HOW TO UNDERSTAND AND FIGHT
YOUTH UNEMPLOYMENT
Samuel EngblomSwedish Confederation for Professional Employees
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…”
How is youth unemployment measured?
Outside thelabour force
Unemployed
Employed
All youth aged 15-24
In the labour forceYouth
unemployment = unemployed as a
percentage of young people in the labour
forceMajority are
students, but not all students are outside
the labour force
How is youth unemployment measured?
Outside the labour force
Unemployed
Employed
Unemployed, not full-time
students
Full-time students
All youth aged 15-24 årUnemployed aged 15-24
Discouraged youth
How is youth unemployment composed?
WO
RK
Discouraged youth
Lack of education
Lack of experience
Frictional unemployment S
OC
IAL
EX
CLU
SIO
N
Focus for analysis and action
”Job ready”
What are the causes ofyouth unemployment?
Youth unemploymentis 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
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.
Seniority rules in dismissal situationsdisfavours 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.’
…en cas de licenciement collectif pour motif économique, à
défaut de convention ou accord collectif de travail applicable,
l'employeur définit, […] les critères retenus pour fixer l'ordre des
licenciements. Ces critères prennent notamment en compte les
charges de famille et en particulier celles de parents isolés,
l'ancienneté de service dans l'établissement ou l'entreprise, la
situation des salariés qui présentent des caractéristiques
sociales rendant leur réinsertion professionnelle particulièrement
difficile, notamment des personnes handicapées et des salariés
âgés, les qualités professionnelles appréciées par catégorie.
France, Code du Travail art L.321-1-1
Seniority rules in dismissal situationsdisfavours 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.
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 53,1 12,5 11,5 9,1 8,3 2,7 8,7 27,4
Re-entrants 25,4 38,1 35,2 29,9 15,3 13,4 25,8 25,6
Looked for work immediately
21,5 49,4 53,4 60,3 76,4 83,9 65,4 46,8
ThereofEconomic dismissals
2,5 8,1 11,5 11,3 18,1 26,3 15,1 9,6
Fixed-term employment
12,9 25,9 24,5 28,4 33,2 29,3 28,6 21,9
Source: Swedish Labour Force Survey 2008
Seniority rules in dismissal situationsdisfavours 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.
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.
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.
How to fight youth unemployment?
WO
RK
Discouraged youth
Lack of education
Lack of experience
Frictional unemployment S
OC
IAL
EX
CLU
SIO
N
Focus for analysis and action
”Job ready”
Different people – different needs
Different people – different needs
• 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.
WO
RK
Discouraged youth
Lack of education
Lack of experience
Frictional unemployment S
OC
IAL
EX
CLU
SIO
N
Subsidised employment
Good job seeking infrastructure
Different people – different needsPractical possibilities to complete their education
Guidance and motivation
Vocational trainingTraineeships
WO
RK
Discouraged youth
Lack of education
Lack of experience
Frictional unemployment S
OC
IAL
EX
CLU
SIO
N
Reducing youth unemployment
WO
RK
SO
CIA
L E
XC
LUS
ION
The substitution effects dilemma
?
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.
Contact details
Samuel Engblom
Legal advisor
The Swedish Confederation for Professional Employees (TCO)
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