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In 2003 OECD has published the working paper ‘The Competitive Market for Employment Services in the Netherlands’. The document is based on a translation of Chapter 3 of Van aanbieden naar aanbesteden: Marktwerking bij arbeidsbemiddeling en reïntegratie in Australië, Nederland, Verenigd Koninkrijk en Zweden by Ludo Struyven, Geert Steurs, Anneleen Peeters and Veerle Minne (ACCO, Leuven, 2002).
In the Netherlands, the introduction of market mechanisms has been part of a search for a more coherent benefits and activation system. This paper describes aspects of experiences with the operation of markettype mechanisms for the provision of publicly-financed employment services. It tackles issues identified in the literature on competition, contracts and New Public Management theories, including the scope and duration of contracts, transaction costs, incentive and payment structures, price and quality competition, quality control and monitoring, and measures to combat creaming of easy-to-place jobseekers.
Social Employment and Summary
OECD countries are increasingly interested in structuring government organisation and the financing of job brokerage and employment reintegration services to use market forces. In the Netherlands, the introduction of market mechanisms has been part of a search for a more coherent benefits and activation system. The former Public Employment Service has been split up into a basic employment service provider (Centre for Work and Income) which remains public, and a privatised reintegration services company, which competes with other commercial entities for contracts to promote return to work. Since a large number of municipalities are looking to buy employment services for their social assistance clients in the Netherlands, a quasi-market for reintegration services has emerged, with many purchasers and providers. However, the purchasers use a variety of tendering methods and parts of the market suffer from a lack of transparency.
Following the outcome of a tender round held in 2000, in 2001 the Reintegration arm of the former public service was left with a 17% share in the market for services to unemployment insurance beneficiaries needing intensive employment assistance. On the supply side, partly related to the preconditions for tendering and the complexity of the tendering procedures, there has been increasing market concentration. The four largest providers together had a combined share near 60%, although they subcontracted a significant proportion of their work to smaller providers. The second tender round for this group, held in 2001, encouraged specialisation, with providers bidding to assist 2 500 batches of jobseekers categorised by region, industry of origin, and other criteria. The cost of authorised vocational training for clients is 100% reimbursed to the providers, but about half of the remaining payments to providers depend on their success in placing jobseekers into stable employment. […]
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