Employment Initiation contract
Started in July 2007, modified and extended in 2010, permanent since April 2013.
It is an ALMP geared towards young job-seekers.
The goal is to reduce the incidence and duration of youth unemployment. By subsidizing the initial year of work, necessary work experience can be gained by the young worker.
It provides work experience and necessary skills to young workers as part of ALMP.
Aim of policy instrument
Main responsible body
ADEM - Agence pour le développement de l'emploi
Funded by the government. Processed/organized by ADEM.
Young unemployed have an increased chance of being hired after gaining work experience that allows for easier (re-)entry on the labour market.
Use of labour market intelligence
Compensation to employers for wage and non-wage costs incurred when hiring of young people. The employment initiation contract (CIE) involves a subsidy covering 50%-65% of the new hire’s base salary for the first 12 months. If a contract extension for an additional 6 months is granted, the subsidy falls to 30%.
Frequency of updates
Adjustments in compensation and duration were made in 2009-2010. Given the pick-up rate by companies, the CIE also started covering qualified young job-seekers.
No regular progress measurement.
Simplification of the hiring of young workers without labour market experience, but with spells of non-employment.
Evidence of effectiveness
The instrument is permanent since 2012. The effectiveness is not directly measured. Pick-up by firms is evaluated in, for example, Efstathiou, Mathä, Veiga, Wintr (2017), BCDL Working Paper No 110. The instrument had an increasing acceptance by companies and was extended to cover qualified young job-seekers too. Given its positive development, the measure has been extended twice to then become a permanent measure.
Engagement of stakeholders
No direct involvement of stakeholders in the process. The government provides funding and the process is governed by ADEM.
In principle the transfer is possible. However, experience in other countries (e.g. France) has shown that the successes in Luxembourg do not seem to imply successes abroad.
It is a permanent programme.