Report: long-term unemployment can be reduced by benefit cuts

Long-term unemployment in Switzerland can be reduced if the duration of benefit payments is shortened and if the cantonal authorities pursue a more active re-integration policy, a newly-released report said Monday.

Long-term unemployment in Switzerland can be reduced if the duration of benefit payments is shortened and if the cantonal authorities pursue a more active re-integration policy, a newly-released report said Monday.

The report was commissioned by the State Secretariat for the Economy and is based on an extensive study of the long-term unemployed between 1984 and 1994. The report particularly analyses the impact of Switzerland’s strategies to fight unemployment over the past years.

The author of the report, economics professor George Sheldon, said past experience clearly illustrated that increasing the number of paid days also increased the number of long-term unemployed.

In 1997, for instance, 25 percent of all workers had been out of work for more than a year. That same year, the authorities increased the duration of paid days, with the result that the percentage of long-term unemployed rose to 30 percent in 1998, the report said.

Sheldon warned that the continuing increase was dangerous for the Swiss economy because the problem would simply not go away, even if the economy continued to grow.

Sheldon said the main goal for the authorities must therefore be to reintegrate the unemployed into the regular labour market as quickly as possible.

If a worker was able to hold a job for at least a year, then his or her chances improved significantly of finding a regular job, the report states.

Sheldon also cautioned that benefit payments should not bee too high, so that lower paid regular work would always be more attractive than a government-supported work project.

The funds saved by shortening the duration of benefit payments should be used to boost job creation and reintegration efforts, the report recommends.

However, the author admitted that there were some limits to retraining as many of the long-term unemployed had only limited job training skills.

Additionally, many job creation programmes were not meant to compete with Swiss private industry – a situation which made the teaching of new and real skills often very difficult.

It was also difficult to retrain older workers, foreign nationals and those workers who cannot easily move to another part of the country, the report said.

Those groups were clearly running a higher risk of falling into the category of the long-term unemployed.


From staff and wire reports.