innovation

Not a job plan but an innovation plan

Minister Ascher wants to make 600 million available for a job plan. However, studies of previous job plans show that such plans hardly work. Supporting innovative developments appears to work well.

Job plan
Job plans arise every time with rising unemployment, which prompt politicians to show decisiveness. A kind of indulgence for failing financial economic policy. But research into the many plans, both at a national and local level, shows that it doesn’t help much.

In 2012 Arnhem started with a job plan to get the long-term unemployed to work. In four years, Arnhem wants to help 1100 people with social assistance benefits to find a job. After a full year of hard work, Arnhem has 366 more people entitled to social assistance than at the start of the project. The number of jobs realized could not be determined.
In Drenthe, the 2000 job plan is active by the province. Ecorys and Professor Paul Elhorst of the University of Groningen have made an interim evaluation of the job plan.

“The researchers conclude that the yield of the instrument is low. In an optimally functioning labor market, there is a strong elastic demand for labor. However, all kinds of market imperfections occur, which reduces the effect of the wage subsidy. Practical research into comparable measures shows that the share of additionally created jobs fluctuates roughly around 25%, in this case it is not about 2,000 but a maximum of 500. This is partly due to dead weight loss and displacement effects. an existing scheme. Moreover, this concerns temporary jobs because the subsidy ends after one year. ”

Innovation
The same research also looked at the effect of subsidies on innovative developments. In particular, projects that are still in a preliminary phase appear to be developing well due to government support. Without additional support, the projects would either be shelved or phased over a longer period of time. Support should therefore mainly focus on innovations that are still far from the market, but have good potential. Due to the often still premature phase of the project, there is little to no funding available from private financial institutions.

In recent years, there has been a lack of effective innovation policy in the Netherlands. The intentions under Balkenende are stranded in good intentions. This is partly due to the lack of targeted government policy related to the future development of a certain sector. The policy is also often very snap because employers [organizations] have different wishes depending on economic development. And so it happens with job plans. As soon as the need arises, the magic word is taken off the shelf again. But in fact it is already too late and there is no question of any structurally oriented policy.

Source: Ecorys. Employment effects economic policy 2012