Youth Unemployment in Southern Europe: Experts Warn About Ill-Designed Policies
ResearchWithout substantial reforms of the education systems and labour markets in Southern Europe, youths will continue to be much more affected by unemployment than the older generation of workers, even after the financial crisis. This is the finding of a study conducted by the Centre for European Economic Research (ZEW) Mannheim on behalf of Robert Bosch Foundation (Robert Bosch Stiftung). According to the authors of the report, the business-cycle-related rise in youth unemployment comes in conjunction with severe structural problems that were already present before the onset of the crisis. These include the incapacity of educational systems to provide youths with the skills demanded by firms, the duality of labour markets, with well-protected permanent positions on the one hand and precarious temporary jobs on the other, as well as insufficient wage-setting flexibility. As a consequence, structural reforms of educational and labour market institutions are necessary even in case of an uptake in economic growth. In the short term, supporting the mobility of young people through better access to information on employment possibilities abroad could help to alleviate regional differences in youth unemployment. However, many practical issues such as the recognition of degrees and the lack of language skills deter young people from starting a new job abroad, the experts add.
In the Berlin office of the Robert Bosch Foundation, Chief Executive Officer Dr. Ingrid Hamm presented the study to State Secretary Dr. Rainer Sontowski who received it on behalf of Sigmar Gabriel, the Federal Minister for Economic Affairs. In reaction to the report, the minister said: "Combating high youth unemployment in Europe is an issue of particular importance. The future of young European citizens is at stake, and this means that a part of Europe itself is at stake as well. The study commissioned by Robert Bosch Foundation supports the need to act. We will continue to provide strong support on the European level and with regard to bilateral agreements. One approach to fighting youth unemployment is dual vocational training. Germany's experience with the early labour market integration of youths has been excellent, and in many countries, experts and policy-makers support this idea of firm and school-based professional education."
Youth unemployment has reached alarming levels in all European countries except Germany following the latest financial and economic crisis. Southern European countries were hit hardest by youth unemployment. Against this background, the "Youth Unemployment in Europe" study aims to identify the relevant institutional and economic drivers and to discuss the necessary courses of action to achieve a better integration of young adults into the labour market in Italy, Portugal and Spain.
The authors underline that in Southern Europe, in particular in Spain and in Portugal, first policy measures were taken in the right direction. Initiatives that aim to reduce secondary school dropout rates and to increase the practical relevance of vocational training in cooperation with employers are particularly promising.
However, they also warn about ill-designed labour market policies. "Job-creation schemes with unclear goals and incentives have proven to be weak measures when it comes to labour market integration of young people. The current EU approach, which only aims to ensure that every young person receives a government-funded job or training offer within four months, is therefore problematic", notes Professor Clemens Fuest, President of ZEW. "Instead, governments should focus on target-oriented measures such as return-to-learn programmes for young people with no vocational qualification. Moreover, the quality of vocational counselling and employment services need to be improved."
The ZEW researchers criticise labour market regulations that have split the labour market in many Southern European countries. Long-standing permanent employees benefit from a strong employment protection legislation especially in case of dismissal for economic reasons, while young professionals are mostly employed on fixed-term contracts with very little employment protection. For this reason, young employees bear the largest share of dismissals for economic reasons.A continuously increasing employment protection scheme for all workers could end the divide between permanent and temporary worker.
The study also shows that deficits in education systems adversely affect youths in southern Europe. Young professionals often lack the skills required by employers, which increases the risk of unemployment and secondary school drop-out rates are higher in Southern Europe than in other EU countries. High-quality dual education concepts should be developed in cooperation with firms and standardized within a legal framework to create a real alternative to an academic education.
At the moment, about 7.5 million young Europeans have no job and no apprenticeship training position. Against the backdrop of this figure, the Robert Bosch Foundation and Robert Bosch GmbH want to contribute to fighting youth unemployment. As a first step, the foundation commissioned ZEW to conduct the now published study. Based on these recommendations, the Bosch Foundation and Company will develop further projects in the coming months.
"Having no prospects means losing trust in politics, in the future and in a united Europe", says Dr. Ingrid Hamm, Chief Executive Officer at Robert Bosch Foundation. "Therefore, the desperate situation of millions of unemployed young people should be a wake-up call for the economic sphere and the civil society, too. If we fail to integrate this young generation and improve their prospects, youth unemployment will further strain the EU and our democracy. Increasing right-wing populism has become a substantial worry. And in addition to that, people who constantly have to live in precarious conditions cannot start or support a family. Social vulnerability becomes a permanent problem – possibly for generations."
"If we combine the foundation's funding expertise with our rich experience in training young people, we can make an important contribution to the fight against youth unemployment in southern Europe", says Christoph Kübel, Member of the Board of Management and Director of Industrial Relations at Robert Bosch GmbH. "Qualified vocational training has shown to improve the employment opportunities of young people. That is why companies in Germany and in the countries affected by crisis should work hand in hand with the civil society and policy-makers to draw on the recommendations of the study."
For more information please contact
Prof. Dr. Holger Bonin, Phone +49/621/1235-151, E-mail bonin@zew.de
Download the study "Youth Unemployment in Europe – Appraisal and Policy Options”