The fact that Ireland’s long-term unemployment rate is significantly higher than the Nordic countries is mainly due to the scale and nature of the recession in Ireland.
Our economy’s reliance on labour-intensive non-traded domestic sectors such as construction and retail and our exposure to the global financial crisis, inter alia, resulted in a relatively severe downturn in our economy vis-à-vis the Nordic countries. This in turn led to a sharp increase in unemployment in 2009, which has taken several years to reverse.
The most recent available figures show that the Nordic countries have very low long-term unemployment figures; Denmark’s and Sweden’s long-term unemployment rates were 1.6% and 1.5% in Q4 2013 respectively, while the Irish long-term unemployment rate was 7.3%.
The Irish rate has fallen from a peak of over 9% and lies between the low Nordic rates and the extremely high long-term unemployment rates in countries such as Greece (19%) and Spain (14%), where, moreover, long-term unemployment continues to rise.
Prior to the crisis, long-term unemployment in Ireland was at an extremely low level, comparable to that in the Nordic countries. Government policy is aimed at restoring that situation, through the continuing recovery in employment and through labour-market policies set out in Pathways to Work.