Labour Markeet access for young people: Eurofound findings
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Presentation by Juan Menéndez-Valdés (Eurofound) on the occasion of the 20th LMO meeting on 6 June 2011 in Madrid, Spain
![The youth unemployment rate in 2010Q4 reached the 20.6% +5.8% compared to 2007Q4 ,[object Object],[object Object],Youth unemployment](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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Labour Markeet access for young people: Eurofound findings
- 1. European Economic and Social Committee – Spanish Economic and Social Council Joint conference: Youth Unemployment Panel 1: Youth unemployment: where we are ` Labour Market access for young people: Eurofound findings Juan Menéndez-Valdés , Director Eurofound Madrid, 6th June 2011
- 4. In the last decade, a new phenomenon attracted the attention of EU policy makers: the so called NEET generation Not in Employment, Education or Training 12.9% of youth 7.5 million Policy priority: Employment guidelines A new phenomenon: NEETs Social Cost Economic Cost Unemployed Inactive People with disabilities Discouraged workers
- 7. Government action Education system reform(s) Promotion of apprenticeships, training & work exp. programmes Labour legislation DE, DK, RO, CZ, GR, IE Incentives to employ and train – subsidies, tax reductions, etc. GR, LT, NL, ES, SE, IE, CY, RO PT, HU, DE NL, ES, GR
Editor's Notes
- The problem of youth unemployment has been exacerbated during the crisis. The youth unemployment rate reached the 20.6% in 2010Q4 and this correspond to an absolute increase of 5.8pp (relative increase of 39.1%) compared to the value recorded in 2007Q4. This is probably the steepest increase in the history of the EU. At the MSs level the situation is highly differentiated. In the map, the 2010Q4 youth unemployment rate is represented. Light purple indicate lower unemployment rate and dark purple indicate higher youth unemployment rate. In the period 2007-2010 t the MSs level Youth unemployment rates have doubled or in some cases tripled since the onset of the recession. The Netherlands has the lowest unemployment rate: 8.7% (abs variation 2007/10: +2.8%; relative variation: +47%); On the other hands Spain recorded the 41.6% (abs change: +23.4%; rel. change : +128.5%); Lithuania: 35.1% (abs change: +26.9%; rel change: +328%). During the great recession, unemployment hit all youth, regardless their education level and in several MSs a tertiary degree do not constitute a protection against unemployment anymore: for example this is the case of Greece, Italy and Portugal. Conversely in Spain those with a tertiary educational level are still more protected against unemployment (EF elaboration of EU-LFS data – preliminary resutls of the NEET project) The 2010 youth employment rate in Europe dropped to 34.1% Decrease of -3.4% compared to 2007 In 2010, the youth employment rate dropped to the low of 34.1. In absolute terms, this value corresponds to a decrease of 3.4% compared to the value recorded in 2007, while in relative terms the variation is approximately equal to -10%. There is huge variability among the European countries on Labour market participation of young people, in fact the 2010 employment rate of youth in Netherlands is 63% while in Spain is 24.9% (for Spain the absolute variation 2010-2007 is -14.2%, which correspond to a relative variation of -36%) and in Italy is 20.6%. In addition to an overall low participation, the job held by young workers are characterized for being less certain, simpler and physically more demanding. In particular, compared to other workers ,the job s of young workers are characterized for having the same level of intensity but less autonomy. (Results of the European Working Conditions Survey)
- The 2010 European Working Conditions Survey indicates that Young workers are more likely to think they will lose their job and they are less likely to work in type of occupation requiring higher skill levels. This may indicate that young workers are more likely to be over-qualified for the job they have. Moreover, young worker are also much more likely to be in jobs with a high strain or a passive type of work organisation (Karasek). This pattern is found consistently across all types of occupation. We cannot expect young workers to be granted very high levels of control over how and when to carry out their tasks as soon as they enter the labour market - they often still have to develop the knowledge and skills required to independently exercise their jobs. However, it is concerning to see that young workers straightaway are faced with the same high levels of work intensity as older workers, without having the autonomy to cope with these demands. As a consequence, these young workers are at a high risk of suffering from stress and the long term physical and psychological effects it entails. (Results of the European Working Conditions Survey)
- During the last decade a new phenomenon attracted the attention of the EU policy-maker: the so called NEET generation, the generation of those Not in Employment, Education or Training. The concept of NEETs was firstly defined in the UK in the late 80s. Now almost all the MSs have developed NEET-equivalent concepts. NEETs are an heterogeneous group and include all young people that for various reasons are excluded from labour market and education. The importance of focusing more on NEETs is clearly stated in the 2010 EC employment guidelines where a new policy action for re-activating the NEETs is called. In fact the exclusion of this generation from Labour Market and Education can bring additional social and economic costs to our societies. At the EU level, the NEET rate reached the 12.6% in 2009 that is qual to 7.5Mio of young people aged 15-24 who are excluded from labour market and education. This correspond to a 1.5% increase compared to 2007. Obviously at the MSs level a high variability is recorded. The Netherlands (4.1%, followed by Denmark(5.2%) and Luxembourg (5.8%) are the countries with the lowest NEET rate. Conversely, Bulgaria (19.5%), Ireland (18.5%) and Spain (18.3% = 862k people) are the countries with the highest NEET rate. Focusing on Spain, the 2009 NEETs rate was the highest rate ever recorded in Spain. In Spain the 19.5% of the young male population are NEETs compared with the 17.1% of the young women. Approximately the 65% of the Spanish NEETs are unemployed. If we analyse the age groups, in Spain the NEET rate has reached the 12.6% for those aged 15-19 and the 23.2% for those aged 20-24. Compared to the rest of Europe, the Spanish population of NEETs is characterized for having a higher share of people with low education level. In fact the 72% of the Spanish NEETs has a low education level, the 19% has a secondary educational level and just the 8.6% of the NEETs has a tertiary degree. Respect to the general youth population we can say that the approx. 25% of those with a lower education level are NEETs compare with the 12% of those with a secondary or a tertiary educational level. In Italy, for example just the 50% of the NEETs has a lower education level, while the 15% of those with a tertiary degree is a NEET. (EF elaboration of EU-LFS data – preliminary resutls of the NEET project)
- The Social Cost of the NEETs: It has been found that NEETs are likely to opt-out from the participation to the democratic and civic society engagement of our society. The analysis of the European Social Survey confirm this evidence and NEETs are less interested in politics and are less likely to vote and to participate in civic society. Moreover they also have a lower level of interpersonal trust. These are the results of our micro-econometric model and, differently from a simple descriptive statistical table, it takes into account a large set of socio-demographic variables (i.e. there is really a negative effect in being NEETs). The economic cost of the NEETs: Labour market exclusion of NEETs brings additional cost for the societies. This can be divided in current cost and lifelong cost. In the EF project on NEET we focused on current cost of NEETs. Following the literature, the cost of the society for NEETs can be divided in Resource cost and Public Finance cost. Resource costs include the loss to economy for their lack of participation to labour market as well as the loss for the individual and the family. Conversely, Public finance costs include all the additional cost for the MSs such as: Tax Loss, Benefits received, Cost for health and criminality activities. In our project we used EU-SILC data and we restricted our attention just on two aspects: the loss of economic (for the lack of participation to LM: what if they would participate to the LM?) and the public benefit that NEETs are more likely to receive. Given the characteristics of the NEETs population we could not assume that if they would participate to the Labour Market they would be interchangeable with the EETs. In order to provide the most accurate estimation of these costs we applied the statistical methodology known as “propensity score” which make possible an uniform comparison of the two samples of NEETs and EETs. Based on these assumptions, the preliminary results of our project shows that at the EU level the cost of the NEETs is approximately 100Billions of Euros, which corresponds to a approx. 14k Euros per NEET. The breakdown of this amount indicate 11k for the loss of the economy (what if they worked) and 3k in additional benefit paid to NEETs. This cost is just a small part of the current cost that our societies are facing with NEETs. Other economically important costs are the cost derived by Health and Criminality. (EF elaboration of EU-SILC data and ESS data – preliminary resutls of the NEET project)
- Notes: Governments have generally been responsible for the bulk of initiatives to help young workers, namely through wider ALMPs programmes. The three main mechanisms used by governments to improve the young people’s situation in the LM are: promotion of apprenticeships, training and work experience programmes ; Examples: DE, DK, RO, CZ, GR, IE. However, there are concerns with the transition between the end of an apprenticeship and achieving a good quality job . For example, in DE (and AT too), country with long tradition of strong technical and vocational training (apprenticeships), training has favoured high-skill work traditionally undertaken by men (engineering, etc). Moreover, many young people who do not achieve the educational levels required to access apprenticeships and these remain a concern and SPs question whether YP can obtain quality jobs after apprenticeships or vocational training; Incentives to employment and training – subsidies, tax reductions, etc. Examples: GR, LT, NL, ES, SE, IE, CY, RO. Opportunities for employers to reduce their contributions to taxes and/or social security if they recruit young workers are a common mechanism reported in countries such as Greece, Lithuania, the Netherlands, Spain and Sweden . Education system reform(s). Examples: PT, HU and DE. PT - attempt to increase young people’s participation in education by promoting and strengthening vocational education options through initiatives such as the launch of 50,000 new occupational traineeships vacancies; HU - the national education system is seen as partly responsible for the mismatch between the skills requirements of employers and the skills with which young people leave formal education - much of the action in HU around this is focused on improving skills and employability at all levels of the education system; DE - the potential gap between school education and labour market skills is being addressed through the offering pre-vocational training to young people who fail to complete their school education Labour legislation - few reports of changes to labour legislation developed in order to try to help young workers but important because t hese initiatives have largely been justified as measures aimed at reducing barriers to labour market entry for young workers, but are highly contested by social partners. In The NL and ES – possibility for employers to offer more consecutive fixed term contracts to young workers. GR – lower minimum wage for workers under 25. Challenges : Effectiveness of the programmes and measures in place – scarce information publicly available on suitability of funds available, take up rates, etc… ASSESSMENT IS CRUCIAL (Results of the CAR on young workers)
- Background note : - In general, collective bargaining has not been an instrument used during the crisis to address and overcome young people’s situation; across Europe, very few sectoral and company level collective agreements deal specifically with young workers. - All things considered, and given its multifaceted nature, the situation of young people is the result of a set of complex interactions between the following factors: mismatches between skills requirements of employers and skills held by young people; labour market structures that may advantage older workers at the expense of new entrants; dynamics of migration patterns (inwards and outwards); employers halting or reducing recruitment to cope with economic challenges; early impact of the crisis on particular sectors where young workers are employed in significant numbers (eg. construction and manufacturing). As current research and debates underline, this complex nature of the problem requires solutions combining multilevel measures that are far from easy to implement. Slide notes : - Convergent view (Blue rectangle) - trade unions and employers’ organisations recognise the particular difficulties facing young workers; they even mostly agree on some policy measures, such as developing apprenticeship and reforming education systems. Divergences (separate orange callouts) - Employer organisations revisit the arguments for reducing employment protection and wages for young workers in view of removing barriers to hire them; trade unions stress the importance to assess the quality of jobs offered to young people either after initial education or apprenticeship. (Results of the CAR on young workers)
- The conclusions review the major messages given in the presentations: The situation of young people is very complex and these problems have been exacerbated with the economic crisis. The results of the crisis is that not just those with lower educational level but also the well educated are under the fire of unemployment. Moreover, in some countries tertiary degrees do not constitute a protection against unemployment anymore. The EU employment strategic guidelines call for a new policy action for NEETs. The first partial estimation of the cost of the NEETs justify this call. And it is worthwhile to mention here that in some MSs the debate around NEETs has not started yet. Social Partners and MSs have the responsibilities to address this issue. However there is a lack of assessment of the effectiveness of the policy measures aimed at increasing the employability of young people. In times of austerity the needs of effective measures is crucial as with lack of resources only good investment should be done.