TWN Info Service on Finance and Development (Oct11/06)
25 October 2011
Third World Network

Youth unemployment remains at high levels
Published in SUNS #7244 dated 21 October 2011

Geneva, 20 Oct (Kanaga Raja) - Youth unemployment is projected to decline slightly from 75.1 million in 2010 to 74.6 million in 2011 or from 12.7 to 12.6 per cent, the International Labour Organisation (ILO) said on 19 October.

In its latest update on global employment trends for youth, the ILO attributed this more to youth withdrawing from the labour market, rather than finding jobs.

The ILO report warns of the possibility of "scarring", whereby "the bad luck of the generation entering the labour market in the years of the Great Recession brings not only current discomfort (from unemployment, underemployment, and the stress and social hazards associated with joblessness and prolonged inactivity), but also possible longer term consequences in terms of lower future wages and distrust of the political and economic system."

According to the ILO, this collective frustration among youth has been a contributing factor to protest movements around the world this year, as it becomes increasingly difficult for young people to find anything other than part-time and temporary work.

In the Middle East and North Africa, for example, over the past 20 years, approximately one in four youth have been unemployed despite progress made in the education of girls and boys.

"These new statistics reflect the frustration and anger that millions of youth around the world are feeling," said Jose Manuel Salazar-Xirinachs, Executive Director of the ILO Employment Sector. "Governments are struggling to find innovative solutions through labour market interventions such as addressing skills mismatches, job search support, entrepreneurship training, subsidies to hiring, etc."

"These measures can make a difference, but ultimately, more jobs must come from measures beyond the labour market that aim to remove obstacles to growth recovery such as accelerating the repair of the financial system, bank restructuring and recapitalisation to re-launch credit to small and medium sized enterprises, and real progress in global demand rebalancing," he added.

The ILO report finds that in the current context of economic instability, young men and women face increasing uncertainty in their hopes of finding a decent job.

"There is no doubt that the global economic crisis has further exposed the fragility of youth in the labour market," says the report, noting that at the end of 2010, there were an estimated 75.1 million young people in the world struggling to find work - 4.6 million more than in 2007.

Between 2008 and 2009, the number of unemployed youth increased by an unprecedented 4.5 million.

The absolute number of young job-seekers fell since its peak in 2009, albeit only marginally (600,000 youth), and not enough to bring the youth unemployment rate down.

According to the ILO, the spectre of youth unemployment has continued to worsen in the Developed Economies & European Union region, where young people paid the highest price over the course of the crisis. Youth unemployment numbers and rates were higher in 2010 than any time since measurement began in 1991.

The region showed the largest jump, by far, in youth unemployment rates between 2008 and 2010 (4.6 percentage points).

Young males have been affected more than young women during the crisis period in the region: the youth male unemployment rate increased by 4.9 percentage points between 1998 and 2008, compared to 1.0 point for young females, says the report.

In most developed economies, the report notes, the long-term unemployment rates of youth surpassed those of adults, by far. In Italy, for example, the gap between the youth and adult long-term unemployment rates was extremely large, with young people three times more likely to be unemployed for at least one year compared to adults.

Substantial differences between youth and adults (ratio greater than 2.0) were also seen in Greece, Hungary, Slovakia and the United Kingdom.

The report further finds that there has been a clear increase in inactivity among youth in the crisis years.

Globally, the youth labour force participation rate decreased from 49.4 per cent in 2009 to 48.8 per cent, with the largest regional decreases in the Developed Economies & European Union and South Asia.

In 56 countries for which comparable monthly/quarterly data were available, the youth labour force expanded by far less during the crisis than would be expected: across the 56 countries, there were 2.6 million fewer youth in the labour market in 2010 than expected based on longer-term (pre-crisis) trends.

"This figure implies that growing frustration over unemployment and underemployment has pushed a large cohort of discouraged youth to drop out of the labour market altogether."

Citing the case of Ireland, the report says that in 2010, the youth unemployment rate in Ireland stood at an alarming 27.5 per cent, up sharply from 9.0 per cent in 2007.

Yet even the scale of the unemployment increase understates the extent of the problem: youth participation declined sharply in the country during the crisis and there is a massive gap now between the current youth labour force count and the expected youth labour force based on pre-crisis trends.

"This means many young people are either ‘hiding out' in the education system rather than face the job search or are idly waiting at home for prospects to improve before taking up an active job search. Had these youth been instead looking for work, the ‘actual' youth unemployment rate in Ireland could be as much as 19.3 percentage points higher than the official rate," the report emphasises.

In Austria and Hong Kong-China, the youth unemployment rate could be as much as double the official rate if all of the additional inactive youth are really holding out hope for future employment.

The report further highlights that part-time employment rates increased for youth in all developed economies but Germany and Poland between 2007 and 2010.

The sheer magnitude of the increase in part-time employment among youth in European countries since the onset of the crisis - between 2007 and 2010, the part-time employment rate of youth increased by 9.2 percentage points in Iceland, 17.0 points in Ireland, 10.5 points in Luxembourg, 10.1 points in Slovenia, 8.8 points in Spain and 5.2 points in the United Kingdom - is a sufficient hint that part-time work is being taken up as an only available option for many young men and women.

By the end of 2010, as much as half of working youth were in part-time employment in Canada, Denmark, the Netherlands and Norway, while in Australia, Iceland, Ireland, Slovenia, Sweden and the United Kingdom, the share was 1 in 3.

The ILO underscores that over the entire twenty year span for which data exist, approximately 1 in 4 youth in the labour market have been unemployed in the regions of the Middle East and North Africa, and this is despite progress made on the education front for both girls and boys.

There are deep-seated structural issues in these regions that result in the world's highest youth unemployment rates as well as severe underdevelopment in the productive potential of the economies, it adds.

"The collective frustration of a generation of youth that was granted the opportunity to gain an education but not given the same opportunity to gain decent employment was certainly a contributing factor behind mobilizing youth in support of the political protest movements in Bahrain, Egypt, Libyan Arab Jamahiriya, Syrian Arab Republic and Tunisia."

Consequently, the report stresses, promoting opportunities for decent employment for youth remains firmly fixed among the priority of the interim governments.

The ILO projects a slight decline in youth unemployment to 74.6 million in 2011 (from 75.1 million in 2010) and a minuscule decline in the youth unemployment rate from 12.7 to 12.6 per cent.

"However, heightened uncertainty in economic growth, coupled with the greater sensitivity of youth rates to the business cycle, means the recovery for young people is highly uncertain. This could mean many more difficult years ahead for young people."

The report finds that it is not just the Middle East where young people are voicing their discontent.

"Los indignados" in Spain spent much of the summer of 2011 peacefully protesting against high youth unemployment (an incredible 41.6 per cent in 2010).

Discontented youth have also engaged in protests in other countries, notably Greece, Italy and the United Kingdom, with at times violent outcomes.

In some countries, youth are protesting with their feet, the report notes, citing a recent report of the National Youth Council of Ireland that found that the number of people under 25 emigrating increased from 15,600 in 2004 to 30,000 in 2009.

"Increased crime rates in some countries, increased drug use, moving back home with the parents, depression - all of these are common consequences for a generation of youth that, at best, has become disheartened about the future, and, at worst, has become angry and violent," says the ILO.

It notes that governments are not closing their eyes to the dangers. Most are actively searching for solutions to stimulating job growth and effectively investing in youth, with interventions tending to focus on addressing skills mismatches; addressing inadequate job matching; addressing poor signalling; supporting strong labour market information systems; addressing slow job growth barriers; and financial and macroeconomic policies.

With respect to financial and macroeconomic policies, the report says that ultimately, job growth will not come from labour market policies alone.

Additional measures are needed to remove the obstacles to growth, such as: accelerating the repair of the financial sector balance sheets, including bank restructuring and recapitalization to relaunch credit to small and medium sized firms; reducing the instability in the euro area; reducing the inventories of non-performing mortgages in the US financial institutions and reactivation of housing markets; and real progress in global demand rebalancing based on effective measures by the G20.

"Addressing these various macroeconomic and financial policy challenges is essential for paving the way to stronger output and employment growth."

The report cautions: "The reality now is that short term fixes are not enough. Sustained support of young people, through expansion of the social protection system, long term investment in education and training, hiring subsidies to promote employment of young people, employment intensive investment, sectoral policy, etc. is needed now more than ever."