The model of Public Employment Services that developed in the industrial economies post WWI and WWII – single operators of a single national employment service – is no longer in use anywhere in the world. All over the globe, this old model has given way to a transformation of Public Employment Services using new forms of partnerships with a range of private and non-profit actors, creating a diverse and ever-growing market of employment and labor intermediation services. This blog post examines how the public, private, and non-profit sectors have joined in partnerships to change the way labor intermediation – the connection of jobseekers to jobs – happens in a more interconnected, more global, and more mobile world economy.

The evolution from a single national PES to diverse forms of partnerships

We can trace the experimentation of PES with public-private partnerships to many new economic, labor market, and institutional realities, beginning in the late 1970s and 80s.

Stage 1

The diverse demands on PES required a greater variety of services, particularly in new and emerging sectors and with youth. PES needed a greater range of placement and training expertise at very variable levels of scale – e.g., youth just leaving school, support to working mothers, training to adapt to technology, or workplace placement of persons with disabilities. These many connections, involving diverse barriers to employment, could simply not be met with a single standardized model fitting industrial jobs for unemployed workers.

Stage 2

Old legal restrictions on the private provision of employment services were falling away, particularly after the International Labor Office (ILO) revised its convention banning private employment agencies from charging fees. The growing need for diverse sets of employment services spurred the increase of the number of organizations who could provide these employment services.  

Stage 3

The 100% public financing model had become unsustainable, even in wealthy economies, and lost credibility to the private sector. This was especially true in developing countries, where public services were often limited to the capital and housed in rundown buildings, offering few job listings. Revitalizing Public Employment Services required new strategies involving collaboration with employers and private or non-profit service providers, both in developed and developing economies. 

Towards an expanding public-private-non-profit market 

“Many OECD countries have a long tradition of delivering employment services through grants or contracts to other public and non-profit institutions, with a more recent expansion to contracting to for-profit organizations.”            (Powers, 2017) 

This includes grants and contracting with various types of training institutions to carry out active labor market policies or providers of specialized services, for example, for vocational rehabilitation.  

If we talk about partnerships directly with Public Employment Services to expand their reach it is best to talk about a spectrum of models, from the single public service model with no partnerships to a fully privatized model with no public service offices. Even these direct forms are a limiting concept, as the next section will discuss, because each of these models also interacts in an expanding public-private-non-profit market.  

Public-Private Partnership models in PES

Public-private-non-profit partnerships model in PES

Model A: Fully Publicly Financed and Executed PES 

Indeed, nowadays it is hard to identify a public employment service that does no contracting out to either public or private providers, whose employees are public employees, and which has no associated services conducted by other private or non-profit entities in coordination with the PES.  

However, Japan’s Hello Work program, is managed entirely by the Japanese government (Ministry of Health, Labour and Welfare). The program is designed to support job seekers and employers without any coordination or outsourcing to private or non-profit organizations, ensuring that all aspects of the employment services are conducted within the public sector.  

Model B: National Public Service Operating with or via Networks of Public and Non-Profit Providers 

In the developing world, this is the dominant model – public service and public finance, supported by collaborations with private and public providers. These partnerships extend the reach of all involved parties but with this model, the PES can retain its public service brand while accessing greater resources in non-government and private providers. The arrangement can have both formal elements – with some parts of the service contracted out – and informal cooperation agreements, particularly at a regional level. 

Informal collaboration could be job listings for private providers on government employment portals. More formal exercises may include consultative roles for the private sector to guide the work of the PES, joint access for job registry and placement, subcontracting placements in specialist professions, or full contracting out of specific services to local providers. 

Model C: Formal Association of Public and Private Providers 

This model represents the midpoint between a wholly public or private service – the collaboration or subcontract is fully integrated with the external provider. These structures will benefit from a management board with members drawn from both sides, to ensure balanced policy decisions. 

Most PESs using this model are in a constant state of evolution and are also experimenting with new ways to better deliver their services. The partnership often started as a loose collaboration that evolved into something more formal. Depending on the country’s pressure points, the PES may for example allocate areas of high unemployment to external partners. When considering how to get people back to work, they may decide there is a clear distinction between the requirements of the short-term and long-term unemployed.  A smart choice may be to contract one group to an external partner while the other is handled centrally by the PES. 

Model D: Autonomous Service with Tripartite Management 

A fully public service can opt to switch to independent management via a tripartite partnership where key decisions are shared.  Some PES have attempted this and found that autonomy is primarily financial, with little deviation from the national employment service. 

Model E: Completely Privatized Public Employment Service 

Australia is currently the only example of a fully privatized public employment service, with its network 

contracting out to over 310 private, community-based, and public organizations. The unemployed groups each contractor handles are a mix of short and long-term, simple, and complex individuals, but the partner is paid according to the difficulty of each placement. Performance is closely monitored and rated, thus affecting future contracting potential. 

Choosing the right model 

Each model requires careful consideration, but the future clearly lies in a national intermediation network with interlocking public, private, and non-profit providers. The right model for each PES will depend greatly on the current service, available providers, the skills deficit, and specific pressure points in the local economy.  

With more than 25 years of experience working with PESs all over the world, WCC Group stands at the forefront of providing tailored software solutions that empower organizations like yours.  Schedule a short meeting with our solution expert and let’s discuss how we can further tailor our solutions to help you achieve your strategic objectives. 

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