HORIZON EUROPE┋Strengthen economic fairness and resilience of active labour market policies and address high unemployment

Expected Outcome

Projects should contribute to all of the following expected outcomes:

• Improved understanding of macro effects of labour market policies on general equilibrium including displacement and substitution effects;
• Improved skills strategies and skill development, also at sectoral level, during periods of economic downturn benefitting from lower opportunity costs;
• Improving policy design to increase labour market participation and employment in a context of high unemployment and high number of job vacancies, notably in low and high skilled jobs.

Scope

Active labour market policies are widely used by European countries to improve the functioning of their labour markets by addressing skill mismatches, labour market segmentation, and by promoting the integration in the labour market of those facing difficulties in accessing it. Policies aimed at skill development could be effective in periods of low economic activity at the macroeconomic level, given that the opportunity cost of training programmes is lower in times of recession. These policies could facilitate the reallocation of labour, prepare the ground for a fair economic recovery, and facilitate transitions towards the green and digital sectors.

However, there have been studies post the 2007 recession arguing that training programmes have so far had only a modest effect in generating post-programme employment. Furthermore, researchers found that responses of adult learning and training to the business cycle are different for employed and not employed workers, with the participation of the latter group diminishing in times of economic downturn due to credit constraints preventing them from investing in education.

In light of such studies, more research is needed to survey the different types of active labour market policies enacted by the Member States, especially in the area of skills development during economic downturns, and their effects on people facing economic challenges, e.g. people at risk of poverty or workers whose job is at risk of automation or at risk of transformation due to transition to a decarbonised economy. Proposals should focus on the ways in which active labour market policies can be strengthened to provide economic fairness and resilience.

Research activities may focus on the response of public authorities to the COVID-19 crisis and estimate their effectiveness including displacement and substitution effects. Alternatively, research could also focus on the participation of persons coming from a vulnerable socio-economic background or from regions with a high degree of unemployment (e.g. people at risk of poverty, people coming from rural communities) to active labour market policies with an aim to mapping barriers and policy responses to increase their participation. Research could also focus on the impact of active labour market policies while incorporating a gender dimension. Another research avenue could be analysing the role of active labour market policies within broader exercises to rethink employment and income protection with an aim of underpinning synergies that enhance their effect, e.g. the interplay between active labour market policies and housing allowances in the housing first approach.

Where relevant, activities should build upon existing research, draw lessons from recent policy interventions in a contextual and transdisciplinary manner and propose adjustment measures, or test them through social innovation experiments. Clustering and cooperation with other selected projects under this call and other relevant projects are strongly encouraged.