No career, no classes

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2 juli 2013 | Young people are hit hard by the economic downturn. A growing group of young Europeans is neither working nor studying. This depresses the EU GDP with 150 billion euros each year. “This could pose a serious threat to social cohesion and increase the risk of political instability.”

Young people have been most affected by the economic crisis. Youth unemployment for the EU has reached an unprecedented high of 23.5 percent this February, more than twice as high as the adult rate. In 2012, the EU average youth unemployment rate was 22.8%, but reached 30.3% for low-skilled youth.

“Leaving school with good qualifications is more important than ever”, OECD Secretary-General Angel Gurría explained during the presentation of ‘Education at a Glance’. In 2012, the average youth unemployment rate in the EU was 22.8%, but reached 30.3% for low-skilled youth, figures by the European Commission showed.

Fear for a lost generation

“The situation is particularly acute in certain Member States and in certain regions. This could pose a serious threat to social cohesion and increase the risk of political instability”, the European Commission wrote. The fear for a ‘lost generation’ penetrates nearly every advise on education, training and employabilaty.

The OECD underlines these trends spotted by the EC. Unemployment among people that did not finish secondary education is almost three times higher (13%) than among those with a degree in higher education (5%). This gap has been widening since the start of the economic crisis in 2008. The unemployment rate among the poorly educated rose with four percent point, while unemployment among people with a higher education degree has risen with only 1.5 percent point.

Many studies focus on the European youth unemployment rate. The rates for those aged 15-24 vary from 8.1% (Germany) to 55.3% (Greece) in 2012. In 2013 these numbers worsened in the majority of countries, see figure 1 with Youth Unemployment rates for EU Member States. Overall employment rates for young people fell by almost five percentage points over the last four years (from 37.4% to 32.9%) – three times as much as for adults.

EC EU youth unemployment feb2012-feb2013

Figure 1: Youth unemployment rates (under 25) for the EU Member States, February 2012, August 2012 and February 2013 (SOURCE: EUROSTAT, LFS)

Stuck in temporary jobs

“In 18 of the EU Member States, the youth unemployment rate was above 20% in 2012. In six, the rate was over 30% (Greece, Spain, Portugal, Italy, Ireland and Slovakia) and in 12, the rates range from 20 to 30%. However, six Member States had rates between 10 and 20% (Denmark, Malta, Luxembourg, Finland, Czech Republic and Belgium) and in three (the Netherlands, Austria and Germany) the youth unemployment rate was below 10%”, the European Commission wrote.

Labor markets are segmented in a way that young people are overrepresented in temporary jobs. In 2012, 42.1% of young employees were working on a temporary contract. This is four times as much as adults, 31.1% of young Europeans worked part-time, nearly twice the adults’ rate. There are fewer and fewer permanent jobs for young people, a trend that has persisted since 2008.

Long-term youth unemployment is on the rise: on average, 32.4% of the young unemployed have been jobless for more than 12 months in 2012. The long-term unemployment rate increased by 3.8 percentage points (to 7.3% of the young labor force) between 2008 and 2012, compared with a 1.9 point increase for adults (to 4.4%).

Germany and the Netherlands do well

Another less cited but therefore no less important statistic, shows the percentage of people between 15 and 24 that are not in employment, education or training (NEET). The EU average in 2012 was 13.2% and this varied between 4.3% in the Netherlands and 21.5% in Bulgaria. In total, in 2012 7.5 million people in the age group 15-24 were neither in employment nor in education or training. The share was over 16% in Cyprus, Romania, Ireland, Spain, Greece, Italy, and Bulgaria.

EC EU NEET 15-24 2001-2012 by scienceguide

Figure 2: NEET rate in the EU for population 15-24 in EU Member States 2001-2012

Education at a Glance shows that 15% of people in the OECD between 15 and 29 are currently neither employed nor enrolled in education. Both the OECD and the European commission found that for most European countries both the unemployment rate as the percentage of NEET is still rising, as can be seen in figure 1 and 2.
OECD ed at a glance NEET 15-19
Figure 3: NEET rate (age 15-19)for OECD countries in 2008 and 2011 (SOURCE: OECD)

The figure shows a clear dip around 2008 for most countries, just before the economic crisis started and the number of NEET was at its lowest point. Some countries are relatively unaffected like Germany and the Netherlands. Several Central and Eastern -European countries like Poland, the Czech Republic and Bulgaria had a temporary dip but kept the number of NEET after 2008 lower than during 2001-2006.

The cost of young people’s unemployment or inactivity was estimated in 2011 at €153 billion for 2011 (1.21% of the EU’s GDP). The re-integration into employment of just 10% of these young people would create a yearly gain of more than €15bn. The first steps the EU takes focus on more quality apprenticeships and better vocational training.

EC NEET rate by gender in member states

Figure 4: NEET rate in the EU for population 15-24 in EU Member States by gender (SOURCE: EUROSTAT, LFS)

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