Unemployment: Jobseeker’s agreements unnecessary for all claimants in Germany

Germany’s jobseeker’s agreement policy researchEmployment agency staff have more time to help jobseekers find work, following a study by Professor Gerard van den Berg.

By Michelle Kilfoyle.




Do jobseeker’s agreements really help people get back into work? This was a question puzzling Germany’s Federal Employment Agency (Bundesagentur für Arbeit) when they commissioned Gerard van den Berg, currently Honorary Professor of Economics at the University of Bristol, in 2012 to find answers.

Local employment agency staff, who work directly with jobseekers, had mixed opinions on the agreements. Some said the agreements give claimants the guidance and nudge needed to commit to job-hunting. But others complained they were a waste of time and energy.

In the first evaluation of Germany’s jobseeker’s agreement policy, van den Berg provided crucial evidence to the Agency. His study not only led to a nationwide policy change, but also inspired a new approach to evaluating labour market policies in Germany.

Integration agreements in Germany: how well do they work?

Jobseeker’s agreements are used around the world to help speed up re-employment. They come in various forms, but all set out an unemployment benefit claimant’s rights and obligations in their search for work. These might include the number of jobs they must apply to each week or month, for instance.

They are known as integration agreements (Eingliederungsvereinbarungen) in Germany, where they involve a more formal contract-signing ceremony than in most other countries. Also unlike most other countries, they come with the threat of punishment. If a claimant fails to comply with their duties, their employment agency can withhold their benefits for a week – or longer.

Together with the Federal Employment Agency and the highly respected Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB), van den Berg designed a set of trials to provide hard evidence on how well these contracts work.

No difference for the most employable workers

The research team randomly assigned 5300 jobseekers across the country to one of three different strategies. Either a claimant signed an agreement when they first become unemployed, or for those yet to find work, three or six months later.

This was a bold new approach to policy assessment for Germany. “At the time, other EU countries were more favourable towards using experiments to evaluate labour market policy,” explains van den Berg, who has a history of conducting similar trials in the Netherlands. “One reason the Federal Employment Agency chose to work with me was that they wanted to give this approach a try.”

He analysed the rich data that emerged from the trials in 2015 (published in 2020), whilst Professor of Economics at the University of Bristol.

Integration agreements had, indeed, sped up re-employment for one major group of claimants. “For the low-opportunity groups who had poor hopes of finding work, they really work,” says van den Berg. These were “the people who have lower skills, or skills that aren’t in demand, or who are stigmatised for whatever reason.”

Low-opportunity groups were 18% more likely to find work within a year if they signed an agreement either immediately or within three months of unemployment. This was compared with claimants (with equally poor hopes) who signed one at six months.

But integration agreements made no difference to jobseekers with strong hopes of finding work. “For people who are sufficiently motivated or are in high demand, it seems they don’t need them.”

Ending compulsory integration agreements for all

The Federal Employment Agency acted swiftly on the study’s results, introducing a nationwide policy change. As of December 2015, a caseworker can choose whether to use an integration agreement or not, provided the claimant has good job-finding prospects. Before this point, they had been mandatory for all claimants.

“The Agency were delighted to learn that they could make big savings in time,” says van den Berg. Although it only takes around 15 minutes to sign an agreement, over 1 million people with strong job-seeking prospects become unemployed every year. “The savings across the organisation and for each caseworker are considerable.”

An IAB survey of caseworkers in 2016 revealed that around 80% of those using the new discretion put their newfound time towards client consultations. Two-thirds said they also used it to help clients search for work more intensively.

Furthermore, two-thirds reported that they now had more trusting relationships with their clients. “Caseworkers had complained that integration agreements create a bad atmosphere,” van den Berg explains.

He is equally delighted to have helped millions of jobseekers: “It gave me a very good feeling. To do innovative research and have a major positive contribution to how things work in society – this doesn’t happen every day.”

Randomised controlled trials (RCTs) to assess policy

The IAB, an office of the Federal Employment Agency, were impressed by the experimental evaluation. So much so that the study has led to an ongoing research partnership with van den Berg to investigate related policies using randomised controlled trials (RCTs).

As used in the integration agreement study, RCTs test out an intervention on a randomly selected group of people. The outcomes are then compared with those for people who were not subject to the measure.

IAB’s Director at the time, Joachim Möller, describes their experience with the integration agreement experiment as “excellent” before confirming: “our Institute is strongly supporting the usage of randomised controlled trials for evidence-based policymaking.”

Successor experiments have followed, notably, an ongoing study to assess integration agreements’ effects on job-finding for the very long-term unemployed.

See more from Professor Gerard J van den Berg including recent publications.

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