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Characteristics and Challenges of Youth Unemployment Ton Wilthagen Stockholm, 16 October 2014 Geography 2 What causes youth unemployment? • Strong relationship with macro-economic situation • Labour market is “entry tournament” (Marsden): youth unemployment rates usually twice average unemployment (and more among non-nationals and loweducated groups) • Smooth and effective school-to-work employment prevent youth unemployment – structural skills mismatches exist (up to 3.5 of total unemployment) • High Employment Protection Legislation levels correlate with youth unemployment rates and temporary contracts 3 Youth unemployment 15-25yr NL 1969-2013 NL-SE similarities and differences • Job mobility in SE higher than NL; employment security high in both countries (decreased during crisis); youth unemployment relatively high in SE (20.1%) and low in NL (11.0%) • School-to-work transition quick and rather successful • But time to 1st job longer in SE (4.4 month) than NL (3.5 month) and lower % employed 1 year after completing education in SE (80.4) than NL (88.2) • Proportion of school-leavers in permanent full-time job 40% or less • High proportion of students who combine work and education, plus students are older Challenges and consequences • Youth unemployment can result in long-term scars, such as increased risk of future unemployment, reduced levels of future earnings, loss of human capital, less capacity and motivation to found a family (and buy a house), contributing to negative demographic trends. • Moreover, in both NL and SE temporary employment amoung youth is growing • High costs of NEETs (NL 0.77% GDP; SE 0.34%) • This young generation – declining cohorts! - should carry our economies for the next 45 years • Wrong to make this human capital “rust” – their future is our future 6 Solutions: Dutch youth measures <- Apprenticeship as part of curriculum school -> <- Reduction early school leaving -> <- Lower minimum wage for youth below age 23 -> € 80 mln regional youth unempl Action Plan Youth Unemployment Sectoral Small jobs arrangement job plans 4 consecutive fixed-term jobs Welfare: Investing in Youth Act 2009 2010 2011 2012 Welfare: 4 weeks search period -> 2013 2014 COUNCIL RECOMMENDATION of 22 April 2013 on establishing a Youth Guarantee •2013/C Ensure that all young people under age of 25 120/01 years receive good-quality offer of employment, continued education, an apprenticeship or a traineeship within period of 4 months of becoming unemployed or leaving formal education. • Not just crisis related: embark on structural reform – plan to be submitted to DG EMPL • Countries that already have formal YG do not necessarily perform better … 8 The “Youth Employment Free Zone” • Policies should aim at early intervention and prevention • Evidence based: good data &knowledge of “stock and flows” of young people, from primary school onwards • Monitoring their careers and the “turns” they take • Involving all stakeholders • Building more productive roads towards employment – avoiding and blocking wrong turn 9 The Work Experience Grant (www.startersbeurs.nu) 10 Work Experience Grant (Starterbeurs in Dutch) • Trainee contract 32h/week during max 6 months for job seekers up to age of 27, with basic qualification • Based on evaluation and strengthening of youngster’s competences • Grant: €500/month (€ 100 organization, € 400 municipality – eligible for ESF) • Budget for further training education: €100/month • Fully digitalized procedure for both parties • Started in Tilburg and Rotterdam, over 150 Dutch municipalities have joined scheme, still expanding Work Experience Grant: preliminairy results Competences developed* Professional network expanded* Labor market position improved* Employment (after 1 month) 52% • match level of education 77% • match content of education 60% * Self-report What works • In bad LM situation wage subsidies for employers work, but effect modest • All measures that enhance job seekers work experience and their professional networks • Any way to get job seekers in direct contact with companies … • An ounce of prevention …starting at young age • Regional – triple helix – coordination, responsive to smart specialisation • Baking a bigger cake … 13 Degrees of policy learning/transfer • Inspiration • Selective imitation • Synthesis (internal/external) • Hybrid (new modality) • Adaptation • Copying • Photo copying 14 Tack om din uppmärksamhet Dank u voor uw aandacht 15