Placement Vouchers Foster Reintegration of Unemployed People

A number of unemployed succeeded in finding a job thanks to placement vouchers. ZEW estimations suggest that 5 out of 100 voucher recipients between July 2003 and June 2004 found a job as a result of the instrument.

A glance at the figures reveals the actual dimensions of this performance. With the aid of 690,000 vouchers distributed between July 2003 and June 2004, approximately 31,700 unemployed were able to re-enter the labour market. That means, without these vouchers they would not have found employment. These are the findings of a study on the effectiveness of placement vouchers as part of the accompanying research conducted by ZEW on behalf of the Institute for Employment Research of the Federal Employment Agency.

However, only a small share of unemployed benefited from these vouchers due to their rather low penetration rates. The vouchers were handed out to merely 20 per cent of the entitled unemployed people in western Germany and to 37 per cent in eastern Germany. The use of these vouchers turned out to be selective. Younger unemployed people with better training or education drew on the vouchers more frequently.

Apart from the positive effects among those who used the vouchers as mentioned above, the ZEW study also indicates that there are negative effects for those who did not draw on the vouchers. Due to the fact that unemployed people with placement vouchers find a job more easily, the reintegration of unemployed people not using a voucher takes longer.

Placement vouchers for the unemployed represent a form of public promotion of private employment services. Since April 1, 2002, job-seekers entitled to unemployment benefits who could not be placed with a firm by a job centre after three months of unemployment, have had a claim to placement vouchers. These vouchers enable them to consult private employment agents who receive their payment from the corresponding job centre once the job-seeker has been successfully placed with a company. Until the end of 2004, this remuneration depended on the duration of unemployment and amounted to EUR 1,500 to EUR 2,500. By the end of 2006, this temporary instrument is to connect unemployed people with job opportunities more rapidly.

Contact

PD Dr. Friedhelm Pfeiffer, Phone: +49(0)621/1235-151, E-mail: pfeiffer@zew.de

Henrik Winterhager, E-mail: winterhager@zew.de