Lowering Long-Term Unemployment

With BCG’s help, Germany’s Federal Employment Agency has gained a greater understanding of its clients and is using this deeper customer knowledge to develop programs that meet the unique needs of those who have been unemployed for a long period of time.

A Deeply Challenging Problem

Long-term unemployment is a challenge most European countries are struggling to address. The longer a person remains unemployed, the less likely he or she is to be hired into another job. In fact, many employment experts contend that the larger issue of long-term unemployment is a problem that has not yet been tackled successfully.

Officials at the German Federal Employment Agency (Bundesagentur für Arbeit) don’t share that belief. More than 1.1 million Germans qualify as long-term unemployed even though Germany has boasted Europe's lowest unemployment rate, which has remained unchanged for many years. The agency seeks new ways to lower the ranks of the long-term unemployed. 

To accomplish this goal, the agency turned to BCG. Together, we approached the problem by deploying BCG's unique tools and an innovative, end-to-end strategy designed to better understand the population. BCG helped develop and implement new processes, programs, and incentives that would empower the agency to thoughtfully and significantly boost its placement rates. 

The agency views the effort as critical not only to improving the prospects of unemployed citizens but also to positioning Germany to address an ongoing and major shortage of skilled labor.

Digging Into the Details

BCG launched the effort with a pilot program in Frankfurt. The approach was unique for several reasons:

  1. BCG brought a deep understanding of the difficult challenges involved in tackling long-term unemployment—and an innovative mindset and comprehensive perspective on strategy, implementation, and KPIs.
  2. We focused on understanding long-term unemployed individuals rather than the broader long-term unemployment category. Applying MindDiscovery, a proprietary tool developed by BCG’s Center for Consumer Insight, BCG used workshops and psychologically derived projective techniques to determine individual preferences and behaviors of Frankfurt’s long-term unemployed. The team ran seven workshops to segment participants by their abilities and motivation. Understanding more precisely who the agency was serving made it possible to set up effectiveness strategies for addressing each segment and to identify the most appropriate strategies, programs, and materials.
  3. BCG developed the concept and delivered strategic guidance that helped the agency to develop the program and implement it, manage change, and devise new content, program materials, and workshops.

Moving Ahead

BCG’s pilot in Frankfurt has started successfully, enabling the agency to better serve the unique needs of the individuals it serves. Under the program, customers are segmented into four groups—restarters, observers, ready to go, and go-getters—and served through four tailored approaches. This classification enables the agency to focus first on the approximately 25% of go-getter candidates who are both highly skilled and highly motivated. It can prioritize its time and resources to match these most promising candidates to suitable employment opportunities. Simultaneously, it can provide effective programs to the other customer segments, encouraging those customers to enhance their abilities, motivation, and employability.

Although matching the long-term unemployed to appropriate jobs takes time, several customers in Frankfurt have already re-entered the workforce and are gainfully and happily employed.