Participation in labour market programmes: A positive or negative signal of employability?

Abstract

Active labour market policies (ALMPs) are widely diffused measures aiming to re-integrate jobseekers into the labour market. Despite their crucial role in acting as gatekeepers to employment, the literature scarcely considers the employer’s perspective of these measures. We analysed whether and how employers consider ALMP participation in the hiring process as a signal that helps explain the labour market outcomes of jobseekers. We developed a theoretical argument regarding how employers interpret ALMP participation and identify assumed agency, that is, whether employers believe that the agency for initiating ALMP participation lies with the jobseeker (voluntary participation) or the job centre (mandatory participation), as a crucial factor determining whether their evaluation of ALMPs is positive or negative. To examine our expectations, we conducted qualitative interviews with employers hiring for low-skilled occupations in Switzerland and Sweden, representing two countries with comprehensive ALMP systems. As expected, the interpretation of ALMP programmes differs depending on the assumed agency. Employers who believe that participation is voluntary interpret participation as a signal of motivation; however, employers who believe that participation is mandatory interpret participation as a signal of lower productivity, which reduces the chances of a successful labour market access.

Integrating refugees through active labour market policy: A comparative survey experiment

“…We examine whether and under what conditions ALMPs affect employers’ assessment of refugees and how employers’ attitudes towards refugees moderate this effect. The finding that employers’ attitudes towards a particular group influence their hiring preferences (and behaviour) has been shown in studies of black people in the US (Pager and Karafin, 2009), ethnic minorities in OECD countries (see Zschirnt and Ruedin, 2015), the long-term unemployed in Europe (Bonoli, 2014) and low-skilled jobseekers in Sweden and Switzerland (Fossati et al, 2020b). The literature on discrimination shows that, in particular, low-skilled members of minorities are disadvantaged in the LM (Helbling and Kriesi, 2014; Waldinger and Lichter, 2003).…”

“…However, participating in such programmes can also act as a positive signal of certain skills, qualities and trainability ( signalling effect ) (Liechti et al, 2017; van Belle et al, 2019). Research shows that participation in ALMP programmes is considered a positive signal, particularly for jobseekers who are most distant from the LM and thus are least employable (Fossati et al, 2020b; Liechti et al, 2017).…”

“…This ALMP should have straightforward positive effects because it reduces wage costs for an employer ( substantive effect ). The results from qualitative interviews in Sweden and Switzerland show that employers who are offered such incentives are more willing to give a chance to a candidate they would otherwise consider too risky to hire (Fossati et al, 2020b).…”

“…Surprisingly, little research has investigated the extent to which the success of ALMPs is influenced by the attitudes of those who are mainly confronted with these policies – employers. For instance, Fossati et al (2020b) show that employers tend to consider ALMP participation a positive signal only when they attribute the agency for programme participation to the unemployed person. In a similar vein, we argue that for ALMPs to be successful, employers must perceive refugees as a valuable and suitable labour force.…”

Allowance for Self-Employed Gainful Activity in Slovakia: A Closer look into the Factors Involved

“…Instruments or labour market measures are usually divided into active and passive (Zielinski, 2015). While active instruments should increase the chance of permanent employment for the unemployed, passive labour market instruments are more protective in nature and are designed to help people to get a job (Fossati, Liechti, Wilson, 2021) and reduce the risk of a sudden drop in income (Zielinski, 2015).…”