book review in issues and problems in contemporary
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BOOK REVIEW IN ISSUES AND PROBLEMS IN CONTEMPORARY SOCIETY
Alex Christopher V. AgupeIII-21 BSE Social Science
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BASIC INFORMATION OF THE BOOK
Title: Active Labour Market Policies
around the world:Coping with the consequences of
GlobalizationAuthor:Peter AuerUmit EfendiogluJanine Leschke
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Copyright © International Labor Organization 2008First Published 20005
Second Edition published 2008
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TABLE OF CONTENTS Introduction The ILO’s mandate for active policies The Historical background of ALMPs Definition and Functions of LMPs and ALMPs The contribution of ALMPs to the objectives of
employment creation, security in change, equity and poverty reduction.
Differences in the utiliztion of ALMPs: Developed, Transition and Developing countries
Financing ALMPs Evaluation ALMPs
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ILO’S ROLE
ILO means International Labor Organization The solemn obligation of the ILO is further among the
nations of the world programmes which will achieve full employment and the raising of standards of Living and the prevention of unemployment and the provision of an adequate living wage
ILO advocates for the practice or implementation of Active Labor Market Policies
ILO believes that the adaptation of ALMPs as a policy could be the answer on the consequences of Globalization
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Historical Background of ALMPs
ALMPs conceptualized and implemented in a large scale during:
o Great Depression in 1930s (Specific example: New Deal policy of USA)
o The Swedish model of Economic and Societal changes implemented in Sweden during 1950s
o Germany and France adapt ALMPs during 1970s because of Oil Price Hike in West Asia.
o When European Union was formed, ALMPs became part important policies to accompany structural change in EU economic sphere
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During 1997, ALMPs became important and major part of European Employment Strategy (EES)
During 1990s, China adopt ALMPs as a permanent feature of their labour market governance.
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LMPS LMPs means Labor Market Policies
Labor Market Policies are defined here as policies that provide income replacement and labor market integration measures to those seeking work, usually the unemployed, but also the underemployed and the employed who are looking for a Better job.
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EXAMPLES OF LMPS
Job search assistance Training Employment Subsidies Unemployment Insurance Provisions for retirement
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Active and Passive LMPs
Definition and their functions
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Passive LMPso are concerned with providing replacement
income during periods of joblessness or Job search
o always corresponds to social transfers that are not conditional upon joining a training or work programme, though they usually include job search provisions that are increasingly enforced and correspond to an active element in passive policies
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ALMPS
ALMPs means Active Labor Market Policies
ALMPs refers to labor market integration through demand or supply side measure.
When a country adopt ALMPs, the country would be more involve in International Labor market integration
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Functions of Active and Passive LMPs
Passive LMPs The primary function of PLMPs is the matching of
labour demand and supply. The impact of this intervention on labour demand and supply can vary.
PLMPs can intervened the labour demand and supply by: Directly matching Labour demand and supply by:
Public and Private employment services Job search assistance Prospecting and registering vacancies Profiling, providing labour market information.
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Creating Demand Public works Enterprise Creation Self-Employment
Reducing Supply Early Retirement
Enhancing Supply Training and Retraining
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Active LMPs Active participation in Labour Market Integration Job creations in the form of public and
community work programmes Enterprise creation programmes and
Employment Subsidies This type of LMPs targets the specific groups who
are facing labour market difficulties such as younger and older people, women and those particularly hard to place such as the disabled.
It also answers the growing criticism that pure income replacement policies might entail disincentives to work once unemployment becomes on longer duration.
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Labor Market flows in a Developed country
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Shrinking Enterprises and Public Sector (Exit Dominated)Entry / Stable Employment/ Exit
Labour Market Entries(Reentries)
Entry /Stable Employment/ ExitExpanding enterprises and public sector(Entry Dominated)
Labour Market Intermediaries-Unemployment insurance-Labour exchange-Active Labour market Policy-Information Evaluation
Retirement
Informal Economy
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Labor Market flows in a Developing country
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Shrinking Enterprises and Public Sector (Exit Dominated)Entry / Stable Employment/ Exit
Retirement
Labour Market Entries(Reentries)
Labour Market Intermediaries-Unemployment insurance-Labour exchange-Active Labour market Policy-Information Evaluation
Entry /Stable Employment/ ExitExpanding enterprises and public sector(Entry Dominated)
Informal Economy
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Why do we need to have an LMPs?
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Because there’s an important challenge with regards in Labour market that every government or
state need to address
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Every government need to address the urgent balancing of Mismatches that occurs in
the Labour Market(Both Qualitative and
Quantitative)
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The contribution of ALMPs to the: Employment Creation
Security in Change
Social Equity
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EMPLOYMENT CREATION
ALMPs support employment creation in two basic ways:
directly by job-creation measures (e.g public works and enterprise creation
And Indirectly by improving employability through training and by ensuring efficient labour exchanges that provide better market information and enhanced job matching
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SECURITY IN CHANGE
In globalized economies, characterized by openness to trade and investment, continuous technological progress and privatization of state-owned enterprises, labour market changes are inevitable.
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In many cases, these changes result not only in internal reallocation of labour but also in massive lay-offs. As a consequence, gov’ts must find ways to cope with such changes. In this respect, ALMPs are an important policy tool addressing the adverse effects of structural change and insufficient labour demand, thus creating security in Change
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SOCIAL EQUITY
ALMPs contribute to equityIt provides equity by overcoming discrimination against older workers, the least qualified, ethnic groups and the disabled in business world or labor market
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Differences in the utiliztion of ALMPs
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In the OECD (Organization of Economic cooperation and development) countries, ALMPs have become a permanent feature of Economic and Social Policy.
For Example.In 1993, 3.63% of GDP in The EU was spent on LMPs of Which 1.13% was spent on ALMPs.In 1998, 2.8 % of GDP was spent on LMPs and 1.07% on ALMPs
o In the data shown above, EU countries favoured active over passive spending. The Passive decrease by 0.83% but Active decrease only 0.06%.
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Transition countries are lower spenders on ALMPs.
In Latin America, the average of public countries on ALMPs in seven countries amounted to 0.4% of GDP in 1997. The High spenders among these seven countries were Costa Rica, Jamaica and Mexico while the low spenders were Argentina, Chile and Peru.
In Africa, Only Tunisia and Algeria who reported has an 1% of GDP spending in ALMPs the next higher to them were Egypt and Morocco 0.3% of the GDP.
ALMPs are used also in the developing country and the rest of the world but ALMPs are marginalized part of their economic plans.
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Financing ALMPs
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In OECD countries, 22 EU countries calculated for the estimated budget for ALMPs. They come up with 4% of the GDP as a suggested budget for the ALMPs.
But in Developing countries, Finding a source of funds for spending on a ALMPs is more difficult, complicated and if worst, impossible.
Why is it difficult to find a source of funds for ALMPs in the developing countries?
It is difficult to find a budget for ALMPs in the developing countries because we have to consider many factors; such as; Proper tax collection, Monetary Policies, Political Situation, International Aid and remittances.
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How should labour market policies be financed?
First, we can financed it through the General budget which appropriated annually by the government.
Second, we can financed it by Specific wage-based social security contributions
In a developed country, neither of the two can be used but in the cased of the developing countries; that’s a long debate.
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Evaluation of ALMPs
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Different Models for Evaluation
Target Oriented EvaluationThis model does not only stresses the
importance of measuring the impact of policies in terms of reaching their targets but also the crucial role played by the incentives created by the interaction of different policy interventions and the cumulative impact of policy regimes on the disposition and observable behavior of relevant actors in the target area.
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This evaluation model viewed as a bottom-up approach, whereby the effects of policies are viewed from the perspectives of the relevant agents and the process of policy formation and implementation as a black box.
While…
Programme Oriented Evaluation It assesses the impact of one programme
designated for a specific target,
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Example of Evaluation Results (Programme Evaluation model)
*EuropeProgramme
Job search Assistance
Appear to help
Unemployed adults when economic conditions are improving.
Comments
Relatively more effective than other labour market interventions due to low intervention costs
Training for Long term Unemployed
Women and other disadvantaged groups
No more effective than job-search assistance in increasing re-employment probabilities and post-intervention earnings; two or more costly
Employment and Wage subsidies
Long-term unemployed Benefits to treatment group not significant compared with control group. Sometimes used by firms as permanent subsidy programme, High Deadweight and Substitution effects
Public works programmes Severely disadvantages groups
And unemployed in general
Good as safety net, low performance as labour market integration tool
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CONCLUSION ALMPs can be used to cope with the
consequences of Globalization in labour market
In order to make AlMPs work we should evolve towards a more permanent policy instrument for the management of change rather than being a band-aid solutions in emergencies
ALMPs has a lots of functions. We must allow these functions as bridge for development not as a trap that will stun our economic progress.
ALMPs can be a solution in some economic problems but we must remember that there is no single solution for every individual, there is also no “one-size-fits-all” solution either.