Dutch political economy

[Jurriaan Bendien <bendien@xxxxxxxxxxxx>]

Subsidised work schemes not effective

by Carolien van Eykelen

AMSTERDAM -  The millions of euro's spent in the last years to help
unemployed get a job were a waste of time. According to a report published
today by the Social Cultural Plan Bureau, subsidies used to reintegrate
beneficiaries into the labour market had little effect. If more people got a
job, it is attributed by the SCP to economic boom in the 1995-2001 period.

Despite economic growth in the second half of the 1990s, there were at the
end of 2001 still 1.5 million beneficiaries younger than 65 years.
Especially job-seekers without a benefit profited from economic growth -
such as job-seeking mothers, schoolleavers and employed people looking for
another job.

In 1998 some 800 million euro were spent on reintegration policy. Meanwhile
that sum has risen well above 1.2 billion euro per year. That is excluding
money spent on other subsidised employment (apprentice type arrangements),
implementation costs, the costs of subsidies for employers and the costs of
childcare. In addition, state employment bureaus were radically reorganised.

The number of people seeking work will rise in the next years by 117,500.
This is the consequence of cabinet plans for the sickness benefit, the
unemployment benefit, and social security benefit. The sickness benefit is
from 2005 only applicable to those who are completely and long-term
unemployable. This applies not only to new cases but also to current
sickness beneficiaries younger than 45 years. Whoever is not eligible for a
sickness benefit must apply for the unemployment benefit or social security
benefit. But these provisions will be tightened up as well. Unemployed older
than 57,7 years will be forced to look for work and every beneficiary will
be forced to look for work.

The SCP doubts whether tightening up policy will promote a flow of labour to
paid work. In addition, it raises the question whether the new people to be
integrated can all be helped into a job.

For potential employers, the newly integrables are less attractive. They
have health problems or care for young children, requiring jobs adjusted to
their circumstances. In short, it is a group which is even more difficult to
help into a job, than beneficiaries whom various agencies tried to help into
a job in the last years.

Chances for paid work are reduced, the longer somebody is dependent on a
benefit. According to the SCP policy must be focused on this area, to
prevent people from becoming dependent on a benefit for the long-term. The
government should thus invest especially in groups who now run the risk of
becoming unemployed or who just lost their job. Special attention should be
paid to lower-educated people, youth and non-western immigrants.
Unemployment rose strongly in these categories last year.

But also for employers there is a role according to the SCP. Staff that
threatens to become redundant and runs the risk of becoming dependent on the
unemployment benefit, must be retrained. In this way, employees can be
placed somewhere else in the firm, so that they are not dependent on a
benefit.

And the SCP has more recommendations: the organisation of reintregration
projects must become more efficient. Actual job placement must occur faster.
At the moment it can take months before somebody can finally start work. In
addition, the schemes must, more than is now the case, combine training and
work. In this way jobseekers have more contact with employers.

Especially that contact with employers turns out to be an important success
factor in finding a job. From research it is apparent that people who
combine a social security or unemployment benefit with paid work, have the
greatest chance of success in finding a new job.

Cabinet Balkenende I has announced that the subsidies which employers get
for employed long-term unemployed will be scrapped. The SCP questions
whether this is wise. The subsidies were introduced in 1996, in a time that
the economy was expanding strongly and when there were massive labour
shortages. Perhaps it is the case that the subsidies which are not necessary
in times of labour shortage, could be indispensable during a recession.

http://www.parool.nl/artikelen/NIE/1060060752727.html

Note: the obligation of the state to provide financial means of support to
guarantee every citizen subsistence is stated in an article of the
Constitution. The unemployment benefit applies to those who have previously
or recently worked for pay, the social security benefit is, in principle, a
constitutional entitlement for those without other means of support. The
unemployment benefit is higher than the social security benefit.