human services: empowering services, improving lives .../media/accenture/conversion-ass… · and...

Toward Thriving Labor MarketsFrom the status quo to sustainability

Human Services: Empowering Services, Improving Lives

European nations face an unprecedented crisis in employment. The International Labour Organization (ILO) reports that the world must meet the urgent challenge of creating 600 million productive jobs over the next decade to generate sustainable growth and maintain social cohesion.1

Yet the prospect of achieving thriving labor markets seems daunting. Unemployment, underemployment, a declining economy, changing demographics and skills shortages complicate real prospects for meaningful and sustained change. With increasing national debt in many countries, many governments have responded with knee-jerk reactions to cut budgets and hence, jobs. The market has responded to this sentiment with downsizing or “right-sizing” to assuage the unions. The need to tackle unemployment is increasingly taking on a new urgency.

How can European Union (EU) member states move away from the status quo of an anemic recovery to sustainability in employment and thriving labor markets? Accenture’s point of view—derived from our analysis of key trends, data and leading practices across various EU states—is that change can happen. It demands a willingness to look at the issues anew and address them with holistic strategies that can alleviate market fragmentation, change behavior among the unemployed, close the widening skills gap and transform a weak business environment.

Setting the scene

Understanding the landscape: The declining economy and rising unemployment

Moving toward a thriving labor market begins with understanding the current landscape and drawing insights into key social, economic and demographic trends on the horizon.

Today, the economy is slowly recovering from a crippling downturn, and unemployment is again at the forefront of policy agendas. In 2008, GDP growth rates declined and even turned negative in 2009, reaching -4.9 percent in both the EU and the euro area.2 The EU emerged from

recession in Q3 2009 after five consecutive quarters of negative growth.3 As would be expected, this negative growth significantly impacted employment levels across a majority of member states with some like Germany emerging largely unscathed owing to proactive policy measures like the Kurzarbeit.

Eurostat estimates that 24.325 million men and women in the EU-27—of whom 16.925 million were in the euro area (EA-17)—were unemployed in January 2012.4 Figure 1 compares unemployment rates

across EU-27, EA-17, the United States and Japan from January 2000 to January 2012. The global unemployment rate has been rising since 2008 and the EU remains the highest unemployment area. This data suggests that an overall contraction in GDP with reduced aggregate demand has had a downward push on employment levels (as a trailing indicator) even though in some economies the results are less obvious, owing to structural adjustments in their labor markets.

Figure 1: Unemployment rates across EU-27, EA-17, United States and Japan, seasonally adjusted, Jan 2000 through Jan 20125

Looking to tomorrow: The employment outlook for Europe

How do these unemployment figures affect the outlook in Europe? The unemployment rate is an important indicator with both social and economic dimensions.

1. Re-building motivationRising unemployment results in a loss of income and morale for individuals, with more enhanced psychological issues as this turns to long-term unemployment.

2. Reducing welfare dependencyHigh structural unemployment also exacerbates pressure on government spending on social benefits and on the flip-side reduction in tax revenue, thereby resulting in a big strain on the exchequer.

3. Preventing a lost generationFrom a social and economic perspective, unemployment may be viewed as unused labor capacity, and thereby productive growth. In countries or regions where there is high youth unemployment e.g. Spain or Italy (often dubbed as the lost generation), this could also lead to social unrest and issues of community integration.

4. Securing the future ‘hands and minds’Against rising unemployment rates, demographics are also shifting. An analysis of future trends reveals that the EU’s labor force is expected to decrease in size by approximately 0.2 percent per annum from 2000 to 2030. The percentage of people age 65 and above compared to the number of people age 15 to 64 will rise from 23 percent in 2000 to 35 percent in 2025 and rise further by 10 to 15 percent in 2050.6

This data reveals that Europe’s population is aging. At the same time, the demand for highly-skilled workers is growing. In Europe, the employment rate of highly-skilled workers is more than 30 percent higher than that of low skilled workers.7 A study by the World Bank estimates that approximately 68 million immigrants will be needed to meet EU labor requirements from 2003 to 2050.8 With these changing demographics and growing demand for skilled workers, governments must identify what skills are needed and assess current training approaches to develop the right workforce and enhance cross-sector collaboration.

The goal? To secure the future “hands and minds” that will play an integral role in tomorrow’s economy. Some countries like Germany and Sweden have started programmes to identify qualified workforce from developing countries and to create an immigration process (including circular migration) that avoids brain drain, fosters integration and prohibits wage dumping.

Addressing the challenges: The move to transformation

Accenture has studied today’s environment and identified four key challenges that policymakers and employment agencies must address to transform the labor market:

1. A lack of employment opportunities and a weak business environmentDue to the EU-27 still slowly emerging from a recession, demand for labor is still weak and business creation rates are low. There is fear in the markets and a lack of investment in new jobs, which creates a vicious cycle. Businesses, especially Small and Medium Enterprises are taking a cautious approach, and given that in most EEA countries they form the largest employer segment, the result is very limited employment opportunities.

2. Fragmented labor markets and a lack of understanding of skills and jobs matchingThere is a mismatch between skills and employment opportunities in many European economies. Moreover, there are unemployed workers with irrelevant specialized skills and positions that require skills that cannot be learned quickly. There has also been a fundamental shift in the dynamics of the labor market. Labor’s occupational and geographic mobility has risen as the variety of occupations has increased and the needs of the economy diversified. In addition, regional employment disparities are more prominent than ever.

3. A lack of right behavior to enter the labor market—especially among the hard to reachAs a result of long periods of unemployment, some workers have lost the incentive to work and re-enter the labor market. Many are lacking right behaviors and attitudes to break free from the unemployment trap—the dependency on welfare payments and low perceived benefits of work. This effect has become widespread among the harder to reach groups of society and minorities.

4. A widening skills gap and changing demographicsIn a trend often related to workers’ lack of right behavior, many have lost the skills that are relevant in today’s marketplace. Out of work, they have not benefitted from employer generated training and education—and they have not pursued such programs on their own. This makes it difficult for prospective employees to remain competitive and adapt to employers’ changing demands.

Transforming these challenges into opportunities—and moving toward a thriving labor market—means solving these challenges with a comprehensive understanding of the big picture (see Figure 2). Accenture’s work across the European labor and employment community demonstrates the key strategies that are needed—and that each can be tailored to every country’s unique circumstances.

Figure 2: Toward thriving labor markets

Skill

s Ga

p an

d Ch

an

ging D

emographicsFragmented Labor M

arkets

Weak Business Environment Lack o

f Righ

t Beh

avio

r

Incentiv

es Ag

enda

Growth Agenda

Empl

oyab

ility A

genda Intelligence Agenda

Thriving LaborMarkets

Challenges

Strategies

Skill

s Gap

and

Cha

nging

DemographicsFragmented Labor M

arkets


f Righ

t Beh

avio

r

Incentiv

es Ag

enda

Growth Agenda

Empl

oyab

ility A



Challenges

Strategies

Challenge 1. A lack of employment opportunities and a weak business environmentKey strategy 1: The growth agenda

To boost the business environment, governments should support a key sector in the economy—the growth of existing small and medium enterprises (SMEs). This can help ensure that employment opportunities continue to get generated and proceed at a sustainable rate.

Analysis from the European Commission shows there were over 20.8 million enterprises active in the non-financial business sector in the EU in 2010—of which 99.8 percent were SMEs. Moreover, about 67 percent of the employment in the non-financial business economy is provided by SMEs.9 Clearly, SMEs play a vital role in the economy and have a positive effect on economic growth. Governments can assist by driving innovation and entrepreneurship while providing a supportive environment for growth.

This can be achieved by targeting improvements in governance and political conditions to encourage more individuals to start or grow their own businesses. The infrastructure needs to be in place with low barriers to entry and less regulations to reduce the cost of doing business.

Governments can also encourage a culture of entrepreneurship through policy mechanisms such as access to technical know-how, develop business and investment plans, effective supply chains, a strong intellectual property (IP) regime and available growth finance. Finally, Governments can catalyse job-creation in certain sectors such as the green economy with high-potential for growth (the European Commission estimates the over 20 million jobs could be created in this sector between now and 2020).

Case study: Business coaching for growth

United Kingdom Department for Business, Innovation and SkillsIn January 2012, the United Kingdom Department for Business, Innovation and Skills launched a creative program called “Business Coaching for Growth,” aimed at helping up to 10,000 high potential small and medium enterprises. The program matches expert business coaches with SMEs to target a 20 percent improvement in annual growth.10

Business Coaching for Growth offers to coach senior management teams to develop and implement growth strategies and develop leadership and management skills. It also includes tailored, specialized help to develop a successful investment pitch, and access to high quality facilities through partnering with leading business incubators, science parks and technology innovation centers. Advice and support are available on how to identify and protect IP and copyright and develop strategies to commercially exploit IP among other topics.

Delivering BenefitsBy leveraging the abovementioned management skills, technical and financial know-how as well as business networks, the programme offers new start-ups the potential to become “gazelles” i.e. the potential to achieve turnover of £1m within three years of starting to trade, or to have at least 10 employees within three years.

Challenge 2: Fragmented labor markets and lack of understanding of skills and jobs matching Key strategy 2: The intelligence agenda

To move past the challenge of a fragmented labor market and inefficiencies in matching the right skills to the right jobs, many countries have deployed technology and management processes to understand the structural make-up of the labor market.

At a policy level, this entails a series of job-creation policies, including cutting labor-related taxes as well as lifting restrictions on worker movement. At a public employment service level, business analytics can be deployed to identify gaps in the labor market. Gaps are then targeted by matching available jobs with the skills of the unemployed and keeping citizens abreast the most up-to-date job information. For example, Sardinia Labor

Ministry in Italy has transformed its Public Employment Services. A program has taken place to modernize and digitalize administrative procedures relating to labor and unemployment services, significantly easing the burden of 55,000 transactions carried out on average in a month. Another example is how the German National Employment Agency (BA) developed a “Virtual Labour Market” (VLM)—an online system used by employers to post job vacancies and by jobseekers to register for benefits and find suitable work or training opportunities. Digitalization of key data provides real-time information on the labor market. It is an insight-driven approach that is dramatically improving the efficiency and accuracy of job matching.

Skill

s Gap

and

Cha

nging


arkets


f Righ

t Beh

avio

r

Incentiv

es Ag

enda

Growth Agenda

Empl

oyab

ility A



Challenges

Strategies

Case study: Virtual Labour Market (VLM)

Bundesagentur für Arbeit (BA) - German National Employment AgencyIn December 2003, the first phase of the “Virtual Labour Market” was up and running on schedule. The objective of the portal is to develop a state-of-the-art, job seeking tool, attractive for employers as well as for job seekers with a consistent, centralized IT database and a consistent tool to support the counselors’ work. The aim was to create coordinated, aligned and well-connected internal procedures.

The BA Virtual Labour Market comprises of:

• Jobboerse–anonlinejobportalfor job seekers and employers (www.jobboerse.arbeitsagentur.de). An external online portal for job seekers to register for benefits, registering vacancies, application management for job seekers and employers.

• VERBIS–theinternalIT-systemsupporting the Public Employment Service (PES) core functions (employment service and vocational counseling) and BA’s internal users located at offices throughout Germany. It assists in scheduling assessment appointments and includes a smart search function to link job seekers to employers quickly and efficiently.

• JobRobot–anonline“job-crawler” that collects job vacancies from company websites and posts them in the PES intranet.11

The implementation replaced the antiquated internal IT system, which placement agency employees had worked with since the mid-1980s. Accenture helped BA develop VERBIS, an innovative Web-based solution and an internal matching, advising and information System, which allows more effective matching accuracy. It enables the implementation of complete and efficient placement processes. General data files relating to vacant positions and job seeker profiles are made available via the Internet.

Other features of the service portal include applicant/application management and integrated messaging services, as well as self-administration of job seeker profiles and employment vacancies. Intelligent IT-based search mechanisms optimize the matching of supply and demand, increasing the accuracy of placements. The internationally leading HR-XML standard provides the foundation for consistent and current data storage as well as data transfer with job market partners.

Delivering benefitsThe success of this initiative is reflected in the benefits it brought both to the BA—and to job seekers, which include the following:

• SupportsBA’sgoaltoshortentheaverage length of unemployment. Assuming a reduction of one week, savings of approximately one billion Euros are possible.

• Simplifiesmatchingofsupplyanddemand, so that it is more flexible and more efficient. Job seekers and employers receive improved personnel services, including more precise placement suggestions.

• Providesgreateraccesstojoblistings because of improved employer interfacing and automated data exchange.

• Fostersclosercooperationwithjob seekers coupled with an increase in individual activity.

The internal monitoring shows that Jobboerse and VERBIS contain up to 3.8 million applicant profiles12, while the number of job vacancies available on Jobboerse and VERBIS is up to 1.1 million. Overall, the Virtual Labour Market helps accelerate job market balancing as it has increased transparency and access to the job market. It also allows a more sophisticated matching of job seekers to job vacancies. The management of agencies has also become more efficient through a common centralized database. This portal is also aligned with the current eGovernment agenda by providing more efficient communication using integrated eGovernment processes that further helped skills and jobs matching in the market.

Challenge 3: A lack of right behavior to enter the labor market—especially among the hard to reach Key strategy 3: The incentives agenda

To encourage people to get back into the labor market and off of benefits, various incentives—such as work flexibility, dynamic benefits and short-term work arrangements—should be more widely adapted.

For example, many countries now use strategies such as “flexicurity” to give citizens flexibility and security in the labor market. This approach focuses on reconciling employers’ need for a flexible workforce with workers’ need for security—confidence that they will not face long periods of unemployment.13 It is not only one of the key demands of employers; it is also high on employee wish lists—albeit with different emphases.

Flexicurity arrangements can be harnessed to improve hours, work/life balance and working conditions, which is especially helpful for those employees with extenuating circumstances. Such approaches can also increase rates of labor market participation and retention.14 Some countries are also offering psychological counseling provided through NGOs, and in coordination with their regional and local employment offices―this is particularly targeted at the hard to reach, those with behavioural or substance abuse issues, and long-term unemployed.

Another approach to reducing benefits dependency is the idea of ‘making work pay more’. The motivation behind this is that in a number of member states, if we look at the complexity of out-of-work benefits and tax-credits, especially for people with multiple-conditions, it actually pays less to re-enter the labor market in part-time work. The nature of reform needed to the welfare system (for instance, being implemented in the UK) entails dynamic benefits paid to individuals, based on their particular circumstance to ensure higher entitlements for those in need, but also sanctions for those who refuse to cooperate.

Similarly, short-term work arrangements could also an important alternative to layoffs in coping with cyclical declines in labor demand. They allow individuals a route into the labor market while easing them back into employment. These strategies could be the new way forward to encourage hard-to-reach job seekers to get back into the labor market.

Skill

s Gap

and

Cha

nging


arkets


f Righ

t Beh

avio

r

Incentiv

es Ag

enda

Growth Agenda

Empl

oyab

ility A



Challenges

Strategies

Case study: Nordic Flexicurity ModelIn an era in which the EU is under immense pressure from trends such as globalization, demographic change, technological development and innovation, the Nordic flexicurity model offers a dynamic approach to balancing demand and supply in the labor market, with the following key success factors:

Openness to changeEmployers and workers are relatively supportive to change and transition in the labor market. This is evidenced by an extraordinary level of social acceptance.

The role of social partners The capability of social partners (such as labor unions) to adjust is pivotal to the integration of flexibility and security. Rates of membership to labor unions are high and the state and social partners cooperate well. The social partners are free from government intervention as long as they can maintain a competently performing labor market.

Collective AgreementsThese are an essential component of the flexicurity model. These agreements between the state and labor unions for instance, allow for more flexibility than legislation on areas like moderating working hours, salary levels and benefits, whilst securing a more equal distribution in the workforce.

Strong and collaborative public sector workforce This ensures a high level of social assurance, working well in combination with an active labor market policy that creates new job opportunities.

Challenge 4: A widening skills gap and changing demographics Key strategy 4: The employability agenda

Governments have a fundamental role to play in addressing the skills gap that has resulted from shifts in the labor market as well as long-term unemployment. There are many opportunities to expand the management of training institutions and systems, develop specialized training programs and certifications as well as review and develop vocational training policies. For example, policy makers can work with employers to expand workplace learning, on-the-job training and apprenticeships.

Ensuring that people remain sustainably employed also means ensuring that they remain appropriately and adequately skilled. Since extended periods of inactivity often lead to de-skilling, these periods must be addressed in new ways, including “lifelong learning accounts” that extend the learning experience beyond work. This way, education and training merge to form a continuous process that should be supported by a flexible operating model, updated content and financial support.

To continue retaining and upgrading the employable population, one solution is to use a Virtual Learning Market, an education portal that involves a continuously updated worker profile including information on profession, region, industry and existing and undesired skills, and a prospective model with a set of high demand skills aligned to professions, regions and industries in the market (based on market trend analysis). A gap analysis between the two identifies missing skills, hard skills, soft skills and certificates and licenses that are necessary for the individual to acquire. This can be done via an advanced training database that consists of available training, classroom sessions, blended learning, e-learning, books and the Internet.

France also provides an interesting example of state intervention to help address employability problems. The government has implemented the Plan de Sauvegarde de l´Emploi—measures to avoid or reduce layoffs; Mesures d’accompagnement, which soften the impact of massive layoffs by offering benefits and retraining to the dismissed worker; and Chômage partiel, which distributes the impact of a reduction in production to all the staff, avoiding layoffs. These initiatives have helped retraining and upgrading the employable population.

Skill

s Gap

and

Cha

nging


arkets


f Righ

t Beh

avio

r

Incentiv

es Ag

enda

Growth Agenda

Empl

oyab

ility A



Challenges

Strategies

Case study: Virtual Learning Market

United Kingdom E-Learning Centre This e-learning center is a free information resource run by an e-learning consultancy, Learning Light, for business, education, not-for-profit and the public sector to access the latest skills and training.16

Despite experiencing public sector cutbacks under the coalition government, the United Kingdom

(UK) e-learning industry remains robustly positive in its view of the market and the prospect for continuing growth. The virtual learning market continues to show significant growth in the UK. The market size is estimated to be between £300 million to £450 million, and growth rates are forecast between 6.7 percent and 8 percent. The E-Learning Centre has fostered this growth by embracing innovative approaches to learning, such as immersive learning scenarios, and adopting Web 2.0 and social networking to create “portable flexible learning.”16

15

Virtual learning can often be a cheaper and more efficient and targeted way to deliver training. In turn, efficient training can help improve social costs, preventing and decreasing unemployment and reducing the need for social benefit payments. Such training can also increase quality of life, allowing people to tackle more challenging and demanding tasks and for greater rewards.

Conclusion: The promise of sustainability

The economy in the EU is still in a gloomy state. It requires active and bold measures from governments to turn the situation around. With rising unemployment levels, an aging population, changing social demographics and a widening skills gap, governments must look at employment policy in a new light.

Accenture has examined the current landscape of the European labor market and recommends governments consider new strategies to improve overall employment opportunities, such as stimulating the job market by promoting the growth of business, particularly SMEs. Governments should also incentivize the long-term unemployed and hard-to-reach by putting flexible work models and innovative work schemes in place along

with positive reinforcement counseling. Through the use of active labor market policies, lifting restrictions on worker movement and adopting more targeted job-matching solutions, fragmentation and diversity in labor markets can be tackled more effectively.

The key to realizing thriving labor markets is to tailor these strategies to the local context, which requires identifying the right partners to assist the transformation process while closely collaborating with employees, employers, various government departments and NGOs. If governments can seize this opportunity and adapt their employment policies appropriately, they are well positioned to unleash labor market potential, move from the status quo to sustainability and transform their economies for a better future.

References1. International Labour Organization. (26. Jan 2012). Global Employment Trends 2012: World faces a 600 million jobs challenge, warns ILO. Abgerufen am 26. Jan 2012 von http://www.ilo.org/global/about-the-ilo/press-and-media-centre/news/WCMS_171700/lang--en/index.htm

2. http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/National_accounts_-_main_GDP_aggregates_and_related_indicators

3. http://www.icis.com/Articles/2009/11/13/9263064/europe-emerges-from-recession-as-q3-gdp-grows-0.2.html

4. http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_statistics

5. http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Unemployment_rates_EU-27,_EA-17,_US_and_Japan,_seasonally_adjusted,_January_2000_-_January_2012.PNG&filetimestamp=20120301094746

6. http://www.icpd.org/employment/Empltrends21century.htm

7. The Cologne Institute for Business Research http://www.iwkoeln.de/en/studien/iw-trends?filter.year=2004&list.p=1

8. Eurostat, National Acounts and LFS; http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

9. Do SMEs create more and better jobs? http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/pdf/do-smes-create-more-and-better-jobs_en.pdf

10. UK Department for Business Innovation and Skills. (2012, Jan 26). Coaching for high growth SMEs. Retrieved Jan 26, 2012, from http://www.bis.gov.uk/policies/economic-development/leps/lep-toolbox/helping-smes/coaching

11. http://www.mutual-learning-employment.net/Case%20study_VerBIS_approved%20EC.pdf

12. http://statistik.arbeitsagentur.de/Statischer-Content/Arbeitsmarktberichte/Monatsbericht-Arbeits-Ausbildungsmarkt-Deutschland/Monatsberichte/Generische-Publikationen/Monatsbericht-201111.pdf

13. http://ec.europa.eu/social/main.jsp?catId=102&langId=en

14. Horizons. (2005, Apr). Flexicurity schemes. Retrieved Jan 26, 2012, from http://www.horizons.gc.ca/doclib/PA_LC_Klammer_Flexicurityschemes_200603_e.pdf

15. http://www.e-learningcentre.co.uk/

16. http://www.trainingdirectoryuk.com/news/training-industry-news-%7C20262/learning-light-augments-and-redevelops-its-e-learning-centre-website-%7C685/

17. http://www.creativesheffield.co.uk/NR/rdonlyres/3AADC9A6-627A-486C-B1C9-0AC3BAD5C538/0UKelearningmarketreportbyLearningLight2009_2_.pdf

For further information, please contact:Gaurav Gujral Public Service for the Future Program Manager, EALA [email protected]

Jan-Erik Hunn Accenture Human Services Industry Lead, EALA [email protected]

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with more than 246,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.

Copyright © 2012 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

human services: empowering services, improving lives .../media/accenture/conversion-ass… · and...

Documents