Tag Archives: Youth Unemployment

Youth Unemployment: What’s Everyone Been Up to?

Just one more extra post related to the Youth Unemployment summit post of yesterday. For anyone wondering what EU countries had been doing to boost employment before the summit, I came across this article from The Guardian that explains each country’s initiatives and policy changes quite nicely. It also illustrates the problem I see with all the governments pushing their own specific plans. Sure, things have to be tailored to the specific situation of each country, but perhaps there could be a little more coordination here?

To summarize:

France: A subsidized program called Jobs For the Future was created. Low-skilled people between 16 and 25 from areas badly hit by unemployment will be placed in 3-year contract jobs in the public and non-commercial sector. The government will pay 75% of their wages. It’ll be interesting to see if those employees are retained afterwards and if their skills are transferrable. Seems strange for the government to pay you to work in another company, but that’s the way it works in Europe!

Spain: Instead of targeting youth unemployment specifically (though it has the highest figures on that count) the government has tacked to helping companies do business with less restrictions, which is intended to stimulate the labor market. To this end, it has dismantled some “worker protections” to help allow companies to fire and hire with less difficulties, and it also plans to allow small companies to defer VAT payments and tap government credit lines to create jobs. This seems like the kind of (admittedly sometimes painful) changes needed throughout the Eurozone as a whole, but dismantling labor protection can’t be taken too far yet or it’ll risk a backlash. Also, with such high youth unemployment rates, couldn’t they spare a bit to invest in something proactive, like employer-training programs for those who have been struggling or a startup fund?

Italy: According to the article, it seems that Italy is mainly throwing money at the problem. A €1.5bn package will give tax breaks to employers who hire under-30s and “included measures to stimulate training, apprenticeship and internship schemes” mainly in the South. Sounds awfully vague to me. Who is going to keep track of all that money exactly? We all know where the money sent to combat issues in the South ended up in the past…

Germany: Oh shining Germany – they’re doing just fine on the youth unemployment front for now, thank you very much, but hey, they’ll lend everyone else a helping hand with another summit!

EU: The EU will throw more money to the struggling countries with some vague directions, and “the European Investment Bank will borrow on the markets to increase lending to small businesses in an attempt to bypass the credit crunch and encourage the hiring of school-leavers.”

Caution With the Numbers

To add on to my previous post, it bears reminding that there are pitfalls to seeing all the squawks about youth unemployment percentages as clear signs of impending catastrophe. The media is always fuzzy about exactly who they are counting in the unemployment figures and of course, you can bet they choose the calculation that sounds the most critical and headline-worthy.

In June, Daniel Gros, Director of the Centre for European Policy Studies, pointed out in the European Voice that there’s too much emphasis put on the 15-24 year old cohort anyway, because it doesn’t necessarily give an accurate picture of the problems at hand. For one thing, the majority of 15-20 year olds are probably in school instead of working – otherwise they are low-skilled workers with less prospects in the short-term. It’s also important to look at the unemployment ratio and the percentage of youth unemployment in overall unemployment numbers to get a fuller understanding of what’s really going on.

It would probably be better to focus on achieving better unemployment levels for 20-30 year olds, even breaking it into categories for what level of education they have, since there is often a significant skills mismatch between jobs available and talent in workers.

At the end of his analysis, Gros asks :

“The fact that youth unemployment is just a part of a larger problem leads to the real policy question: why should officials spend limited time, energy, and public funding specifically on unemployed young people, rather than on all of the unemployed?…. Europe has a general macroeconomic problem, owing to demand factors that interact with a rigid labour market, rather than a specific youth-unemployment problem. This implies that there is no need for ad hoc measures for young people, which merely risk overloading welfare systems with even more exemptions and special rules.”

Gros is right that the whole labor market should be re-assessed and refreshed in order to solve the problem. But I think that it’s still worthwhile to shine some focus on youth unemployment because they are the next generation and there’s still a lot of targeted changes that could help them to enter the labor market. True, more exemptions and special rules are not the way to go. Instead, long-term changes geared towards efficiency, transparency, international communication and stronger career training could greatly elevate youth potential – and all of Europe’s potential –  in the long term.

Not to mention entrepreneurship….governments could also do more to help young people launch their own companies and I’m looking forward to investigating how that is shaping up here in Lisbon, where there seems to be a burgeoning startup scene.

Youth Unemployment and the Future of Europe

This week there’s been a lot of discussion about cracking chronic youth unemployment in Europe, (riding on the wave of Angela Merkel’s Youth Unemployment summit in Berlin) and I’ve been keenly following the discussion. The unemployment rate for 15-25s is hovering around 25% and many already refer to this as “the lost generation.” (Check out this really interesting info graphic from The Guardian to hear personal stories from some of that generation.)

Besides the drag of the economic recession, part of the problem is that most Eurozone work systems are mired in structural issues related to post-war socialist concepts of employment that were intended to bolster stability and equality. But now, many aspects of these laws are backward and cumbersome. They aren’t easily adaptable to the rising global marketplace and they often don’t serve those who need assistance most – like young people trying to gain a foothold in an over-saturated and timid market.

Even worse, laws that should theoretically protect workers and their environment can backfire. Instead of following them, recession-squeezed employers find ways around the laws that drag them down, limiting new hires for fear of biting off more than they can chew or creating precarious short-term contracts for young employees that never lead to full-time jobs, promotion, or growth.

Something will have to change, and the solutions that arise could be a game changer for Europe’s economy. I’m planning to investigate everything from large-scale national and EU initiatives to individual and community responses to unemployment. Laws, programs, and mentalities here are often staggeringly different than what I’m familiar with in the U.S. and I’ll also share many of those differences on this blog.

So what came out of the summit? Well, it’s only one of many such summits in recent months, and skeptics coolly alluded to Merkel’s impending re-election campaign as the reason behind this one. The good news is that the European Investment Bank is earmarking even more money to go towards employment projects (€24 billion, or $31.1 billion) , And politicians are, at least at face value, recognizing the need for more structural changes to support struggling youth.The NY Times reported: “Concrete measures planned for the short term include having countries set up a national labor market monitoring system, make all vacancies known publicly and increase the outreach and guidance services of labor agencies.” I’m not sure how much these will  jumpstart things, but they do seem like common-sense adjustments that should have been put in place long ago.

To me, it seems that continually pounding on the national governments to make individual changes could slow the process down- a process that should probably eventually result in some kind of overarching international youth-work system. Streamlining the whole method of preparing for and finding employment within the EU as a whole would be the most efficient and sane thing to do,whatever the national objections are –  then again I’m probably just an idealistic American talking.

But after all the EU Commission already runs Erasmus internships that link students across the zone to foster mobility. Can’t they build more upon that? Also, experts keep praising the German system that connects students with sustained work experience long before they graduate school. I know everyone is squeamish about taking prescriptions from Germany, but it could be a blueprint for an integrated student-work model for the entire zone. It seems to combine the best of both worlds, linking students with future jobs openings while protecting the framework of socialist-minded workplace regulations. (Though I do wonder how this affects startups and entrepreneurs but thats a question for another day…). The cost of setting  up training programs like this  hinders other countries from following suit, so it would make sense for the EU to use the money to take the reigns of implementing an international program. Unfortunately, we all know that “efficiency,” and “sane” are not usually buzzwords at the top of EU countries’ priorities.