One-Euro-Jobs Do Not Improve Employment Chances For Long-Term Unemployed

German welfare recipients accepting a so called One-Euro-Job (Ein-Euro-Job) are less likely to find regular employment, which is subject to social insurance contribution, than similar long-term unemployed without One-Euro-Jobs. This is the finding of a new study conducted by the Centre for European Economic Research (ZEW). The study analyzed the employment history of 160,000 German welfare recipients in the unemployment benefits II scheme (UBII).

In order to analyze the effects of One-Euro-Jobs on the employment chances, the researchers calculated how many welfare recipients who accepted a One-Euro-Job in the first four months after beginning to receive UBII found employment subject to social insurance contributions 12 months later. The results of welfare recipients with One-Euro-Jobs are compared to the employment chances of similar welfare recipients without One-Euro-Jobs. The study focuses on welfare recipients in Germany who have received UBII in 2006 for the first time.

All welfare recipients with One-Euro-Jobs have disadvantages when finding regular employment. The strongest effects can be seen for men without migration background. Their likelihood to take up regular employment after one year is 3.1 percent points lower than the reference group. Women with migration background are the least affected with 0.9 percent points. However, this effect is still statistically significant.

Various factors could explain the uniformly negative results. The qualifications obtained at the One-Euro-Jobs could possibly miss the requirements of the primary labour markets. Moreover, One-Euro-Jobs could stigmatise long-term unemployed if employers consider this jobs as lacking employability. It would also be possible that, to avoid unappealing One-Euro-Jobs, welfare recipients of UBII are keener to find regular employment and thus search look more intensely. The higher employment rate in the reference group would indicate an indirect success of One-Euro-Jobs.

"With this data, we are unfortunately unable to identify the reasons responsible for the negative results of One-Euro-Jobs", says researcher Stephan Thomsen, who contributed to the study. "Therefore, we must not jump to the conclusion that One-Euro-Jobs are totally unsuitable as instruments in labour market policy."

The One-Euro-Job is currently the most frequently used instrument to vitalise long-term unemployed. It is supposed to increase the employability of long-term unemployed and the chances of taking up regular employment subject to social insurance contribution. Every year, more than 750,000 long-term unemployed take up One-Euro-Jobs.

For further information please contact

Dr. Holger Bonin, Phone: +49 (0)621/1235-151, E-mail: bonin@zew.de

Jun. Prof. Dr. Stephan Thomsen, Phone: +49 (0)391/6718431, E-mail: stephan.thomsen@ovgu.de