Paying for results: Contracting out employment services through outcome-based payment schemes in OECD countries

Kristine Langenbucher and Matija Vodopivec

No 267, OECD Social, Employment and Migration Working Papers from OECD Publishing

Abstract: OECD countries deliver publicly-funded employment services through different institutional arrangements. While in most OECD countries the majority of such services are delivered by public employment services, in two in five OECD and EU countries (or regions) they are partly or fully contracted out to external providers, including for-profit and not-for-profit entities. Contracting out employment services to outside providers offers many potential benefits: an increased flexibility to scale capacity in line with changes in unemployment, the possibility of offering services more cost-effectively, the option to better tailor services through the use of specialised service providers and the possibility to offer jobseekers choice of providers. However, achieving these benefits will depend on the actual design and monitoring of the contracting arrangements that are put in place. Focusing on the job brokerage, counselling and case-management employment services typically provided by public agencies, this paper reviews the experiences of OECD countries that have contracted out employment services through outcome-based payment schemes. It highlights the need to carefully consider questions related to the design and implementation of this form of contracting: fostering competition amongst potential providers, setting appropriate minimum service requirements and prices for different client groups, and ensuring the accountability of providers through monitoring and evaluations. These issues are discussed based on country examples, which are also detailed in factsheets contained in the online annex of the paper.

Keywords: active labour market programmes; contracting out; employment services; outcome-based payments; private providers; public employment service; quasi-markets (search for similar items in EconPapers)
JEL-codes: J68 L33 (search for similar items in EconPapers)
Date: 2022-01-18
New Economics Papers: this item is included in nep-lab
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