The Public Employment Service: A Survey of Cost-Benefit Analysis and Productive Efficiency Analysis Studies

Public employment services’ operations will be massively and profoundly influenced by changes on both the supply and the demand side of the labour market and by such structural impediments as, for example, mismatch between labour demand and supply and low participation rates among vulnerable disadvantaged groups. Rapid and targeted mediation is considered to remain essential for PESs but it has to be combined with attention to provide transitions for individuals facing redundancy and career building. PESs should help job seekers adopt long-term career perspectives, stimulate them to enhance their competencies, give career guidance, give workers support to make smooth career transitions, as well as working with employers to ensure they meet their requirements and encourage and support them to provide career opportunities to more disadvantaged individuals. PESs have to develop their organisation and methods to efficiently and effectively respond to the changing needs in society and the labour market. Far-reaching changes in the tasks, organisational structures, and methods in PESs present corporate governance with great challenges—exacerbated by reduced budgetary resources. The pathway of change that has to be managed will be dotted with demands on decision-makers to choose between alternative courses of action. One of the main thrusts of this paper is to describe cost-benefit analysis, CBA, as a tool to assist decision-makers in choosing. CBA is a tool that judges alternatives in terms of their efficiency as regards the realisation of social objectives, which means that CBA allows policy makers to judge alternatives by their allocative efficiency. This requires taking into account the costs and benefits of the alternatives under consideration. The other main subject of the paper is about measuring productive efficiency which occurs when at a given cost the highest possible output of one service is produced, given the production level of other services. Such measurements make it possible to compare the productive efficiency of individual employment offices or to make comparisons in that respect between PESs in different countries. Therefore, measurements of productive efficiency can be the basis of actions to improve production and managerial processes. Examples of cost-benefit analyses of PES projects and productive efficiency analyses of PESs are given in the paper. The remainder of this paper is organised as follows: Section 1 opens with a brief sketch of