Section for Employment, Social Affairs and Citizenship

Section for Employment, Social Affairs and Citizenship

Labour Market Observatory

Minutes of the Conference on "Taking action on long-term unemployment: national and European perspectives"

11 March 2015 in Zagreb, Croatia

Opening of the conference by Christa Schweng, President of the Labour Market Observatory(LMO), European Economic and Social Committee(EESC)

Christa Schweng opened the meeting by welcoming the speakers, participants and the host organisation and presented the European Economic and Social Committee and its Labour Market Observatory. Speaking about the importance of the event's topic, she pointed out that long term unemployment affects 11.9 million people, or 4.9% of the active EU population (ranging from 1.2 % in Austria to 18.5 % in Greece). Out of these, 59% have been jobless for at least two consecutive years. The group of long-term unemployed people is very diverse: some of them are unemployed because of low employability (due to low skill and qualification levels, prior work experience in declining occupations/sectors, disability or health problems), others combine social benefits and part-time work, others suffer from multiple problems (addictions) and some groups are also more at risk: such as people over 50 and unemployed Roma people.

Ms Schweng spoke about the significant negative social and economic consequences of long-term unemployment for individuals and society. Providing employment is key to social and economic integration of the long-term unemployed in order to bring them out of social isolation and reduce levels of poverty.

The longer the duration of unemployment, the more difficult it becomes for the job seeker to find a job. This may be due to several related factors, e.g. the erosion of skills, declining motivation on the part of the unemployed person, employers' preference for hiring people who spent less time in unemployment.

The LT unemployed who are furthest away from the labour market require a step-by-step approach, starting from strengthening life / basic skills, followed by workplace-oriented training, vocational training and job search assistance. Effective ALMP are small scale, individualised and carefully targeted at those most in need and supported by an accurate assessment of the competencies and needs of the client.

The PES plays an important role in tackling long-term unemployment, but they face considerable resource constraints. Also, effective governance processes of partnerships are key: PES, municipalities, youth services, family services, other social services, education and training providers have to work much more closely with social partners and civil society organisations. More attention should be given to working with employers to raise awareness and encouraging them to provide employment opportunities to the LT unemployed.

Session 1 - Current tools and new initiatives to fight long-term unemployment

Mirando Mrsić, Minister for Labour and the Pension System

Mirando Mrsić explained that the long-term unemployed in Croatia are mainly older workers or people with a low level of education and poor skills. The Minister affirmed the commitment of the government to dedicate attention and resources to tackling long-term unemployment, to prevent poverty and loss of skills. Effective and efficient measures will be supported by 1.2 billion kuna in 2015, coming from both ESF and the state budget, which represents a significant increase in comparison with the 250 million kuna allocated in 2011. The Minister recognised the important role of the Public Employment Service in training and career guidance and mentioned some main elements of Croatian policy:

investing in human capital, key factor for innovation and growth – in education and training as well as in lifelong learning to equip people with skills that are relevant to the labour market's needs,

enhancing cooperation with social partners,

developing the recognition of informal / non-formal qualifications.

The implementation of the Youth Guarantee will continue and disadvantaged groups will benefit from programmes to increase their competencies and employability, requalification for jobs that are needed on the labour market, as well as from direct job creation.

The Minister ended on an optimistic note, mentioning the recovery that can already be seen in some regions and local communities and mentioning that subsidised internships enabled the creation of 28000 permanent jobs for young people since 2012.

Jackie Morin, Head of the Mobility and Employment Services Unit in the Directorate for Europe 2020: Employment policies, DGEmployment, Social Affairs and Inclusion, European Commission

Mr Morin welcomed the occasion to have a direct exchange of views on long-term unemployment as the Commission is currently analysing different options and seeking views from stakeholders on how to improve service provision to the long-term unemployed in order to shorten the duration of unemployment.

The Commission Work Programme 2015 announces a new initiative, the Proposal for a Council recommendation on integration of the long-term unemployed and the Council Conclusions on "The 2015 Annual Growth Survey and Joint Employment Report" and on "Inclusive labour markets" also focus on preventing and reducing long-term unemployment.

Mr Morin explained the most recent data on long-term unemployment and very long-term unemployment (unemployment for more than 2 years) and their evolution since 2008. Talking about the prospects for finding employment after a certain length of unemployment, Mr Morin said that while about 40% of unemployed people find a job after 2 months, about 25% only find a job after one year of unemployment. 10% of unemployed people only find a job after 4 years of unemployment. Indeed, the longer a person is unemployed, the more difficulties they will have finding a job.

We need to increase employment in all categories, but extra effort is needed for the long-term unemployed, as this category is persistent and on the rise. Support for these people is not adequate at the moment: the spending per capita is unsufficient and active measures for the long-term unemployed have low coverage. The link between demand and employers should be strengthened, e.g. through hiring subsidies.

Better continuity in individual assessment and the action plan must be ensured when responsibility for services shifts, e.g. when social assistance takes over from the public employment services.

Mr Morin then presented the EC's work on a draft Council recommendation, a new initiative that aims to provide a consistent framework to support LTU integration into the labour market.

The Specific objectives of the initiative are:

- to increase the transition rates of the long-term unemployed to employment and reduce the share of those falling into inactivity,

- to prevent the descent from LTU (one year) to very long-term unemployment (two years or more),

- to better align social benefits and activation measures, enhancing cooperation within Member States between relevant public or outsourced services delivering activation support, benefits and social services to LTU.

The Commission is currently carrying out an impact assessment for this proposal and considering three options:

- a baseline scenario: no policy change and continuation of the European Semester process. This already offers tools such as the country-specific recommendations, but these are expressed in rather general terms,

- a broad Council Recommendation on general measures to address LTU (Guidelines, integration policies),

- a targeted Council Recommendation introducing the notion of Job integration offers (or individual activation offers).

The broad recommendation would be based on four aspects:

an individualised approach towards the long-term unemployed: individualised case management, tailored services,

an integrated approach to foster partnerships and offer coordinated support,

mutual commitments for the State and the unemployed, with clear rights and responsibilities,

a partnership with employers: enriching services for employers, awareness, incentives and post-placement support.

A more ambitious option would be to put in place Job Integration Agreements, a specific instrument for a specific group of beneficiaries, in addition to other ALMP offers. The long-term unemployed would receive a relevant activation offer through a personalised approach, a single point of contact and implied mutual commitments. Such an approach will be feasible for a small group, not for all the 12 million long-term unemployed in the EU. Open questions remain on the timing of intervention, on identification of the target groups and on type of agreement.

Finally, Mr Morin announced the next steps leading up to the adoption of the proposal in summer 2015: the public consultation open until 15/05 on the Europa website, the impact assessment, the informal consultations of social partners and the consultations of relevant EU committees.

Donald Storrie, Head of the Employment and Change Unit, European Foundation for the Improvement of Living and Working Conditions (Eurofound)

Donald Storrie highlighted the severe consequences of long-term unemployment, such as skills degradation, loss of motivation to search for a job, psycho-social problems, employers' preference for hiring people who had not been unemployed for long. Long-term unemployment also posed a serious economic problem and threatened growth, which was not acceptable in the context of demographic ageing.

Building on the conclusions of a major recent conference in the USA on “Transforming the U.S. workforce: development policies for the 21st century”, Mr Storrie presented some recommendations:

a high-quality, unbiased labour market and career advice (on the web and in person),

job clubs to help combat theisolation many long-term unemployed job seekers experienced,

commitments from employers to consider the long-term unemployed for jobs,

incentives for employers to hire older long-term unemployed job seekers.

Finally, Mr Storrie mentioned the forthcoming work of Eurofound, on Policies to integrate those furthest from the labour market, the impact of, and policies for, long-term unemployed youth and the labour reserve in Europe.

Bernard Jakelić, Deputy Director-General, Croatian Employers' Association (HUP)

Mr Jakelić considered that in Croatia, most active labour market measures targeted young people and that the long-term unemployed were neglected. He therefore very much welcomed the Commission’s initiative focusing on this group.

After 6 years of recession, creating new jobs and attracting foreign investment were crucial. Therefore, the business climate had to be more friendly to enterprises, without administrative burdens and red tape, and female, senior and youth entrepreneurship had to be encouraged. The need for flexibility and the specific dynamics of the business sector had to be taken into consideration. Tackling undeclared work was also important and welcome. Given that Croatian industry had declined, the manufacturing sector and the digital economy had to be developed. Therefore, it was urgent to create well-paid jobs for young people, also in order to prevent them leaving the country.

Mr Jakelić finally congratulated the Minister for his attachment to social dialogue, which needed to be further strengthened at national and EU level.

Anica Milićević-Pezelj, Executive Secretary, Union of Autonomous Trade Unions of Croatia (SSSH), also representing the position of the Independent Trade Unions of Croatia (NHS) and the Association of Croatian Trade Unions (Matica)

Ms Milićević-Pezelj, who spoke on behalf of the main Croatian trade unions, complained that, following the adoption of the new Labour Act, the labour protection index for Croatia had decreased significantly. She then focused on long-term unemployment and its very negative consequences for individuals and society: falling into poverty, loss of self-confidence and motivation, psychological problems, loss of human capital, lack of consumption and lack of contributions to the pension system.

She also explained that the State had introduced 13 measures for tackling long-term unemployment, but she complained about the lack of external evaluation and quality data regarding these measures.

Active labour market measures concentrated too much on highly skilled young people who could find a job anyway, rather than people who were further away from the labour market.

According to Ms. Milićević-Pezelj, further efforts were needed to:

better tailor activation measures, especially for vulnerable groups,

support the PES in providing training and in their role vis à vis employers,

prevent long-term unemployment through life-long learning and support for employers with economic difficulties,

recognise informal / non-formal skills,

monitor declining sectors and plan the transfer of workers into emerging sectors, such as the green jobs sector.

Nedjeljko Marković, President of the NGO Udruga and VicePresident of the Croatian Anti-Poverty Network

Mr Marković highlighted the need to promote social investment, social protection and ownership.

NGOs had access to deprived groups and could contribute to the provision of specific services (providing work experience, developing life skills) to specific groups of long-term unemployed (early school leavers, minorities, people with disabilities etc.). However, Mr Marković wondered whether Croatian civil society had the capacity and scope for action to respond to the problem of long-term unemployment.

Finally, Mr. Marković raised the question of the role of EU funds in sustainable and intelligent social development. That was linked to the issue of adapting public procurement procedures to NGOs and the issue of sustainability and stability of financing.

DEBATE

EESC members and the public participated in a lively discussion. Ms Vladimíra Drbalová supported the Commission's initiative, and in particular the idea of individually targeted activation measures. She asked whether it was better to put in place measures for specific groups, such as the long-term unemployed, or to keep on with structural reforms, aiming at a better functioning labour market for all. In reaction to Mr. Jakelić's presentation, she agreed that the potential of promising sectors such as the digital economy should be better exploited and the workforce should be adapted to developments.

Mr Krzysztof Pater raised the question of why people were low-skilled – were they early school leavers, disabled? He also spoke about skilled people who ended up unemployed.

Ms Dana Štechová focused on the need for information and statistics about declining and growing sectors.

Other participants asked about activation measures for vulnerable groups. They insisted on the need for growth and job creation and welcomed all measures at EU level that could tackle unemployment. Other speakers also expressed concern about the substitution of unlimited work contracts with apprenticeships and short-term contracts.

The Minister, Mirando Mrsić responded and said that the statistics did not show that employers were replacing their employees with apprentices or workers on more flexible contracts.

Mr Morin provided some details regarding the structural reforms taking place in the Member States. These should of course continue, in the framework of the European Semester, but the Commission's initiative on the long-term unemployed was an additional tool.

Mr Storrie estimated that data on skills were rather poor and made reference to the OECD's PIAC study. Mr Jakelić added that, in Croatia, skills acquired by young people were not relevant to firms' needs. Ms Milićević-Pezelj therefore considered that apprenticeships should be part of education in order to facilitate the transition to the labour market.

Mr Marian Krzaklewski pointed to the possible relationship between undeclared work and long-term unemployment.

Mr Denis Meynent addressed some questions to the Commission representative regarding the specific indicators in the Europe 2020 framework and the relationship with the Juncker investment plan. He asked whether investment could be expected in the education area. Mr Meynent was also interested to hear more about the American long-term unemployed clubs mentioned by Mr Storrie.

Ms Marina Škrabalo pointed out the importance of networks to support the unemployed. Also, she talked about the potential of the social economy and the need to develop new areas of quality employment.

A representative of an Austrian association of the active unemployed regretted the lack of involvement of unemployed people in policies concerning them.

Nikola Bukovic, the representative of the Croatian Youth Association, strongly supported the inclusion of work-based learning in education. He regretted that the implementation of the Youth Guarantee left out disadvantaged groups who were harder to activate. Finally, a representative of the National Cluster for Economic and Social Development supported the better recognition of social enterprises.

The speakers responded to the various statements. Mr Marković considered that civil society needed to put more effort into developing the concept of social enterprises in Croatia. Mr Storrie from Eurofound provided some additional informationregarding job clubs in the USA. These worked better when they were initiated and managed by NGOs rather than by public authorities.

Regarding a possible link between undeclared work and long-term unemployment, Mr Morin explained that, as most unemployed people did not receive benefits, they adopted survival strategies. The European platform on undeclared work would foster a better understanding of the situation. Regarding the Juncker investment plan, Mr Morin pointed out that investing in human capital was a priority and that the Juncker plan was part of a broader approach. He also mentioned some important ideas: the need to better understand employers' need for skills (vacancy monitoring, links between public employment services and employers), in order to support employers in recruiting workers and encourage the hiring of the long-term unemployed.

Session 2 - Building on good initiatives at the EU and national level: the way forward regarding long-term unemployment

Andrew Dean, Researcher at the University of Exeter’s Marchmont Observatory (UK)

Mr Dean’s presentation focused on international approaches to tackling long-term unemployment among vulnerable groups (e.g. the low-skilled, ethnic minorities, older workers, people with disabilities). He presented the lessons learned from a series of case studies and learning models analysed in the framework of the OECD's LEED Programme (Local Economic and Employment Development):

All local activities have their own unique characteristics (vulnerable group, partners, financing, etc.). They cannot simply be replicated in another area.