Towards a Quasi-market in Reintegration Services: First Assessment of the Dutch Experience

Abstract

The Netherlands has recently introduced market forces into the labour market reintegration services sector. In this paper, we examine the extent to which the emerging market-oriented Dutch reintegration services sector meets the conditions, established by Le Grand and Bartlett (1993), for the efficient functioning of quasi-markets. Le Grand and Bartlett define a ‘quasi-market’ as a market where independent agents compete with one another for custom from purchasers, but where purchasing power comes not directly from consumers but from the state. This study makes a first assessment of the Dutch experience with a market-oriented reintegration services sector for the period 2000-2002. The paper concludes that the key strength of the new Dutch reintegration services market lies in the way the market has been structured and the mechanisms by which providers and purchasers (on behalf of the clients) have been motivated to act in the best interests of clients. Information flow and transaction cost outcomes, two further key dimensions of an efficient quasi-market, are moving in a positive direction. There are, however, indications of risk-averse behaviour by providers. The question is how this may be tackled in further refinements to the tendering process.

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