A NEW AND PROMISING INSTRUMENT TO IMPROVE LABOUR MARKET PERFORMANCES
Articolo pubblicato nella Nwsl dello Studio Ichino-Brugnatelli e Ass., ottobre 2013
Following to a draft agenda by Lista Civica, Democratic Party, and Sudtiroler Volkspartei Senators, Italian Government has been engaged since October 10th by the Senate with testing an innovative arrangement of employment services, based on a new statutory instrument, namely “Employee Repositioning Work Contract”(ERWC).
The project introduces a new approach to the problems related to employment crisis and re-access to work environment. Income support has been the only help offered to people who lost their job so far, either by a proper support or by inappropriate unemployment compensation under the name of “Cassa Integrazione”. In both cases the benefit was granted regardless of new jobs being actually sought or even of every related activities.
In truth, income support should have already been conditioned to job seeking according to present law regulations, however, this has been totally ignored in fact. As a result, only so-called “passive” labour market policies have been applied so far – income support, as mentioned above – and we have spent over € 20 billion a year since 2010 on them. Conversely, “active” policies are missing, i.e., those aimed to reposition effectively the employee. Now, ERWC experimental project is bound to create a direct connection between “passive” policies and “active” initiatives to grant access to work again, by making the first dependent on the latter.
These are, in brief, the contents of the project. The option to test ERWC is given by the State to the Regions, since the latter have legislative and administrative competence for employment services: individual regions may adhere if they wish to, thus redeveloping their spending in this area. By means of a resolution of their Governing Body (“Giunta”), any adhering Region, in turn, will offer a chance for people who lost their job to enter into ERWC, granting special vouchers for adequate outplacement services, including intensive assistance with job seeking. Voucher shall comprise a fixed amount, payable when the provider is appointed, on and a further much higher amount, payable upon goal accomplishment, i.e., when the beneficiary gets a new job. Every unemployed individual can freely choose his/her provider of outplacement services from a list of certified providers by his/her respective Region, thereby fostering positive competition among providers.
To prevent providers from focusing on the easiest people to place, leaving out the others, the project provides for gradable voucher financial value depending on the attributed “employability” rate to every individual beneficiary, according to previously laid down criteria by his/her Region (some regions, such as Lombardy, have already gained a good experience in this field) .
In addition, ERWC arranges for a tutor being assigned by the provider to every unemployed individual, to assist him/her day-to-day and to monitor his/her attitude to actual repositioning, including, for example, if he/she is available to take adequate training. In case the beneficiary unreasonably refuses to adhere to any initiative, or to accept a job, the tutor shall report the employee’s behaviour. Unless the beneficiary opposes to the report, calling for arbitration, voucher financial value is halved. If the event occurs again, service provision shall be terminated.
The appointed Arbitrator, who needs to know well the local labour market, shall be selected by mutual agreement between the most representative trade unions and the Association of providers. The decision by the Arbitrator shall be released within two weeks, by an extremely simple procedure, since no complex investigations are required: just the tutor and the employee will need to be heard.
The project also allows the last employer of a beneficiary to participate: when the beneficiary is dismissed or made redundant, the employer may undertake to pay a complementary unemployment financial support. Hence, thanks to ERWC, a dismissed employee receives 90% per cent of his/her last pay rather than just 75 per cent, which is the percentage paid under the existing welfare policy by the public body in charge of income support to the unemployed. In any case, if few people show interest into ERWC at the beginning, the Region will be able to make all of the resources available to a small number of beneficiaries, all the more to their benefit.
As regards project costs, let us consider a Region in which 10,000 ERWC are executed. Assumingly, costs for every outplacement service paid by means of the above mentioned vouchers may range from 2,000 to 4,000 euro. Total costs to be borne by the Region, if all ERWC’s are successful, equal 30 million approximately. It may seem a very large amount, but it is not, compared to costs borne for “Cassa Integrazione” paid to the same number of dismissed employees for two, three, four or more years, or costs currently borne by Regions for training sessions without any connection with the actual demand expressed by the labour market, and, furthermore, the usefulness thereof has (almost) never been assessed.
It is time for the Regions to redevelop the allocation of the said expenditure, even by moving part of it from training to placing activities. Furthermore, we need to take into account the contributions from the European Social Fund: only an average of 40 per cent thereof has been used so far, because eligible projects are missing, whilst ERWC project would meet their requirements in full. In addition, Youth Guarantee funds by EU can be used, i.e., a program for intensive help to include the young in production activities.
Finally, we need to be aware that that paying “Cassa Integrazione” to dismissed employees for years, as we do now, costs much more than placing them in the labour market again in about six months: in 2012, despite deep economic crisis, a million and a half permanent employment contracts were executed, evenly distributed through the North, Centre and South of Italy.
“Employee Repositioning Work Contract” can be key to Italian labour market, assuring effective services for matching supply and demand, through close cooperation between public employment centres and employing companies, exploiting best practices and know-how also with reference to successful results achieved by some foreign Countries.
