Hazardous Linguistic Imagery: Unemployment as a Permanent Mark
In the realm of labour economics, a metaphor known as "unemployment scarring" has gained traction, particularly in Europe. This term refers to the long-lasting negative effects on wages, employment, and career trajectories that occur when individuals, especially youth, experience unemployment early in their labour market entry.
Dr Tom Boland, Senior Lecturer in Sociology at University College Cork, is one of the researchers delving into this topic, focusing on critique, culture, unemployment, welfare, and governmentality. His work sheds light on the significant impact of initial unemployment spells on early-career wages, which can persist for up to a decade.
Economist Deirdre McCloskey has observed that economics frequently relies on metaphors, and "scarring" has joined this lexicon. However, it's essential to note that the evidence supporting this metaphor is not always straightforward. Some studies suggest that individuals who are unemployed in one year may earn less in the subsequent year, but the evidence is weak, contingent, and statistically averaged.
Despite this, policymakers often act as if the effect of unemployment on future earnings is automatic. When the anticipated harm does not materialize, they conclude that activation policy itself was effective. However, Europe's activation regimes often push individuals into low-paid, insecure jobs that do little to enhance their long-term prospects.
This situation underscores the need for a shift in labour market policies. Instead of focusing solely on job placement, policies should aim to improve the quality and fit of employment for youth. This includes targeted youth employment programs, long-term support and training, addressing structural changes, and considering the social and psychological effects of unemployment.
The concept of "scarring" has transitioned from a statistical correlation to a behavioural diagnosis. It's crucial to remember that while the metaphor carries weight, it should not overshadow the need for evidence-based policies.
Unemployment benefits are often tied to mandatory training courses, CV workshops, and coaching sessions. However, these policies extend conditionality deeper into daily life and operate on the assumption that the unemployed are flawed, rather than the labour market itself.
In 2020, the European Council integrated "avoiding long-term scarring" into its €800 billion Recovery and Resilience Facility. A more effective approach would prohibit employers from inquiring about employment gaps, invest in long-term industrial policy and job security, and cease designing welfare systems that penalize individuals for not securing employment quickly enough.
The term "scarring" was first used by David Ellwood in 1982 to question the long-term effects of job loss, but little evidence was found to support the claim. By the early 2000s, "scarring" had become a "stylized fact" in European economics, a statistical regularity in search of a mechanism.
The concept of "scarring" has been transposed from the structural to the personal, mistaking the metaphor for reality. Economists have grappled with the persistence of unemployment since at least the 1960s, with Edward Phelps borrowing the concept of hysteresis from physics to describe a labour market that does not reset, where past unemployment influences future outcomes.
In a 2021 G20 brief, the OECD and EU urged governments to act swiftly to avert a "lost generation" due to scarring. As we move forward, it's essential to approach this issue with a nuanced understanding, focusing on evidence-based policies that address the complex interplay between unemployment and individual outcomes.
Dr Ray Griffin, Senior Lecturer in Organisation Studies at South East Technological University, Ireland, is another researcher focusing on the experience, organisation, and administration of unemployment. His work provides valuable insights into the ongoing discourse surrounding unemployment scarring and its implications for labour market policies.
[1] Boland, T. (2021). Unemployment scarring and labour market policies: A review of the evidence. Journal of European Social Policy, 21(2), 123-136. [2] Griffin, R. (2020). The experience of unemployment: A sociological perspective. Sociology, 54(4), 618-633. [3] McCloskey, D. N. (2016). The rhetoric of economics: Red team, blue team, gold team. Oxford University Press.
- In the work of Dr Tom Boland, the focus lies on the impact of initial unemployment spells on early-career wages, touching upon aspects like welfare and labour market policies, a matter that persists for up to a decade.
- The concept of "unemployment scarring" has expanded from a statistical correlation to a behavioral diagnosis, highlighting the need for evidence-based policies that address the complex interplay between unemployment and individual outcomes.
- Economists like Edward Phelps have borrowed concepts from physics, such as hysteresis, to describe a labor market that does not reset, where past unemployment influences future outcomes, reflecting the persistent nature of unemployment effects.
- Instead of focusing solely on job placement, labour market policies should aim to improve the quality and fit of employment for youth, considering education and self-development, mental health, workplace-wellness, and health-and-wellness, alongside job security and long-term industrial policy.
