Sara Johansson de Silva (World Bank) Serbia Functional Review: Efficiency Analysis of the National Employment Service 1st Vienna Conference on Western Balkan Labor Markets April 4 and 5, 2017 Sara Johansson de Silva (World Bank)

Vertical Functional Review of National Employment Services (NES) Objectives Help rationalize and improve the services of NES Ultimately, improve labor market outcomes of NES beneficiaries Approach Data envelopment analysis (DEA): a benchmarking exercise used to evaluate efficiency in organizational units Technical frontier/best practice Questions of interest Has the performance of PES changed? How? How much room for improvement is there? What would be the pay-off? Is size and geographic organization optimal? What drives outcomes? What specific activities appear to increase efficiency? Title of Presentation

DEA of branch offices M3 ENVIRONMENTAL EFFECTIVENESS INPUTS [resource use by offices] E.g. Expenditures on active measures, unemployment benefits, staff, real estate, maintenance, number of staff (counselors, registrars, admin) M1 EFFICIENCY OUTPUTS [activities by offices] E.g. number of employers contacted, vacancies registered, profiles of unemployed created, participants in activities M2 IMPACT OUTCOMES [final goal] Number of registered unemployed transitioning into formal jobs ENVIRONMENTAL [outside the purview of office] E.g. number of unemployed in area, formal jobs in area, geographic size, average wages, skill levels of unemployed EFFECTIVENESS Title of Presentation

Result 1: NES has became more effective Shift “northwest” with time: more jobs for same expenditures

Result 2: Most of the improvement is due to “technology”   Overall change in performance* (%) Catch-up Frontier-shift M1: how expenditures and staffing decisions result in activities like placements profiling, etc. 117 100 M2: how above activities lead to job placements 118 109 M3: how expenditures and staffing decisions lead to job placements 129

Result 3: But also some catch-up by poorer performing offices   Overall change in performance* (%) Catch-up Frontier-shift M1: how expenditures and staffing decisions result in activities like placements profiling, etc. 117 100 M2: how above activities lead to job placements 118 109 M3: how expenditures and staffing decisions lead to job placements 129

Result 4: Substantial savings and job gains from increased efficiency, impact, and effectiveness to “best practice” Improving efficiency in activities Expenditures on goods and services could be reduced by between 29 and 36 million RSD… … At the same time, activities such as referrals, contacts with employers, profiles, could increase significantly (e.g. between 1600 and 3000 additional contacts with employers) Improving impact # activities could be reduced significantly… e.g. between 43,000 and 49,000 fewer profiles of unemployed created … While between 31,000 and 53,000 additional jobs could be created Improving overall effectiveness Expenditures on goods and services could be reduced by between 48 and 53 million RSD… …While between 24 and 34,000 additional jobs could be created INPUTS [resource use by offices] E.g. Expenditures on active measures, unemployment benefits, staff, real estate, maintenance, number of staff (counselors, registrars, admin)

Result 5: More work is needed on improving final outcomes Branch offices are more efficient in how they use inputs to undertake activities (m1) than in the outcomes of these activities (m2). Title of Presentation

Result 6: Merging branch offices would not increase efficiency significantly Title of Presentation

Result 7: Jobs outcomes depend greatly on qualitative and environmental factors- so there is a need to adapt policy mix to circumstances Title of Presentation

Effect of one additional unit on the number of jobs Result 8: More counselors and links with employers have the strongest effects on jobs placements Outputs Effect of one additional unit on the number of jobs #contacts with employers 2.55 #contacts with unemployed 0.73 #profiles 0.08 #referrals 0.11 #vacancies 0.26 Inputs Effect of one additional unit on the number of jobs #active measures on education/employment 1.56 #counselors 144.99 #other staff 50.26 Title of Presentation

What can branch offices take away from this exercise? Check ranking and results for activity efficiency, impact, and effectiveness in 2012, 2013, and 2014 What is going well? Where are the weaknesses (if any)? Check developments over time (2012-2014) Has effectiveness improved or worsened? In what areas? Could any changes depend on changes in resource use/mix and quality of activities/external factors Reflect on composition of input (e.g. staff) and activities How to best adapt the mix of activities and increase quality to the environment E.g. few job opportunities: contacts with employers (not helpful?); training, job search assistance and mobility assistance for other regions? Learn from relevant peers Title of Presentation

Best practice peers: use same mix of input and output but with higher effectiveness in job placements (with respect to inputs) Office Potential Peer Offices Za Beograd Novi Sad, Leskovac and Subotica Sremska Mitrovica None! Kragujevac Leskovac, Zrenjanin and Novi Sad Subotica Niš Leskovac Uzice Leskovac and Pirot as Novi Sad Kragujevac, Sremska Mitrovica, Pirot, Zrenjanin Leskovac and Subotica Cacak Zrenjanjin and Pirot Bor Zrenjanin, Pirot and Loznica Sabac Zrenjanjin and Leskovac Valjevo Pirot and Leskovac Zajecar Subotica and Pirot Vranje Jagodina Zrenjanjin and Lescovac Zrenjanin Pirot Kikinda Sremska Mitrovica and Pirot Prokuplje Kraljevo Zrenjanin, Leskovac and Loznica Smederevo Zrenjanjin Krusevac Zrenjanin and Pirot Novi Pazar Loznica Leskovac, Prijeploje and Prokuplje Pancevo Projepolje Zrenjanjin, Sremska Mitrovica and Pirot Pozarevac Vrsac Sombor Title of Presentation

Thank you! Sara Johansson de Silva sjohansson@worldbank.org