HOW TO UNDERSTAND AND FIGHT YOUTH UNEMPLOYMENT Samuel Engblom Swedish Confederation for Professional Employees

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  • HOW TO UNDERSTAND AND FIGHT YOUTH UNEMPLOYMENT Samuel Engblom Swedish Confederation for Professional Employees
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  • How high is youth unemployment? Since the start of the crisis, the average youth unemployment rate has increased by 7 percentage points The youth unemployment rate exceeds 21 per cent on average in the countries for which data are available. youth unemployment is now nearly three times the average level among adults aged 25 and over
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  • How is youth unemployment measured? Outside the labour force Unemployed Employed All youth aged 15-24 In the labour force Youth unemployment = unemployed as a percentage of young people in the labour force Majority are students, but not all students are outside the labour force
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  • How is youth unemployment measured? Outside the labour force Unemployed Employed Unemployed, not full-time students Full-time students All youth aged 15-24 r Unemployed aged 15-24 Discouraged youth
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  • How is youth unemployment composed?
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  • WORK Discouraged youth Lack of education Lack of experience Frictional unemployment SOCIAL EXCLUSION Focus for analysis and action Job ready
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  • What are the causes of youth unemployment? Youth unemployment is naturally higher Seniority rules in dismissal situations disfavours younger workers? Demographic effects Employment protection is too strict? Entry level wages are too high? Failures in the education system
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  • Are entry level wages too high? As young people, due to their lack of experience, are less productive and a greater risk than older workers, employers will prefer to hire older more experienced workers unless young peoples wages are significantly lower. New research questions the connection between high minimum wages and high unemployment (ILO, OECD, Krugman) Not a solution for young people with insufficient education, unless much lower. Productivity gap due to lack of experience is quickly closed, but effects of low entry level wages can stay on. Big differences between countries and sectors.
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  • Seniority rules in dismissal situations disfavours younger people In case of collective redundancies (dismissals for economic reasons) most countries apply seniority rules or other selection criteria that favours old workers which means that young people lose their jobs.
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  • en cas de licenciement collectif pour motif conomique, dfaut de convention ou accord collectif de travail applicable, l'employeur dfinit, [] les critres retenus pour fixer l'ordre des licenciements. Ces critres prennent notamment en compte les charges de famille et en particulier celles de parents isols, l'anciennet de service dans l'tablissement ou l'entreprise, la situation des salaris qui prsentent des caractristiques sociales rendant leur rinsertion professionnelle particulirement difficile, notamment des personnes handicapes et des salaris gs, les qualits professionnelles apprcies par catgorie. France, Code du Travail art L.321-1-1
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  • Seniority rules in dismissal situations disfavours younger people In case of collective redundancies (dismissals for economic reasons) most countries apply seniority rules or other selection criteria that favours old workers this means that young people lose their jobs. Probably only a small percentage of unemployed youth have been affected by seniority rules.
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  • Seniority rules and youth unemployment - Sweden Table 1. Unemployed by cause of unemployment and age (per cent). Age 15-24 Age 25-29 Age 30-34 Age 35-44 Age 45-54 Age 55-64 Age 25-64 Age 15-64 New entrants 53,112,511,59,18,32,78,727,4 Re-entrants 25,438,135,229,915,313,425,825,6 Looked for work immediately 21,549,453,460,376,483,965,446,8 Thereof Economic dismissals 2,58,111,511,318,126,315,19,6 Fixed-term employment 12,925,924,528,433,229,328,621,9 Source: Swedish Labour Force Survey 2008
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  • Seniority rules in dismissal situations disfavours younger people In case of collective redundancies (dismissals for economic reasons) most countries apply seniority rules or other selection criteria that favours old workers this means that young people lose their jobs. Probably only a small percentage of unemployed youth have been affected by seniority rules. Young people who have been dismissed for economic reasons quickly find jobs again (young, competent, experienced, mobile). Seniority rules create incentives to invest in older workers better for society than early retirement.
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  • Is employment protection too strict? If it is difficult to dismiss workers who do not fulfil the expectations of the employer, employers are less likely to hire young people as they, with less experience and no proven record, are a greater risk. Employment protection weak at the initial stages of employment (probationary contracts, qualifying periods). In most countries, employers have large possibilities to use fixed- term contracts, which are often used to test new employees. Economic research proving this hypothesis should be questioned.
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  • Failures in the education system Young people who lack general or vocational education are especially vulnerable to the crisis. They experience more severe scarring effects from periods of unemployment and are more likely to be unemployed long term (ILO 2010) More jobs require a higher level of education. Employers avoid young people who have not finished school, also for less skilled jobs. Modern labour markets require life-long-learning.
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  • How to fight youth unemployment?
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  • WORK Discouraged youth Lack of education Lack of experience Frictional unemployment SOCIAL EXCLUSION Focus for analysis and action Job ready Different people different needs
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  • No one simple solution to youth unemployment. There must be different kinds of measures for young people with different needs. General measures tend to be too broad dead weight effects. National differences no one single strategy.
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  • WORK Discouraged youth Lack of education Lack of experience Frictional unemployment SOCIAL EXCLUSION Subsidised employment Good job seeking infrastructure Different people different needs Practical possibilities to complete their education Guidance and motivation Vocational trainingTraineeships
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  • WORK Discouraged youth Lack of education Lack of experience Frictional unemployment SOCIAL EXCLUSION Reducing youth unemployment
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  • WORK SOCIAL EXCLUSION The substitution effects dilemma ?
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  • Final advice to young trade unionists Make your own analysis and identify the real problem. Dare to question conventional wisdom on the causes of youth unemployment. Present credible alternative solutions.
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  • Contact details Samuel Engblom Legal advisor The Swedish Confederation for Professional Employees (TCO) samuel.engblom@tco.se
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