Managing Performance

How can the Public Employment Service (PES) assess the impact of its labour market programmes and use this information to manage them better? PES data systems need to allow identification of the “output ” of labour market programmes in terms of their impact on off-benefit, employment and earnings outcomes. Impacts should be valued using the formula (B + tW) where B is benefit payments saved, t is the tax rate on earnings and W is total earnings, i.e. the product of months employed and the monthly wage rate, with these outcomes measured for up to five years after the start of programme participation. In quasi-market systems, employment service providers must be given broad-ranging responsibility for clearly-defined groups of clients, and institutional arrangements must prevent “gaming ” (artificial manipulation of outcome measures) and “creaming ” (provider failure to enrol disadvantaged clients) and must protect individual entitlement to benefits. These underlying principles can be adapted to manage performance in traditional PES arrangements. Outcome measurement and the evaluation of programme impacts may seem to be relatively technical concerns, but they have already played an important role in the history of labour market policy in several OECD countries