Employment Policies and Labor Market Intermediation
Employment Policy and Measures to Promote Employment
This document outlines the mechanisms used to bring together labor supply and demand, as managed by employment policies. It is important to clarify the methodology: in the context of work, “supply” refers to the employer (businessman) and “demand” refers to the employee (job seeker). These terms are not equivalent to their use in general economics.
European Union Guidelines on Employment Policy
The lines of employment policy have historically been heavily influenced by the European Union. Therefore, individual states’ independent policies have become less prominent.
The Lisbon European Council (2000) established crucial guidelines:
- Fight for equality between men and women.
- Employment policies should be accompanied by the promotion of social services, such as childcare and other support services.
- Attention should be given to unemployed groups and those with particular difficulties entering the labor market (e.g., individuals with disabilities).
- Emphasis on vocational training and combating illiteracy. There are three steps: education (for minors), workstation training, and occupational training (for the unemployed).
Public Employment Services
State Level
- The Public Employment Service (SPEE), formerly known as INEM, is an autonomous body of the General Administration. It is a public administration under the Ministry of Labor and acts as an instrumental body.
- It manages unemployment benefits and coordinates public employment services across different Autonomous Communities. In 1994, Spain had a high unemployment rate. Two mechanisms were implemented to address this: reforming the INEM and allowing private initiative intervention in the labor market. This involved creating non-profit employment agencies.
Autonomous Community Level
- The SOC (Catalan Occupation Service) is organized and operates through labor offices (OTG).
- It is a body attached to the Department of Labor of the Generalitat de Catalunya.
Labor Market Intermediation
Labor market intermediation involves connecting labor supply and demand. The goal is for job seekers and employers to connect through this system. Intermediaries only facilitate contact between the worker and the employer; they do not employ the worker directly.
Mediation (public or private) occurs when the job seeker and the employer are brought together.
The aim is to reduce the number of unemployed individuals.
Temporary employment agencies (ETT) recruit and assign workers employed by them. However, in this context, we are discussing intermediaries who do not hire the worker but merely facilitate contact between the worker and the employer.
Private Involvement in Placement: Non-Profit Placement Agencies
- Non-profit recruitment agencies are regulated under Article 16.2 of the Workers’ Statute (ET) and Royal Decree 735/1995 of May 5 (development).
- Administrative approval is not required for their creation. They must register with the State Public Employment Service through an administrative procedure that concludes with approval or rejection.
- If approved, a collaboration agreement is signed between the Public Employment Service and the Placement Agency.
- They can be public or private, but are generally private.
- They cannot operate for profit (they cannot generate profits like a commercial enterprise but can only cover salary and operational costs).
- They must uphold the principle of equal access to employment.
- They differ from corporate recruiters.
Agency Obligations:
- Communicate all contracts agreed upon with companies.
- Communicate rejected job offers.
- Temporary agencies must demonstrate that they are current with their obligations and must deposit a security equivalent to 25% of the minimum wage to cover potential insolvency.
Unions often establish foundations dedicated to labor intermediation. These non-profit organizations can only charge employers and employees for expenses incurred during their activities. They cannot generate profits like a regular business, as per Article 16.2 of the ET, which addresses traditionally discriminated groups.
Difference Between Recruitment Companies and Placement Agencies
Recruitment companies do not need to register or seek authorization from labor authorities. They are not subject to the non-profit restriction and can operate for profit. Recruitment companies can specialize in areas such as headhunting.