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Youth Employment, European Thematic Factsheet

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Youth Employment, European Thematic Factsheet EUROPEAN SEMESTER THEMATIC FACTSHEET YOUTH EMPLOYMENT 1. INTRODUCTION countries. A high prevalence of temporary contracts for youth may be Helping young people enter the labour the result of participation in education market and stay there is an essential and training, or a probationary period2. part of policies promoting economic growth and better living conditions. Such The levels of youth employment, activation and sustainable integration of unemployment and inactivity are young people are also instrumental in largely influenced by the macro- reaching the Europe 2020 employment economic situation. But they may also target1. have important root causes in the structural characteristics of school-to- The transition of young people from work transitions. These structural factors school to work is burdened by specific include: challenges. The result is relatively low employment rates, high unemployment unsatisfactory outcomes of education and high rates of young people who are and training systems; neither in employment, education or segmentation of labour markets training (NEETs). Youth unemployment affecting young people in particular, and is more sensitive to the business cycle the low capacity of public employment than adult unemployment. Being new services to provide tailored services to entrants with limited work experience, young people and the limited efforts of young people are less likely to find a these services to engage with young job, are often employed through people in the most vulnerable situations. temporary and part-time contracts or are pursuing a traineeship, and they are Unemployment and inactivity among more easily dismissed if the economic young people have a high cost and require cycle is weak. targeted policies. Unemployment, especially long-term unemployment, at Moreover, in many Member States, a the start of a career can have negative high number of young workers have long-term consequences such as lower involuntary temporary contracts, and future earnings and worse employment often in such cases have difficulty prospects (the so-called 'scarring effect')3. transitioning on to permanent jobs. However, the nature of temporary work and the opportunities for finding a permanent and stable job it offers to 2 IMF Staff Discussion Note, 'Youth young people varies widely across Unemployment in Advanced Economies in Europe: Searching for Solutions', December 2014, p.9. 3 Fondeville N. and Ward T., 'Scarring effects 1 Increasing the employment rate of the of the crisis', Research note 06/2014, Social population aged 20-64 to at least 75 %. Situation Monitor, European Commission, 2014. Page 1 | It may also lead to lower productivity agenda. With the Youth Guarantee, levels overall4. Member States have committed to ensuring that all young people up to 25 Young people's employment prospects receive a good quality offer of employment, have to be considered also in the context continued education, apprenticeship or of inter-generational fairness. With traineeship within four months of leaving an increased need for flexibility, various education or becoming unemployed7. atypical forms of work have emerged and working careers are now less stable. This commitment has been reinforced by While more flexibility may respond to the its inclusion as principle 4b8 of the needs of both firms and workers to a proposed European Pillar of Social certain extent, it also entails social risks. Rights. The Pillar principles serve as a There is more demand for some types of compass for a renewed convergence labour and skills to the detriment of towards better working and living other types and greater inequality in the conditions9. Reducing the share of young distribution of income. Some workers are people (aged 15-24) neither in in an increasingly precarious position. employment, education or training (NEETs) in the EU10 (11.5% in 2016) Given the changing realities of the world thus becomes a key objective. of work, welfare systems tailored to traditional labour markets may not cover The Youth Guarantee is built on a all those who need protection. All these political commitment by all EU Member developments may affect young people States to give every young person under more than those at a more advanced 25 a good-quality offer of employment, stage of their career or those in continued education, an apprenticeship retirement and may have implications for or a traineeship within a period of four the fulfilment of their life projects. months of becoming unemployed or leaving formal education. It has been The reduction in the number of potential rapidly implemented across the EU workers due to demographic change and thanks to an unprecedented combination 5 the increase in the dependency ratio of high political momentum, significant highlight the importance of labour financial resources through the Youth productivity growth. It will become more Employment Initiative and the European difficult to rely on adding more people to Social Fund, and robust monitoring the labour force as a potential source of mechanisms at EU level. The Youth growth. However, in the medium term, Employment Initiative, a EUR 8.8 billion engaging more people actively in the financial resource, provides direct targeted labour market can make an important support to young NEETs living in regions difference. To achieve higher productivity, policies need to shift towards innovation and expanding the EU knowledge base 6 through skills and education . 7 Council Recommendation of 22 April 2013 on establishing a Youth Guarantee. Promoting youth employment and 8 Principle 4b states that young people have improving school-to-work transitions has the right to continued education, appren- been an important priority in the EU ticeship, traineeship or a job offer of good standing within 4 months of becoming unemployed or leaving education (Chapter I: Equal opportunities and access to the labour 4 Bell, David N.F. and Blanchflower, David G., market, European Commission, Communication 'Young people and the great recession', Oxford Establishing a European Pillar of Social Rights, Review of Economic Policy, 27(2): 241-267, 2017). 2011. 9 European Commission, Communication 5 Number of dependents, aged zero to 14 and Establishing a European Pillar of Social over the age of 65, to the total population, Rights, 2017. aged 15 to 64. 10 Unless otherwise specified, Member States 6 Commission, Employment and Social covered by data in this factsheet are the Developments in Europe – Annual Review EU28, and 'youth' data relates to the age 2017. group 15-24. Page 2 | struggling with youth unemployment rates requires careful weighing of country higher than 25%11. specific factors. This factsheet is structured as follows: Approximately 3.8 million young people (15-24) are unemployed in the EU today Section 2 reviews youth un- (down from a peak of 5.7 million in employment, young people neither January 2013). While these numbers in employment, education or training remain high, since 2013 annual youth (NEETs), and other key indicators of unemployment rates have dropped by 4 performance in EU countries; pps to 18.73% and NEET rates have Section 3 discusses the available decreased by 1.5 pp to 11.5% on evidence on what policies are average in the EU. Both rates have appropriate to effectively address decreased in most EU Member States the challenges of youth and in particular in those with the unemployment and inactivity and highest rates in 2013 (see Figures 1 and briefly reviews the approach taken 3 and tables in the annex). at EU level, focusing on implementation of the Youth The youth unemployment rate is the Guarantee; percentage of unemployed in the age Section 4 outlines good policy group 15 to 24 years old compared to practice to meet these challenges the total labour force in that age group and provides examples from EU (which includes both employed and Member States. An overview of the unemployed young people but not the state of play in all EU countries is economically inactive, i.e. young also provided. people who are not working and not available or looking for work). The following factsheets offer information complementary to the topic The youth unemployment rate in the of youth employment on: early school EU has decreased from a peak of leaving; employment protection almost 24% in 2013 to 18.7% in 2016, legislation; active labour market but it is still 2.8 pps higher than it was policies; labour force participation of in 2008 (and more than double the women; skills for the labour market; overall unemployment rate which stood poverty and social exclusion; at 8.6% in 2016). Eleven Member unemployment benefits; undeclared States faced a youth unemployment work; wage developments and wage rate of above 20%: in 4, the rate was setting systems; and tertiary education even over 30% (Greece, Spain, Italy, attainment. and Croatia). For 10 Member States (Germany, the Czech Republic, the 2. POLICY CHALLENGES: AN Netherlands, Malta, Austria, Denmark, OVERVIEW OF PERFORMANCE IN EU Hungary, the UK, Estonia and COUNTRIES Lithuania) the rates were lower than 15%, an improvement from 2015 when Risks to successful school-to-work it was just 8 Member States. The transitions come in multiple forms. dispersion of youth unemployment Because the share of young people who among euro area countries remains are active in the labour market — i.e. higher than for the EU 28, ranging from who are either employed or seeking a a low 7.1% in Germany to a very high job — varies substantially across 47.3% in Greece (see Figure 1). Member States, analysis of these risks should employ several indicators related to the relevant population (those aged 15-24). Furthermore, the analysis 11 European Commission, Communication The Youth Guarantee and Youth Employment Initiative three years on, 2016. Page 3 | Figure 1 — Youth unemployment rates (15-24 years old) in EU Member States, 2008, 2015 and 2016 60 2016 2015 2008 50 40 30 20 10 0 FI IT IE SI PL LT EL PT LV EE FR LU AT NL CY SE ES BE SK CZ DE UK HR MT BG DK HU RO EA19 EU28 Source: Eurostat, LFS [une_rt_a] 2014 was the first year since the crisis in (Greece 13%, Italy 16.6%, Spain 18.4% which the employment rate for young and Bulgaria 19.8%).
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