Total Unemployed (level)

What Is Long-Term Unemployment?

Long-term unemployment measures the share of all unemployed persons who have been continuously without work for 12 months or more. While the headline unemployment rate treats all jobless workers identically—whether they have been searching for a week or a year—the long-term unemployment rate isolates the most entrenched segment of the unemployed population. It captures a form of labour-market distress that is qualitatively different from short-term joblessness and carries far more severe economic and social consequences.

Short spells of unemployment are a normal feature of a dynamic economy. Workers leave one job and take some time to find another; seasonal workers experience predictable gaps between engagements; new graduates search for their first position. These frictional episodes are generally brief and resolve without lasting harm. Long-term unemployment, by contrast, signals a breakdown in the matching process that keeps workers connected to the labour market. When individuals remain jobless for a year or more, something has gone structurally wrong—their skills may have atrophied, their professional networks may have frayed, employers may view the gap in their employment history with suspicion, or the industries and occupations they are trained for may have permanently contracted.

The long-term unemployment rate is derived from the monthly labour force survey, which asks unemployed respondents how long they have been searching for work. By aggregating the responses, statistical agencies can tabulate the distribution of unemployment by duration and calculate the share that exceeds the 12-month threshold. This share is the headline measure of long-term unemployment, though some agencies also report the share exceeding 6 months, 18 months, or 24 months to provide a more granular picture of duration.

How It Is Calculated

The long-term unemployment rate is the number of persons unemployed for 12 months or more as a share of total unemployment.

$$\text{Long-Term Unemployment Rate} = \frac{U_{12+}}{U} \times 100$$

where $U_{12+}$ is the number of unemployed persons who have been without work for 12 months or longer and $U$ is the total number of unemployed persons.

An alternative formulation expresses long-term unemployment as a share of the labour force rather than of total unemployment:

$$\text{Long-Term Unemployment (LF share)} = \frac{U_{12+}}{LF} \times 100$$

where $LF$ is the total labour force. This version provides a sense of how large the long-term unemployed population is relative to the entire working population, rather than just relative to other unemployed people. Both measures are widely used, and context determines which is more appropriate.

The incidence of long-term unemployment is closely related to the average duration of unemployment spells, but the two concepts are not identical. Average duration can rise either because more people are entering long spells or because a small number of people are experiencing extremely long spells that pull the average upward. The long-term unemployment share focuses specifically on the fraction of the unemployed population that has crossed the 12-month threshold, making it a more targeted indicator of structural distress.

How to Read the Numbers

The long-term unemployment share varies widely across countries and over the business cycle. In well-functioning labour markets with flexible institutions and active employment services, the share of unemployed persons who have been jobless for more than a year may be as low as 10 to 15 percent. In economies with rigid labour markets, weak employment services, or structural mismatches, the share can exceed 40 or even 50 percent, indicating that a large proportion of the unemployed population is trapped in a state of persistent joblessness.

The cyclical pattern of long-term unemployment is distinctive and worth understanding. During the early stages of a recession, the unemployment rate rises quickly, but most newly unemployed workers have been jobless for only a short time. The long-term unemployment share may actually fall initially because the surge of recently laid-off workers dilutes the proportion who have been unemployed for over a year. As the recession persists, however, workers who lost their jobs early on begin to cross the 12-month threshold, and the long-term share climbs steadily. This lagging behaviour means that long-term unemployment often peaks well after the overall unemployment rate has begun to decline, making it one of the last labour-market indicators to normalise following a downturn.

The composition of the long-term unemployed is also informative. If long-term unemployment is concentrated among older workers with industry-specific skills, the diagnosis points to structural change that has rendered certain occupations obsolete. If it is concentrated among younger workers, the concern is that a generation is being scarred at the outset of their careers. If it is evenly distributed across demographics, the problem may be one of generalised demand deficiency rather than structural mismatch.

Economic Significance

Long-term unemployment is one of the most consequential indicators of structural health in the labour market. Its economic significance extends well beyond the immediate hardship experienced by the individuals affected, though that hardship is severe. The longer a person remains unemployed, the more their skills depreciate, the more their professional contacts weaken, and the more difficult it becomes to convince employers that they remain a viable candidate. This self-reinforcing dynamic is known as state dependence or duration dependence, and it means that long-term unemployment has a tendency to become self-perpetuating.

The concept of hysteresis is closely related. Hysteresis refers to the phenomenon whereby a temporary economic shock—a recession, for instance—leaves a permanent mark on the economy's productive capacity. If a recession pushes a large number of workers into long-term unemployment, and those workers subsequently exit the labour force or accept positions far below their skill level, the economy's effective labour supply is permanently reduced. The natural rate of unemployment may ratchet upward, meaning that even full recovery of aggregate demand does not restore the labour market to its pre-recession condition. This is one of the most compelling arguments for aggressive counter-cyclical policy during downturns—preventing workers from falling into long-term unemployment in the first place is far easier and cheaper than rescuing them once they are there.

Central banks consider the level of long-term unemployment when assessing the amount of slack in the economy. If a significant share of the unemployed has been out of work for over a year, their effective availability to fill vacancies may be diminished, meaning that the measured unemployment rate overstates the true degree of labour-market slack. This distinction affects the calibration of monetary policy: a central bank that treats all unemployed workers as equally available for hire may misjudge the inflationary implications of falling unemployment.

Fiscal authorities bear the direct costs of long-term unemployment through extended income-support payments, retraining programmes, and the indirect costs of poorer health outcomes and higher demand for social services. Active labour-market policies—job-search assistance, subsidised employment, skills retraining—are the standard toolkit for addressing long-term unemployment, though their effectiveness depends on the quality of implementation and the underlying state of labour demand.

The social costs of long-term unemployment are profound and well-documented. Prolonged joblessness is associated with clinical depression, deteriorating physical health, family breakdown, loss of social status, and reduced civic engagement. These effects create negative externalities that ripple outward from the individual to the community, making long-term unemployment not merely a personal misfortune but a public-policy challenge of the first order.

Income inequality tends to widen when long-term unemployment is elevated, because the longest-suffering unemployed are typically drawn from the most vulnerable segments of the population—older workers, workers with lower levels of education, minority groups, and residents of economically depressed regions. Reducing long-term unemployment is therefore a key channel through which labour-market policy can influence the distribution of income and opportunity.

Related Indicators

• Unemployment Rate
• Youth Unemployment
• Participation Rate
• Gini Coefficient