ITCILO/ACTRAV COURSE A Capacity Building for Members of Youth Committees on the Youth Employment Crisis in Africa 26 to 30 August 2013 Labour Market Policies Concepts and Definitions

Key Words and Concepts  Labour  Labour Force  Labour Market  Labour Market Information  Labour Market Analysis  Labour Market Policy

Labour  Simple dictionary definition: Labour is very hard work (BBC English Dictionary)  Economists: Labour is a production factor  International Labour Organization: “Labour is not a commodity”

Labour Force  All those, above a specified age, and during a specified brief period, who are either working, or available for work and seeking it.

Labour Force POPULATION WORKING AGENOT OF WORKING AGE WORKINGWITHOUT WORK EMPLOYERUNDER-EMPLOYEDEMPLOYED AVAILABLE AND SEEKING WORK AVAILABLE BUT NOT SEEKING WORK NOT AVAILABLE FOR WORK INADEQUATELY EMPLOYED FULL TIMEPART TIME SELF- EMPLOYED PAID EMPLOYMENT THE UNEMPLOYED THE CRURRENTLY ACTIVE POPULATION

Employed 1  Persons engaged in economic activity or production, such as: Employees: persons who during the reference period perform some work for wage, salary or family gain in cash or in kind; Contributing family workers: unpaid persons who engaged in economic activity as defined for at least one hour during the reference period Own account worker: person who operates his or her own enterprise, but hires no employee Employer: person who operates his or her own enterprise, and hires one or more employees

Unemployed  Without work Without paid employment or self-employment during the reference period (one week)  Currently available for work Available for employment or self-employment during the reference period (four weeks)  Actively seeking work Through active steps taken during a specified recent reference period to seek paid employment or self-employment

Under-employed  Time related In relation to an alternative employment situation  Inadequate employment situation For those who work, but who want to change, for various reasons (insufficient use of skills, inadequate income, excessive hours…)  These are not exclusive Criteria during survey: the person must be willing and available to work more hours, wants to change for, or have tried to fine, better paid employment, etc.

The Labour Market  Virtual space In which are matched, in a more or less organised manner: The supply and demand of all sorts of labour And in which wages are determined

A Free Market?  No government intervention  In a “free market,” demand and supply (“market forces”) determine together the price of labour and, hence, how much of it will be employed.

A Free Market?  It doesn’t exist! Labour is not a commodity Workers have rights Workers have preferences Competition is never perfect Contractual relations are biased There is a lack of information Decisions are subject to regulations Whether formal or not

Which Regulations?  National laws and decrees: Employment, lay-off, security at work, minimum wage  Collective Agreements concerning wage & working conditions Shaped by the market (mobility and availability of specific skills)

Which Regulation?  International regulations: The ILO Declaration on Fundamental Principles and Rights at Work (1998): FOA and the effective right to CB The elimination of all forms of forced & compulsory labour The effective abolition of child labour The elimination of discrimination in employment and occupation

Factors Affecting Labour Markets  Affecting both demand and supply side: Failing institutions Labour market information Political instability, conflicts Natural disasters Health crises

Factors Affecting Labour Markets  Affecting the supply side: Population growth Changes in labour force participation Migration within and between countries State of education and training

Factors Affecting Labour Markets  Affecting the demand side: Economic and financial crises Changes in economic structure Technological changes (ICT) Process innovation Product innovation Globalization

Selected Labour Market Issues  Gender  Child labour  Youth unemployment  People on the move  HIV and AIDS

Labour Market Policies  Measures meant to address failure in the labour markets, in particular measures that reduce unwanted distortions in process of supply meeting demand.  For whom are these policies intended?  Whom do they actually benefit?  Whom do they by-pass?

Labour Market Policies  Production e.g. investing in human resources  Exchange e.g. labour market information  Use e.g. social protection

Active Labour Market Policies  ALMPs are measures that seek to:  Facilitate transition from school to work  Reduce disadvantages among youth  Prevent detachment from the labour market  Decrease labour market failures  ALMPs include measures such as:  Providing employers with incentives for hiring young people  Offering job search assistance to youth  Encouraging public employment creation

Active Labour Market Policies  The primary objectives are: The placement of the unemployed The improvement of the productivity and income of the under-employed  Examples: Facilitating the contact between workers & employers (e.g. job search assistance, public employment services, mobility incentives, etc.) Increasing the supply of needed skilled workers (e.g. training of the unemployed, specific programs for the disabled, etc.) Increasing the demand for workers (e.g. direct job creation, incentive to employers, self-employed, SMEs promotion, etc.)

Active Labour Market Policies  The primary objectives ALMPs are: The placement of the unemployed The improvement of the productivity and income of the under-employed  The 3 main tools to carry out these objectives are: Public employment services Training programs Direct job creation programs (wage or self-employment)

ALMPs: Public Employment Services  Keep a record of job seekers’ requests  Match as much as possible employers’ needs with job seekers requests  Register the unemployed for their benefits

ALMPs: Training Programs  They have a dual role: Improve the productivity of the employed Improve the employability of the unemployed  They mainly target: The youth Women The unemployed, especially the long-term unemployed The disabled

ALMPs: Employment Support  Four kinds of employment support programs: Employment creation in the private sector Employment creation in the public sector Self-employment assistance Support for vulnerable or specific groups (disabled and women, etc.)

ALMPs: Direct Job Creation  In the private sector: Recruitment incentives Subsidies on social security contributions, wages, “tax incentives,” etc.)  In the public sector: Stimulate the economy by spending on: Infrastructure building and rehabilitation projects Public works  The aim is to create jobs on a sustainable basis

ALMPs: Providing Support for Self-Employment  By providing credit equal to the amount of unemployment benefits  Promoting funds for enterprise creation

ALMPs: Advantages  Improve matching between supply and demand  Reduce discouraged workers’ effect  Keeps wage pressure low and, therefore pushes supply higher  Improve productivity, profitability and competitiveness of workers

ALMPs: The Risks  Dead weight loss: Paying to help those who will find work anyway!  Substitution effect: No new jobs creation, if those helped get only someone else's job  Displacement effect: Wage subsidies creating unfair competitive advantage and pushing other firms to lay-off workers

Passive Labour Market Policies  Primary objective: Income to support the unemployed  Relevant particularly in industrialized countries (or those with capacity e.g. Korea, China, Brazil, South Africa)  Examples: Early retirement, severance pay, unemployment insurance, unemployment assistance, public works program, etc.

Characteristics of Good Labour Market Policies Balanced between active and passive (Promoting work vs. mere support that can jeopardize incentive to seek work) Engaging social partners (employers and workers should design policies) Linked to the world of work (Focusing on skills first then jobs later will not do the trick) Part of the comprehensive package of services (targeting both the demand and supply side of the labour market Targeted and tailored to individual needs (Remember! Youth are not a homogeneous group; not everything works for everyone)

The End Thank You!