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Reversing the sharp decline in youth employment

Report | Doc. 12626 | 01 June 2011

Committee
Committee on Economic Affairs and Development
Rapporteur :
Ms Marija PEJČINOVIĆ-BURIĆ, Croatia, EPP/CD
Origin
Reference to committee: Doc. 12288, Reference 3695 of 25 June 2010. 2011 - Third part-session
Thesaurus

Summary

Europe’s young generation is severely affected by unemployment: about one in five young people has no job and youth unemployment rates remain twice as high as for the rest of the population. This is despite the fact that most young Europeans today have better levels of education than their parents and that many European countries face labour shortages in a growing number of sectors. If governments fail to offer realistic solutions to youth unemployment, Europe may well have to pay a high price for a “lost generation” and compromise its competitiveness, security, social peace and future development prospects.

The mismatch between the qualifications of young people and labour market needs, rapidly changing labour market conditions, structural economic shifts and eroding public spending on integrated pro-employment strategies are among the main causes of youth unemployment or underemployment. The situation is further aggravated by the economic crisis.

Member states are urged to adjust public policies so as to fully implement the labour-related provisions of the revised European Social Charter and give priority to reducing youth unemployment. They should thus promote better qualifications and skills, more mobility and inter-generational solidarity, improved access to job offers and apprenticeship schemes, as well as a greater interaction between employers, state employment agencies and young jobseekers. The report also stresses the need for Europe’s policymakers to help southern Mediterranean countries to fully tap their development potential by offering a better future to their youth in their quest for jobs and sustainable livelihood.

A Draft resolutionNote

1. Access to fairly remunerated employment is essential for ensuring sustainable livelihoods, shielding against poverty and socio-economic exclusion, and enabling the exercise of fundamental rights.The effective implementation of the right to workenshrined in therevised European Social Charter – requires European States to take action in terms of specific legislation, policies or programmes, not least in order to minimise the negative consequences and significant cost of unemployment to society. Although unemployment and precarious work risk undermining the dignity of every individual concerned and the human progress of society at large, young people are particularly vulnerable in this respect.
2. In Europe, youth unemployment remains twice as high as for the rest of the working-age population and the situation is further aggravated by the effects of the economic crisis. At the end of 2010, on average one in five young people was unemployed in both the European Union countries and central and eastern Europe, with unemployment rates reaching 42% in Spain but staying below 10% in some countries such as Germany, the Netherlands and Norway. Across the globe, unemployment affected about 13% of economically active young people – the highest figure ever recorded by the International Labour Organization.
3. The Parliamentary Assembly is concerned that despite the fact that young people in Europe today have a better level of education than their parents and that many European countries are facing labour shortages in a growing number of sectors, young workers face more difficulties in entering or re-entering the labour market than the rest of the population. If governments fail to offer realistic solutions to youth unemployment, Europe may well have to pay a high price for a “lost generation” and compromise its competitiveness, security, social peace and future development prospects. With the challenges of globalisation and the lingering effects of the economic crisis, Europe simply cannot afford to waste the talents, energy, mobility and creativity of its youth.
4. The Assembly believes that the mismatch between the qualifications of young people and labour market needs, rapidly changing labour market conditions, structural economic shifts and eroding public spending on integrated pro-employment strategies are the main causes of youth unemployment or underemployment. There is therefore a need for adjustment in public policies at national and European level, with a view to fully implementing the labour-related provisions of the revised European Social Charter and promoting better qualifications and skills, more mobility, improved access to job offers and apprenticeship schemes, as well as a greater interaction between employers, state employment agencies and young jobseekers.
5. Taking into account the size and the possible implications of the youth unemployment problem, the Assembly considers that European policymakers face an imperative to better integrate the young jobseekers before resorting to bringing in high-skilled workers from non-European countries. Enhanced inter-generational solidarity and innovative arrangements in the workplace should enable the smoother transfer of skills between the senior and young workers, whilst helping the latter to embrace gainful employment more rapidly and the former to gradually prepare their retirement.
6. The Assembly is convinced that the European organisations, notably the European Union and the Council of Europe, can and should do more to help their member states offer more and better jobs for the young generation. Other partners, such as the European Bank for Reconstruction and Development (EBRD), the Council of Europe Development Bank (CEB), the North-South Centre, the European Social Fund (ESF) and the European Investment Bank (EIB), could usefully supplement both European and national action programmes.
7. In this context, the Assembly underscores the need for policymakers in Europe to take more into account the demographic reality, economic development problems and democratic challenges in Europe’s Mediterranean neighbourhood where millions of skilled yet unemployed and frustrated young people seek better living and jobs in all possible ways, including through emigration. The Assembly sees an overarching long-term interest for European states to support the European Union and Council of Europe action – via their respective neighbourhood policies and strategies for youth, and by involving the North-South Centre – in order to help southern Mediterranean countries to fully tap their development potential and offer their youth a better future.
8. The Assembly therefore calls on the Council of Europe member states to:
8.1 assert their support for youth employment as a major medium-term priority of public policy;
8.2 foster quality job creation, social dialogue and incentives for hiring young workers, in particular in the most promising economic sectors, notably services, and in those facing labour shortages;
8.3 improve interaction between employers, state employment agencies and young jobseekers;
8.4 strengthen links between educational institutions and businesses, with a view to better balancing the match between the qualifications of young people and labour market needs – current and future;
8.5 enhance educational orientation, skills development, professional guidance, employability training and job-search services in order to smooth the transition of young people from studies to work;
8.6 ensure additional education, training and income support in order to help lifestyle change for the disadvantaged or vulnerable young people, including those with an immigrant or minority background and those living in rural or remote areas, and support youth organisations with field activities in this domain;
8.7 remain vigilant regarding employers’ compliance with the obligations to ensure decent working conditions, regular training and adequate remuneration for young workers, notably with regard to temporary employment contracts;
8.8 consider setting up or strengthening, as appropriate, public-private partnerships conducive to offering start-of-career work experience and in-work training for young people;
8.9 put in place fiscal incentives for businesses to employ young people under long-term contracts, notably in order to assist the integration of the disabled and those most at risk of social exclusion or marginalisation;
8.10 study the policies and practices, notably “flexicurity” arrangements, of countries that are the most successful in underpinning youth employment, with a view to drawing lessons for reducing youth unemployment at home;
8.11 support, not least through voluntary contributions, the Council of Europe projects aimed at promoting youth employment, mobility, language skills and skills development schemes;
8.12 promote access of the young generation to self-employment, microcredit schemes and advisory services for entrepreneurship;
8.13 encourage multilateral development banks, in particular the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the Council of Europe Development Bank (CEB), and other relevant institutions, such as the European Centre for Global Interdependence and Solidarity (“North-South Centre”), to contribute to the implementation of the European Union and Council of Europe neighbourhood policies, in particular through projects aimed at job creation and youth employment in southern Mediterranean countries.
9. The Assembly invites national parliaments of the Council of Europe member states to consider holding annual debates on youth problems, including youth employment challenges, and the possibility of proposing youth action plans to tackle the problems thus identified.

B Explanatory memorandum by Ms Pejčinović-Burić, rapporteur

1 Introduction

1. The revised European Social CharterNote (Part I, paragraph 1) states that “everyone shall have the opportunity to earn his living in an occupation freely entered upon”. Article 1 of the same treaty recognises the right to work and underscores the responsibility of the contracting parties in the achievement and maintenance of a high and stable level of employment, with a view to attaining full employment. Accordingly, the Council of Europe member states must seek to protect effectively the socio-economic rights of their population and thus aim to provide free employment services for all workers as well as appropriate vocational guidance, training and rehabilitation.
2. Today’s world population includes 1.2 billion young people aged between the ages of 15 and 24. This group represents a significant part of the world’s total workforce (24.7%). However, unemployment in this same age group accounts for 43.7% of the world’s total unemployed population.Note In the 27 countries of the European Union alone, youth unemployment is twice as high as for the rest of the working-age population (20.9% against 9.6% in 2010) and grew throughout 2010. The situation is similar across non-European Union countries of central and eastern Europe, where one in every five economically active young people was unemployed in 2010.Note The Council of Europe must address the issue of youth employment and propose ways to remedy the disproportionate levels of unemployment experienced by young people.

2 The impact of globalisation

2.1 The increasing dynamism of emerging countries and its consequences for Europe

3. The different changes affecting the global economy are not without impact in Europe. In fact, globalisation is a phenomenon full of paradoxes which reduces global poverty in some areas and at the same time creates new disparities. Globalisation has highlighted Europe’s lack of competitiveness when compared with the dynamism of emerging economies.
4. Emerging economies attract more business because of the lower costs and vast opportunities for development they can offer. They boost their trade through the use of modern information and communication technology (ICT), global transport networks and a highly flexible workforce. The global trend also shows that growth in emerging economies is much higher than in developed countries. In addition, many emerging economies have gained experience in high technologies and now represent a major challenge for European industry. Europe is less competitive than before and it is more difficult for European economies to stand out from the crowd. Economic success for European companies depends increasingly on differentiation strategies (quality of the products) since European social systems make it difficult to reduce productions costs.
5. It is clear that globalisation has had an impact on the European labour market. A smaller workforce is required because European businesses have no choice but to specialise in activities that require more capital and skills than basic manpower. Consequently, most European economies are increasingly looking for highly qualified employees in order to remain competitive. In this context, the youth workforce could be a huge advantage in rising to the challenge of competitiveness and this is one of the reasons why the burning issue of youth unemployment must be tackled.

2.2 How the need for competitiveness impacts on European youth on the labour market

6. The need to be competitive has obliged European companies to make choices and, in order to survive in the global economy, few options exist. The differentiation strategy implies making products competitive in some way (for instance, by emphasising quality, innovation and the high added-value of products or by exploiting niche opportunities). At the same time, policies to lower prices by reducing production costs can also be considered as achieving the same goal.
7. To achieve the first objective, companies have to invest in research and development and benefit as much as possible from innovative ideas. In this context, highly-skilled workers are needed to maximise the chances of success. What is important here is not only to be a graduate, but also to have the qualifications needed in the labour market. European education systems are not always adapted to the specific needs of labour markets. Furthermore, pursuing the objective of better qualified workers may reduce the job opportunities for low-skilled workers as, in most cases, this strategy goes hand in hand with a greater use of capital at the expense of manpower.
8. If companies aim to reduce production costs, different options can be chosen, either through improving productivity by embracing more flexibility and efficiency or through cutting wage bills. In each case, labour market regulations may be a major obstacle. The less regulation there is, the easier it is to be flexible and the lower costs will be. Nevertheless, demands for ever-increasing flexibility, mobility and the simplification of labour laws are sure to have negative effects on working conditions and stability.
9. All of these actions are prejudicial for youth employment but the negative impacts vary depending on the decisions taken by businesses and policymakers. Indeed, these decisions impact either on youth working conditions or on their opportunities for finding employment after leaving school. In addition, a distinction must be made between low- and highly-skilled young workers: while some may benefit from specific policies, others may be penalised. When chances to find an official job diminish, the likelihood increases that some young people will slide into the underground economy with undeclared jobs.
10. The “Insider-outsider theory of employment and unemployment”Note may be considered relevant to this report. The theory holds that a labour market is segmented between people who are already integrated in companies and others who want to obtain jobs. The main explanation for this is the high costs incurred by companies in integrating newcomers: companies prefer to increase the salaries of their existing employees (insiders) rather than hiring new employees (outsiders) since this is often the least expensive option.
11. There are various explanations as to why youth unemployment is higher than the global rate and why young people are the first victims in a crisis. We have to take into account the fact that young people who want to enter the labour market have to confront the inherent barriers of this sector. The lack of experience and the high cost of training/education is always a handicap for young people, even if they are qualified and have recently finished their studies.
12. Statistics of the Organisation for Economic Co-operation and Development (OECD) show that France, Germany, Poland, Slovenia, Spain and Sweden are among the countries with a relatively high percentage of temporary employees. On the contrary, the same statistics show that Denmark, Estonia, Hungary, the Slovak Republic and the United Kingdom have a lower percentage. The extensive use of temporary contracts is one of the reasons why youth unemployment in some continental European countries and transition economies of central Europe is more sensitive to the business cycle.Note

3 The worrying s&tuation of youth unemployment

3.1 Unemployment is increasing, especially for young people

13. According to Eurostat, the Youth Unemployment Rate is “the percentage of the unemployed in the age group 15 to 24 years old compared to the total labour force (both employed and unemployed) in that age group”. This age group represents 10% (in Italy for example) to 17% (in Turkey) of the total population in Europe.Note Eurostat’s studies highlight the fact that youth unemployment rates are much higher than the rates for the total population. However, these figures need to be read with caution since many young people may not be on the labour market (studying or not looking for a job), thus affecting the accuracy of the unemployment rates. The data nevertheless indicates that young people face specific difficulties in finding jobs. Youth unemployment in the OECD area now affects approximately 15 million people and represents almost 19% of the young workforce. In the European Union countries, youth unemployment has risen in the last three years, from 14.9% in early 2008 to 20.9% at the end of 2010. This percentage varies significantly in different countries, reaching 42% in Spain, 35% in Latvia and Lithuania, and 34% in Slovakia, for example (see also the table in the appendix).Note
14. The sharp decline in youth employment is not a new issue and has plagued European countries for several years, as testified by the many articles and reports written and the many measures taken during the last decade. Nevertheless, the rapporteur underlines the fact that improvements in public employment policies have not yet solved this problem. More effective remedies are still required.
15. Moreover, the current economic crisis and the corresponding decrease in economic activity is negatively affecting the labour market in European countries and has had a devastating impact on unemployment rates and job creation all around the world. The situation for young people is worse than for other sectors of the population as labour markets are unable to absorb the growth of the young workforce. The main causes of the problem and the explanation as to why young people are more affected by the crisis than other sectors of the working population need to be analysed before proposing solutions.
16. One explanation for the impact of the crisis on youth employment is the extensive use of temporary contracts. According to various estimates across Europe, on average 40% of young workers – over 60% in some countries, for example Poland, Slovenia and Spain – were on such contracts in 2007 compared to about 18% for the rest of the workforce. Such a situation is only partly explained by the fact that some young people seek temporary employment whilst studying; a majority of young Europeans are in temporary employment because they cannot find a permanent job. Temporary contracts make it easy for companies to lay off employees during economic downturns, thus further increasing the likelihood of young people losing their jobs during such periods. Young workers are often the last to be hired and the first to be fired. This is known as the “last-in first-out” rule, which shows that, in times of crisis, most companies wish to avoid high training costs so prefer to do without inexperienced workers. Therefore, if companies decide not to renew contracts and stop employing, newcomers to the labour market are the first sector of the working population to be affected.
17. Another factor that contributes to explaining the major downturn in youth employment is that young people are often employed in cyclically sensitive industries, for example construction. In France, the crisis has particularly affected young men, many of them low-qualified workers employed in such industries. Consequently, since the third quarter of 2008,Note and for the first time in France, the unemployment rate of young men has been higher than that of young women. A similar trend has also been observed in other European countries.
18. In times of economic crisis, the number of early retirements decreases. Moreover, the retirement age has been raised across Europe in the last few years taking into account demographic trends. The consequence for young people is fewer job vacancies, which again contributes to the rise in the youth unemployment rate.OECD statistics show that the percentage of 55- to 64-year-olds working has increased significantly in the last two years.Note The employment of 55- to 64-year-olds in member states of the Council of EuropeNote followed the same trend, increasing by an average of 10% during the same period. An explanation for this trend may be that older employees wish to stay in their jobs longer in order to improve their financial situation for the future. In some countries, life savings have been devastated by the impact of the crisis, leaving many employees determined to rebuild their savings with a few more years of work.

3.2 Different groups of young people

19. Certain groups of young people are more at risk of losing contact with the labour market than others. OECD studies have identified four youth employment groups: high performers, poorly integrated new entrants, youth left behind, and returning to education. “High performers” are employed most of the time and take less than six months to find a job after leaving school. The “returning to education” group concerns young people who have decided to complete their secondary education or who enter tertiary education following a dissatisfying experience on the labour market. The “youth left behind” group comprises young people who lack recognised qualifications, come from an immigrant/minority background and/or live in disadvantaged/rural/remote areas. This group refers to those who are neither in employment nor education or training (“NEETs”). The “poorly integrated new entrants” often have qualifications but experience difficulties in finding stable employment, even in times of economic growth. They move from periods of employment on temporary contracts to periods of unemployment or inactivity.Note
20. The “poorly integrated new entrants” and members of the “youth left behind” group face a high risk of losing contact with the labour market. Both of these groups can be found in all OECD countries, but the latter is particularly large in countries such as France, Greece, Italy, Japan and Spain. Young people in this group should receive state assistance in seeking employment after leaving school. One strategy could be to offer them the possibility of participating in programmes to obtain a recognised qualification or diploma. In the case of “poorly-integrated new entrants”, governments must also ensure that the young people in this group rapidly find stable jobs that offer better prospects for career progression.
21. The rapporteur would like to point out that general employment trends may also affect young people. Inequalities between men and women, for example, seem to penalise young women too. Only one factor is favourable to women: they are generally less represented in cyclically sensitive industries, and consequently are less affected by economic downturns. However, in the future, young women may be more affected as the sectors where they are more often employed (the public sector, health, education, social services, etc.) will be hit by budget austerity measures in many European countries.
22. By the same token, handicapped people are regularly victims of discrimination on the labour market and the issue of the employment of handicapped young people must be specifically taken into account.
23. The earlier problems are tackled, the fewer problems remain later. Also, with regard to already existing problems of discrimination, more effective measures should be taken to deal with the root causes, and to limit their possible consequences on the whole population. Moreover, European countries must adapt their policies to improve their specific support to the more vulnerable groups.

4 Structural problems linked to education systems

4.1 Impact of educational achievements on youth employment

24. In general, there is a strong correlation between employment rates and levels of education: the higher the educational achievements, the higher the probability of avoiding unemployment. In most economic sectors, between 20% and 40% of young workers are also in formal education. In European Union countries, half of young workers are employed in elementary or low-skilled jobs; this proportion shrinks to about 35% in the next age group as more young jobseekers possess a diploma and higher qualifications. According to OECD statistics, Italy is the only OECD country where the proportion of young people aged 15 to 29 leaving education with an upper secondary education qualification is higher than that of those with a tertiary diploma.Note The benefits of having a good level of education also depend on the economic characteristics of each country since the skills required by the labour market can vary from economy to economy. Nevertheless, there is still a relative advantage to being a graduate with a higher education diploma on the labour market.
25. From an employer’s point of view, especially in the context of globalisation, “a well-trained human capital, capable not only of adapting to and using new technology but also of pushing forward technological frontiers, is crucial”.Note Employers are reluctant to hire “young workers with unmatched skills”Note due to the costs involved in training and adaptation in the work place. This relates directly to the “Insider-outsider theory of employment and unemployment” described in chapter 2.2. This theory can help to explain some of the difficulties experienced by young people on the labour market, especially for the less well educated who have no educational advantages in comparison with the “insiders”.
26. One of the major problems underlined by official reports on youth unemployment is the issue of school dropouts. It seems that if too many young people leave school early (with lower secondary education), countries face an increased risk of long-term unemployment. In Spain for instance, “one in four youths leave school with less than upper secondary education which is regarded as the minimum level of basic skills to integrate in today’s labour market”.Note Even if the situation is better in other OECD countries, the issue of school dropouts must be tackled as a priority in fighting the potential social exclusion of youth. This issue also relates to the increasing rate of “Neither in Employment nor in Education or Training” (NEET) among young people because the probability of becoming “NEET” is higher when young people leave school too early without any educational qualifications. These young people present a “high risk of poor labour market outcomes and social exclusion”.Note On average, in 2007 they represented 11% of 15- to 24-year-olds in OECD member countries,Note about 15% in the EU-27 (but about 36% in Malta and Portugal), 28% in Iceland and nearly 48% in Turkey. With a few exceptions, young men are more numerous among early school-leavers than young women.
27. The level of education is also a determining factor in accessing stable jobs and long-term employment contracts. There is no denying that most jobs obtained by young people are temporary, but these contracts do not have the same consequences on future career development depending on the level of education. It is not rational to condemn fixed-term contracts as it has been shown that they may be a “stepping stone to a permanent contract [instead of] a dead end”.Note Nevertheless, the probability of obtaining a permanent job after a fixed-term contract or even after a period of unemployment is always greater for highly skilled young people.

4.2 The transition from school to work

28. The transition from school to work refers to the time taken by young people to find a job after their studies. This time varies from country to country and some young people are more exposed to difficulties during their school-to-work transition. Moreover, “many youth move in and out of the labour market before finding a job that offers them career prospects and some stability”.Note Only afew young people get into the labour market directly after having left school. Two youth groups experience particular difficulties on the job market: the “youth left-behind” and the “poorly-integrated new entrants”. The first group requires specific assistance to avoid the trap of long-term unemployment and inactivity. As they tend to accumulate disadvantages, it should be possible to detect them before their situation becomes irremediable. The second group is more concerned by an unstable professional life, alternating between employment on temporary contracts and periods of unemployment. In the rapporteur’s view, the transition from school to work presents particular difficulties for these two groups of young people and this situation needs to be addressed.
29. First of all, the school-to-work transition should be improvedin order to limit the long-term unemployment related to the increasing NEET proportion among youth. Young people in difficulty need help either to rapidly find a job or to integrate a training programme. Secondly, a solution must be found to ensure that temporary jobs become a real stepping stone to “more stable and promising jobs”.Note These goals have to be pursued as European countries seek to solve the problem of the “youth left-behind” and the issue of precarious contracts that increase the risk of unemployment in economic downturns.
30. According to OECD studies, school-to-work transitions are smoother in a less reglemented labour market because the instability due to temporary contracts for new entrants appears to be compensated by the flexibility of the labour market. In addition, the transition tends to be easier and quicker for young people who have at least an upper secondary qualification. Lastly, young people in countries where apprenticeshipprogrammes and dual systems of education are well developed experience fewer difficulties in the school-to-work transition. Nevertheless, the rapporteur is convinced that each situation can be improved and considers the issue of school-to-work transition as one of the most important problems to be tackled by the member states.

5 Consequences of youth unemployment

5.1 The consequences for young people

31. More than one third of young people in the world are unemployed, have completely given up looking for a job (discouraged) or are working but still living below the $2-a-day poverty line (the working poor). There are an estimated 152 million young “working poor” living in extreme poverty with less than US$1.25 a day, which in 2008 corresponded to 28% of employed young people.Note The International Labour Organization's (ILO) report on global employment trends for youth in 2010 points out that 81 million out of 620 million economically active young people were unemployed at the end of 2009 – the highest ever recorded number. The prospects for 2010 were no better.
32. One of the major consequences of unemployment for young people is the negative impact on their professional prospects. This impact has been termed the “scarring” effect due to the fact that the mere experience of unemployment will increase the risk of future unemployment and/or reduce future earnings. The longer the period of unemployment, the greater the risk of “path dependence” (future long-term unemployment, low employment opportunities and proportionally lower wages). Long periods of unemployment also tend to lead to increased levels of future job dissatisfaction and ill health. For most young people, the effects of early unemployment on subsequent job prospects have been proved to be temporary. However, for disadvantaged young people lacking basic education, a failure in their first experience on the labour market is often difficult to make up and may expose them to long-lasting “scarring” effects.Note
33. The rapporteur wishes to underline the psychological consequences that may affect young people who are excluded from the labour market for a certain time. In our European society, social recognition is closely related to professional status and sociologists have shown that unemployment, through low incomes and the lowering of social status, can lead to social exclusion or marginalisation. For this reason, periods of unemployment can have highly negative consequences on young people who have never had the chance to prove that they are good enough to work. Their self-confidence may suffer in that they feel useless or unable to work.

5.2 The consequences for society in general

34. The rapporteur is aware that the situation of over-indebtedness in Europe has led to lower levels of public spending. Nevertheless, one should not forget that youth unemployment is a problem that will penalise society as a whole in the future if nothing is done now. A major challenge for public authorities is therefore to ensure coherent action that takes into account current constraints on short- to medium-term public spending, structural trends in the labour market and the overarching long-term public interest. Considering the global trends and evolutions in Europe, youth unemployment is a structural problem and is not simply a consequence of the current economic crisis. In order to improve living conditions in Europe, the rise in youth unemployment has to be tackled without delay.
35. First of all, high unemployment creates an important shortfall for European economies, as it implies a drop in demand and investment spendingNote whilst low unemployment stimulates consumption and investment, that is to say economic growth and higher tax revenue in most cases. Fighting unemployment should be related to the fight against poverty and precarious situations. Both are unfavourable to European economies, especially in times of crisis when an upturn of economy is the first priority.
36. The current situation of youth unemployment threatens to marginalise many young people whose future employment opportunities may dry up as a result of a structural change in the labour market. The erosion in a working generation involves the risk of compromising not only individuals’ future plans and expectations but also their contribution to the economy, democracy and a country’s return on its social investment.
37. Another consequence which could affect countries with high rates of youth unemployment is that young people may decide to move to other countries which offer them a brighter professional future. This type of migration can result in a country’s loss of productivity and the loss of its young workforce (both non-qualified and highly skilled). This in turn would negatively affect its future economic development. By helping young people to access employment and to find their first jobs, states would attenuate social tensions in their societies and would diminish the reliance of certain economic sectors on immigrant labour.
38. In addition, the European demographical situation and the set-up of social welfare systems in most countries requires young people to work in order to finance pensions. In the context of population aging trends, European countries have to prepare the future: the young generation represents an opportunity to make intergenerational solidarity and national development sustainable. As the baby boomers retire, European economies need more young people to work.Note This situation should naturally help to reduce youth unemployment, but governmental action is still required to ensure that young people have better qualifications and accede to satisfying job opportunities.
39. One possible and highly worrying consequence of youth unemployment is the increase of violenceor delinquency among young people due to the lack of opportunities offered by the labour market. This may in turn increase social costs. The issue could be included in a wider discussion about the unequal opportunities that have recently provoked violent reactions in some European countries and Europe’s Mediterranean neighbourhood where populations are eager to reclaim their fundamental rights of living and working in dignity.

6 Solutions

6.1 Measures to improve youth employment prospects

40. All the social costs of youth unemployment must be taken into account and governments must find ways to minimise if not eliminate them. The European institutions, including the European Union and the Council of Europe, can and should do more to help their member states offer more and better jobs for the young generation. Other partners, such as the European Bank for Reconstruction and Development, the Council of Europe Development Bank, the North-South Centre, the European Social Fund (ESF) and the European Investment Bank, could usefully supplement both European and national action programmes.
41. The ESF is in fact the main European Union financial instrument for supporting youth employment, entrepreneurship and the learning mobility of young workers, as well as action to prevent young people from dropping out of school and raise skill levels. About a third of the 10 million ESF beneficiaries supported each year are young people. Moreover, about 60% of the entire ESF budget (€75 billion for 2007-2013) is combined with national co-financing in favour of young people.Note We should also note that in September 2010 the European Commission launched a public consultation on future education and learning programmes with a view to presenting new proposals in 2011, in time for the next programming period of the ESF. The rapporteur encourages all those interested in the ESF-supported projects for youth and employment in the European Union member states to visit the Fund’s website.Note
42. The Council of Europe member states have formulated their strategic proposals on youth employment in the declaration adopted at the 8th Conference of Ministers responsible for Youth (October 2008), in parallel with the European Union’s “Council Resolution on a renewed framework for European co-operation in the youth field (2010-2018)” and the “EU 2020” economic strategy, including the “Youth on the Move” flagship initiative. Your rapporteur notes that an existing joint programme between the Council of Europe and the European Union on “Youth Partnership Framework Programme 2010-2013” aims, amongst others, at the social inclusion of young people through access to rights and the creation of opportunities in employment, education and training. Within that framework, more synergies could be sought in the work of the Council of Europe’s Youth Centre and the European Social Fund towards concrete projects to underpin youth employment.
43. As the wind of democratic change is blowing across the southern Mediterranean, the “old” democracies of Europe cannot stand and watch idly. In the context of a wider discussion on the Council of Europe Neighbourhood policy, this Organisation could consider better exploiting the potential of its North-South Centre for joint projects in favour of youth, employment and human development in southern Mediterranean countries.
44. The private sector plays a major role in fostering both youth employment in particular and job creation in general. To this effect, companies have to be encouraged by governments to hire young low-skilled workers on apprenticeship contracts which allow them to combine their studies with a first experience in the labour market. Apprenticeships also provide low-skilled workers with an opportunity to obtain the necessary skills to advance in their future profession and gain enough experience to become an asset to their company. Moreover, they are an excellent way of adapting the skills obtained by apprentices to the skills demanded by the labour market. To carry out apprenticeship training, companies need to have access to training and management assistance, particularly for apprentices without any qualification.
45. The evidence has shown that a dual system, alternating study and apprenticeship training or other vocational education programmes is an effective pathway to enter the labour market and thus smooth the transition from school to work. It has also been proved that countries with strong apprenticeship systems have a greater proportion of high performers. The dual system is used by countries such as Germany and Austria as a complement to a regulated labour market. Youth unemployment rates in Germany and Austria are among the lowest in Europe due to a successful apprenticeship system that ensures a relatively smooth transition from school-to-work for most young people.
46. Even if some experts are convinced that the key to the problem is the removal of labour market rigidities that penalise youth employment, many argue that even highly regulated labour markets perform well when strong vocational education and training systems are in place. Indeed, there is no need toderegulate labour markets as long as countries are able to run efficient educational systems. Furthermore, we should consider that the more flexible the market is, the more precarious the jobs held by young people will be. Considering the high levels of cyclical youth unemployment in some countries, such as Spain, the development of temporary contracts for young people should be avoided in order to reduce the risk of lay-offs during economical downturns.
47. The establishment of an efficient apprenticeship system benefits both companies and young employees. This approach requires adequate state support and programming. The rapporteur considers that governments should promote this avenue by providing – though local, regional or central authorities – subsidies or tax incentives to companies, in particular small and medium-sized enterprises (SMEs) and start-ups. Targeted support measures to prevent apprentices from being made redundant before they complete their training could also be helpful. Governments could also financially encourage companies to hire their apprentices on a more long-term basis at the end of the apprenticeship. However, in some countries where the apprenticeship system is well established, companies have become reluctant to offer this kind of contract, particularly to young people lacking educational qualifications or from an immigrant background. To counter this situation the rapporteur considers that fiscal benefits should be given preferably to companies hiring unskilled apprentices.
48. It should be noted that apprenticeship contracts can turn into a negative practice when companies misuse them. A persistent aim of lowering labour costs could lead companies to take advantage of apprentices’ low wages and make profits out of the extra output provided by their work. The misuse of these contracts can result in a precarious situation among apprentices where, instead of being trained, apprentices are asked to do the same jobs as ordinary employees but do not receive adequate remuneration. Therefore, governments should ensure that minimum wages are paid to apprentices and should protect them from possible abuses. International and national laws could limit the extension of apprenticeship contracts when the worker exceeds a certain age. Moreover, subsidies given should be designed to minimise possible deadweight or substitution effects and they should only be given in relation to youth without skills or laid-off apprentices in order for them to complete their qualifications.
49. Concerning other possible improvements that could smooth the school-to-work transition, OECD experts advise several measures. They recommend that European countries should “provide early guidance to school-leavers in search of a job”, “extend job search assistance measures for those who are job-ready”, “ensure a better co-operation between employment services and the education system to reach youth as soon as possible when risk of disengagement is detected” and “maintain those who are hard-to-place connected with the labour market”.Note The rapporteur shares this view. Moreover, in this context, she recalls the proposal of the European Youth Forum to introduce “youth guarantees” – policy measures that would aim to ensure that no young person is out of employment, education or training for more than four months, unless the person chooses to be.
50. As full employment would be a utopian ideal, income support in case of unemployment is important for protecting unemployed young people from social exclusion, while at the same time preventing them from becoming dependant on social security payments. In other words, income support must depend on a certain number of conditions ensuring that unemployed people are making efforts to find work or are taking part in training/educational programs. Some countries’ practices unfortunately encourage income support dependency. In Belgium, for instance, young people can request unconditional and time unlimited income support immediately after finishing their studies.Note By contrast, in Denmark youth income support is subject to certain strict conditions: young people who receive welfare benefits must attend an interview in the first week, a job-search training course in the second week and an educational or work placement within the third week.Note
51. The rapporteur considers that an intermediate plan could be implemented with the aim of both protecting young people from the risk of social exclusion and preventing their dependence on income support. European countries should help unemployed young people not only with income support but should also give them new perspectives. That is to say, public policies must take into account that unemployment for new entrants in the labour market might penalise them in their future professional life. A number of measures must be taken to reinforce the chances of young unemployed people starting over after a period without work. At the same time, it is clear that European countries cannot afford to finance social security payments without having a strong employment policy.
52. Welfare benefits should be allocated under certain conditions in order to encourage unemployed people to actively seek employment. In order to reduce the gap between unemployed young people and other unemployed people, the rapporteur advocates the use of specific measures directed at 15- to 24-year-olds who do not have access to ordinary income support because they have not worked the minimum time required. Such beneficiaries of income support should attend an interview that offers them more personal assistance in their job/training search and should be asked to take part in job-search training courses. Public employment agencies could offer them employment matching their profiles for a restricted period. Beneficiaries should be allowed to refuse offers only after proving the incompatibility with their skills and professional experience. A determined number of unjustified refusals could be allowed but, once exceeded, beneficiaries should accept new offers of employment or renounce their right to income support. The rapporteur notes that the success of these measures depends on the quality of the public employment agencies and their efficiency in matching offers to demand and being respectful of the profiles of unemployed people.

6.2 Measures on education

53. As already outlined in this report, educational systems have an important impact on youth employment rates. The rapporteur is convinced that European countries should invest in deep reforms to remedy the lack of coherence between educational systems and the labour market that today penalises young people. Several improvements could be introduced to ensure that young people leave education with the skills required by the labour market.
54. Special and innovative measures are needed to integrate disadvantaged young people. Firstly, European countries need to provide the necessary language training to immigrants in order to facilitate their integration on national labour markets. Secondly, to limit the problem of young people that are NEET, European countries should reduce the number of early school dropouts and assist these young people in making a fresh start. Here the rapporteur notes that the “second chance schools” initiatives introduced in several countries (for example Hungary)Note could be a good example to follow. A pilot project was introduced by the European Union in order to “provid[e] new, tailor-made avenues back to the world of work and to active citizenship”Note for young people who dropped out of school too early to have acquired an adequate educational background in relation to labour market needs.
55. As a general rule, educational systems should prepare young people to work in the globalised world by teaching, where possible, three foreign languages, that is to say English and two other languages.Note This is already possible in some countries, but students’ levels vary enormously from one country to another, so less efficient systems have to be improved. This idea goes hand in hand with economic opportunities for international companies and young jobseekers. As European countries have no other choice but to take part in globalisation, it seems inevitable that languages have to be learned well at school to facilitate communication and mobility across multilingual Europe and beyond. In fact, as European economies are not necessarily specialised in the same fields, multilingualism could be a balancing factor in the supply and demand of the European labour market.
56. Furthermore, European countries should try to build better balanced systems of education including academic studies and vocational training. Even if it seems obvious to have both, some countries have not done enough to promote certain professional qualifications that are in high demand on the market but have lost prestige among the public. In France, for example, academic studies have become the goal to achieve for students, regardless of the real needs of the labour market and the shortage of specialists in certain professions (notably in manual professions and crafts). Better communication between all actors involved in the employment process is needed in order to identify buoyant or promising sectors and guide students in making their choices. This could enable a better match of offers with demands in the labour market.
57. Another possible measure could be to establish a better regulation of admissions to universities. This measure could help achieve a balance between job offers and jobseekers by orienting young students to studies which offer better perspectives for future employment. Limiting access to studies in certain sectors deemed of low priority could be a good short-term measure to prevent future graduates’ frustration at having to work in sectors for which they are not qualified. However, this measure must be accompanied by a promotion of the more promising sectors in terms of jobs or economic development trends in each country.
58. Last but not least, the rapporteur wishes to introduce the idea of developing work-linked school courses,even in academic studies, because “the combination of solid education and work experience can help to ensure the long-term integration of young people into the labour market”.Note This idea comes after findings that many academic courses require students to carry out an internship during their studies. The rapporteur’s advice would be to include more practical subjects in academic studies and to develop new weekly timetables with one day of work in order to provide students with the practical knowledge needed in the labour market. This implies using a dual system not only for vocational studies but also for academic courses. Such measure would allow companies to be involved in the training process, and would thus reduce the gap that currently exists between educational systems and the needs of the labour market.

7 Concluding remarks

59. Although unemployment and precarious work undermine the dignity of every individual concerned and the human progress of society at large, young people are particularly vulnerable. As the data shows, they are much more affected by unemployment and the difficulties in entering or re-entering the labour market than the rest of the population. This is despite the fact that young people in Europe today have a better level of education than their parents and that many European countries are facing labour shortages in a growing number of sectors. With the challenges of globalisation and the lingering effects of the economic crisis, Europe cannot afford to waste the talents, energy, mobility and creativity of its youth.
60. The mismatch between the qualifications of young people and labour market needs, rapidly changing labour market conditions and eroding public spending on integrated pro-employment strategies seem to be the main causes of this situation. There is a need for adjustment in public policies at national and European level, with a view to promoting better qualifications and skills, more mobility, an improved access to job offers and a greater interaction between employers, state employment agencies and young jobseekers. European policymakers face a moral imperative to better integrate youth in the search of work before resorting to bringing in high-skilled workers from non-European countries. This is a vital public interest if Europeans want to win the global race of competition and avoid major societal problems in the medium- to long-term.
61. European countries have been testing various solutions to the problem of youth unemployment and some options seem to yield quite substantial positive results. Policy options that work best form part of an integrated framework for economic and human development, taking national specifics into account. Good education, vocational training or higher studies and “first job” or traineeship experience remain a key springboard into working life. Better guidance for young people in choosing studies-to-job pathways is necessary to rebalance real labour market demand with sufficiently qualified – and motivated – jobseekers.
62. Country strategies should take stock of national strengths and weaknesses in order to make sure that all actors across the public and private sectors have accurate information about strategic national priorities, training/retraining/lifelong-learning and employment opportunities in booming economic sectors, state-supported requalification options and any pro-employment tax incentives. Additional public effort may be required to compel enterprises to hire young employees on decent contractual terms, to create conditions fostering youth entrepreneurship, to support employment of the most vulnerable young people and to resort to public-private partnerships for the development of disadvantaged areas.
63. The United Nations have launched an International Year of Youth starting in August 2010. European countries could champion the youth cause by better tapping young people’s potential through work and thus make substantive progress towards a more just, prosperous, inclusive and democratic society.

Appendix

Youth (under 25 years) unemployment rates in some European countries (in % of working-age population)
 

2009

2010

Men

Women

2009

2010

2009

2010

Austria

Belgium

Bulgaria

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

The Netherlands

Poland

Portugal

Romania

Slovenia

Slovakia

Spain

Sweden

United Kingdom

10.0

21.9

16.2

14.0

16.6

11.2

27.5

21.5

23.5

11.2

25.8

26.5

24.4

25.4

33.6

29.2

16.5

14.4

7.7

20.6

20.0

20.8

13.6

27.3

37.8

25.0

19.1

8.8

22.4

23.2

17.8

18.3

13.8

32.9

21.4

23.3

9.9

32.9

26.6

27.8

27.8

34.5

35.1

16.1

12.9

8.7

23.7

22.4

22.1

14.7

33.6

41.6

25.2

19.6

4.7

8.2

9.9

6.1

7.1

8.3

23.4

9.5

9.7

8.0

8.3

11.6

16.4

7.5

24.1

21.9

4.2

6.9

4.5

9.5

9.6

8.0

7.0

14.3

19.2

8.9

9.0

4.7

7.7

12.7

6.7

6.2

8.3

..

8.3

8.9

6.8

..

12.5

18.0

7.6

..

..

3.7

6.5

4.3

9.5

10.2

..

8.3

14.1

20.1

7.7

..

4.2

8.6

8.9

6.3

8.7

5.8

14.4

7.8

10.1

6.5

14.8

10.5

8.8

9.9

15.5

12.9

5.2

7.8

4.5

10.0

11.4

6.6

6.5

15.1

19.5

8.7

6.6

5.0

7.5

10.3

7.7

8.1

7.4

..

7.6

10.3

5.9

..

11.4

11.0

9.5

..

..

5.4

6.4

4.2

10.1

12.2

..

7.8

13.9

20.9

7.5

..

EU-27

20.0

20.9

9.8

9.5

9.4

9.6

Croatia

Norway

Moldova

Russian Federation

Turkey

Ukraine

25.0

8.9

22.1

26.7

22.7

17.8

30.7

8.9

25.6

..

19.7

17.4

..

4.1

12.9

..

..

..

..

..

16.3

..

..

..

..

2.9

9.2

..

..

..

..

..

9.3

..

..

..

Sources: Eurostat, gender data (for European Union countries, Croatia, Norway and Turkey) of February 2010 and 2011; national statistics offices for Moldova, Russian Federation and Ukraine.

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