The Choice of Active Labour Market Policies for Young People - What Role for Employers?

Active labour market policies (ALMPs) are widely used to fight youth unemployment but, because of a lack of disaggregated expenditure data, we still know fairly little about the politics surrounding them. This paper investigates the role of business with respect to ALMPs for young people. It draws on varieties of capitalism literature to develop hypotheses concerning employers' preferences for ALMPs in coordinated (CME), liberal (LME) and dependent market economies (DME) which are tested with Eurostat data on ALMP participants under 25 in twelve countries for the period 2004-2014. In addition, process-tracing is used to analyse the adoption of individual ALMPs for young people in the UK and in Germany since 1998. In line with the hypothesised preferences, CMEs are found to have the highest share of young people in ALMPs supporting firm-based training, DMEs rely almost exclusively in wage subsidies and LMEs use a mix of subsidies and institutional training. Preliminary evidence from the two case studies shows that business interests indeed influenced the design of ALMPs for young people albeit in different ways. While German employers organisations successfully engaged in the policy-making process, business groups in the UK showed little initiative. However, the UK government actively sought to engage employers and to design policy's according to employers needs. While the findings do not contradict earlier work which found left groups as the drivers of spending on ALMPs, they suggest that employers' instrumental and structural power can play an important role regarding the choice of ALMPs for young people.