Europe / Five Myths About Youth Unemployment Crisis

MYTH 1: Nearly one in four young people in the EU is looking for work and can’t find it.

REALITY: As in the U.S., the unemployment rate counts the unemployed as a share of only those who are in the labor force. It thereby excludes 15- to 24-year-olds who are enrolled in school or in training programs and therefore not looking for work. According to the Organization for Economic Cooperation and Development, only 12.6 percent of EU residents aged 15-24 are neither working nor studying, and not all of those are looking for jobs…

MYTH 2: Youth unemployment has risen everywhere in Europe during the economic crisis.

REALITY: While the overall rate has risen, it has declined over the past three years in a number of countries, including Germany, Austria, Finland, and the Baltic states of Estonia, Latvia, and Lithuania.

Indeed, Germany has effectively achieved full employment for young people, with a youth unemployment ratio (taking into account the entire population of 15-to-24-year-olds) of only 4.1 percent. Indeed, Germany says it has 30,000 unfilled vacancies in training programs for young workers.

MYTH 3: The key hurdle is getting young people into their first jobs.

REALITY: The jobs most readily available to young people are temporary and/or part-time, and because young workers have less seniority they’re more likely to be laid off. “Young workers have a significant problem of under-employment,” says David N.F. Bell, an economist at the University of Stirling in Scotland who has studied youth unemployment. “Wages have not been rising, but prices have. People want to work longer hours, but their employer isn’t offering that.”…

MYTH 4: Youth unemployment is lower in countries with highly educated work forces.

REALITY: In some instances the reverse is true. In Spain, for example, 39.1 percent of people aged 25-34 are university-educated—one of the highest rates in Europe. In Greece the figure is 30.9 percent. Contrast that with Germany, where only 25.3 percent of people aged 25-34 have university degrees.

Instead of pushing high school students toward higher education, Germany steers many into apprenticeships that lead to stable full-time jobs…

MYTH 5: Targeted programs are the best way to attack youth unemployment.

REALITY: The track record of targeted programs is generally dismal. In France, every government since the mid-1990s has announced an ambitious plan to create jobs for young people. In 2009, for example, then-President Nicolas Sarkozy said the government would provide €1.3 billion ($1.7 billion) in tax breaks and cash incentives for employers who hired young people. President François Hollande, who is backing the new EU youth employment initiative, has previously announced his own program to create 150,000 jobs for disadvantaged youth. None of these programs has made a dent, and youth unemployment has continued to rise.

Broader initiatives to spur growth make far more sense. Even with tax breaks and loan guarantees, companies won’t hire if their order books aren’t growing, which is the case across most of the Continent right now, with the region mired in recession. Nor will targeted incentives offset the serious competitiveness problem faced by businesses in such countries as France, where government-mandated social charges and rigid work rules keep labor costs 20 percent higher than those in Germany.

Chosen excerpts by Job Market Monitor

via Five Myths About Europe’s Youth Unemployment Crisis – Businessweek.