Helping young workers during the crisis: contributions by social partners and public authorities

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Why focus on young workers?

The particularly vulnerable situation of young workers in the labour market has long been a concern of policymakers and social partners at European and national levels. In its Europe 2020 strategy, the European Commission emphasises the challenge of tackling high unemployment rates and improving skills levels through reducing early school leaving and encouraging 40% of young people to study to at least tertiary degree level. The strategy highlights initiatives to develop work opportunities and policies aimed at increasing young people’s entry to the labour markets. Its recommendations seek to achieve the headline targets and to implement flagship initiatives such as Youth on the move (1Mb PDF), which aims to increase young people’s chances of finding a job by enhancing the mobility of students and trainees.

Young people are in a particularly challenging position in relation to work opportunities and conditions of work. Delay in finding initial employment and long spells of unemployment often have long-term negative repercussions on career prospects, lifetime income, health prospects and social mobility; as noted in recent report (890Kb PDF) published by the Organisation for Economic Co-operation and Development (OECD), some experts refer to this as ‘scarring’. Unemployment and precarious work also bring with them the absence of financial autonomy which may constrain opportunities to live independently, start a relationship and begin a family.

Across the European Union, young people have been particularly badly hit by the economic crisis of 2008 and the subsequent financial challenges facing Member States. Youth unemployment typically reacts more quickly and more strongly to changes in economic trends than other groups. Unemployment is not the only challenge facing young workers. Even before the crisis of 2008, social partners and public authorities in many Member States were concerned about the situation of young workers because of the high rates of youth unemployment in comparison with other workers. In addition, young people have been far more likely than other groups to find themselves in precarious work and to move in and out of employment.

As shown in previous research, including a Eurofound report (312kb PDF) published in 2007 and a report (3.23mb PDF) from the International Labour Organization (ILO) published in 2010, young workers are often subject to more flexible and less secure employment conditions, including a comparatively high share of fixed-term contracts and temporary agency work. Combined with the effects of redundancy schemes that often target those with the least experience and fewest skills, as well as employer decisions to reduce recruitment efforts, young workers are notably more vulnerable than those in older age groups in an economic crisis.

An obvious manifestation of the vulnerability of young workers is seen in the steep increase in youth unemployment rates across EU Member States during 2009 and 2010, with rates often three times higher than average unemployment. There is also evidence in some Member States that the rate of precarious employment for this group of workers has increased since 2008. Although trends in precarious work are more difficult to capture than unemployment trends, Labour Force Survey data from Eurostat show a rise in young temporary workers in Austria, Belgium, the Czech Republic, Latvia, Luxembourg, Hungary and the UK.

These developments imply serious consequences for personal development as well as social cohesion. There is strong evidence from previous recessions that the effects of extended periods of unemployment early in life continue to have a negative impact on individuals throughout their adult life. This effect appears to manifest itself in a wide range of problematic outcomes including reduced life earnings, continued experience of unemployment and precarious work, poorer health outcomes, and even decreased life expectancy.

But the effects are not only on individuals. Serious concerns have been raised by policymakers about the potential impacts of negative experiences of labour market on young people’s engagement with civil society more widely. Concerns have been raised about the implications on democratic engagement and the danger that some young people may ‘opt out’ of participation in civil society. Furthermore, it is probable that early experiences of insecurity in employment reduce the likelihood of young people establishing financial autonomy and may well be related to trends towards postponing starting a family.

Causal evidence of this is, of course, difficult to establish. But it is important to note that the interest of policymakers is not simply economic; the potentially problematic social outcomes of high levels of youth unemployment and precarious work are attracting increasing attention.

There are some exceptions to these trends. For example, young people in Norway have generally been less affected by the crisis of 2008 than in other European countries largely because of the very high proportion who continue in non-compulsory education, facilitated by legal rights to attend upper-secondary school, college and university, as well as financial support from the state to do so.

The following groups of young people are particularly disadvantaged in their labour market position:

• those who have experienced a lengthy period of unemployment;
• young people with low levels of qualifications and educational achievement;
• those facing health problems and disabilities;
• those from particular minority ethnic groups.

There is strong evidence that many Member States have responded to the multiple challenges of these groups by including particular measures to target them in existing and new initiatives for stimulating youth employment and opportunities. Some of these are outlined in this report.

Overall, the situation is generally rather bleak and likely to worsen. Unemployment tends to be a ‘lagging indicator’, often continuing to rise for many months after a period of recession and taking far longer to recover than economic growth figures. Youth unemployment is complicated by issues such as the fact that young workers may have opportunities to remain in or return to education and training if work is not available.

Social security provisions and mechanisms for providing unemployment benefits also impact young people’s experiences. In some national systems, workers may only be eligible for unemployment benefits if they have worked for some period of time (for example in France) or if they have opted into unemployment insurance schemes (for example in Sweden).

Aims of this report

In the context presented above, this report examines the responses of social partners and governments in the EU Member States to address or mitigate labour market challenges that affect young people whether they are in formal employment, in training arrangements, seeking their first job, or unemployed.

The study is based on contributions from national correspondents of the European Industrial Relations Observatory (EIRO) network, covering the EU27 (with the exception of Latvia where no correspondent was in place when the study was launched) plus Norway. A key element of the study was the use of a questionnaire designed to gather national information on the following main issues:

• general debates and trends relating to young people and work since 2008;
• views, attitudes and actions by social partners helping young workers;
• government responses to helping young workers.

Labour market situation of young people in Europe

Internationally agreed definitions of ‘youth’ typically refer to those in the 15 to 24 age group. This definition, taken from the first page of the ILO 2010 report (3.23mb PDF), is used throughout this report unless otherwise stated.

Social partners, public authorities, Member States, specific initiatives, national statistics, active labour market policies (ALMPs) or specifically targeted programmes may sometimes define ‘youth’ differently. Such groups are particularly relevant in the EU because there is evidence that young people are delaying their transition into the labour market, often through the extension of the provision of higher education. As that trend is particularly notable in developed economies and is a strong feature of the experiences of young people across the EU, the question arises as to what extent is the commonly accepted definition of youth still appropriate to capture the European youth. However, this report is not intended to engage in methodological debates.

Rate of youth unemployment

Youth unemployment was already a significant issue in all Member States before the financial crisis. Figure 1 shows the unemployment rate for those under the age of 25 in 2007, the last full year before the financial crisis of September 2008, compared with the rate in 2010.

In 2007, the rate of youth unemployment reached 15.4% in the EU and ranged from 7% in the Netherlands to 22.9% in Greece. The trend between 2007 and 2010 is even more striking; the EU27 youth unemployment rate experienced a dramatic increase, increasing by 5.3 percentage points to 20.7%, in 2010. This growth in the youth unemployment rate illustrates the dramatic impact of the economic crisis of 2008–2009 on the position of young people in the labour market across the European Union.

Figure 1 shows the jump in youth unemployment across Member States. What is particularly striking is that all Member States with the exception of Germany and Malta experienced a notable jump in youth unemployment between 2007 and 2010. The Netherlands still reports the lowest rate at 8.7% and Spain reports the highest at a striking 41.6%. The relative size of the increase is also noteworthy. Estonia, Ireland, Latvia, Lithuania, Slovakia and Spain all report double digit percentage point increases in their youth unemployment rates over that period.

The exceptions of Germany and Malta are interesting and noteworthy. Very quickly after the start of the crisis, Malta established a tripartite forum to develop social policy to promote employment, with a specific target on young workers. There is strong evidence that this has been highly effective at mitigating the worst effects of the crisis for this vulnerable labour market group. Germany has faced a long-standing challenge of establishing sufficient training opportunities for young people. This has eased significantly since 2007 because of a decline in the numbers of school-leavers (a long-term population trend), which has mitigated the challenge of establishing sufficient training and apprenticeship placements. At the same time, the federal 2007 Apprenticeship Pact has increased the supply of apprentice and training positions, further working to reduce the rate of youth unemployment.

Youth unemployment versus total unemployment

The challenging situation for young workers in many countries is demonstrated by the higher levels of unemployment for young workers compared with unemployment in the labour market as a whole.

Figure 2 shows that the rates of unemployment for young people are higher than the general rate of unemployment in all Member States, with youth unemployment in most Member States is at least double, and sometimes triple, the rate for the workforce in total. This highlights the deep nature of the problems for young people but also for the economies and societies in which they live.

The exceptions are Denmark, Malta and the Netherlands where, nevertheless, the rate for young people is very nearly double of the overall unemployment rate. Germany is an exception to this common feature, but still reports a higher youth unemployment rate than for the overall workforce.

Security of employment

The challenges facing young people are not simply related to whether or not they are in employment. A common feature of the labour market debate in many Member States is that employers often complain about the mismatch between academic qualifications and the skills needed at the workplace, with the consequence that employers may prefer to hire older and more experienced workers. In addition, there are claims of lack of ‘work experience’ with the consequence that even highly qualified young people have increasingly difficulty in finding employment and have to undertake apprenticeships, traineeships and fixed-term contracts before gaining secure employment and full employment rights.

As a consequence, younger people are often subject to less secure employment conditions compared with older counterparts. The younger cohort of the working population is over-represented among workers on temporary employment contracts (including fixed-term contracts and temporary agency work), which reinforces the fragility and vulnerability of this group on the labour markets.

Figure 3 illustrates the higher propensity of young workers to be employed in ‘insecure employment’ in all Member States. Combined with the unemployment figures, it is clear that young workers in Europe are currently struggling to find employment and when they do, it is often characterised by temporary contracts.

Use of temporary contracts

There is also evidence that the economic and financial situation has significantly worsened the prospects of this already vulnerable group by not only reducing employment opportunities, but also encouraging greater use of flexible contracts.

Figure 4 shows that although a small number of countries (Cyprus, Denmark, Portugal, Romania, Slovenia and Spain) registered a small reduction (less than 2 percentage points) in the proportion of young individuals with temporary contracts between quarter 3 2008 and quarter 3 2010, most of the countries recorded an increase in the indicator. Moreover, in six countries (the Czech Republic, Hungary, Ireland, Latvia, Luxembourg and Malta), this increase was more than 6 percentage points.

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• ID: TN1101019S
• Author: Melanie Simms
• Institution: IRRU, University of Warwick
• Country: EU Countries
• Language: EN
• Publication date: 29-04-2011