Delivery of Welfare Services: from Institutional to Consumer Market

1
Delivery of Welfare Services from Institutional
to Consumer Market

• Els Sol
• c.c.a.m.sol_at_uva.nl
• BPFnet seminar, Copenhagen
• June 16 2006

2
Key Figures Dutch Labour Market
3
Timetable

• 1991 Tripartite PES
• 1996 Introduction purchasing model
• First UWV tender
• End of PES old style
• 2002 SUWI Act
• 2003 First Municipal tender
• Worc and Income Act (WWB)
• 2006 Exit obligation to contract out for
  municipalities
• Evaluation implementation
  SUWI
• 2008 Evaluation Worc and Income Act

4
Going Private Step by Step

• 2002 SUWI
• NPM gt split between policy and
  implementation gt private providers, closing
  down of employment offices
• 2 2004 WWB
• Steering from top-down to decentral
• municipalities obliged to tender, no provision
  of central point to assemble and analyse
  placement results
• 3 2004 IRO (vouchers)
• Steering by product to steering by market gt
  role of end user (recipient of welfare
  benefit)
• 2005
• Discovery of role employer as client (social
  security -gt labour market orientation)
• 5 2006
• Public principal -gt exit obligation
  municipalities to contract out

5
Motives for introducing the quasi-marketof
employment services

• Factors
• Bureaucracy and implementation problems
• Lack of effectiveness instruments
• Lack of efficiency
• Discontent consumers (employers, people on
  benefit)
• - Discontent politicians strong position trade
  unions
• Decision making disabled (wao)
• Rising Costs -gt role Ministry Financial Affairs
• Better/cheaper results in Anglos Saxon countries
  with NPM
• - New right wing cabinet

6
Assumptions Structure for Work and Income (SUWI)

• cost savings by competition (efficiency)
• user choice
• -gt client orientation
• innovation cq better service quality
• employment effects (effectiveness)
• explicit outcome focus

7
Dutch service delivery structurepro type of
welfare benefit
8
Matching in Terms of Process
9
Public Budget Employment Services (x 1 mln.)
10
Shift in Paradigma W-t-Work Policy

• From Human Capital to Work First
• Causes
• - rising costs
• - lack of effectiveness

11
Work first Elements in the Netherlands
Push
Pull

• - Shorter benefit periods and levels
• - Definition change of suitable work
• Sanctions
• Stricter Job Search require- ments (57,5)

• Active labour market policy measures
• Trajectories
• WF projects
• Fiscal measures

12
Human Capital Development

• Pros Cons
• raising long-term - expensive
  investments
• employability
  in education and
• emphasis on sustainable training
• transitions
  - difficult to demonstrate
  
• potential of career mobility
  effects
• expands range of job openings - lack
  of incentives

13
Work First

• Pros Cons
• rapid transitions into employment - revolving
  door
• outcome oriented policy - disregards
  individual skill needs
• rapid results - failure to tackle multiple
  job barriers
• low unit costs - destroys training
  infrastructure
• takes advantage of - dependend on tight
  available job opportunities
  labour market

14
UWV Tenders
15
Municipal tenders

• 2003 first tender
• Duration free (mostly 1 year)
• Follow up tenders full autonomy
• See website tender info

16
Role of private non-profit and for profit
contractors

• Expenditure of reintegration budget in
  percentage of non -profit and for profit
  reintegration companies, Amsterdam, 1996-2003

17
Developments I

• creaming and parking -gt payment model-gt growth
  in bureaucracy
• info assymmetry -gt lack of input for
  politicians
• lack of trust -gt reregulation
• complaints about limited knowledge about labour
  market providers
• complaints about lack of platform to discuss
  substance of services
• development of partnerships and preferred
  suppliers
• more professionalised tendering
• tendency towards longer contract periods

18
Developments in reintegration market II

• bad press, discontent amongst consumersgt loss of
  reputation
• price competition rather than quality
  competition
• nobody wants to return to public provision by
  PES
• residual PES (Kliq) does not survive
• lack of vocational training as component of
  services
• lack of evidence based policies
• continuous process of engineering deficiencies
• tendency towards uniformation of services, no
  made to measure
• little innovation

19
Outflow after two years by recipients of
unemployment benefits 2003Source CBS, 2005,
Uitstroom naar werk.
20
Outflow after two years by recipients social
assistance, 2003Source CBS, 2005, Uitstroom
naar werk.
21
First results and effects

• efficiency cost savings
• innovation and new methods in process not (yet)
  in content
• employment effects limited (knowledge)
• -gt consequence user choice IRO !

22
Output and outcome

• Bruto effects
• Borea
• UWV
• Netto effects
• Value added by reintegration firms (Rdam)
• SEOR

23
Bruto effect

• Bruto effectiveness Do providers deliver
  placement?
• Borea quality mark 2005 (100.000 trajectories, 90
  firms)
• 65 trajectories placement or return to work
• UWV market 40 of contracts result in
  placement
• Assurance/employers market 83 return to work
• Municipalities market 29 of contracts result
  in placement
• Results according to norm or better
• Purchasers and clients service provision on
  scale 0-10 6,6
• Complaints pro 1000 trajectories in 2004 from
  2.9-gt2.4
• UWV 2002-2005
• placement percentages pro firm pro contract

24
Cost effect

• Cost effectiveness What are the costs of a
  trajectory compared to the benefit savings?
• What are the individual costs for the principal
  related to savings?
• Municipalities and assurance companies
• internal reports cost effective
• focus is on fast exit of benefit, not on value
  added in terms of position client on labour
  market
• What are the societal costs and benefits?
• SEO (2006)
• to be released summer 2006

25
Netto effect

• SAW/TNO (2006) Bruto and netto results pro
  instrument in Rotterdam
• __________________________________________________
  ______________
• instrument placement (p) shortens
  duration
  (bruto effect) placement in months
• __________________________________________________
  ______________
• Basic reintegration 12-37 16 4
• Reintegration plus 13-28 24 10
• Social activation 8-19 16 4
• Work experience 40-43 52 3
• No instrument -
  10
  --
• __________________________________________________
  ______________
• Source Hekelaar, Zwinkels, Braat,
  2006, De juiste klant op het juiste
  traject.Rotterdam SWA/TNO.

26
Drawing right IRO

• Introduction January 2004
• Very popular amongst clients and contractors
• Popular amongst coaches UWV
• Low treshold for small contractors

27
IRODemand driven service provision

• Demand-driven service provision is one in which
  the consumer influences the provision of public
  employment services, and in which he also
  exercises genuine control, either directly or
  indirectly, over the resources used to manage
  this provision.
• (Source Min EZ, 2003 Vraagsturing)

28
New Trajectories UB (WW) IRO and regular
(1-1-2004 till 1-4-2005)
29
Amount of ContractorsUWV
30

• IRO Tender regular
• Choice
• Provider yes
  limited
• Services individualised plan
  plan according to contract
• Payment no cure less pay no cure
  no pay
• Price setting room to manouvre little room to
  manouvre
• Type of services not much different
  regular package

31
IRO

• Consequences market
• Loss in transparancy
• Strenghtening of marketisation
• Shift of market shares towards new small
  contractors -gt specialisation
• Consequences contractors
• ? Please the client or the UWV?
• Refusal client possible
• Less uncertainty about amount of clients
  to serve
• Consequences clients
• Clients very content
• ? Output, outcome ??

32
Preliminary figures IRO

• Results for people started 1-1-2004 by end of May
  2005
• IRO Regular
• Disabled
• finished 18,7 26,5
• placement 11,3 10,6
• Unemployed
• finished 16,7 23,7
• placement 13,8 11,9

33
NPM Management Mechanisms

• Benchmarking
• Steering by output
• Tendering
• Vouchers (IROs)

34
Strong and weak aspects of mechanisms

• __________________________________________________
  _________________
• tender provision by
  demand
• IRO
• __________________________________________________
  _________________
• choice -
• transaction cost /- --
• transparancy /-
• made to measure /-
• incent.to compete
• risc selection --
• ec of scale /- -
• implem. costs - -
• budget risks /- --
• __________________________________________________
  _________________

35
Transparancy

• Foundation Blik op werk www.blikopwerk.nl
• Directory Providers http//keuzegids.blikopwerk.n
  l/reintegratiemonitor/rwi/intro.asp
• Information on UWV tenders
• http//www.uwv.nl/aanbestedingreintegratie/
• Information on Municipal Tenders
  http//www.reintegratiemeldpunt.nl/home.asp?depart
  ment1
• Certificated Providers
• http//www.boreakeurmerk.nl/
• http//www.boakeurmerk.nl/