Youth unemployment, Europe’s unshakeable challenge

BRUSSELS: Europe’s economy is thriving on the back of decade-high growth, the latest official data suggests, with rising consumer demand and an overall unemployment figure that, month after month, keeps falling.

But lurking behind this positive picture of a European recovery on the march is youth unemployment, the joblessness of the under 25s that since the crushing recession of the eurozone debt crisis has become an economic scourge that Europe cannot shake.

In 2017, the picture remained stark. The unemployment level for Europe’s youth remained nearly twice as high as that of all job seekers, despite a steady decline since its peak in early 2013.

Dig into the data, and the picture is highly varied across the eurozone. In Germany, Europe’s economic powerhouse, the young enter the economy almost seamlessly while in the crisis-hit ‘Club Med’ nations to the south, joblessness bites with thousands of young choosing the road of exile to find fortune elsewhere.

Still, the picture in 2017 was an improvement across the eurozone. According to figures published Wednesday by the Eurostat statistics agency, 17.9 percent of job seekers under 25 — not counting students — were unemployed last year, against 8.7 percent for all workers.

Map of Europe showing percentage of people under 25 who are unemployed 

This rate has certainly decreased significantly from its highest level of 24.7 percent in February 2013 when, put more simply, one in four European youths were without jobs.

In Greece, in that catastrophic year of 2013, youth unemployment stood at a shocking 60 percent. In Spain, the number was 57 percent, in Ireland more than 30 percent.

But at near 18 percent, the eurozone rate today remains higher than that of February 2008 (15.1 percent), before the fall of Lehman Brothers and the subsequent eurozone debt crisis.

 ‘Trial and error’

To the frustration of policymakers, even in good times youth unemployment remains high, leaving an ugly picture of a society that creates good jobs for its older members, but does little for the youth.

To be sure, for structural reasons, youth unemployment tends to always be higher than that of working people in general because under-25s usually have zero experience in the labour market.

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“Their integration into the jobs market is a succession of trial and errors that usually requires several trips back to unemployment before finding the right job,” said Stephane Carcillo, economist at the Organisation for Economic Cooperation and Development.

In most European countries, the youth unemployment rate is between 1.5 and 3 times higher than that of the most active bracket — workers between 25 and 45 years of age, he said.

“However, the unemployment rate for the under-25s is very sensitive to the economic situation — both upwards and downwards — because of the flexibility of their contracts: when economic activity picks up, companies hire for 3 to 6 months and when it skids, firms quickly dump these short-term contracts,” Carcillo said.

 German exception

The situation for the under 25s Germany is exceptional when compared to the rest of the 19 eurozone countries.

In Germany the youth unemployment rate was 6.6 percent at the end of 2017. Even the economically liberal Netherlands trailed with 8.0 percent and Austria with 9.3 percent.

“In countries like Germany or Austria, young people have less trouble getting into the job market thanks to the education system that puts an emphasis on apprenticeships,” said Karl Brenke, economist at DIW Institute of Berlin.

In both countries, young people already have pertinent work experience linked to their training and contacts with potential employers, he said.

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“Businesses are part of the curriculum so that classrooms are directly linked to the needs of the firms,” ​​said Carcillo.

The German system is not limited to manual trades either. Services such as insurance, banking and journalism are also involved, leaving young workers in synch with the professional world as a whole.

In addition, said Claire Dheret, an analyst at the European Policy Centre, a think tank: “Germany, a federal country, benefits from a network of companies that is well-distributed geographically. This is not the case in Spain or Italy in particular, that have a only a few industrial hubs. For apprenticeship programmes to work, there has to be a demand, and if there are no companies in your region, they won’t work.”

 ‘Loud announcement’

Unsurprisingly, the two countries most affected by youth unemployment are Greece and Spain, where years of recession and unprecedented austerity policies have been particularly harsh.

Youth unemployment rates in these countries remain staggering for developed economies supposedly going through a recovery.

In Greece, the rate stood at 40.8 percent in October, the most recent data available, while in Spain, lauded as a star economic performer, it towered at 36.8 percent.

Even France, where reformist leader Emmanuel Macron has promised to reverse the trend, the rate is high, at 22.3 percent in December 2017, above the eurozone average.

“Apprenticeships are not sufficiently valued in France”, said the OECD’s Carcillo, who also pointed to “the problem of dropouts, young people who have left school without a diploma and have zero access to training.”

Embarrassed, in 2013 European leaders launched the “Youth Guarantee”, a programme that offers training or employment in the four months after the end of studies or the loss of a job, drawing on the EU budget.

However, the effect has been quite limited. “There was a big, loud announcement from the top of the hills, but the effect of this measure is not seen at all in the statistics,” said Brenke.

Less harsh, Carcillo believes that the guarantee at least attracted attention to the problem.

Meanwhile, warned EPC’s Dheret, “beyond the problem of unemployment, it is also the salaries of young people and their prospects in the long term” that matters.

“This is the first generation which believes that it will be worse off than its parents in financial terms,” she said.

The situation was deplored by the IMF in a study published in January.

Since 2007, “the income gap between generations in Europe has deepened to the detriment of young people and, without any adequate policy,” with a whole generation that may never recover, the IMF said.

“To reduce the risk of young people becoming poor and suffering loss of income for life, facilitating their integration into the labour market is essential.”