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Finnish PES Reform
Ilkka Nio
Mutual Learning – Benchmarking among Public Employment Services
Workshop 4, Vienna, 16/17 June 2009
2
Content
1. Background (3-6)
2. New PES-service model (7-11) 2.1 Service Model of the Employment Office (12-14) 2.2 Labour Force Service Centres (15-19)
3. Main evaluation results (20-23)
4. Performance indicators to assess the reform (24) 4.2 National indicators (25-29) 4.1 BM indicators of PES performance (30-34)
3
Target system and key performance indicators of PES Government Missions and tasks Key performance platform and strategy indicators To improve the functioning of labour market
* Securing the supply of skilled labour Employers who have had recruitment problems, % - Tailor made labour market training Training arranged in cooperation with employers, %
- Quickly filling of the vacancies Average filling time of a vacancy, days - Prolonging working careers Expectation of time in the labour market at the age
of 50 To reach full employment by 2011 * Increasing the number of employed * Reducing structural unemployment Composite indicator of structural unemployment persons by 80 000 - Improving effectiveness of ALPM-measures Transition into open labour market after measure * Reducing unemployment rate to 5 % - Early intervention Flow over 3 months’ unemployment, % - Assignments of work Assignment share of all fillings, %
* Increasing customer satisfaction Share of good or very good responses, per cent - employers - job-seekers
4
Background figures of PES in 2002 and 2007
2002 2007 % abs.
Terminated spells 878 000 841 000 -4,2 % -37 000Started spells 865 000 812 000 -6,1 % -53 000Average duration ( weeks) 17 14 -17,6 % -3
Unemployed js ( excl. lay offs) 281 000 210 000 -25,3 % -71 000Structural unemployment 178 800 124 800 -30,2 % -54 000Vacancies during the year 327 600 570 400 72,1 % 236 200
Unemployed js / labour force, % 10,6 7,8 -2,8Unemployment rate (LFS) 9,1 6,9 -2,2
Contribution of shortened duration*to the number of unemployed js -50 000*to unemployment rate 1½-2
5
Probability of an unemployment spell to end during a month by duration
0
0,1
0,2
0,3
0,4
0,5
0,619
88-1
1989
-4
1990
-7
1991
-
1993
-1
1994
-4
1995
-7
1996
-
1998
-1
1999
-4
2000
-7
2001
-
2003
-1
2004
-4
2005
-7
2006
-
2008
-1
2009
-4
Pro
bab
ilit
y
<12 weeks 13-26 weeks 27-52 weeks >53 weeks
6
Started unemployment spells and average length of a spell (monthly figures, trends)
0
10000
20000
30000
40000
50000
60000
70000
80000
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Sta
rted
sp
ells
0
5
10
15
20
25
30
35
40
Du
rati
on, w
eek
s
Quick transition from work to work
7
PES Service model
Finnish tradition
LegislationAgreed targets Common service products Employment offices are very free to organise their service model
More emphasise on a similar model Our aim: to build up a separated service model to face the challenges
• Main Employment Office: focus on the open labour market• Labour Force Service Centre: focus the services for difficult
groups
8
Structural Reform of PES 2004-2007
• To strengthen a multi- channel service model and increase the use of e-services and call centres
• To develop market orientated services in the employment office
• To ensure enough support to the most disadvantaged groups
Main Targets
9
Structural Reform of PES
Labour ForceService Centre
Self Service, e-Services Individual Services Special Services
e-servicese-services
Jobcentre
EMPLOYMENT OFFICE
Services for jobseekers• placement• career guideance• labour market training
Services for employers• special units• wide range of services
10
Structural Reform of PES - Two prongs
Main Employment Office Labour Force Service Centre
Target Group
”Ready to work” -jobseekers, employers, jobseekers close to the open labour market
People in need of very intensive service, the most disadvantaged groups
Key Services
Job-search, job brokerage, employer contacts, career guidance, labour market training
Multi-professional coaching and counselling, assessment of needs
Emphasis Self-service and activity of customers, PES’ own services
Complementary tailor-made services, holistic life support, subcontracting: rehabilitation additional services
Key Partners
Employers, educational institutes Municipalities, the third sector, private service providers
11
Deepening service levels according to the needs of the PES customers
Self services
Personal services at the local employment offices (3-5) Individual, multi-
professional counselling at the Labour Service Centres
1) Self services on the Internet
2) Supported self services at the Job centres (local PES offices)
- individual advise for job seeking and training, writing of CV:s- Job Clubs
- about 200 advisers and employment counsellors
3) Personal employment counselling
- interviews- action plans- providing of jobs, training, active programmes, Eures
- training and vocational information services
- about 1800 employment counsellors and specialised counsellors for youth
and immigrants
4) Vocational rehabilitation for disabled people
- about 150 special employment counsellors and psychologists
5) Career guidance
-250 psychologists
6) Multi-professional, individual counselling
- about 300 psychologists and employment counsellors who cooperate with the municipal social and heath care specialists (300)
12
Service Model of the employment office
The key features of the service model
• Strong start, early intervention• Customer responsibility• Responsibility areas according to the occupations • Specialised service units for employers
13
Strong start - early intervention
• First interview within two weeks• Renewed individual action plan
• Short assessment, clear targets • Emphasis on concrete jointly agreed activities• Follow up of activities (personal contacts, reminding system)
• Customer needs assessment• Profiling method
• To indentify those jobseekers at risk of becoming long term unemployed
• Offering job is the objective number one
14
Service Model of the employment office
• Special units for employer’s services
• Strong emphasise on the services for employers • Wide range of services
• Free of charge basic services• Paid services: hiring out of personnel & services for
recruitment, personnel redundancies and the development of the personnel and cooperation
• Change security model
15
Structural Reform of PES
LABOUR FORCE SERVICE CENTRES (39)
• established in co-cooperation between PES and municipalites
• joint management• for the most disadvantaged
groups
EMPLOYMENTOFFICE (PES)
Services for jobseekers• placement• career guidance• labour market training
Services foremployers• special units• wide range of services
MUNICIPALITY
• social services• heath care
Pension Insurance Institution
16
Organisational position
Labour Force Service Centre
a multi-professional permanent network of co-operating partners
employment officemunicipalitysocial Insurance Institution
the network is based on a co-operation agreement
according the agreement the services will be provided jointly in co-located premises
39 Labour Force Centres
620 full time officers (320 from the PES)
17
Funding
Administrative costs of the Labour Force Service Centres:
• The municipalities and PES share the costs arising from the operation of the Labour Force Service Centres (50 % - 50 %)
• The Social Insurance Institution will pay its own costs
Cost for the services and measures (e.g. Public Employment Services) are paid by the ‘parent’ administration.
Setting up Labour Force Services Centres is based on voluntary commitments by the parties.
18
Customers
The customers sent by local employment office or by municipal social services on the basis of the service needs
• Primarily those with serious difficulties to enter the labour market (over 500 days labour market support).
• Secondary whose unemployment period is expected to be prolonged and for whom the basic PES services are considered inadequate.
• Customers who need multiprofessional services and are expected to benefit from additional services.
19
Services provided
Combination of services provided by the parent organisation,additional services bought from the other expert organisations
• Assessment of the physical and mental health, medical health care and vocational rehabilitation, individual activation activities by the social service, labour market measures: coaching, training, subsidised work.
• Expert services are provided by nurses, doctors, dept advisors, social workers, training advisers, vocational guidance psychologists, career planners, individual coaches, employment advisers.
20
Evaluation of the new service model
both customers and the staff of PES have been satisfied strategically right operations have been done and the changes in the
service process lead to the intended direction stronger and more active start of customer service has contributed to
lower both unemployment and structural unemployment. The early intervention and developing of internet based services have had a clear causal connection to the prevention of unemployment
the ways of action do not change instantly but they develop gradually and at different times in different offices
the reform must be understood as one of the sequential reforms of employment services going on continuously
- the connections between the two “strands“ of reform, the PES and LAFOS, have been unsatisfactory. There is still challenge in how to activate the most difficulty employable persons and how to place them in the working life
- recruitment problems have not relieved
21
Evaluation Labour force service centres (LAFOS)
customers are very satisfied assessment of situation of the customers has been done
in a very professional way multi-professional co-operation seems to work well, better co-operation
between the state and municipalities premature to estimate the effect on structural unemployment
barriers complicating customer service have been created in some places. It is not easy to define a joint management structure suitable for all centres
customer volumes have been small in relation to the total number of disabled and those employed with difficulty
new indicators are needed to measure the impact on welfare and employment. finding permanent solutions – entry into the labour market is extremely slow
and difficult. The threat is that the service centres may remain the “far end” for the hard to place customers.
22
GDP and passive labour market support
-14 %
-12 %
-10 %
-8 %
-6 %
-4 %
-2 %
0 %
2 %
4 %
6 %
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
GDP
Passive labour market support
Dependent variable:
Passive labour market support,
expenditure in average
N % N %
Before reform (2000-2003) 31 68,9 14 31,1
After reform (2003-2006) 9 20 36 80
(-) Dependent variable (-) Dependent variable
Chi2 = 22,622222; P = 0,000002
Independent variable (GDP) Independent variable (GDP)
> <
23
Flow over 12 months' unemployment and GDP
-14 %
-12 %
-10 %
-8 %
-6 %
-4 %
-2 %
0 %
2 %
4 %
6 %
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
GDP
Flow over 12 months' unemployment
Dependent variable:
Flow over 12 months' unemployment
N % N %
Before reform (2000-2003) 12 26,7 33 73,3
After reform (2003-2006) 23 51,1 22 48,9
Chi2 = 9,822222; P = 0,001724
Independent variable (GDP) > Independent variable (GDP) <
(-) Dependent variable (-) Dependent variable
24
Comparison of PES indicators
2002 2007BM indicatorsTransition to ememployment Q1 11,1 13,7Empl. before uemployment lasts long Q2 67,7 61,5Transition from training measures Q3 38,2 40,0 Including subsidised jobs
Accessible vacancies Q4 36,9 69,1Posted vacancies filled Q5(var1) 54,9 52,8Filled within 4 weeks Q5(var2) 40,9 37,8Filled with PES candidate Q5(var3) 26,9 23,0Customer satisfaction (js) Q6 70,6 73,0 Good or very good responses, % ( adj)
Customer satisfaction (empl.) Q7 80,9 81,4 Good or very good responses, % (adj)
National indicatorsRecruitment problems, % (Q5) 28 34 Employers who have had recruitment problems, %
Average filling time of a vacancy (days) (Q5var1) 23 25Early intervention (Q2) 68,2 73,1 Flow over 3 months´ of unemployment, % (inv.)
Transition to open labour market, % (Q3) 28 33 All measures
Transition to open labour market ,% (Q3) 33 41 Measures with target of direct transition
Share of structural unemployment (Q2,Q3,Q5var3) 49,6 42,0 Composite indicator of structural unemployment
Customer satisfaction (js) (Q6) 56,5 57,9 Good or very good responses, %
Customer satisfaction (empl.) (Q7) 60,0 58,6 Good or very good responses, %
25
Structural unemployment (hard to place job-seekers) in 2002, 2006 and 2007, in average
2007 2006 2002 2007 - 2002
change change%
a Long-term unemployment ( 12 months) 52 000 64 800 79 100 -27 100 -34,2
b Recurrent unemployment (12/16) 33 800 39 500 45 600 -11 800 -25,8
c Unemployed after participation in active labour policy measures 28 600 30 500 38 500 - 9 900 -25,7
d Recurrent participation in LMP measures (12/16) 10 300 11 700 15 600 -5 300 -33,9
Structural unemployment ( a + b + c + d)
124 800 146 500 178 800 -54 000 -30,2
b) unemployed who have been unemployed in total 12 months during the last 16 months
d) those placed recurrently in LMP measure who have been unemployed or in measure in total 12 months during the last 16 months
26
Change of broad unemployment and structural unemployment from previous year
-20
-15
-10
-5
0
5
2005 2006 2007 2008
Per
cen
t Broad unemployment ( UJS+LMP-measures)
Structural unemployment
27
Activation rate and share of structural unemployment
15
20
25
30
35
40
45
50
2004 2005 2006 2007 2008 2009
Per
cen
t
Structural unemployment
Activation rate
28
Flow over 3 months´ unemployment (national performance indicator of prevention)
0
10
20
30
40
50
60
70
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Per
cen
t
0
5000
10000
15000
20000
25000
30000
35000
Per
son
s
29
Preventing long term unemployment, Q2 and national indicator of prevention, trends
50
55
60
65
70
75
2000 2001 2002 2003 2004 2005 2006 2007 2008
Per
cen
t
Q2 National prev.
30
Q1 Transition from unemployment to employment
0
2
4
6
8
10
12
14
16
2000 2001 2002 2003 2004 2005 2006 2007 2008
Q1
60
62
64
66
68
70
72
74
76
NI
of p
reve
nti
on
Q1 National prev.
31
Q5 Filling posted vacancies
0
10
20
30
40
50
60
70
2000-1 2001-1 2002-1 2003-1 2004-1 2005-1 2006-1 2007-1 2008-1
Per
cen
t
Q5var1 Q5var2 Q5var3
Filled with PES candidate
Filled within 4 weeks
Posted vacancies filled
32
Terminated unemployment spells by duration and reason in 2007
< 1 1-2 3-4 5-8 9-12 13-26 > 26 Total
Employed on open labour market 187 803 87 710 40 302 42 495 26 239 37 683 22 050 444 282Subsidised employment ( LMP measure) 10 741 15 042 9 020 10 793 7 559 14 856 20 475 88 486Labour market training ( LMP-measure) 4 162 6 723 6 442 9 722 7 414 13 645 13 749 61 857Normal vocational education and training 820 1 728 1 266 2 099 1 780 1 933 1 403 11 029Outside labour force ( retired, migrated etc.) 5 487 7 997 6 214 8 916 6 354 12 904 29 465 77 337Others or destnation unknown 6 913 25 503 23 137 24 650 19 866 32 245 25 682 157 996
TOTAL 215 926 144 703 86 381 98 675 69 212 113 266 112 824 840 987
per centEmployed on open labour market 22,3 10,4 4,8 5,1 3,1 4,5 2,6 52,8Subsidised employment ( LMP measure) 1,3 1,8 1,1 1,3 0,9 1,8 2,4 10,5Labour market training ( LMP-measure) 0,5 0,8 0,8 1,2 0,9 1,6 1,6 7,4Normal vocational education and training 0,1 0,2 0,2 0,2 0,2 0,2 0,2 1,3Outside the labour force ( retired, migrated etc.) 0,7 1,0 0,7 1,1 0,8 1,5 3,5 9,2Others or destination unknown 0,8 3,0 2,8 2,9 2,4 3,8 3,1 18,8
TOTAL 25,7 17,2 10,3 11,7 8,2 13,5 13,4 100,0
Q2 = 490243/728163 = 67,3 NI = 614897/840987 = 73,1
33
Due to job search activation and increased use of e-services the unemployed can find more often employment by own means
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
<1 1-2 3-4 5-8 9-12 13-26 27-39 40-52 53-78 79-104 >104
Weeks
Ter
min
ated
sp
ells
, rea
son
un
kn
own
. 2002 2007
50 600 spells
34
Comparison of Q2 with the Finnish indicator of prevention
Indicator 2002 2007 Change 2002-2007% Persons
BM-monitoring of prevention (deregistration within 6 months as denominator)
Change%
Q2 ( monthly POPs) 67,8 61,5 -6,3
Q2 Counted from competely updated yearly register 74,7 67,3 -7,4Q2 Including those employed by own means** 86,3 85,5 -0,8N (denominator) 728 406 728 163 -243
Revised Q2 ( all deregistrated spells as denominator)Open labour market + subsidised jobs 61,9 58,3 -3,6Incl. those employed by own means 71,6 74 2,4Including also labour market training and VET 77,9 80,9 3,0N (denominator) 878 329 840 987 -37 342
National monitoring of prevention ( 3 months´ period, all spells as denominator)
Change % Persons
Employed in open labour market 49,2 45,7 -3,4 -28 800Incl. those employed by own means** 5,9 11,9 6,0 50 600Subsidised job 5,4 6,3 0,9 7 800Labour market training 3,3 4,1 0,8 7 000Vocational education and training ( VET) 1,1 0,9 -0,1 -1 000Went outside the labour force 3,5 4,2 0,7 5 900
Total 68,2 73,1 4,9 41 500N (denominator) 878 329 840 987
** Reason of deregistration is not recorded, but vast majority have found employment by own means.