Activation Policies for the Poor in OIC Member States

1.2.3

Job Creation

Job creation strategies focus on the creation of temporary jobs that are only open to unemployed

people. This review also considers job creation to include demand-side interventions, which are

aimed at employers to increase the number of jobs they create and the promotion of self-

employment and new enterprise formation.

The broad categories within ‘job creation’ for activation strategies are:



Temporary waged jobs

– Where the jobs are mostly created within public works

planned and delivered by government



Employment subsidies

– That incentivise the private sector to recruit the unemployed



‘Intermediate Labour Markets’ (ILMs)

– Where unemployed people are required to

take temporary waged jobs that deliver goods or services of public value and are often

organised by non-profit organisations



Workfare

– That requires welfare recipients to work unwaged in projects of community

benefit in return for their income support



Enterprise support –

Where welfare recipients receive active support to establish their

own business

Temporary job programmes are mostly used during economic downturns to maintain labour market

attachment for the long-term unemployed in times of job shortages. However, these programmes

can also ‘lock in’ participants and discourage active and ongoing job search. Good practice suggests

that job search support should be included in these programmes to maximise the number of people

securing unsubsidised employment at the end of their temporary job.

Employment subsidies are often criticised for subsidising employers when they would have

recruited anyway. However, if used in a highly targeted way they can change the recruitment

behaviour of employers so that more disadvantaged people are recruited.

Mandatory workfare programs are seen as ‘hard’ programmes in the requirements they place on

participants, however the effect may discourage welfare dependency. Workfare is often introduced

in downturns where there has been a policy decision to not support temporary waged jobs (either

because of cost considerations or social policy preferences). However, some programmes are

maintained across the economic cycle but targeting the most vulnerable. There is some evidence that

the threat of workfare can influence the exit probabilities from claiming welfare.

1.3

Links between employment, social and poverty reduction policies

Employment, and therefore activation, is seen as key in reducing poverty because earnings from

paid work typically make up the largest source of income for households.

This is particularly true in

OIC Member States as many of these countries do not offer effective SSN benefits to the unemployed.

However, assessing the impact of activation on poverty alleviation hinges not only on whether it

increases employment amongst the poor, but also whether employment reduces poverty. Impact

assessments of activation do indicate a link between employment and poverty alleviation. The

activation tools reported as being most effective include wage supplements and minimumwages.

This section reviews some of the different ways in which unemployment and other working age

benefit entitlements exercise an indirect influence on poverty by leading to a strong influence on

labour market outcomes. The nature of the relationship between benefit entitlements and activation

Ray, K. et al (2014)

Employment, Pay and Poverty: evidence and policy review

, The Work Foundation

Ibid