BY TESTING THIS CONTRACT A DIRECT CONNECTION BETWEEN “PASSIVE” POLICIES AND ACTIVE INITIATIVES WILL BE CREATED
Articolo pubblicato sulla Newsletter dello Studio Ichino Brugnatelli e Associati, febbraio 2014 – È disponibile su questo sito la versione italiana di questo articolo [1]
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The one section of 2014 Financial Stability Act, under paragraph 215, provides for a dedicated fund to foster and support active labour policies, and, in particular, an experimental combination of employment services, based on a new institution within our labour law framework: the so-called “Employee Reskilling and Repositioning Mutual Agreement”, akin to a Career Transition Service Mutual Agreement. Let us have an insight into it.
Income support, in the best case, has been the only help offered to people who lost their job so far, either by a proper support (unemployment benefit) or by inappropriate unemployment compensation under the name of “Cassa Integrazione” (which is a temporary lay-off benefit scheme and shouldn’t be utilized in the case of work contract termination). The said benefits were granted regardless of any actual search for new jobs or of any effective performance of the 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, by testing the “Employee Reskilling and Repositioning Agreement”, a direct connection between “passive” policies and “active” initiatives will be created, since the former shall depend on the latter, to include the unemployed again in the labour market.
The guidelines for testing the said institution are laid down below. (It is worth noting, though, that they are not included in the wording of the above mentioned paragraph 215 of 2014 Financial Stability Act, however, they have been set forth in its drafts first, and then in the first Resolutions of Regional Authorities, providing for the experiment: mainly, the resolution by Regione Lazio on the topic of Youth Guarantee, dated 30th December, 2013.). The option to test ERRMA 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 an ERRMA, granting special vouchers for adequate outplacement services, including intensive assistance with job seeking.
Vouchers shall comprise a fixed amount, payable when the provider is appointed, 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 (so called “creaming”), 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, e.g., Lombardy, have already gained a good experience in this field, drawing on the Dutch experience).
In addition, pursuant to the ERRMA a tutor is 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 most interesting earmark of this procedure, which was successfully tested in the Netherlands, is a balanced checking process on the required availability from the unemployed individual, in strict connection with the actual conditions of the local labour market of reference.
As it has been pointed out, the said tutor is a key operator in this procedure, since his/her assignment of detecting job opportunities and training programs targeted thereto is crucial, and the unemployed individual cannot unreasonably reject these offers, taking into account every circumstances. Should any intermediaries be indulgent to the unemployed, to the purpose of alluring him/her, they would jeopardize the achievement of the employment, and be exposed to financial loss: in fact, the voucher is due only upon the achievement of the result (the successful placing). Conversely, should any intermediaries be unreasonably strict in their evaluations, the unemployed would rather chose some others, capable to reposition them in reasonable time even by means of more sensible criteria. In other words, the competition among appointed intermediaries is bound to lead to a balanced relation between the availability of the tutor to take into account the needs and aspirations of the unemployed person, and a quick achievement of the result.
Even any dismissing Company is allowed to take part into an ERRMA: when an employee is dismissed or made redundant, the employer may undertake to pay a complementary unemployment financial support. Hence, thanks to the ERRMA, 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 unemployment benefit scheme (ASpI) by the public body in charge of income support to the unemployed. In any case, if few people show interest into the ERRMA 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 ERRMA’s are executed. Assumingly, costs for every outplacement service paid by means of the above mentioned vouchers may range from Euro 2,000 to 4,000. Total costs to be borne by the Region, if all ERRMA’s are successful, equal 30 million approximately. Although it looks like a large amount of money, this is not at all large, compared to all costs that would be borne for “Cassa Integrazione”, should the latter be paid to the same number of dismissed employees, since we need to take into account that such payments can last for two, three, four or more years. Neither it is, compared to all costs currently borne by Regions for training sessions without any connection with the actual demand expressed by the labour market, not to mention the fact that any assessment of their usefulness has hardly ever been made.
It is time for the Regions to redevelop the allocation of the said expenditure, even by moving part of it from vocational training to placing and retraining activities aimed at existing skill shortage. 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 costs borne for paying “Cassa Integrazione” to dismissed employees for years, as we do now, are much higher than costs borne for placing the same employees in the labour market again within a period of about six months: in 2012, despite deep economic crisis, a million and a half permanent employment contracts were concluded, evenly distributed among North, Centre and South of Italy.
ERRMA can be key to Italian labour market, assuring effective services for matching supply and demand, through close cooperation between public employment centres and private employment agencies, exploiting best practices and know-how, also with reference to the successful results achieved by many foreign Countries.
A sensible and effective balance between income support and proper checks on the actual availability of the unemployed to be repositioned, and to all related actions thereto.
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