SEMSEM: Fostering cooperation among mediterranean countries

thumbnail_320_-1_265616_LogoSemsem_mini

SEMSEM: Services for Employability and Mobility in the form of Business Internships for Students from the Maghreb/Mashreq

This project aims to revive the practice of graduates in companies in addition to the mandatory form in the appropriate grades to improve the employability of young people. There are involved many universities from both shores of the Mediterranean sea.

 SEMSEM is a cooperation project funded by Tempus Programme which is an EU financial tool to support the modernisation of higher education in the partner countries of the western Balkans, eastern Europe, Central Asia, North Africa and the Middle East. Tempus is an integral part of the EU’s foreign policies (Neighbourhood, Enlargement and Development), which are aimed at promoting prosperity, stability and security in these regions.

Partners are from Spain, France, Morocco, Algerie, Deutschland, Tunisia, Egypt, Lebanon. Not only are cooperating universities but also chambers of commerce, ministries of education and Industrial Associations.

The aim is to improve the skills of university students through practice and training in companies. Enhancing the employability of young graduates and opening the door to get a foothold in the labour market more rapidly. VET is a powerful gun to insert youth in the labour market, no matter the educational background or the age. The more VET is offered, the better run the labour market

The Balearic Islands University is a fully member of SEMSEM and FUEIB asked me to present some Balearic Islands Labour Market facts, taking into account the specific context of an economy highly specialised in tourism activities. Furthermore, some key ideas about Active Labour Market Policies  applied to the youth will be commented along the lecture.

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More on ALMP Evidence: keeping focus on it

images Few months ago, I posted a summary of the empirical evidence on Active Labour Market Policies  (ALMP) in Spain. I want more. Always more and I would like to focus on the importance of  asssesing ALMP if you want to help policy makers when they are designing Employment Programes.

Definition: What are ALMP?

ALMP are a set of interventions aimed to improve the access of the unemployed to the labour market, job-related skills and the functioning of the labour market (Martin, 1998). Indeed, ALMP are designed to moderate cyclical downturns, reduce structural imbalances and support at-risk employers (Arellano, 2010). An expansive definition may include specific policies for workers who want to improve their labour condition while they are working and acquiring new competences trough the lifelong learning approach (CEDEFOP, 2013).

AS we already mentioned, ALMP are a key public policy in advanced economies because job search assistance, training, wage subsidies, and direct job creation are the main tool of the European countries’ efforts to combat unemployment (Kluve, 2010). These programes are implemented to enhance labour supply    -training-, increase labour demand –subsidies- and improve the functioning of the labour market -public employment services- (Betcherman, Olivas & Dart, 2004). The convenience of assess the effectiveness of the ALMP becomes more relevant in a context of scarce resource and budget constraints. It is imperative to get a better value for public expenditure in ALMP (Martin & Grubb, 2001).

Expected value of ALMP

The impact of ALMPs on labour market outcomes has been assessed through both micro and macro studies (Martin, 2015). Despite the specificities of labour markets and the problem of the unobserved heterogeneity when you are comparing cross country studies in ALMP (Martin & Grubb, 2001), there is a wide corpus of scientific literature showing some common results in high-income countries that help to understand better the importance and usefulness of ALMP. However, ALMP are not the magical solution in a context of high unemployment and depressed labour demand. They may alleviate the symptoms (Lechner & Wunsch, 2009) but not overcome the structural imbalances. A comprehensive strategy –economic, monetary, industrial and educative- is required.

Evaluation, Assesment and ethics

The evaluation methodologies to know the impact of ALMP are experimental and quasi-experimental. The benchmark to estimate causal impact of any treatment is an ideally randomized experiment (Scott & Watson, 2011). However, ethical and political concerns are linked to the randomization because no government wants to become unpopular by excluding eligible unemployed individuals from an ALMP (World Bank, 2009). Consequently, research is mainly based on administrative data and pilot studies using quasi-experimental methodology. Techniques suitable for quasi-experimental data are Matching, Regression, Regression Discontinuity, Instrumental Variables and Difference in Differences (Verick, 2013).

As a conclusion, the measure of ALMP effectiveness depends on the specific country involved, length of the policy, participant profiles, programme type and methodology applied (Borra, Palma, Gonzalez & Aguado, 2012).

More on the empirical evidence of ALMP and the relationship with Spain and the Balearic Islands

The last twenty years some iconic meta-analysis focused the attention on efficiency and effectiveness of ALMP; Martin (1998), Dar and Tzannatos (1999) Martin and Grubb (2001), Betcherman, Olivas and Dar (2004), Kluve (2010), Card, Kluve & Weber, (2010). Last but not least, a macroeconomic review of the efficiency of ALMP has been presented recently by Martin (2015) adding a fresh insight beyond the microdata analysis. We present a short review of empirical cross-country findings with the Spanish and Balearic Islands performance in ALMP.

Job searching assistance and counselling / meeting case, achieve positive impacts in the short run. This is the cheapest ALMP (Rosholm, 2014) but requires solid Employment Services. The effect can be limited when cyclical unemployment is high due an economic downturn or when the informal economy avoids flourishing job offers. Notwithstanding, Spain has the OECD second worst average load rate of unemployed registered -269- for each worker of the Public Employment Services (OECD, 2014). On the other hand, Spain is one of the top informal economies in the Eurozone with an estimation of 18% of national GDP involved in such unfair practices.

Last but not least, the spatial distribution of the placement services appears as a key element of leaving unemployment (Détang & Gaigné, 2009). Spain exhibits a strong spatial correlation between local unemployment rates and neighbourhood and the empirical evidence found important disparities in accessibility to employment offices that are affecting to the adequate delivering of ALMP (Suarez, Mayor & Cueto, 2012a). Indeed, economic theory indicates that the market share of PES is higher in those Spanish regions in which the labour market is less dynamic (Suarez, Mayor & Cueto, 2012b). It is not only a matter of professionals working in the PES, but also the number of employment offices and it spatial distribution.

Training programmes achieve more positive impacts in the medium and long run than in the short run (Arellano, 2010). Similar results were found in the Balearic Islands using propensity score matching (Alegre, 2009). The unemployed being trained in the low tourist season have 8,7% more probabilities of being hired the next season than unemployed with same characteristics of gender, age, studies, nationality and professional experience but not involved in training activities. However, Training programmes have some risks such as the lock-in effect and the failure in the design of the programme due an inappropriate contents or the absence of quality management systems (CEDEFOP, 2015). Another issue is the unobserved heterogeneity such as the motivational characteristics of the unemployed. It is difficult to disentangle from the overall effect of being treated by an ALMP (Borra, Palma, Gonzalez & Aguado, 2012). As training activities are usually longer than other ALMP, motivation, personality traits and psychological profiles may become relevant to the success of the programme.

Subsidized employment has not a significant impact in the employment outcomes of the participants in the long run. Furthermore, deadweight loss and substitution effects are presented in the literature review (Verick, 2013). However, this is the ALMP which still captures the higher ratio of the Spanish ALMP expenditure. Figures are clear; 0.3% of the national GDP (Cueto & Suarez, 2014) and 25% of the regional budgets for ALMP is dedicated to subsidising employment (Eurostat, 2011).

Public Employment Programmes have not significant impact in improving the employability of the participants after their participation (Kluve, 2010). Indeed, from the point of view of many employers there is a stigma attached to public works jobs (Betcherman, Olivas & Dar, 2004). It is a social protection policy more than an employment or human capital policy. However, a massive Public Employment Programme –Plan E- was launched in Spain during the economical crisis. It created a half million of temporary jobs using a national fund scheme for local investment but the consequences in the long run for the participants are not assessed yet and the unemployment ratio kept rocketing during and after the Plan E. The Spanish public employment programmes should be transformed into training actions based on dual formation schemes that re-skills workers, promotes lifelong learning and labour market adaptability (Caparros, 2012).

Entrepreneurship Incentives have a positive effect in some targeted unemployed such as older unemployed workers and well educated (Betcherman, Olivas & Dar, 2004) but should be balanced with the business rate of survival. The Spanish research is not conclusive due the lack of control group (Garcia Serrano & Toharia, 2008). The degree of innovation and the entrepreneur’s qualifications are key elements in the growth and business success. In 2008, the annual rate of business failure was 30% similar to other Europeans countries (Cueto & Suarez, 2014). More impact evaluation in this field must be done due the development stage of this ALMP in Spain (Mayor, Cueto & Suarez, 2014).

e-services are a new trend to provide ALMP in some advanced economies such as Finland or the Netherlands (Martin, 2015). However, the empirical evidence is mixed about the usefulness of online tools as a labour market matcher but recent research suggest that online job searching might speed up the reemployment of unemployed workers (Kuhn, 2015). There is a trade-off between cost cutting PES expenditure and activation strategies that demands face-to-face techniques and meeting case (Rosholm, 2014). The Spanish Employment Service –SEPE- is developing a unique online job board where can be matched national labour demand and labour supply. All regional PES are active part of the online job board. On the other hand, SOIB is a fully member of the online EURES network which provides guidance, job searching and training possibilities across Europe. However, there is a national and regional lack of research to know the impact of such e-services.

To sum up, the Spanish ALMPs is suffering a lack of impact evaluation studies. In fact, Card, Kluve & Weber (2010) meta-analysis review only considered three Spaniard studies from an overall of two hundred. On the other hand, the Spanish Employment Strategy and the PES do not take into account some promising results produced by national researchers as we already commented. It is time to invest in a new generation of tailored ALMP that responds the needs of regional labour markets, makes worthy the public expenditure and above all, designed in line with the empirical evidence.

References

ALEGRE, J. (2010) Valoració de l’efecte sobre la inserció laboral dels cursos de formació professional dirigits a persones en atur. Estudis Laborals OTIB. No 9, Available from http://www.revecap.com/revista/numeros/53/pdf/alfonso.pdf

ARELLANO, F. (2010) Do training Programmes get the unemployed back to work? A look to Spanish Experience. Revista de economia aplicada. No 52. Available from http://www.revecap.com/revista/numeros/53/pdf/alfonso.pdf

DAR, A. & TZANNATOS, Z. (1999): Active labour market programs: a review of the evidence from evaluations, World Social Protection Discussion Paper, No. 9901.

BETCHERMAN, G., OLIVAS, K. & DAR, A. (2004) Impact of active labour market programs: new evidence from evaluations with particular attention to developing and transition countries, World Bank Social Protection Discussion Paper, No. 0402.

BORRA, PALMA, AGUADO & GONZALEZ (2012) Evaluation of an Active Labour Market Programme in a Context of High Unemployment, Desarrollo y sociedad, No 70.

CARD, D., KLUVE, J., & WEBER, A., (2010): “Active labor market policy evaluations: A meta analysis.” Economic Journal, Nº, 129 452–477. Available from http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0297.2010.02387.x/pdf

CAPARROS, F (2012) Les Escoles taller, Cases d’Ofici i els Tallers d’Ocupació: un quart de segle de formació amb alternança amb l’ocupació (1985-2011): valoració i propostes de futur. Journal of Public Policies and Territories P3T Paper 2, 1-33. Available from http://www.politicsandterritories.com

CUETO, B., SUAREZ P. (2014) A review of active and passive labour market policies in Spain. Munich Personal RePEc Archive [Online] MPRA Paper 60648. Available from http://mpra.ub.uni-muenchen.de/60648/

DÉTANG-DESSENDRE, C., GAIGNÉ, C., (2009) Unemployment duration, city size, and the tightness of the labor market. Regional Science and Urban Economics, No 39, 266-276.

EUROPEAN UNION. CEDEFOP (2013) Benefits of vocational education and training in Europe for people, organisations and countries. Luxemburg: Publications Office of the European Union

MAYOR, M., CUETO, B. and SUAREZ, P. (2014): Fostering the Self-employment in Spain: An Evaluation of the Capitalization of Unemployment Benefits Programme. Geographical Labor Market Imbalances. AIEL Series in Labour Economics. Physica Verlag-Springer, (forthcoming).

KLUVE, J. (2010) The effectiveness of European active labor market programs. Labour Economics,  Nº 17, 904–918. Available from http://dx.doi.org/10.1016/j.labeco.2010.02.004

LECHNER, M. & WUNSCH, C. (2009) Are training programs more effective when unemployment is high?, Journal of Labor Economics, No 27, 653-692. Available from

 MARTIN, J. (1998), What Works Among Active Labour Market Policies: Evidence from OECD Countries’ Experiences, OECD Labour Market and Social Policy Occasional Papers, No. 35, OECD Publishing. Available from http://dx.doi.org/10.1787/267308158388

MARTIN, J. & GRUBB D. (2001) What Works and for whom: a review of OCDE countries´ experiences with Active Labour Market Policies, Swedish Economic Policy Review, 8, No. 2, Available from http://dx.doi.org/10.2139/ssrn.348621 

MARTIN, J. (2015), Activation and active labour market policies in OECD countries: stylised facts and evidence on their effectiveness, Iza Journal of Labor Policy, Nº 44.

OECD.(2014) Economic survey of Spain. Paris: Publications Office of the Organization for Economic Cooperation and Development.

ROSHOLM, M. (2014) Do case workers help the unemployed? Evidence for making a cheap and effective twist to labor market policies for unemployed workers. Iza World of Labor, Nº 72, Available from http://wol.iza.org/articles/do-case-workers-help-the-unemployed

STOCK, J.H., WATSON, M.W. (2011) Introduction to econometrics. Addinson-Wesley: Prentice Hall

SUAREZ, P., MAYOR, M. & CUETO, B. (2012a) The accessibility to employment offices in the Spanish labor market. Papers in Regional Science, No 91, 823-848.

VERICK, S. (2013) Labour Market Policies for development. In CAZES, S. & VERICK, S. (eds.). Perspectives on Labour Economics for Development. Geneva: Publications Office of the International Labour Organization

WORLD BANK (2009) A practitioner’s guide to evaluating the impacts of labour market programmes. Employment policy primer. No 12 Washington

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European Policies in Vocational Education and Training (VET)

índice The last days I have been involved in a meeting at CEDEFOP Headquarters in Thessaloniki. It was an excelent opportunity to revisit the European policies and frameworks on Vocational Education and Training (VET), apprenticeships and the transferability of the learning outcomes using International classifications (ISCO, NACE, ISCED and ESCO).

Aim
The aim of this post is to provide some  facts and highlight the European recommendations on VET, skill mismatch  and labour market.

Facts

800px-Unemployment_rates,_seasonally_adjusted,_April_2015

Nowadays, the whole continent is still  facing a seasonally-adjusted unemployment rate of 11.1 % in April 2015. Some countries are performing  better such Germany (4,7%) while others such as Spain (22,3%) or Greece (25,7%) need to readdress clearly this dramatic situation. The empirical evidence (CEDEFOP, 2015) shows that VET programs are convenient to smooth transitions between unemployment and work or school and work. Indeed, VET is also a suitable tool for youth employment actions.

On the other hand, It is estimated that the European skills mismatch  during  2014 was roughly 2 milion of jobs vacancies on average. Furthermore, many people being hired is working in positions where they are overqualified or using obsolescence skills. One possible explanation comes from the economic downturn of last years and the disadjusted employment requirements due the weak demand and the excess of workers looking for a job. Consequently, mature workers can get important benefits of Continue VET.

Policies
In order to increase the employability and adaptability of the worker skills (supply side) and to provide adequate labour force to Small and Medium Enterprises (demand side) the  EU 2020 strategy has designed clear  benchmarks to achieve  at the end of the decade:
At least 15% of adults participating in the lifelong learning.
Less than 10% of early leavers from Training or Education
75% of employment rate
40% of workers with 30-34 years old with tertiary Education attainment

Regarding the EU general strategy there is a specific one for Education and Training based on the Copenhagen Process (2002) and the  Bruges Communiqué (2010) with 22 short deliverables to monitor the country  progresses  in VET policies. It is pursued to promote cooperation among countries and stakeholders: EU educational  and employment bodies, National, Regional and local authorities, Unions, Business, Chambers of Commerce, VET providers and NGOs.

Some tactical objectives arise from the EU ET 2020:

  1. A better transparency of VET and more Lifelong learning:
    Developing National Qualification Frameworks and the European Qualification  Framework to promote the comparability of the learning outcomes and new flexible pathways.
    More mobility and internationalisation using the Erasmus Plus program and the European Quality  Charter of Mobility.
  2. Quality,  Quantity and Efficiency of VET:
    Acquisition of the key competences (8) for Longlife learning and basic skills; literacy, numeracy, science, technology and communication.
    Promote and develope traineers career and to share best practices.
  3. Equity, social cohesion and active citizenship:
    Total Accesibility to VET opportunities to all citizens. Specific solutions to people coming from disadvantaged groups or at risk such as: female, migrant, low skilled workers and NEET.
  4. Enhancement of creativity, entrepreneurship and innovation: Development of partnerships and mechanisms to compete internationally.

Results
Dibujo

The 28 European countries show a great variability in the deployment of VET policies and results obtained. Countries can be classified into three big groups;

I. Countries leader, with better ratios to the European benchmarks (> 15%)
II. Countries progress that probably will meet the benchmarks in 2020 (10%-15%)
III. Countries with special monitoring due the low ratios (<10%)

Conclusion
VET policies are not a magical stick that will fix the youth unemployment or the long term unemployment but can facilitate the acquisition of skills, professional transitions and enhance the general output of enterprises.  In fact, countries with a long tradition in lifelong learning and Apprenticeships such as Germany, Denmark or Austria have a better ratios on unemployment, early leavers, and general Qualification.

Maybe, it is high time that the Southern countries put an extra effort in VET policies instead of tertiary Education where not surprisingly some of them like Spain already matched the European Benchmark of 40% of 30-34 years old with a university degree. 

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Active Labour Market Policies: empirical evidence and Spain

The aim of this post is to show some empirical evidences of the Active Labour Market Policies (ALMP) in developed countries. It is considered that ALMP are designed to readdress the labour market imperfections and smooth the career transitions between employment-unemployment processes.

On the other hand,  it is highlighted the lack of ALMP evaluations in Spain despite the fact that the public expenditure is 0,9% of the national GDP (OECD 2011).

ALMP EXPENDITURE IN SPAINLast but not least, the regional elections are forthcoming. The ALMP policies are totally transfered to the Autonomous Comunities so it is considered important to rotate from an intuitive and liberal employment policy to another one based on the empirical evidence and the Labour Market Institutions.

The ALMP are a set of interventions aimed to increase the probability of reemployment of unemployed workers and reduce the risk of losing the job in the case of the employed workers (Cueto & Suarez 2014). An expansive definition may include those actions for workers who want to improve their labour condition and are looking for a new job or acquiring new competences (long life learning approach).

A broader approach to summarize the ALMP should include (Cazes & Verick 2013):

  1. Job Search Assistance / other employment services
  2. Training schemes
  3. Job / wage subsidies
  4. Public Employment Programmes
  5. Entrepeneur Incentives

In Spain, the ALMP provision is competence of the Regional Employment Services of the Autonomous Communities. The SOIB is the public body entitled to develop the ALMP in the Balearic Islands.

The importance of ALMP such as job search assistance, training, wage subsidies, and direct job creation in the public sector are a key element of European countries’ efforts to combat unemployment (Kluve 2010). The convenience of assess the effectiveness of the ALMP becomes more relevant in a context of scarce resources and budget constraints due the economical downturn of the last years.

Apart from some highlighted exceptions such as the studies carried by Alegre (2010), Arellano (2010), Borra & others (2012), Toharia & others (2008) or Suarez & Mayor (2012) there is a lack of evaluations focused on ALMP in Spain. In fact, one of the seminal papers in this topic, which is the meta-analysis review of ALMP evaluations conducted by Card, Kluve & Weber (2010) , only considered three Spaniard studies.

The point is that Spain is spending a huge amount of money in ALMP and there is not an employment policy based on evidence neither a transparent access to the microdata that permit researchers to analize the impact of the ALMP. Nonetheless, the Spanish Employment Strategy (EEE) has developed a set of tools to monitor the ALMP,  but it does not include effectiveness and efficacy indicators for each Regional Employment Service neither for each ALMP paid by public funds.

Furthermore, all the different measures considered in the EEE do not take into account any sort of Control groups or Instrumental Variables that could overcome endogeneity problems when you are assessing the impact of the ALMP.

There are some different methodologies to use when you want to know the impact of ALMP. The most suitable for quasi-experimental data are Matching, Regression, Regression Discontinuity, Instrumental Variables and Difference in Differences (Verick, 2013). Indeed, the meta-analisys of Card, Kluve & Weber (2010) found that the covariate adjustment method for the overall sample of 199 studies was the matching methodology in the 50,8% and the rest of the studies were based on regression models.

In plain English; a matching methodology means go to hell and spend several months before you can conclude something in terms of impact evaluation. So maybe it is time to open the databases of the regional employment services to the researchers and try to promote ALMP assessments in a coordinate way like other European Employment Bodies do.

The nitty gritty of this post is the empirical evidence of the ALMP. Even though the regional specificity of the Labour Market and the country particularities of Labour Market Institutions, the literature shows some common results in developed countries that help to understand better the importance and usefulness of ALMP.

The starting point is the research of Card, Cluve & Weber conducted in 2010. This meta-analysis of microeconomic evaluations of ALMP used a refined sample of 97 studies conducted between 1995 and 2007 in many different countries. Another important studies to take into account are provided by Betcherman, Olivas and Dar (2004), Kluve and Weber (2010) and Kluve (2006)

The main conclusions are:

  1. Job searching assistance, counselling / meeting case, achieves positive impacts in the short run. This is the cheapest ALMP but requires solid Employment Services and the effect can be limited when cyclical unemployment is high due an economic downturn or when job offers do not flourish.
  2. Training programmes achieve positive impacts in the medium run and long run more than in the short run. The main risk is the lock-in effect and the failure in the design of the programme due an inappropiate contents or  the absence of training activities on the job.
  3. Subsidized employment has not a significant impact. The deadweight loss and substitution effect are present in the literature review. However, this is the ALMP which captures the higher ratio of the Spanish ALMP Budget.
  4. Public Employment Programmes has not significant impact in improving the employment outcomes of the participants after their participation. It is a clear social protection scheme but the empirical evidence does not justify this ALMP in terms of long term employment outcomes unless the programme includes training components. However, this is one of the main ALMP used during the economical crisis in Spain (Plan E or the ancient programme defined as ¨Colaboraciones sociales¨)
  5. Entrepeneurship Incentives has a positive effect in older unemployed workers and well educated but must be balanced with the bussiness rate of survival. More impact evaluation research in this field must be done due the development stage of this ALMP in Spain.
  6. There is not significant evidence of differential effects on men versus women, so the effect of the ALMP are not biased for gender which is a good news because it means that the effect of the ALMP (positive or negative) affects in the same way to women or men.
  7. ALMP tailored to the youth are performing worse than ALMP designed for general unemployers. The evidence suggest the importance of promoting preventive actions with a wider scope than the ALMP such as Education and Social Inclusion.

To sum up, the real challenge is to be able to develope a comprehensive system that take into account the economic features of the Balearic Islands and also look for the impact evidence of the ALMP. This system will help the policymakers to take right decisions and will make worthy the public money. It is time to invest in a new generation of tailored ALMP that responds positively the needs of the labour market and above all, designed in line with the empirical evidence.

Now. The politicians have the floor.

Food for brain

Alegre, J. (2010): “Valoració de l’efecte sobre la inserció laboral dels cursos de formació professional dirigits a persones en atur”, col·lecció d’Estudis Laborals núm. 9, OTIB

Arellano F. (2010) Do training Programmes get the unemployed back to work? A look to Spanish Experience. Revista de economia aplicada. No 52.

Card, D., J. Kluve, and A. Weber (2010): “Active labor market policy evaluations: A meta analysis.” Economic Journal 129 452–477.

Cazes, S. & Verick, S. (2013). Perspectives on Labour Economics for Development. ILO, Geneva.

Cueto, B. & Suarez P. (2014): “ A review of active and passive labour market policies in Spain” MPRA

Kluve, J. “The effectiveness of European active labor market programs.” Labour Economics 17 (2010): 904–918.

Suárez, P., Mayor, M. and Cueto, B. (2012): “The accessibility to employment offices in the Spanish labor market”. Papers in Regional Science, 91(4), 823-848.

Suárez, P. and Mayor, M. (2012), “La intermediación laboral del Servicio Público de Empleo en España: un análisis regional con los datos del SISPE”, Revista del Ministerio de Trabajo e Inmigración, Serie Economía y Sociología, 96, pp. 175-194.

Rosholm, M. (2014) “ Do case workers help the unemployed?” Iza World of Labor

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Fitting Optimal Labour Market Institutions on Countries’ Plateau

The Internimagesational Labour Organisation (ILO) considers Labour Market Institutions (LMIs) as a system of laws, norms or conventions resulting from a collective choice and providing constraints and incentives that influence individual choices over labour and remuneration. It is referred to long term horizon and the main LMIs should include (Cazes and Verick, 2013):
• Minimum wages
• Collective bargaining and trade unions
• Unemployment and mandated benefits

Despite the fact that the Classical Labour Market Model considers the Labour Market as a perfect competitive with an equilibrium point between the supply and demand curve, there is a general consensus among researchers, practitioners, policy makers and other stakeholders that Labour Markets have some significant imperfections that may be addressed through the LMIs and the use of Active Labour Market Policies (ALMPs).

Key evidence on the impact of LMIs on employment
The impact of LMIs in the Labour Market is often the subject of heavy ideological debates among the parts (Freeman, 2011). However, the empirical evidence shows that the estimated effects of LMIs in the outcomes of the Labour Market are mainly modest or nulls (Betcherman, 2012). At the same time, the principle of caution should be considered if you are analising data due the multidimensionality and endogeneity of the LMIs.

The empirical evidence of the impact of EPL and Minimum wages take into account the dimensions of Living Standards, Productivity and Social Cohesion. The Indicators linked to these dimensions are Aggregate Employment/Unemployment, targeted groups, employment dynamics, adjustment to shocks, wage distribution, productivity growth, training, technological change, reallocation of labour, fairness, security, equality and poverty. This analytical approach presents mixed results but some clear evidences tend to arise above all:

• Minimum wages and EPL have a significant effect reducing poverty and narrowing earnings inequality. Not only is in the formal sector, but also in the informal one, due the lighthouse effect. However, stricter EPL and relative higher minimum wages may shift formal employment away from specific groups such as youngsters, women, disable people and the less skilled.

• EPL has an important effect in diminishing Labour Market flows and increasing the duration in employment and unemployment transitions. Furthermore, EPL has some positive effect on productivity in terms of training and investing in human capital.
Most countries are set on a ¨Plateau¨

Regulations always depend on country’s context but the results confirm the idea that many nations understand the risk of setting EPL and Minimum Wages at the strong or weak extremes. Allocating in a optimum range where impact on employment or productivity may is modest and avoiding high costs to the enterprises, the EPL tends to alleviate some market failures and the Minimum wages enhance the wealth redistribution. Then, the country is on a ¨Plateau¨.

PLATEAUTheoretical predictions and empirical evidence
Competitive Labour Markets predict that strong EPL or higher minimum wages creates unemployment (Cazes, 2013), underemployment and shift part of the production from the formal sector to the informal one.

However, the empirical evidence is not aligned with these models (Betcherman, 2014). The reasons that explain the divergence are:

• Governments, Enterprises and Union workers make adjustments when are facing changes in the labour demand but they are not only taking into account the price of labour.

• The Developing countries usually have difficulties to enforce EPL.

• The impact of regulations is not always the same for all workers due the high vulnerability of some specific groups such as youngsters, migrants, women and disabled people.

Plateau implications for labour market reforms
When a Government is preparing labour market reforms the policy challenge is to avoid extreme decisions because it increases the risk of pushing LMIs over the Plateau. Despite the fact that the Plateau is country specific and includes changes in terms of inter-temporal series, the consequences of being out of the Plateau are quite dramatic. It implies more inefficiency of the labour market, the failure tackling unemployment and also a significant increase of inequality among other non-desirable effects. A paradigmatic example of labour market reforms without considering the country Plateau is Spain.

Last but not least, another important implication of the Plateau is the redistributive effect of the labour market reforms which let partially address some imperfections. A realistic approach that take into account the country Plateau, uses Benchmarking tools and enforces the labour market reforms into other national reforms such as industry, energy, education and monetary policy may create the right conditions for an strengthened labour market.

Changing LMIs
The existence of a Plateau does not mean that countries should not change their LMIs because some imperfections may be addressed with punctual changes in the LMIs, but it should be taken into account the country specific profile and try to keep the country in the safe area of its Plateau. Furthermore, studies shows some effects in countries that have changed LMIs such as Germany with the Protection Against Dismissal Act (Verick, 2004) or the new forms of collective bargaining in China.

Countries falling off the cliffs
Empirical evidence in India or Colombia shows that the impact of changes on LMIs is more negative when the country has fallen off the cliff. Dramatic changes in labour regulations and minimum wages will produce important employment losses if the country is already in the edge or falling off. It does not mean that the solution is the lack of regulation or a passive institutional attitude. Probably, the effort should be focus on other risks less visible that are affecting negatively.

Implications of enforcement for countries placement on the Plateau
One successful key when a country is pursuing optimal LMIs is to develope a good enforcement of the regulations and a systematic culture of the compliance among the main actors. A Weak development of LMIs will affect negatively the country stability in the Plateau and will maintain unaddressed the imperfections of the Labour Market which means an increased probability of worsening the Labour Market outcomes.

Conclusion
To sum up, the design, execution, monitoring and evaluation of new LMIs should consider not only the country Plateau but also the empirical evidence of the labour market outcomes and pay attention on the culture of enforcement in order to increase the probabilities of success.

References
Betcherman, G. 2012. “Labor market institutions: a review of the literature”, World Bank Policy Research Working Paper, No. 6276.

Betcherman, G. 2014. “Designing labour market regulations in developing countries”, IZA World of Labor, No. 57.

Cazes, S. & Verick, S. (eds) 2013. Perspectives on Labour Economics for Development. ILO, Geneva.

Freeman, R. 2011 “New Roles for Unions and Collective Bargaining Post the Implosion of Wall Street Capitalism” Negotiating for Social Justice. ILO, Geneva.

Verick, S. 2004. “Designing Threshold Effects of Dismissal Protection Legislation in Germany”, IZA World of Labor, No. 991.

Publicado en 2015, Sorpresa | Etiquetado , , , | 1 Comentario

Corruption & Prosperity Ranking 2013

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As part of ILO activities deployed prior the face to face phase at ITC-ILO not only have I been working with classic Indicators such as Unemployment or Growth rate but also I have been involved with other International Indicators that measure relevant variables such as Prosperity or Corruption.

Transparency international is a Non profit organisation focused on Corruption which is measured by a Corruption Perception Index. Every year, it presents a global comparison in terms of corruption and the effects in society or economy. Recently, it presented the latest report.

On the other hand, The legatum Index analises Prosperity because it  is more than just the accumulation of material wealth, it is also the joy of everyday life and the prospect of an even better life in the future. This is true for individuals as well as nations. Prosperity Index is the only global measurement of prosperity based on both income and wellbeing. It is the most comprehensive tool of its kind and is the definitive measure of global progress.

Spain is suffering the spreading of corruption in political parties and bad practices in corporative organisations. Some of our leaders want to enlarge their economical and private benefits in front of the common welfare. Despite the Courts are prosecuting the crime, perception corruption is increasing and inequity, for many reasons, is also growing.

D’Souza suggests at ¨Macroeconomics Handbook¨ (2012) that underground economy is sometimes correlated with bad practices and corruption. The black economy affects on Aggregate Income because it is not recorded in government statistics.

However, I would like to focus on practical corruption effects more than theoretical effects and this is one of the reasons that pushed me to explore the results of Prosperity and Corruption Indexes.

 Do you think that corruption affects in the same way all different social classes? Furthermore, is it possible to link wealth with corruption practices?

Last but not least, do you believe that countries with a good mark in terms of non corruption achieve better economies and their societies are more fair than others?.

If you analise the Prosperity  and Corruption Index during 2013 for 143 countries, you may find a clear correlation (Rxy:0,74) between both variables. It means that the more punctuation obtain a nation with Non Corruption practices, the more puntuaction obtain in Prosperity.

I would say, the less corrupted is a country, the more prosperous is.

There is room for hope!

 

Correlation Prosperity and Corruption Index 2013

 

tabla comparativa paisesRemember that: The Corruption Index measures perceived levels of public sector corruption worldwide. The Prosperity Index is the only global measurement of prosperity based on both income and wellbeing. It includes equally weighted aggregate data from Economy, Entrepeneurship, Education, Governance, Health, Safety, Freedom and Social Capital.

 

 

 

 

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Los números de 2014: un clásico

Los duendes de las estadísticas de WordPress.com prepararon un informe sobre el año 2014 de este blog.

Aquí hay un extracto:

Un teleférico de San Francisco puede contener 60 personas. Este blog fue visto por 1.100 veces en 2014. Si el blog fue un teleférico, se necesitarían alrededor de 18 viajes para llevar tantas personas.

Haz click para ver el reporte completo.

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Más rápido, más alto, más fuerte

imagestreballaire nació hace un puñado de años como respuesta a una crisis económica y de empleo que acorralaba Baleares. La crisis vino para quedarse y hay sigue. Maquillada y desdibujada por el agotamiento diario de una sociedad en reconversión en la que el factor trabajo, cada vez pesa menos respecto de la ecuación del valor agregado. Al mismo tiempo, las políticas activas de empleo languidecen de recursos o de imaginación.

Afortunadamente, siempre hay una parte de la ciudadanía soliviantada que busca nuevas fórmulas, ya viejas. Pero a mi, me ha llegado la hora de cambiar de óptica.

Después de desplegar programas de empleo, de luchar en las trincheras de la oficina de empleo cuando más arreciaba el fragor del paro, de ser capaz de marcharme a otra esquina del mundo para buscar ideas de inclusión juvenil, de localizar recursos por Europa mientras difundía buenas prácticas, de impartir formación y participar en cualquier actividad bienintencionada, de hacer diagnósticos de empleo, de publicar investigaciones, de asistir a congresos, de perseverar en la mejora del entorno y sobre todo, de meterme en muchos charcos, algunos de ellos tóxicos.

Cierro una etapa.

Se acabó.

Citius, Altius, Fortius.

No me resigno a las mismas recetas. Tampoco a los conformistas. Los tengo calados. Me voy en busca de nuevas alquimias porqué me encanta mi trabajo. Así de claro. Da igual traspasar el meridiano de la vida y volver a cargar con mochilas o calculadoras en un déjà-vu universitario. Lo importante es progresar. Saber más, para aplicar mejor.

En Enero de 2015, me voy al Centro de Formación de la Organización Internacional del Trabajo, que es la agencia especializada de las Naciones Unidas en empleo y mercado laboral. Un stage de 4 meses en la ciudad de Turín como parte de un proceso capacitador mucho más largo, para continuar aprendiendo y mejorando.

Sólo el esfuerzo te hace ser más rápido, más fuerte y sobre todo, te lleva más lejos.

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Informe del mercado de trabajo de Ias Islas Baleares

índiceUno de los mejores organismos relacionados con el análisis del mercado laboral es el SEPE. Su observatorio actua como un gran hermano del empleo que todo lo ve y su capacidad de explotación de datos y síntesis cubre ampliamente las necesidades de información de la prole de técnicos de empleo, agentes de desarrollo local, intermediadores, gestores, orientadores y curiosos.

Tal y como avanzabamos hace unos meses y como así comunicamos al SEPE en calidad de experto consultado para el informe que hoy presentamos en treballaire la situación global del empleo mejora en Baleares respecto a la serie de datos del  2012, 2011 y 2010. La mejora hay que leerla con sus matices dada la estructura económica de las Islas y sus puntos oscuros en política de cobertura al desempleado y calidad del empleo ofrecido.

Salimos del atolladero.

El Informe del mercado de trabajo de las Islas Baleares elaborado por el Observatorio de la dirección provincial del SEPE  y sus servicios centrales muestra una recuperación del empleo con incremento en la tasa de actividad, bajada del paro registrado y de la tasa de desempleo en términos interanuales, mayor volumen de contrataciones y de altas en la seguridad social.

Por el camino queda mucho trabajo pendiente y sobre todo personas con nombres concretos en situación de necesidad objetiva. Muchas de ellas, ya estan desprotegidas dada la duración de la crisis. La caída del número de beneficiarios de prestaciones contributivas es del 3,44% respecto el 2012.

No obstante, hoy puede ser un dia en el que se dejen de lado las lecturas veraniegas y se encuentren razones para recuperar la esperanza de mejora cuantitativa del empleo detrás de la contrita estadística que nos ofrece el Informe del mercado de trabajo de las Islas Baleares .

Publicado en 2014, Sorpresa | Etiquetado , , , , , | 1 Comentario

JOB DAYS EURES – SOIB

vente a aleminaPara la memoria colectiva de la piel de toro queda el recuerdo de las desventuras de un español en los años sesenta cuando emigraba a Europa en ¨Pepe, vente pa’Alemania¨

Afortunadamente hoy en día el ciudadano común dispone de más recursos y oportunidades para internacionalizar su carrera profesional que los entrañables Alfredo Landa y José Sacristán.

El SOIB a través del Servicio de Intermediación en el que está encuadrada la unidad de Eures de Baleares y en colaboración con otros organismos pone a disposición de todos los ciudadanos interesados en irse a trabajar en algún país de Europa la posibilidad de asistir gratuitamente a las jornadas de 2 dias en las que participaran profesionales de los servicios de empleo de Francia, Alemania, Italia, Austria y Suecia.

Un auténtico lujo.

Guárdate las fechas del 16 y 17 de junio y acércate a la Conselleria d’Economia i Competitivitat en la Plaza de Son Castelló  con tu currículum traducido si quieres saber como es vivir y trabajar en alguno de esos paises.

Al mismo tiempo, los talleres, previa inscripción, impartirán contenidos sobre búsqueda activa de empleo, trabajar en alguna institución europea o la situación actual del mercado de trabajo.

Por último, se pondrán a disposición de los asistentes ofertas concretas de empleo en diversos sectores como la informática, salud, hosteleria, turismo y otros trabajos estacionales.

Toda una ocasión para mirar un poco más allá de Baleares.

Publicado en 2014, Sorpresa | Etiquetado , , , , , , , , | 1 Comentario