24 March 2009 – Publication of DWP working paper 59: Active labour market policies in international context: What works best?  Lessons for the UK

A report is published today by the Department for Work and Pensions which draws together international evidence from comparator countries that use Active Labour Market Policies (ALMPs) to combat unemployment and economic inactivity.

The research was commissioned to inform long-term policy making for working age benefit recipients including lone parents, those on incapacity benefits and Jobseeker’s Allowance.

The main findings of the research are:

• All OECD countries now employ ALMPs to combat unemployment and economic inactivity.  The UK is at the forefront of this work.  Only Australia and certain US states have gone further in terms of pushing people into work to decrease welfare dependency.
• Evidence on what works shows that personalised assistance with job search and ‘Work First’ strategies tend to be more cost effective in the short term.
• A key function of Work First strategies is to discourage existing and potential benefit recipients from remaining on or returning to the welfare rolls.  This ‘deterrence effect’ has been particularly strong in Denmark, Sweden and the US.  In particular, there is some evidence that benefit caseloads respond to news about changes in the labour market regime even before the individuals experience any change.
• ALMPs can ease the transition into the world of paid employment through the provision of a personalised, supported job search.  Both the Netherlands and Australia have considerably strengthened the obligations of hard to reach groups in terms of conditionality.  But to date, there is no strong evidence that this approach works well for disadvantaged youth.
• A common policy instrument is the creation of subsidised jobs in the private sector for vulnerable groups who would not otherwise be employable under normal market conditions. Such programmes produce good post employment results but are also extremely costly.

Notes to Editors

• The DWP Working Paper ‘Active labour market policies in international context: what works best?’ will be published on 24 March 2009.
• This paper draws together international evidence from comparator countries that use active labour market policies to combat unemployment and economic inactivity.  The research was commissioned to inform long-term policy making for working age benefit recipients including lone parents, those on incapacity benefits and Jobseeker’s Allowance.  The author is Anne Daguerre (with David Etherington).
• The research draws mainly on experience from countries within the Organisation for Economic Co-operation and Development (OECD) that have led in the use of active labour market policies, namely Australia, Denmark, the Netherlands and the US.

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