Consequences of halving the unemployment benefits period

The 2010 reform on unemployment benefits entailed a halving of the maximum unemployment benefits period from four to two years. This survey examines the development in unemployment and employment among the persons who were the first to be covered by the new rules on a two-year entitlement to unemployment benefits. The survey shows that, three months before expiry of the unemployment benefits period, the propensity to come into employment increases for people with the shorter unemployment benefits period. Between 460 and 685 persons got a job earlier than they would have done with a longer unemployment benefits period. This corresponds to about 1% of the 50,600 unemployment benefits periods examined. The small, positive effect at the end of the unemployment benefits period does not outweigh the fact that several people in the group only qualifying for unemployment benefits for two years have abandoned the unemployment benefits system for other activities than employment, e.g. education or no support at all. The survey also shows that the shorter unemployment benefits period has not generally increased employment. On the contrary, a lower percentage of recipients of unemployment benefits with the shorter unemployment benefits period actually got a job after two years than recipients of unemployment benefits with more than two years right to unemployment benefits. This survey was commissioned by the National Employment Council (BER).