The hot summer of youth unemployment in Europe

Recently published data shows that youth unemployment in Italy has reached a startling 40% (general rate is 12.7%). But Italy is just one amongst many Eurozone countries where recession is being particularly cruel with young people.

During the past three years, tax hikes – wrongly denominated “austerity” – have triggered protests all over the Eurozone. However, no meaningful market or labor reforms have been implemented; better, the weight of labor flexibility and salary cuts, as well as of a later retirement age, has been imposed on the youngest, the so-called “outsiders”.

Both governments and European leaders are de facto ignoring the problem.

A couple of years ago, the European Commission launched a program – “a job-rich recovery”: they seemed to ignore that without growth – substantial, prolonged growth – there is no way unemployment can be tackled. With little room to increase public spending – it has reached almost 60% of the GDP in certain countries – it seems like European leaders have run out of solutions.

Lately, rumors are circulating that many governments are actively pushing to relax the so-called austerity – translation: increase public spending and debt without which they cannot survive.

But even considering such an increase as economically possible, current governments will still use the money to keep “insiders” – workers with guaranteed contracts or “protected” professionals and entrepreneurs – quiet: Italy has already shown the path by approving tax brakes for home-owners (identikit: 45-60 year old people) and by pouring money into the “cassa integrazione” fund, which protects workers with favorable contracts that had been signed before labor market reforms in the late 1990s imposed flexibility.

In many countries – Italy is one of them – the crisis has created a very interesting scenario: while productivity of the “insiders” has not increased, trade balance has not shifted to the negative. This is because so many young people have been “hired” with less or no benefits and no guarantee of keeping the job: therefore, a generation is bearing the cost of the crisis by compensating the “laziness” of the one before, whose privileges that politicians do not dare touching.

The result is that, while public declarations of national politicians, union leaders and European commissioners all pledge to take an interest in the matter of “youth unemployment”, behind the scenes they protect the “perfection” of a world they have contributed to create. Young people, on the other hand, are outraged; but they miss their target. In their furious attacks against the status quo, they show a great deal of appreciation for it: instead of asking for higher labor flexibility so that they can compete with the “insiders”, they request their same privileges.

It is highly unlikely that politicians in the Eurozone will change the pace. Investing in the youngest requires the creation of a more favorable startup scene, lowering labor-related taxes, implementing more competitive university programs and intervening aggressively on “established privileges”, braking the wall of protectionism in the world of “regulated” professions.

All of these reforms are economically cheap, but politically very expensive. And as far as they have shown during the crisis, European politicians prefer to spend “our” money (yes, our generation will bear the costs of this) instead of their political capital.

Alfonso Ricciardelli

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