Promoting youth employment: Individual employment relations - Q3 2014 (EurWORK topical update)
Published:
18 February 2015
Research report
Abstract
This article presents some of the key developments and research findings on aspects of individual employment relations in the EU during the third quarter of 2014. Measures to combat the growing problem of youth unemployment and prevent the misuse of traineeships and internships are the main focus of this report.
Worrying youth unemployment rates
Since the onset of the economic crisis, youth unemployment has been a growing problem in the EU. In the second quarter of 2014, the EU28 unemployment rate among people aged 15–24 was 21.6%, compared to 15.2% in the second quarter of 2008.
More than half of those in this age group are unemployed in Spain (53%) and in Greece (52%), according to Eurostat figures.
A number of countries are introducing programmes using the framework of a youth guarantee scheme, or are making legislative changes to support youth employment.
Figure 1: Unemployment rate among people aged 15–24, Q2 2008 and Q2 2014 (%)
Some recent decline in youth unemployment
In 19 EU countries and in Norway, the unemployment rate among young people decreased between the second quarters of 2013 and 2014. The highest decrease was seen in Croatia where it was down 8.8%, in Greece (-7.2%) and in Hungary (-6.9%). In Italy the rate rose by 4.2% and in Estonia by 2%, the two countries which have experienced the largest increase of youth unemployment.
Table 1: Recent changes in the unemployment rate among people aged 15–24 (%)
Source: Eurostat
Member States introduce Youth Guarantee
The aim of the EU Youth Guarantee, adopted by Member States in 2013, is to tackle youth unemployment by ensuring all young people get a good quality, concrete offer of a job, apprenticeship, traineeship or continued education within four months of leaving formal education or becoming unemployed. This applies to all people under the age of 25, whether registered with employment services or not.
In June 2014, the Youth Guarantee Scheme was officially launched in Luxembourg. It guarantees individual support to help a young person to enter the labour market. It also provides assistance for people who have failed to complete their formal school education, and for people not in education, employment or training.
There were several other developments in a number of countries.
In September 2014, the Greek Ministry of Labour launched a voucher employment programme to promote access to the labour market for young people between the ages of 18 and 24, and its target is the practical training of 12,000 young unemployed in the private sector.
In November 2014, the Youth Guarantee Programme will start in four disadvantaged regions in Hungary. The programme will provide funding of HUF 36 billion (€116 million as at 16 December 2014) over two years for around 37,000 registered jobseekers under 25. The Economic Development and Innovation Operational Programme linked to the Youth Guarantee will provide a further €700 million for the support of at least 180,000 young people.
The Youth Section of the National Federation of Hungarian Trade Unions (MSZOSZ), however, expressed serious concern that nothing concrete was known about the content of the programme even though it was due to start within the month.
The use of the Youth Guarantee system was also approved in Spain in July 2014 through Royal Decree Act 8/2014. The Youth Guarantee system introduced a range of incentives for employers to hire young workers. One of these incentives is a bonus of €300 per month for six months for employers who hire youngsters with open-ended contracts. This incentive will be in force at least until June 2016.
It is estimated that approximately 845,500 youngsters in Spain were not in education, employment or training in July 2014.
The EU is providing funding support of €6,000 million, and Spain’s budget is €1,800 million to be distributed during 2014 and 2015.
In May 2014, the amended Act on Promotion of Employment and Labour Market Institutions came into force in Romania. It introduced, among other things, a number of the provisions included in the Youth Guarantee.
In August 2014, the Slovenian Ministry of Labour, Family, Social Affairs and Equal Opportunities said that data on its Youth Guarantee scheme showed the initiative was producing satisfactory results.
Financial aid to promote youth employment
Two further recent initiatives saw governments providing financial aid to promote youth employment.
In August, the Swedish government amended the regulation of vocational introduction jobs. It is aimed at young unemployed adults up to the age of 25, and allows employers to claim back up to 75% of the wage set by collective agreements if the young person’s job includes an educational element of at least 15% of working time. The amendment clarified the subsidy rules. Employers not covered by collective agreements but having similar agreements (substitute agreements) can now also claim this subsidy for vocational introduction jobs.
Similarly, in Italy, Law Decree 91 included financial help for businesses in the agriculture sector. This help is available to businesses in the sector hiring people aged between 18 and 35 on permanent contracts, or on fixed-term contracts lasting at least three years, for a minimum of 102 working days per year.
Combating the misuse of internships
The Austrian Ministry of Employment, Social Affairs and Consumer Protection, meanwhile, has launched an internet platform where details about internships can be posted anonymously. The platform was launched in conjunction with Generation Internship.
Details logged on the site are checked by the Social Security Fund, which may take action against an employer if it feels rules are being breached. The platform was established in response to a growing number of voluntary and mandatory internships. Research suggests that employers are increasingly using interns as a cheap alternative to regular employees. Interns perform normal tasks but are paid significantly less than regular employees and aren’t eligible for the same social security benefits.
In Bulgaria, changes to the Labour Code introduced the concept of apprenticeship as a form of work for which an employment contract can be drawn up.
Apprenticeship is defined as ‘performance of work under the guidance of the employer or a mentor in order to obtain practical skills of the acquired profession or specialty’. To sign up to an apprenticeship employment contract, the trainee must have completed secondary or higher education with a specialism or occupational qualification, and the apprenticeship must be relevant to those qualifications. The trainee should be younger than 29 and have no previous work experience in the discipline for which the apprenticeship will train them. The contract must be at least six months long and no longer than 12 months.
Commentary
The issue of youth unemployment is high on the political agenda. After seeing deteriorating employment prospects for young people, many European governments are now taking steps to tackle the problem using the Youth Guarantee.
Young entrants to the labour market face a number of disadvantages compared to their more experienced counterparts. The ageing population also makes it imperative that younger employees are offered career opportunities as part of general efforts to effectively use the existing qualified workforce.
Finally, research indicates that the costs of Youth Guarantee schemes are considerably lower than the costs of taking no action. In a report on the euro zone jobs crisis, the International Labour Organization (ILO) estimated that Youth Guarantee schemes would cost approximately €21 billion, while Eurofound’s study on mapping youth transitions estimates that young people not in employment, education or training annually cost the EU around €162 billion.
About this article
This article is based mainly on contributions from Eurofound’s network of European correspondents. Further resources on individual employment relations in the area of youth employment issues can be obtained from:
Eurostat 2014: Eurostat database, variable tsdec460 as reported on 12 November 2014.
Eurofound 2014: Mapping youth transitions in Europe
Eurofound 2013: Young people and ‘NEETs’
Eurofound 2013: Working conditions of young entrants to the labour market
Eurofound 2012: Youth Guarantee: Experiences from Finland and Sweden
For further information, contact Karel Fric: kfr@eurofound.europa.eu