their public and private employment services, to medium - and long-term strategies;

• The transfer of employment services to external providers can be used to further expand services.

Conclusions

Governments need to consider how to scale up the ALMP in a timely but also effective manner. 

A key element will be investment in the digital infrastructure of employment services. Those PESs that had full-featured digital tools before the COVID-19 outbreak were able to better serve their customers by seamlessly paying out income support by providing support to candidates remotely. 

Many countries have accelerated the digitalization of employment services during 2020 and 2021. Nevertheless, there are still large differences between countries that require additional investment in digital capacity.  

In addition, countries may also need to adjust their ALMP basket, including investments in measures such as training or incentives for startups. In the future, countries will need to continue to monitor and assess the impact of their ALMP to ensure that resources are spent effectively.