As has been clearly defined by a study by Belgium’s Bureau fédéral du Plan (le coût budgétaire d’un chômeur de 1987 à 2002, Brussels, 2004) unemployment leads to human, social and economic costs, which can be broken down into three major categories:

• The macroeconomic costs associated, in the short term, with a decline in the level of production and income loss (consumption, investment, revenues, etc.) as a result of unemployment and, in the medium term, from the subsequent loss of human capital (deskilling). On an individual basis, these macroeconomic costs are synonymous with a loss of professional income, which may affect the entire career profile and which involves a reduction in disposable income, both immediately and in the future (including pension income) and, therefore, a decline in living standards.
• The psychosocial or human costs that arise as a result of the deterioration of a person’s professional and social status and the material conditions of existence. On an individual level, there may be damage to mental integrity (anxiety and low self-esteem, possibly leading to the breakdown of family and social relations) or physical well-being (deterioration in health status). The loss of self-confidence not only leads to difficulties for the return to work but reduces societal participation, feeding a vicious circle of exclusion. At a societal level, there may be an increase in divisions between social groups and a higher risk of delinquency.
• Public finance costs, which can be direct (an increase in social spending) or indirect (such as lost revenues: employers’ and employees’ social contributions; income tax; consumption taxes).

Social security institutions play an essential role in reducing these costs and in unleashing the full human, social and economic potential available through the development of appropriate strategies that support an efficient labour market in all its aspects, and by taking action on two main aspects.

The first is to prevent unemployment by supporting efforts to limit the number of newcomers to the unemployment compensation system while ensuring that it remains accessible for those in genuine need. This requires the close cooperation of social security, employment and training organizations, and employers and public authorities. The appropriate analysis and identification of labour market participants facing potential unemployment should ensure that resources are allocated in a manner that best supports the goal of sustainable employability.

The second is to support efforts to shorten the period of unemployment. This is done through different programmes and mechanisms, skills development and reinsertion techniques, in partnership with different actors. It is complemented by a second level of preventive measures to avoid recurring or long-term periods of unemployment: upgrading skills to match labour market demand and reducing barriers to labour participation – childcare is an example – to better safeguard employability. These strategies, while clearly similar in terms of economic, social and societal objectives, require a substantially differentiated individual, organizational and systems approach.

The ISSA Guidelines on the Promotion of Sustainable Employment aspire to influence a paradigm shift in the design of unemployment insurance schemes. They seek to break away from the notion of passive unemployment insurance schemes, limited to providing a source of replacement income, in favour of active schemes, the main objectives of which are to reduce unemployment and reintegrate recipients of unemployment benefits who are fully or partially capable of working. This approach aims to take full advantage of the greater availability of accurate labour market information and also to make more use of online-related services.