Youth unemployment is not a new problem for the European Union. In the last 20 years youth unemployment has been significantly higher than general unemployment, at times up to three times as high. The economic crisis has severely worsened this situation, 5,6 million young people are unemployed across Europe, and a total of 7,5 million is neither studying nor working. Young people are eager to work, more than half of those without a job say that they simply can’t find one, while businesses insist they struggle to find young people with the skills they need.
Mismatch between applicants and jobs
Europe’s youth unemployment is – of course – partly caused by the sheer lack of jobs, but that isn’t the whole story. “Across the 15 countries that were members of the EU prior to May 2004, for example, the percentage of people aged 55 to 59 who are in the labor market has jumped 11 percentage points since 2005, while increasing 4 percentage points among women aged 35 to 39. This increase in the participation rate in a demand-constrained environment means greater competition for jobs for younger people, who are disadvantaged by their lack of proven experience. Meanwhile, labor-market regulations that discourage hiring and firing, which are common in Europe, make it even more difficult for youth to step onto the first step of the employment ladder,” the consultants conclude in the report ‘Education to Employment’.
Despite this enormous availability of labor, employers are dissatisfied with the skills of most applicants. 27 percent of the employers reported in the survey that they have left a vacancy open in the past year because they could not find anyone with the right skills. A third of the respondents said that the lack of skills is causing major business problems, in the form of cost, quality, or time. “Counterintuitively, employers from countries where youth unemployment is highest reported the greatest problems. So why is it that young people are not getting the skills that employers need? One reason is the failure of employers, education providers, and young people to understand one another.”
“In Europe, 74 percent of education providers were confident that their graduates were prepared for work, but only 38 percent of youth and 35 percent of employers agreed. The different players don’t talk to one another and don’t understand one another’s expectations and needs. Only in Germany and the United Kingdom did most employers report that they communicate with education providers at least several times a year. In Portugal, only a third did. And only in Spain did most employers report that their interactions with providers were actually effective.”
The three main hurdles
The education-to-employment path can be described as a road with three intersections: enrolling in postsecondary education, building the right skills, and finding a suitable job. The problem is there are roadblocks at each of these three points, the authors of the report explain.
The most significant barrier is the cost of a study. Although university tuition fees are usually subsidized in Europe, many students find the cost of living while studying too high to sustain. For students that choose for vocational training, the expenses are often even higher since these studies are not subsidized in many countries. The prestige of vocational education remains a problem, less than half of those who wanted to undertake a vocational course actually did so.
“At the second intersection, young people are often not learning a sufficient portfolio of general skills while they study, with employers reporting a particular shortage of soft skills such as spoken communication and work ethic. Employers and providers are not working together closely to address this.”
“At the final intersection, young people find the transition to work difficult. One-third fall into interim jobs after graduating, and many more struggle to find a job at all. Many lack access to career-support services at their postsecondary institution. Many more do not pursue a work placement, in spite of this being a good predictor of how quickly a young person will find a job after his or her studies are completed.”
Smoothen the road
To make the road from study to a job easier, and to reduce costs, McKinsey advises to break up degree or vocational programs into individual modules that focus on building a particular set of skills while still counting toward a degree or formal qualification. This model also enables young people to take a break in their studies to work for a period, and then return and pick up where they left off.
In order to make rational decisions, young people need to think more strategically about their futures. Students often have to make life-defining decisions about their educational future by age 15, the time when many need to choose between academic or vocational tracks. To enable young people to make better choices, better information between different career paths need to be developed.
McKinsey suggest that education institutes should focus more on what happens to students after they leave school. Specifically, they should track graduates’ employment and their job satisfaction. Schools and universities could use this data to improve curricula.
It would also be very to let employers and education providers work together to design curricula that fit business needs, employers could participate in teaching, give opportunities for internships and make work placements available. Larger enterprises could go even further, by setting up training academies to improve required skills for both themselves and their suppliers.
Bologna for vocational training
McKinsey also sees an important role for the European Union. The EU could develop and share a more comprehensive labor-market platform incorporating the most relevant data to capture employment trends in each sector and region. This would help institutional decision makers, employers, and job seekers make better decisions, for instance, by helping users understand the implications of the data—whether on the courses they should offer as an education provider or the skills gaps they should try to fill as a group of employers within an industry.
The consultancy firm also pleads for a Bologna process for vocational training, which would allow students to transfer their qualifications across borders. The EU would also be an ideal actor to share best practices across Europe and even the rest of the world.