Assessment and Recommendations

The Italian labour market is witnessing a mild recovery

Helping the unemployed and other inactive people to find jobs is not easy in a period of slow or negative economic growth. The global financial and economic crisis hit the Italian economy more than many other OECD countries. Although productivity growth is still stagnant, the economy is undergoing a mild recovery albeit with some headwinds looming large on the horizon. The improved economic situation has triggered an increase in labour force participation and some increase in employment. The employment rate of persons aged 15-64 years has risen to 58.0%, which is very close to its pre-crisis level, but still well below the OECD average (67.8%). Although the unemployment rate has been decreasing in recent years, at 11.4%, it is still well above its pre-crisis levels and the third highest among OECD countries.

Some groups are still disadvantaged

Despite the recent improvements in the labour market, several groups continue to face rather bleak labour market prospects:

Women still face greater challenges than men in the labour market. The participation rate of working age women, at 56% in 2017, remains almost 20 percentage points below that of men despite rising by over 10 percentage points in the past two decades. To promote further much needed progress in addressing gender gaps in the labour market, significant improvements are needed in the provision of caretaking facilities for children and elderly and better targeting of active labour market policies to support women’s labour market prospects.
Young people were hit hardest by the crisis in Italy. The unemployment rate of 15-24-year-olds stood at 43% at its peak in 2014. The labour market situation of youth has improved only mildly during the recovery. In 2017, every third economically active person aged 15 to 24 was unemployed compared with one in every eight in the OECD, and more than one in four persons aged 20 to 24 were neither in employment, nor in education or training (NEET) compared with one in six in the OECD. So far, the measures under the Youth Guarantee programme have not been successful at drawing large numbers of jobless youth into active labour market programmes and bringing them closer to the labour market. Public employment services have to be strengthened to be able to reach the NEETs on time and provide them with appropriate support.
Long-term unemployment remains high in Italy. Long-term unemployed persons accounted for 59% of all the unemployed in 2017, second highest – together with the Slovak Republic – among OECD countries, just behind Greece. The share of the long-term unemployed in the labour force was 6.5% in 2017 (for the population aged 15-74), versus 3.4% for the EU countries.

Under-skilling and labour market mismatch hinder economic growth

Italy also faces a challenge of improving the skills of its workforce and better utilising those skills and matching them to employer needs. Only about one in six adults aged 25 to 64 years have a tertiary degree in Italy, the second lowest share among the OECD countries, behind Mexico. In addition, according to the results of the OECD Adults Skills Survey (PIAAC), the skill levels of the adult population are low compared to the other participating countries at all levels of educational attainment. The low skill levels are coupled with a high incidence of skill mismatch which depresses productivity further. Wages in Italy are set through sectoral collective agreements that are automatically applied across the country and provide weak incentives for investing in skills or improving work performance. While the Italian Government has made efforts to encourage firm-level bargaining (e.g. tax reductions on productivity bonuses), wages still tend to be rigid and contribute further to skill mismatch and low productivity.

In 2016, close to 40% of adults aged 15-64 were either over- or under-qualified for their job in Italy which is higher than the OECD average. The high incidence of mismatch suggests that there may be room for promoting labour mobility across occupations and sectors. This could be done through a range of services administered and delivered by the system of employment services. A prerequisite for promoting labour mobility is the availability of good information on labour market prospects in each region, which is currently lacking in Italy.

Spending on active labour market policies is low

Italy spent 0.51% of GDP on active labour market policies (ALMPs) in 2015, which was just below the average spending among OECD countries (0.53% of GDP). However, Italy’s unemployment rate was almost double the OECD average (12.1% vs 7.0% among 15-64-year-olds), which indicates that the country invests relatively little in active measures per unemployed person.

At the same time, spending on passive labour market policies (i.e. income support), notably wage supplementation schemes, is relatively high (0.49% of GDP on wage supplementation and related schemes and 0.78% on unemployment benefits in 2015). Spending on passive labour market policies increased from 0.67% of GDP to 1.29% between 2005 and 2015, in line with the increase in the number of jobseekers during the crisis and the growing reliance on wage supplementation schemes.

Spending on active labour market programmes is not well directed

Italy’s budget on active labour market policies is skewed toward measures that are more susceptible to suffering from large deadweight losses as half of the budget for active labour market policies is devoted to employment incentives. More than a third of the budget is devoted to training measures, though mostly in the form of reductions in social contributions for employers during apprenticeships programs. In contrast, only 2% of the budget for active policies is devoted to services that have internationally proved to be more cost-effective, such as job mediation, job placement and related services. As a comparison, OECD countries spend on average on these services almost 10% of their budget for active policies.

Furthermore, the allocation of funding by regions and provinces does not always follow a coherent national framework, leading to differences in access, quality and effectiveness of active labour market policies across the country.

Labour market policies rely heavily on subsidising employment relationships

ALMPs in Italy serve a similar purpose as the passive measures. Two thirds of active measures are used to subsidise new employment relationships while 40% of spending on passive labour market policies are used to subsidise continuing employment relationships. Both active and passive measures lack transparency and targeting, and are likely to be misused as permanent subsidies for non-sustainable employment in low value-added enterprises. Therefore, employment incentives should be redesigned to target only the most vulnerable groups (for example by adjusting the quantitative jobseeker profiling tool for this purpose) and not as a permanent subsidy for non-sustainable enterprises.

Training provision does not address the widespread lack of skills among adults

The vast majority of training programmes in Italy are targeted at people up to 29 years of age. For the unemployed aged 30 and over, there are only limited institutional training options available and essentially no workplace training or internships. The Polish apprenticeship programs for adults provides one example of how access to training for adult jobseekers can be facilitated.

The referral of jobseekers to institutional training and the corresponding funding for these programs should be increased considering the widespread lack of skills among adults but linked better to their training needs and the skill needs of employers. Currently, the results of skills assessment and anticipation exercises are not systematically linked to referrals to training nor is there any information available about the effectiveness of training programs. As a first step, the choice of training programs to be provided for the jobseekers should be linked better with employer needs (e.g. the Excelsior model conducted by Unioncamere providing detailed overviews on short-term labour needs and long-term skill forecasts) and outcomes of training programs (labour market integration rates after participation). To strengthen the effectiveness of training programs, the programs should be regularly evaluated to take the net effect of each program into account in training referrals. A tool called TrEffeR in the German public employment service provides an example of regular impact evaluation of programs by providers, area and type of program. A similar mechanism could be introduced in Italy for example in co-operation with INAPP (the National Institute for Public Policy Analysis) and/or universities. As ANPAL (the National Agency for Active Labour Market Policies) is working currently together with the regional authorities on setting up a register for vocational education and training, this provides a good prerequisite to have the necessary data ready in the future to conduct impact evaluations of training courses.

Public employment services have low credibility as job brokers

Only about half of unemployed persons in Italy are registered with the public employment service (PES), a lower share than in most other OECD countries. Moreover, the public employment service is not a popular channel for seeking employment: only half of the registered unemployed use these services to look for work, a low share relative to the situation in other OECD countries. Jobseekers are reluctant to use PES services as the access to active measures is low and often perceived to be of low quality.

Employers also make little use of the PES to fill their vacancies. In 2014, as the main recruitment channel, only 1.5% of employers used the PES while two thirds used their personal and social networks. This low use of the PES is observed among all employers, regardless of their size, sector or region.

The low share of jobseekers who find employment with the support of the PES, also points to its limited role as a job broker. In 2016, only 2.5% of new hires have involved some services from the PES. This share is five times lower than the OECD average and shows that the Italian PES lacks credibility both on the side of employers and jobseekers.

An important labour market reform was introduced in recent years

To address its labour market challenges, Italy launched the “Jobs Act” in 2014-16, a set of reforms that introduced the flexicurity concept resting on three pillars: changing employment protection legislation (simplifying and clarifying procedures for dismissal of those on open-ended contracts), reforming the benefit system (security) and strengthening the system of ALMPs. Though some preliminary measures were introduced already in March 2014, the majority of the relevant decrees were finally adopted by September 2015 and implemented thereafter. By 2018, there had been some progress on the first two pillars but the reform of the system of ALMPs remains more challenging. The Jobs Act has been complemented by two additional reforms, Buona Scuola and Industria 4.0, aiming jointly at boosting productivity and improving the ability of the economy to adjust to external shocks due to global changes. These reforms have the potential to increase the supply of and the demand for skilled labour and improve the matching between the two.

Labour market duality remains a significant problem in Italy

The Jobs Act replaced the multitude of forms of open-ended and non-standard contracts with one permanent contract type with severance payments increasing with job tenure (tutele crescenti). By introducing this new contract type, the uncertainty of firing costs was cut by restricting the grounds for reinstatement in cases of dismissal without just cause. It was only applied to newly signed permanent contracts (after the 7 March 2015) in firms with more than 15 employees. Additionally, the new permanent contracts were exempted from the social security contributions in 2015-16 (maximum limits reduced in 2016). The budget for 2017 extended the social security exemptions, but limited them only to students newly hired to firms where they completed their internship or traineeship and young workers hired in the southern regions with permanent or internship contracts.

These attempts to increase labour market flexibility have generated some positive effects. The number of new open-ended contracts increased in response to the changes by 63% in 2015, but fell back to the 2014 level in 2016 and even decreased by 7% in 2017 compared to 2014. The different estimations indicate that the Jobs Act has reduced labour market duality, mostly by encouraging the conversion of fixed-term contracts to permanent ones and less so by triggering new hires using open-ended contracts. The positive effects have emerged mostly due to monetary incentives and less so due to the changes in the employment protection legislation. Regardless of the initial modest effects, introducing more clarity on the conditions for dismissal has been a step in the right direction besides boosting employment and reducing labour market duality. These changes could also potentially increase productivity through improved labour allocation and skill match and decrease the extent of undeclared work in the Italian labour market.

Nevertheless, at the end of September 2018, the Italian Constitutional Court declared rigid indemnities upon unfair dismissal dependent solely on job tenure to be unlawful. This threatens to re-introduce the uncertainty of firing costs and to eliminate the positive effects of the Jobs Act on the use of open-ended contracts. Furthermore, a recent change in the employment protection legislation called the “Dignity Decree” approved already in July 2018 increases the minimum and maximum amounts of firing costs. In addition, the use of fixed-term contracts is now more constrained making the employers hesitant to hire additional employees and calling a further increase in employment into question.

Unemployment benefit schemes have so far been fragmented and benefit few

Italian passive labour market policies have relied past years heavily on generous, but poorly targeted wage supplementation schemes for workers on reduced working hours covering only some sectors, contract types and companies. At the same time, only around 7% of registered unemployed people received unemployment benefits. Wage supplementation schemes have been more popular than unemployment benefits due to their generous levels and low contribution requirements from employers.

The main goals of the Jobs Act regarding social security have been to reduce the reliance on wage supplementation schemes, to introduce more “harmonisation” and “universalisation” of unemployment benefits and link their duration to the previous working history, to introduce means-tested measures complementing social insurance ones, and to strengthen the principle of conditionality. During the initial years, the reform has led to a slightly higher coverage of unemployment benefits. The share of unemployed persons registered at the public employment service and receiving unemployment benefits increased from 6.7% in 2014 to 7.0% in 2015 and to 7.8% in 2016. The magnitude of these effects has been modest, but the true effects will be visible only when the new benefit system has had some time to mature and only if the accompanying changes in the active labour market policies will be fully implemented.

Somewhat less fragmentation of the system since Jobs Act and creation of ANPAL

While there have been many attempts to promote labour market flexibility and passive labour market policies during the past 30 years, the provision of active labour market policies has been lagging behind. Up until the Jobs Act, the provinces were responsible for delivering employment services which led to a fragmented system with great differences in the quantity and quality of measures available across Italy. The original aim of the Jobs Act was to consolidate the responsibilities from the provincial level to a new central organisation, the National Agency for Active Labour Market Policies (ANPAL). However, this step required a constitutional reform preceded by a referendum. Due to the negative outcome of the referendum in December 2016, only the consolidation of the powers from provinces to the regional level was possible. Nevertheless, this has led to a lower level of fragmentation than before as there are 21 regions and autonomous provinces implementing employment services instead of over a hundred different provinces.

The original aim of the Jobs Act was to entrust ANPAL with the responsibility for setting the objectives and strategies for the employment services in Italy. However, following the negative outcome of the Referendum, ANPAL’s role has been that of the co-ordinator of the activities of the network of employment services that was established to improve the efficiency of the labour market. The network includes ANPAL, regional structures responsible for ALMPs, public and private employment offices delivering ALMPs, the organisation responsible for unemployment benefits (INPS), the organisation managing measures for disabled jobseekers (INAIL), the organisation evaluating public policies (INAPP), universities and upper secondary schools, among other actors. Its creation involved a slight rearrangement of responsibilities between the organisations rather than a new set-up of employment services. The establishment of ANPAL as the co-ordinator of the network is a positive step, as the existence of a national level organisation such as ANPAL is instrumental in a decentralised system to support the regional authorities and thus make the system effective and efficient.

ANPAL’s role needs to be strengthened further

The main documents framing the scope of action for ANPAL are the decree implementing the Jobs Act regarding ALMPs, ANPAL’s statute and the strategic agreements between the State and the regional authorities. In addition, ANPAL has laid down its Performance Plan defining the multitude of tasks assigned to it by the legal framework in detail. ANPAL has progressed well fulfilling many of these tasks already during the first years of its activities. ANPAL has worked out new methodologies (for profiling jobseekers, contracting out employment services, etc.), reached agreements with the regions on common concepts (a suitable job offer for jobseekers, minimum service standards, indicators for performance measurement, etc.) and developed new IT solutions.

In addition, ANPAL has done a lot during its first years to generate and disseminate knowledge about the situation in the system of employment services by conducting surveys among the local employment offices and their customers. This has created strong awareness about the challenges in the system among the members of the network of employment services. To overcome these challenges, ANPAL has a crucial role to play to co-ordinate and support the activities of the network designing and implementing change. ANPAL has to provide central support to the system, going beyond individual detailed tasks to enable the system go through a fundamental reform rather than a patchwork of small changes. Thus, ANPAL’s clear strategic plan defining its main mission is vital for its success.

While ANPAL has an elaborate Performance Plan in place, it is important for ANPAL to elaborate its strategic view further to clearly state its mission, vision, core values, clients and key partners. A solid strategic identification of ANPAL would benefit the implementation of the reform and moving forward. On the one hand, this would promote co-operation within ANPAL as the objectives of the organisation and the strategy to achieve these objectives would then be understood in the same way by all parties. This is especially important for the co-operation between ANPAL and its in-house entity ANPAL Servizi, but also ANPAL’s employees who were moved there from INAPP and the Ministry of Labour and Social Policies.

On the other hand, a clear strategic view would benefit also the co-operation of ANPAL with the other partners in the network of employment services as there would be then more clarity what the exact role of ANPAL is and what kind of support the regional authorities could expect from it. ANPAL’s mission should be above all supporting the regions and the local employment offices – Centri per l’Impiego (CPIs) to improve the employment services.

Thus, it is crucial that ANPAL keeps both its external and internal stakeholders in mind when refining its strategy. The communication by ANPAL of its strategy both internally and externally should become an integral part of its business model to become effective.

Regarding internal stakeholders, the strategy should ensure that the ANPAL Servizi staff are treated as an integral part of the organisation. ANPAL Servizi’s presence in the regions is a tool for ANPAL to better serve the regions, but it has not yet been fully utilised.

Efforts should be made to strengthen co-operation

The law provides only a limited set of tools to ANPAL to fulfil its role as the co-ordinator of the system of employment services. First, ANPAL is leading the negotiations to draw up strategic documents. For this purpose, ANPAL has set up a Committee of Active Labour Market Policies, which is chaired by the general director of ANPAL and meets about ten times a year with the participation of the regional directors for employment. Second, ANPAL is authorised to monitor and evaluate the management and performance of ALMPs and even manage these employment offices directly that do not meet the minimum service standards. The latter tool is however a last resort and the full process of implementing it is not yet in place.

As a result of the limited tools ANPAL can use, during the first years of activity, ANPAL has been struggling in its co-ordinating role and the stakeholders perceive the progress to be slow. To overcome the limited tools, ANPAL should build trust among stakeholders through its activities to encourage collaboration within the system. Harmonisation of the system is important, but it should not be ANPAL’s primary objective at all costs. The key objective is to find good working methods that could be delivered in all the regions while making it possible to accommodate best practices already in use and create the ground for development and innovation.

While ANPAL has made good efforts to reach agreements in the Committee of Active Labour Market Policies, the reform progress depends also on the willingness and efforts of the regions to co-operate. The co-operation of the regions is crucial, as the resources in the system are very limited and thus developing nation-wide tools is more efficient, allowing regions to save funds for staff and active policies.

A way to encourage co-operation can be through an evidence-based sharing of good practices like the method implemented in the EU PES Network and applied also by the decentralised system of employment services in Spain. Within this framework, the performance of employment services is monitored to enable detecting best practices and share these practices with each other. This form of co-operation to create mutual improvements can be even more easily applicable in Italy where the institutional context across regions is much more similar than across European countries.

Encouraging competition at a local level with a performance management system and appropriate incentives is crucial in any system of public employment services. Yet this becomes even more critical in a decentralised system where the local units have more flexibility to define their business model. For example, performance of employment services has been successfully improved by transparency and financial incentives in the decentralised systems of Denmark and Spain. However, in the case of Italy, so far also the budget laws regulating the funding of the system of employment services have been passed without making funding of CPIs conditional on their performance. An incentive system rewarding an increase in performance (i.e. not the absolute level of performance) could be potentially feasible also in Italy. For example the funds allocated from the state budget to cover partially the operating costs of local employment offices could depend on improvements in performance (measured by a set of well-identified performance indicators). This becomes even more crucial if the funding of public employment services will be increased from the state budget as has been announced by the new government.

The mechanisms to improve the quality of active labour market policies provided by the Jobs Act have not yet been put into practice

Besides restructuring the system of employment services, the Jobs Act also targets the content and above all the quality of active labour market policies. First, it identifies general principles of active labour market policies and sets grounds for introducing minimum service standards across Italy. The first agreements to set the minimum service standards have been reached, although the monitoring of the implementation of these standards is still problematic. Second, activation conditionality on benefit recipients is enforced to shift the focus from passive measures to active measures in the system. This will likely not be implemented any time soon as it is depending among other issues on IT developments. Third, the Jobs Act aims to increase the quality of employment services by enhancing the quasi-market for employment services and stimulating competition between the public and private providers. This has been implemented mainly through a national measure to outsource job placement services called the reintegration (replacement) voucher.

Benefit conditionality is in its infancy

Although conditionality of benefit receipt on participation in ALMPs and active job search has existed in the legislation for some time, it has never been imposed and until recently it was technically difficult to make a link between benefit recipiency on the one hand and participation in ALMPs and active job-search on the other. The Jobs Act stipulates that conditionality on benefit recipients is enforced in order to shift the focus from passive measures to active measures in the system. However, this has proved to be the most difficult aspect to implement and several other changes have to be made in the system before it could take effect successfully.

The biggest obstacle until recently was that the concept of a suitable job offer was not well defined and approved by the Ministry of Labour and Social Policies up until July 2018. During this phase, the CPIs and operators were reluctant to apply the activation conditionality due to the possible lawsuits as it would not be possible for them to prove that the job offer was suitable. Nevertheless, even if the term of suitable job offer was well defined, there would be difficulties for the operators to prove that the jobseeker refused it. The operators in the CPIs have to be trained to implement activation, making them aware of its objectives and build the know-how to use the appropriate tools.

The online tools for communicating violations of activation activities by jobseekers to the institution managing unemployment benefits (INPS) have not become fully functional yet, implying that the data exchange is not properly facilitated and any communication attempt is at the moment rather burdensome. The processes and IT systems have to be amended to support the application of conditionality.

Finally, the number of vacancies mediated by the public employment services is very low, which also makes it harder for the operators in the CPIs to apply the activation conditionality by referring jobseekers to suitable jobs. Hence, shifting the system of employment services towards activation requires still fundamental changes throughout the business model and related processes, from developing supportive IT infrastructure to putting a strategy for employer outreach in place.

If the proposal by the new government to provide universal basic income (extending means-tested benefit called Reddito di Inclusione) is to be implemented, the activation conditionality will gain even more importance as the number of benefit recipients would be significantly increased compared to the current benefit system. Any positive effects of such scheme on poverty and employment in the framework of limited financial resources will only be possible if the benefit recipients get a strong support from the employment services helping them to actively seek work and providing them the necessary active measures to succeed in that.

Contracting employment services out to private providers could be a good solution for the under-resourced public system

The Jobs Act aims to increase the quality of employment services by enhancing the quasi-market for employment services and stimulating competition between the public and private providers. Contracting out employment services to private providers could potentially help overcome the lack of staff, skills, and efficient processes in the network of public employment services. Though the legal system allowed private providers to deliver employment services already before the Jobs Act relaunched it, this approach is not yet well rooted in Italy. Most of the regions have a system to outsource employment services in place (though not yet fully functional in all of them), but the rules tend to be quite heterogeneous and thus the market fragmented leading to unequal access and quality of services for jobseekers living in neighbouring regions.

More regulation from the national level is needed for the positive effects of the quasi-market for service providers to emerge. ANPAL should develop a strategic view on how the market should look like and function, and this view should lay out the foundation of regulations. The aim should be to harmonise the rules and increase the range of services that private employment services could provide. A number of OECD countries have experience in setting up the market for private service providers and monitoring their performance. A good example of how to contract services out is Australia where the model focuses on performance-based fees; the performance outcomes are published and available to all labour market stakeholders, including to jobseekers who can use this information when choosing a provider; certification for a minimum standard of quality is in place; and the market shares of service providers are adjusted promptly according to their results. Also the experience of developing the quasi-market in the United Kingdom provides useful and easily transferable guidelines for enhancing the market in Italy. The necessity to build strategic relationship with the providers, the need to pay by results or the need to take action against providers who do not deliver can be applied at both the regional and national level. The role of ANPAL should be to enhance co-opetition between service providers, but also between the regions, develop a management information system that supports performance monitoring by regions, but also supports the regions to monitor the providers, etc.

The development of the national IT infrastructure is critical for enhancing the market. When the new IT system will be fully operational, it will link data about jobseekers, their participation in measures and labour market outcomes in order to establish a performance management system involving both private and public providers, to extend performance-based outsourcing and to supply also private providers with a direct access to the data about jobseekers they need for service provision.

The results of piloting the reintegration voucher seem rather poor

The Jobs Act aims to increase the role of private providers of employment services through a new measure for job placement services which involves drawing up an individual action plan and support from a job search coach. The voucher was implemented first in 2017 as an experiment and rolled out fully in 2018. As the jobseeker can choose a service provider for this service her/himself, it should encourage competition between public and private service providers and thus improve the quality and timeliness of the services. The fees for service providers depend on how close a jobseeker is to the labour market (the outputs of a quantitative profiling tool) and on the results of the service (whether job integration takes place and the type of employment contract used), thus aiming at performance based fees for the service providers. However, the reintegration voucher during its piloting year in 2017 has not been viewed as a success. The take-up has been lower than expected with only 9.6% of the 30 000 persons invited to participate enrolling for the voucher. Moreover, the employment outcomes of participants have been weak with evaluations indicating statistically insignificant effects and the information on job quality has been missing. This new scheme suffers from a low take-up due to its design flaws such as the perceived stricter activation conditionality compared to non-participation, limited services covered and its duplication of existing regional measures.

These flaws should be addressed by aligning better the regional measures with the national reintegration voucher to avoid duplication and confusion among the jobseekers. For instance, the reintegration voucher should target jobseekers who are still relatively close to the labour market, whereas the regional measures could target jobseekers further away from the labour market and who need more complex services. These measures can take into account the regional peculiarities and may rely less on the performance-based approach. The activation conditionality on unemployment benefit recipients should be strengthened in general so that the activation activities connected to the reintegration voucher would not perceived as a threat, but as support. The package of services covered with the reintegration voucher should be widened to accommodate other necessary services such as training for upskilling.

A common IT infrastructure is the backbone of the new network of employment services, but efforts to build it are still inadequate

The IT infrastructure is one of the key areas that needs modernisation and higher integrity to implement the necessary changes in the provision of employment services in Italy. Until the end of 2017, there was no national IT system available which would put together the data collected by the provincial and, following the Jobs Act, regional IT systems. It was only in December 2017, when the new IT system was created by ANPAL and launched with the aim to integrate the regional systems. This new IT system was expected to be developed further to enable data exchange with other organisations such as INPS (to implement activation conditionality), INAPP (to enable conducting evaluations of labour market policies) and with other registers that contain relevant data about jobseekers (education data, income and income tax returns data, land and real estate data) that are needed to provide labour market policies. These linkages with other institutions and data sources are crucial to monitor and evaluate the effectiveness of active labour market policies.

This new IT infrastructure has in theory all the prerequisites to facilitate services for jobseekers and employers, significantly reduce administrative burden in the local employment offices, enable introducing monitoring and performance management system of employment services and thus make the system of employment services more effective, efficient and customer friendly.

In practice though, there are still many limitations. The system set up in the end of 2017 is prone to breakdowns, undermining the quality of the data collected, as CPIs revert to their regional IT systems when the national system is not working. Moreover, the new system has created additional administrative burden for the local employment offices (e.g. after mandatory online registration a jobseeker has to come physically to the CPI so that the online form could be printed, signed and archived) and CPI staff have not received appropriate training for its use. Very importantly, the new system does not provide adequate inputs for monitoring and evaluation of employment services and does not take into account the end users’ needs.

This new IT system is about to be abandoned due to the technical difficulties concerning the system indicated above and due to too high dependency on the infrastructure of the Ministry of Labour and Social Policies (i.e. the use of an external infrastructure causes delays in extracting the data, fixing technical problems, etc.). The decision to abandon the system was taken only a few months after its launch and a new one will be built from scratch. The development of a new system has financial implications and will result in delays in the collection of data on registered unemployed, and the monitoring of participation in ALMPs and conditionality. A new system can be successful if a number of considerations are taken into account. First, it has to be kept in mind that it takes time to develop an appropriate IT infrastructure that supports the business model. The development plans and the different stages of the developments should be regularly communicated to the end-users, creating awareness about the objectives of the different new tools and features and building know-how about their use. Second, the development process should be planned to minimise negative side-effects to CPI staff. Above all the integration of different applications and their fit to the processes should be given more consideration. The quality of the system developed by ANPAL is not only instrumental for implementing modern active policies but it is also of ultimate importance regarding ANPAL’s credibility among the stakeholders.

The staff in the local employment offices are ill-equipped to deliver modern employment services

Adequate front-line human resources are vital to put into practice the changes in the service concept foreseen in the strategic plans. However, the number of staff in the local offices is currently low and has been decreasing in the past years. In 2016, the number of CPI staff shrank by 10% while the number of unemployed persons decreased by 1%. The vast majority (83.5%) of the CPIs consider their staff numbers insufficient. Moreover, the infrastructure and process design do not support the CPI staff work process. In addition, there is a serious lack of skills, with 90% of the CPIs expressing the need for further training for their staff and the staff is reluctant to implement the new concepts.

The upcoming increase in the CPI staff (1 600 persons temporarily until 2020 in addition to some 7 500 existing employees) and the training for existing operators which are provided in the Plan to Strengthen Employment Services and Measures are necessary to overcome these obstacles and thus truly useful initiatives. In addition, the new tools and IT infrastructure have to be designed to support the operators and should be better integrated to the business model. Furthermore, the set and division of tasks in the CPIs should be analysed as some of the responsibilities and processes might be more efficiently executed if centralised to the regional or the national level, freeing up more local resources for the core services for jobseekers and employers. Services such as face-to-face counselling of jobseekers and co-operation with local employers should be offered by the local offices, while more general services and particularly services via online tools and telephone do not have to be physically close to the customer.

The training plans to increase competencies of the front-line staff need to be developed further to reach all employees of the local employment offices, requiring non-negligible investments of time and financial resources. Additionally, a plan for continuous training has to be drawn up to keep the skills of the staff up to date along with the improvement of the methodologies and developments of the IT infrastructure. Strategies and experiences in human resource management in the public employment services of Germany, Estonia and Austria could offer good practices.

Furthermore, to mobilise staff in local offices and gain their support, a communication plan of the reform agenda and the strategy of ANPAL should be drawn up. It has to be systematic and reach all offices and front-line staff, and should create the feeling of common mission by providing an overall vision of the system. The role of the staff of ANPAL Servizi, situated physically in the regions could be instrumental. They should be utilised as advocates for the reform, communicating directly and face-to-face with the local offices and front-line staff. Regional ANPAL Servizi has to co-operate with regional authorities to help incorporate the reform agenda provided by ANPAL into the regional plans.

An additional substantial investment in the system of public employment services has been proposed by the new government. However, the details and conditions for this funding have not been declared. Indeed, additional investments are necessary regarding the number of staff and their skills and the IT infrastructure (IT systems, software, hardware, internet connection). The additional funding should follow an agreed accountability framework, rewarding regions and local employment offices which improve their services.

National profiling tools have the potential to target active policies more effectively when they are fully developed and implemented

Efficient allocation of resources for active labour market policies is especially crucial when the financial resources for the measures as well as for counselling are very limited, such as is the case of Italy. Over the years, many different approaches have been developed across the country to tackle this issue, involving quantitative profiling tools (statistical profiling using register/survey data), qualitative tools (discretion of case worker) and rules-based profiling approaches (particularly in the case of employment incentives). However, in many regions no distinct profiling/targeting methods have emerged.

National quantitative tools are used for the two national labour market programs (the Youth Guarantee program and the reintegration voucher), although due to the lack of available data their usefulness to target other measures is currently limited. The Job Seeker Classification Instrument in Australia is a good example of how to improve data in a profiling tool by adding survey data. Furthermore, if the profiling tool could be refined, its use could be extended also on allocating jobseekers to different counselling channels like in the Netherlands to manage better the scarce resources available for face-to-face counselling.

The national profiling tool should be fully developed and integrated into the business model

ANPAL proposed recently a profiling tool that combines a quantitative profiling of all jobseekers with a qualitative tool to help case workers to develop a personalised service pact for the jobseekers in a harmonised way across all Italian regions. The new tool has the potential to harmonise the targeting of active policies and above all the application of activation via the personal service pact. At the moment, this national profiling tool reflects a light approach to profiling as the topics covered are fairly general and the supporting skills and infrastructure are missing. Most importantly, the tool is only a proposal made by ANPAL to the regions, and is by no means a mandatory tool.

For the new tool to become fully operational, a number of steps should be made. First, ANPAL should clearly communicate to the regional authorities and the local offices the tool’s purpose and merits. Moreover, training should be offered to the operators to create the understanding about how the tool should be applied, how to assign the best corresponding active policies and how to conduct interviews with the jobseekers. The application of the proposed approach should be further facilitated by the IT tools (the qualitative part is not supported by the IT yet). As long as the supporting tools and activities have not been developed and established, the tool’s application in practice remains highly unlikely.

Profiling of skills is needed to assess training needs and help job matching

The PIAAC Education & Skills Online Assessment tool developed by the OECD provides individual-level results for cognitive skills similarly to the OECD Survey of Adult Skills (PIAAC) and has been recently complemented by non-cognitive assessments as well, involving skill use, career interest and intentionality, subjective well-being and health and behavioural competencies. The use of PIAAC online tool was piloted in 2017-18 by 181 local employment offices in Italy to test if it could help profiling the skills of their customers. The PIAAC tool maps well literacy, numeracy and problem solving skills, enables some reflection on jobseeker’s potential to be integrated in the labour market and gives some general input for training needs. However, the value added for a public employment service would be higher if a tool that covers a wider array of skills, particularly regarding soft and vocational skills, could be used instead. The component of the test assessing behavioural competencies was not used in Italy.

If the current approach based on PIAAC Education and Skills Online was to be retained, it should be shortened to minimise the time jobseekers spend on it. The current duration of the test (on average two and half hours to fill in the test and an additional half hour to analyse it with the case worker) is way too long if the test was to be taken by all jobseekers. The PIAAC online tool (or specific sections of the tool) could be offered instead on a voluntary basis for the jobseekers and could be filled in at home. Its results could provide some complementary input to the main skill profiling tool used by the case workers.

It would be more useful to develop a tool that feeds better into mapping training needs and into matching jobseekers to vacancies (for examples tools used by the public employment services in Belgian Flemish part (VDAB), Germany or France could be seen as good practices). In this case the skills (also non-cognitive) could be mapped by the jobseekers as a self-assessment during on-line registration (and validated if necessary by the case workers, designated career counsellors or even by former employers) and the same easily understandable (i.e. in “common language”) classification should be used by the employers when inserting a vacancy for job mediation. It is crucial that the skill profiling tool would be bi-directional to map the skills of the jobseekers as well as the skills needed for the vacancies.

The labour demand side has been neglected

Reaching out to employers has not been a priority in the system of public employment services in the majority of Italian regions. Thus, the demand-side services are generally under-developed and the resources devoted to employers’ needs are insufficient leading to inefficient job matching functions and low credibility among both jobseekers and employers. A new strategy towards employers has been proposed by ANPAL, which maps well the gaps in this field, calling for further training for employers’ counsellors, improved services for employers and IT tools to support these services. Ideally, ANPAL should take even more explicit responsibilities to provide itself the common tools for job mediation and matching, design training for the staff in CPIs, communicate the strategy to the CPI staff with the help of ANPAL Servizi and aim at adjusting the agreed minimum service standards according to the new strategy of employers for monitoring purposes.1 The national strategy for employers by the Danish Agency for Labour Market and Recruitment could be a useful example for Italy to improve and implement its strategy. The Danish strategy outlines priorities for local employment offices and supportive tasks for the national level in the context of a decentralised system. For example, the national level organisation has developed a manual for the local offices on how to draw up local strategies for employers and how to implement them as well as disseminates good practices from different parts of Denmark.

There is currently no appropriate national tool to support matching jobseekers to vacancies and a matching function across regions (which would facilitate regional mobility) is impossible as the few existing regional tools are not harmonised and thus cannot be linked. It is critical to develop a nation-wide tool to match vacancies and jobseekers that would have functionalities to upload vacancies via online tools, apply for jobs via online tools, conduct automatic matching and enable matching across different regions. This tool should take into account not only experience and qualifications, but also generic skills, technical skills as well as soft skills. Many public employment services among OECD countries have increased their efficiency by using national matching tools, including countries with decentralised systems similar to the Italian one, such as Canada and Denmark.

Building employers’ trust in the system of employment services

Being relevant as a job broker and improving the matching of jobseekers and vacancies on the labour market needs establishing trustful relationships with the employers that are supported by good tools and services. It also needs active outreach to employers, which requires more resources in the system of public employment services. The operators who are currently manually matching vacancies and jobseekers should instead focus on interacting with employers by offering (tailored) demand-side services to encourage vacancy inflow to job mediation.

Moreover, the system of public employment services should play a role in making the skill needs and supply shortages more transparent, for instance by conducting an assessment of the jobseekers’ skills, going beyond experience and qualifications, to include generic, technical as well as soft skills (such as the tools in France or Belgium VDAB). This exercise would be a step forward to convince employers about the jobseekers’ skills and the usefulness of working with the public employment services to fill their vacancies. A national skill profiling tool that enables testing soft skills has to be integrated with the job matching tool.

An effective system of public employment services can promote labour mobility

The system of public employment services has a role to play in promoting mobility between regions, which is currently very limited. For example, a decentralised system of public employment services, such as the one in Italy, may help design labour market measures tailored to local requirements and specific needs. Additionally, general measures for the public employment system to increase geographical mobility can involve for example a certain level of mobility in job search and acceptance requirements (which is also established in Italy), but also motivating job acceptance in other areas by case management and counselling as well as geographical relocation subsidies. Thus it is important that the front-line counsellors have information about their local labour market as well as about other regions (for example an overview of which skills/occupations are in surpluses/shortages in other regions, general trends, etc.) and that there is information exchange between regions.

Labour demand-side policies would be also relevant, such as measures encouraging employers to move to a geographical area where the skills they need are available (considering the supply of skills of both mismatched workers as well as unemployed persons). Also, it is important that the IT system matching jobs and unemployed is capable to match across regions (such as in Canada, Denmark and most other advanced systems of employment services) and that information is accessible for jobseekers, employers as well as counsellors, which today is still missing in Italy.

In addition to geographical mobility, occupational mobility should be encouraged. The public employment services have a double role to play in promoting skills development. They should direct more systematically to training those who have lost their job and are hard to place because of a lack of skills. Moreover, they should aim at up-skilling those who are still employed, but are at risk of losing their job due to their low skill level or skill mismatch. In the context of low participation of adults in education and training, the role of the public employment system should not only be to provide short training but also to have case workers and career counsellors guiding low-educated adults and drop-outs back to formal education. The integration to formal education could be facilitated by scholarships for low-skilled adults, particularly when they are unemployed and do not have an income source.

Key policy recommendations

Establishing an accountability framework for employment services

Reach an agreement between the central authorities and the regions on an accountability framework that establishes regional objectives and key performance indicators, and set regional targets, taking into account local labour market situation.
Make funding of local offices from the state budget dependent on progress defined by a set of well-identified performance indicators.
Develop a national management information system (including a dashboard) accessible to all levels of employment services to manage and disseminate the performance results.
Publish the results of performance management system for both private and public providers in order to enhance performance-based outsourcing.

Developing and communicating the strategic plan and reform agenda

Refine further ANPAL’s strategy to clearly state its mission, vision, core values, clients and key partners keeping both its external and internal stakeholders in mind.
Set ANPAL’s mission as supporting the regions and local employment offices to improve the employment services.
Develop a clear communication plan for ANPAL’s strategy and reform agenda to be used both internally and externally and make it an integral part of the business model.
Treat the ANPAL Servizi staff as an integral part of ANPAL and use their presence in the regions as advocates for the reform reaching all front-line staff.
Improve the co-operation between regional ANPAL Servizi and the regional authorities to help incorporate the reform agenda provided by ANPAL into the regional plans. Use ANPAL Servizi staff to provide technical assistance to the local employment offices for implementing the reform.

Strengthening job-search conditionality

Train the staff in the local offices to implement the new concept of a suitable job offer, make them aware of the objectives of activation and build the know-how to use the appropriate tools.
Fully develop the IT tools for data exchange to communicate sanctions on unemployment benefits to the institution managing benefits (INPS).

Increasing the role of private providers to complement counselling and job placement activities of public employment services

Harmonise the rules across the country for contracting out the provision of employment services and increase the range of services that private employment services may provide. Lay down a national strategy on how the market should look like and function.
Align the regional measures with the national reintegration voucher better to avoid duplication and confusion among jobseekers. Target the national reintegration voucher to jobseekers closer to the labour market providing them with job placement, training and upskilling. Target the respective regional measures to more difficult clients offering them more diverse service package aiming to eliminate area-specific obstacles on job integration.

Increasing the access and effectiveness of active labour market policies for jobseekers

Redesign employment incentives to target better the most vulnerable jobseekers, for example by using the existing quantitative jobseeker profiling tool that predicts the individual probability of long-term unemployment and is used currently to contract out job placement services through the reintegration voucher.
Increase access to training (also workplace training and internships) for unemployed over 29 years of age.
Increase the referral of jobseekers to appropriate institutional training and the corresponding funding for these programs.
Link the choice of training programs with the employer needs better (e.g. the Excelsior survey and forecast model) and the performance results of the training programs.
Through counselling services, expand the range of ALMPs to address the individual needs of jobseekers in greatest difficulties by addressing care obligations of female jobseekers, actively reaching out to NEETs, training under-skilled employees, referring low-educated adults and drop-outs back to formal education, and advancing occupational and geographical mobility in case of mismatches.

Improving demand-side services and job-brokering

Develop a nation-wide tool to match vacancies and jobseekers, which would allow uploading vacancies and job applications online, automatic matching (also based on generic, technical and soft skills) and matching across different regions.
Develop a tool for skill profiling that feeds better into mapping training needs and into matching jobseekers to vacancies, using a skill classification in a “common language” for jobseekers and employers.
Consider offering the OECD PIAAC online tool on a voluntary basis for jobseekers to fill in at home. Its results could provide some complementary input to the main skill profiling tool used by case workers.
Direct more resources to active outreach to employers. The operators that are currently manually matching vacancies and jobseekers should be devoted to selling demand-side services by encouraging employers to register their vacancies with the public employment services via a national online tool.

Developing integrated IT infrastructure

Reach an agreement between the central authorities and the regions to develop nationally integrated IT infrastructure that supports the common management information system, links with other registers (e.g. unemployment benefits), and produces labour market information for all stakeholders (including jobseekers and employers).
Design the new tools and IT infrastructure with the main objective to support the operators in the local offices, decreasing their administrative burden and helping them applying new concepts regarding qualitative profiling, activating jobseekers, engaging with employers, etc.
Communicate the development plans of the IT tools and the different stages of the developments to the end-users regularly, creating awareness about the objectives of the different tools and features and building know-how about their use.

Improving the support structures for staff in local offices

Draw up a plan for continuous training to keep the skills of staff up to date along with changes in service concepts (such as applying activation conditionality and reaching out to employers), improvements of the methodologies and developments of the IT infrastructure.
Consider centralising some of the responsibilities and processes in the local offices to the regional or the national level to increase efficiency.

Note

← 1. Many of these areas were significantly strengthened compared to the initial proposal by ANPAL in the employers’ strategy that was adopted by the Committee of Active Labour Market Policies in December 2018.

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