Tackling Youth Unemployment

The level of global youth unemployment has been a problem for many years. Although there is no easy fix the recent Global Employment Trends for Youth report does mention the increase in investments in worthwhile employment for young people. Guy Ryder, Director-General, International Labour Organization (ILO) highlighted some of the many ways that countries, with ILO support, are aiming to tackle the youth employment challenge:

• Recommending that government policies support employment and lift aggregate demand, including public employment programmes, wage and training subsidies, sectoral programmes, counter-cyclical fiscal policies and youth entrepreneurship interventions.

• Labour-market training and work experience programmes targeting young people so that they don’t leave the labour force. To achieve this there needs to be quality apprenticeships, informal or formal, is another solution for ensuring school-to-work transition, and a top priority for the ILO. In countries where apprenticeship systems are strong, youth unemployment rates are no higher than those for adults.

• Forging partnerships for scaling up investments in decent jobs for youth. Combining the strength of international organizations, governments, employers and workers to implement global policies can really make a difference.

Young people are often the most robust advocates for those very ideas we all support: an end to child labour and forced labour, equality in the workplace, ecological sustainability and decent work. We can all benefit from that energy and sense of solidarity and social justice.

In the interests of inclusive economic growth and an equitable transition to a more sustainable world, a sharper international focus on the issue of youth unemployment must be adopted. With the right will, we can develop policies to develop the skills and jobs that young people need and deserve.

Youth Unemp


OECD outlook for employment

The OECDs annual employment report makes for sombre reading especially for those European countries. The Economist reports that policymakers in Europe, where projections remain especially poor, need to focus on creating demand. There is good discussion on structural and cyclical unemployment and especially the problem of youth unemployment. Basically the OECD have stated that there needs to be more focus on demand but with austerity measures in place where is it going to come from? Good introduction to unemployment.

Youth Unemployment in Europe

Here is a very good video graphic from The Economist. It looks at youth unemployment rates in the main economies of Europe and discusses the reasons why some countries have had much higher rates. Notice German’s low rate which was falling during the GFC which was mainly due to labour reforms which allowed small businesses to fire employees more easily and liberalised work for part-time and temporary work.

AS Unit 5 – State of Global Unemployment

In Unit 5 of the Cambridge AS course unemployment is a significant area of study. It is also important that you are up to date with current trends worldwide. In the OECD the average unemployment rate was 7.9% whilst the eurozone area showed 11.1%. There are two main features of this unemployment – youth unemployment and those who are long-term unemployed. The graph below shows figures that range from 4.4% in Japan and 24.6% in Spain.

Youth Unemployment
This is a major problem especially for those that are unskilled and looking for employment in blue collar jobs. These countries with high youth unemployment have experienced long-term consequences, particularly for those with limited education. Brian Gaynor in the New Zealand Herald mentioned some consequences of youth unemployment from various sources. They include:

* Being unemployed young resulted in lower earnings by 8.4% – 13% in future years.
* A 1% increase in US unemployment resulted in a 6-7% decrease in the wages of college graduates.
* Youth unemployment raised the probability of unemployment in later life
* Loss of earning up to 21% at age 41 for workers who experienced unemployment in early adulthood.
* Unemployment in early 20’s affected earnings, health and job satisfaction up to two decades later.

Long-Term Unemployed

According to the OECD and since the GFC the rise in numbers who have been unemployed for over one and two years are as follows:
1 year – 1.6% to 2.9%
2 years – 0.9% to 1.5%

One of the major issues that a lot countries face is the number of baby boomers that are remaing in the workforce after 65 and the impact this will have on youth unemployment. Furthermore, it is interesting to note from the OECD that labour’s share of national income in its 34 countries has declined from 66.1% to 61.7% in the last 10 years. According to Brian Gaynor the decline in labour’s share is due to a number of factors:

* Greater productivity gains
* Increased mobility and transfer of low-skilled activities from developed to emerging countries
* Weaker trade unions – impacts bargaining powers
* Privatisation – newly privatised companies are more profitable and have fewer employees

Minimum Wage Increase?

The OECD argue against a higher minimum wage as it will increase prices. Also in the long-term firms respond by increasing productivity levels beyond the wage rise which leads to a decline in labour usage and therefore a greater emphasis on capital.

The youth of Spain fall mainly on the “dole”

Youth unemployment has been one of the major issues in the Spanish labour for a number of years. However, it has been the latest crisis in the euro zone that has highlighted the issue and it has worrying consequences for future growth in the Spanish economy. One cause is that of education participation.

As the chart (BBVA Research – Madrid) below shows, the rate of youth unemployment in Spain during the 1990‘s showed little change between the various sectors of education. From 2000 onwards those with secondary and tertiary education had lower rates of unemployment when compared to their counterparts whom had left secondary school early – the latter unemployment rate being consistently above 20%. The current crisis in the euro zone has seen the unemployment rate of those in the lowest level of education rise to 50% when compared to 35% amongst those who finished secondary education and 30% of whom gained a university degree. Tertiary education needs to be restructured in their content and duration as too many degrees have no direct future with regard to employment. Maybe there needs to be greater links with the private sector in order to improve the employability of graduates. It could be the case that certain degrees have compulsory internships that provide students with experience and specific knowledge.