2. Recent trends in Greece’s labour market and the set-up of active labour market policies
This chapter describes recent trends in the Greek labour market including how it has performed over time, the challenges it faces (including during the COVID-19 pandemic), and the key groups in need of employment support. This chapter also describes the set-up of active labour market policies (ALMPs) in Greece, including the role of DYPA (the Greek public employment service), major ongoing reforms at DYPA, a high-level overview of ALMP spending in Greece, and the customer journey of unemployed jobseekers.
This chapter provides an overview of the labour market situation in Greece and outlines how Greek active labour market polices (ALMPs) function. This sets the scene for later chapters which conduct counterfactual impact evaluations (CIE) of training and wage subsidy programmes for unemployed people.
The Greek labour market has improved markedly in recent years following the global financial crisis and coped relatively well with the COVID-19 pandemic. Nevertheless, unemployment remains among the highest in the EU and OECD while certain groups lag behind others.
ALMP spending is low when compared with per capita ALMP spending on the unemployed in other OECD countries. Such tight budgets underscore the importance of providing services that are both efficient and effective. A major reform at the Greek public employment service (DYPA) is underway, much of which is funded by the EU’s Recovery and Resilience Facility (RRF). This reform aims at a significant modernisation of DYPA and the support it provides to jobseekers and employers. DYPA has made great first steps towards implementing the change agenda, but further success will depend on developing a concise strategy, engaging staff and ensuring sustainable human and financial resources.
Section 2.2 of the chapter lays out the context of the Greek labour market, its performance over time, the challenges faced, and the key groups in need of support. Section 2.3 then turns to the system of ALMPs in Greece. It provides an overview of ALMP spending in Greece and explains the set-up and the major on-going reform of DYPA.
The Greek labour market has seen massive improvements since the financial crisis, but there is still further to go and some groups in particular suffer poor labour market outcomes. This section charts the latest labour market trends, investigates the impact of the COVID-19 crisis on the labour market, and lays out the challenges that remain in Greece.
2.2.1. The Greek labour market has improved markedly over the last decade and weathered the COVID-19 crisis well, yet unemployment remains high
Greece was especially hard hit in the period following the financial crisis, suffering a sovereign debt crisis and ensuing major economic depression. Government spending was slashed to address unsustainably high debt and budget deficits, GDP severely contracted, and unemployment soared. The depression played out over many years with unemployment peaking at 27.7% only in 2013, several years after the onset of the crisis (Figure 2.1, Panel A).
Since 2013 the Greek labour market has improved markedly. With steady progress, unemployment has dropped by 15.1 percentage points from its peak to 12.6% in 2022 (Figure 2.1, Panel A). The labour force participation rate – which has long lagged other European and OECD countries – was less affected by the crisis than the unemployment rate and indeed now stands well above its pre-COVID level at 69.4% in 2022. These trends are mirrored by increases in the employment rate, from a nadir of 48.8% in 2013 to a peak of 60.7% in 2022.
Note: OECD and EU27 are weighted averages.
Source: OECD Dataset “LFS by sex and age – indicators”, http://stats.oecd.org//Index.aspx?QueryId=118627.
At the outset of the pandemic, Greece enacted strong containment measures which included lockdowns, curfews, travel restrictions, and social distancing requirements. Such measures necessitated an upheaval in the labour market. Some businesses such as restaurants, bars, and retail shops, were prohibited from opening while, in an unprecedented global shift, many office workers were able to continue working from home. Moreover, even when businesses were allowed to operate, customers were not always readily available. The tourism industry was severely affected as international arrivals plummeted by 78% in 2020 and were still down by 55.9% compared to 2019 in 2021 (OECD, 2022[1]).
Overall, the Greek labour market however held up well during the pandemic. Despite massive disruption, unemployment fell in 2020 compared to 2019 and fell again in 2021. While this fall in unemployment was from a high base and the labour force participation rate dropped during this time as some of the people who were out-of-work stopped searching for work and became inactive, the fall in unemployment is still remarkable. Greece saw the largest percentage point drop in unemployment between 2019 and 2020 of any OECD country and indeed was one of only five OECD countries to see a fall in unemployment between 2019 and 2020 and one of only three to see a fall between both 2019 and 2020 and between 2020 and 2021.
Nevertheless, despite these marked improvements in the last decade and relative resilience during the COVID-19 pandemic, unemployment remains well above its pre-financial crisis levels. Indeed, the unemployment rate ranks the second highest in the OECD (Figure 2.1, Panel C) and labour force participation ranks sixth lowest in the OECD. Much unemployment is long-term unemployment, with 63.1% of the unemployed having been unemployed for 12 months or more as of 2022 – the second highest share in the OECD (OECD, 2023[2]).
These high levels of unemployment translate into very strong demand for employment services, notably the services provided by the Greek public employment service, DYPA. Meanwhile, the high numbers of inactive individuals outside the labour market create strong needs for outreach from DYPA. The number of people registered as unemployed has fluctuated around 1 million in recent times, with strong seasonality exhibited in the data in addition to the COVID-19 shock.
Intriguingly there has been a disconnect between the fall in official unemployment and the flat to slightly increasing numbers of registered unemployed (Figure 2.2). As there are differences in the concepts of registered unemployment (which measures registration with DYPA) and official surveyed unemployment from the labour force survey (which captures those who are out of work but are available and searching for work), it is naturally the case that the measures do not coincide. Still, there is concern that the degree of decoupling could reflect large numbers of people on the unemployment register that are not actively searching for work. DYPA has undertaken recent reforms to the benefit system which aim, in part, to strengthen the enforcement of obligations related to unemployment benefit receipt (see Section 2.3.2). The OECD, in co-operation with the European Commission’s Directorate-General for Structural Reform Support is providing technical support to DYPA related these reforms through a separate project (OECD, forthcoming[3]).
Source: OECD calculations based on data from the Greek public employment service (DYPA) and the Hellenic Statistical Authority (ELSTAT) www.statistics.gr/en/home.
2.2.2. The Greek labour market faces several structural challenges
Greece faces several structural challenges in its labour market. These include informality, disincentives arising from the tax and transfer system, challenges with low skill levels and skill mismatch, seasonal work, and an ageing and declining population. These structural challenges underscore the need for effective ALMPs which can help to promote upskilling and reskilling and improve matching between labour demand and supply. Effective activation strategies can bring the unemployed and those out of the labour force into employment, increasing labour supply within the context of an ageing and declining population.
Informality makes up a large share of the Greek economy, reduces tax revenues and social insurance benefits of workers. While estimating the exact size of the informal economy is notoriously difficult – as by definition such work is undeclared to public authorities – one earlier estimate from Schneider (2013[4]) puts it at about a quarter of GDP in 2005, with this figure picked up as a central estimate by others (ILO, 2016[5]). Much of this work appears to be in under-declared work rather than wholly undeclared work. Of Greeks who report undeclared work in the Eurobarometer survey, 35% report that all of their paid activities are undeclared while 46% report a mix of paid and unpaid activities (Williams and Horodnic, 2021[6]).1 There are no recent estimates of the informal economy which would reflect the recent efforts made by the authorities to address informality.
Workers in Greece face a higher tax wedge from income tax and social security contributions than the OECD average but recent tax cuts in 2020-22 have lessened this (OECD, 2023[7]). A higher tax wedge reduces the incentive to work and increases the incentives for informality. Moreover, Greece has a complicated system of working-age benefits that should be consolidated (OECD, forthcoming[3]). Such a fragmented system of benefits is more complex for DYPA counsellors to administer and for clients to navigate than a consolidated system (for a more in-depth analysis of the unemployment benefit system see (OECD, forthcoming[3])).
Across 40 countries and economies captured in the OECD skills strategy dashboard, Greece scores in the bottom 20% for most indicators on the development of skills (OECD, 2019[8]). While completion rates of high school and tertiary education are above the OECD average, the quality of education received has room to improve. Average scores on reading, mathematics, and science tests of 15-year-old secondary school students are below the OECD average as captured by the OECD’s Programme for International Students Assessments (PISA) (OECD, 2023[9]). The skills among the adult population are also low, with significantly below average performance in literacy and numeracy in the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) (OECD, 2016[10]).
Greece suffers not just from low levels of skills but also from the effective allocation and use of skills, with some of the most severe skill mismatches among OECD and EU countries. Greece has the largest share of overqualified workers across countries and economics participating in the Survey of Adult Skills and features in the bottom 20% in terms of the alignment of skills with the labour market, the intensity of skill use in workplaces, and the use of high-performance workplace practices (OECD, 2019[8]). On another ranking, the European Skills Index (ESI), produced by the European Centre for the Development of Vocational Training (Cedefop), Greece ranks last or second to last for the skill matching component of the index in 2020, 2021 and 2022 (Cedefop, 2022[11]). As a result, even though the job vacancy rate for Greece is still much below EU average and shortages were not a large issue prior to the COVID-19 pandemic, labour shortages exist in certain sectors, including agriculture, construction and tourism (Cedefop, 2023[12]). Job openings are expected to increase across a broad range of occupations, but particularly in occupations where ALMPs can play an important role, such as services or shop workers.
Figure 2.2 above clearly shows the seasonal nature of registered unemployment at DYPA with registrations peaking in winter and decreasing in summer. This makes for an uneven workload across the year at DYPA and poses challenges for those who have specific needs due to the seasonal nature of their work, many of whom work in tourism. Seasonality also implies a need for DYPA to support some workers during the low season.
In addition, as well as in relation to these large variations across seasons, labour market trends also vary dramatically across regions in Greece. For example, there is a 11.7 percentage point gap between the region with the highest employment rate for the working age population (Attica, 64% in 2022) and the region with the lowest (Western Macedonia, 52.3% in 2022) (OECD, 2023[13]). Meeting the varying needs of regions thus poses a challenge for DYPA, with more clients and fewer job opportunities in some areas than others. Indeed, the remoteness of some areas can make it harder for DYPA to meet needs. For example, it may not be possible to put a PES office on every island, some of which have very small populations.
An ageing and declining population underscores the importance of increasing labour market participation for those who can work. Greece’s population is forecast to fall by 13% between 2020 and 2050, one of the largest declines in the OECD (United Nations, 2019[14]). At the same time, Greece’s population is ageing rapidly. In 1990, there were around five working age persons for every person aged over 65 in Greece. Today, that figure stands at around 2.8 and is forecast to fall further to just 1.5 working aged persons for every person over 65 (OECD, 2020[15]). Such ageing and population decline will put pressure on public finances and can exacerbate labour shortages. To counterbalance to some extent such trends it is crucial that Greece lifts its low labour force participation rate and reduces its high levels of unemployment.
2.2.3. Some groups have weak labour market outcomes
Youth and older workers, women, and those with disabilities have worse labour market outcomes than other groups in Greece. Young people aged 15-29 in Greece have the highest unemployment rate in the OECD (24.3% in 2022) and many youth (21.4% in 2021) are also not in employment education and training (NEET) (OECD, 2023[16]; OECD, 2023[17]). The unemployment rate for persons aged 55-64 is 9.1%, the second highest in the OECD in 2022 (OECD, 2023[16]) and almost half of this age group is not in the labour force in Greece (OECD, 2023[18]).
Female employment for persons aged 15-64, at 51.2% in 2022, lags well behind male employment of 70.3%. This nearly 20 percentage point gap is substantially higher than the 14.4 percentage point gap for the OECD average (OECD, 2023[19]). Women also earn less than men in Greece, but the gender earnings gap is lower in Greece than the OECD average (6.9% versus 11.9% in 2021) (OECD, 2023[20]).
Finally, Greece has very low levels of employment for people with disabilities. Just 30% of people with a disability work, which is some 29 percentage points less than those without a disability and much lower than that in many other countries with available data (OECD, 2022[21]).
This section describes the setup of DYPA and the system of ALMP delivery in Greece. Sub-section 2.3.1 gives an overview of how ALMP funds are spent and how effectiveness of programmes is measured, while sub-section 2.3.2 discusses DYPA’s role and operating model. It also discusses the ongoing reform of DYPA which aims to better meet high demand for services with existing resources.
2.3.1. ALMP spending is low and more could be done to ensure its effectiveness
Greece spends much less than the OECD average on ALMPs (Figure 2.3) while facing much higher rates of unemployment and inactivity than many other countries (as discussed in Section 2.2). Spending on Greek ALMPs was just 0.30% of GDP in 2021, which is around three-quarters of the OECD average of 0.42% of GDP. This calculation excludes category 1.2 of ALMPs (benefit administration), which is missing in the relevant data source for Greece and category 4.2 (temporary employment maintenance incentives), which is heavily influenced by the COVID-19 crisis. Indeed, throughout the last nearly two decades covered in Figure 2.4, ALMP spending as a share of GDP is consistently lower in Greece than the OECD level, even during the Greek spikes in spending in 2014, during the economic crisis, and a second spike in 2019 during a temporary surge in direct job creation. Such modest spending combined with high demand for its services makes it difficult for DYPA to meet the needs of jobseekers, workers and employers. Possibilities to increase resources for the ALMP system need to be sought regardless of the overall limited public spending.
The limited spending translates into low numbers of people participating in training and wage subsidy programmes. For example, the calculations using the OECD’s Labour Market Policy database show that, between 2017 and 2020, the average number of participants in ALMPs (categories 2-7) was about 41 000 while there were 1 million registered unemployed during this period.
Note: OECD is an unweighted average of the 34 countries shown. Due to missing data for Greece, Category 1.2 (benefit administration), is excluded. Category 4.2 relates to temporary employment maintenance incentives which were dramatically affected by exception measures to address the challenges of COVID-19 and is excluded from this comparison.
Source: OECD Database on Public expenditure and participant stocks on LMP, http://stats.oecd.org//Index.aspx?QueryId=8540.
ALMP spending is too focused on direct job creation
In terms of composition of ALMP spending, Greece focuses too much on direct job creation programmes. Yet, such direct job creation programmes are found to be of questionable effectiveness in supporting people back into the unsupported employment according to an international meta-analysis of the effectiveness of ALMPs (Card, Kluve and Weber, 2017[22]) regardless of less clear evidence in the longer time horizons and if complemented with additional activities. Averaged over 2017-21, Greece spent about 48.4% of its ALMP budget on direct job creation programmes, more than four times the OECD average (11.2%2 over the same period).
With Greece spending little on ALMPs overall, and a high share of this limited spending going towards direct job creation, spending on training programmes is particularly low at around 0.02% of GDP (over 2017-21), less than one-fifth of the OECD average (0.11% of GDP). Spending on training programmes is also uneven and volatile, for example quadrupling from 2017 to 2018 and then halving in 2019. Greece spends a slightly higher share of GDP on employment incentives than the OECD average since 2019. However, Greece does not offer rehabilitation and support programmes (as part of its ALMP package), which represents a challenge for DYPA and it makes it difficult to provide the necessary employment support to people with disabilities who struggle more in Greece than in other countries to find work. Nevertheless, specific measures to groups like ex-prisoners and people with disabilities are available under other types of ALMPs, such as training and employment incentives.
Note: PES: public employment service. GDP: gross domestic product. OECD is an unweighted of 33 member countries for which data are available over the time period shown. Due to missing data for Greece, Category 1.2 (administrative expenditure for managing benefits) is excluded from PES and administration. Employment incentives exclude category 4.2 (Employment maintenance incentives), to remove as much as possible measures that are specific to COVID-19.
Source: EC-OECD Labour Market Policies Database, https://stats.oecd.org/Index.aspx?DataSetCode=LMPEXP and OECD LFS by Sex and Age – Indicators Database for unemployment https://stats.oecd.org/Index.aspx?DataSetCode=lfs_sexage_i_r.
Few rigorous counterfactual impact evaluations of ALMPs are conducted though recent progress is encouraging
CIEs aim to estimate the true impact of a programme on participants. They seek to answer the question of the effect of the programme on participant outcomes such as probability of employment and wages relative to a counterfactual of not participating in the programme. CIE studies differ from basic monitoring results (e.g. what percentage of participants are employed at the end of the programme?) as monitoring results do not estimate what would have happened to participants if they had not participated. For example, a recent analysis by DYPA showed that about 64% of participants in employment subsidy programmes were employed 12 months after the end of the programmes. However, without a counterfactual, it is not known how many participants would have found a job anyway, even if they had not participated in the programme. Whereas monitoring helps policy makers follow policy implementation over time and support quality and performance measures potentially in real-time, CIEs are necessary to rigorously assess programme effectiveness and perform the cost benefit analysis necessary to identify which programmes are cost effective and which programmes need to be stopped, expanded, or improved (OECD, 2022[23]). That is, CIEs and monitoring are complementary and are an essential tool for evidenced-informed policy making.
Historically Greece has conducted few CIE studies. This is changing though with two examples of recent studies by the Institute of Economic and Industrial Research (IOBE) and the World Bank. In an unpublished impact evaluation completed in 2022, the Institute of Economic and Industrial Research (IOBE) found training programmes in Greece to have a positive effect on employment, a negative effect on unemployment, and no effect on earnings (IOBE, 2021[24]). This report by IOBE leveraged similar linked administrative data as those used in this report and presented in the next chapter.
A study by the World Bank, looked at the effects of a small pilot in three municipalities covered by the Elefsina local office (the intervention was a mixed intervention, with employment counselling given to participants that could be supplemented with training or employment subsidies). The World Bank study found the pilot programme to be effective at raising employment rates and decreasing the likelihood of unemployment registration – though it only looked at the results in the short term (maximum one year after enrolment) and the authors cautioned against a causal interpretation of the results (World Bank, 2021[25]).
Each of these earlier studies highlighted the potential of administrative data for CIE, and both projects recommended that more evaluations be conducted leveraging these data. This report thus helps to fulfil this earlier recommendation by conducting additional CIE of Greece’s training programmes, as well as evaluations of wage subsidy programmes which have not been examined in the earlier work. In addition, this report looks at a broader set of outcomes than previous work, controls for a richer set of participant characteristics, and looks at longer term outcomes several years after participation in ALMPs. The differences between the three studies are discussed further in Chapter 4.
Building on these recent efforts, as well as the OECD analysis presented in the next chapters, Greece should seek to build its capacity to regularly conduct CIEs of its programmes as new ALMPs are introduced, and labour market conditions and client profiles continue to change.
2.3.2. The Greek Public Employment Service DYPA is undergoing major reforms
The Greek Public Employment Service, DYPA, provides the key employment services, such as registering jobseekers, supporting their job search and referring them to other ALMPs, as well as engaging with employers and mediating vacancies. Contrary to the PES in most other OECD countries, DYPA is also providing some of the training measures for jobseekers in-house, via its own vocational training centres, institutions and schools. Furthermore, DYPA has many additional tasks and functions in addition to organising ALMPs, as it is managing 13 unemployment insurance schemes, different social services (social tourism, social camps for children, day nurseries), social housing and even vouchers for books and theatre for jobseekers.
The Ministry of Employment and Social Affairs (YEKA) sets the broader strategy for ALMP provision (Ministry of Labour and Social Affairs, 2022[26]). In co-operation with YEKA, DYPA is responsible for developing a more detailed design for ALMPs that are financed from the social contributions of employees, as well as its operational model and organisation of ALMP delivery. However, YEKA designs the public works schemes, as well as implements these schemes and collects the vacancies for public works from the municipalities. DYPA mediates the vacancies for public works to jobseekers, so that those interested could apply. DYPA and its tripartite Board of Directors have also lesser role in designing and deciding on those ALMPs that are financed via ESF funding, as these are driven by the discussions involving the European counterparts and YEKA and set in a national programme.
To address many of the long-standing and severe challenges on the Greek labour market described in the previous sections of this chapter, an extensive reform is taking place in the design and implementation of ALMPs, benefit schemes, as well as DYPA as an organisation itself. While several initiatives for modernisation have been implemented already since 2020, including to address challenges caused by the COVID-19 pandemic, a big push for change was launched in April 2022 in the framework of a dedicated law for modernisation, so-called “Jobs Again” (Gazette of the Government of the Hellenic Republic, 2022[27]).3 Many of the reformed aspects have not seen changes for the past 50 years and a substantial funding is allocated from the Recovery and Resilience Facility (RRF) of the European Commission to introduce modernisation in the system (see Box 2.1). Thus, the reform is expected to significantly modernise the support that jobseekers and employers receive and better align service provision with labour market needs. The success of the reform will hinge on a clear change agenda, the engagement of all relevant stakeholders and the availability of appropriate resources for implementation.
The Recovery and Resilience Facility (RRF) is the European Commission’s key instrument designed to support EU countries to come out of the COVID-19 crisis stronger, more resilient, and better positioned for the green and digital transitions (European Commission, 2022[28]).
Countries submit a Recovery and Resilience Plan (RRP) which describes how the funding will be spent. The RRP is assessed by the European Commission and approved by the Council of the European Union. The total budget is EUR 723.8 billion (EUR 385.8 billion in loans and EUR 338 billion in grants).
Greece’s RRP is substantial and involves EUR 30.5 billion in RRF funding – EUR 17.77 billion in grants and EUR 12.73 billion in loans. Through this large grant, the European Commission predicts that the plan will have a larger effect on GDP in Greece than in any other country (European Commission, 2022[28]). Within the field of labour markets in Greece, the plan includes EUR 776 million to “increase job creation and participation in the labour market” and EUR 2 311 million for “education, vocational education, training and skills” (Government of Greece, 2021[29])
Source: European Commission (2022[28]), Recovery and Resilience Facility, http://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en (accessed on 14 October 2022).
DYPA aims to be an agile organisation
The Greek PES has gone through a re-branding to communicate a change of era unequivocally to its staff, customers and the society at large, in par with the major reform. The change from the previous name, Manpower Employment Organisation (OAED), to the Public Employment Service (DYPA) aims to mark a shift towards a modern PES, which prioritises active support to jobseekers and employers, while supporting them also with necessary benefits. Such a re-branding can indeed facilitate DYPA to better communicate the change in its services, while the actual implementation of changes needs to follow fast to avoid any negative connotations associated with the new brand name.
DYPA continues to be directed by its tripartite Board of Directors and supervised by YEKA. Such a governance model proved to be more agile than others among the PES in the OECD countries during the crisis induced by the COVID-19 pandemic, as such PES were able to quicker redesign their operating models and business processes, as well as apply the changes across country (Lauringson and Lüske, 2021[30]; OECD, 2021[31]; OECD, 2021[32]; OECD, 2020[33]). The Board of Directors has a strong role in driving ALMP provision in Greece, as it is in charge of implementing relevant laws and regulations, feed into ALMP design, define the operational model and business processes of DYPA, as well as take many of the more operational decisions concerning ALMP provision in addition to the strategic ones.
The reform “Jobs Again” aims to further increase the agility of DYPA by downsizing the composition of the Board of Directors from 17 members to 11 (three representatives of DYPA’s operational management and staff, four representatives of the social partners and four representatives from different relevant ministries). A smaller governing body in a PES can indeed lead to more agile and efficient decision-making and enable to respond to changes in labour market needs fast (OECD, 2021[34]). Nevertheless, it is necessary to establish ways to involve additional stakeholders and experts in the decision-making needs-based to ensure that the decisions do meet the labour market needs. The latter can be a concern as the reduction of members in the Board of Directors took place above all on the side of the social partners.
Counselling capacity remains a constraint
Along with the changes in the management of DYPA, additional changes were made throughout the organisation, updating the organigram for the first time in five decades (Gazette of the Government of the Hellenic Republic, 2022[27]). DYPA is now established as consisting of a Head Office (Administrative Services) and eight Regional Directorates, which manage in total 120 local delivery points of employment services called Employment Promotion Centres (KPA2).
The changes in DYPA’s organigram in 2022 marginally increased the local presence, and the number of job counsellors was doubled. Nevertheless, as the number of job counsellors was at an extremely low level before these changes and as the number of registered unemployed has stayed on a similar level over the past decade (see Section 2.2), the average caseload of jobseekers per counsellor has remained very high in international comparison, at around 2000 jobseekers per counsellor (1 847 jobseekers per counsellors on average over the second half of 2022).4 As some KPA2 are particularly susceptible to seasonality, their caseloads can reach even substantially higher levels during some months. Although exact comparisons of counsellor caseloads between OECD countries are problematic because the responsibilities of PES and the organisation of tasks within PES differ considerably between countries, the crude estimates indicate that the caseloads in Greece are considerably higher than in many other OECD countries, particularly in those with more modern and well-performing ALMP systems (see e.g. Lauringson and Lüske (2021[30])). For example, the caseloads of counsellors supporting people further from the labour market was around 100 jobseekers per counsellor in Denmark, Germany and Flanders (Belgium), and at 150 in France in 2022 (Bourguignon et al., 2023[35]). The caseloads of counsellors supporting jobseekers close to the labour market were at the same time at 100 in Denmark and 150 in Germany. The evaluations in Germany have shown that low caseloads (as low as 70 to 80 jobseekers per counsellor, and in a pilot in 2007-10 even 40 jobseekers per counsellor), particularly concerning supporting the vulnerable groups, are an effective approach to help these groups to integrate into the labour market (Hainmueller et al., 2016[36]; Staible, 2017[37]). An experiment (randomised controlled trial) decreasing caseloads from 250 to 100 in Austria in 2015 showed that jobseekers are returning to paid work more successfully the lower the caseloads are (Böheim, Eppel and Mahringer, 2017[38]).
As resources for counselling in DYPA are very limited, it is extremely important to support the counsellors with appropriate tools, so that they can deliver their services as effectively and efficiently as possible. For example, jobseeker profiling tools can help counsellors to focus their resources on those clients that would benefit from counselling the most. Statistical profiling tools using sufficient background information on jobseekers have demonstrated high performance in predicting support needs (Desiere, Langenbucher and Struyven, 2019[39]; OECD, 2018[40]). The profiling tool that DYPA uses since November 2018 has the advantage of being transparent and easy to implement for the counsellors, but lacks value added as most of the five segments that the profiling tool proposes, are perceived to be very similar and thus not sufficiently facilitating counsellors’ job. In addition to adopting a more advanced jobseeker profiling tool for a better resource allocation, DYPA needs to continue working on leaner administrative processes and modern digital solutions for both counsellors and clients (see more details later in this chapter). For example, tools supporting counsellors in recommending job search paths can increase counselling impact on jobseekers’ job finding rates and occupational mobility (OECD, 2022[41]). Greece is currently supported by a project with the Directorate General for Structural Reform Support (DG REFORM) of the European Commission and the World Bank,5 as well as a project with the OECD to move towards a more modern jobseeker profiling tool, skills profiling and supporting the most vulnerable groups.6
Regardless of the additional steps towards modernisation that will be taken in DYPA, DYPA needs to have more counselling capacity and decrease caseloads to provide actual counselling and meaningful support to jobseekers.7 Leaner and more streamlined processes and modern digital support to counsellors and jobseekers will lead to more efficient support to jobseekers and employers, but will not be able to substitute counsellors entirely. With the current caseloads, the time that a counsellor can devote to a jobseeker is too short to identify their challenges and needs for support and provide appropriate and profound assistance in their pathway to work or can provide such approach to only very few.
DYPA has made first steps in creating a performance management system
The “Jobs Again” act foresees creating a performance management system in DYPA to maximise the counselling capacity and effectiveness of the existing counselling resources. The law gives DYPA the opportunity to design a performance management system, by setting a framework to define good performance and encourage good performance with (financial) rewards to counsellors. DYPA has exchanged with other PES in the EU that have advanced performance management systems in place (such as the Estonian and German PES (OECD, 2021[34]; OECD, 2019[42])) and received assistance via the Technical Support Instrument of the European Commission to develop such a system (World Bank, 2019[43]). DYPA has also made good progress in starting to implement the performance management system digitally using data in its Data Warehouse and developing dashboards with data visualisations that both DYPA management and staff in KPA2 can access. The performance management system consists currently of eight indicators, mostly focusing on improving administrative processes (e.g. targeting the duration of processing subsidies for employers, i.e. output indicators). DYPA management holds meetings with regional managers twice a month to discuss performance, as well as solutions for improvements in case the performance is lower than expected.
While DYPA has made key first steps in introducing a performance management system, further development of the system has been largely put on hold. DYPA needs to further ensure that the performance management system would be binding for the staff and increase the feeling of ownership among them by involving and engaging staff in designing the system and disseminating the objective and methodology of the system (i.e. the process cannot be a purely top-down approach). DYPA needs to find ways to incentivise good performance via monetary (on team and office level, in case counsellor level is not possible) and non-monetary (recognition) ways to create accountability within the organisation. In addition to discussing underperformance, the best performance cases should be studied to identify the best practices that could be rolled out nationwide. The implementation of the performance management system should be streamlined and appear transparent and efficient for the staff. The current practice of printing out performance results (that are already available on the centrally accessible dashboard) on paper in the local level and sending these to the higher levels can appear inefficient and confusing for the staff. In addition, providing sufficient resources and appropriate tools for the staff are key to ensure the means for good performance, as well as motivate staff to perform well.
Furthermore, the overall monitoring framework of ALMPs needs to cover ALMP provision systematically, such as using the results chain framework (inputs-activities-outputs-outcomes), measuring both quantity and quality in ALMP provision, as well as study all relevant break-downs by sub-groups and sub-policies to be able to identify challenges in ALMP provision operatively (see examples on setting monitoring frameworks for ALMP provision in OECD (2023[44]; 2022[23])). The much narrower set of indicators for performance management needs to focus on the key objectives of DYPA and be targeted to drive performance (such as using “SMART” targets: specific, measurable, achievable, relevant and time-bound), taking into account the local labour market situation to be fair across local offices, and involving the local offices in the process of setting targets to create accountability and ownership. As DYPA is re-establishing its processes and approaches, the performance indicators can initially include indicators to ensure the foreseen application of the new processes and approaches. As the concepts will be continuously more established, DYPA will need to gradually move towards a performance management system that indeed would focus on performance, i.e. ultimate outcome indicators (jobseekers finding good jobs and employers finding staff meeting their needs for skills).
DYPA has levelled up its digital infrastructure
When the COVID-19 pandemic hit in 2020, DYPA had essentially no digital services for citizens and employers or advanced digital solutions to support back-office activities efficiently in the circumstances of remote working and needs for high capacity. Nevertheless, DYPA was very quick in developing the urgently needed digital solutions, starting from a digital channel to apply for benefits launched already on the third week of the pandemic. Other digital initiatives continued to follow, such as MyDYPALive to book and manage remote counselling, DYPA application for smartphones, increasing user-friendliness and accessibility of DYPA’s website, co-operation with Google, Coursera and Microsoft to provide digital training courses, and, more recently, launching a digital assistant called Daphne on DYPA’s website that uses natural language processing to help citizens with information on DYPA’s services (an AI-based chatbot launched in 2022).
DYPA’s efforts to streamline its processes and level up its digital backbone have been greatly facilitated by similar endeavours in the public sector nationwide. Greece has a national level initiative to simplify all processes in the public sector, and also DYPA is mapping its processes to streamline them and develop lean digital solutions to support these processes. DYPA’s digital solutions have already hugely improved due to the newly developed possibilities to exchange data with other registers via the infrastructure of the Central Interoperability Centre (KED), which is launched and hosted by the Ministry of Digital Governance to facilitate digital public services across Greece. The DYPA’s operational IT system has now web services to exchange data on employment records, taxes, social security, property, refugee status etc., and additional web services are being developed.
In addition to exchanging data for administrative purposes, DYPA needs to further develop its capacity to systematically link administrative data for evidence generation and make these securely available for researchers. DYPA has taken the first steps towards evidence-based policy design by starting to monitor ALMP provision (within the performance management system, see previous sub-section) including by using employment data in addition to its own register data for this purpose, as well as sharing linked administrative data first time ever for the purposes of evaluating training measures and wage subsidies within the current project (see the next chapters). A fully-fledged evidence-based approach to ALMP design and implementation would need additional financial and human resources to be able to conduct evaluations both in-house and contract them out, in addition to developing technical capacity to link and share data.
Further modernisation of DYPA’s digital infrastructure to improve the effectiveness and efficiency in ALMP provision is a key pillar in the “Jobs Again” act funded by the RRF. The RRF funding is being used to modernise the crucial parts of DYPA, such as updating its main operational IT system that is already over a decade old and uses an outdated software, and developing new digital tools for jobseekers to access and prove their eligibility to benefits and rights (DYPA Digital Card, Digital Register, Digital Individual Action Plan). Within 2023-24, DYPA hopes to develop a cutting-edge tool to match jobseekers and vacancies, applying competency-based matching methods and enhancing the technology with AI algorithms. Although matching jobseekers and vacancies should be the very core of PES activities, DYPA has not had the resources, capacity or internal consent to develop such a tool so far. The development of a matching tool met resistance from staff in the past due to the concern that digital solutions would make counsellors redundant, despite the fact that counselling capacity has been at a stretch throughout the past decade. Currently, vacancies are listed on DYPA’s website with few filtering options, and full details for application are available for jobseekers only by visiting a KPA2. Thus, the current matching tool is far from effective and efficient in supporting the labour market and it is crucial to be upgraded to a modern solution.
Despite the substantial progress that DYPA has made in modernising its digital backbone, a range of digital developments still lies ahead as modernising an IT infrastructure needs considerable time and resources. In addition to the IT developments foreseen in the RRF that need to be still fully implemented, additional modernisation is likely needed, such as continuing the work on updating the jobseeker profiling tool or automating and digitalising processes that are not yet digital. Even some solutions that were quickly put in production during the COVID-19 crisis might need soon updating or streamlining to fit well within the renewed digital infrastructure. For example, while MyDYPALive is a good example of developing a modern solution in times of crisis (Alexiou and Koitsanou, 2021[45]), its capacity is not covering full needs for digital counselling (limited access to the tool for counsellors and limited counselling slots), and counsellors need to opt currently for face-to-face counselling even when digital counselling would be sufficient for the specific client.
While DYPA needs to stay agile in its progress in digitalisation, an underlying strategic concept is needed to guide DYPA in this pathway. The strategy should state the objective and principles for digital innovations, helping to prioritise the different IT projects and set a clear framework for digitalisation. A clear strategy would help to avoid a patchwork of initiatives that are not well integrated technologically or process wise. Furthermore, the digital strategy should address such issues as achieving sustainable financial and human resources for IT developments, using modern development concepts (including systematic ways to involve end-users in the development processes to increase value-added of the new digital solutions (OECD, 2022[41])), ensuring take-up and avoiding staff resistance, and monitoring and evaluating digital tools systematically. The digital strategy should also consider the ways to manage the different risks associated with digital tools, such as issues concerning ethics, trustworthiness, transparency, fairness, data security and system security. As DYPA is aiming to enhance its digital infrastructure increasingly with AI algorithms, many of these concerns become even more prominent.
DYPA is improving the effectiveness of active labour market policies
DYPA initiated significant changes in ALMP design in 2020 within its scope of responsibilities under the overall ALMP strategy of YEKA, aiming to increase the effectiveness of ALMP support to jobseekers and employers. Although evidence on ALMP effectiveness was at that time scarce, DYPA based the new policy design on analyses of gross employment outcomes of ALMPs and learning from evidence and good practices available from other countries. For example, the design of wage subsidies was substantially revised to decrease misuse of this measure, increase take-up and create new jobs (see details in Chapter 3). By the example of other countries, DYPA designed new measures for graduates, increased communication and engagement with employers, started organising job fairs where employers and jobseekers meet (so-called career days), and improved interactions between jobseekers’ counsellors and employers’ counsellors.
The “Jobs Again” act foresees further improvements in ALMP design, particularly regarding training measures. A major change in training provision is applying the concept of “payment by results” for both the training provider and the participant, aiming to decrease drop-out rates, increase training quality and boost employment rates after participation in training. Such an application of an accountability framework on training providers is a promising initiative and potentially a good example for other PES to learn from. Nevertheless, it is crucial to monitor and evaluate the model of payments by results and be in a dialogue with the providers to ensure that any challenges in this framework are addressed in time – see a thorough discussion on designing and implementing payment by results model in OECD (2022[46]; 2022[47]; 2023[48]; 2023[49]).
In addition, the “Jobs Again” act foresees many other key measures to increase upskilling and reskilling and decrease skill mismatches on the Greek labour market. Although the new national skills strategy has been already published (Ministry of Labour and Social Affairs, 2022[50]), many of the other initiatives are still under development, such as individual learning accounts (a digital tool recording all received training and certifications) and a Single Digital Portal for Skills (skills.gov.gr) to access all vocational training measures easily. Another key initiative, the Labour Market Diagnosis Mechanism, is able to already assess labour market needs, but not yet anticipate them.
The “Jobs Again” act also aims to strengthen the regulation of job-search requirements to decrease misuses of the benefit system, but also to nudge jobseekers to increase job search efforts, give counsellors more tools to activate jobseekers and allocate counselling resources to those jobseekers who need these. Although the new regulation has been passed, its implementation is largely on hold, including due to the resistance from DYPA’s staff. To be able to implement the job-search requirements successfully, the counsellors need clear guidelines and thorough training for implementation, as well as support from the digital infrastructure to record actions made regarding the jobseekers efficiently and precisely, and thus avoid potential appeals from the jobseekers. Furthermore, although a proper application of job-search requirements would eventually decrease counsellors’ caseloads, the current caseloads are too high to implement job-search requirements appropriately and equally to all jobseekers.
In addition to changes foreseen in the “Jobs Again” reform, additional changes are relevant in the ALMP package in Greece to make the support to jobseekers and employers effective and efficient. For example, the many temporary programmes that are split by narrow target groups can be inefficient to manage and still not reach those jobseekers who need these the most. Continuous programmes with wider eligibility criteria but more narrowly targeted to the individual needs of the jobseekers (e.g. using also profiling tools mentioned previously in this chapter) could address the efficiency and effectiveness issues. Further reforms on entitlements associated with registering with DYPA beyond unemployment benefits might be relevant to target ALMPs. Public works schemes that are internationally evaluated to be generally ineffective measures (Card, Kluve and Weber, 2017[22]) in terms of supporting jobseekers to return to employment in the open marker, need to be revised by YEKA (e.g. analyse which groups do benefit from such measures and how to increase the positive effects, and which groups need different support altogether). All in all, DYPA and YEKA need to continue building the evidence base on ALMP take-up, effectiveness and efficiency, and make changes in ALMP design and implementation accordingly.
A clear strategy is necessary to avoid a patchwork of changes
In the context of the reform, DYPA is expected to implement an abundance of extensive acts, regulations, circulars and ministerial decisions. One of the acts also aims to declare DYPA’s mission (Gazette of the Government of the Hellenic Republic, 2022[27]) but, in reality, it rather states DYPA’s long list of tasks and responsibilities. Furthermore, DYPA’s tasks are listed in several different regulations (e.g. Gazette of the government of the Hellenic Republic (2022[27]) and Ministry of Labour and Social Affairs (2022[26]), similarly to the changes it needs to undertake (e.g. Ministry of Finance (2021[51]) and Gazette of the government of the Hellenic Republic (2022[27])). As a result, there is no clear and concise strategy for DYPA, which severely compromises its pathway to a new and modern PES, as it can be difficult to communicate its aspirations to external stakeholders, as well as its staff, and potentially even cause resistance to change within the organisation.
DYPA needs to draw up its strategic plan to be able to continue its successful transformation pathway. While DYPA has been able to make significant first steps towards an effective and efficient PES, also first challenges have been met, and many difficult steps still lie ahead. A concise strategic plan would enable DYPA to set the clear long-term objectives and prioritise addressing any upcoming issues and ideas along the way, avoiding getting DYPA side-tracked. While agile take-up of innovations and good practices is important, new investments need to be thought through in terms of DYPA’s strategic goals. An exemplary strategic plan should clearly and very concisely state the mission (DYPA’s purpose), vision (an inspirational statement what DYPA desires to achieve or become), core values, clients to whom the services are targeted, key partners in achieving the strategic objectives, key activities to reach the objectives and key performance indicators to assess the progress. Some examples of clear and concise PES strategies concerning Estonia, France, Denmark and Spain can be accessed in OECD (2019[42]). DYPA’s strategy needs to be of course aligned with the regulations it needs to follow, as well as other strategic documents that DYPA might need (e.g. a digitalisation strategy, a strategy for generating knowledge, shorter term action plans or annual plans to implement the long-term strategy).
Crucially, a clear and concise strategy is vital to get the whole DYPA on board with the change agenda. Every staff member needs to easily understand the strategy to be able to contribute to the common goals. For this, a strategy that is easily comprehensible, focused and discussing the critical elements is needed. Furthermore, the feeling of ownership is critical to implement the change agenda. Thus, it is relevant that the strategy is not merely drafted at the highest level of DYPA and communicated to the staff afterwards, but that DYPA would aim to engage staff already in the strategy development process (e.g. at least some staff from the eight Regional Directorates and potentially some staff from different KPA2; these staff members could later on also serve as the “agents” for the change agenda, disseminating the strategy and importance to their colleagues).
Involving and engaging staff in DYPA’s planning and innovation processes is relevant beyond developing the strategy document. Staff involvement would help to increasing the feeling of ownership of the change agenda among DYPA’s employees and facilitate implementing the changes (decrease resistance to change and embrace responsibilities), as well as encourage innovation ideas that might not come up with purely top-down processes for innovation.
This chapter has illustrated the strong demand for employment services in Greece due to Greece’s long struggle with high levels of unemployment. Despite such high levels of demand for employment services, Greece allocates much less funding to ALMPs than do many other countries. This makes DYPA’s job challenging. More resources for ALMPs would help, but in the absence of increased expenditure on ALMPs, efficient use of existing resources becomes ever more important. Within this context, DYPA’s ongoing reform holds much promise to improve service delivery, but its success will depend on developing a concise strategy, engaging staff, and ensuring adequate human and financial resources are available.
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Notes
← 1. The figures do not sum to 100% due to refusals and people responding “other”. While the authors note that the figures should be treated with caution due to small sample sizes, the figures from the earlier 2013 Eurobarometer survey on informality paint a similar qualitative picture with 54% of all undeclared work estimated to be under-declared waged employment (ILO, 2016[5]).
← 2. Unweighted average for 33 OECD member countries for which data are available over the time period shown in Figure 2.4 and excluding categories 1.2 and 4.2.
← 3. The full name: Jobs Again: Reorganization of the Public Employment Service and digitalisation of its services, upgrading of workforce skills and diagnosis of labour needs and other provisions.
← 4. Statistics for counsellor caseloads refer to averages of monthly statistics, where the monthly statistics are calculated by taking the stock of registered unemployed (recorded on the final day of the month) and dividing by the number of DYPA counsellors (figures calculated on the 15th of each month). For small local offices where DYPA staff may have multiple roles, any staff whose responsibilities included counselling were included in the calculations as full-time counsellors.
← 5. The project “Supporting the implementation of a National Skills Framework for Learning Pathways in Greece” is conducted in the context of DG REFORM’s Technical Support Instrument (TSI).
← 6. OECD-DYPA project to strengthen support to vulnerable clients via modern digital tools and supplementary services.
← 7. Increasing the number of counsellors may also require co-ordination with other Greek entities, such as the National Organisation for Certification of Qualifications and Vocational Guidance, who also play a role in ensuring that there are sufficient numbers of certified DYPA counsellors in Greece.