Seven - Active labour market policy and social investment: a changing relationship

Summary

Introduction

Active labour market policies (ALMPs) seem an obvious component of any social investment project. Rather than simply paying a replacement income to jobless people, an active labour market policy aims to make sure that unemployment spells are as short as possible, by proactively helping jobless people re-enter the labour market. Reducing the duration and the incidence of unemployment, or, more generally, of worklessness, is an objective that is perfectly consistent with the social investment perspective as defined by Jenson (see Chapter Three). ALMPs provide help to disadvantaged people (the jobless) and take a long-term perspective by reducing the scarring effect of unemployment. They also provide returns for society as a whole by contributing to reduce outlays for cash benefits.

Upon closer scrutiny of the policies that usually go under the rubric of ALMP, the case for their inclusion within the social investment perspective is less obvious. In fact, ALMP is an umbrella term that refers to very different types of interventions. These include training, assistance in job search, subsidies paid to employers who accept to take on an unemployed person, work experience placement programmes or temporary job creation programmes in the public sector. Some consider sanctions and benefit conditionality also part of the ALMP toolbox (see, for example, Kluve, 2006) in so far as these are instruments that may provoke a change in the behaviour of the beneficiaries and speed up labour market re-entry. In short, given the broad variety of interventions that constitute ALMPs, it is simply impossible to make a general statement concerning their conformity to the social investment ideal.

The objective of this chapter is to focus on the different types of ALMPs that exist, or have existed, in OECD countries, and assess the role they play or have played from the point of view of the social investment perspective, as discussed by Jenson (Chapter Three). It begins by developing a two-dimensional classification of ALMPs. The first one focuses on the extent to which policies comprise an investment in beneficiaries’ human capital. The second dimension considers the degree to which beneficiaries are expected to re-enter the labour market.