Long-term unemployment, the new challenge for many countries

Unemployment spells for workers are becoming longer in some countries compared to the pre-crisis situation in 2008, according to the new edition of the ILO Key Indicators of the Labour Market.

"Headlines on a recent decline in unemployment rates hide the bitter reality that many jobless workers are finding it increasingly difficult to get into a new job within a reasonable period of time of six months or less,” says chief of the ILO Employment Trends Unit Ekkehard Ernst.

For example, in Spain, the UK, the US, Serbia and Bulgaria, long-term unemployment has increased by 40 per cent or more in comparison to 2008.
The latest edition of Key Indicators of the Labour Market – an online reference tool offering data and analysis on the world’s labour market – includes information about the dynamics of job losses and job creation in 70 developed and emerging economies.

The new figures revealed that in countries with similar unemployment rates, there can be substantial differences in labour market trends.
While both the US and Germany had unemployment rates of around 6.3 per cent between 1970 and 2013, unemployment spells were on average shorter in the US labour market.

In France, where unemployment rates have been about 30 per cent higher than in Germany since 1991, it takes on average less time for an unemployed worker to find a job than it does in Germany.
However, the story is different in developing countries. Workers move faster between spells of unemployment and employment than in advanced economies, but that’s because they transit frequently into informal employment.
“Unemployment rates only give a rough picture of the functioning of a country’s labour market," Ernst said, adding that ILO data will help countries adapt their policies to those categories of workers who are most affected by the dynamics of the labour market.

Likewise, countries at all development levels find that adequate education and skills make the difference between inclusive growth and growth that leaves large segments of society behind.
The report also revealed that the level of skills mismatch – the skills that workers have compared to what the market needs – in developing economies stood at an average of 17.1 per cent in 2012. During most of the past decade it was well below this level, particularly in advanced economies.

The average incidence of over-qualification in developed economies was 10.1 per cent in 2010, up from 8.5 per cent in 2008, and particularly affected migrants, younger workers and persons with disabilities. Under-qualification in developed economies averaged 28.1 per cent in 2010 compared to 31 per cent in 2008.
The report also showed that the incidence of over-education tends to increase over time. It is partly due to rising levels of educational attainment. In times of economic crises, when employment opportunities are scarce and unemployment rates are high, over-education tends to accelerate.

Key findings:

• Working poverty continues to decline and a global middle class is emerging.
• A total 822 million workers are in poverty in the developing world, amounting to 30.6 per cent of the workforce.
• The global middle class continues to expand.
• The developing world’s middle class has surged by 870 million since 1991. Currently, 32 per cent of all employees in developing countries belong to the middle class, almost twice as much as at the end of the 1990s.