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Hidden reserve: Opportunity for the job market

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Hidden reserve: Opportunity for the job market

Due to economic and demographic factors, the need for workers has increased noticeably. This can offer an opportunity for those people who have received little attention so far: the so-called “hidden reserve”. Good labor market support, public job offers and the expansion of childcare facilities can help to offer these people prospects again.

An underestimated phenomenon

Common definitions of unemployment assume the immediate availability and active search for work. A number of people who basically want to work and are available for the labor market but have stopped looking for work are not recorded. According to the usual Definition der International Labor Organisation (ILO) these are included in the non-working population.

Based on the definition of the ILO, Statistics Austria defines the Non-active population with a desire to work based on surveys. The definition includes all those who are not (immediately) available for the labor market, are not actively looking for work and say they want to work. This includes, for example, people who are not immediately available for the labor market due to illness or a lack of childcare facilities. As silent Reserve Statistics Austria describes the part of the non-active population that could start working within two weeks.

In the third quarter of 2022 71,200 people belonged to the hidden reserve. At 55 percent, women were more affected than men. The non-working population with a desire to work was 260,100 people, the proportion of women rounded up to 58 percent. This is probably due to the care responsibilities, which are still predominantly taken on by women.

The hidden reserve is dependent on the economy, similar to unemployment. During the pandemic, the number of non-working people who wanted to work also increased, but fell again significantly with the good economic situation. The currently high demand for workers offers these people an opportunity, but also a challenge for labor market policy to give them prospects again and to encourage them.

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Who are the “silent reserves”?

Little is known about the reasons why people in Austria gave up looking for work. Experiences of frustration with applications and in the placement process are likely to play an important role. Older unemployed people over 55 in particular often withdraw and stop actively looking for a job Analysis of data from the ILO show. A study for Germany also makes it clear that discouraged (older) unemployed people show a pattern of health restrictions, a low level of education and often also a migration background. Discouragement is then often the result of poorer prospects on the job market.

Bacher et al. examined the hidden reserve in Austria in the years 2016 to 2020. Many belong to the first generation of immigrants. In addition, there is an above-average proportion of people with a low level of education and people who previously worked as unskilled workers.

This is a group of people that is relevant for labor market policy, because 46 percent of the hidden reserve have been unemployed for more than a year and 19 percent for more than five years. Finally, the study by Bacher et al. came to the conclusion that under ideal conditions, 65 to 84 percent of the vacancies could be filled from the “hidden reserve”.

Women are particularly affected

Unlike among the unemployed, women are overrepresented in the hidden reserve. As part of a Study by SORA on behalf of the Vienna Chamber of Labor affected women were asked about their experiences.

It became clear that the working conditions, especially in the service sector, and the framework conditions on the labor market do not match the realities of life for women: physical stress, including health impairment, discrimination, sexual assaults and, last but not least, the incompatibility of gainful employment with care work lead to withdrawal from the labor market.

Health reasons, care obligations, professional reorientation phases and the assumption that there are no suitable jobs were identified as the main reasons why the search for work was given up. Insufficient support from the AMS, worse treatment or discrimination in counseling were also reported on a case-by-case basis.

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Experiences from the practice of social enterprises

Reports from the daily work of the social enterprisewho accompany people on their way (back) into the labor market, make it clear that it is often structures and a lack of support that lead to a withdrawal.

Formally, people who are assigned to socio-economic companies or non-profit employment projects are registered with the AMS. According to experiences from a Vorarlberg company, however, more than 70 percent had not been looking for gainful employment for a long time. Reasons for this include health problems, being overburdened with family work or a lack of mobility options. Above all, however, people have often had negative experiences in the application process, experienced rejection or received no feedback on applications at all and are therefore resigned.

Many people who are long-term unemployed face major hurdles that make it difficult for them to take up gainful employment in the short term, even if they are actually looking for it: For example, a counseling center for women in Salzburg reports that childcare places are often not available and Companies do not respond to the needs of women with care responsibilities. This is particularly difficult for single parents when family support is lacking or the children need more and more structured care due to disabilities. The compatibility of work and family remains a task for women – and it often turns out that this compatibility is not possible given the general conditions.

Material deprivation, which means, for example, that people are unable to buy suitable clothing, a lack of mobility in rural areas or health restrictions are also factors that make it difficult for people who are actually willing and able to work to participate in the labor market. In particular, first-generation migrants often lack important information about access to the Austrian labor market.

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What to do? Opportunity and challenge in labor market policy

The research results and reports from the social enterprises make it clear that the “hidden reserve” is a relevant factor that overlaps with vulnerable target groups of labor market policy. The advantageous situation on the labor market is an opportunity for labor market policy to focus on groups that are otherwise neglected.

  • The first generation of immigrants is overrepresented in the “hidden reserve”. To counteract this, offers are needed that promote integration and counteract dequalification.
  • Above all, qualification must be accessible and financially secure for people with little formal education.
  • People with care responsibilities – i.e. women in particular – are often not available for the labor market because this is not compatible with the care work that they do privately. This is where the public sector must step in and expand childcare and high-quality care offerings. At the same time, companies need to rethink: The world of gainful employment must adapt to the requirements of compatibility.
  • Persons with health impairments find it difficult to find a place on the labor market. Working conditions and structures in companies often make it impossible to work productively even with health restrictions.
  • People who have already given up due to negative experiences or who need support in the face of major hurdles could benefit from an expansion of subsidized employment in social enterprises or from a state job guarantee. In this context, employment relationships can be designed better to meet needs and at the same time offer an integration path into the “primary labor market”.
  • In order to reintegrate the “hidden reserve” into working life, more and good support from the AMS is needed and not coercion or sanctions that push them into the labor market under unsuitable conditions or even further into non-employment.

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