Labour Markets: Youth unemployment?

Youth unemployment has become a serious problem in Europe. Currently, there are roughly one million young people aged 15-24 believed to be unemployed in Spain. This number is over 600,000 in Italy. During the past five years, the youth unemployment rate in Europe constantly grew from 800,000 to 2 million in four countries. The UK and France also cannot avoid this problem. The 15-24 years old people who are unemployed and not in the education/training are referred to as NEET. Up to fifth of young people in Spain, Italy, Greece, Bulgaria, Croatia and Cyprus are absent from the labour market. At the same time, the same lot is also not in training/education forums. The number of NEET is especially high for migrants and low-skilled people.

Youth unemployment rate is different from one country to another across Europe. Countries such as Denmark, Austria, and Netherlands have relatively low youth unemployment rate. In contrast, countries like Spain, Portugal, Italy, Greece, and Croatia have relatively high youth unemployment rate. In the year of 2016, according to the statistics, Greece occupied roughly 47.3 per cent compared to Germany with approximately 7.1 per cent (Mursa et al. 2018). Notably, the youth unemployment rate is particularly high in Greece, Italy, and Spain where rates exceeded two times above the average. There are a couple of reasons behind the significant difference in youth unemployment rate between different countries in the EU.

First, the economic depression affects each country differently. Since 2000, Southern European countries showed a sharp economic growth. However, after 2008, most of them were influenced hugely by the economic depression. Therefore, they experienced a significant increase in youth unemployment. Secondly, the minimum wage legislation also has the impact on youth unemployment. For instance, Germany introduced the minimum wage legislation in the year of 2015. The legislation restricted the young graduate with limited working experience to enter the job market. However, the minimum wage legislation does not exist in Cyprus and Italy at all. However, the two countries still suffer from youth unemployment greatly due to the unstable and fluctuated GDP. Non-economic elements such as cultural factors also play an important role in youth unemployment (Kotowska, 2012; Tagliabue et al. 2014). For example, the degree of mentality and paternalist result in the different amount of support from the families to young people. Therefore, in countries such as Denmark where young people are independent from their families, youth unemployment rates are relatively low. Mentality enables a young person to reject the financial support from their family and seek a job more initiatively and actively. In this situation, they are easier to accept a job.

Comparative, Southern European countries such as Spain and Italy, where young people live with their parents until they are in their early 30s, the youth unemployment rate is quite high. This means that a Spanish and Italian young graduate can be very meticulous when they are looking for their first job. From the cases that have been discussed, it is obvious that there is a connection between the age of leaving parents’ house and the rate of youth unemployment.

The third reason revolves around the discrepancies between what schools teach students and what the labour markets demand from the young graduate (Hannan et al. 1997; Hannan & Werquin, 2001; Wolbers, 2007; Mascherini et al. 2014; Vuolo et al., 2012). With Europe, governments are involved differently in the educational system. For example, the private companies in Germany and Netherland are positively engaged with the students. Such companies make sure that skills, which are delivered to the students, are closer to the needs of the labour market. On the other hand, Scandinavian countries such as Sweden and Finland only provide general education to the students. The employment agencies support students to enter the labour market. Besides, these countries also have advanced welfare system and with an equipped and strong unionization, the relevant polices would always be advanced to help the unemployed youths.

European continental countries such as Denmark, Germany, Netherlands, Austria, and France do not only provide the general education but also give efficient vocational training during the education process. Therefore, the young graduates are well-prepared when they finish their education and enter the labour market. Anglo-Saxon countries such as UK and Ireland provide the dedicated and high-quality education to the students, which imply that they have quite low youth unemployment rate. As long as people prove they are looking for a job, employment agencies will give them specific and significant income support.

Mediterranean countries such as Spain, Italy, Greece, and Portugal have both underdeveloped labour markets and support systems. The youth unemployment in those countries is very high. In addition, the new member states of the European Union such as Hungary, Poland, the Czech Republic, Slovakia, and Estonia also have relatively high youth unemployment rate. This is because the spending on labour market policies was constantly growing (Vogel, 2002; Pastore & Giuliani, 2015). The government should give the priority to the investment in youth to help the young graduates successfully enter the job markets (Scarpetta et al. 2012). For instance, a college education investment from the government can help young people obtain high-skilled jobs after they graduate. The benefit of a good and firm education background can last for a lifetime. However, the lack of education results in the young people who are only capable of doing unstable and unsecure part-time or temporary jobs. They are also forced to work during the weekends or outside the normal working hours. This means that they have very limited chance to get a proper training and fewer opportunities to develop their competencies compared to those permanent employees (Scarpetta et al. 2010).

Work experience has also emerged as the most important factor for employers to consider in the selection process. Young graduates with zero working experience find it almost impossible to get their very first jobs (Levels et al. 2014). To make the matter worse, the employers often do not trust the productivity and ability of the young people with no reference from the former employers (Brzinsky-Fay, 2017; Skans et al. 2009). When facing the highly competitive older employees, young people are in a very vulnerable position. In addition, the later introduction of employee protection means that employers cannot easily dismiss less capable workers. This means that they are much conscious in terms of hiring young people. Apart from that, young people do not have enough social networks. They have very few occupational contacts and normally depend on their parents social networks.

Is there need to reduce unemployment among youths and what methods can be used? Ultimately, all countries strive to reduce unemployment rates to almost zero. Most of them would try to implement several methods to curb the whole problem of unemployment. The most effective method to reduce youth unemployment rate in the EU is a program called the Youth Guarantee. Broadly, it is a policy that allows young people to be offered a job, a further education opportunity, an apprenticeship within four months after they finished their education or simply become unemployed. This program was very successful, after it applied, as the youth unemployment rate declined (Brenke, 2017). In spring 2013, the youth unemployment rates reached a zenith. Then, it declined by just less than a third. In the year of 2017, the number of youth unemployment went down by 1.7 million. The figure implies that the unemployment rate decreased by 7 per cent.

The youth unemployment rate is 2.5 times higher than that of adults in Europe. This age-specific differences in the unemployment rate in Finland, Romania, and Sweden are very high followed by such countries like Poland, Italy, and the UK. In comparison, there is a minimal age-specific difference of unemployment rate in Central Europe, countries such as Switzerland, Germany, and Austria. In those countries, the youth unemployment rate is much lower than the EU-average.

Generally, the people who hold lower qualification level have the higher unemployment rate. It works for both adults and young people. However, the youth unemployment is far higher than average in the EU. The reason would be those young people in the EU are less qualified to take significant jobs. The young people who hold the university degree normally have a relatively lower unemployment rate. However, in as much as young people complete the vocational training or an apprenticeship program, the unemployment rate of this group of young people is still higher than that of adults who received similar training. Research also suggests that even if the young people hold the same qualification with the adults, they are still in a negative position in the job market compared to the adults. Surprisingly, the gap between youth unemployment rate and adults’ unemployment rate is increased the same time with the qualification level. In other words, the better the qualifications are, the bigger the gap.

In Europe, young people who obtained an ISCED 3 or 4 levels show a relatively higher unemployment rate than unskilled adults. This phenomenon is especially popular in France, Belgium, Romania, and southern/central Europe. It is clear that the high youth unemployment rate in Europe is not caused by the limited jobs in the job market but by the cultural factors such as mentality, partiality and by the limited public policies. The data shows that by having a flexible culture and efficient market-oriented policy, the youth unemployment rate is relatively low. In Germany, statistics shows that young people who have received vocational training are less likely to face the unemployment dilemma. The unqualified young people from rural area also increase the youth unemployment rate. For instance, in Turkey, a large amount of young people move from countryside to urban areas with still majority of them lacking the qualifications, not well-educated or not well-trained. This means that still most of them cannot meet the criterion put in place by the qualified human resources (Tatlıdil & Xanthocou, 2002; Tunalı, 2004; Dayıoğlu & Ercan, 2010; Bayrakdar & İncekara, 2013). Therefore, providing proper training for this type of people is necessary.

In Germany, the dual system decreased the youth unemployment rate through introduction of the technical school-employment relationship (Gündoğan, 1999).This system has a structure which help young people to successfully transit from school to work place. Although several EU countries have introduced dual training system but the effectiveness of this system is still unknown. It is better to practice it in the regional and sectoral level of the companies, as it is good for evaluating the feasibility of this system. The more flexible employment policies should also be developed instead of just rigid passive employment policies. It is even more appropriate for young people to be guided by career counselling along with the labour market demand. Besides, the additional regional incentive systems should be introduced to encourage young entrepreneurship in order to reduce youth unemployment rate (Bayrak, and Tatli, 2016).

School-to-work programs is thought to provide an avenue for young people who are not able to continue with high-school based programs, higher education and even vocational programs to join the workforce. However, it is quite unfortunate that most of the school-to-work programs are underfunded, stigmatized, as well as poorly connected to significant job opportunities in the labour market. To contain this trend, Germany, United Kingdom and European countries are expected to go the United States way by adopting the career academy (Bayrak, and Tatli, 2016). The model encourages the development of smaller learning communities, which are commonly created within high schools. The smaller learning communities would always combine the academic rigor with the significant preparation for significant careers. The career academy gives room for mentoring and bridges the gap between adults and students.

Within the career academy programs, young people, mostly the students, have a chance to experience the significance of the strong vocational elements and day-to-day schoolwork (Gündoğan, 1999). With many funding programs in Europe such as the European Social Fund, Youth Employment Initiative, Employment and Social Innovation Fund, European Globalization Adjustment Fund and even the European Investment Fund, the school-to-work initiative, through the career academy, can be expanded to the entrepreneurship forums. These would introduce the young generation in the private sector where self-employment dominates (ManpowerGroup, 2017). A refocus on entrepreneurship, in conjunction with the career academy, forges a significant synergy that would see a growth in terms of creation as well as supply of jobs. Based on the research conducted by Boston Consulting Group, most of the African countries would only have a single job yearned by at least 6-7 potential applicants. This means that there are high chances of leaving out 6 people unemployed if only one candidate has to be picked (ManpowerGroup, 2017). This means that there is an urgent demand for business startups both in the developing and developed countries as it is the case with the European countries.

Another strategy resides with provision of the worker mobility. At the beginning of people’s career, they are intending to look for a better job and matches with their degree. Therefore, job mobility is particularly high for young workers. Young workers change their job very frequently, which is one of the concerns of the employers. They prefer stable workers for retention reasons. As a result, employers would always be reluctant to hire young workers. When young workers try to enter the labour market, many older workers inside the labour market impose their power into the labour market. They are will-trained and they are also capable of training young workers. They are more productive and do not cost company any money on training. This lot also has all the advantages compared with young workers, which makes them more favourable to employers (Dietrich, and Möller, 2016).

Improving labour mobility within Europe creates a better opportunity for young people. As cross-border migration have the potential to tackle the youth unemployment problem, the agreement between Germany and Spain government allowed over 5,000 Spanish to be employed in German in the year of 2017. If every country in the EU can introduce this kind of agreement between one country and the other one, then young people can significantly benefit from it. Going forward, every country should be more transparency to the foreign workers. The employer associations and companies should control the national online portals instead of the government. The searching process for training and employment should also be more transparency.

In addition, the recognition of educational qualifications obtained in foreign countries also benefit young people who are ambitious to work outside the country. The degrees offered by colleges or universities are standardised by European qualification framework. Once those young people get the experience of working abroad, the majority of them chose to return their own countries. In Western Europe, they have introduced dual vocational training and social partnership to help youth unemployment. For those countries, which have transferable occupational skills, they have significant chances of experiencing lower youth unemployment rate. Apart from Germany, Netherlands, Denmark, Switzerland and Austria also advocate for occupational training that stresses on what the firm needs and address the requirement of the employers’ involvement. This kind of training programs connect trainees with the economy changing needs, enable them to obtain occupational knowledge and initial working experience, as well as the relationship with the training companies.

At the early stage, in order to address youth unemployment, the European countries introduced restricted and rigid early retirement policies in order to make more space for young people. However, it did not address the problem but increase the burden on young generation’s shoulder, as they have to supply their older parents once they have the early retirement. Actually, older workers are not competitors to young workers. However, the older lot is just a complement to young workers in the production process as they can provide help and experience to the young workers. Firms should keep the old people in their position while trying to improve the employment prospects of the youth.

On the other hand, the programme “Youth on the Move” aims to reduce the unemployment rate in Europe. The program is said to have started in 2010 as part of “Europe 2020” strategy. The method they applied to address high unemployment rate problem is to support higher education of young people. It criticized the trend of early school leaving and discouraged school dropping out. Meanwhile, the program strengthened the recognition of qualifications, which were provided by dual training system, and practical internships that would allow young people to get early working experience. The program insists on increasing university or higher education graduates. However, there is still a great threat of rising disappointment (for which the EU will be blamed) as well as massive economic mismanagement. In view of approximately 7 million unemployed young people across the EU, it would call for huge national programmes to maintain the Youth Guarantee, whose design and coordination would be accompanied by considerable difficulties, although around €8 billion is being provided from EU funds. Instead of spending organisational power and scarce financial means for this Youth Guarantee, the numerous important aspects of the Youth on the Move strategy should be followed, and current crisis states should be “promoted and required” to reform their labour markets by reducing the structural discrimination of young people and supporting the creation of new employment. In the end, only extensive reform policies in the respective countries can ensure the improvement of young people’s prospects. The EU should maintain the pressure to reform, but it should refrain from offering guarantees and thereby raising expectations that cannot be kept.

Conclusion

The discussion has focused on the youth unemployment rates in Europe, the causes and remedies to the problem. It could be noticed that the problem of unemployment is affecting most youths who running into millions. Major causes being the high standards set by the employers in the job market, the saturated labour market full of old employees and reluctance of employer to engage young employees who have no experience and are extremely mobile. Some of the solutions to this include provision of the school-to-work programs such as career academy, apprenticeship, and entrepreneurship among other remedies.

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