When Eurostat or the OECD release the latest figures on youth unemployment, we know what to expect: alarming newspaper headlines and commentaries full of rates and detailed figures, which provide a good picture of the macro changes but very little explanation of the realities of youth employment in Europe. While I share Steven Hill’s uneasiness about the overreliance on unemployment rates, my contribution to the ongoing debate is to discuss the current context of youth employment beyond youth unemployment rates.
The first missing element in the youth unemployment discussion is an overall understanding of the relationship between education and unemployment. Here, Steven Hill’s argument is: if you do not count people in education, the unemployment rate looks not so bad and having young people in education is actually positive. I agree in discussing the reality behind the scenes of youth unemployment rates, although the situation does not look as encouraging to me as Hill suggests.
Following the mass expansion of European higher education in the 2000s, there are now more Europeans in higher education than ever: according to EQUNET, about 48% of Europeans between 16 and 27 participate in HE, with peaks of participation in Latvia (75%) and Poland (71%) and lower rates in continental countries (28% in Belgium, 32% in Germany). This is not only a consequence of the attractiveness of HE during the rise of youth unemployment, but also an overall change that started well before the economic crisis. It is a change made to last: the high level of participation in HE will persist also in the UK, as suggested by the latest figures on applications after the rise in tuition fees. This educated labour force, competing for the few jobs available, is often trapped in ‘underemployment’: graduates employed in non-graduate jobs. The employment/unemployment dichotomy is clearly not telling us much about the destiny of those young people who do have a job, but not the one that they expected. As ‘Lost Generation?’ has effectively described, young people’s choice of embarking on HE is a surviving tool to compete in the labour market and not to climb down the ladder.
Training is the other side of the education debate. Here Hill’s suggestion that people in training should not be part of the count echoes the New Labour panacea of the ’90s: putting the NEETs into training and education to decrease the number of unemployed youth. While there the focus on training for NEETs did not lead to the expected positive effects, it had the misleading consequence of shifting the youth unemployment debate to individual causes (training, employability) rather than investing into structural changes in the labour market, as Keep and Mayhew suggest. In the current climate, it would be even more absurd to solve the problem of youth unemployment by proposing an ‘employability agenda’ to the most qualified cohort of young people that the European continent has ever had. In this framework, the creation of jobs endorsed here in SEJ does appear as the only way to escape from the paradoxical trap of qualified unemployment.
The other evident limit of relying heavily on youth employment rates is depicting a reality of labour market transitions that does not exist anymore, such as the assumption of the linear path from education to the labour market. Current transitions are better described as non-linear or ‘yo-yo transitions’; they are characterised by mutual exchanges and overlaps between education and the labour market and are hard to track. For example, in HE we have students who do work while enrolled in higher education. The latest data from Eurostudent show a great diversity of self-earned income of students, but also suggest the relevance of earning money by yourself during HE: the rate of self-earned income over total income goes from 67% in the Czech Republic, 50% in Finland and Norway, to 24% in the Netherlands. Rather than starting their labour market career from zero, many European students might stick with the job sector that supported them financially during HE.
Unemployment rates are often interpreted without reflecting the current reality of youth transitions. Also, the overreliance on youth unemployment rates distracts us from more salient topics, such as precarious work, free internships and short-term jobs. It might also signal another limit of current progressive talk: the overreliance on statistical measures and the lack of a critical view on the overall context.
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Lorenza, your article is very interesting and contributes something important to the discussion. When it comes to youth employment, a particular salient dimension is those of “insiders” versus “outsiders”in the labor market, with young people being concentrated in the “outsider” labor market, especially in Spain, Italy and Greece. To explain further, I paste below an excerpt from a previous article of mine analyzing the Spanish economy and its current predicament, which can be read in its entirety at http://www.steven-hill.com/dispatches-from-spain-how-does-a-socialist-government-cope-with-20-percent-unemployment/. Unfortunately, there are certain “zero sum games”, i.e. “if I win, you lose” dilemmas that Europe faces, particularly in Spain, Italy and Greece.
Labor insiders vs outsiders
Further bedeviling the Socialist government’s decision-making triage was the complexion of Spain’s labor sector. More than most countries, and increasingly as unemployment began climbing in the aftermath of the economic collapse, Spanish workers are polarized into two segments—those with secure employment (insiders) and those without it (outsiders). Each of these constituencies demands radically different interventions in the economy.
“Insiders, such as labor union members and public employees, strongly prefer employment protection schemes that protect their jobs,” says Professor Mariely Lopez-Santana of George Mason University, who studies Spain’s labor markets. “Whereas outsiders such as the unemployed or those with temporary employment favor policies that reduce labor protections to pry open more jobs.” Historically, socialist and social democratic governments have maintained or expanded employment protection schemes because labor unions are a core part of their political base. Outsiders usually don’t have sufficient political power to influence parties and electoral outcomes; recent immigrants, who are the weakest politically, have been especially affected by unemployment during the crisis, as have young people, giving rise to the Indignados camped out in Madrid and other cities’ main squares. However as unemployment rose and more insiders started joining the ranks of outsiders, the pool of outsiders increased. Suddenly the Socialist government was faced with a difficult choice: should its policies support the insiders or outsiders? Damned if you do, damned if you don’t.
Despite protests from its labor allies, the Zapatero government responded by scaling back some of the employment protections and expanding policies designed to help the outsiders. The government passed measures which were highly unpopular among the insiders, including making dismissals easier and less costly. The government expanded the conditions for which a person could be dismissed, and reduced the amount of severance pay received by employees who lost their jobs. By law that severance had amounted to 45 days of salary per year of employment – typically thousands of dollars in severance for each laid-off employee –and now it was reduced to 33 days. The government also raised the retirement age from 65 to 67. The government’s rationale for doing all of this, which could be justified on the basis of universal and socialist values such as fairness and equality, was to open up the labor market to more outsiders and to create more jobs by reducing burdens on businesses as a way to entice them to invest more. Leftist critics, whether in Spain or beyond, saw it differently however and accused the Socialist government of selling out its core principles and constituencies.
Steven Hill
Dear Stephen,
An interesting reply to Lorenza’s piece (in response to your article) which in my view actually goes to the heart of the debate regarding youth unemployment.
Is there any evidence that the measures taken by the previous Spanish government – decreasing employment protection legislation as a means to foster job-creation while increasing the retirement age – has led to an improvement in Spanish unemployment rates?