Economic crisis sharpens need to reform employment services

For several years, all of the social partners have agreed on the need to reform the country’s Employment Administration (ADEM). With each percentage point increase in unemployment, ADEM has been accused of weakness and a lack of speed in processing cases, but no reforms have been initiated. A survey reveals that 60% of vacancies are handled without any involvement from ADEM, thus reducing the agency’s ability to propose vacancies to registered unemployed people.

Calls from social partners

For several years, the Business Federation Luxembourg (FEDIL) has been calling for a reform of the country’s Employment Administration (Administration de l’Emploi, ADEM). The employer organisation believes that the administration should serve the needs of jobseekers and companies properly and that unemployment benefits – the level of which FEDIL regards as counterproductive – need to be adjusted. ADEM has also been the target of criticism by the Federation of Small and Medium-Sized Businesses (Fédération des Artisans). The latter organisation argues that ADEM needs to undergo a process of professionalisation in order to shift from a user-based to a customer-based approach.

ADEM has been audited by a Luxembourg company and the Organisation for Economic Co-operation and Development (OECD). All of the recommendations issued by the auditors pointed towards the need for ADEM to be reorganised, if not privatised. However, the latter solution has met with strong condemnation from the trade unions.

Effects of economic crisis

The long-announced reforms of ADEM have so far proved very difficult to realise, despite the fact that a bill was introduced in March 2009. However, as a result of the economic crisis, the number of jobseekers has risen substantially and ADEM has been unable to keep track of them. The Luxembourg government has admitted that, under normal conditions, each employee at ADEM is supposed to deal with 100 cases of registered unemployed people but, under the current circumstances, each employee has to monitor 600 registered unemployed people. It has therefore become a matter of urgency to make progress in this area in order to clear the backlog in the processing of cases and restore the confidence of jobseekers and companies in the country’s employment administration.

Survey on use of ADEM’s services

Against this background, the Centre for the Study of Population, Poverty and Socioeconomic Policies (Centre d’Études de Populations, de Pauvreté et de Politiques Socio-Économiques/International Networks for Studies in Technology, Environment, Alternatives, Development, CEPS/Instead) has carried out a survey on the way in which companies make use of ADEM’s services in their recruitment processes. The survey, which was conducted prior to the global economic crisis, reveals that despite companies’ obligation to report all vacancies to ADEM, a certain proportion of open job positions are not handled in accordance with this rule. In fact, 60% of vacancies are dealt within the job market without any involvement from the institutional partner, thus reducing the public agency’s ability to propose vacancies to registered unemployed people.

The survey was carried out in the first quarter of 2007 and therefore still distinguishes between blue-collar and white-collar workers. As a result of the single status introduced in January 2009 (LU0809019I), this distinction no longer exists. A total of 1,500 companies took part in the survey.

Main survey findings

In 48% of the recruitment cases reported to ADEM, companies declare that they have not used the administration as a recruitment channel for obtaining candidates. In these cases, companies only made an administrative declaration of their open positions. This means that ADEM was not a channel for recruitment in 79% of all recruitment procedures. By contrast, in the case of 52% of reported recruitments, companies used the services of ADEM to look for potential job applicants. In 31% of recruitments where ADEM was involved, the successful candidate was found by the employment services. In other words, ADEM was the recruitment channel in only one third of the recruitments in which it had been asked to look for candidates – this represents just 7% of all recruitment procedures.

Vacancies that are not reported to ADEM were more likely to relate to blue-collar employment positions than to white-collar positions. Such vacancies were also more likely to be in sectors such as manufacturing, construction, and transport and communication, as well as in large companies. Neither the type of employment contract nor the working time regime appear to make a difference whether a company reported a vacancy to ADEM. However, vacancies that were reported to the country’s employment services were more likely to be in companies experiencing recruitment difficulties. In fact, vacancies in these companies were only half as common among those not declared to ADEM (16%), compared with those that were declared (31%). The survey findings also show that recruiters of Luxembourg nationality declare their vacancies more frequently than other recruiters: 41% of vacancies reported to ADEM came from companies with a Luxembourg recruiter, while the proportion of Luxembourg recruiters among unreported vacancies stood at one third (33%).

Overall, companies more often declare vacancies for job profiles requiring higher educational qualifications. Nevertheless, in cases where such vacancies were reported to ADEM, the employment service was less frequently involved in looking for job candidates. For such profiles, any collaboration between the company and ADEM usually went no further than the administrative declaration.

Reference

Genevois, A.S., ‘Place de l’Adem dans les recrutements des entreprises implantées au Grand-Duché (804Kb PDF)’, CEPS/INSTEAD, Population & Emploi, No. 45, November 2009.

Odette Wlodarski, Prevent