Activation at work in Belgium Employment pathways out of social assistance

1. Activation at work in Belgium Employment pathways out of social assistance Sarah Carpentier Herman Deleeck Centre for Social Policy Antwerp University MIPI meeting Stockholm, 15-16 June 2010

2. Outline • Introduction • Activation in the Belgian social assistance scheme • Data • Methodology • Hypotheses • Preliminary results 7. Tentative conclusions 8. Further Analysis

3. 1. Introduction Research questions • Which employment pathways can we discern in the exit from social assistance to paid labour? • Regular labour market versus labour market integration programmes • Who has which employment pathway - Individual socio-economic characteristics - Labour market history - Duration in social assistance • Which are the characteristics of the employment along different pathways • Full time/ part time employment • Full/partial independency from social assistance

4. 1. Introduction Literature • Two strands of activation literature • International comparative studies focussing on policy design (e.g. Lodemel & Trickey, 2000; Barbier & Ludwig-Meyerhofer, 2004; Serrano Pascual & Magnusson, 2007; Eichhorst & Konle-Seidl, 2008; Immervol, 2009) • Assessment of specific active labour market programmes (e.g. Heckman et al. 1999; Martin & Grubb, 2001; Card et al., 1999) • Literature on social assistance dynamics (e.g. Bane & Ellwood, 1986; Blank, 1989; Leisering & Leibfried, 2001; Saraceno, 2001; Capellari & Jenkins, 2008; Dahl & Lorentzen, 2003; Hansen, 2008)

5. 1. Introduction Approach • Combination of longitudinal perspective & policy design approach by studying trajectories to multiple exit states by survival analysis (self) selection of beneficiaries in employment paths

6. 1. Introduction Belgium is an instructive case because of • High expenditure on active labour market programmes • Very rich administrative data • Nation-specific in-depth analysis • Federal country division of competences strongly impacts on social assistance

7. 2. The Belgian social assistance scheme

8. 2.1. Overall characteristics • Last financial safety-net for able-bodied persons at working age • In addition to • Other categorical social assistance schemes • Unemployment benefits unlimited in time • Flat-rate benefit for school leavers • Family-based means-test • Shared competence of the federal state and 589 local welfare agencies • Indirect multilevel governance

9. 2.2.Activation 2002 Social Integration Act • Aim: maximum societal integration, participation and self-sufficiency mainly through employment • Social assistance can be provided as • A cash benefit, in combination with a personal social integration contract • A job in an labour market integration programme • Working in an activation programme: =working according to labour law goes with loss of social advantages linked to beneficiary statute, except when entitled to supplementary benefit

10. 2.2. Activation • Availability for work, except when exempted • Instruments: incentives and services • Generosity: rather low to international standards, especially for singles & couples with children • Strict time limit for youngsters: 3 months • Personal integration contract obligatory for youngsters optional for those aged 25 and more

11. 2.2. Activation • Fixed rate socio-professional exemption in calculation of the benefit to stimulate to take up a (part time) job • Inactivity and poverty gaps Full time: Substantial gains, but differentiated along household types (less attractive for couples with a single wage earner and lone parents) Part time: less attractive, especially for couples with a single wage earner

12. 2.3. Active labour market policy • High expenditure on active labour market policy • Focus on job creation low expenditure for vocational training & stimuli for self-employment

13. 2.3. Active labour market policy Labour market integration programmes for social assistance beneficiaries • Direct job creation programme (Article 60) • Specific programme for social assistance beneficiaries • Welfare agency is the employer • “User” is the welfare agency itself, an non-profit organisation or an acknowledged social economy initiative • During the number of days the beneficiary lacks to be entitled to full social rights • Total exemption of employer’s contribution • Federal subsidy (circa 900 €/month if full time) • Minimum part time (max. 6 months); mainly full time (or 4/5) • Permanent/fixed-term contract (with clause)

14. 2.3. Active labour market policy • Other labour market integration programmes for beneficiaries common features • Accessible on the basis of proved former periods of inactivity (for age groups) • Fixed-term exemption from employer’s contribution & federal subsidy • Min. 1/3 or part time work • Contract: permanent/ fixed-term/ temporary 3 types • Activa (all beneficiaries; all types of employers) • SINE (low-skilled; acknowledged employer in the social economy) • Work experience (on-the-job training; regional design component)

15. 2.3. Active labour market policy Distance from labour market Article 60 SINE ACTIVA Work Experience • Other subsidised employment programmes (no fixed-term) Service Vouchers Permanent subsidised workers in local governments

16. 2.4. Labour law • High employment protection for insiders distinction between blue collar workers and employees • 3 types of contracts • Permanent • Fixed term • For a specific task

17. 3. Data • 28590 persons aged 18-64 = stock population June 2005, not working and not entitled to other benefits • 1/3 proportionally stratified sample • Administrative data from Datawarehouse Labour Market and Social Protection • Result of the trade-off between information on the duration in social assistance and the number of events observed

18. 63 58 53 b a c d 48 43 e f 38 33 g 28 j h i 23 k 18 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Lexus chart for stock population June 2005

19. 3. Data • Individual characteristics of the sample (June 2005) • 53% of women • 27% under 24 years old, 24% between 25-34 years • 65% has another nationality at birth; in 2005 17% of these persons has acquired the Belgian nationality • 30% one person household, 23% lone parents, 14% couple with children, 26% other • Work intensity since 1999 72% has not worked in Belgium

20. Duration in social assistance

21. 4. Methodology Classification of employment pathways • Compromise between 4 considerations • What is theoretically interesting • Wage earner versus self-employed • Normal contract (FT/PT) versus temporary contract • Active labour market policy vs. regular job circuit • Linked to (social assistance) beneficiary status • Fixed-term versus no time limit • Which employment paths involve different processes & actors • Possible to distinguish in the data • Substantial number of transitions

22. 4. Methodology • Five exit states • Article 60 • Fixed-term active labour market programmes • Other subsidised employment/ regular labour market • Temporary or seasonal work • Self-employment

23. 4. Methodology • Survival analysis • Late entry design modelling calendar time, duration as a covariate • Competing risks analysis of employment pathways (not yet integrated) • Event: exit to first employment (can be combined with supplementary benefit) • Discrete-time framework Complementary log log link function

24. 5. Hypotheses • Transition to work • Households with children have a lower probability to exit than lone persons (financial incentives) • Men have a higher probability to find a job • Non-linear relationship for age • Employment paths (active labour market programmes design) • Higher work intensity, higher probability to be employed in the regular labour market; followed by activation programmes, and finally the article 60 programme • Longer duration in social assistance, lower probability to exit to regular labour market, higher probability to exit to article 60 and activation programmes

25. 6. Preliminary results

26. Survivor function (all employment paths) for the June 2005 stock population

27. Survivor functions by employment pathway for the June 2005 stock population

28. No exit 61% Regular labour market/ No fixed-term ALMP 14% Temporary or seasonal work 10% Article 60 9% Fixed-term activation Programme 3% Social assistance beneficiaries (100% of the stock population) Self-employed 1% Death 0.6% Pension (no supplementary social assistance benefit) 0.3% Flat-rate unemployment benefit (no supplementary SA benefit) 0.2% Other Unknown 0.2% Invalidity 0% 38%

29. Employment pathways at first moment of employment by December 2007

30. 6. Preliminary Results Controlling for other characteristics • Duration • longer duration, lower probability of exit to article 60 and interim • non-linear relationship of duration for activation programmes • No significant effect on exit to regular LBM or self- employment • Work intensity • higher work intensity, significant less probability to exit to article 60 • no significant effect of the work history on the probability to exit to an activation programme • Higher work intensity, higher probability to exit to interim/self-employment/regular or subsidised work

31. 6. Preliminary Results • Household type (ref=lone person) • Article 60: lone parent higher probability; couple with/without children & other lower probability • Activation Programme: no significant effect • Self-employed: couples with children, higher exit probability • Interim: unknown householdtype, higher probability • Regular/subsidised: couples with children & other higher probability • Age for all employment paths: non-linear effect • Sex no significant effect for Article 60 & Activation Programme man: higher probability of exit to interim/regular work & self-employment • Nationality at birth Art.60: non-EU lower probability Interim: non-EU higher probability • Similar for type of legislation, also higher probability to exit to regular/subsidised work

32. Percentage entitled to supplementary benefit at first moment of work by exit state

33. Percentage of working time at first moment of employment by employment path

34. 7. Tentative conclusions • Social assistance population has a substantial distance from the labour market • Remarkable high percentage (30%) combines work with a supplementary social assistance benefit • Studying all employment paths is instructive and crucial to understand a welfare-to-work scheme • Employment by active labour market programmes accounts for only 1/3th of all exits to paid labour • High share of seasonal or temporary workers

35. 7. Tentative conclusions • Employment paths mediated by individual characteristics, in addition to work and social assistance history • Employment paths are linked with characteristics of employment • Conceptualising activation employment paths useful ! Labour law

36. 8. Further research • Refining the classification of employment pathways • Survival analysis with multiple events in discrete time • Studying the sustainability of employment for the different employment paths

37. Thank you for your attention! Sarah.carpentier@ua.ac.be

38. Questions for discussion • Classification of employment pathways • Conceptualisation of cumulated statutes (duration in social assistance; transition to employment)