Social partners disagree on solutions for youth unemployment

Youth unemployment in Sweden is among the highest in Europe. Lately, the social partners, the government and the media have been focusing on the difficult position of young people due to the ongoing recession and their future labour market opportunities. The employers and trade unions disagree on the reasons for youth unemployment and the measures that should be taken in order to improve the situation.

High levels of youth unemployment

Sweden has one of the highest youth unemployment rates in Europe, at about 30% in July 2009 according to Statistics Sweden (Statistiska Centralbyrån, SCB). Moreover, the number of temporary employment contracts has increased considerably among young people in the last 20 years. Currently, 50% of young people hold a temporary employment contract.

Thresholds in the labour market system put young people at a disadvantage in the labour market, according to the social partners. However, the social partners and politicians disagree on where exactly the problems lie and, accordingly, also differ on which solutions and measures need to be taken. National-level employer organisations and trade unions have been actively debating the future possibilities for young people in light of the ongoing global economic crisis. All of the social partners agree that something has to be done to improve the situation.

In fact, young people as a group have been hit particularly hard by the economic crisis due to the structures in the Swedish labour market and the 1982 Employment Protection Act (Lag (1982:80) om anställningsskydd, LAS), which regulates the order of selection for redundancy. The rule is that the last person employed is the first worker to go when employers have to cut costs and give notice of dismissal. This system tends to disfavour young people.

Views of social partners

Employers

The Confederation of Swedish Enterprise (Svenskt Näringsliv) states in a press release (30 July 2009) that unemployment is closely linked to three factors: a weak link between the education system and working life, high salaries for young people and high minimum wages (SE0906029I), as well as strict employment protection. The employer confederation encourages the Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO) to realise that these are the factors that cause the problem of youth unemployment. Overall, the employer organisation concludes that if nothing is done about these issues, young people will pay a high price in terms of poor labour market opportunities.

The employer confederation argues that young people received an extra high wage increase (equivalent to 8% more) in comparison with other workers in the last four years, and it believes that this has strongly contributed to the current situation. The Confederation of Swedish Enterprise accuses LO of not being responsible and realistic, by ignoring this correlation. In a press release of 28 July 2009, the employer body states that the LAS and the labour law create thresholds for employing young people, and it argues that keeping the new generation out of the labour market will have significant consequences for the future.

The order of selection for redundancy is another important factor fuelling the problem, according to the Confederation of Swedish Enterprise. The employer organisation criticises LO for not including this aspect in its arguments on the situation and for manipulating the statistics regarding youth unemployment – thereby refusing to acknowledge the problem.

Trade unions

LO agrees with the Confederation of Swedish Enterprise that the order of selection for redundancy puts young people at a disadvantage. The trade union confederation argues for the need to restrict the use of temporary employment contracts and to give young people permanent contracts. LO accuses employers of using young people as tools for regulating and adjusting their companies to meet the challenges of the recession, and it criticises the government for not taking sufficient action.

The LO Negotiating Secretary, Per Bardh, believes that the statistics are deceptive and he argues that young people aged 16 to 19 years should not be included in the unemployment statistics. Mr Bardh points out that, if this age group is excluded from the data, youth unemployment is reduced to about 11% – referring to the 20–24 year age group.

LO accuses the Confederation of Swedish Enterprise of debating fundamental issues such as labour law instead of taking practical action (article in the daily newspaper Svenska Dagbladet (SvD), 29 July 2009). The trade union confederation considers that the lack of market demand and the recession are the main reasons for the high youth unemployment and not labour regulation. LO contends that a curtailed use of temporary employment contracts would enhance young people’s employment security. However, the Confederation of Swedish Enterprise states the opposite and defends the use of temporary employment contracts as a good way for young people to enter the labour market.

Commentary

The cost to society would be substantial if the economic crisis were to prevent young workers from integrating into the labour market. Many young people choose to continue or start a new education at university in order to avoid unemployment and, as a consequence, students have to apply for longer and bigger student grants. Many of the young people who do not choose to continue their education and are unable to receive unemployment benefits are also forced to apply for supplementary benefits from the social security and municipalities. In fact, young people are overrepresented among receivers of these benefits.

During the spring of 2009, some municipalities reported a doubling in applications for supplementary benefits. According to the evening newspaper Aftonbladet (14 April 2009), young people are the group that is increasing the most with regard to receipt of supplementary benefits: in 121 municipalities, young people are the fastest growing group receiving these benefits, with the proportion rising by about 7% in four months. Consequently, the costs for the municipalities in relation to young people have escalated considerably in the last year.

Karolin Lovén, Oxford Research