Job Creation Measures ("Arbeitsbeschaffungsmaßnahme", ABM) in the New German Federal States: Insufficiently Effective

Within the framework of an active labour market policy in the new federal states, a lot of money is invested in job creation measures (ABM) as well as in further training and retraining ("Fortbildung und Umschulung", FuU). Compared with ABM, FuU provides better opportunities for its participants - each in relation to unemployed persons who did not participate in the respective programmes - when it comes to reintegrating into working life. These are the findings of two studies carried out by the Centre for European Economic Research (ZEW) in Mannheim. Against the backdrop of this result, it therefore seems advisable to either relocate the funds which are spent on an active labour market policy in the new federal states in favour of FuU and at the expense of ABM, or to make ABM more effective.

In the periods from 1990 to 1992 and 1992 to 1994, ABM only proved successful in few cases regarding a fast reintegration into a stable and regular employment situation of its participants. Compared to unemployed persons who had not held any ABM-position before, participants in the ABM-programme even had more difficulties in finding a job after finishing the programme. The main reason for this is the low degree of further training of ABM-participants. However, lack of qualification is one of the main reasons for unemployment. In contrast to ABM, FuU mainly focuses on further training. Over the past few years, the quality of FuU was improved as can be seen in the period between 1992 and 1994, in which women taking part in the FuU programme, and men attending external FuU-programmes, were more likely to reintegrate into stable employment than the comparison group of unemployed persons. Within in the framework of an active labour market policy in the new federal states, ABM and FuU are made use of on a large scale. For instance, last year an average of 200,000 persons participated in such programmes. The net costs per participant amount to about 20,000 German Marks and in this way exceed the costs for benefits per unemployed person by around 50 per cent. The net costs for FuU amount to 11,000 German Marks per person.

Contact

Katrin Voss, E-mail: voss@zew.de