Youth unemployment remains stubbornly high across many EU member states, according to new data that were released at the end of July by Eurostat, the EU’s statistics authority. Despite growth generally starting to pick up across the Continent, why hasn’t the level of youth unemployment improved?
The statistics demonstrate that youth unemployment is failing to diminish in many EU countries and remains significantly higher than unemployment among older age groups. Across the EU as a whole, the latest statistics show that 21.4% of people aged 15–24 are unemployed, compared with just 9% of 25–74 year olds.
This average level of youth unemployment masks significant variation between different member states. Spain and Greece currently have the highest levels, at 51.7% and 51.1% respectively, followed by Croatia with 46% and Italy 42%. Unsurprisingly, Germany has the lowest level with just 7.4%, while the UK is actually better than average at 16.1%.
Countries which have high youth unemployment also generally have high overall unemployment, for obvious reasons, but the gaps between the two are still stark in most of these member states. For example, unemployment among people aged 25–74 in Spain is 22.3%, almost 30% lower than the level among their younger counterparts. Even in Germany, the rate of adult unemployment is almost half the rate of youth unemployment, at just 3.9%, and in the UK it is two-thirds, at 9.8%.
No countries for young men (or women)?
The shockingly high rates of youth unemployment in many of the EU member states will cause significant problems over the years ahead. Economists talk about a spell of youth unemployment creating a “wage scar” which is felt into the future: young people who are unemployed find that their skills erode and their general employability declines compared with the next cohort of school-leavers who follow them into the labour market, which means they tend to earn significantly less over time. Youth unemployment is also linked with psychological problems such as increased depression and anxiety, which is a major issue as youth mental health services are frequently inadequate.
Young people who miss out on employment also usually have to postpone the major economic and social milestones of adult life, such as achieving financial independence from their parents, purchasing their own homes and forming stable adult relationships. It is hardly surprising that throughout history, having large numbers of dispossessed youth in society has been associated with political instability: the growth of populist protest parties such as Podemas in Spain and Syriza in Greece seem to be evidence of that happening today.
What are the possible solutions? Many young people are being forced to move to countries where the economy can offer them more opportunities, such as Germany and the UK, although this often may not be ideal from a personal point of view. For those young people for whom this is not an option, the types of labour market reforms which could really benefit them are often extremely hazardous to implement. For example, young people in Spain are at a particular disadvantage because many sectors of the labour market are taken by older workers on permanent contracts who are virtually impossible to sack, which means employers will only hire their younger counterparts on temporary contracts. Any kind of structural reform in this area is tricky because, firstly, the older workers are sure to resist any loosening of the regulations that protect them, and secondly, in a perverse way, many unemployed young people may be dependent upon the current system if they are still living at home with their parents, whose jobs are protected.
Cutting these types of policy knots is something that virtually all European leaders are finding extremely difficult at the moment; but unless they can find something new to offer young people, the next generation will continue to face a jobless future.