Long-term unemployment is a challenge – for those affected and for society. In Germany, they want to combat them better with citizen income from 2023. Labor market expert Eric Thode on prospects for success and structural errors.

Long-term unemployment is high in many European countries. In Germany, too, it persists. In an interview with FOCUS online, Eric Thode, Senior Advisor for Labor Market and Employment at the Bertelsmann Foundation, explains whether citizen income is actually the way out of misery, which country is best at getting the long-term unemployed back into work and why the right qualification measures are crucial.

FOCUS online: When exactly does one speak of long-term unemployment in Europe?

Eric Thode: The countries have different standards here. For better comparability, however, harmonized data from the European statistical authority Eurostat is used within the European Union. Here it is generally assumed that long-term unemployment exists if it lasts longer than twelve months.

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What is the proportion of long-term unemployed among all unemployed?

Thode: In the past, Germany has always had a notoriously high proportion of long-term unemployed. The high of this century was in 2007 with 56.6 percent. This then decreased over the course of the 2010s. Today we are at 32.6 percent. That means: Of the approximately 2.5 million unemployed in Germany, 891,000 are long-term unemployed.

Where does Germany stand in a European comparison?

Thode: In Greece, the proportion is around 63 percent. At the other end of the spectrum are the Scandinavian countries. Here the proportion is 19 percent in Sweden and 20 percent in Denmark.

Who does long-term unemployment affect?

Thode: Older, low-skilled workers are the largest group. But also younger people who do not manage to enter the labor market because they have no professional training.

So a lack of qualifications is the decisive factor in how long someone is unemployed?

Thode: That is definitely an important point. Another is what the Federal Employment Agency describes as “multiple placement obstacles”. In addition to low qualifications, this includes high levels of household or individual debt. But also serious illnesses or addictions.

Long-term unemployment is one of the biggest challenges for the labor market. What else?

Thode: The acute labor shortage. That is also the paradox at first glance: that on the one hand there is a shortage of workers, companies are desperately looking for employees, and on the other hand we have a high number of long-term unemployed in Germany. We have a glaring mismatch here.

Why aren’t these people getting into the labor market anyway?

Thode: This is mainly due to the lack of qualifications. What the majority of the long-term unemployed bring with them is often not what companies expect.

That may be true for craftsmanship and care. But also for gastronomy – at least in parts?

Thode: Another factor comes into play here, namely the quality of the working conditions. These are not perceived as particularly high, for example with regard to working hours, remuneration or the quality of management in the catering trade.

Which countries are best at getting the long-term unemployed back into work?

Thode: That’s the Scandinavian countries again, especially Denmark and Sweden. For a long time they have relied on a high-quality further training system in which workers can also expand their qualifications in modular form.

This does not mean that there is a constant need for lengthy and expensive retraining, but rather that new knowledge and skills are imparted bit by bit. Overall, it is easier to keep qualifications up to date, which means that workers are also less likely to lose their jobs in the first place.

What if?

Then tailor-made qualification measures help to find work again quickly. Above all, the Scandinavian countries manage to bring the further training offers not only to those workers who are already doing quite well, but also to those who are at the bottom end of the labor market. That is also the big difference to Germany.

Can you be more specific?

Thode: In this country, the Matthew principle often still applies: whoever has, will receive. Those who have a good job receive a lot of further training. On the other hand, others who would particularly benefit from further training because of their low level of qualification still take part in it too rarely.

Is it also due to the possibility of sanctions, which are judged to be rather lax, at least in the eyes of the public?

Thode: Sanctions don’t play a major role. In the case of benefit recipients, this means that the total refusers are the first to be met. It also makes sense here. But that is a very small group of people. Basic security is not something that the majority of the population aspires to.

But there are exceptions.

Thode: That has to do with the duration, i.e. the consolidation of long-term unemployment. If there were no sanctions at all, job-seeking engagement would certainly decrease on average. But even with the new citizens’ income, sanction options remain.

There should be a six-month period of trust for the citizen’s income, which will replace Hartz IV on January 1st.

Thode: There are actually no sanctions here. But I don’t think that will make a big difference.

“Work is no longer worthwhile” say many of our readers. With the citizen money you get away better. What is your assessment of this?

Thode: You shouldn’t compare apples with pears, especially since a major housing benefit reform is to come at the same time. Here, the circle of beneficiaries is expanded from 600,000 to two million recipients. The receipt of housing benefit will then rise to an average of 370 euros per month. This in turn increases the net income for all those who are on low wages but do not receive citizen income.

In addition, the minimum wage was increased sharply on October 1st. However, it is also clear that the more children there are in the household and the shorter the working hours, the gap between basic income and low income becomes smaller.

With the introduction of citizen’s income, the further training opportunities are also to be improved. What do you expect?

Thode: In any case, the citizen’s income has the potential that the long-term unemployed can get back to work thanks to the better qualifications they seek. The big problem in the past was that Hartz IV recipients had a job from time to time, but then quickly ran out again. There was often a lack of long-term perspective.

This means?

Thode: We had priority in Germany. This means that as soon as a job opportunity opened up, the benefit recipient was obliged to take it up. On the one hand, this is good so that people are not related for a long time. On the other hand, these were often only helper jobs in a very volatile employment environment with no development opportunities. Citizens’ income now wants to heal this deficiency.

And how?

Thode: In that further training and retraining will be possible over a period of three years. So a professional qualification with prospects can also be acquired. At the same time, however, short-term further training courses with quick qualifications are to be expanded so that people can find permanent employment again.

What’s the sticking point?

Thode: Of course, that would also have to be further training that also brings people something on the job market. This requires good advice. And of course the job centers that implement this reform also need capacities in terms of advice and support.

Is this realistic?

well For now, I would put a question mark here. In the summer there were reports that the funds needed for this would be restricted. The job centers may no longer have a budget for such sensible measures. It shouldn’t come to that.

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