The situation of youth eployment in Spain

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Presentation by Jesús Ferreiro (University of the Basque Country) on the occasion of the 20th LMO meeting on 6 June 2011 in Madrid, Spain

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The situation of youth eployment in Spain

  1. 1. The situation of youth employment in Spain<br />JESÚS FERREIRO<br />Department of Applied Economics V<br />University of the Basque Country<br />Conference “Youth Employment”<br />European and Social Committee – Consejo Económico y Social<br />Madrid, June 6, 2011<br />
  2. 2. MAIN FEATURES OF YOUTH EMPLOYMENT IN SPAIN<br />Between 2007q3 and 2011q1 youth employment has fallen in 1,050,000 people (44.5% of total employment destruction in Spain)<br />Youth unemployment rate is above 45%, 26 p.p. higher than those above 25 years old<br />2<br />
  3. 3. Highyouthunemploymentrates are anstructuralfeature of Spanishlabourmarket, skyrocketing in recessions<br />3<br />
  4. 4. Unemployment rate is specially high amongst the youngest workers: 65% (54.8% for workers 16-24 years; 19.1% for workers +25)<br />4<br />
  5. 5. REASONS OF THE BAD PERFORMANCE OF YOUTH EMPLOYMENT IN SPAIN<br />Institutionaldesign of Spanishlabourmarket: <br />theexcessive use of fixed-termemploymentcontracts leads toanadjustmentviaquantities: temporarycontracts as a buffer toadjustemploymenttolabour-aggregatedemand shocks<br />Employmentadjustmentisconcentrated in workerswiththelowestfiringcosts (bothpermanent and fixed-termemploymentcontracts) and/orthelowestproductivity (usuallyyoungworkers in both cases)<br />Skillsmismatch<br />Socio-cultural elements: bias in payrollsadjustmenttowardsworkerswithoutfamilyburdens<br />5<br />
  6. 6. Temporary employment<br />Temporaryemployment has anextraordinaryimportance in youngemployment<br />6<br />
  7. 7. 94% of destruction of salaried employment has taken place in temporary employmentTemporary employment in young people fell in 687,000 people (42% of the destruction of total temporary employment)<br />7<br />
  8. 8. The burden of the employment adjustment has concentrated in two categories of workers:- temporary workers over 25 years old- young workers, regardless their employment contract<br />8<br />
  9. 9. Skills mismatch<br />High schooling failure leads to a low qualification of young workers<br />Percentage of people that have taken secondary education: 65% (OECD: 80%, EU-19: 82%)<br />Percentage of people that have not completed secondary education and have not taken any kind of professional training: 31.2% (lowest: Basque Country: 16%; highest: Andalucia 37.5%, and Balearic Islands 40.8%)<br />But at the sime time a phenomenom of over-qualification (a problem for a demand of low productivity jobs)<br />Percentage of people between 25-34 years old that have taken university education: 39% (OECD: 35%, EU-19: 34%)<br />9<br />
  10. 10. 10<br />Unemploymentrates are higherforlow-skilledyoungworkers<br />
  11. 11. Solutions to the problem of youth (un)employment<br />Recovery of economicactivity<br />Reform of thelabourmarket: <br />eliminatingtheexcessive use of fixed-termemploymentcontracts (reducingthenumber of modalities of fixed-termemploymentcontracts)<br />elimination of thedifferences of firingscostsbetweenpermanent and fixed-termcontracts: (universalization of thepermanentcontractwith 33 days of firingcosts)<br />Reduction of skillsmismatch: <br />Educationsystemlevel: reduction of schoolingfailure, skillsupgrading, promotion of professional training reducingthe share of peopletakingtertiaryeducation<br />Workplacelevel: promotion of on-the-job training<br />Mixedlevel: promotion of part-time employment<br />11<br />

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