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Employment Initiation contract

Policy Instrument

Employment Initiation contract

Berufsförderungsvertrag / CONTRAT D’APPUI-EMPLOI (CAE)
Luxembourg

Description

Timespan

Started in July 2007, modified and extended in 2010, permanent since April 2013.

Stage

Fully operational

Foundations

Policy area

It is an ALMP geared towards young job-seekers.

Policy goal

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.

Mismatch

Part of broader programme, yet with explicit focus

It provides work experience and necessary skills to young workers as part of ALMP.

Aim of policy instrument

Administrative level

National

Main responsible body

ADEM - Agence pour le développement de l'emploi

Stakeholders

Funded by the government. Processed/organized by ADEM.

Funding

Ministry Budget

Intended beneficiaries

Young unemployed have an increased chance of being hired after gaining work experience that allows for easier (re-)entry on the labour market.

Processes

Use of labour market intelligence

Financial schemes

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

Infrequently.

Development

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.

Monitoring

No regular progress measurement.

Innovativeness

Not innovative

Simplification of the hiring of young workers without labour market experience, but with spells of non-employment.

Sustainability

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.

Transferability

Not easily transferable

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.

Sustainability

It is a permanent programme.