Activation Requirements

COMPARATIVE ASSESSMENT OF ACTIVATION REQUIREMENTS FOR UNEMPLOYMENT AND MINIMUM INCOME BENEFIT RECIPIENTS

Joanna MROCZKA, joanna.mroczka@oecd.org Daniele PACIFICO, daniele.pacifico@oecd.org

How demanding are activation requirements for benefit recipients?

• What are activity-related eligibility conditions for benefit recipients?

– Mandatory activity-related criteria that individuals receiving unemployment benefits and related income support must fulfill to maintain their benefit eligibility.

• Project Background: – Policy library and quantitative indicator of the strictness of policy rules.

– Developed in 2012 and updated in 2014, 2017, 2020, 2022 and 2024.

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The role of activation requirements Advantages

 Promote labour market participation  Encourage long-term self-sufficiency and financial independence  Contribute to efficient public expenditure and reduce benefit dependency

-

+ Disadvantages

 Potential to create low-wage traps and contribute to skill degradation  Can increase strain on benefit recipients, discourage or delay benefit applications  Harsh sanctions may exacerbate financial hardships For Official Use - À usage officiel

The OECD policy database on activation requirements Database describing the activity-related eligibility conditions for unemployment benefit recipients in a total of 40 EU and OECD countries, includes information on: First-tier unemployment benefits Two-tiers of unemployment assistance and/or minimum income benefit programmes Policy dimensions covered: availability requirements in activation measures, job-search requirements and monitoring procedures, and sanction regimes for non-compliance.

Data Source: National Authorities responsible for the administration of Unemployment Benefits.

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The strictness of activation requirements for benefit recipients Quantitative policy indicator on the strictness of statutory benefit eligibility rules.

Enables accurate international comparisons of complex national rules by scoring eleven eligibility criteria on numerical scales across three sub-indicators.

Sub-indicator

Item

Availability requirements Availability during ALMP participation Demands on occupational mobility Demands on geographical mobility Other valid reasons for refusing job offers Job-search requirements and monitoring procedures Frequency of job-search monitoring Documentation of job-search activities Sanctions Sanctions for voluntary unemployment Sanctions for refusals of suitable job offers Sanctions for repeated refusals of suitable job offers Sanctions for refusals to participate in ALMPs Forrefusals Official Use À usage officiel Sanctions for repeated to- participate in ALMPs

Weight in overall indicator 0.33 0.08 0.08 0.08 0.08 0.33 0.17 0.17 0.33 0.11 0.06 0.06 0.06 0.06

Overall strictness of activation requirements for tier-1 benefits in 2024

More Strict

Note: The figure presents the 2024 strictness scores for OECD countries broken down by sub-indicator.

Source: Strictness of activation requirements for benefit recipients | OECD Data Explorer.

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Strictness of activation requirements for tier-2 programmes compared to tier-1

More Strict

Note: The figure presents the 2024 strictness scores for OECD countries for tier-1 benefits in comparison to tier-2 benefits.

Source: Strictness of activation requirements for benefit recipients | OECD Data Explorer.

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7

Overall strictness of activation requirements for tier-2 benefits in 2024

More Strict

Note: The figure presents the 2024 strictness scores for OECD countries broken down by sub-indicator.

Source: Strictness of activation requirements for benefit recipients | OECD Data Explorer.

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8

Changes in the strictness of activity related eligibility conditions for tier-1 benefits (2022-2024) Relative changes in strictness scores for each sub-item of the strictness indicator for tier-1 unemployment benefits between 2022 and 2024.

A positive change results in a stricter activation requirement, whereas a negative result is more lenient.

Job-search requirements and monitoring procedure

Availability requirement

Sub-indicator

Demands on Demands on occupational geographical mobility mobility

Other valid reasons for refusing job offers

Sanctions

Frequency of job- Documentation of Sanctions for Sanctions search job-search voluntary for refusing monitoring activities unemployment job offers

Sanctions for repeated refusals of job offers

Sanctions for failures to participate in counseling interviews or ALMPs

Sanctions for repeated failures to participate in counseling interviews or ALMPs

Item

Availability during ALMP participation

Finland

0,0

0,0

0,0

0,0

1,0

1,0

-1,0

-0,5

-2,5

-1,0

0,0

Greece

0,0

0,0

0,0

2,0

1,0

1,0

0,0

0,0

4,0

0,0

0,0

Hungary

0,0

0,0

0,0

0,0

1,0

0,0

0,0

0,0

0,0

0,0

0,0

Ireland

0,0

0,0

0,0

0,0

0,0

0,0

0,0

1,0

1,0

0,0

2,5

Lithuania

0,0

1,0

-1,0

0,0

0,0

0,0

0,0

0,0

1,0

0,0

0,0

Note: Only OECD countries which had significant changes to the strictness score for one or more item between the current (2024) and previous data collection (2022) are displayed in the table.

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Changes in the strictness of activity related eligibility conditions for tier-2 benefits (2022-2024) Relative changes in strictness scores for each sub-item of the strictness indicator for tier-2 unemployment benefits between 2022 and 2024.

A positive change results in a stricter activation requirement, whereas a negative result is more lenient.

Job-search requirements and monitoring procedure

Availability requirement

Sub-indicator

Demands on Demands on occupational geographical mobility mobility

Other valid reasons for refusing job offers

Sanctions

Frequency of job- Documentation of Sanctions for Sanctions search job-search voluntary for refusing monitoring activities unemployment job offers

Sanctions for repeated refusals of job offers

Sanctions for failures to participate in counseling interviews or ALMPs

Sanctions for repeated failures to participate in counseling interviews or ALMPs

Item

Availability during ALMP participation

Finland

0,0

0,0

0,0

0,0

1,0

1,0

-1,0

-0,5

-2,5

-1,0

0,0

Greece

0,0

0,0

0,0

2,0

1,0

1,0

0,0

0,0

4,0

0,0

0,0

Hungary

0,0

0,0

0,0

0,0

1,0

0,0

0,0

0,0

0,0

0,0

0,0

Ireland

0,0

0,0

0,0

0,0

0,0

-1,0

0,0

1,0

1,0

0,0

2,5

Italy

1,0

4,0

2,0

0,0

0,0

-2,0

0,0

4,0

0,0

0,0

0,0

Lithuania

0,0

1,0

-1,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

Note: Only OECD countries which had significant changes to the strictness score for one or more item between the current (2024) and previous data collection (2022) are displayed in the table.

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Stricter rules, better outcomes?

Strict availability and job-search requirements strengthen benefit recipients' incentives to find work quickly.

Stricter sanctions can push people into jobs more quickly, but often into less stable or lower-quality employment, increasing the likelihood of repeated claims For Official Use - À usage officiel

How do activation requirements interact with benefit design features?

Countries counterbalance more generous benefits and longer entitlements with stricter penalties for non-compliance and reinforced availability requirements

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Conclusions Differences in how countries balance the various features of activation requirements (availability requirements, job-search requirements and monitoring procedures, and sanctions).

Overall increase in the strictness of activation requirements 2022 - 2024.

The design of activation requirements for benefit recipients is associated with other benefit design features (benefit generosity and maximum benefit duration) and labour market outcomes Further research needed to understand (1) the enforcement mechanisms of activation requirements and (2) the behavioural impacts of activation requirements on work incentives.

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Thank you for your attention!

Contact: Tax-benefit.models@oecd.org