Introduction

At first sight, active labour market policies (ALMPs) are an ideal instrument to promote an inclusive growth strategy. They promote labour market participation and, as a result, access to incomes for disadvantaged people. In this way they allow them to make the most of their potential, to participate to economic growth. ALMPs consist of a broad range of tools, including training, work experience programmes, wage subsidies, job search assistance, and so forth (European Commission, 2016). If used appropriately, and if of sufficient quality, they can help jobless individuals to re-enter the labour market. It is a typical example of a productive or investment oriented social policy, which entails helping disadvantaged people not by redistribution but by investing in their human capital and by facilitating their participation in productive processes.

ALMPs, however, do not exist in a vacuum. They operate within specific labour markets, and their overall impact on social stratification will depend on the characteristics of the labour market in which they operate. More precisely, if ALMPs operate in balanced labour markets, where structural unemployment is low, then it is likely that they will serve well the objectives of an inclusive growth strategy. The few excluded individuals can be effectively helped to get a place in productive processes and, as a result, improve their living conditions and contribute to wealth creation.

In contrast, if ALMPs operate in unbalanced labour markets, where labour supply vastly exceeds demand and where structural unemployment is high, then the outcome may be different. Unbalanced labour markets produce low quality employment, with wages that may be insufficient to afford above poverty living conditions to even small households. Even when successful in putting jobless people back into the labour market, ALMPs may well be powerless in helping them out of poverty. In addition, the low quality employment produced by unbalanced labour markets tends to be unstable, and many individual trajectories are characterised by frequent moves between social benefits and precarious employment. ALMPs, in such a context, can at best help manage labour market exclusion. Whether they contribute to an inclusive growth strategy, however, remains doubtful.

In this chapter I argue that the conditions described here prevail in the low skill segment of the labour market in a majority of OECD countries. Globalisation, technological progress and mass migration have concurred in creating this situation.