Youth unemployment in the Eurozone looks like a social and economic disaster in the making – 30%, 40%, even 50% of young people sitting on their hands instead of building skills and experience. This column argues the headline numbers are misleading. While youth unemployment is a serious problem, a large share of EZ youth are not in the labour force, so the headline figures overstate the labour-market ‘scar tissue’ that will be left over from the crisis.
Hardly a day goes by without a reminder of youth unemployment rates in excess of 50% in Greece, Spain, Italy, and other parts of the European periphery. Sometimes the reminders are in the form of rants by economists or pundits about the moral deficiency of EZ demands for austerity and the risks of a lost generation of young people. The challenge for Europe’s youth is stark, and demands for government action are long overdue, especially in liberalising the insider biases that make it hard for outsiders to get jobs.
The situation is illustrated in Figure 1, which shows youth unemployment rates in the 15- to 24-year age group in the OECD countries in Q1 2011, compared with the latest available data1.
Figure 1. OECD Harmonised Youth Unemployment Rates, 15-24y
Youth unemployment in Europe: It’s actually worse in the US