Company Integration Subsidy as a Tool to Integrate Older Unemployed

Within the scope of efforts to raise the retirement age, increasingly greater importance has been awarded in recent years to schemes aimed at reintegrating older unemployed workers in the employment system. For the coming years, no relief can be expected in the employment situation for older people, which translates into a particular challenge for labour market policy. One tool to achieve reintegration is the company integration subsidy granted by the Public Employment Service. The granting of an integration subsidy allows a company to determine at low cost whether or not an applicant eligible for the subsidy is suitable for the job. The positive experience gained by companies from integration subsidies might serve as a signal for others that have so far shied away from employing people who fall under the subsidy scheme. The integration subsidy is an effective labour market policy instrument to achieve integration, particularly for older unemployed where the employment effect is greater than for the young. Nevertheless up to 1999, the subsidy did not adequately take into account the problems of older persons. This group may be hampered by a shortage of information on the subsidy on the one hand, and by inexperience in looking for work and lack of knowledge of the range of employment opportunities on the other hand. Added to this are the restrictions facing older people when it comes to their actual job opportunities: the strict internal separation of labour market segments and health problems close them off from access to a large range of activities. Against this background, the subsidy is utilised, especially for older unemployed, by sectors where labour demand is declining and unemployment is high. There is hardly any refocus on low-unemployment sectors. The current use of the integration subsidy should thus be viewed primarily as a tool to help make structural change more socially compatible.