Employees of the public employment services (PES) are street-level bureaucrats who shape activation policy on the ground. This paper examines how PES staff use enhanced discretion in an innovation project carried out by the German Federal Employment Agency. Applying a bottom-up perspective, we reconstruct PES employees’ logic of action and the dilemmas they face in improving counselling and placement services. According to our findings, placement staff use enhanced discretion to promote more individualised support and an adequate matching of jobseekers and employers. The use of discretion is framed by organisational norms and reward mechanisms and by the current labour market situation. Our analyses are based on qualitative interviews and group discussions with placement staff.

This article contributes to the literature on engaging employers in activation policies. It focuses on a specific policy aimed at promoting the labour-market participation of people with disabilities. Unlike many activation policies, this policy recognises that the engagement of employers and the human resource management practices in their organisations are crucial factors for the policy’s success. The article reports on a study among employers participating in this policy. It focuses on the challenges employers experience in placing people with disabilities in their organisations, and on the public support they expect in dealing with these challenges. The article concludes that as promoting the labour-market participation of groups remote from the labour market requires social policy interventions as well as interventions in organisational human resource management, it poses challenges for policy makers, agencies providing employment services, and employers and their organisations.