Design Choices in Market Competition for Employment Services for the Long-Term Unemployed

Most Western countries have a long tradition of employment service provision by public bodies and non-profit organisations, but not by for-profit organisations. The creation of a quasi-market arrangement is not a simple choice for government. This paper underscores the difficulties and discusses design options. It calls for a complex balancing act between regulation and the creation of room for market competition, between old and new instruments and procedures, and between efficiency and equity. It identifies as two key issues the need to actively create sufficient room for market competition, and the need for "positive creaming" which encourages providers to concentrate their efforts on the most disadvantaged target groups. The paper starts by stating the principles and preconditions for market competition, with a focus on possible quasi-market arrangements for strengthening service provision for the long-term unemployed in Flanders. It sets out four models for contracting with ...