The document discusses the role of private employment services in labor markets. It notes that while restrictions on private employment agencies have been eased in OECD countries, temporary work agency assignments still only represent a small fraction of total employment. Outsourcing case management services to private providers is done variably by different countries' public employment services (PES). Effective PES require addressing challenges like decentralization, continuous performance management, and evaluation to ensure efficient spending on labor market policies and programs.

1. WHAT ROLE FOR PRIVATE
EMPLOYMENT SERVICES
ON THE LABOUR MARKET?
Stefano Scarpetta
Director of Employment, Labour and Social Affairs
OECD
CIETT World Employment Conference
28th May 2015, Rome

2. KEY CHALLENGES
2

3. The jobs recovery remains incomplete
Note: Countries shown by ascending order of the maximum gap (country-specific trough).
a) Aggregate of 15 OECD countries of the euro area.
Source: OECD calculations based on OECD Economic Outlook (database), http://dx.doi.org/10.1787/data-00688-en.
Employment gap
Percentage-points change in the employment rate since the onset of the crisis (Q4 2007)
-15
-10
-5
0
5
10
%
Maximum gap
(country-specific trough)
Current gap
(Q4 2014)
Projected gap
(Q4 2016)

4. Unemployment is declining but further
progress is required
Note: Countries shown by ascending order of the current unemployment rate (Q4 2014).
a) Aggregate of 15 OECD countries of the euro area.
Source: OECD calculations based on OECD Economic Outlook (database), http://dx.doi.org/10.1787/data-00688-en.
Unemployment rate
Percentage of the labour force
0
5
10
15
20
25
30
%
Current value
(Q4 2014)
Start of the crisis
(Q4 2007)
Projected value
(Q4 2016)

5. Long-term unemployment remains
persistently high
Note: Countries are shown in ascending order of the incidence of long-term unemployment in Q4 2014.
a) Data are not seasonally adjusted but smoothed using three-quarter moving averages. OECD is the weighted average of 33 OECD countries
excluding Chile.
b) 2014 for Israel.
Source: OECD calculations based on quarterly national labour force surveys.
Long-term unemployed (more than one year) as a percentage of total unemployed,a
Q4 2007-Q4 2014b
0
10
20
30
40
50
60
70
80
%
Q4 2007 Q4 2014

6. The NEET rate among youth has increased
Percentage of youth (aged 15-29)
a) OECD is the unweighted average of 32 countries (excluding Chile and Israel).
b) 2008 for Korea.
c) 2013 for Korea and the United States.
Source : OECD estimates based on national labour force surveys.
A. NEET rate in 2014c, selected OECD countries B. Percentage-points change in NEET rate,
2007b – 14c, selected OECD countries
0
5
10
15
20
25
30
35
40
45
%
Share of youth population inactive and not in education or training in
2014
Share of youth population unemployed and not in education or training
in 2014
NEET rate in 2007
-15
-10
-5
0
5
10
15
%
Share of youth population inactive and not in education or training
Share of youth population unemployed and not in education or training
NEET rate

7. Mismatch is prevalent whether by skills,
qualifications or field
7
Prevalence of skills, qualification and field-of-study mismatch
As a percentage of employed workers, 2012a,b
*The OECD Survey of Adult Skills only covered Flanders (BEL) and England/N. Ireland (GBR).
a) Workers are classified as mismatched by qualification if they have higher or lower qualifications than required by their job; workers are classified as
mismatched in terms of literacy skills if they have literacy proficiency exceeding or below that required in their job; workers are classified as mismatched by field
of study if they are working in an occupation that is not related to their field ofstudy.
b) Occupation is only available at the 2-digit level in the ISCO-08 classification for Australia. It is not possible to assess the extent of field of study mismatch
using the same definition used for other countries.
Source: OECD calculations based on the Survey of Adult Skills (PIAAC) 2012.

8. Many of the jobs destroyed as a result of the
crisis will not come back in the recovery
Annual percentage change, employees in the non-agricultural
business sector,a Q4 2007-Q4 2014
a) Manufacturing refers to mining, manufacturing and utilities and business services to trade, transport and communication, accommodation
and food services, financial services, real estate and business services.
Source: OECD calculations based on the European quarterly national accounts, on the Current Employment Statistics survey for the United
States and on the labour force survey for Japan.
Manufacturing Construction Business services Non-agricultural business sector
Euro area Japan United States
-5
-4
-3
-2
-1
0
1
2
3
%
-3
-2
-1
0
1
2
%
-10
-8
-6
-4
-2
0
2
4
%

9. Changes in the composition of employment
by type of contract
Annual percentage change in total employment by work status
in the euro area, Q4 2007-Q4 2014
Source: OECD calculations based on the European Labour Force Survey (EU-LFS).
-3
-2
-1
0
1
2
3
%
Permanent Temporary Self-employed Employed

10. KEY BUILDING BLOCKS FOR
FOSTERING MORE
INCLUSIVE AND RESILIENT
LABOUR MARKETS
10

11. The central role of the
Employment Service
11
Inclusive
and resilient
labour
markets
Opportunities
EmployabilityMotivation
Ensuring that
jobseekers have the
motivation to seek
work
Intensive case
management,
placement services and
participation in
measures to increase
employability
Addressing demand-side barriers and expanding
employment opportunities for jobseekers

12. Effective and efficient labour market
policies and institutions
12
How can the
employment services
achieve more with
less?
Which role can PPPs
and contracted out
services play?
How to address the
challenges of
decentralised
systems?
How to manage
performance and
ensure continuous
improvement and
learning?

13. Effective and efficient labour market
policies and institutions
13
How can the
employment
services achieve
more with less?
Transition to e-services
as one solution
(e.g. in EU, BRA, MEX, IND, DEU)
Saving costs, while also
increasing service
availability and accessibility?
E.g. though online benefit applications
(e.g. in AUS, GBR, TUR, ESP, and ITA)
Far-reaching
changes in NLD:
2/3 of local PES
offices closed

14. Effective and efficient labour market
policies and institutions
14
Which role can PPPs
and contracted out
services play?
Experience in AUS and
GBR shows …
Providers need to be
paid on the basis of
outcomes they
achieve
Accurate measurement
of performance is key
Most-effective
providers should
be able to expand

15. • Restrictions on private employment agencies relate to fees,
types of employment, licensing by the authorities, etc. have
been eased.
• Temporary work agency (TWA) assignments in OECD
countries represent a fraction of total employment, but
they account for large share of job starts in some countries.
 Significance of TWA work for the overall employment
services:
- Major source of job vacancies for the unemployed
- TWA assignments may convert to a permanent post, or provide
work experience that allows other placements e.g. “reverse
marketing” of the hard-to-place unemployed
- There is a risk of cycling between short-term contracts and
benefits
15
Private agencies in the labour market

16. • PES often outsource a high percentage of their budget for individual jobseeker
services, e.g. job clubs, training.
• Where PES outsource the individual case management function, PrEAs tend to
be one of the successful bidder.
• Outsourcing of case management is structured variably, e.g.
– Targeted on all registered unemployed vs. specific groups;
– Voluntary jobseeker participation and freedom to switch provider at any
time vs. assignment or multi-year commitment to the provider
– Purchaser defines provider processes vs. provider autonomy (“black box”)
– Fixed fees vs. payment for results; e.g. payment for 6-month job outcomes
• Since the mid-2000s, the recourse to outsourced case management has
increased in some countriers, UK (Work Programme, 2011) and Ireland
(JobPath, 2015). There is also some non-OECD business (Saudi Arabia).
16
Experiences with outsourcing

17. Effective and efficient labour market
policies and institutions
17
How to address the
challenges of
decentralised
systems?
Usually, federal funding for
unemployment benefits
Employment services
managed by the
regional or local level
(e.g. CAN, CHE, ESP, ITA, DNK)
CHE & DEU: comparative
benchmarking of local offices
DNK: national
authorities
define key
procedures

18. Effective and efficient labour market
policies and institutions
18
How to manage
performance and
ensure continuous
improvement and
learning?
Performance indicators
should show relation
between inputs and
final outcomes
In OECD, expenditure
on PES and ALMPs
ranges from 0.01% to
2.1% of GDP
Evaluation is crucial to ensure
effective and efficient spending
Test locally and
evaluate before
national rollout

19. 19
Thank you
Read more about our work
Email: stefano.scarpetta@oecd.org
Website: www.oecd.org/employment/outlook
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