Characteristics and Challenges of

Youth Unemployment

Ton Wilthagen

Stockholm, 16 October 2014

Geography

2

What causes youth unemployment?

• Strong relationship with macro-economic situation

• Labour market is “entry tournament” (Marsden): youth unemployment rates usually twice average unemployment (and more among non-nationals and low-educated groups)

• Smooth and effective school-to-work employment prevent youth unemployment – structural skills mismatches exist (up to 3.5 of total unemployment)

• High Employment Protection Legislation levels correlate with youth unemployment rates and temporary contracts

3

Youth unemployment 15-25yr NL1969-2013

NL-SE similarities and differences

• Job mobility in SE higher than NL; employment security high in

both countries (decreased during crisis); youth unemployment

relatively high in SE (20.1%) and low in NL (11.0%)

• School-to-work transition quick and rather successful

• But time to 1st job longer in SE (4.4 month) than NL (3.5 month)

and lower % employed 1 year after completing education in SE

(80.4) than NL (88.2)

• Proportion of school-leavers in permanent full-time job 40% or less

• High proportion of students who combine work and education, plus

students are older

Challenges and consequences

• Youth unemployment can result in long-term scars, such as increased risk of future unemployment, reduced levels of future earnings, loss of human capital, less capacity and motivation to found a family (and buy a house), contributing to negative demographic trends.

• Moreover, in both NL and SE temporary employment amoung youth is growing

• High costs of NEETs (NL 0.77% GDP; SE 0.34%)

• This young generation – declining cohorts! - should carry our economies for the next 45 years

• Wrong to make this human capital “rust” – their future is our future

6

Solutions: Dutch youth measures

2009 2010 2011 2012 2013 2014

Welfare: Investing in Youth Act

Welfare: 4 weeks search period ->

4 consecutive fixed-term jobs

Small jobs arrangement

<- Reduction early school leaving ->

<- Lower minimum wage for youth below age 23 ->

<- Apprenticeship as part of curriculum school ->

€ 80 mln regional youth unempl

Sectoral job plans

Action Plan Youth Unemployment

COUNCIL RECOMMENDATION of 22 April 2013 on establishing a Youth Guarantee

2013/C 120/01

• Ensure that all young people under age of 25 years receive good-quality offer of employment, continued education, an apprenticeship or a traineeship within period of 4 months of becoming unemployed or leaving formal education.

• Not just crisis related: embark on structural reform – plan to be submitted to DG EMPL

• Countries that already have formal YG do not necessarily perform better …

8

The “Youth Employment Free Zone”

• Policies should aim at early intervention and prevention

• Evidence based: good data &knowledge of “stock and flows” of young people, from primary school onwards

• Monitoring their careers and the “turns” they take

• Involving all stakeholders

• Building more productive roads towards employment – avoiding and blocking wrong turn

9

The Work Experience Grant (www.startersbeurs.nu)

10

Work Experience Grant (Starterbeurs in Dutch)

• Trainee contract 32h/week during max 6 months for job seekers up to age of 27, with basic qualification

• Based on evaluation and strengthening of youngster’s competences

• Grant: €500/month (€ 100 organization, € 400 municipality – eligible for ESF)

• Budget for further training education: €100/month • Fully digitalized procedure for both parties• Started in Tilburg and Rotterdam, over 150 Dutch

municipalities have joined scheme, still expanding

Competencesdeveloped*

Professional network expanded*

Labor market positionimproved*

Employment (after 1 month) 52%

• match level of education 77%

• match content of education60%* Self-report

Work Experience Grant: preliminairy results

What works

• In bad LM situation wage subsidies for employers work, but effect modest

• All measures that enhance job seekers work experience and their professional networks

• Any way to get job seekers in direct contact with companies …

• An ounce of prevention …starting at young age

• Regional – triple helix – coordination, responsive to smart specialisation

• Baking a bigger cake …

13

Degrees of policy learning/transfer

• Inspiration

• Selective imitation

• Synthesis (internal/external)

• Hybrid (new modality)

• Adaptation

• Copying

• Photo copying

14

Tack om din uppmärksamhet

15

Dank u voor uw aandacht