The U.K. and The Netherlands are considering having the long-term unemployed in their countries to do some unpaid work or lose benefits. This has raised the hackles of many. Others are hailing the move as a good one.
This approach is being considered despite the fact that Germany has provided evidence that such an approach would be counter-productive. The Centre for European Research (ZEW) has recently published a report that states that unpaid work to keep the long-term unemployed in touch with the labor market is counter-productive, competes with the real economy and does not help get the long-term unemployed back into work because the experiences gained by the unemployed workers are usually irrelevant.
The ZEW report was backed up by the Federal Audit Court of Germany, which came to the conclusion that more than 50 percent of the 280,000 German unemployed who work on forced '1 Euro jobs' should not have been on the government's scheme because the work they carried out was either not in the public interest or simply competed with the real economy, thereby undermining minimum wage agreements.
Shortly after both reports appeared, the British and Dutch governments started considering the introduction of unpaid work for the long-term unemployed precisely for those reasons the reports had already repudiated.
'1 Euro jobs' were introduced by the government in 2005 to keep the long-term unemployed in touch with the labor market and to help them get back into work. Participating employers are usually public institutions such as nursing homes. According to the Federal Labor Agency (BA) around 280,000 unemployed people worked on '1 Euro jobs' schemes in 2009.
The government guidelines for what is effectively unpaid work state that '1 Euro jobs' must only concern work, which would otherwise not be done and must be in the public interest. This is supposed to prevent '1 Euro jobbers' from competing with the real economy.
The reality, however, is completely different according to the Audit Court. '1 Euro jobbers' were found to be carrying out tasks such as removing illegal waste or cleaning showers in nursing homes.
The Audit Court also highlights that in many cases, the job centers randomly assign any job to any person without any regard for the specific professional needs of the long-term unemployed person. "The '1 Euro jobs' are in the majority of cases therefore not useful for getting the long-term unemployed back into work" the report states.
Different opinions notwithstanding, it remains to be seen where this leads. If it were a simple matter to get the unemployed back to work, it would have been done a while ago.