Multinational Mass Producers and the Public Placement Service

Abstract

Multinational parts manufacturers and assembly plants are important actors in the Hungarian labour market. An increasing number of them are unable to find enough semi-skilled workers, although a significant proportion of unemployment benefit recipients is composed of the low-qualified, long-term unemployed. The study explores the reasons why matching the unemployed and employers is so difficult, and discusses the role of public placement service in mediation between them. In terms of the principal-agent theory the study analyses the consequences of the situation in which the public employment service acts in two different capacities: it offers services to companies and the unemployed, but it also acts as an authority over them. The study argues that the efficiency of the public placement service can be increased by refining mediation procedures, rather than by breaking up its current organisation, according to the two functions. Finally, two novel labour market programmes will be discussed. It will be shown that they may improve matching the unemployed and employers, and reduce the risk of their opportunist behaviour.