Federal Departement of Economic Affairs FDEA State Secretariat for Economic Affairs SECO Labour Directorate Labour Market / Unemployment Insurance From

Federal Departement of Economic Affairs FDEAState Secretariat for Economic Affairs SECOLabour DirectorateLabour Market / Unemployment Insurance

From centralized to decentralized steering

The Performance Management System of the Swiss unemployment insurance

WAPES Conference Moscow, Russia - September 2014

Olivier Nussbaum - SECO

Moscow - September 2014

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Some facts and figures about Switzerland and the Swiss labour market

Population: 8.1 million, 23.8% of whom are foreign nationals

National languages: German (65%), French (23%), Italian (8%),Rumantsch (0.5%), other (21%)

Net activity rate (15 - 64 age range): 83.5%

Unemployment rate by ILO standards: 4.4% Youth unemployment rate : 7.7%

Liberal Labour Market policy

Structure: - primary sector 3.5%- secondary sector 22.3%- tertiary sector 74.2%


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Registered Unemployment: Regional differences (July 2014)


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Since 1995: active labour market policy

• Objective: rapid and durable reinsertion of jobseekers into labour market

• Means: - Regional Employment Centres REC- Labour market programms LMP- Strict definition of a ‘reasonable job’


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Rights and duties of job seekers

Rights: - Receive unemployment benefits- Get help from job centres to find a new job

Duties: - Actively search for a new job (own initiative)

- Respect control regulations - Respect instructions from the job centres


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From centralized steering…

• Pilot REC in two cantons 1995-1996

• Evaluation in 1996

• Decision of general implementation in 1996

• Deployment in 1997 All cantons had to establish REC and increase LMP Number of counsellors per jobseeker Number of administrative staff per jobseeker Number of managers per counsellors Number of interviews per jobseekers Minimal offer of LMP and of counselling

Steering over input / output (resources and activities)


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… to decentralized steering

• Evaluation of the deployment phase in 1999

• The system being established, decision to switch to outcome oriented steering from 2000 Benchmark over outcome oriented indicators Global budget: maximal budget, but more freedom for the cantons

when it comes to input (resources) and outputs (activities)

Two very important aspects of the way we do things:

Pilot before general implementation

PLAN – DO – CHECK – ACT


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Management system – paradigm shift

3’000 local employment offices

unprofessional

120-150 regional employment centres

professionalInput/output-oriented

New agreements

professionaloutcome-oriented

19962000


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Management by results• Steering no longer via inputs, but via results achieved on reinsertion

of unemployed persons• Confederation sets out objectives for the cantons. The Confederation

forgoes imposing detailed regulations. No longer tells cantons how to reach objectives.

• Results-oriented agreement• between cantonal governments and Federal Department of

Economic Affairs• first agreement in 2000, renewed 2003, 2006 and 2010

• Budget allowed to the cantons depending on cantonal jobseeking rate and cantonal number of jobseekers

paradigm shift (NPM)


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Preconditions for implementing PMS

• Political framework: • Commitment• Stability in goals / patience• Evaluation / no over-steering• Accept not to control everything centrally and accept

local differences in implementation

• Legal framework: • Stable legal basis (law), also for financing• Contracts between parties defining the modalities of

PMS

• Technical framework: Data availability and quality

• Resources: Planning possible at regional level

• Process / Development of PES: Some processes must already be implemented


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“Global budget”

• Budget of Regional Employment Centres depends on two parameters: cantonal job seeking rate and cantonal number of jobseekers (decreasing scale)

• Effective costs refunded

• Greater scope for the cantons regarding:- Staff- Investments- Processes- Active labour market measures


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Labour Market Authorities of Switzerland

SECO – Directorate of LabourLabour Market / Unemployment insurance

Public employment servicesPES Unemployment funds

RegionalEmploymentCentres REC

Employers Jobseekers

DisabilityInsuranceAgency

SocialSecurityServices

PrivateEmployment

Agencies

CareerCounselling

LabourMarket

Measures

Federal

Cantonal

Labour Market

Cooperation


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SECO – Directorate of Labour

• Responsible for instruments of Swiss labour market policy (Unemployment Insurance Act AVIG and Employment Services Act AVG)

• Administration of unemployment insurance fund• Supports cantons in strategic management • Responsible for European agreement on the free movement of

persons


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Public Employment Services of the Cantons

• Responsible for: • Implementing relevant legal acts• Organising different public employment services: Regional

Employment Centres, unemployment funds, Logistical Centres for Labour Market Measures

• Implementing labour market measures• Most operative work delegated to public employment services


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Regional Employment Centres REC

• More than 120 Regional Employment Centres in 26 cantons

• More than 1,500 counsellors

• 4 instruments: - counselling - job placement

- training / labour market measures- controls and sanctions


Federal Ministry (SECO)

Regulatory framework

Agreement between cantonal governments and federal ministry

Steering CommitteeCantonal

governments

Federal act / ordinance

- AVIG

- AVIV

- AVG

Financing

- operating cost

- vocational training

Steering tool (benchmark) Activity of cantons

Measurement of efficiency(Result indicators)

Communication of results

Process and output indicators

Review of the situation

Exchange of best practices

Transfe

r of b

est

pra

ctices

Co

mp

etitio

n

Activity according to the law:

- Counselling- Job placement- Training- Controls and sanctions

Outcome measurement

4 results indicators:

- Rapid reintegration

- Reduce long-term unempl.

- Reduce exhaustion of benefits

- Reduce re-registrations

Continuous improvement process


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Objectives and indicators

Objectives Indicator Weight.

1

2

3

4

Rapid reintegration

Prevent/reduce long-term unemployment

Prevent/reduce exhaustion of benefits

Prevent/reduce re-registrations

Rapid and sustainable reintegration

Avg. no. of benefit days drawn by former beneficiaries.

Entrants to long-term unemployment divided by the # of persons who entered a new framework period 13 months earlier.

# of exhaustions of benefits in the reporting month, divided by the # of persons who entered a new framework period 2 years earlier.

Proportion of benefit recipients who re-register within 4 months.

Global indicator

50%

20%

20%

10%

100%


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Management by results :The econometric model

• Purpose: Enable comparisons between cantons

• How: By setting off the influence of special regionalfeatures (exogenous factors):

- Labour market situation- Seasonality

- Nationality- Frontier workers (persons living abroad and

working in Switzerland)- Size of agglomeration

• Calculated and made public once a year, at the beginning of June of the following year.


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Measure of performance: publication of results

• Benchmark using the econometric model calculated and made public once a year

• Relative benchmark. Average = 100.

• Published at the beginning of June of the following year.


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Example of relative Benchmark result

Total index unadjusted Total index adjusted

0

20

40

60

80

100

120

140

160

ZH BE LU UR SZ NW-OW

GL ZG FR SO BS BL SH AR AI SG GR AG TG TI VD VS NE GE JU CH


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Some Lessons learned (1)

• Management by results is tried, tested and accepted

• Strong incentive for improvement (competition, reputation effect)

• Incentive to reintegrate jobseekers as fast as possible (social security is financed by cantonal and local authorities)

• Incentive to cooperate with private employment services and any other partner

• Better possibilities to act on part of cantons by introducing global budgets

• Political shield


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Some Lessons learned (2)

• Too strong competition and monetary incentives lead to demotivation

• Relation between inputs, outputs and impacts can not be modelled

• Strong focus on rapid reintegration may lead to neglect of sustainability of reintegration

• Focus on benefit recipients may lead to a trade off with non benefit recipients, the later being less taken care of

• Econometric model considered by cantons to be too complicated / a black box


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Thank you for your attention

Olivier Nussbaum

Federal Department of Economic Affairs, Education and Research - EAERState Secretariat for Economic Affairs – SECOLabour DirectorateLabour Market and Unemployment Insurance

Holzikofenweg 36, 3003 Berne, Switzerland

Phone ++ 41 58 464 15 78

Cellular ++ 41 79 875 34 77

[email protected]

www.seco.admin.ch

Documents

Federal Departement of Economic Affairs FDEA State Secretariat for Economic Affairs SECO Labour Directorate Labour Market / Unemployment Insurance From