Design and Implementation of Redeployment Programs
Redeployment support aims to help displaced workers reenter the job market or become selfemployed. Redeployment programs are politically and socially valuable, providing a tangible demonstration of government's commitment to helping workers. But program design and implementation has to be considered carefully to ensure the costeffectiveness and efficiency of such programs.
Redeployment support aims to facilitate restructuring of the enterprise, the sector, or the economy and to shorten and alleviate the period of unemployment and income loss experienced by displaced workers. It is an active rather than passive labor market policy response. This section summarizes the key types of redeployment support and the broad lessons emerging from international experience.
The main types of redeployment support are:
There are five main types of redeployment support.
How have redeployment programs worked in practice? The evidence shows mixed results. Reviews of retraining and other active labor market programs (mainly in the industrial countries of the OECD) found limited impacts (Dar and Gill 1995, 1998; Dar and Tzannatos 1999; Fay 1996). These findings are summarized in table 5.7. The evaluations revealed that retraining programs were generally no more effective than job-search help in increasing either reemployment probabilities or postintervention earnings, and they were between two and four times more expensive than job-search assistance.
Evaluations of large, active labor market programs conducted in OECD countries have shown mixed results.
There are limits to what can be achieved by redeployment alone–economic policies that generate sustainable economic growth will offer the best prospects for displaced workers in the medium term.
Although many evaluations have focused on OECD experiences, the few evaluations of active labor market programs in developing countries also show mixed results, given the capacity, funding, and infrastructure constraints that many developing countries face. For example, Mexico's PROBECAT program, which was enrolling half a million workers a year, may have had no effect on the employability of trainees (Wodon and Minowa 2001). Similarly, Tanzania's redeployment program for more than 60,000 retrenched civil servants had no effect on employability, although the combination of counseling and training helped improve subsequent earnings (Blomquist 2002).
Redeployment programs, however, play an important political and social role in the labor restructuring process. When designed properly they can also be economically beneficial in moving unproductive workers to more productive sectors of the economy. The experience provides several general lessons in developing such programs:
Link to the Web site of the Polish rail redeployment service: http://www.transport.most.org.pl/railways/prod03.htm.
Many developing countries face challenges in putting in place effective redeployment programs. In many countries training is still supplied by staterun agencies that lack resources, market orientation, and institutional capacity. Private sector training providers are few or weak. Moreover, employees themselves often have little faith that training will improve skills and help them find alternative job opportunities, particularly when unemployment is high. All of those factors need to be taken into account in the design and implementation of redeployment programs.
| Program | Appears to help | Comments |
|---|---|---|
| Job-search assistance/ employment services (19 evaluations) | Adult unemployed workers generally when economic conditions are improving; women may benefit more | Relatively more cost-effective than other labor market interventions (such as training), mainly because of the lower cost; youth usually do not benefit; difficulty lies in deciding who needs help in order to minimize dead-weight loss. |
| Training of long-term unemployed workers (28 evaluations) | Women and other disadvantaged groups | No more effective than job-search assistance in increasing reemployment probabilities and post-intervention earnings, and is 2 to 4 times more costly. |
| Retraining in the case of mass layoffs (12 evaluations) Training for youth (7 evaluations) | Little positive impact–mainly when economy is doing better No positive impact | No more effective than job-search assistance and significantly more expensive; rate of return on these programs is usually negative. Employment and earnings prospects are not improved as a result of the training; taking costs into account, the real rate of return of these programs is negative. |
| Employment/wage subsidies (22 evaluations) | Long-term unemployed workers by providing a means of entry into the labor force | High dead-weight and substitution effects; impact analysis shows treatment group does not do well compared with control; sometimes used by firms as a permanent subsidy program. |
| Public works programs (17 evaluations) | Severely disadvantaged groups by providing temporary employment and a safety net | Long-term employment prospects are not helped; program participants are less likely to be employed in a normal job and they earn less than do individuals in the control group; not costeffective if the objective is to get people into gainful employment. |
| Microenterprise development programs (15 evaluations) | Relatively older groups and more educated workers | Very low take-up among the unemployed; significant failure rate of small businesses; high deadweight and displacement effects; high costs; cost-benefit analysis is rarely conducted but sometimes shows costs to the unemployment insurance budget to be higher than for the control group; administratively intensive. |
Note: Based on evidence from around 100 evaluations of active labor market programs, mostly in OECD countries–mainly, Canada, Germany, Sweden, the United Kingdom, and the United States–but with some examples from transition and developing countries such as the Czech Republic, Hungary, Poland, and Turkey. Most of the evaluations were undertaken recently, during the 1990s.
Source: Dar and Tzannatos 1999.
