Published on 7th July 2021
The 2021 OECD Employment Outlook provides us with an extensive, fact-based assessment of the impact of the COVID-19 pandemic on labour markets. Although very much far from over, we see developed economies finding their pathway to recovery. Still, employment numbers aren’t back to where they were. It identifies two significant and concurring labour market challenges: labour market participation is dropping, while digitalisation and economic reform require new skillsets. Thus, we have an activation challenge and a transition challenge.
It brings to the fore how OECD countries have organised their labour market activation systems, or active labour market policies. These policies are crucial to either support large numbers of workers finding a job, especially in times of economic downturns; or activate people to train and/or (re)join the labour force, especially during labour scarcity. Right now, we need both! On the one hand, we see participation and employment rates dropping—in particular for young people, women and workers with low wages and skills. On the other, we see employers in desperate need for skilled staff to power their survival and recovery. Yet, this skills mismatch was a challenge that we faced pre-pandemic as trends like digitalisation and the green transition picked up speed, destroying jobs and creating new ones in return. Moreover, further labour scarcities may lead to inflation, prompting central banks to raise interest rates—an effect nobody wants at this stage. The time for more adequate and agile labour market supports is now.
In this respect, the 2021 OECD Employment Outlook provides a good first step and flags the elements that contributed to an agile policy response as COVID-19 struck labour markets. The key insight is that in countries where partnerships between public and private employment services exist, public activation and transition support were more effective and responsive to workers’ and employers’ needs.
This showcases the important role of these collaborations for the world of work. Vast expenditures go into active labour market policies, and the need for these will remain urgent given the concurrence of abundance and scarcity of labour supply. But taxpayers will demand efficiency and effectiveness for their support to be sustainable as economies and fiscal room deteriorate. Private employment services can be a part of the solution. A growing number of private providers support jobseekers and workers as they find their way in the world of work. This includes recruitment, re-integration, training, outplacement, and career guidance firms. They share a core purpose with public employment services: get people (back) into a job! But they each have unique “on the ground” insights into the labour market, and especially on labour market transitions. As such, employment services, both public and private, hold the key to successful active labour market policies.
The ways to compose these partnerships are diverse. Many public employment services across the OECD already outsource the delivery of some of their services to private specialists. This is done at all levels: local, regional and national. Also, many exchange information on vacancies and jobseekers, or organise job fairs and training together. In some instances, private representatives play a key role as part of the tripartite governance of public employment services. This collaboration is often formalised, but most of the time it is of an informal nature: public and private labour market support staff (consultants, recruiters, management etc.) just work together on an operational level to match employers and jobseekers. Of course, this is done inside and outside of specific programmes for specific groups that are underrepresented on the labour market.
Given that shared purpose, there are clear efficiency gains from such collaboration. The mandate of public employment services often goes vastly beyond job matching alone. They often act as the co-ordinator for unemployment and other labour market insurances, including potential supervision of requirements of jobseekers. Yet, many public services can be limited to those meeting certain thresholds or criteria, thus limiting their capacity to deliver individualised “early warning” services. Public employment services can potentially have a vastly more comprehensive labour market overview, feeding trends on labour demand and supply to the market. They are also in control of the conditions to which private providers can be tendered. Meanwhile, private providers focus on shaping a match, and have vast and elaborate ties with business and their human resources departments and staff. Their services are accessible to all, and as such are broadly implemented across all sectors and skill levels of the labour market. Public private partnerships bring synergies of operational expertise, insight and capacity to deliver on labour market support through focused training and career guidance.
In conclusion, active labour market policies will be crucial for recovery from the COVID-19 pandemic—and far beyond. As monetary and fiscal space decreases in the coming years, efficiency and effectiveness will need to satisfy taxpayers’ scrutiny. To deliver on this, more structured collaboration between public and private employment services needs to be integrated into labour market policymaking. Each have their role to play, but vast efficiency gains can be achieved through a concerted and collaborative approach. This would leverage the capacities and roles of both public and private employment services and capitalises on their shared purpose: get people (back) into a job!
First published on OECD Forum Network, July 2021