Step 3. Setting the scope of the policy
- Specify target user and worker groups as well as the scope of the services based on the context and objectives
Given the context, it might be relevant for a national authority to target some types of workers/users specifically. In that regard, several specific instruments might help to reach this aim. For example, when the measure is designed to promote employment for specific target groups (i.e. the long-term unemployed), policymakers could only grant the possible tax deductions (for employers and/or users) when some criteria are met (for example, hiring an individual who has been unemployed for more than X months). Likewise, depending on the objectives selected, some types of services will be chosen and others will not.
Step 4. Designing the policy
- Consider a policy mix to ensure that the implemented policy is able to foster both demand and supply sides and ensure that they match
Supporting only the demand side might not be sufficient when policymakers believe that the current formal PHS sector is not mature/professionalised enough to face the increase in demand. In that regard, as illustrated in Part 5, the policy implemented in the countries reviewed very often brings together a number of distinct measures that support both the demand and supply sides of PHS activities.
It is also important to ensure that supply and demand match. When that is not effective (owing to, for example, a lack of accessibility for services providers or burdensome administrative procedures), policymakers consider, for example, digitalising the system or the implementation of vouchers to help the two sides match. It is also important to bear in mind that the existence of intermediaries in the system reduces administrative burden for users but also the perceived difficulties for some people when it comes to hiring somebody to perform domestic work.
- Ensure the price of formal activities is competitive with the price of undeclared activities, guarantee equity of access and ensure long-term policy sustainability
Two crucial aspects must be taken into account when setting the price (or when implementing indirect price reduction through subsidies, etc.):
- First, the price of formal activities must be sufficiently competitive with the price on the undeclared market. More specifically, formal services must be relatively more appealing than undeclared services. This must be ensured by a sufficiently competitive price (which would, in the long run, be higher than the undeclared price, with a view to ensuring sustainability of the measure), competitive and better quality of services and a sufficiently simple system (few administrative burdens, and so on.).
- It is important to take into account the fact that the price/offering subsidy must enable the measure to be sustainable in the long run in terms of public funding. More specifically, revenues for the State (from the measure and including earn-back effects) must compensate for the costs of the measure.
When considering reducing the price of PHS, policymakers could pay specific attention to the equity of the measure. Indeed, the measure should also benefit the people with the lowest incomes, who might also be looking to work more hours and/or spend time with their families and support the education of their children, and so on. In that regard, one sole tax deduction might not be enough to benefit them. To obtain equity, policymakers might complement a possible tax deduction with other measures or think about tax credit possibilities.
- Promote professionalisation and attractiveness of PHS jobs by improving working and employment conditions
Professionalisation of the system is key to its long-term development. PHS workers must receive the necessary training and so on in order to develop the skills needed to perform good quality PHS services.
In general, it is crucial for the development of the sector to ensure that it is attractive. In that regard, workers’ working and employment conditions must be promoted to avoid possible shortages on the supply side.
- Consider triangulation of the system to boost professionalisation
In comparison to a system with direct employment (between users and workers), setting up services agencies/companies can help to match supply and demand, professionalisation and the improvement of working conditions. Indeed, if the system if triangulated, the employment relationship might be more formal and comparable to other forms of employment, which could guarantee access to social protection, facilitate access to training, and so on. What is more, it might reduce the risks of possible fragmentation of the labour market (in which, for example, some workers would work very few hours) that could arise when direct employment is set up. Triangulation might, however, lead to higher costs for the State. In that regard, these costs must be compensated for with an improvement in the balance between supply and demand (for example, by reducing the administrative burden for users).
Step 5. Financing the policy
- Design policy instruments according to available budget
It is important to have a clear view of the total budget of the measure when considering implementing PHS measures. In light of that, policymakers might bear in mind that demand-side supports might be more costly, especially when demand is being subsidised directly. Within demand side supports, it is also important to be aware that the direct cost of tax deduction is less than the direct cost of a subsidy. However, it is also important to remember that the implementation of a PHS policy also generates earn-back effects, with a consequent return on investment.
- Consider all forms of funding with a view to alleviating budget expenditure: co-financing
Several types of “co-financing” should be considered:
- Private companies. Including private organisations in the system might help to reduce functioning costs. As discussed above, PHS improve work-life balance and may lead to an increase in hours worked and workers’ productivity of. In that respect, there is rationale for the private sector to participate in financing the system.
- Other national ministries. Given that PHS measures have broad positive effects (employment, etc.) that could have positive consequences for other national ministries, they might also be willing to invest in the design and implementation of the measure.
- EU funds (the ESF, in particular).
Step 6. Promoting the policy
- Widely promote the implemented measure
In parallel to communication about the undeclared market and its dangers, an efficient communication of the PHS system must be provided, in order to ensure that demand and supply will respond to it.
- Fight social acceptance of the undeclared economy
As discussed above, the price of declared PHS must not be much higher than the price on the undeclared market. Another complementary way to fight the undeclared market is also to communicate (through awareness campaigns) the illegality of hiring somebody without declaring him/her and the social dangers which that might entail. Communication on the rights and duties of both domestic workers and users of the services is also crucial.