February 26, 2013
The high level of youth unemployment is increasingly moving to the top of the European political agenda. There are currently 7.5 million adults below the age of 25 who are searching for employ-ment, 30% of them for more than a year. In Spain and Greece, more than half of those between 16 and 24 have no job, and also in Portugal, Ireland and Spain the youth unemployment rate exceeds 30%. Europe is facing an often-cited “lost generation” which experiences long periods of unemployment or unstable jobs during their first working years, with serious long-term consequences. Therefore, the EU Multiannual Financial Framework for 2014-2020 includes an employment initiative for the young, with EUR 6 billion earmarked for regions where youth unemployment exceeds 25%, and an employment guarantee for those seeking a job for longer than 4 months.
Youth unemployment is currently especially pressing, but it is not a new phenomenon specific to this crisis. The relative youth unemployment rate, i.e. the unemployment rate of those aged 16-24 divided by the total unemployment rate, illustrates that it is a structural problem. For many years the unemployment rate of young adults between 16 and 24 has been roughly twice as high as for the general population. The relative rate is remarkably stable for most countries and does not change significantly even in booms and recessions. For example, between 2006 and 2012 youth unemployment in Spain tripled from 17.9% to 53.2%, but it always remained roughly twice as high as the total unemployment rate, and thus close to the European average. Young adults in Italy suffer most disproportionally, while Germany performs best in this respect. Reasons for high unemployment among the young include ineffective education systems (the share of early school dropouts is 20% in Italy and 30% in Spain) and dual labour markets with highly protected jobs for older employees. The good performance of Germany is not least a result of the German apprenticeship system, which facilitates labour market access for school leavers by lowering the company’s costs for employing them. The OECD’s latest “Going for Growth” report recommends reforms to strengthen the vocational training systems as one of the most effective ways to fight structural youth unemployment. This would also be a reasonable starting point for the EU’s youth employment programme.