How could European cities promote a solid active inclusion model
Gabriel highlights the EU and the Finnish approach to active inclusion, discusses the models that the GSIP Vantaa Project has applied so far to develop a sound local active inclusion agenda for unemployed persons, and summarizes key learning points and major challenges of interest to local policy makers and stakeholders across Europe.
This is the first Zoom-in of the EU (Urban Innovative Actions - UIA) funded GSIP (Growth and Social Investments Pacts) Project, one of the main instruments used by the City of Vantaa in Finland to develop a solid local jobs and skills agenda applying a labour market innovation discourse that interrelates innovation with inclusive business growth. It was compiled by the UIA Expert of the Project within the context of the Task B’ “Capturing knowledge” (development of documentation and outputs that will capture and disseminate the lessons learnt and good practices for a wider audience) that UIA Experts shall perform during their activities.
The main aim of the UIA Initiative is to provide urban authorities across Europe with space and resources to test bold and unproven ideas addressing interconnected challenges and experiment how these respond to the complexity of real life. It relates to the topics that EU Member States, local authorities, NGOs, European and national associations of cities have identified within the frame of the European Urban Agenda. The GSIP Project is focused on the topic “Jobs and skills in the local economy”, a key challenge for sustainable inclusive growth in Europe. It started in November 2018 and will continue till October 2021.
Zoom-ins are complementary to the information included in the Expert Journals and web articles. They offer the possibility to Experts and urban authorities to explore a cross-cutting dimension of the Project, to analyze a specific component of the Project and/or to highlight an aspect of the Project which is less visible but particularly important.
In this respect, the first Zoom-in of the GSIP Project concerns a more or less neglected issue in the overall debate about the development of local community jobs and skills agendas in Europe: the role and the contribution of European cities towards a solid active inclusion model through inclusive labour markets for unemployed persons.
The Zoom-in has six thematic Chapters across a number of sections. The first Chapter summarizes the discussion about local active inclusion discourses in Europe. The second Chapter describes the main features of the EU Active Inclusion Strategy. The third Chapter presents the Finnish approach to active inclusion, both at national and local level, paying emphasis to the key challenges that municipalities encounter. The fourth Chapter discusses the ways that the GSIP Vantaa Project has used so far to develop a sound local active inclusion agenda for unemployed persons. The fifth Chapter provides a brief presentation of the Project’s active inclusion implementation progress during 2019-2020, highlighting the major achievements and accomplishments. The last Chapter summarizes key learning points and discusses major challenges.
The local active inclusion discourse is defined as the multi-pillar approach of regional and local authorities to prevent or combat poverty and social exclusion through a concerted set of cash benefits, active employment measures and access to basic services. It became a key priority for many local policy makers during reform agendas of social policies, particularly after the deep economic crisis of 2008/2009.
European cities apply very different approaches to active inclusion[1], particularly influenced by the broader national social policy context, local needs, interests of key stakeholders and pressure groups and the agendas of social partners who participate in labour market governance[2]. They also use different administrative and operational settings, which include inter alia the establishment of specific Departments, Units, Centres and sometimes Research Labs.
One of the most striking relevant initiatives concerns the establishment of Cities for Active Inclusion (EUROCITIES-CfAI), a dynamic network of nine European cities (Barcelona, Birmingham, Bologna, Brno, Copenhagen, Brussels, Office Metropole Europeenne de Lille, Rotterdam, Sofia) each establishing a Local Authority Observatory (LAO)[3] within its administration. Their aim is to share information, promote mutual learning and carry out research on the implementation of the active inclusion strategies at the local level http://www.eurocities.eu/eurocities/projects/Cities-for-Active-Inclusion&tpl=home).
[1] H. Johansson and A. Panican (eds.), Combating Poverty in Local Welfare Systems - Active Inclusion Strategies in European Cities, Basingstoke: Palgrave Macmillan, 2016.
[2] G. Scalise, “The local governance of active inclusion - A field for social partner action”, European Journal of Industrial Relations, 12, 2019, https://doi.org/10.1177/0959680119889707.
[3] The Observatories are coordinated by EUROCITIES, the network of major cities in Europe, and supported through a partnership between the European Commission (DG Employment, Social Affairs and Inclusion) and EUROCITIES.
Given that the field of social policy remains a national responsibility in the context of EU competencies, EU bodies support since the beginning of the 2000s national, regional and local authorities to combat poverty and social exclusion through a rich set of non-binding (soft) law and financial instruments (European Structural and Investment Funds). In this context, the EU active inclusion discourse was introduced by the European Commission in its Recommendation of 3 October 2008 on the active inclusion of people excluded from the labour market (https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32008H0867)[1], which recommends that the Member States should:
Design and implement an an integrated comprehensive strategy for the active inclusion of people excluded from the labour market combining adequate income support, inclusive labour markets and access to quality services. Active inclusion policies should facilitate the integration into sustainable, quality employment of those who can work and provide resources which are sufficient to live in dignity, together with support for social participation, for those who cannot.
The 2008 Recommendation is in favour of local oriented initiatives, given that it stresses inter alia that the Member States should:
- Take due account of local and regional circumstances and improve territorial cohesion (general principle);
- Provide support for the social economy and sheltered employment as a vital source of entry jobs for disadvantaged people, promote financial inclusion and microloans, financial incentives for employers to recruit, the development of new sources of jobs in services, particularly at local level, and raise awareness of labour market inclusiveness (Inclusive labour markets pillar);
- Take every measure to enable those concerned, in accordance with the relevant national provisions, to receive appropriate social support through access to quality services. In particular, measures should be taken to: provide services which are essential to supporting active social and economic inclusion policies, including social assistance services, employment and training services, housing support and social housing, childcare, long term care services and health services in accordance with specific common principles, taking the role of local, regional and national authorities, applicable Community rules and the different situations, needs and preferences in the Member States into account (Access to quality services pillar).
The importance of developing an active inclusion approach was subsequently reinforced at EU level in 2010, when it was a key theme of the European Year for Combating Poverty and Social Exclusion (https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:298:0020:0029:EN:PDF). Then in 2013 the European Commission’s Social Investment Package (2013 Communication on Social Investment for Growth and Cohesion), in the context of the Europe 2020 Strategy’s social priorities - namely reducing the number of people at risk of poverty and social exclusion by 20 million by 2020 - (https://ec.europa.eu/eu2020/pdf/COMPLET%20EN%20BARROSO%20%20%20007%20-%20Europe%202020%20-%20EN%20version.pdf), reaffirmed the validity of an active inclusion approach but acknowledged that progress in implementing the 2008 Recommendation on active inclusion at national level had been relatively limited[2]. This approach was further reinforced when active inclusion was made a specific priority in the use of EU Funds during the period 2014-2020[3].
The implementation of the 2008 Recommendation should be combined with the Council Recommendation of 15 February 2016 on the integration of the long-term unemployed into the labour market (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32016H0220%2801%29), which recommends that the Member States should:
- “Support the registration of jobseekers and a closer labour-market orientation of integration measures, inter alia, through a closer link with employers;
- Provide individual assessments to registered long-term unemployed persons;
- Make a specific offer of a job-integration agreement[4] at the very latest when a long-term unemployed person has reached 18 months of unemployment”.
[1] The Recommendation reiterated the 92/441/EEC Council Recommendation of 24 June 1992 on common criteria concerning sufficient resources and social assistance in social protection systems (https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A31992H0441) in emphasizing individual’s right to resources and social assistance sufficient to lead life of human dignity. However, it went further as it placed the focus on adequate income support in the broader context of an active inclusion approach which combines the three strands of adequate income support, inclusive labour markets and access to quality services.
[2] European Commission, Follow-up on the implementation by the Member States of the 2008 European Commission recommendation on active inclusion of people excluded from the labour market - Towards a social investment approach, Staff Working Document, Brussels, 20.2.2013 (file:///C:/Users/user/Downloads/SWD_Implementation-recommendation-active-inclusion_en.pdf).
[3] The European Social Fund is the Union's main financial instrument for supporting the active inclusion discourse. Other Funds, such as the European Regional Development Fund and the European Agricultural Fund for Rural Development, may also complement the measures financed by the European Social Fund in accordance with the allocations for the relevant investment priorities for 2014-2020, namely by supporting job-creation, the modernization of public employment services and vocational education, training for skills and lifelong learning, access to basic services.
[4] A ‘job-integration agreement’ is understood to be a written agreement between a registered long-term unemployed person and a single point of contact, having the objective of facilitating that person's transition into employment on the labour market.
Finland has established a sound national active inclusion regime with strong participation of regional and local authorities. People excluded from the labour market are entitled to income support benefits, take advantage of various active employment measures and have access to a generous universal set of social and health services[1]. In addition, special programmes are available for the long-term unemployed[2], fully in line with the key principles of the EU inclusive labour markets pillar for unemployed persons.
3.1. What about unemployed persons?
As far as the unemployment risk is concerned, Finland provides access to all three pillars of the active inclusion discourse.
a) Unemployed persons are entitled to income-related benefits paid out by voluntary unemployment funds and two parallel basic benefits paid by the Social Insurance Institution (Kela)[3].
b) Unemployed jobseekers are entitled to use various services offered by the 15 Centres for Economic Development, Transport and the Environment (the so called ELY Centres supervised by the Ministry of Employment and the Economy that are responsible for the regional implementation and development tasks set by the central government), the 120 local Employment and Business Service Offices (TEOs) and the municipalities.
c) Unemployed are entitled to all basic social and health services available to all residents.
A map of employment policies in FinlandIf you lose your job or you are laid off, you should register as an unemployed jobseeker with a TE Office immedialately. You must register as a jobseeker and apply for a full-time job, if you wish to receive unemployment benefits. Apply for the benefit from your unemployment fund or Kela. Before unemployment Start your job search before your employment relationship or studies end so that your possible unemployment will be as short as possible. When you become unemployed You can receive unemployment benefit from Kela or unemployment fund when you register as a jobseeker with the TE Office and look for a work. Finding employment Help and support is available for looking for work, starting studies, setting up a company and putting an end to long-term unemployment. |
3.2. What about long-term unemployed persons?
Special measures are available for the long-term unemployed to improve their employability. Additional benefit amounts are paid to those who take part in rehabilitative employment (subsistence payments for the recipients of labour market subsidy and activation benefits for those on social assistance) and travel costs are covered. On the other hand, active employment programmes are run jointly by TEOs and municipalities for the long-term unemployed and those with reduced work capacity who are at risk of social exclusion. Medical rehabilitation tries to restore physical functional capacity, rehabilitative work experience is offered to the long-term unemployed, vocational rehabilitation aims at increasing the chances of returning to employment, and rehabilitative psychotherapy is tailored to those whose employment problems are related to mental health. Social rehabilitation tries to strengthen the social skills of the long-term unemployed.
3.3 Which are the key challenges for Finnish municipalities?
1. The first key challenge within the inclusive labour markets pillar for unemployed persons lies in the coordination between the different actors in the field: Kela (national level), ELY Centres (regional level), TEOs (local level) and municipalities. In 2014, the Government introduced the Act No. 1369/2014 on Employment-Promoting Multi-Sectoral Cooperative Services to make cooperation between the different actors more effective and to improve the integration of different benefits and services. This statute obliges Kela, TEOs and municipalities, together with the jobseeker, to draft a ‘multi-sectoral’ plan for employment related to the following three categories:
a) those who have received labour market subsidy for more than 300 days;
b) those who are younger than 25 and have been unemployed for six months;
c) those who are older than 35 and have been unemployed for more than 12 months.
2. The second key challenge lies in the concerted implementation of activation techniques[4]. In principle, each unemployed person draws up in cooperation with a TEO expert a plan (employment plan, activation plan, and an integration plan for immigrants) containing the job-seeking goal and the steps towards that goal. Implementation of the plan is assessed at regular intervals. The plan is individually tailored and adapted to the claimant’s personal needs.
Two agencies are responsible for the design and monitoring of the activation plan. If the unemployed person receives labour market subsidy, initial responsibility for the activation plan rests with the TEO, whereas the local municipality is responsible for such a plan if the client receives social assistance benefits.
The “Activation Model” introduced to the Finnish unemployment protection system in 2017 has been in force since 1 January 2018. This model has increased conditionality for both basic (flat-rate) unemployment benefits (paid by the Social Insurance Institution, Kela) and income-related schemes (paid by unemployment funds). The aim of the AM is to tighten the conditions for benefit eligibility, in order to encourage activation of the unemployed, reduce the duration of periods in unemployment and increase the employment rate. The AM stipulates that the unemployed person has to meet an “activity condition” (AC) in order to avoid curtailment of his or her benefits (https://stm.fi/en/unemployment/activation-model-for-unemployment-security).
But the AM was abolished in the beginning of 2020. As of 1 January 2020, the activity of the unemployed will not be monitored, and the AM will not cut the unemployment benefit. The AM will still affect unemployment benefits accrued in 2019, even though these benefits will be paid in 2020.
Starting from the beginning of 2020, the Social Insurance Institution (Kela) and unemployment funds will no longer monitor the activity of the recipient of the unemployment benefit or reduce the unemployment benefit. The customer does not need to contact Kela because of the change in the AM and the benefit will automatically be restored to the normal level from 1 January 2020.
3. The third key challenge lies in the motivation of unemployed beneficiaries to choose work over benefits. It should be noted here that the current national legislation is rather favourable for the treatment of benefits during work, given that if unemployed persons are working part-time or only occasionally during their unemployment period, their unemployment allowance or labour market subsidy will be coordinated with the earnings. Earnings under € 300 per month do not reduce the amount of unemployment benefit; if the earnings exceed € 300, a sum corresponding a half of the earnings exceeding € 300 will be reduced from the unemployment benefit.
4. The fourth (and sometimes most critical) key challenge lies in the provision of incentives to local companies interested to hire unemployed persons[5]. These incentives are particularly crucial for the management of small and very small companies and usually take the form of additional cash grants paid directly to the company[6], counselling and regular advice about existing forms of support and subsidies to employ unemployed people (e.g., work trial, internship, apprenticeship, or wage-supported employment).
[1] The activation policies in the EU vocabulary are policies designed to encourage unemployed to step up their job search after an initial spell of unemployment, by making receipt of benefit conditional on participation in Active Labour Market Policy (ALMP) programmes, which include training, job rotation and job sharing, employment incentives, supported employment and rehabilitation, direct job creation, and start-up incentives.
[2] OECD, Job Creation and Local Economic Development 2018 - Preparing for the Future of Work, OECD Publishing, Paris, 2018, https://doi.org/10.1787/9789264305342-en.
[3] The City of Vantaa Employment Service provides a sum of € 500 per month to businesses that employ any Vantaa unemployed person whom the TEO Office has granted unemployment benefits.
[4] Kela is a government agency that provides basic economic security for everyone living in Finland (www.kela.fi). Among the social security benefits offered by Kela are family benefits, health insurance, rehabilitation, basic unemployment security, housing benefits, financial aid for students, disability benefits and basic pensions.
[5] K. Lahteenmaki - Smith, Assessment of the implementation of the European Commission Recommendation on Active Inclusion – National Report for Finland, EU Network of Independent Experts on Social Inclusion, European Commission, 2013, available at: file:///C:/Users/user/Downloads/Finland%20-%202012%20report%20on%20active%20inclusion_en.pdf.
[6] O. Kangas and L. Kalliomaa-Puha, Thematic Report on integrated support for the long-term unemployed - National Report for Finland, European Social Policy Network, European Commission, 2015, available at: file:///C:/Users/user/Downloads/FI_ESPN_Thematic%20report%20on%20LTU%20(2015).pdf.
a) 33 companies have used till April 2020 the recruitment service offered by the GSIP Project through direct meetings, phone and email.
b) 19 companies have asked for and received advisory and guidance services on apprenticeship, financial support or use of other service.
c) 16 companies were directed to the City of Vantaa services involved in the development of an active inclusion discourse for unemployed persons and the Vantaa based TEO.
d) Almost 100 unemployed jobseekers out of the 9,461 registered to the Vantaa based TEO in October 2019 (1%) have been contacted during recruitment events.
e) Over 60 CVs of unemployed jobseekers have been received.
f) 16 out of 67 job vacancies (24%) offered by companies that have used so far the recruitment service have been fullfilled[1].
But the most striking result was the opening of new jobs by Project Partner companies, which were filled by unemployed jobseekers. In this context, Vantti created 34 job vacancies for specific categories of unemployed persons (i.e. migrants, partially disabled, low-skilled and long-term unemployed[2]).
For me, it is a matter of the heart to help people become employed. A person can be employed quickly and efficiently, as long as a decision for supporting their salary is obtained. Salary support, a Vantaa extra, or alternatively, recruitment support for an under-30-year-old unemployed job seeker, for example, can be applied for in order to assist employment. The new recruitment model is a social and responsible way to improve employment that supports both the growth of companies and society, Minna Tuomi, Project Coordinator, Vantti
[1] This equals to 8% of the Project’s total employment indicator.
The implementation of the Project’s active inclusion model (inclusive labour markets pillar for unemployed persons) during the first 18 months (January 2019 - June 2020) highlights a set of key challenges and lessons, summarized briefly as follows:
(a) The COVID-19 crisis has created new risks for governments, regions and cities across Europe. Finland, Vantaa and its labour market could not be an exception.
Number of Finnish unemployed jobseekers nearly doubled in April 2020
|
In addition to the tragic loss of human life, the pandemic is likely to increase poverty and inequality, with particularly adverse effects for older persons, persons with disabilities and chronic diseases, migrant workers and forcibly displaced people. There are signs however that, in spite of significant national measures[1], another group at high risk of poverty and social exclusion is having to decrease any possibility for standard employment and turn to means-tested, minimum-income-protection benefits: workers with non-standard contracts, freelancers, self-employed individuals. And many others, particularly long - term unemployed persons, will eventually deplete their entitlement to unemployment insurance and similar contributory benefits[2].
In this respect, Project Partners need - without abandoning the inclusive labour markets pillar of the Project - to discuss seriously the validity of the total employment indicator and seek:
- guidelines of International Organizations about the treatment of unemployed persons during the pandemic;
- international good practices about the performance of municipal active employment services during the pandemic.
(b) The design and use of a sound cooperative plan with main external public stakeholders was strongly beneficial, given that accurate public data on employment, unemployment and business development were taken fully into consideration. Project Partners tried to establish a new internal register for unemployed persons and companies but this process was not completed.
In this respect, Project Partners decided to consider a more realistic scenario that will take advantage of the existing municipal services: a new register supported by the Yritysohjaamo Service has been used since April 2020.
(c) The identification process of unemployed persons was based in principle on the analysis of existing public registries and data bases, as well as on meetings with specific Vantaa based civil society organizations. But given that unemployed persons are usually faced with other risks and problems (poverty, sickness, disability)[3], it becomes clear that the active inclusion priorities of the Project could be strongly supported through the participation of the competent municipal agency (Vantaa Health and Social Welfare Department - https://www.vantaa.fi/organization/health_and_social_welfare_department) in the internal (city level) partnership structure.
In this respect, Project Partners need to discuss seriously the involvement of the Vantaa Health and Social Welfare Department during the next implementation phases, which might focus on two interrelated activities:
- identification and recruitment of disabled unemployed jobseekers;
- identification and development of vocational training courses for disabled low-skilled employees and employees with outdated skills.
(d) The design and use of recruitment services during the implementation of the first GSIP model “Need for Skilled Workforce” shed light to a rather common problem in national and local active employment programmes: the skill mismatch issue that results in different imbalances between skill supply and demand and is de facto influenced by the different phases of the economic cycle and by the relationships between different types of mismatch (Overeducation, Undereducation, Overqualification, Underqualification, Overskilling, Underskilling, Skill shortage, Skill surplus, Skill gap, Economic skills obsolescence, Physical obsolescence, Crowding out and Bumping down)[4].
In this respect, Project Partners introduced during the test phase of the first GSIP model a job design service, which was strongly appreciated by participating companies, particularly because it was adapted to their real needs using a holistic approach to recruitment[5].
Figure: Four Elements of a Holistic Recruitment Strategy
Source: https://resources.careerbuilder.com/recruiting-solutions/holistic-recruitment-strategy
This service helped them to find the right ways to recruit, which was a real incentive to move from abstarct planning recruiting[6]. Companies were encouraged to searh for potential employees through complex channels, where information about unemployed and other special groups excluded from the labour market (i.e. migrants, disabled) is available. But they also need cost-effective tools to forecast their own skill needs more regularly and accurately, including spotting the differences between skill shortages and skill gaps[7].
(e) The provision of recruitment services during the implementation of the first GSIP model “Need for Skilled Workforce” was in principle promoted by the Project Partners themselves: one Project employee was charged with the recruitment process of unemployed persons and another one focused on crating apprenticeship opportunities. But Project Partners understood that this model was inadequate from time to time.
In this respect, Project Partners decided to consider a more horizontal coordination model between the recruiting service of the Project and the City of Vantaa Employment Service Center. This model will strengthen synergies and take advantage of the high experience and expertise that municipal Employment Services usually offer to the development of local jobs and skills agendas[8].
[1] International Labour Organization, Social protection responses to the COVID-19 crisis: Country responses and policy considerations, Geneva, 2020.
[2] See S. Marchal and I. Marx, “Europe’s social safety nets were not ready for the corona shock”, Social Europe, 21.4.2020, available at: https://www.socialeurope.eu/europes-social-safety-nets-were-not-ready-for-the-corona-shock.
[3] Although the Finnish labour market is moving towards better integration of people with disabilities or chronic diseases (1.9 million Finns of working age have some type of disability or chronic disease), available data confirm that "Health and social services and employment services are operating separately, as do services concerning social welfare, rehabilitation and education. This may lead to situations where the client falls in between and does not receive the services he or she needs". See for further information D. Päivi Mattila-Wiro and R. Tiainen, Involving all in working life, Results and recommendations from the OTE Key Project ‘Career opportunities for people with partial work ability’, Reports and Memorandums of the Ministry of Social Affairs and Health No. 27, Helsinki, 2019, available at: http://urn.fi/URN:ISBN:978-952-00-4058-1.
[4] Cedefop provides inter alia a basic distinction between ‘Vertical’ mismatch, commonly referred to as overeducation (it occurs when an individual is employed in a job which requires a lower level of education) and ‘Horizontal’ mismatch (when the type, rather than the level, of education or skills is inappropriate for the job). See Cedefop, Skill supply and demand in Europe - Medium-term forecast up to 2020, available at: http://www.cedefop.europa.eu/EN/publications/15540.aspx and Cedefop, The skill matching challenge - Analyzing skill mismatch and policy implications, available at: http://www.cedefop.europa.eu/EN/publications/15275.aspx.
[5] B. O’ Meara and S. Petzall, Handbook of Strategic Recruitment and Selection - A Systems Approach, Emerald Group Publishing, 2013.
[6] Service included a lot of valued discussion and thinking of how realistic or beneficial it is to employ different people, even with the match making problem existing.
[7] This need is further explained in European Commission, Monitoring good practices in the areas of Employment, Social Affairs and Inclusion, Brussels, 2015, available at: file:///C:/Users/user/Downloads/Monitoring%20good%20practices%20report%20volume3_final%20Web.pdf.
[8] F. Froy and S. Giguère, “Putting in Place Jobs that Last - A Guide to Rebuilding Quality Employment at Local Level”, OECD Local Economic and Employment Development (LEED) Working Papers, 2010/13, OECD Publishing, http://dx.doi.org/10.1787/5km7jf7qtk9p-en.
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