Transcript Youth In and Out of the Labour Market: The Impact of the

Youth In and Out of the Labour Market:
The Impact of the Economic and Financial Crisis on Youth
Employment in the European Union and North America
Niall O’Higgins
CELPE, LABESS & DiSES,
Università di Salerno
& IZA, Bonn
Today
• Overview of the situation of Youth in (and out) of
the labour market – in the EU & North America
– Recent developments
– Policy responses
– Some Comments on Policy issues
• A couple of general points
– Youth (15-24) vs. Adults (25-64)– simply a convention
– Distinction between countercyclical measures and
structural longer term measures
Introduction: The Recession
• Global Recession has hit young people hard
– But, something of a misunderstanding:
Not that more young people than adults are affected by the
recession,
But that young people are more affected than adults by the
recession
• Majority of young people are in education
• Real problem is the potential long-term consequences of an
early interuption in working lives
–
–
–
–
Life-time employment & earnings
Crime
Unhappiness
Social exclusion: Freeters in Japan emerged after recessuion in the
1990s
-20.00
-30.00
-40.00
-50.00
Anglo
Continent
Mediterranean
Scandinavia
Central Europe
Baltics
Lithuania
Latvia
Estonia
Slovenia
Slovakia
Romania
Poland
Hungary
Czech Republic
Bulgaria
Sweden
Netherlands
Finland
Denmark
Spain
Portugal
Malta
Italy
Greece
Cyprus
Germany
France
20.00
Belgium
Austria
USA
United Kingdom
-10.00
Ireland
Canada
Percentage Point Change, 2007Q3 - 2009Q3
Employment rates fell unevenly during the
recession…
% point change in employment rates 2007Q3 – 2009Q3
10.00
0.00
F15-24
F25-49
F50-64
M15-24
M25-49
M50-64
Percentage change in employment by age and sex, Italy
2007Q3 – 2009Q3
12
10
Percentage change 2007Q3 - 2009Q3
8
6
4
2
0
F15-24
-2
-4
-6
-8
-10
-12
-14
-16
F25-49
F50-64
M15-24
M25-49
M50-64
European Union
Italy
Percedntage Point Change in Unemployment rates 2007Q3 2009Q3
-5.0
Anglo
Continent
Mediterranean
Scandinavia
Central Europe
Lithuania
Latvia
Slovenia
Slovakia
Romania
Poland
Hungary
Czech Republic
Bulgaria
Sweden
Netherlands
Finland
Denmark
Spain
Portugal
Italy
Greece
Cyprus
Germany
France
Belgium
35.0
Austria
USA
United Kingdom
Ireland
Canada
And Unemployment rose…..
% point change in unemployment rates 2007Q3 – 2009Q3
30.0
25.0
20.0
15.0
F15-24
F25-49
10.0
F50-64
M15-24
M25-49
5.0
M50-64
0.0
Baltics
Youth unemployment rates were already high compared to adults
prior to the recession…
5
Ratio of youth to adult unemployment rates, 2007Q3
4
3
Females 2007Q03
2
Males 2007Q03
Anglo
Continent
Mediterranean
Scandinavia
Central Europe
Lithuania
Latvia
Slovenia
Slovakia
Romania
Poland
Hungary
Czech Republic
Bulgaria
Sweden
Netherlands
Finland
Denmark
Spain
Portugal
Italy
Greece
Cyprus
Germany
France
Belgium
Austria
USA
United Kingdom
Ireland
1
Baltics
And, not infrequently, thry worsened during the
recession
1.0
Change in the ratio of youth to prime age adult unemployment rates, 2007Q3 – 2009Q3
0.8
0.6
0.4
0.2
-0.2
-0.4
-0.6
-0.8
-1.0
-1.2
-1.4
Ireland
United Kingdom
USA
Austria
Belgium
France
Germany
Cyprus
Greece
Italy
Portugal
Spain
Denmark
Finland
Netherlands
Sweden
Bulgaria
Czech Republic
Hungary
Poland
Romania
Slovakia
Slovenia
Latvia
Lithuania
0.0
Anglo
Continent MediterraneanScandinavia
Central Europe
Baltics
Females
Males
Percentage point change in the incidnce of longterm unemployment 2007Q3-2009Q3
-5
-15
-20
-25
-30
Anglo
Continent
Mediterranean Scandinavia
Central Europe
Lithuania
Latvia
Slovenia
Slovakia
Romania
Poland
Hungary
Czech Republic
Bulgaria
Sweden
Netherlands
Finland
Spain
Portugal
Italy
Greece
Germany
France
Belgium
Austria
United Kingdom
-10
Ireland
With some exceptions, long-term unemployment fell during the
recession
10
5
0
Baltics
F15-24
F25-49
F50-64
M15-24
M25-49
M50-64
The recession often hit more educated young
people harder
20
10
Anglo
Mediterranean
Scandinavia
ISCED 0-2 Females
ISCED 0-2 Males
ISCED 3 - 4 Females
ISCED 3 - 4 Males
ISCED 5-6 Females
ISCED 5-6 Males
Lithuania
Latvia
Slovenia
Romania
Poland
Central Europe
-30
-40
Hungary
Bulgaria
Sweden
Netherlands
Finland
Denmark
Spain
Portugal
Italy
Greece
Cyprus
Germany
France
Belgium
Continent
Czech Republic
-20
Austria
-10
United Kingdom
0
Ireland
Percentage point change in employment rates 2007Q3 - 2009Q3
30
Baltics
With some notable exceptions temporary employment
fell during the recession, but its incidence often didn’t
8
Percentage point change in the incidence of temporary employment of young people in the
European Union, 2007Q3 – 2009Q3
Anglo
-8
-12
-16
Mediterranean
Scandinavia
Central Europe
Lithuania
Latvia
Slovenia
Romania
Poland
Hungary
Czech Republic
Bulgaria
Sweden
Finland
Denmark
Spain
Portugal
Italy
Greece
Cyprus
Germany
France
Austria
Belgium
Continent
Netherlands
-4
United Kingdom
0
Ireland
Percenntage point change
4
Young Females
Young Males
Baltics
Incidence of temporary employment by age and sex,
Italy, 2007Q1 – 2010Q1
50
Temporary Employment as a % of total
employment of age-group
45
40
35
30
2007Q1
2010Q1
25
20
15
10
5
0
15-24
25-49
50-64
Males
15-64
15-24
25-49
50-64
Females
15-64
Programmes and policies for young people in
the context of the crisis
Macro Policy:
Throughout the EU & NA, most countries
adopted substantial expansionary fiscal
policies.
An example is instructive
Example of Germany & Italy
105
Germany Young People
Employment , 2007Q3=100
100
95
Germany - All
90
85
80
Italy - Young
People
Italy - All
Education
• Some countries have extended support for young
people remaining in education
– Piecemeal
• Good time to take such action
– Desirable in any event – part of the (old and) new EU 2020
strategy
– Recession – opportunity costs of educational participation
are relatively low
– Support for recovery
– Help prevent increases in the hardcore of ‘excluded’ youth
• Costs of inaction – higher youth unemployment and joblessness
with connected direct and indirect costs
Labour Market Policy
• Much variety in the response to the crisis
– Expansion of passive income support common –
and short-time working or partial unemployment
for employees
• Sometimes combined with training measures – clearly a
fruitful avenue to pursue
– Many countries have introduced subsidised
training for young people, however, it needs to be
linked to private sector employment opportunities
Labour Market Policy
• Job Search Assistance & more efficient PES
– Improving the efficiency of JSA is typically seen
as a very cost effective means of enhancing the
employment prospects, particularly, of young
people
• But, in the context of a recession, the usefulness of such
measures is limited
Employment Protection Legislation
Often argued that too strong EPL limits
opportunities for Young People –
Mediteranean countries since the 1980s
(Spain) and 1990s (Italy), moves towards
flexibility at the margin
But
Employment Protection Legislation
1.
Correlation between the percentage change in unemployment rates
and the strictness of employment protection legislation (EPL) is
negative and moderately strong (-.20) for both young men and
young women
2.
Correlation between the youth-adult raio of changes in
unemployment and OECD EPL index is positive (+.20) for males
(+.20) and females (+.23)
Taken at face value, suggests that strong EPL mitigated the negative
effects of the recession – for both young people and adults – but that
stronger EPL tended to worsen the relative position of young people
(compared to adults)
– May be a partial explanation of the Italian experience
Employment Protection Legislation
Moreover,
• Not much evidence to support the idea that
recessions are shorter in countries with more
flexible labour markets
• Much evidence to suggest that recessions are
deeper in countries with more labour market
flexibility
• Implication: now is not the right time to put an
emphasis on flexibility (although there are a great
dela of cross-country variation) – worrying trend
– some countries reacted to the recession by
Key Issues
1. Question of the job prospects of YP entering the labour
market during the recession – the ‘youth left behind’
– Above-all low educated young people who are more susceptible
to the scarring effects of unemployment and joblessness
2. Job Quality: Type of employment available to young
people – dangers associated with the wide diffusion of
temporary employment forms. Inter alia have a number of
costs
–
–
–
Less training
Greater insecurity
Less satifìsfactory jobs
Concluding comments
• No one size fits all
• Risk of exclusion is greater for the low
educated
• Problem of dual labour markets & job quality
for young people
• Combination of passive and active LMP
• A more radical approach to educational
reform?