Journal of European Social Policy vol:5 issue:3 pages:199-217
This article summarizes the findings of an explorative research commissioned by the European Commission's Third Poverty Programme, on mechanisms that cause inefficiencies and undesired side-effects within targeted labour market policies.
These 'pitfalls and dilemmas' are discussed in relation to three types of socioeconomic effects that are expected from these policies :
(i) distributional effects : a number of explicit or implicit mechanisms of discrimination against vulnerable groups in existing policies are described : legal or administrative barriers to entry, creaming off mechanisms, inconsistencies between measures. Even positive discrimination in favour of the most vulnerable groups appears to have its drawbacks. The article concludes that the abolition of existing discriminations, and the establishment of guaranteed services to all unemployed are to be preferred over positive discrimination.
(ii) Labour market outcomes for beneficiaries : low or even negative performance of policies can be attributed to mismatches with needs of the unemployed or of the labour market, segmentation of povision, or different kinds of 'dead ends', including stigmatisation. Remedies are sought in a better design of policies for particularly disadvantaged groups, a rigorous application of the 'routing' principle, and partnerships between public agencies, social partners and local non-profit organisations.
(iii) Macro-economic effects : it is argued that 'active labour market policies' are on the whole more effective at redistributing opportunities than at creating employment. In a situation of excess labour supply, one can hardly expect supply-side measures to restore the equilibrium. Therefore, activating labour supply should go in tandem with more structural policies.