Making the long term unemployed active again: a deceptive illusion!

Article publisehd in the daily paper La Libre Belgique, on april 21st 2009
By
Jules GAZON, Emeritus Professor, HEC-University of Liège Management School

In the EU-27, 50% of unemployed workers are long term unemployed (a period of joblessness lasting over a year). Their numbers total over 60% in the French Speaking Community of Belgium. Making its first appearance in the middle of the 1970s, this mutation from structural unemployment to long term unemployment can first of all be explained by an increased globalization of the economy due to the emergence of newly industrialised countries, which sharpened international competition by threatening all the intensive occupations in low skilled work in industrial nations. On the other hand, since around thirty years ago the digital revolution has meant not only the creation of new professions but also a profound change in the way we work, an often major modification in the ‘process’ of producing goods and services.

The lack of any pre-emptive planning in terms of training and teaching in the face of the redeployment of occupations and in preparation for the new profession constitutes the major cause of long term unemployment. Despite all the efforts that have been undertaken it is here that we have to look to find those who are responsible, in the full knowledge that it was the absence of appropriate decisions in the past that has determined the skills shortage today.

After the Second World War the founding fathers of Social Security put in place - alongside sickness-invalidity insurance and retirement pensions – a solidarity based link between active workers and the jobless: unemployment insurance financed by obligatory contributions taken into account in the wage bill, representing an ‘insurance premium’ which guaranteed unemployment benefit for workers who lost their jobs, a system conceived at a time when structural employment was a short term affair. This was the case up until the middle of the 1970s; workers who lost their jobs could quickly resolve their skills shortage and find another position. There was no long term unemployment. Since structural unemployment was transformed into long term unemployment, this solidarity based system has not been adapted and no longer meets the principle of equality that any democracy should be based upon, as other hardships have an impact on the long term jobless. In effect, long term inactivity marginalises and shuts these people into a ghetto in which professional skills and motivation are lost. In our societies this isolation creates, thanks to unemployment benefit with no work in return, a welfare benefit assisted community, a welfare community whose turning in on itself creates a kind of self generated social exclusion and in which the children, formatted from birth to have nothing on the horizon other than welfare benefit, often have practically no chance of joining the job market when they reach adulthood. From this also flows the phenomenon of active workers rejecting this ‘community of the assisted unemployed,’ which stirs up social and racial tensions in so much as unemployment hits certain people more because of their ethnic origins. This accepted ghetto, which the unemployed do not even try to get out of, represents a genuine challenge for a form of governance that cares about fairness.

But hitting these people with ostracisation because of an apparent or real laziness is to miss the target. Losing a job is always a very difficult experience; being born and growing up in an environment which can only live through welfare benefits is to be struck with a handicap at birth. In both cases it is society which excludes the individual and it cannot hide behind the acceptance, conscious or otherwise, by the unemployed that they have become socially ‘handicapped.’

Reactivating the unemployed, including the long term unemployed, is a necessary objective not only for economic reasons but also for ethical ones because we cannot allow a section of the population to become enclosed in a ghetto which jeopardises every reference point linked to self respect. And to conclude that it is necessary to punish these people because they are not actively looking for work falls however under the terms of hypocritical governance because these jobless people have become UNEMPLOYABLE. Thinking that they could find work again by presenting themselves on the job market is a deceptive illusion. This adds yet more to their failed situation. Absent from the context of job advertisements, they are moreover not in great demand as far as businesses are concerned. And even the social economy set up by the Walloon Region is often counter productive in this respect; as it was essentially organised to recruit the short term unemployed, the allowances thus not being allocated in terms of an unemployed person’s social handicap.

 


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What is to be done?
In the actual context, obliging unemployed people who are in good health to follow a training programme and thus punishing them by withholding benefit payments should they refuse is one solution. But a lot better remains to be done. In my recent book (1), I suggest that the paradigm be changed and that we should no longer consider unemployment as an adjustable variable of the job market. It is not a question of denying the causes of frictional or structural unemployment, even if everything needs to be done to reduce its effects, but of guaranteeing a job contract, in various formats, to those people who lose their jobs, and this in place of unemployment insurance or benefit. First of all by creating new intensive occupations in low skilled work which face no competition on an international level. Already presented in an embryonic state to the Walloon Region in 1996, my system was transformed, because contingent on the itinerary of political decision makers, into a pale copy of that of the ‘Titres-Services’ system (Services – Bond Certificates), which it should nonetheless be stressed has been successful. My system is not based on subsidies. It could cost the state nothing in comparison with the present costs of unemployment benefit and other forms of welfare paid to the jobless. It promotes mobility between businesses with the guarantee of a job contract. It also provides a solution as well as the financing of bringing the long term unemployed back to work. But this return to work would be effected by a job-training contract which would be a genuine job contract with an income at the level of the minimum wage during the very probable period during which workers who have left their ghetto would be hardly productive. A tailor made support system is necessary for these victims of a social handicap. Before teaching them a profession or trade, genuine coaching sessions in terms of becoming aware of social and citizenship responsibility will be necessary. The ills generated by our so called solidarity based system are such that its victims will have to relearn how to organise their lives according to the demands of a work-training day. Once dignity has been rediscovered, a dignity which for each individual in good health represents an acceptance to participate in the creation of wealth in order to receive in return the just rewards of his or her work, some sort of commitment to allocate funds such as that already practiced by the ‘Training through Work Businesses’ programme (Entreprises de Formation par le Travail) would be welcome.

Within this system workers who lose their jobs remain active by following the different modules put forward in my book and by being paid at the level of their qualifications. If the right to work is thus guaranteed, the duty to work thus imposes itself on every person of working age who is in good physical and mental health, be it within a work-training context. And it is precisely because the right to work would be guaranteed that a refusal on the part of the worker would be sanctioned with the utmost severity, incomes replacing those gained through work no longer being applicable.

Certainly such a system should be put in place in progressive stages, but it should nonetheless be done quickly. Several obstacles will have to be overcome, including that of firmly countering those who, through political or other forms of clientelism, would want to retain welfare benefit for those who would refuse a job-training contract and thus later refuse, as a result, a decent job.

Read also Neither unemployment nor benefits

 

(1) Jules Gazon, Le chômage, une fatalité. Pourquoi et comment l’éradiquer, L’Harmattan Ed., Paris 2008.