The probability of obtaining subsidised employment among eligible persons is very low. It is close to 3% for persons who have been unemployed for at least 12 months and even lower for youth and older unemployed persons. For persons with disabilities, the likelihood is 6.6%.
The evaluation of employment subsidies’ effectiveness conducted in this review relies on comparing the labour market outcomes of participants (the intervention group) with similar eligible unemployed persons who did not receive employment subsidies (the comparison group). Two sets of estimations are implemented because the time that must be spent in unemployment to become eligible for employment subsidies differs for certain groups: some individuals (including young people) must wait just six months to become eligible while others must wait 12 months from the start of the unemployment spell. The second group is likely to capture the LTU, including those unemployed persons who have not been treated as a priority by caseworkers and those who have spent time participating in other ALMPs. It should also be noted that some groups – including persons with disabilities – become eligible for employment subsidies immediately after registering. In any case, the intervention group comprises those persons who received the employment subsidy within 6 months of becoming eligible for participation in the programme. To increase the comparability of the intervention and comparison groups, the estimations include a rich set of controls for personal characteristics, household composition, and location.
Participation in the programme is associated with a higher probability of employment, which declines quickly over time. Two years after the point at which they become eligible (six months of unemployment), programme participants are 16 percentage points more likely than similar unemployed individuals in the control group to be employed. The estimated effects are large but are not very different from those found in similar settings in other countries and when similar econometric techniques are applied. They reflect to a great extent the fact that many of these persons still hold a subsidised job two or even three years after becoming unemployed.
When individuals who remain in (or return to) subsidised jobs are excluded from the analysis, the estimated effect of the programme is smaller (i.e. ten percentage points at 24 months after they become eligible for person who become eligible after six months of unemployment) but remains positive and statistically significant up to four years after the moment when the individual became eligible. Separate analyses conducted for the different target groups show that when only non-subsidised jobs are considered, the estimated effect of the programme is positive and significant up to four years after the clock start for youth and for older unemployed persons (to a lesser extent).
However, no effect is found for persons with disabilities. This result seems in line with anecdotal evidence that employers tend to let persons with disabilities go after the end of the subsidy. The short-lived increase in the maximum duration of the subsidy for persons with disabilities in 2014 led to some increase in the average duration of the subsidy for this group, but was not correlated with improved labour market outcomes. More in-depth analysis would be required to fully understand the absence of an effect for persons with disabilities, but this is not possible given the small number of persons affected by the change. However, the lack of any correlation between the longer subsidy duration and improved labour market outcomes suggests that such programmes may have limited effectiveness for this group as a whole. One option for consideration would be to differentiate the treatment of persons with disabilities according to their assessed degree of disability and barriers to work. For those with severe disabilities, a longer subsidy duration could be considered, while for those with milder disabilities, a shorter subsidy duration could be coupled with strong social services. Moreover, the level of the subsidy could vary according to the unemployed person’s assessed disability and could also change over time.