The Policy Brief summarizes the latest evidence on active labour market policy (ALMP) spending and Employment Protection Legislation across the OECD countries. It then summarizes theoretical findings from Tepe & Vanhuysse 2013 on the diverging roles of left parties and trade unions in determining ALMP spending. It argues that unions but not left-wing parties today increasingly take into account the re-employability worries of their members and have therefore adopted ALMPs as a second-best priority. Where high levels of employment protection have not been achieved (the first-best goal), more powerful unions will promote activation spending as an alternative way to offer their members some labour market help. Empirically, left party power has no effect on ALMP spending, whereas more powerful unions increase ALMP spending, specifically on programmes likely to help their members. Moreover, these strategies are context-dependent: they are observed especially in labour markets where jobs are not yet well protected.

Vanhuysse, Pieter (2014), ‘Workers’ Worries and Labor Market Policies,’ Vienna: European Centre Policy Brief, June, 11 pp. Available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2444619