Paying for results
Contracting out employment services through outcome-based payment schemes in OECD
countries
OECD countries deliver publicly-funded employment services through different institutional
arrangements. While in most OECD countries the majority of such services are delivered
by public employment services, in two in five OECD and EU countries (or regions) they
are partly or fully contracted out to external providers, including for-profit and
not-for-profit entities. Contracting out employment services to outside providers
offers many potential benefits: an increased flexibility to scale capacity in line
with changes in unemployment, the possibility of offering services more cost-effectively,
the option to better tailor services through the use of specialised service providers
and the possibility to offer jobseekers choice of providers. However, achieving these
benefits will depend on the actual design and monitoring of the contracting arrangements
that are put in place. Focusing on the job brokerage, counselling and case-management
employment services typically provided by public agencies, this paper reviews the
experiences of OECD countries that have contracted out employment services through
outcome-based payment schemes. It highlights the need to carefully consider questions
related to the design and implementation of this form of contracting: fostering competition
amongst potential providers, setting appropriate minimum service requirements and
prices for different client groups, and ensuring the accountability of providers through
monitoring and evaluations. These issues are discussed based on country examples,
which are also detailed in factsheets contained in the online annex of the paper.
Published on January 18, 2022
In series:OECD Social, Employment and Migration Working Papersview more titles