Long 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.

The 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.

The Costs Of Long Term Unemployment

Long-term 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 chance.

Employers 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.

Policies 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.