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