Tackling long-term unemployment in the EU

Written by Verena Kern

With the onset of the crisis, unemployment rates have increased sharply throughout Europe and the trend seemed set to continue. However in March 2015, the European Commission reported that, for the first time since 2009, the LTU rate fell slightly. Currently, long-term unemployment (LTU) stands at 4,9% for the EU. LTU remains highest in Greece, Spain, Croatia and Slovakia and lowest in Austria, Sweden and Finland.

Anyone who is without a job for more than 12 months is considered to be long-term unemployed. Affected are people in all age groups, but older workers have the most difficulty to return to the labour market. The nature of one’s previous job also seems to impact chances for re-employment. Common obstacles on the employer’s side are high labour costs, rigid employment protection or lack of incentives. For those affected, being away from the labour market for a long time can have devastating effects, such as social isolation and exclusion, stigmatisation, skills obsolescence and negative effects on family life, health and well-being.

Current national strategies to tackle LTU consist of targeted training approaches and wage subsidies, as well as reduced social security contributions for employers. Moreover, some countries have also made changes to their unemployment benefit systems by linking receipt of benefits to participation in active job seeking.

The European Commission launched a public consultation on tackling LTU on 24 February 2015. It seeks views on how to improve services to support long-term unemployed in finding their way back into employment. In recent years, there has already been an exchange of best practice by national public employment services on approaches for sustainable activation of long-term unemployed persons. Commissioner Thyssen announced that the European Commission will present an initiative aimed at the integration and employability of long-term unemployed before summer 2015. Already on-going is the EU Programme for Social Change and Innovation, a financing instrument which runs from 2014 to 2020, with a budget of €9 billion, and which has declared combating LTU as one of the objectives. The European Parliament has repeatedly expressed its concern over the rise of LTU in EU Member States in several resolutions.

This keysource is a collection of research published by the European Commission, international organizations and think tanks as well as a compilation of scientific articles and statistics on LTU.

European Commission

Long-term unemployment – EEO Review 2012. European Commission, 2012, 56 p.
This detailed report describes recent trends in LTU in Europe, shows the incidence of LTU across different age groups and describes factors driving transitions into and out of LTU. Finally, the report looks into national policies to prevent and tackle structural unemployment and LTU.

In 2012, the European Commission organised a thematic review seminar under the mutual learning programme on tackling LTU. Presentations and a final report as well as thematic discussion papers are available on the website of DG Employment, Social Affairs and Inclusion. Main points of discussion were reforms of unemployment benefit systems and the role of active labour market programmes in reducing LTU. Participants concluded that emphasis needs to be placed on individualised and well-targeted measures both at supply and demand side.

Another event on taking actions on LTU organised by the European Economic and Social Committee took place on 11 March 2015 in Zagreb. Presentations from representatives of the European Commission, Eurofound and national experts are available online.

Organisation for Economic Co-Operation and Development (OECD)

Tackling Long-Term Unemployment Amongst Vulnerable Groups, OECD, A. Dean, OECD Local Economic and Employment Development (LEED) Working Papers, 2013/11 21 June 2013, 85 p.
This working paper looks into how vulnerable groups are affected by LTU and which innovative local approaches (based on case studies and learning models from EU and other countries) are suitable to reach out specifically to these groups.

Innovative Financing and Delivery Mechanisms for Tackling Long-Term Unemployment. OECD, 2013
OECD LEED Forum on Partnership and Local Governance, Handbook no. 7, June 2013, 44 p.
“This paper describes innovative financing and delivery mechanisms for getting long-term unemployed people back into work. Finance can be innovative especially when it comes from non-public sources, when it is not grant based or when it is applied to structure the delivery system in a new way.”

International Labour Organization (ILO)

The impact of Long-Term Unemployment. World Employment Social Outlook, ILO, 20 January 2015.
This comprehensive ILO report sheds light on current employment and social affairs on a global scale. Page 36 onwards looks into LTU and social indicators in the EU and concludes that LTU and discouragement exist alongside increased risks of poverty and social exclusion. Based on the report there is also a short video summary by Steve Tobin (ILO Research Department) on the impact of LTU in advanced economies.

Long-term unemployment, the new challenge for many countries. OECD, Key indicators of the Labour Market (KILM), 2013. This short article explains why LTU is ‘the new challenge’ for many countries such as Spain, the United Kingdom or Bulgaria as jobseekers find it more and more difficult to find a job within six months or less.

Scientific articles

The Global Economic Crisis: Long-term unemployment in the OECD. P.N. Raja Junankar, IZA Discussion Paper No. 6057, October 2011, 87 p.
This study analyses the development of (long-term) unemployment in OECD countries during the crisis. It finds an increase of LTU, especially in those countries and sectors which have been hit hard by the crisis, and assumes that LTU will remain high for a long period.

Long-term unemployment in the European Union during the last five turbulent years. Tomas Pavelka, Intellectual Economics, Issue 6(3), 2012, 14 p.
This paper investigates how economic development during the years 2007 to 2011 affected the incidence of LTU in EU Member States. It finds that targeted employment policies for long-term unemployed persons are needed, in particular for older workers who are affected the most by LTU.

Consequences of Long-Term Unemployment. Austin Nichols, Josh Mitchell, Stephan Lindner, Urban Institute, July 2013, 20 p. This paper from US think tank Urban Institute describes the consequences of LTU from several angles: declining income and consumption; re-employment wages; human and social capital; the impact on labour market re-integration; physical and mental health; children and families and communities.

Lost in activation? The governance of activation policies in Europe. Martin Heidenreich, Paolo R. Graziano, International Journal of Social Welfare, Volume 23, Issue Supplement S1, October 2014.
“Over the past two decades, activation has become a rather fashionable European trend for policies in the area of welfare and work, facilitating the job inclusion especially of the long-term unemployed and other disadvantaged groups. (…) The main aim of this Supplement is to shed new light on the ways through which activation strategies have been translated in policies and new governance arrangements.”

Statistics

Unemployment and Labour Market Support. Eulalia Claros, Verena Kern, EPRS Infographic, 7 October 2014, 2 p. “Labour Market Supports are government interventions that provide financial assistance to individuals in difficult labour market circumstances: to compensate them for loss of wage or salary and to support them during job search, or to facilitate early retirement. Long-term unemployed are those who were registered as unemployed throughout the last 12 months.”

MISSOC: Comparative tables on unemployment for all EU countries with information on applicable statutory basis; basic principles; fields of application etc. describe also conditions for long-term unemployed persons in receiving benefits.