Performance management in the Danish employment system
Performance management has a central role in the Danish employment system and thus implicates municipalities, citizens and enterprises.
The objective of national management of employment initiatives is to contribute to a proactive labour market policy and move as many people as possible from unemployment and cash benefits into employment or education and to ensure that enterprises have access to the labour they need.
STAR is responsible for implementing and following up on employment policy in Denmark. Through laws, regulations, financial incentives, digital and practical solutions and dialogue-oriented activities STAR has since 2009 worked to establish a framework for effective employment activities in the 94 municipalities (job centres) which are responsible for the provision of employment services to all citizens and businesses.
Performance management in the Danish employment system can be divided into the following four tracks: 1) Legislation and regulations, 2) Financial incentives, 3) National digital tools and 4) Implementations and dialogue.
Performance management track: Legislation and regulations
Employment initiatives are primarily managed through legislation and regulations aimed at municipalities, unemployment insurance funds, individuals and enterprises. Legislation contains regulations on implementing employment initiatives in the municipalities, ranging from regulations on the right and obligation of unemployed individuals to take part in employment initiatives, to regulations that affect the financial incentives in municipalities, and regulations on the use of national digital tools. Regulations are implemented by means of acts, executive orders, guidelines etc.
Legislation stipulates which schemes municipalities can use in active employment initiatives. Furthermore, the legislation includes a framework of three key tools in employment policy (guidance/upgrading of skills, on-the-job-training and wage subsidies). The objective is to ensure uncomplicated national framework conditions for local employment initiatives.
The legislation determines the minimum requirements for how often people are entitled and obligated to take part in active employment initiatives (employability programmes).
The objective is to secure the legal position of each individual and to prevent “creaming”.
The legislation stipulates the framework for the employment of unemployed people in wage subsidy schemes or on-the-job-training programmes.
The objective is to prevent speculation and to ensure reasonable conditions for enterprises, unemployed people and employees.
Legislation is an effective management tool when regulations stipulate provisions that are desirable in relation to national considerations. Examples of this are:
- People’s rights and obligations (e.g. legal rights, sanctions and right to appeal)
- Benefits and subsidy levels for the public and private enterprises
- Ensuring that everyone, including those in the weakest demographics, is included in active employment initiatives
- Prevention of “creaming”, and avoiding situations in which groups of people are left to passively receive public assistance
- Minimum requirements for the initiatives of job centres and members of the public when the initiatives described in the regulations (almost) always yield positive results (e.g. requirement for regular interviews)
Performance management track: Financial incentives
Financial incentives frequently form an element in the relationship between municipalities and the public, and less frequently in relation to enterprises.
Financial incentives, including the reimbursement system, are utilised by municipalities. The objective is to give municipalities the financial incentive to work actively to get people to become involved in training/employment early in the process.
Financial incentives are used to encourage people to apply for jobs instead of receiving public assistance. This is done for instance by establishing a fixed rate for unemployment benefits and cash benefits etc. to make working worthwhile, as well as by establishing a fixed period in which it is possible to receive benefits. Financial incentives are also used to motivate recipients of unemployment benefits under the age of 25 to sign up for education.
Financial incentives are rarely used in relation to enterprises.
They are primarily used to motivate enterprises to train weaker candidates for employment, for instance in the form of wage subsidies, on-the-job-training and mentoring.
Financial management aims at creating a financial incentive for municipalities and unemployment insurance funds to move unemployed individuals from benefits to employment and education/training. Incorporating financial incentives into legislation will encourage the various stakeholders to provide initiatives which are in line with the political goals of the employment initiatives.
Financial incentives thus foster a certain kind of behaviour on the part of municipalities, individuals and enterprises without explicitly dictating it.
In terms of employment, financial incentives encourage:
- people to look for jobs, or young people to sign up for education/training programmes
- municipalities to introduce active employment initiatives, without dictating how these efforts should be implemented in practice. As a result of the new State Reimbursement Reform (2015), which came into force on 1 January 2016, municipalities will have very strong financial incentives to get as many unemployed as possible into work or education as possible, and a strong focus on bringing long-term unemployment down to a minimum
- enterprises to implement efforts targeted at people in the weaker demographics of unemployed people
Another application of financial incentives is to finance certain activities through pools. This sort of pool management typically means that certain operating costs are covered in full, e.g. from a regional education and training pool or the pool for enhancing education.
Performance management track: Management by national digital tools
Digital tools and IT solutions can be used as elements of management strategy. Their primary purpose is to support or promote politically desirable behaviour. Users are required to use these solutions in order to comply with legislation and regulations, while other digital tools are made available to users to apply on a voluntary basis.
In general, digital solutions as elements of employment initiatives have three objectives:
- improving service.
- streamlining administrative processes
- management of users' behaviour.
Digital solutions often meet several of these objectives concurrently. IT solutions are often closely related to a desire to streamline administrative processes. Digital tools are however increasingly used to influence user behaviour (management).
By using digital tools it is also easy to gather new knowledge about employment initiatives by comparing municipalities across target groups, and in this way, digital tools provide the basis for decision-making.
The website jobindsats.dk makes structured information available to municipalities.
On the website Jobnet.dk, caseworkers have direct access to a number of current job advertisements matching a person’s CV and which are therefore relevant for the person in question to apply for.
On the website Jobnet.dk, people’s CVs are automatically matched to current job advertisements. The objective is to facilitate a quick and relevant job-seeking process for unemployed people.
Jobnet.dk incorporates features such as “My page” and self-service tools for unemployed people.
On the website Jobnet.dk employers can post job vacancies and search for manpower in the CV-database.
Performance management track: Implementation and dialogue
The objective of dialogue management is to ensure changes in behaviour on the part of stakeholders in the employment system by influencing stakeholders’ attitudes. In general, dialogue focuses on management and influencing management attitudes.
Dialogue management can be implemented locally or centrally. Central dialogue management is carried out by means of uniform communication with job centres, e.g. via brochures, campaigns and websites as well as centrally-initiated trials to influence behaviour.
Compared with other ministerial areas, the employment sector is unique due to the extensive dialogue with local job centres. STAR’s three regional divisions support and motivate the job centres to achieve better results in each region.
The local road is the path to achieving results
This description of the management of employment efforts in Denmark focuses on national management and the interaction between national and local management. However, since all employment efforts are implemented in the municipalities, it is essential to remember that results are ultimately achieved locally by the municipalities. The path to achieving results thus leads through the local administration of employment efforts.
For these reasons, management of employment initiatives in Denmark focuses on establishing the best possible framework for the local administration of initiatives in order to ensure consistent management of employment initiatives throughout the country, while maintaining local freedom of administration.