What is the cost of long-term unemployment to society? Now it is possible to determine the cost with the aid of a web page calculator.
Courtesy of the Finnish Confederation of Professionals STTK, there is now an indicator that can measure or assess the price tag of long-term unemployment in Finland. The figure is running at 216 euro per second, 12,963 euro per minute and 18.7 million euro per day.
– No one can calculate these costs with 100 per cent accuracy”, says Ralf Sund, the economist at STTK, who is behind the calculator. But it is possible to ascertain what the costs are, on the basis of costs of unemployment including unemployment benefits, other social welfare benefits, losses in tax revenue and losses to the pension systems.
In Finland, long-term unemployment means a person who has been completely without work for 12 months.
Experience has shown that some 70 per cent of those who have been more than one year without work are in serious danger of moving permanently outside the active labour force.
– For more than half of them it is similar to the experience of ex-heavy weight boxing champions: they never come back”, Sund writes in the STTK web page. – The bill comes to several billions.
And Sund estimates that the cost for one such person to the national economy is 600,000 euro. Long-term unemployment, on average, begins at the age of 48. This is also taken into account in Sund’s calculations. The calculator counts the costs for society until the existing long-time unemployed reach the pension age.
Political debate in Finland today focuses almost entirely on public debt and the competitiveness of Finnish economy. But one of the most worrying long-term problems in the present economy is the growth of long-term unemployment, Sund stresses.
It has been rising at an alarming rate since the economic crises began in 2008. Back then the number of people out of work was around 40,000, and at the end of February 2015 it was 103,000. Unemployment is up by19 per cent from last year.
– Cutting long-term unemployment to half would melt away one third of the sustainability gap. It is not charity but profitable investment”, asserts Sund in the STTK web page. The sustainability gap in public finances is the main theme in the forthcoming parliamentary elections on 19 April.
– I say to all political parties and candidates for parliament: focus on what is essential, to raise the level of employment. To create jobs by any means possible is wise politics.