Ministry of Economic Affairs and Employment analysis: Education and training could prevent long-term unemployment

In order to thwart the risk of prolonged unemployment, it is important that people who have been unemployed for longer than a year find work quickly. Long-term unemployment is often related to a diagnosis of an illness and lack of education. Education plays a minor role in the employment plans of the long-term unemployed.

It is positive that the measure most frequently mentioned in the employment plans of the long-term unemployed is searching for work in the open labour market. Such persons have also been in fairly close contact with the employment and economic development office (TE office). These are the conclusions of an analysis on long-term employment by the Ministry of Economic Affairs and Employment, which was published on 11 April 2023.

The analysis looks at unemployment periods lasting more than a year and their background in order to promote employment. Amid a high employment rate and ageing population, the Finnish labour market suffers from a labour shortage. This is a problem that could be solved by employing some of the 258,000 persons currently out of work. Around one third of them, or 85,000, are long-term unemployed persons who have been without work continuously for at least one year, some even for many years.

Path dependence

According to the Ministry of Economic Affairs and Employment analysis, there is a clear link between the unemployed person’s own previous activities and the duration of unemployment and the content of employment plans, even though employment services should break this kind of path dependence. A previously experienced long spell of unemployment is connected to the duration of a subsequent long-term unemployment period. Most often, a low level of education, a low level of training received during the working career, a fragmented career path and a diagnosis of an illness increase the likelihood of long-term unemployment.

Astounding lengths of unemployment

Some people have been unemployed for a staggering number of years. The Ministry’s analysis proposes that thought is given to whether persons who have been unemployed for many years can still genuinely be considered unemployed jobseekers. On the one hand, there are persons among the unemployed who have poor health, but on the other hand, long-term unemployment has a negative effect on health. Instead of a social and health policy phenomenon, long-term unemployment should be considered a labour policy phenomenon, and the number of people who have been unemployed for a long time should be reduced with effective measures. Age also affects the duration of unemployment. The older the long-term unemployed person is, the more difficult it is for the person to find employment.

Collapse of Uusimaa

At the moment, nearly two out of five long-term unemployed people live in Uusimaa. Long-term unemployment used to be rare there, but it has now become a serious labour market problem in the region. About 32 per cent of Finland’s entire population lives in Uusimaa, while 34 per cent of the unemployed live there. However, 44 per cent of those who have been unemployed for at least three years live in Uusimaa. Unemployment seems to last longer in the region than elsewhere.

Inquiries:
Heikki Räisänen, Research Director, Minister of Economic Affairs and Employment, tel. +358 295 047 118
Tallamaria Maunu, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 374
Mika Tuomaala, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 048 450
Email addresses are in the format: firstname.lastname(@)gov.fi