Unemployment negatively impacts your future salary

WASHINGTON - If you are jobless you need to know this: Unemployment has a negative impact on a worker’s future salary if it continues for a long time.

That’s the conclusion of a study conducted by Spanish researchers, who have analysed the impact of job loss on relative salaries in six European countries.

“Out of the countries studied, Spain, Italy and Portugal are the European Union countries in which long-term unemployment is likely to have the most negative effect on salary when the individual in question returns to work”, Carlos Garc�a Serrano, a researcher at the University of Alcal� (UAH) and one of the authors of the study, said.

The study analysed employment mobility and “relative losses” to salary when an individual goes through a period of inactivity - reporting that they are neither looking for nor available to work - or unemployment in Spain, Italy, Portugal, the United Kingdom, France and Germany over seven consecutive years (1995-2001), based on data gathered by the European Union Household Panel (ECHP).

“We wanted to find out what effect unemployment and inactivity had on salaries, and to see whether the selected countries could be grouped according to the level of impact on this remuneration. To do this, we looked at the different institutions in the labour market and the social protection systems in place in each country”, points out Garc�a Serrano.

The result shows that the countries studied can be divided into three groups. The first of these includes Germany and France, countries which are representative of “protective institutions”, in other words those that follow a more preventive or social security model with regard to labour.

Spain, Italy and Portugal, meanwhile, operate a similar preventive policy, but this is “weaker”, and is different with respect to the collective negotiation system and the active policies within the labour market. Lastly, the United Kingdom has the most flexible system, with less unemployment protection.

“We expected that the impact of inactivity and unemployment would be the greatest in countries such as France and Germany, but this was not the case. In terms of inactivity alone, France, Germany and Portugal take the lead in relation to negative salary impact on subsequent employment”, the researcher says.

The study has been published in the journal Manchester School. (ANI)