Employment problems change over time. In the aftermath of the oil shocks of the 1970s, unemployment concerned mostly industrial workers who were laid off by restructuring industries write Giuliano Bonoli and Quartier Unil Mouline in The postindustrial employment problem and active labour market policy.
Since the mid-1990s, however, industrial restructuring is less of an issue for European labour markets. The key problem, instead, is a durable imbalance between supply and demand in the low skill segment of the labour market. There are various reasons for this imbalance, but the fact of the matter is that low skill people today must confront an increased penalty, that takes the shape of a higher risk of unemployment and labour market exclusion, or, when in a job, of low earnings and economic insecurity. Low skill people are much less likely to be in employment than their better educated counterparts, they are generally overrepresented among the beneficiaries of social assistance or other long term benefit.
The main policy response adopted in order to deal with this problem has taken the shape of active labour market policy, a notion that encompasses a broad range of rather diverse interventions including vocational training, job subsidies, help in job search, work experience programmes, and sanctions. The objective of this paper is, on the basis of available research, to assess the adequacy and the potential of active labour market policies in dealing with the employment problem described above. It argues that active labour market policies must continue to innovate and improve as the results obtained so far do not seem up to the challenge.