Unemployment and Active Labour Market Policy Measures

CE7 in the Period from 2004 to 2013

Abstract

Each year, Central European (CE) countries spend tens of billions of euros on active measures of employment promotion with the explicit aim of contributing to the reduction of unemployment. Yet, high unemployment has universally been a persistent problem throughout the last decade, questioning the actual effect of the measures of employment promotion. This paper investigates the theoretical framework of the active labour market policy measures (ALMPM) for the reduction of unemployment. Accordingly, we analysed active labour market policy measures in CE7 countries from 2004 to 2013 with multi-factor regression framework. Our results suggest that for CE7 countries in the mentioned period, ALMPM were not efficient, they stimulated the unemployment process. The only efficient way for reducing unemployment in the analysed countries is stimulation of economic growth. Namely, the regression model suggests if selected countries increase the annual real GDP growth rate by 1%, the rate of unemployment will be reduced by 0.26%.