UNESCO Social and Human Sciences
 
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"Personal and Institutional Strategies for Management of Transformation Risks in Central and Eastern Europe" Project

LONG-TERM UNEMPLOYMENT AS SOCIAL EXCLUSION

Iskra Beleva

In: N. Genov, Ed. Bulgaria 1997. Human Development Report.
Sofia: UNDP, 1997, pp. 29-36

Unemployment is a major incentive to economic action in a market economy. However, it brings about manifold negative social and economic consequences as well. They are most visible in developing or inefficiently operating labour markets. The larger and longer the unemployment, the deeper and more complicated are the social and economic problems it causes insociety. The existence of stable long-term unemployment extracts a segment out of the labour force and isolates it economically and socially. Long exemptions from labour life and labour environment lead to losses of professional qualification. For society this means a lossof economic and social gains and no return ofinvestments made. Reintegration of unemployed into working life requires new investments. Moreover, unemployed people represent a vulnerable economic and social group. In their struggle to survive, they are inclined to join the shadow economy and to conductcriminal and violent behaviour. Many consequences of unemployment are manifest in psychological and behavioural deformations of personality.

                          Long-term unemployment
                          turns into psychological
                          and behavioural deformations
The negative effects of long-term unemployment are rather relevant when the model of management of economy is being changed as this is currently the case in Eastern Europe. The mechanisms of labour market in the region are still evolving simultaneously with the structural adjustment. This brings about difficulties in the adaptation of economic actors to long-term unemployment. The slow and painful reforms in Bulgaria offer a typical example of such a development where the economic and social costs of the transition by far exceed the expectations. The isolation of large groups of the able-bodied population from labour is a portion of these costs.

On the other side, a substantial part of the employed are suffering job uncertainty. They have the feeling of potentially jobless people.


Figure 3. 1
What is the probability for you to loose your job during the next year?
(Responses of employed persons in a national survey, November 1996)

Thus job uncertainty, unemployment in general and long-term unemployment in particular have become central issues in Bulgarian society which are related to variouseconomic, social, cultural, political and ethnic problems.

3. 1. Long-term unemployment: parameters and effects

The level of long-term unemployment in Bulgaria significantly exceedsthe level of long-term unemployment in other countries in transition as well as in countries with developed market economies. The regular statistical monitoring of employment shows that the level of unemployment in the period between 1993 and 1996 varies between 21. 3% and 13. 5% of the entire labour force. The share of long-term unemployed during the same periodvacillates between 12. 3% and 8. 7% of the labour force. This means that in Bulgaria the long-term unemployment alone has the level of the general unemployment in European countries which are classified as economies with a relatively stable high rate of unemployment. This fact indicates the enormous burden of long-term unemployment onBulgarian society during thetransition period.

Table 3. 1
Dynamics of labour force, unemployment, and long-term
unemployment in Bulgaria

 

Indicators Sept. 93 June 94 Oct. 94 March 95 June 95 Oct. 95 March 96 June 96
Labour force (Thousands) 3, 809. 3 3, 676. 1 3, 608. 9 3, 566. 8 3, 602. 6 3, 552. 3 3, 512. 4 3, 626. 0
Unemployment 814. 7 734. 1 740. 2 683. 6 564. 6 520. 8 536. 1 488. 7
Long-term unemployment 438. 2 439. 9 444. 4 432. 2 378. 3 341. 9 339. 1 316. 3
                          The key problems of unemployment
                          are those of long-term unemployment
The data of Table 3. 1. lead to the conclusion, that the key problems of unemployment in Bulgaria are those of long-term unemployment. Undoubtedly, the economic development during the last years led to the establishment of large segments of the able-bodied population staying aside of employment for prolonged periods of time. Figure 3. 1. presents the high level and the stable character of long-term unemployment:


Figure 3. 2.
Dynamics of the general and long-term unemployment


Some accumulated negative effects of long-term unemployment are already visible. Others are to be expected in the years to come. The major economic effect is the exemption of ca. 10% of the labour force from labour for a period longer than one year. In this way society looses one tenth of the added value to be produced. After one year of unemployment most unemployed loose their professional skills. Simultaneously, society invests further in unemployment benefits, social support benefits for long-term unemployed, and in expenses for their reintegration in employment. In addition to the economic burden of long-term unemployment, social, cultural, ethnic and political effects show the real costs of unemployment covered by the entire society and by unemployed individuals. Long-term unemployment deepens the stratification in society, dividing it in numerous poor and few rich people. A new social structure emerges. The moral values of social groups change. The impoverished part of society, which includes long-term unemployed, gets more and more isolated and demoralised. The long-term unemployment affects compact ethnic groups and brings about a deep ethnic division insociety thus causing ethnic tensions and undermining the national integration.

The outlined problems of increasing economic and social disintegration could be elaborated in more details when exploring the main groups of long-term unemployed. In Bulgaria, the problems of unemployed youth and females are most relevant.

3. 2. Long-term unemployment of young people: aspects of social damages

Young people are a major part of the unemployed in general and of the long-term unemployed in particular. They comprise approximately one third of the unemployed countrywide between September 1993 and June 1996. The core of this group is filled in directly by secondary school leavers and university graduates as well asby dischargees from the compulsory military service. For 29. 7% of the unemployed young people in June 1996 unemployment has started immediately after the accomplishment of secondary or higher education and for 27, 4% after military service. During the last several years this unemployment rate of young people remains high and stable. Obviously, in the period of transition the state is not capable of providing avariety of jobs. In fact, it cannot offer any jobs to large groups ofyoung people.


Table 3. 2.
Relative share of the unemployment of young people
in general unemployment and in long-term unemployment

 

Indicators Sept. 93 June 94 Oct. 94 March 95 June 95 Oct. 95 March 96 June 96
Unemployed 814. 7 734. 1 740. 2 683. 6 564. 6 520. 8 536. 1 488. 7
Unemployed youth 248. 8 197. 3 214. 8 190. 1 163. 8 157. 3 142. 7 135. 0
Long-term unemployed 438. 2 439. 9 444. 4 432. 2 378. 3 341. 9 339. 1 316. 3
Long-term unemployed youth 112. 9 97. 1 102. 1 80. 2 84. 7 77. 2 74. 4 70. 1

As seen from the point of view of long-term unemployment of young people, the period of transition does not bringthe benefits of market economy and causes hesitation in young people to support it. Staying out of employment at the time they should start their working life, young people cannot reach self-fulfillment in the way which is typical for a democratic market economy. They cannot improve their professional qualification on the basis of the preceding theoretical education in schools and universities. Usually, they cannot be competitive at the labour market because of the lack of professional experience. However, staying out of thelabour environment they cannot establish contacts with people having professional skills and acquire the skills when working together with them. Thus the break in the transfer of professional qualification in societyis another dimension of the negative impacts of unemployment.

                          Mass unemployment
                          among young people
                          breaks the continuity
                          in developing labour skills

Figure 3. 3.
Youth unemployment in total unemployment (1),
 long-term youth unemployment in total long-term unemployment (2),
and youth long-term unemployment in total youth unemployment (3) (shares)


                          The transition period is characterised
                          by a high and stable unemployment
                          among young people
The labour market is not simply unfavourable to young people. The unfriendly situation is long lasting. One quarter of long-term unemployed are young people. They stay very long in the position of job-seekers. This seems to be paradoxical since the young segment of manpower is better educated. It ismore adaptable towards the changing environment and prone to mobility. These are important prerequisites for adjustment of the labour force to the economic restructuring. Obviously, in the Bulgarian conditions the major shortcoming of the young labour force, namely the lack of professional experience, seems to be most important.

The negative indicators of unemployment among young people have another dimension as well, namely the specifics of long-term unemployment. This is one of the most disturbing developments in the Bulgarian version of economic transition.


Figure 3. 4.
Structure of theunemployment among young people by length of stay

Within the group of young unemployed, those without qualification score highest - 46. 6%. The largest part of them (78. 4%)have only basic education. A significant part of young unemployed have passed a course of vocational education - 38. 9% by the end of October 1996. A large portion of unemployed youth have attended comprehensive secondary schools - 27. 5%. These data reveal educational and vocational preconditions for unemployment and particularly for long-term unemployment among young people. Lack of proper vocational training, unsatisfactory levels of education and qualification, which do not provide for higher flexibility in the changing economy prevent the smooth adaptation of young people to the present day working conditions. They drive young people out of economic and social life for shorter or longer periods of time.

The consequences for marginalised young people are manifold yet interconnected. Without occupational status and earnings, they fall to a low social position. In a survey conducted by the National Statistical Institute and the Institute of Demography of the Bulgarian Academy of Sciences among young unemployed, 56, 3% of the interviewed said, that the most important consequence of unemployment was the drop of their living standards. When lacking earnings, young people are dependent on their parents. Thus their material and social problems are transferredto other members of the household. Jobless young people are abstaining from marriage and breading of children. They have a low self-confidence. Young people who lackthe influence of a healthy labour environment, dispose of limited incomes and are financially dependent, develop and manifest numerous problems in their adaptation to community. They are socially unstable and disintegrated to a high degree. Those, who enter the long-term unemployment and therefore stay for a long time in economic and social isolation, are disposed to mental illnesses. The years of economic transition are marked by increasing drug abuse on the part of young people. Unemployment is one of the basic factors for the stress, which causes this development. In their attempts to find employment young people often contact the underground world of the shadow economy.

All these problems are transferred directly or indirectly from the individual to the state and to the entire society. The passive attitude towards life and the acceptance of a model of marginal labour and social behaviour are synthetic expressions of the socio-economic consequences of unemployment among young people.

                          Long-term unemployment induces
                          a passive social position.
3. 3. Long-term unemployment among the women

The shift to market economy is a challenge to the position and the role of women in economic and social development. For almost half a century, in the conditions of a centrally planed economy, women have enjoyed a relative equality in social life. During thetransition period their social positions and roles are changing substantially.

A positive feature of the new model is the variety of choices concerning spheres andforms of work. Women may prefer to join the public sector, to start their own businesses, or to stay at home and devote themselves to the family and to the children. In parallel to this variety of valuable possibilities, the new model of the role of women in the socio-economic development contains some negative sides as well. The most significant one is the simple fact that the multiple offers, which emerged during the last years, are hardly accessible. In the conditions of reduced incomes of households, increased prices of services and damaged social infrastructure, women could only join the employed or be among the active job-seekers. In this way, women become actually more discriminated and restricted, than in the conditions of compulsory employment. Surveys on employment and unemployment indicate a share of women with basic education between 43, 3% and 47, 7% in the female labour force. This is the major reason for longer unemployment and lower professional competitiveness of women.

A typical element of the transition and of the economic crisis is the increased social instability of women in the labour force, especially in case of maternity. The low incomes and the high expenses on health care, on education andsocial protection undermine or entirely eliminate a series of social benefits of females which were acquired during the previous decades. The typical effects are the lower rates of marriages and births, and the orientation to one-child family. The increasing difficulties in breading children, in securing their nutrition and education are shocking developments which put women under strong pressure simultaneously with the difficulties they experience at the work place.

The changes in the socio-economic role of women are predominantly determinedby their position in employment and unemployment in the new conditions of labour market. The indicators of female unemployment and long-term unemployment are as depressing as those of theunemployment among young people. Female unemployment varies between 48. 2% in September 1993and 46. 8% June 1996.
 

                          Theeconomic reforms
                          have narrowed the space
                          for participation of women
                          in labour and in social life
The increased share of long-term unemployed women in the general female unemployment reveals rather limited opportunities for employment. The relative share of long-term unemployed women in the entire female unemployment during the last four years has increased from 53. 4% in September 1993 to 62. 3% in June 1996.


Figure 3. 5.
General and female unemployment


Two major socio-economic issues become clear when female unemployment and the female long-term unemployment are considered. The former one is related to the absolute and the relative increase of the number of women, who remain outside the labour force in the period from September, 1993 through June, 1996. There is a clear tendency to change the model of female participation in social and economic life. In the given period, the relative share of women outside the labour market has increased from 49. 4% to56. 5%. In absolute figures this is a change from 1, 750 to 1, 851 thousands.


Figure 3. 6.
Long term unemployment - general and female


This change in the labour status of women occurs in the conditions of drastically lowering living standards. Therefore, its negative impacts on women strongly prevail. The decreased demand of labour is forcing women to leave the labour market against their will. That is why women are more prone to take over any job suggested than man. This new type of economic activity of females was imposed on them. It is not a result of their free choice.

The idea is widely spread, that the burden of employed females has been alleviated by the increased supply of household commodities. To some extent this is true since the supply of some commodities really exceeds demand. The positive effect is the elimination of some deficits and cues which were typical for the centrally planned economy. However, the substantially reduced household incomes make a substantial part of these goods not affordable. Large price differences force women to spent more time in searching for cheaper foodstuffs. The only change, which occurred, is the shifting from one type of difficulties to another: instead of waiting long cues towards spending more time in looking for lower prices. This change is not a benefit for women, since their problems withmaintainingthe family remain.

The involvement of women in working life is being replaced in the emerging model by the household or by the small family business. In the new conditions the striving for improvement of professional qualifications is rare. The social contactsand the cultural interests are shrinking. This change, combined with the collapse of the former pattern of health-care deprives female work-force from the basic prophylactic services. The result is increased malignancy.

Out of the labour market, part of the female work-force goes to the informal sector. The years of transition became a period of increasing prostitution, and of export of "white bond-slaves".

3. 4. Possibilities for limiting the social and economic damages of long-term unemployment

The recent history of market economy confirms that the social and economic damages of long-term unemployment are unavoidable, although their dimensions might differ. The key issue is what is to be done in order to alleviate the negative impact of long-term unemployment on individuals and on society. In societies in transition and especially in Bulgaria, problems are rather intensive because of the strong presence of long-term unemployment among specific groups of the work-force and because of the territorial concentration of long-term unemployment. Attempts to reduce it and to alleviate its socio-economic consequences do not foster optimism. There are diverse reasons for this state of affairs:

-long-term unemployment is not considered to be a priority concern of society;

-the design and implementation of social support programmes do not correspond to the complexity of goals;

-the implementation of social support programmes does not involve all relevant institutions, the structures of the central and local governments, organisations and associations, clubs, etc.

The most important nation-wide programmes to promote employment are those which have been launched by the National Employment Service of the Ministry of Labour and Social Affairs. They combine pro-active and passive measures. The emphasis is increasingly shifting towards active measures forcreatingconditionsfor employment or self-employment.

In the framework of the passive programmes for alleviating difficulties and rendering assistance to job-seekers since the end of 1994, the eligible long-term unemployed have been receiving a dole which amounts to 60% of the minimum wage.


Figure 3. 6.
Dynamics of in-cash unemployment benefits for long-term unemployed

The number of long-term unemployment beneficiaries varied in 1995 around the average of 26 thousands. In 1996 this number was relatively stable, which could be explained by the suspensor character of long-term unemployment. The cash transfers amount to 7. 1% of the expenditures from the Vocational Training and Unemployment Fund. The amount of the average dole varied between Levs 1, 286 and Levs 1, 656. This is equal to ca. 20% of the average wage in the country. The data indicate that the amount of doles are rather modest to motivate a passive behaviour of job seekers. The passive policies which predominantly includea disbursement of doles to this group of the unemployed is a palliative measure. It is intended to alleviate keen economic and social issues of beneficiaries and their families.

                          There is a need for well targeted
                          pro-active policies for promotion
                          of employment
Only well targeted pro-active policies for promotion of employment could be successful. Programmes which are intended to promote employment of long-term unemployed should have priority. Numerous and diverse programmes with low budgets should be implemented to address the various specific parts within the larger group of the long-term unemployed.


Box 3. 1.
Promotion of the entrepreneurship of young people

In order to facilitate the economic and social integration of young people into the labour market and in connection with the launching of the Programme for Youth Employment, a Fund for Promotion of Youth Employment has been established in 1995. The rules and criteria for supporting projects have been elaborated. The schemes of the establishment of business incubators and business consulting centres as supportive structures for promotion of entrepreneurs were approved. On the basis of the results of sociological surveys districts and quotas for pilot implementation of measures of the programme have been determined.


Up to now, long-term unemployed have not been treated as a specially vulnerable group on the labour market by the pro-active policies of the National Employment Service. The involvement in pro-active measures occurred within regional programmes for promotion of employment and self-employment. The initiatives to support long-term unemployed in seeking jobs with the assistance of non-governmental organisations like unions, clubs, associations or foundations are underdeveloped. The activities of the job-clubs to support job-seekers have had local effects. The clubs should perform some social functions in addition to job-brokering. They could offer space for contacts between employers and unemployed. Relations with orphanages, pensioners’ clubs, with companies which offer employment abroad or temporary employment, and with vocational training providers are another type of potential activities. It is worth to establish contacts with representatives of governmental agencies. They can inform the unemployed aboutpossibilities for job-creation, about positive effects of private entrepreneurship, about legal provisions for promotion of self-employment, etc. This is only part of the wide range of possibilities which unfortunately are not fully utilised. Offering additional opportunities to unemployed and long-term unemployed aims at enabling them to select jobs or to maintain social contacts. Another aim is to strengthen their feeling that society is not indifferent to their fate, that it has not bailed them out. All these are strong incentives for improving the integrity and the accelerated reintegration of long-term unemployed in labour, in social and cultural life.

                          Ineffective co-ordination
                          harmsthe programmes to combat
                          long-term unemployment
Ineffective coordination between institutions, organisations and associations dealing with the problems of long-term unemployed young people, women, ethnic and professional groups makes the problems even more complicated.

The active involvement of employers’ associations in labour market policies aiming at the stimulation of job-seeking or at the creation of individual businesses is of utmost importance for overcoming the crisis in finding jobs. The offices of the National Employment Service offer psychoanalytical consultations which aim at alleviatingthe socio-psychological problems of long-term unemployed. In 1995 the regional labouroffices rendered the following services:

—individual consultations    

—telephone consultations    

—selection, assigned on behalf of an employer    

—psychological test for admission to training

5, 824    

846    

840    

472

 

It is difficult to estimate if this services suffice, as no data of preceding years are available, and a quantitative and qualitative analysis of the services is still not possible. Nevertheless, experts estimate the services as minimal concerning their volume and efficiency. Many of the regional offices have vacancies for full-time psychologists. In 1995, one of every 55 jobless has used services of this kind. The figures indicate the unsatisfactory level of the services provided, which results in increased morbidity rate. The establishment of a wider and more comprehensive network of this kind of assistance would help long-term unemployed to more easily sustainthe burden of unemployment.

X X X

The analysed damages of long-term unemployment to the economic, political, and cultural life in the countryare not the sole factors eroding social integration in the long run. The awareness of society as to the harmful effects of this phenomenonand the means for putting it under control should be developed. Economic reforms should be accelerated but also better co-ordinated in order to render broader possibilities for preventing long-term unemployment. The difficult problems of unemployment are a consequence of unclearly defined objectives of the economic transition and ofimproperly chosen means to achieve them. The dramatic delay of the structural adjustment of economy, with the purpose to avoid mass unemployment, in effect led to a higherregistered and to a large hidden unemployment. In the same time, employment paid at the level of social assistance does not stimulate labour and social activity in favour of reforms. Keeping the level of employment stable without introducing serious structural and technological changes is only possible by reducing the remuneration of labour. In this way, the policies pursued converted the prevailing part of employment in the budget sectorin hidden unemployment.

Keeping in mind that this groups include the best educated and skilled part of the nation - teachers, medical doctors, scientists, etc., negative effects of the wrong policies could be expected. This is a vivid example of the impossibility to carry out effective reforms without clearly definingtheir goals and without acting consequently for their implementation. The lesson is that no substantial socio-political and socio-economic changes could be implemented without a social consensus concerning the fundamental objectives of the reforms. These objectives should serve as a focus to unite and integrate Bulgarian society.


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