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Principles for the Performance Management of Public Employment Services

PFM, Vol. 4 No. 3, (2004)

In the field of public employment services (PES), performance
can be measured primarily in terms of employment outcomes - such as
the employment rate, unemployment rate and earnings - achieved by
the clients of each local employment office or employment service
provider. An increasing number of OECD countries now have
performance management systems in place within the national PES or
under nationwide or localized subcontracting arrangements. The
principal in these systems needs to renew or discontinue contracts with
service providers according to the estimated net impact of their
services, i.e. gross outcomes relative to a \\\"benchmark\\\" or \\\"target\\\" level,
which will vary according to local-labor-market and client-group
characteristics. These benchmarks can be explicitly estimated using
econometric methods, but they can also be generated automatically
under an institutional set-up that ensures that multiple service
providers are handling comparable client groups on equal terms. An
alternative contracting model involves paying providers the actual
value of the summary gross outcome measure but with lump-sum copayments,
which are set to ensure that no large economic rents arise.
As various principles are better understood and operational systems
are developed, explicit performance management arrangements may
increasingly outperform traditional hierarchical management and ad
hoc management-by-objectives approaches.

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