The Development of Long-term Unemployment and Labor Market Policies in Austria

Long-term unemployment is eventually becoming a problem in Austria as economic restructuring in the wake of increasing competition is taking its toll. During 1994 as the general unemployment rate amounted to 6.5 percent, 31.5 percent of all unemployed had been on the dole for more than 6 months. As recourse to disability pensions and early retirement is increasingly being questioned as viable solution for the reduction in unemployment of older workers, the mounting employment problems of older workers become visible. As unemployment rises in occupations and economic sectors such as leather, clothing and textile industries as well as chemical, metal and electrical industries which are exposed severe international competitive pressure, older workers have great difficulties changing their profession. Regional mobility of the unemployed is already low and even more so in the case of older workers. In such an environment of high and rising unemployment socio-economically handicapped persons stand no chance of reintegration into the labor market unless specific employment creation measures are undertaken. An evaluation study of employment projects for marginalized long-term unemployed showed that active labor market policies of this sort were the most cost-effective measures of reintegrating socio-economically handicapped persons into the labor market in Austria. As the cost for passive labor market measures rises, as the result of the rapid increase in unemployment and of the prolongation of maternity leave, active labor market measures are losing out. Since 1987 when Sch 4,000 million were spent on active labor market policy measures, or 15.7 percent of the total expenditures on labor market policies, no further increase in nominal expenditures took place. In 1994 only Sch 4,963 million or 9.5 percent of total expenditures accrued to active labor market policies. Measures specifically geared to help the long-term unemployed have not been given high priority; the lack of funding makes social and labor market exclusion a veritable threat for marginalized groups in the labor market.Entwicklung der Langzeitarbeitslosigkeit in Österreich und Maßnahmen zu ihrer Bekämpfung; The Development of Long-term Unemployment and Labor Market Policies in Austria