OECD: Long-term jobless rate worsening despite recovery

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Despite a modest decline in unemployment since late 2009 in developed countries, the number of people unemployed for over a year is continuing to rise, according to a report published yesterday (15 September) by the Organisation for Economic Cooperation and Development (OECD).

The study, which covered the world's wealthiest countries, found that while the average unemployment rate has been slowly declining, the proportion of jobseekers who are out of work for over a year increased from 24.2% to 32.4% between 2009 and 2010.

Some European countries were among the worst hit, with the proportion of long-term unemployed rising between 2009 and 2010 from 30.2 to 45.1% in Spain, 29 to 49% in Ireland and 24.5% to 32.6% in the United Kingdom.

In contrast, Germany is singled out as the only major economy surveyed whose long-term unemployment rate had actually declined.

OECD Secretary-General Angel Gurría argued that this posed particular challenges for people trying to rejoin the job market. "We know from past recessions that steep hikes in long-term unemployment can take many years to unwind, and in the meantime the long-term unemployed are at high risk of poverty," he said in a speech presenting the report.

This comes in the context of a moderate and uneven economic recovery in Europe. The European Union's statistical agency Eurostat also published figures yesterday showing that the number of employed people in the EU had increased by 0.2% in the second quarter of 2011.

Uneven social protection

The report claims that while unemployment had tended to rise most steeply among the young and long-term unemployed, social protection systems often served these sections of the population the least effectively.

"Unemployed youth and other unemployed with little or no previous work experience, as well as the long-term unemployed, were less likely to receive unemployment benefits than other unemployed people," the report outlines.

"The fact that unemployment grew significantly more than benefit recipiency suggests that some of the unemployed may be 'falling between the cracks'," the survey assessed.

The middle classes were also singled out as among the most vulnerable and least-protected from long-term unemployment.

The report claims that as a result of means-testing "typically self-supporting families who experience long-duration unemployment during a deep recession may encounter difficulties in accessing last-tier benefits or be obliged first to run down their savings or even sell their home, potentially jeopardising their long-term economic status".

 

EU countries have been struggling to reduce unemployment in the aftermath of the 2008 economic and financial crises. Although most of Europe's economies have been recovering since then, confidence has been dogged by the recurring sovereign debt crisis of eurozone countries and growth has slowed markedly in 2011.

According to Eurostat, average unemployment has remained largely unchanged since January 2011, remaining at 10% for the euro zone and 9.5% for the broader EU. Youth unemployment is particularly severe, with an EU average consistently above 20% since 2011.

The European Union's '2020 Strategy for Smart, Sustainable and Inclusive Growth' includes a target that 75% of 20-64 year-olds be employed. Only 68.6% of Europeans of that age group were employed in 2010.

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