Labor Market Partnerships

The environment in which PES operate is being reshaped by fundamental changes resulting from demographic shifts, new technologies, and globalization. Workers can now expect many job transitions throughout their careers, meaning they will have to continuously develop their skills. In many emerging and developing economies, these structural transformations are occurring against a backdrop of high levels of underemployment and informal types of employment. Poor labor market outcomes contribute to rising inequalities not only in terms of income, but also in terms of access to quality employment opportunities. In addition, labor productivity growth has tended to decline in both advanced and developing countries since the mid-1990’s, partly as a result of demographic change and mismatch between the supply and demand for skills.

Key challenge for PES: inclusion of people with a distance from the labor market

To tackle these complex labor market conditions, PES must widen the range of their responsibilities. While job brokerage and the provision of labor market information remain core activities, PES must evolve if they are to contribute to the broader objectives of boosting labor market participation, stimulating job creation, promoting inclusive growth, and raising labor productivity. The best way to do that is by connecting jobseekers, employers, and other labor market actors.

Recently, PES have had to operate under continued austerity measures, which means that services have to be delivered more efficiently without compromising quality. At the same time, PES often only have a small market share in terms of vacancy coverage and access to key labor market information. This means PES need to engage with a range of actors to share know-how, expertise, and resources, and to offer complementary services to jobseekers and firms.

In this context, the real question is not so much why, but how PES should cooperate with other actors such as government departments, regional and local authorities, private firms, employer’s associations, unions, and non-profit organizations.

This free chapter of Managing Workforce Potential will review how these forms of cooperation can be most effective. It argues that the local level is often the most pertinent for setting up partnerships, and that the adoption of appropriate governance mechanisms is a key success factor for such partnerships.

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