institut arbeit und qualifikation gerhard bosch youth unemployment and the european employment...

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Gerhard Bosch Youth unemployment and the European employment policy "Decent work and global trends in employment" 5th Astana Economic Forum 22- 24 May, 2012 Prof. Dr. Gerhard Bosch Institut Arbeit und Qualifikation Forsthausweg 2, LE, 47057 Duisburg Tel.: +49 203 / 379 1827; Fax: +49 203 / 379 1809, Email: [email protected] ; http://www.iaq.uni-due.de/

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Gerhard Bosch

Youth unemployment and the European employment policy

"Decent work and global trends in employment"5th Astana Economic Forum22- 24 May, 2012

Prof. Dr. Gerhard BoschInstitut Arbeit und QualifikationForsthausweg 2, LE, 47057 DuisburgTel.: +49 203 / 379 1827; Fax: +49 203 / 379 1809, Email: [email protected] ; http://www.iaq.uni-due.de/

Structure of presentation

1. Youth unemployment in the EU – a lost

generation?

2. The structural problem: Transition from,

education to work

3. The cyclical problem: Need for Growth

package for Europe

1. 1 Growing unemployment of young people in the European Union

Unemployment rate of under 25years increased from 15.8% in 2008 - to 20,1% in 2009 and 21,4% in 2011

Only in DE and AT decline of unemployment figures of young people since the financial crisis

In some countries unemployment rates far above 30% - no short- term hope of decrease

Lost generation – high scar effects

1.2 Youth unemployment rate/ratio by country 2011 (in %)

Source: Eurostat

1.3 Scar effects of a bad startMyriad studies on long term scar effects of a

bad start. Two examples:1. Graduating from college in a bad economy

has large, negative and persistent effects on wages. Lifetime earnings are substantially lower than they would have been if the graduate had entered the labour market in good times (Lisa B. Kahn (2010)

2. Data from the UK 1958 birth cohort (National

Child Development Study) - Youth unemployment raises unemployment, lowers wages, worsens health and lowers job satisfaction twenty five years later. No such effects could be found for spells of unemployment when the respondents were in their thirties (Bell/Blanchflower 2009)

1.4 Scar effects of a bad start

Also many studies on political impact of a bad start – Main results: - Decreasing trust in own efforts and in public institutions

Reasons for high scar effects of young unemployed:

• Young people as outsiders extremely vulnerable in recessions – first measure recruitment ban

• Personality still developing in adulthood

• Employment systems are often not „forgiving“: Access to good jobs and careers increasingly only with „clean CV‘s“ - without the stigma of a bad start

1. 5 Youth unemployment in the EU

Reasons for high youth unemployment and high growth rates of youth unemployment in the crisis:

1. Structural: Difficult transition from education to work – chronically high youth unemployment rates

2. Cyclical: Young people outsiders – recruitment ban first reaction of companies in recession

In deep recessions not sufficient to tackle only structural problems – growth package necessary

2.1 Transition from education to work- Vocational training important pathway - Different VET Systems in Europe

Type of VET system Countries

Apprenticeship-basedAustria, Germany, Denmark

Continental school-based

Netherlands, France

Market-led UK, Ireland,

General EducationGreece, Spain, Poland, Hungary

Egalitarian School-based

Finland, Sweden

2.2 Research on transition from education to work

Myriad studies: • Fast and stable transition in countries with

apprenticeship systems – apprentices are insiders

• Relatively fast, but often not sustainable transitions in market-led systems

• Most difficult transitions in countries with mainly GE and high levels of Employment protection legislation

• Difficult transitions from school-based VET – school leavers are outsiders

Source: Müller/Gangl, Transitions from Education to Work in Europe, Oxford 2003

2.3 Transition from Education to Work: Unemployment rates and labour force experience (in years): ISCED 3 leavers (1990‘s)

2.4 Reasons for fast and stable transitions from apprenticeship systems – How to make apprentices „insiders“?

• High reputation of VET among employers and young people: Not second choice for poor school performers

• Occupational labour markets: Links of certificates with work organization, pay and careers

• Participation of social partners – „Their“ occupations

• In Germany in 2009 „social pact“ - recruitment of 566 000 new apprentices – 50 000 less than 2008, but in recession with a decline of GDP of -4,7%

2.5 Academic drift: increasing mismatch

• Percentage of highly skilled jobs (ISCO 1-3) in most developed countries between 15 and 25%

• Share of graduates from tertiary education exceeding the share of highly skilled jobs in many countries

• Overproduction of graduates: Increasing mismatch because of expansion of tertiary education (Example: 40% of young Spanish tertiary graduates working at lower skill level 2007)

• Shortages at craft level

2.6 Share of population in skilled jobs and share of population with tertiary education (2006) share of the 25-to-64-year-old working population in skilled jobs (ISCO 1-3 Managers, Professional, Technicians and Associate Professionals) and share of the 25-to-64-year-old population with tertiary education (2006)

source: OECD, Education at a glance 2008

2.7 G20 Labour and Employment Ministers Conclusions, Paris September, 26/27 2011

„We agree that training systems based on dual learning or apprenticeships, are particularly effective. We are committed to promoting apprenticeship, vocational training and work-based learning systems, and we encourage the creation of public-private partnerships for this purpose“

3.1 Need for a growth package in the EU

• Upgrading VET - Long term structural

project

• Not fast remedy to help present generation

• Prognosis of OECD 2012 - GDP• Germany +1,2%• Portugal - 3,2%• Greece - 5,3%• Italy - 1,7%• Spain - 1,6%

Growing unemployment especially of

young people in EU with few exceptions

(Germany, Austria)

3.2 Need for a growth package in the EU

• Some migration helpful, but not a solution• Simulations of the medium-term trend in

the euro area show that simultaneous austerity policies, primarily targeting the supply side will deepen the euro area’s economic divide between the southern European member states and Germany.

• A way out of the crisis only, if expansionary policies return to the economic policy agenda in Europe.

3.3 Need for a growth package in the EU

• Different models discussed: - Eurobonds to reduce burden of high interest

rates in Southern Europe- Project Bonds that would co-finance industrial projects with the European Investment Bank - Mobilisation of unused money in structural funds to finance projects (80 Billion)

Not yet discussed how programs can be targeted to young people: Possibilities – lower interest rates if young people are recruited/ or additional wage subsidies for young people

- Also needed: Increase of domestic demand in surplus countries to stimulate imports (Higher wage increases accepted in Germany but not public investments because of fiscal pact)

Conclusions

Young people unproportionally hit by the recession in the EU

No fast recovery in many countries expected – problem aggravating

Threat to the social, economic and political stability of nations

Need to tackle:• structural problem: Improving

transition from education to work • cyclical problem: Need of growth

package especially targeted at young people

Also outside of Europe problems with high youth unemployment: Improving VET crucial