Long-term unemployment

Long-term unemployment is here measured as those who have been unemployed for 12 months or more as a percentage of the total number of persons unemployed. Clearly, long-term unemployment is of particular concern to policy makers. Quite apart from the mental stress caused to the unemployed and their families, high rates of long-term unemployment indicate that labour markets are operating inefficiently and, in countries which pay generous unemployment benefits, the existence of long-term unemployment is a significant burden on government finances.

Definition

Long-term unemployment is conventionally defined either as those unemployed for 6 months or more or, as here, those unemployed for 12 months or more.

Unemployment is defined in most OECD countries according to the ILO Guidelines. Unemployment is usually measured by household labour force surveys and the unemployed are defined as those persons who report that they have worked in gainful employment for less than one hour in the previous week, who are available for work and who have taken actions to seek employment in the previous four weeks. The ILO Guidelines specify the kinds of actions that count as seeking work.

Comparability

All OECD countries use the ILO Guidelines for measuring unemployment, but the operational definitions used in national labour force surveys vary slightly in Iceland and Turkey. Unemployment levels are also likely to be affected by changes in the survey design and/or the survey conduct, but unemployment rates are likely to be fairly consistent over time.

In comparing rates of long-term unemployment, it is important to bear in mind differences in institutional arrangements between countries. Rates of long-term unemployment will generally be higher in countries where unemployment benefits are relatively generous and are available for long periods of unemployment. In countries where the benefits are low and of limited duration, unemployed persons will more quickly lower their salary expectations or consider taking jobs that are in other ways less attractive than those which they formerly held.

Long-term trends

In 2005, rates of long-term unemployment varied from 10% or less in Canada, Korea, Mexico, New Zealand and Norway to 50% or more in the Czech Republic, Germany, Greece, Italy, Poland and the Slovak Republic. Lower rates of long-term unemployment are generally found in countries that have enjoyed relatively high rates of economic growth in recent years. There appears to be a two-way causal relationship here – on the one hand, jobs are easier to find in a fast growing economy and, on the other, economies may grow faster by making unemployment an unattractive proposition.

Over the period shown in the table, long-term unemployment rates have been relatively stable for the OECD as a whole, but there have been some sharp rises in several countries and equally sharp falls in others. Rates of long-term unemployment have more than doubled in the Czech Republic, Hungary, and Japan. On the other hand, since 1992, the share of long-term unemployed has more than halved in Korea, Norway and New Zealand.

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Source

• OECD (2006), Labour Force Statistics, OECD, Paris.

Further information

Analytical publications

• OECD (2002), "The Ins and Outs of Long-term Unemployment”, OECD Employment Outlook, Chapter 4, OECD, Paris, pp. 187-243.


• OECD (2006), OECD Employment Outlook, OECD, Paris.

Statistical publications

• OECD (2004), Quarterly Labour Force Statistics, OECD, Paris.

Online databases

• Employment Statistics.

Websites

• OECD Labour Statistics Database, www.oecd.org/statistics/labour.
• OECD Employment Outlook, www.oecd.org/els/employmentoutlook.