Effective and fair labour markets: more and focused active labour market policy?

This chapter reviews the use and effectiveness of active labour market policies (ALMPs) in Europe in light of two major social-economic crises: the 2008-12 Great Financial Crisis and the 2020-21 Covid-19 pandemic. ALMPs have become central to social models such as the European Union’s ‘flexicurity’ strategy, the social investment paradigm of social policy, and the European Pillar of Social Rights. However, ALMP use varies strongly between countries, and not all ALMP instruments are equally effective at facilitating transitions from unemployment to work. Using process-tracing, I analyse the trajectory of ALMPs in European social and employment policy with an emphasis on policy learning from crises. My findings suggest that ALMP use has concentrated into incentive reinforcement and human capital building instruments, with emphasis shifting towards the latter as a consequence of the political backlash from the financial crisis. Moreover, I find that the inclusiveness of ALMPs is limited by Matthew effects, as jobseekers with the highest likelihood of finding re-employment in the absence of policy interventions tend to be allocated to the most effective ALMPs. This calls for increased attention to the equitable treatment of ALMP participants by both public employment services and recruiting employers.