Policy Brief: From unemployment to work

All OECD governments recognise the need to provide income support for the unemployed. But how do they ensure that income support provides a cushion for a brief period to enable the person to find a new job, without becoming a permanent alternative to work? Cutting benefit levels would automatically increase the incentive to move from welfare to work, but it would not help people to find suitable employment and would aggravate social hardship for those who do not enter employment at all. Providing income support for jobseekers while at the same time strengthening their incentive to work is a puzzle that most OECD countries are still trying to solve.

To resolve this puzzle, countries are using a combination of two methods. First, governments encourage jobseekers to become more active in their efforts to find work by providing job-search support, and by requiring contact with employment services as well as participation in programmes after a certain period of unemployment.

Common activation measures include requirements for unemployed people to attend intensive interviews with employment counsellors, to apply for job vacancies as directed by employment counsellors, to independently search for job vacancies and apply for jobs, to accept offers of suitable work, to participate in drawing up an individual action plan and to participate in training or job-creation programmes.

Second, income supplements can be provided to low-income individuals who accept a job - so-called “in-work benefits”. However, to be effective, activation strategies and in-work benefits need to be well-designed. This Policy Brief looks at what measures work best to help unemployed people to find a new job and keep them in work.