term unemployment occurs
when workers fail to find new paid employment after six months of
unemployment. Many workers remain out of work for very long periods and the
economic and social costs are much higher than for those experiencing
transitory periods of unemployment. Most of the long term unemployed are out
of work for structural reasons.
chart above shows the rate of long term unemployment in the UK using the
labour force survey measure. Gradually, the scale of long term unemployment
has fallen during the latter half of the 1990s. Employment prospects have
improved and the Government's special employment measures have helped to take
many thousands of people off the unemployment figures. However even after
eight years of sustained economic growth, between March-May in 2000, an
average of over 440,000 people were counted as having being out of work for
over a year. As the chart below indicates, in the summer of 2000 there were
still a quarter of a million people counted as unemployed for over two years.
Costs Of Long Term Unemployment
unemployment is an economic disaster. It damages individuals because they
lose their self-respect and employers lose interest in them. Those who have
been unemployed for a short time have a good chance of leaving unemployment,
while those who have been unemployed for a long time have a much lower
often do not consider the long-term unemployed to be interesting candidates
for vacancies because they perceive them to have lower productivity than
other workers. It is therefore possible to have a large number of vacancies
coexisting with high unemployment if many of the jobless have been out of
work for a long time.
to reduce long term unemployment normally focus on improving the
employability of these "outsiders" in the labour market. If
successful, structural unemployment can be reduced and the natural rate of
unemployment can decline.