be that they should come under category 5 (Supported employment and ... included in this category typically provide ongoing support and have no planned ...
(Re-) Classification of disability programs Erik Samoy / Willem De Klerck Flemish Government /Department of Work and Social Economy (April 2009)
The best known disability programs are those that belong to the passive employment policies. All European countries have some (or several) form of benefit system(s) for disabled people who are not or no longer fit for work. They are not part of the Labour market policy database. In our view they should be included in any analysis of the labour market participation of disabled people because they offer a way out of the labour market (with income maintenance guaranteed) for people who are often not completely unfit for work. No strict line can be drawn between unemployment and incapacity for work. However, this is not the subject of this paper. We will look into the active programs to bring people into the labour market. Many of these programs were designed after World War II to bring war victims – mostly physically disabled people – back into the labour force. Special assessment, special guidance and placement, special training and sheltered workshops were the most common programs and still are nowadays. But there have been many changes in the organisation of these programs and it is therefore often not clear how they can be classified and compared with other LMP-measures and across countries. The Labour Market Policy Database Methodology (Revision of June 2006) provides guidelines in §84 to §92 as to how to deal with disability programs. The general idea seems to be that they should come under category 5 (Supported employment and Rehabilitation) unless there is good reason to place them under other categories. The first question is of course how one recognizes a program for disabled people. In § 84 it is said that the category 5 "Supported employment and Rehabilitation" covers measures that aim to promote the labour market integration of persons with reduced working capacity through supported employment and rehabilitation. The next paragraph (§85) specifies that "Persons with reduced working capacity refers primarily to those registered as disabled according to national definitions. However, it also covers persons temporarily incapacitated after an accident or illness, recovering drug-addicts and other groups who are not work-ready and may benefit from rehabilitation. In the scientific literature 'disability' refers to the consequences of some health condition and national definitions include this health element.1 Drug-use poses no problem as it would be considered as a health condition, but what about "other groups who are not work-ready and may benefit from rehabilitation". Do these also have to be 'disabled' in the sense that there should be a link with a health condition ? The second part of the phrase (may benefit from rehabilitation) seems to be a necessary condition, because otherwise everybody who is not work-ready would come under this category. But who may benefit from rehabilitation depends on what Rehabilitation is all about. 1
Definitions of Disability in Europe. A Comparative Analysis. A study prepared by Brunel University. European Commission, Brussels, 2002.
1
§91 states that Rehabilitation covers measures (providing rehabilitation) for persons with a reduced working capacity (temporary or permanent) and which aim to help participants adjust to their disability or condition and develop competencies that prepare them to move on to work (including supported employment) or regular training. And in §92 it is said that Rehabilitation refers to vocational rehabilitation only and that social and medical rehabilitation is outside the scope of the LMP database. The conclusion seems to be that one should look for programs that are meant for people with a reduced working capacity due to a disability which is related to a health condition. Category 5 contains two sub-categories : 5.1 Supported employment and 5.2 Rehabilitation. Now it becomes difficult because once a set of programs for people with a reduced working capacity has been identified, it turns out that not all of these will find a place under this category 5. § 88 states that "Measures that provide incentives for disabled persons to take up a new position in a regular company and which are payable only for a fixed period, belong in category 4." This category 4 is about recruitment incentives such as contributions to the labour costs. Therefore measures such as temporary wage subsidies for hiring a disabled person should come under this category 4. However, when there is no time limit on the wage subsidies they should be classified under category 5.1. because §87 states that measures included in this category typically provide ongoing support and have no planned duration (i.e. last as long as the person keeps the job). What is the sense of this distinction in view of the fact that §72 states that "Employment incentives" (category 4) covers measures that facilitate the recruitment of unemployed persons and other target groups, or help to ensure the continued employment of persons at risk of involuntary job loss ? Would it not be reasonable to say that a not time-limited wagesubsidy for disabled persons favours the continued employment of disabled persons, and would it not be better to put all the wage-subsidies under this category 4 ? There are other types of measures for people with reduced working capacity which are not classified under category 5. The first case concern some subsidies towards the provision of sheltered work places (according to § 90 this is about physical adaptation of the workplace – buildings and/or equipment – and the implementation of special organisational arrangements, including the provision of mentors and other specialised assistants). When such subsidies for the provision of sheltered work places are directly linked to the commencement of employment for specific individuals, they should be included in category 4. Subsidies that are not directly linked to the commencement of a new job are considered to support an ongoing facility to accommodate persons with reduced working capacity in the workplace and should be included in category 5. Here again we might ask why in the latter case this could no be a measure to help ensure the continued employment of a person at risk of involuntary job loss, and therefore category 4 could apply in both cases. The next case concerns some types of sheltered employment. According to § 87 lifetime sheltered work provisions are normally considered as part of social policy and outside the scope of the LMP database. Sheltered work provisions included under category 5 should have the aim of preparing people for the integration into the regular labour market.
2
There is another paragraph which is relevant here, but it is placed where 'Direct job creation' is described (category 6) : "§97 : Provisions for lifetime sheltered work in a non-productive employment are considered to act outside the labour market and are therefore considered as social policy and outside the scope of the LMP database. This paragraph seems to tell us that the crucial element is 'non-productive' work, which would mean that structures such as daycentres where people may do some work-activities are not included when this is not considered to be productive. However, the temporal element – whether a provision is lifetime or not – does not lead to clear distinctions, because the aim of a sheltered work provision as stated in the legislation may well be that preparation for the regular labour market is the aim, but in practice only few people ever move on. Besides, in many countries sheltered employment is defined as a program for disabled people who are temporarily or definitely incapable of working in a regular environment Therefore one wonders also why sheltered work provisions (the productive type) should not be classified as Direct Job creation (category 6), as these are clearly : "… measures that create additional jobs, usually of community benefit or socially useful, in order to find employment for the long-term unemployed or persons otherwise difficult to place" (§93). And finally there is the category Rehabilitation. This concerns only vocational rehabilitation and therefore it is not clear what the distinction is between Rehabilitation and Vocational training, except that rehabilitation is meant for a specific target group. As Rehabilitation is about developping competencies (§91) it would make sense to place all these measures under categorie 2 (Training). All this leads to the question if we really need a category 5 and if so, how ? We have suggested that all the specific measures for the disabled could find a place in the other categories, without really jeapordizing the criteria for these categories. However if this is done, the overview of the total efforts for the disabled might get lost. This is easily solved als long as specific measures for the disabled remain visible within the other categories. Category 5 could become a virtual category, which is a summary of specific programs within the other categories. In this way, no information gets lost. It would even be better than now, because under the current guidelines some measures for the disabled are already classified under other categories and therefore category 5 is not a summary of everything that is done for this target group. . Another advantage would be that the relative weight of the other categories within the policies of a country would become more clear. As it is now category 5 distorts this distribution because it contains measures that are of the same type as measures in other categories.If category 5 were only of limited importance all this wouldn't matter much. But certainly in some countries it is a "large" category in term of persons reached and expenditure. We will illustrate this for Belgium.
3
Exercise: re-classification of category 5 for Belgium (expenditures – 2007) What has been done? In term of expenditures category 5 represents a large share. For the whole country it represents 14% of the total active labour market expenditures, but the share is very different in each region: Flanders: 35%; Walloon region: 13%; Brussels: 10%; Federal level: 0,3% A re-allocation of the exependitures in category 5 will therefore have different effect on the other categories in each region. There are some 20 different measures that were given a new place. - special training for the disabled went to category 2 - wage subsidies and adaptations of the workplace and equipment went to category 4 - all that concerns sheltered employment went to category 6 - one measure of support for independent workers went to category 7 The results are visisble in the next graphs which compare the old and the new classification, and in referral also the European active labour market expenditure (EU27, 2006). Flanders 100%
8%
90% 14% 80%
40% 12%
70%
68%
60% 24%
50% 40%
35%
30%
8%
2%
41%
20% 10%
24%
25%
old
new
0%
cat.2
cat.3
cat.4
EU cat.5
cat.6
cat.7
4
Walloon Region 100%
8%
90% 14% 80% 70%
12%
62% 71%
60% 24%
50% 40% 30%
13% 1%
3%
24%
26%
41%
20% 10% 0% old
new cat.2
cat.3
cat.4
EU cat.5
cat.6
cat.7
Brussels capital 100%
8%
90% 14% 80% 70% 60%
74%
81% 24%
50% 40% 30% 20% 10%
41%
4%
1% 15%
16%
0% old
new cat.2
cat.3
cat.4
EU cat.5
cat.6
cat.7
Belgium 100%
8%
90% 14% 80%
38% 49%
12%
70% 60% 50% 40%
14%
24%
23%
25%
25%
25%
old
new
30% 41%
20% 10% 0%
cat.2
cat.3
cat.4
EU cat.5
cat.6
cat.7
5
The main effect is in category 6 (direct job creation) which becomes even more important than it already was. For the whole country it represents now 49% of the ‘active’ expenditures, compared to 38% in the old classification (= + 9%). However, the effect is different according to the region: Flanders (68% versus 40 = + 28%); Walloon region (71% versus 62% = + 9%; Brussels region: 81% versus 74% = + 7%). At the federal level there is not much change (12,6% versus 12,1% = +0.2%). The re-classification reveals a relatively large share of direct job creation in active labour market expenditure. Almost half of the available budget is spent on direct job creation, against a EU27 average of 14% in this category. This also shows clearly how important sheltered employment was in the whole set of measures for the disabled. In fact it represents 78% of all the expenditures in Belgium on disability measures. Training expenditure remains relative low, even after re-classification. For the whole country, a fourth of the active labour market budgets has been spent on training measures, against an average expenditure of 41% in the EU-27. Because of the existence of ‘regional’ wage cost subsidies for the disabled, a significant effect can also been found in cat. 4, the so-called employment incentives.
Remaining issues The large share of category 6 after re-classification reflects the proper character of active labour market policies in Belgium and its regions. The share of direct job creation in active labour market expenditure is relatively high in Belgium, the share of training measures relatively low. However, some argue that large scale subsidized employment programs for the non profit sector, which initiated more than 20 years ago to absord mass unemployment, should no longer be classified as active labour market policies (cat. 6) because they have become quasiregular funding (the only condition to enter such a program is that the person is unemployed for one day). If not taken into account, direct job creation only represents 4% of active labour market expenditure before and 43% after re-classification of category 5 in Flanders (instead of 68% including subsidized non profit schemes). And the Belgian expenditures for direct job creation would amount to 22% of active labour market expenditure before re-classification of category 5 and 33% after re-classification (instead of 49% including subsidized non profit programmes). It is clear that, removing (non-profit related) subsidized job creation from the database would mitigate the share of the category in total active spending. However, it would also reduce the share of active labour market policies in total public spending. Today, for every euro spent on ‘passive’ benefits (cat.8-9) in Belgium, almost 45 eurocent is spent on ‘active’ measures. Erasing several direct job creation programmes out of the database, this share would shrink down to 37 eurocent.
6
