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KILM 10. Long-term unemployment
Introduction
The indicator on long-term unemployment looks at duration of unemployment, that is, the length of time that an unemployed person has been without work and looking for a job. In this case, while short periods of joblessness are of less concern, especially when unemployed persons are covered by unemployment insurance schemes or similar forms of support, prolonged periods of unemployment bring with them many undesirable effects, particularly loss of income and diminishing employability of the jobseeker. Moreover, short-term unemployment may even be viewed as desirable when it allows time for jobless persons to find optimal employment; also, in employment systems where workers can be temporarily laid off and then called back, short spells of unemployment allow employers to weather temporary declines in business activity.
The indicator, shown in table 10, includes two separate measures of long-duration unemployment: (a) the long-term unemployment rate - those unemployed one year or longer as a percentage of the labour force; and (b) the incidence of long-term unemployment - those unemployed for one year or longer as a proportion of total unemployed. Both measures are given for a total of 52 economies, with all but one of them having data for men and women separately.
Trends
Figure 10a. Economies with incidence of long-term unemployment below 10 per cent or over 50 per cent, latest years
Nine economies have an incidence of long-term unemployment in excess of 50 per cent. The highest is Italy with 63.4 per cent in 2001, down from a high point of 69.8 per cent in 1990. At the other end of the spectrum, four economies showed incidences of long-term unemployment of less than 10 per cent - Mexico, Norway, the Republic of Korea and the United States. It is interesting to note that the Republic of Korea does not have a national scheme of unemployment protection - see Annex table A3 on social security programmes - which could help explain the low incidence (2.3 per cent) in this country. With no benefits, Koreans could not afford to be unemployed for a long period. However, the other three countries do have unemployment protection schemes, so it is not possible to make a definitive statement relating to the correlation of long-term unemployment with social protection without investigating further the extent and degree of coverage of social safety nets.
Figure 10b. Long-term unemployment rates, latest years
The range of long-term unemployment rates across economies is not large. Taking the latest data available, rates range from a minimal 0.02 per cent in Mexico (2001) to 8.3 per cent in Bulgaria (1999). Only six economies - four of which are transition economies - have long-term unemployment rates of over 6 per cent - Belize, Bulgaria, Italy, Latvia, Poland and Slovakia.
Figure 10c. Long-term unemployment rates and unemployment mobility rates, 1998- 2001
It is interesting to look at long-term unemployment in relation to the general mobility rate of unemployment. The latter figure is the sum of flows from unemployment to employment (wage and salaried employment) and the counterflow from employment to unemployment. It indicates the overall movement or rotation between the two segments of the labour market. The two series show a positive correlation. If there is very little evidence of rotation, then few unemployed persons are moving into employed status and some unemployed will move into the long-term unemployed category or become inactive. If there is a high degree of mobility of persons between unemployment and employment, then the job market is more likely to become segmented and it is likely that persons who are unemployed for a long period will have more difficulty returning to employment status.
