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.