26 July 2000 • Active Labour Market Policy to Combat Long-term Unemployment • Helmut Mahringer

One pillar of the National Action Plan for Employment (NAP) focuses on active labour market measures, especially with regard to the long-term unemployed. Within the framework of Guideline 2, "New start for long-term unemployed adults", activities were introduced to prevent long-term unemployment, where possible even before its incipience. In order to encourage integration in the labour market of the long-term unemployed and persons at risk of being long-term unemployed, more emphasis is placed on the financing and implementation of employment and training schemes.

The data on long-term unemployment offer a view that is positive at first glance, showing not just increased expenditure for an active labour market policy but also employment growth: the decline of unemployment starting in 1999 has had its greatest effect on the long-term unemployed. The average stock of persons unemployed for 6 to 12 months contracted by about 7,700 from 1998 to 1999 (–21.9 percent), while the number of those unemployed for more than 12 months fell by almost 6,300 (–16.3 percent) and annual average unemployment declined by 16,100 (–6.8 percent). Women profited slightly more from the decrease than men; young unemployed profited substantially more than older unemployed.

Yet there are clear indications that the problem of long-term exclusion from the labour market did not change in 1999 as much as would be expected from the reduction of the stock of registered long-term unemployed:

• The greater number of participants entering training schemes (+27 percent or 5,700 people more in 1999 than in the previous year) caused a reduction in the number of registered unemployed in general, as well as in those of the long-term unemployed.

• In spite of such a reduction of the stock due to training schemes, the reduction in the number of persons granted unemployment assistance (a welfare benefit granted after expiry of unemployment benefit), while falling at a slightly greater rate in 1999 (–8 percent, or 7,600 persons on average in 1999) than unemployment in general (–6.8 percent), was still markedly less pronounced than the decline in the number of long-term unemployed. The annual average stock of persons registered as unemployed for longer than 6 months plummeted by 19 percent or 14,000 in 1999.

• The number of unemployed finding employment went up at a hefty rate in general (+9.2 percent), whereas the long-term unemployed took up less jobs than the year before.

• Jobs found after training schemes certainly contribute to reducing the stock of long-term unemployed. But much of the change is due to lower numbers of new long-term unemployed and in particular an increase in the number of those entering positions outside gainful employment.

In order to reflect actual labour market problems in planning measures, it is necessary to take into account additional indicators of marginalisation in the labour market. The parameters used for this purpose point at the conclusion that the labour market policy tools used within the NAP have actually reached their target groups: long-term unemployed and persons at the verge of long-term unemployment. There are indications that unemployed people find jobs after training schemes, although the measures have not yet been found to act profoundly on the reintegration of long-term unemployed in the labour market in 1999. Some of the measures extended in 1999 were applied to a very broad base, i.e., not targeted specifically at particular groups, and offered a relatively low training intensity. Better targeting and intensifying of measures should help to improve the integration effects especially for the long-term unemployed.