Job creation project for foreign nationals in SMEs achieves limited success

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A Dutch scheme to create jobs for migrant workers in small and medium-sized enterprises (SMEs) completed its second year of operation in 2002. The initiative has achieved its targets - one of the few schemes to increase labour market participation among foreign nationals to do so - and the employers and employees concerned appear satisfied with the results. However, a study published in June 2002 found that the results achieved are in fact less notable. It appears that economic upturn of recent years had a far greater impact on reducing unemployment among migrant workers.

In April 2000, a job creation project for migrant workers in the small and medium-sized enterprises (SMEs) sector was launched, based on an agreement between the Dutch government, the public Employment Service (Arbeidsvoorziening) and employers in the sector represented by the Dutch Federation of Small and Medium-sized Enterprises (Midden- en KleinBedrijf-Nederland, MKB-Nederland). Under the scheme, employers were to register around 30,000 vacancies per year with the Employment Service via MKB-Nederland and its allied sectoral organisations. Within a year's time, the Employment Service was to fill 20,000 of these vacancies with migrant job seekers. Temporary employment agencies became involved in the project at a later date.

After 'teething problems' over the first six months of its operation, the SME project proved to be one of the few relatively successful initiatives aimed at increasing labour market participation among foreign nationals in the Netherlands. The target of finding jobs for 20,000 migrant workers was attained, according to official figures. This aim was broadly achieved during the first and second years: in November 2001, the 50,000th vacancy under the scheme was registered and employment had been found for 30,000 foreign nationals. In addition to this figure, 6,000 Dutch nationals also found work through the scheme. Of all those who found work, three-quarters were employed on the basis of an employment contract of longer than six months and more than 30% now have an open-ended contract with the same employer, and are said to have achieved 'lasting placement'.

The SME project is thus considered a success. Its success is attributed to the method developed within the context of the agreement, involving intensive supervision of unemployed individuals by the local offices of the Employment Service, known as Centres for Work and Income (Centra voor Werk en Inkomen, CWIs). The intensive approach involves employers being notified immediately by the CWIs of foreign nationals available for work. Foreign job-seekers in the major cities are approached and informed regarding the availability of jobs through an information campaign and local meetings. These local meetings have been well attended. During meetings organised in cooperation with organisations representing ethnic minorities, CWI consultants and representatives from the organisations involved speak to individual foreign job seekers. To this end, the CWIs have engaged 250 consultants, who also maintain close contact with employers offering vacancies. This individual approach, and the presence of representatives of the minority groups concerned, appears to be the critical factor in the success of the scheme and will be continued, at the request of the Ministry of Social Affairs, when the project finishes at the end of 2002. Temporary employment agencies play a limited role in terms of placement under the scheme, with several hundred vacancies being filled through their activities.

Critical study

An evaluation study of the SME scheme for migrant workers has been carried out by the Regioplan research agency at the request of the Ministry of Social Affairs, and the final report was published in June 2002 under the title Minorities at work (Minderheden aan het Werk). In the report, the success of the MKB job creation project for foreigners is placed in a broader perspective. It states that the people targeted by the initiative have been without work for less than six months and are therefore easier to place. Whether these foreign nationals found jobs through the job creation project or would have found work through existing channels anyway is therefore debatable.

The study is critical of the official figures on the scheme's achievements and the definition of 'lasting placement' in particular. Although the projects's objective of achieving a 50% lasting placement rate has easily been achieved, with an actual rate of 64% (33% for the same employer), the employment history of the foreign nationals concerned is not taken into account. Of the candidates placed, 57% had in fact also had a job six months prior to placement. Indeed, one of the conditions for participation in the scheme is that the job-seekers concerned have not been unemployed for longer than six months. Nonetheless, the evaluation study underscores this minimal difference in order to determine the project's 'added value'. It is this added value - in comparison with a financial injection by the government of EUR 63 million - that is questioned. Regioplan does, however, state that the project has had value in promotional terms, because foreign nationals have now become more familiar with SMEs, fostering better mutual understanding.

Decreasing unemployment

According to the study, it is not possible to determine the exact impact of the SME job creation project, since it has mainly taken place during a period in which unemployment among foreign nationals decreased significantly. Unemployment among foreign nationals started decreasing in the mid-1990s: while in 1995, a third of the potential Turkish- and Moroccan-national workforce in the Netherlands was unemployed, the figures had dropped to 9% and 13% respectively by the end of the 1990s. Similarly, while the unemployment rate among Surinamese nationals amounted to 20% in 1995, this figure has dropped to 9%. In 2001, the unemployment rate among all (non-western) foreigners in the Netherlands decreased by two percentage points to 9%, while the figure for Dutch nationals remained at 3%. The Central Statistical Office (Centraal Bureau voor de Statistiek, CBS), which compiles these figures, attributes the decrease in unemployment among foreign nationals down to an increased demand for less-skilled labour. Against expectations associated with the development of a 'knowledge economy', it appears that there are still many jobs for less well-educated employees, in which category foreigners make up a major share. They have benefited from this in the past few years, while less-skilled Dutch nationals did so before.

In a study published in 2001 (Meer Werk), the Social and Cultural Planning Agency (Sociaal en Cultureel Planbureau, SCP) explains decreasing unemployment among foreign nationals since the mid-1990s as a consequence of the upward economic cycle. The SCP study states that employment growth among foreign nationals is taking place in a 'flexible' segment of the labour market; the proportion of flexible employment contracts is thus increasing among foreigners. In 2002, around 20% of foreign nationals' employment is on a flexible basis, while this figure is only 7% for Dutch nationals in the workforce. This also places foreign workers in a vulnerable position in the labour market. There are expectations that employment among foreign nationals will be particularly hard hit by an economic downturn. However, it is precisely the favourable stage of the economic cycle that is seen as a good basis for policy initiatives, as illustrated by the MKB job creation project.

Commentary

The MKB job creation project is unique as it supports close involvement with a specific segment of the economy, namely employers in the SMEs sector. Based on the 2000 agreement, employers are linked to policy objectives, from which they certainly benefited given the stage of the economic cycle. Mutual experience has been gained through the employment relationships that have emerged, consequently increasing integration for foreign nationals as well. The effects of an economic downturn remain to be seen. Although job losses are currently rife, SMEs appear unscathed and continue to be characterised by high numbers of vacancies. Whether the employment relationships that have emerged from the scheme will stand the test of time is uncertain. Public policy will now have to serve as the 'watchdog'. Given the recent Flexibility and Security Act (NL9901117F), which stipulates that certain flexible employment relationships must be converted into open-ended contracts at a certain point, employers should be able to build on the limited success of the job creation project to create a more permanent success story. (Marianne Grünell, HSI)