Design and Implementation of Redeployment Programs
Good program design demands attention to the details of selection and incentives mechanisms.
Redeployment has economic, social, and political benefits.
This section sets out the key steps in designing and implementing a redeployment program tailored to the circumstances of the PPI plan.
Before proposing redeployment support as part of a labor program, implementing agencies must be clear about the rationale for it. Potentially there are three objectives:
In the right circumstances, redeployment programs can have important objectives. When those objectives have been clearly defined, the main challenge is to improve the effectiveness of redeployment programs.
A redeployment program study is essential, and needs to cover three aspects:
Three types of surveys are typically needed early in the program to help inform its design. They are:
These three surveys could be carried out separately, but in practice the findings of each will inform the design of the redeployment program and close coordination is thus required. Outline terms of reference for the various surveys are provided in the accompanying CD-ROM.
Terms of reference for surveys of the labor market, workers, and potential redeployment providers.
Employee surveys provide a descriptive profile of the work force and help the implementing agency to:
Can the survey of workers be scheduled at about the same time as a stakeholder analysis?
The survey can build on, but is different from, the staff and skills audits described in module 7. Those audits focus on the needs of the enterprise, whereas the worker survey focuses on the needs of workers who will lose their jobs (see, for example, box 5.18). The worker survey can also overlap with the stakeholder analysis needed for planning communications and consultation (see module 6). Stakeholder analysis might be usefully scheduled at the same time as the worker survey.
The worker survey can include:
The outcomes of the survey can help in designing the scope of the labor program. Those at highest risk are unlikely to find jobs quickly and will benefit from job-creation activities (public works, support for small enterprise, and community programs) as well as access to income support. Those with the most skills and highest level of mobility may benefit more from job-search assistance skills upgrading or retraining.
Worker surveys are an important input into the design and implementation of redeployment programs and must be designed with considerable care. An example of such a survey is included on the CD-ROM that accompanies this Tookit. Design, implementation, and analysis of the survey can be subcontracted out to national consultants or to academic or policy institutions.
To minimize the social cost of layoffs, Brazil's federal railway, RFFSA, had to have a good understanding of the profile of its employees. A detailed study was carried out as part of the preparation for World Bank support. A detailed analysis of the characteristics of each regional labor market and the outplacement opportunities for each excess worker was conducted. The study covered the employee's age, experience, and education level, compared with similar characteristics in the regional labor market where the redundant employees would have to compete for a new job.
The study revealed that the two main characteristics of Brazil's labor market are (a) the modest qualifications of its labor force and (b) its capacity to generate jobs of poor quality. The poor qualifications of the country's labor force reflect the low level of formal schooling and the low quality of basic education. Professional training is not entirely effective, even for the most educated workers. Moreover, training on the job is often not sufficient because of the high turnover in the labor market. There are frequent short spells of unemployment. In many cases these spells result in lower wages when workers return to the market. There is also an increasing trend toward switching from the status of employee to that of independent businessperson.
In spite of some similarities, such as the low level of education, the profile of RFFSA's employees differed from the rest of labor market. The average rail worker was about 41 years old, had about 18 years of service with the same company, did not have much education, and had few or excessively specialized skills. The average worker in the general labor market is at least 6 years younger. RFFSA's workers were paid between 10 and 30 percent more than the average worker in the respective labor market.
The emerging concern was then that without some assistance, many of the rail workers declared redundant were likely to find it difficult to compete in the labor market in the short run. Even if these workers did manage to reenter the market, they were likely to be paid less. The view at that time was that what was needed was enough training to reduce the cost imposed by specialized job experience and the lack of formal education. A team of advisers from various training institutions was convened by RFFSA to prepare a menu of options from which affected employees could choose, and to design training packages that would meet the employees' needs.
Source: Estache, Schmitt de Azevedo, and Sydenstricker 2000.
Level One–Highest Risk
A woman, alone with children, with 70 percent or more of the family income derived from mine wages, is in level one. People like this are clearly the most at risk of losing everything.
Example: L. N. is 35 years old and has lived in the community all her life. She has two schoolage daughters. Her ex-husband moved away and provides no child support. She has worked in the mine five years as an unskilled aboveground worker and earns US$32 a month in total family income, all of which comes from the mine. Her job will be one of the first to go and is not considered to be transferable to another mine. She is very worried about how she will take care of her children.
Level Two–High Risk
Other aboveground workers make up this category. As a general observation, aboveground workers are considered a highly vulnerable group of workers, not possessing particularly transferable skills. All female staff work aboveground, and 83 percent of the total number of aboveground workers (1,389) are women; 17 percent (285) are men.
Example: V. C. is 60 years old and has lived 60 years in this community. She has worked 30 years in the same mine. She currently works above ground in the stockyard in an unskilled position. She and her husband have a monthly family income of $64, which includes their pensions. Their family income is closely tied to the mine, and it will be cut in half, to about $1 a day, when the mine closes. She is frightened when she thinks about it closing. No one will hire her.
Level Three–At Risk
Underground workers in the engineering and other professions form this group. They are the highest-risk group of the underground workers.
Example: V. G. is a 40-year-old man who has worked 25 years in the mine. He is an electrician under ground and earns $64 a month to support his wife and two school-age children. He is totally dependent on the mine. His wife is unemployed, and 100 percent of the family monthly income derives from the mine. He has no savings and worries that the mine closing is going to be a disaster for his family.
Level Four–At Risk but Mobile
Underground skilled workers (face miners, drifters, timbers/fitters, and coal transport workers) have the best chance of adjusting to mine closure. They are potentially the most in demand for their skills and hence the most mobile.
Example: O. Z., 38, has worked under ground in the mine for 19 years, most recently handling explosives. Seventy-five percent of his family income derives from the mine. His wife earns $18 a month working in the hospital, and he is worried about the future for his two sons. Where will they work? He has lived in the same community his whole life and does not want to leave for another job. His skills considerably improve his chances of getting a new job.
Source: World Bank 1996b.
Labor Market Survey
The supply and demand for labor and skills relevant to the workers leaving the infrastructure enterprise will form the core of the labor market survey. The survey typically would include assessments of:
The labor market survey needs to consider both the formal job market and the informal sector because the latter is often a major source of employment. In South American and Caribbean countries, for example, the informal sector represents typically one-third to one-half of the work force (Freije 2001).
The labor market study should analyze both the informal and formal sectors.
Labor market surveys should not be seen as a onetime exercise. Follow-up studies on a periodic basis can detect trends and changes in the labor market, fill in any gaps in understanding, and improve the quality, relevance, and targeting of redeployment activities.
Survey of Redeployment Service Providers
A survey of service providers is the third important source of information in the development of a redeployment program. The main objectives of the survey are to:
Despite the hostile environment for private enterprise in the 1970s, the commercial district of Dar es Salaam still hosted many small, private business service providers–bookkeepers and accountants, forwarding and courier agencies, marketing agents, and business training establishments. These small businesses seemed to be invisible to the donor agencies and to the government, both of whom preferred to set up high-profile central promotion facilities. Yet these microfirms were operating as profitable commercial businesses; they understood the market and the business environment. To the outside observer it seemed that the small accounting offices, for example–stimulated by increased demand and with some technical help–could be the seeds of future accountancy, business advice, and consultant service firms. But they had to compete with donor-financed facilities working out of expensively staffed and equipped offices and providing free services. Fortunately for them, the local knowledge and the marketing efforts of these state-sponsored bureaus were weak, so the local service suppliers were not seriously damaged and largely retained their traditional "invisible" customers. It was an opportunity wasted, however, because these existing fledgling service firms themselves would have benefited from advice, training, and incentives to upgrade so as to contribute to enterprise growth and improved governance.
Source: Phillips 2000.
Counseling, training, and job search lie at the core of most redeployment programs (figure 5.2). Job creation, community approaches, public works, and employee enterprise are supplementary elements that can be appropriate in some circumstances.
There is no one best model for redeployment programs. Country-specific and enterprise-level circumstances influence the types of redeployment components that are selected. Every situation will be unique, but some guidelines for when various redeployment measures are most likely to be appropriate are set out in table 5.8.
| Activity | When it is most appropriate or likely to work best | Key Elements of a Labor Program |
|---|---|---|
| Counseling and prelayoff support |
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| Job-search assistance/ placement/ employment information exchange services |
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| Skills-based retraining/skills upgrading for employment |
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| Training for self-employme |
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| Employee enterprise |
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| Community-based programs |
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| Public works programs |
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Weaknesses in the provision of training are common. The implementing agency will need to assess these as part of the labor market study.
Poorly designed redeployment programs may have little economic effect. To improve economic benefits, redeployment activities need to be structured in a way that creates appropriate incentives for workers and service providers alike.
An example comes from Chile, where training for displaced workers is provided through the National Training and Employment Service (SENCE), part of the Ministry of Labor and Social Security. More than 1,700 training providers to the program are registered, including private firms, municipalities, or universities. Funds for training are awarded through competitive bidding (publicly tendered) among providers, and must include commitment from private firms for a three-month apprenticeship for trainees. The program design helps ensure a degree of training relevance because both firms and training providers have incentives for monitoring quality (Freije 2001).
Table 5.9 summarizes incentive mechanisms that the implementing agency could adopt in a redeployment program. These are mechanisms for selecting the recipients of redeployment assistance and performance incentives for public or private service providers.
There is no one best model.
Specific incentives that can be adopted include avoiding or reducing stipend payments to employees who attend activities; cost-sharing by participants (especially for such services as training), including through vouchers; and performancebased contracts for service providers.
| Activity | Selection mechanisms for displaced workers | Performance incentives for service providers |
|---|---|---|
| Counseling |
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| Job-search assistance/ placement/ employment information exchange services |
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| Skill-based retraining/ skill upgrading for employment |
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| Training for self-employment |
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| Employee enterprise |
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| Community-based programs |
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| Public works programs |
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Avoiding Stipends
Many programs offer generous stipends to workers who attend the training programs. Although stipends encourage attendance–and hence high levels of activity rates are reported by training providers–they can significantly distort participation in redeployment plans. Several such plans have high dropout levels. Workers attend the courses while they have no other income, but as soon as they get a job they leave.
Increasingly, plans are moving to no or minimal stipends:
It is sometimes argued that the stipends given during training are social protection transfers. If this is a major issue for a large PPI scheme, then other mechanisms for targeting vulnerable workers and providing a social safety net need to be considered, such as a public works scheme or a broader social fund program.
Cost Sharing and Vouchers
One approach to making programs more effective is to introduce some element of cost sharing. Giving workers a choice between obtaining training or getting the equivalent amount in cash as part of severance pay is one way. Making a small deduction or charge for training is another, but this can chase away the poorest workers. A compromise approach is to offer free training for the poorest workers–for example, those with severance compensation below a defined amount–and then establish a sliding scale of (still modest) charges for other workers.
Another mechanism is the use of vouchers (either free or at some cost) to allow workers to select their own programs. Vouchers have been used as a tool for obtaining training and business development services in Ecuador, Paraguay, and Peru. The experiences of these projects are relatively well documented (see, for example, Bothelo and Goldmark 2000; Goldmark and Fitzgerald 2001; and Goldmark, Bothelo, and de Andrade Orozco 2001). Other examples are:
Vouchers help shift from such a supply-driven approach dominated by the training providers to one in which the clients (displaced workers) have the power to select services relevant to their needs (see figure 5.3). Experience with vouchers, however, is relatively recent. Although initial evaluations of programs are promising, there is insufficient evidence to recommend widespread use. Nonetheless, they do address some of the fundamental deficiencies in training provision. A voucher program tightly targeted at displaced workers has a number of potential advantages over other types of voucher schemes in that:
The problems that the implementing agency will face regarding vouchers are likely to be linked to administration and to the training institutions rather than to participants. For example:
Figure 5.3: Moving from Supply-Driven to Demand-Driven Training
Source: Adapted from Goldmark, Botelho, and Orozco 2001 (annex 2).
Performance Contracts
More demand-driven programs can also be encouraged, without the complexity of vouchers, through transparent, competitive procurement, regular retendering, and performance-related contracts for suppliers. In Turkey's privatization program, for example, negotiated job placement rates were required in the contracts of service providers (at minimum levels of 10 percent for counseling and job placement services and 60 percent for retraining).
Vouchers for training may be particularly relevant for redeployment programs.
The reporting and publication of performance data can also support performance contracts. If potential program recipients gain access to good information on all training providers and performance measures (including numbers of other workers selecting the course, dropout percentages, quality ratings by former students, and success rates in redeployment), they are likely to move to programs that are both relevant and appropriate for them.
Experience with vouchers is relatively new.
Workers need honest, transparent information on the quality and performance of courses.
When the redeployment program has been designed, a key step is to put in place a team to implement the program. The main tasks are to:
Links to the Web sites of redeployment and rapid response units in:
- The United States
- Romania
- Hungary.
Labor funds can be a vehicle for a mix of government and donor initiatives directed at creating employment and supporting redeployment.
Social funds are more poverty focused, but can also support active labor market and social safety net initiatives.
In addition to program activities, funding will need to cover the costs of:
These funds should be linked to the overall timetables for PPI and severance because there is little point in releasing funds for a labor program before basic approvals for PPI have been received.
The accompanying CD-ROM provides a spreadsheet to help develop cost estimates for program activities.
Redeployment programs can be implemented and funded through national-level labor or unemployment funds, as has been common in Eastern Europe and Central Asia. These funds are typically financed on a discretionary basis from the state budget, often with the support of loans from donors and international financial institutions. The primary objective of these funds is to enable activities that help unemployed people get back into gainful employment. Where such funds do not exist, or where they serve a different purpose than what is required at the PPI level, separate arrangements can be made in which monies are channeled directly to the PPI implementing agency or to the group that is directly responsible for the redeployment program.
Social funds have also been used in some cases. Social funds are special-purpose, public sector arrangements designed to mobilize resources to alleviate poverty. Social funds differ from labor funds in that they are more directly concerned with poverty reduction and income support rather than employment generation. Their activities may, however, support displaced workers, particularly in regions of acute unemployment or in single-industry towns. Social fund activities are generally demand driven. Social funds do not directly implement social safety net programs, but rather solicit, evaluate, finance, and then monitor projects proposed and undertaken by private contractors, NGOs, or other groups. Social funds can attract substantial donor financing.
In the context of retrenched workers, social funds may serve a range of active labor market programs, such as retraining, microenterprise loans, and public works programs, in addition to social and welfare services. In 1985 Bolivia established the world's first Emergency Social Fund to help miners who lost their jobs because of economic adjustment (see box 5.21). It proved so successful that it became the model for Bolivia's Social Investment Fund set up in 1990 to finance longterm development of the country's social services and to deal with the more intransigent problem of endemic poverty.
Further advice on the design and implementation of social funds is available from the World Bank at http://www.worldbank.org/socialfunds/.
World Bank "gateway" for advice on social funds.
In Bolivia the state mining corporation reduced its staff from about 28,000 in August 1985 to fewer than 6,000 by the end of 1986. The World Bank supported an emergency fund to help redeploy the miners. The Emergency Social Fund (ESF) was set up as a temporary fund to finance a large number of small-scale, laborintensive subprojects in infrastructure (housing, schools, road improvements, erosion, flood control, and irrigation works), as well as technical assistance and extension programs.
The ESF illustrates some of the benefits of public works programs. The greatest benefits from participating in the program were received by those who would have been least well-off without it. Although the subprojects originally were intended to employ mostly miners, only 15–20 percent of them were employed under the ESF. Studies showed that although a number of miners moved rapidly to new jobs, others were reluctant to participate in ESF projects because the pay was low. The subprojects' ex post rates of return were generally positive and contributed substantially to reducing the social cost of adjustment after the economic crisis of the mid- 1980s.
Sources: Mathieu 1996; Newman, Jorgensen, and Pradhan 1991.
If rapid response facilities are in place or are being developed, the implementing agency might usefully build these into the overall design of the redeployment program.
The implementing agency's office does not need to provide services directly, and many services can be contracted out. Terms of reference and contracts should include performance-based payment mechanisms to encourage performance, with clear performance measures and reporting requirements. This enables the program to be outcome driven (for example, by number of workers employed or number of workers with increased incomes) rather than numbers driven (for example, by number of workers counseled or number of workers who attended training courses).
Other measures to improve the quality of service provision are to:
Module 7 sets out monitoring and evaluation processes in some detail and describes a range of performance monitoring measures. The implementing agency's key tasks here are to:
