Labour Market Policies, Poverty and Insecurity (Draft)

The paper sets out to evaluate the performance in terms of poverty alleviation of conventional labour market and social policies and arrangements in the era of globalised labour markets. To this end, it develops a framework based on five policy evaluation principles, centred on the normative notion of social justice, whereby the expansion of full freedom requires basic economic security for all.

It concludes that most of the labour market interventions reviewed have suffered from common failures such as lack of transparency and accountability, high costs, chronic inefficiency in terms of misused resources and ineffective targeting, thus failing most of the time to reach the poorest and to reduce inequalities in labour markets. They rarely meet any of the policy evaluation principles proposed in the paper. Yet, countries are still encouraged to use these conventional policies, which were developed in the context of industrialised countries.

The message is, thus, that not too much can be expected from labour market policies. These policies may help in making labour markets function better but their contribution towards overcoming poverty and economic insecurity can only be limited. Labour markets are part of the broader economic system: policymakers should look to social policies in order to deal with poverty and the misdistribution of income rather than expect labour markets to deal with these fundamental features of a market economy.

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