Roxana Sandu, 4 December 2013
The economic and financial crisis did take its toll on youngsters, as their job market position has proven to be affected by economic conditions (Verick, 2011). Youth unemployment has been increasing in the European Union and it is rather a sensitive topic, bearing high economic cost due to the deteriorating effect of unemployment spells on human capital, high social benefits to be paid, but also high social cost, as for example increasing crime (Bell and Blanchflower, 2010).Youth unemployment rate reached dramatically high rates in Southern Europe, i.e. Greece, Spain and Croatia having the highest youth unemployment rates, above 50%. That is, more than half of their youngsters cannot enter the labour market. Germany seem to be doing much better, having the lowest unemployment rate in the EU, of 7,9%.
So the question that comes naturally is how to reduce youth unemployment? An inter-connected issue and very relevant to the topic is the high share of precarious employment offered to youngsters, i.e. unstable and insecure jobs with limited contracts, low-wages or on-call contracts, with unguaranteed number of working hours. So the second question that comes up is how to offer quality jobs to youngsters?
European labour market regulation and migration plays an important role in this context. The very EU single market design, given labour mobility may help reducing asymmetric shocks in the economy. Labour mobility may be a win-win situation as it redeploys labour force from countries with high unemployment to countries where there are labour shortages. But with countries such as UK struggling to restrict free movement of labour, for example, this solution is not sufficient. Labour mobility by itself cannot solve the problem of increasing youth unemployment. To this end, the European Union came up with several initiatives to facilitate labour mobility but also help increase employment. The European employment strategy, thought several set of measures as for example country-specific recommendations and national reform programmes, aims at jobs creation across the European Union.
An interesting initiative for facilitating employment is the creation of “Your First Eures Job” website which helps matching job seekers with employer’s requirements across the EU. It is in fact a targeted mobility scheme for young EU citizens, aged between 18-30. The aim is to fill in 5000 jobs over 2012-2014 time span. What it can do for both young job seekers and employers alike, is that it matches profiles for jobs to be filled in, across EU. But it may also be of great help for youngsters as it provides soft skills training and financial assistance in order to cover the interview travel costs or the costs for moving abroad.
Proposals such as European Alliance for Apprenticeships or supporting Traineeships are useful in reducing short-term unemployment. Even if an apprenticeship or traineeship may be the way for a newly graduate into having a first job experience and acquiring on-the-job skills, most often these traineeships are not providing a real career path if not followed by a proper placement within the company. What Europe is experiencing right now is that newly graduates end up accumulating traineeship experiences with low-wages and no real career opportunities. Therefore, what is needed in fact is a set of measures in the form of mixed policies and instruments that create jobs sustainable in the long-run.
Other proposals such as The Youth Guarantee tries to ensure that people graduating obtain a job within four months of graduation. In practice this translates into a set of Commission recommendation for member states that need to be implemented in terms of labour market policies. For example, active labour market policies, i.e. vocational trainings or employment subsidies may help reducing youth unemployment. However the issue remains, on how to provide career opportunities for the longer-term.
Bottom-line, the European Union member states need to efficiently implement Commission’s recommendations in terms of labour market policies in order to reduce youth unemployment on the short-run, but ultimately on the long-run what is needed is economic growth. In an European labour market where 85% of the new private sector jobs are created by SME’s, member states must provide the necessary means for SME’s to develop, become more competitive, as well as facilitate the recruitment of young graduates. Helping companies to hire and retain young graduates through reduced bureaucracy, targeted subsidies and lower social contributions for the young employees can make a difference in ensuring not only low youth unemployment rates, but also high quality jobs that offer a realistic career path.
Bell, D. N., and D. G. Blanchflower (2010): “Youth Unemployment: Deja Vu?”, IZA Discussion Papers 4705, Institute for the Study of Labor (IZA)
European Commission, 2013, Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions: “Working together for Europe’s young people, a call to action on youth unemployment”
Verick, S. (2011): “Who is Hit Hardest during a Financial Crisis? The Vulnerability of Young Men and Women to Unemployment in an Economic Downturn” in From the Great Recession to Labour Market Recovery: Issues, Evidence and Policy Options, ed. by I. Islam, and S. Verick. ILO/Palgrave Macmillan