Table of Contents
2.0 Different active labor market policies and their impact in the UK.
2.1 Active labor market policies promote job search in the UK.
2.2 Active labor market policies influence the administrative capacities and benefits levels in the UK.
2.3 Activation policies, effective labor supply and job creation in the UK.
2.4 Activation strategies influence unemployment rates in the UK.
2.5 Activation policies have long-term impacts on employment and earnings in the UK.
2.6 Impact of different ALMPs in EU countries.
3.0 How the effectiveness of active labor market policies can be enhanced accounting for the recent economic crisis.
Active labor market policies refer to the governments’ initiatives for the labor market to support the unemployed people to find out a job. For example, active labor market policies in the UK promote the unemployed people to look for vacancies taking advice from employment counselors, attend intensive interview program with the counselors, look for and apply for jobs independently, take part in individual action plan and training program, and to receive a job offer from the employers. The main target group of active labor market policies is those who claim income-replacement benefits from the government (Barrell and Genre, 2015).
The key rationales of active labor market policies in the UK are they have a long-term impact on the national employment as well as unemployment outcome along with the benefit entitlement in the country. The aim of this paper critically evaluates the effectiveness of several kinds of active labor market policies on the decrease of long-term unemployment in the UK. Then, this paper evaluates how these activation policies work in the EU. Next, this paper discusses how the effectiveness of active labor market policies can be increased in the circumstance of the recent economic crisis.
2.0 Different active labor market policies and their impact on the UK
2.1 Active labor market policies promote job search in the UK
According to Auer (2010), several activation policies in the UK encourage unemployed people to participate in employment services that provide guidelines for job search and enhance skills. In addition, direct job-search obligations in the UK promote a higher level of social protection and motivate people to find out jobs that ultimately cut income-replacement policies. As part of the active labor market policies, participation in job training and interviews in the UK encourages unemployed people to be closer to employment. However, some unemployed people have limited experience regarding employment services like training, counseling, placement, and regulations in the UK. Therefore, they fail to take the advantage of employment services. Secondly, the disutility involved in activation requirements in the UK promotes some of the potential claimants not to claim for benefits and enter work. If the government fails to continue this productive program, the unemployment rate in the UK will go up.
The activation policies in the UK are considered as workfare that includes a work-experience or job-creation program. Under these policies, the government of the UK pays unemployment benefits until the employed people find out jobs (OECD, 2011). The “Workfare” policy can increase social welfare in the circumstance where people’s income varies in different ways but the government fails to measure it directly. Government can use benefit entitlement parameters and make the workfare requirements moderately strict to deter all benefit claims. In addition, in the perspective operational point of view, it is essential to specify the strictness of workfare requirements (such as work hours required to qualify for benefits) in the eligibility conditions as well as legal entitlements for income-replacement benefits (Barrell and Genre, 2015).
The hardship or destitution of workfare requirements supports the UK government to set workfare requirements and their strictness accurately. In addition, if the government can measure the outcome of this hardship or destitution appropriately at a lower cost for all unemployed people, it will be easier to use this information to define benefits directly and appropriately as the alternative of imposing of workfare requirements.
2.2 Active labor market policies influence the administrative capacities and benefits levels in the UK
The activation policies put pressure on all the unemployed people to participate in the job-creation program. If the unemployed people do not take part in this program, the activation policies restrict their benefits. On the other hand, the participants receive a benefits system equivalent to a program of public works to motivate the people towards works (Layard, Nickell and Jackman, 2014). There are some needy families in the UK, mainly in the rural areas, where these public works programs play a significant role by supporting them. However, this program avoids support or payments to the people who have alternative sources of income. The administrative capacity of the UK can record and distinguish people who are facing difficulties in absence of income-replacement benefits and the people having alternative sources of income.
The public employment services of the UK are also effective to detect accurate voluntary unemployment through intensive contact between employment counselors and claimants. These effective and efficient administrative capacities in the UK deliver exact benefits in lower costs. UK has good administrative capacities and able to afford high income-replacement benefits. However, these good administrative capacities promote voluntary unemployment in some cases. Therefore, it is essential for the UK government to be stricter in active labor market policies and introduce a workfare program to reduce the voluntary unemployment program (OECD, 2011).
2.3 Activation policies, effective labor supply and job creation in the UK
Labor market activation policies can promote effective labor supply to meet the labor demand. If the UK government is able to ensure a higher effective labor market, it would motivate the employers to create more vacancies. However, this initiative may promote employers to reduce wages/salaries of employees but enjoy higher productivity. In addition, this program will not provide short-term success (De Koning, 2016). In this case, the government of the UK can develop multiplier mechanisms to reduce benefit claimants and unemployment through intensified supports for the unemployed people (Hasluck and Green, 2013). The “social interaction” can also support reducing the unemployment rate. This is because the people who participated in the employment program are more likely to find jobs than the people who do not participate (O’Connell, 2012)………………