Danish Presidency of the Council of the European Union

“Youth: Employment and Inclusion in Times of Crisis”

26-27 April, 2012, Horsens, Denmark

Youth labour market developments during the jobs crisis: trends and policy challenges

Stefano Scarpetta

Deputy Director for Employment, Labour and Social AffairsOECD

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Structure of the presentation

Youth unemployment during the crisis: some key stylised facts

Structural challenges pre-existing the crisis

Short-term policy tools and long-term concerns

Conclusions

In general, youth face a much higher risk of unemployment than adults…

Youth and adult unemployment rate, 2011 Q4Percentages of labour force

AUS

AUT

BEL

CAN

CHL CZE

DNK

EST

FINFRA

DEU

GRC

HUN

ISL

IRLITA

JPNKOR

LUX

MEX NLDNZL

NOR

POL

PRT SVK

SVN

ESP

SWE

CHE

TUR

GBR

USA

0

10

20

30

40

50

60

0 5 10 15 20 25

Yout

h (a

ged

15/1

6-24

) une

mpl

oym

ent r

ate

Adults (aged 25 and over) unemployment rate

4 times as high

2 times as high

Equal

…and young people have been hard hit by the global crisis…

1. Not seasonally adjusted data for Chile, Iceland, Israel, Mexico and Switzerland.

Countries shown in ascending order of the youth unemployment rates at its peak.

Youth (age group 15/16-24) unemployment rates in 2007 Q4, at its peak and in 2011 Q4 Seasonally adjusted1 data, percentage of the youth labour force

CHE*NLD NOR

JPN

AUTDEU

MEX*AUS

KORDNK

CANCZE

ISL*SVN

ISR*NZL

LUX

USAGBR FIN BEL

TURFRA

CHL* POLSWE

HUN IRLPRT

SVK ITAEST

GRCESP

OECD G7

Euro ar

eaEU-27

0

10

20

30

40

50

60

2007 Q4 Peak Latest%

…and a many are facing long spells of joblessness

Source: OECD Labour Force Statistics Database.

Incidence of long-term unemployment1 among youth, selected G-20 countries, 20102

Percentage of total youth and adult unemployment (aged 15-24 and 25-54, respectively)

Korea

Mexico

Canad

a

Austral

ia

Sweden

Denmark

Turkey

United S

tates

United K

ingdo

mJap

anFran

ce

Europe

an Unio

n (21

)Spa

in

German

yIta

lyIre

land

0

10

20

30

40

50

60

Youth (aged 15/16-24) Prime-age (aged 25-54)%

1. Unemployed persons for one year or more.

2. 2008 for Korea and the Russian Federation.

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Labour market difficulties for youth go beyond unemployment

Youth neither in employment nor in education or training (NEET)

Percentage of youth aged 15-24

Source : OCDE (2010), Off to a good start! Jobs for Youth

NEET 2008 breakdown

Italy Spain United States

United Kingdom

OECD France Europe Germany0

5

10

15

20

25

Short-term unemployed

Long-term unemployed

Inactive

2011-Q1

The “quality” of jobs also matters…The share of working youth in temporary jobs is high in many EU countries

Icelan

d

Irelan

d

Austria

United

King

dom

Slovak

Rep

ublic

Hunga

ry

Denmark

Greece

Belgium

German

y

Netherl

ands

France

Finlan

dIta

ly

Poland

Portug

al

Sweden

Spain

0

20

40

60

80

100Voluntary Involuntary Other temporary

Source: Estimations based on the European Union labour force survey

Percentage of employed youth aged 15-24, by reason for temporary status, 2010

…as the matching of qualifications with the demand Many youth uth are over-qualified for their job, more so than adults

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Source: European Survey of Working Conditions, 2010

Percentage of employed in age group, 2010

Slovak

Rep

.

Estonia

Austria

Finlan

d

United

King

dom

Czech

Rep

.

German

y

Poland

Belgium

Norway

Sloven

ia

Hunga

ry

Sweden

France

Denmark

Luxe

mbourg

Irelan

d

Netherl

ands

Greece

Spain

Italy

Portug

al

Turkey

0.00

0.10

0.20

0.30

0.40

0.50

0.60

Over-qualified 25-34 Over-qualified 35-54

Key short-term challenges in the jobs crisis

– Prevent the current generation of school leavers from becoming a “scarred generation”• Job-search assistance programmes are found to be the

most-cost effective for young people who are job ready• Temporary extensions of the safety nets are vital to

prevent poverty among unemployed youth. But it is essential to apply “mutual obligations”

• Apprenticeships and other dual vocational education and training (VET) programmes can facilitate the school-to-work transition

• More in-depth options are needed for most disadvantaged youth – second-chance education opportunities are expensive but could be

effective in helping youth cumulating several disadvantages

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Going forward, a number of structural problems should be tackled

– Ensure that everyone leaving the education system has the skills needed on the labour market Basic “qualifications guarantee” up to a given age Promote second-chance learning opportunities for school

drop-outs – Make the transition from school to work less abrupt

More opportunities to work while studying Strengthen internships and apprenticeships for smoother

and efficient pathways from school to work– Address over-qualification

Better guidance to inform youth of work opportunities by field of study

Strengthen links between universities and the labour market

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Going forward, a number of structural problems should be tackled

– Addressing labour demand barriers for youth Reduce the cost of employing low-skilled youth,

through youth sub-minimum wages and/or lower social security contributions at low wages

Tackle discrimination at hiring (e.g. mentorship for graduates with an immigrant background)

Continue efforts to reduce labour-market duality – With particular focus on reducing the gap in

employment protection between temporary and permanent contracts

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Summing up

• Most OECD countries have acted swiftly during the crisis by scaling up resources for youth programmes.

• Strong need to keep the momentum and provide adequate resources for cost-effective youth measures. Actions are needed to prevent most school-leavers from being trapped in long spells of unemployment.

• In a long-term perspective, the target group for intensive assistance should be the hard-core group of youth cumulating disadvantages and at high risk of long-term unemployment and inactivity.

• It is therefore crucial that governments tackle the structural barriers this hard-core group faces in education and in the labour market.

• Better school guidance and improved links between the education sector and employers are also needed to tackle over-qualification.

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