The effect of social transfers on the level of unemployment of disabled in EU countries

Abstract

Abstract. Employment brings disabled people not only the necessary income for reasonable life, but also serves as an important part of social inclusion. It is rarely stressed in the literature that in order to find a job it is necessary to possess certain level of welfare. The role of the state in providing that for disabled cannot be underestimated. This way, social transfers may decrease unemployment among disabled people. On the other hand, classical literature suggests, that social transfers demotivate people from looking for a job thus increasing unemployment. This paper studies the effects or reduction in poverty among disabled caused by social transfers on the level of unemployment of disabled in EU countries on macro level. We use data collected by Eurostat in the European Union Labor Force Survey in 2011. Our results suggest that the bigger is the effect of social transfers on the level of poverty, the higher is the unemployment of disabled with only a basic activity difficulty. The effect of reduction in poverty caused by social transfers on unemployment of disabled with limitation in work caused by a health condition and/or a basic activity difficulty is not statistically significant.Keywords: unemployment, disabled, social transfers, povertyJEL classification: E24, Z13, H71(ProQuest: ... denotes formulae omitted.)IntroductionOne out of every six EU citizens between 16 and 64 is reported to have a long-standing health problem or disability although one third of those persons do not experience any restriction in their working abilities (Greve, 2009). These people may suffer difficulties in looking for and maintaining job, resulting in substantial unemployment within this segment of population. The levels of unemployment among disabled in European Union range from 4,9% in Luxembourg to 28,2 in Spain depending on the country and the extent of disability (see table 1). Existing results suggest that the situation is worse for disabled people with low education, for women than for men, for people with intellectual impairments and mental health conditions (Holland, et al., 2011; Greve, 2009; Applica et al, 2007; Achterberg et al., 2009).Severe unemployment among disabled people most of the EU countries attempt to relieve by adopting numerous strategies (Strielkowski and Hnevkovský, 2013). Contrary to earlier strategies, that focused at providing special conditions for employment of disabled, designed to take into account what the disabled cannot do, the recent employment strategies adopted in EU countries focus mostly on what disabled can do (see Ren L. R., et al., 2008 for the description of the concept). The main idea is to integrate disabled to the workforce rather than provide them with sheltered employment and other less valued compensatory employment (Greve, 2009). The current strategies focus on supporting part time work and job flexibility (shorter working hours, flexible attendance, work breaks, etc.) in the boundaries of regular employment. To motivate employers to provide disabled with such work contracts, most of European countries maintain some form of employment quotas for disabled with or without sanctions.While quotas may do their job if enforced, there are also some arguments against quotas. The first problem states that quotas are not always implemented fully (Gundersen, 2008; Greve, 2009). For example in Austria only 30% of companies obeyed the quota for disabled in 2002 (Zelderloo and Reynaert, 2007; Greve, 2009). In some countries, quota places may be traded. For example in the Czech Republic companies can reduce the minimal number of disabled necessary to employ if they buy products from other firms, which employ more than 50% of disabled. This practice provides the companies a legal opportunity not to comply with quotas. In addition, in order to fulfill the quota in the easiest and quickest way the firms may go for internal rather than external employment and target those disabled, who are the closest to the labor market leaving the others unattended. …