What kind of active labour market policies are the most effective at increasing the reemployment
chances of the unemployed? Writing in the la test issue of the Economic
Journal, Professors Michael Gerfin and Michael Lechner evaluate a range of
programmes launched by the Swiss government in 1996. Their research suggests that
wage subsidies for temporary jobs are the most successful, while employment
programmes (job creation schemes) and vocational training programmes may not only
be ineffective: they may even have negative effects.
Unemployment increased dramatically in Switzerland in the first half of the 1990s. The
government’s ambitious response encompasses a large variety of continuing
programmes, intended to increase the re-employment chances of the unemployed:
?? Vocational training programmes, which encompass language courses primarily
aimed at foreigners, further vocational training, and computer courses.
?? Employment programmes very similar to those in other European countries, such as
Germany and Sweden. The jobs in these programmes are offered by non-profit
organisations, which must not be in competition with private sector firms; and wages
are fully paid by the placement office.
?? A rather unusual wage subsidy programme for temporary jobs. The immediate
objective is to encour age job seekers to accept offers for temporary jobs that pay
less than their unemployment benefits by overcompensating the difference with
additional payments from the unemployment insurance system. This makes the
programme financially attractive for both the unemployed and the placement office.
In contrast to wage subsidy programmes in other countries, the subsidised jobs are
expected to be temporary and intended as stepping stones to permanent
employment. And unlike the temporary jobs employment programmes, they are not
in a sheltered part of the labour market.
The researchers’ evaluation shows that the subsidised temporary job is the most
successful programme. Indeed, it is the only programme that increases the reemployment
probability of its participants.
In contrast, employment programmes reduce re-employment probabilities compared to
the wage subsidy and to not participating in any programme. These results indicate that
the more regular work the participants are doing, the better the programme.
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Vocational training programmes have a mixed performance. Although none of the
programmes have a positive effect, further vocational training and computer courses do
not look bad. In contrast, language courses appear to have negative effects.
The research also shows that it is a bad idea to send the unemployed to any
programme in the initial stage of an unemployment spell. The reason for this clear: the
chances of finding a job are best at that stage, and programme participation
compromises those chances.
ENDS
Notes for Editors: ‘A Microeconometric Evaluation of the Active Labour Market Policy
in Switzerland’ by Michael Gerfin and Michael Lechner is published in the October 2002
issue of the Economic Journal. Gerfin is at the University of Bern; Lechner is at the
University of St. Gallen.
For Further Information: contact Michael Lechner on +41-71-224-28-14 (email:
Michael.Lechner@unisg.ch); or RES Media Consultant Romesh Vaitilingam on 0117-
983-9770 or 07768-661095 (email: romesh@compuserve.com).