The long-term unemployed: the people that the economic recovery forgot?

F. Tanay*

The long-term unemployed (LTU) are those who have been out of work and searching for a job for 12 months or longer.

The number of long-term unemployed doubled between 2007 and 2014, reaching 12.4 million people or 5% of the active EU population. This equals to around half of the total number of unemployed.  What is particularly worrying is that six out of ten of the LTU have been out of work for more than two years and their share remains at historically high levels.

The scale of the problem differs considerably between Member States, with long-term unemployment rates in the third quarter of 2015 ranging from just 1.5% of the labour force in Sweden to almost 18% in Greece.

Who are the people most affected by long-term unemployment?
The recently published report Employment and Social Developments in Europe 2015 examines the current state of play and reviews policies that seem to work best to help the LTU back into employment.

The chart below, featured in the report, demonstrates that the young, the low-skilled and third-country migrants who already faced the highest risk of being LTU before the crisis were, along with the intra-EU migrants, hardest hit during the crisis. So the situation of these groups worsened even further. The already high rate of LTU of the low-educated labour force has more than doubled during the crisis reaching 10.5% in 2014.

The report also highlights that older people and the low-skilled have the lowest chances of returning to work (see also a relevant post on re-employment of LTU).

The crisis has narrowed the gap between men and women in terms of LTU, mainly due to men losing disproportionately more jobs. Nevertheless, men tend to have better chances of finding jobs in most Member States.

Note: Country of birth used for migration background (intra-EU migrants, third-country migrants and nationals) with no data available for DE.

Long-term unemployment affects different population groups across the Member States. For example, in Finland, Germany, Lithuania, Latvia, the Netherlands, Bulgaria and Slovenia, very few LTU (less than 10 percent) are young. The opposite is observed in the UK where every third LTU is a young person. Consequently, policies aiming at reducing LTU should be well targeted to capture different needs.

The high risk of labour market exclusion is a loss for all

Levels of long-term unemployment are at record highs at the moment and, even when growth picks up, the future prospects are not particularly encouraging. While positive developments in the economy entail the potential to reduce the number of LTU, there is a high risk that these people will benefit from growth only to a limited degree due to their lower employability which is further eroded as their spell of unemployment lengthens in time.

Without effective measures to prevent LTU in the first place and to facilitate a return to employment, there is a risk that many people become permanently excluded from the labour market and abandon their job search efforts. Each year, one out of five LTU gives up looking for a job and becomes inactive.

Tackling long-term unemployment is therefore crucial for sustainable and inclusive growth in a context of an ageing and shrinking workforce. It can improve the state of public finances by reducing the spending on social assistance and increasing tax revenues. In addition, re-employment is beneficial for the health and well-being of the LTU.

Authors: F. Tanay works as a policy analyst in the unit of Thematic Analysis and L. Salanauskaite as a socio-economic analyst in the unit of Country Reform in the DG EMPL.

The views expressed in this article are those of the authors and do not necessarily reflect the views of the European Commission.

European Commission –> Employment – Social Affairs and Inclusion