Defining Key Performance Indicators Learning from international practices Challenges for the UI scheme in Viet Nam By Celine Peyron Bista, 13 December 2013 Hanoi

Content of the presentation Importance of KPIs How to define KPIs Lessons learnt from other experiences Challenges for Viet Nam

Why do we monitor the scheme’s performance? To monitor whether the system serves its objectives: 1. To compensate workers for the loss of earnings (workers’ protection) 2. In addition, unemployed shall receive: assistance to find a job, including training and re-training if necessary. provision of medical care for themselves and their dependent. To ensure financial sustainability and keep improving the UI scheme and To anticipate any needed reform

From where do we start? Start by setting objectives and targets within a determined time frame= strategic vision for the scheme Need to measure a base-line situation in order to assess achievement of set targets

What do we measure? 1.Coverage (effective/legal) 2.Accuracy of level of benefits 3.Financial sustainability 4.Governance and administrative performance 5.Clients’ satisfaction Looking at international practices.

Coverage Legal: percentage of the economically active population that is legally protected; Effective: percentage of the unemployed (all unemployed of the labour force) receiving unemployment benefits; Examples: - In countries categorized as “high income’, only around 70% of the economically active population is legally covered while only around 40% of those unemployed will receive unemployment benefits.

Adequacy of benefits Ensure adequate income level for maintaining beneficiaries with certain living standard during periods of unemployment; “adequate” : adequate enough to prevent unemployed worker and his/her family from falling into poverty but not overly generous to encourage “moral hazard” Examples: -Average ‘level’ of benefits compared to the average wage, minimum wage, poverty line -Average duration of benefits (distribution) -Whether beneficiaries return to work in a sustainable manner (difficult to measure)

Financial sustainability Status of UI fund with full details on revenues and spending as well as the sustainability of the fund; Ratio of these who pay consistently on time v.s. the overall number of contributors. Examples: – Pay-As-You-Go (PAYG) cost rate – Demographic ratio – Financial ratio – Reserve ratio – Admin cost (compared to contributory wage base etc.) – Real rate of return on investment

Administrative performance All aspects of the process can be measured to some degree and the challenge is to highlight those elements that best reflect the main objectives of the UI programme; “Main objective: to make the correct payment to the correct person at the correct time”; Examples: – Speed of Service: in processing claims for benefit and also payment of benefit; – Accuracy of Benefits: results of on-going quality monitoring programmes to determine the accuracy of payment or the quality of decision making; – Percentage of employers failing to remit contributions on time; – Appeal process: decisions upheld by an appeal board or decisions in favour of the appellant.

Satisfaction of clients Client satisfaction surveys are effective tools in measuring to what degree insured persons, employers or beneficiaries are satisfied with the services provided by the responsible departments. Examples: -Number of complaints / appeals -Satisfaction to services (e.g. registration / benefit payments / job-matching services / vocational training etc.)

National or Provincial KPIs? KPIs are initially used to evaluate the programme’s overall performance at the national level; The same KPIs can also be used to measure if provincial levels meet the set targets.

Lessons to be learned for Viet Nam When defining KIPs, one should avoid : Setting KPIs on the basis that it will be easy to reach certain goals; Selective KPIs can be made public; “secondary KPIs” are kept within the department management team; KPIs that are too complex, difficult to understand or to explain; Choosing KPIs that can be easily manipulated; Too many KPIs which would become too numerous to allow decision makers to focus on what’s important.

Challenges for implementing KPIs in Viet Nam 1.No systematic and rigorous collection of data and statistics Step forward: -agreeing on definitions of labour market indicators (unemployed, employed, etc…) -computerizing all data collection and analysis at ESCs and PSIs levels; -connection through a national IT system.

Challenges for implementing KPIs in Viet Nam (cont.) 2. No clear strategic vision and set objectives for the UI scheme Step forward: - defining a strategic plan (objectives and targets) for the next five/ten years; - such plan should be concrete and realistic (achievable with resources available presently and in the coming years).

Challenges for implementing KPIs in Viet Nam (cont.) 3. No clear idea on the purpose of setting KPIs for the UI scheme Step forward: - defining with all stakeholders which KPIs should be made public, under which periodicity; - using the KPIs results to support national dialogue when reform to continue improving the UI scheme is needed.

To keep in mind A KPI system contains limited but targeted indicators (not more than 10) Selection of indicators will mainly depend on available statistics It is important to determine who will be responsible for compiling which indicator