Tackling youth unemployment

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Tackling youth unemployment
November 13, 2014

The event was hosted at the Center for Monetary and Fiscal Studies (CEMFI) in partnership with IZA World of Labor and the London School of Economics and Political Science (LSE). The discussion addressed the need to find effective strategies of tackling youth unemployment with special attention placed on Spain, where current levels of youth unemployment stand at 52.4%.

While introducing the event and the panel, Professor Alexander Kritikos (Managing Editor at IZA World of Labor) stressed that youth unemployment remains "one of the most difficult and important topics – a problem not only in Spain but all over southern Europe." As a free, online resource that continues to grow, IZA World of Labor’s aim is "to help policy-makers find reliable, balanced information in [an] easy-to-understand format." 

IZA’s Dr. Werner Eichhorst opened the discussion by addressing the effect of fixed term contracts, whose benefits include shortening individual unemployment spells, but which are characterised by "low pay and low training, reducing employers’ willingness to employ permanent staff." He suggested looking to countries such as Germany and Denmark, which combine strong vocational training systems as part of the fixed term contract package and, as a result, are "more conducive to successful transition from temp jobs to permanent [ones] as young workers [become] skilled." 

Talking about the situation in Spain, CEMFI’s Professor Samuel Bentolila pointed out that youth unemployment was a symptom of a larger national unemployment problem that Spain is currently battling. However, shorter-term contracts coupled with a decrease in wages means that Spain is now witness to the second largest increase in youth related poverty.

All speakers agreed that the problem stems largely from the institutional framework. Professor Marcel Jansen of the Universidad Autónoma de Madrid added that positive steps must be taken in policy reforms targeting education, with the goal of providing more options for vocational courses to younger students and including work experience in school and university education. Although there are currently projects in place in Spain to provide support to unemployed youth, such as the EU Youth Guarantee project which offers €1.8bn in funding, they are still not being widely used by target individuals.

The conversation expanded into questions surrounding: the availability of EU funding to help fight youth unemployment; ways of implementing elements of Swiss dual education approach but adapting it to country-specific needs; the role played by the lack of labour mobility within Spain (both regional and international); and the impact that technological change and outsourcing may have on Spain’s current levels of youth unemployment.

There was consensus that it is not only up to government and policymakers to instil changes, and Jansen emphasised that businesses have an important role to play in ensuring that training positions are offered to those who are still in, or are coming out of, education. "Employers also have a responsibility and, of course, need a workforce for tomorrow," he added. For Eichhorst though, the "system only works if there is understanding in the business community that training is vital not only for the company, but for the sector and region." 

A crucial issue was raised by Bentolila – the lack of awareness among firms, workers and government who aren’t familiar with labour market policies, and which continues to act as a barrier to change. Raising awareness is a key component for Bentolila, who added that "we want action and openness to encourage policymakers to allow more policy evaluation."

With lively discussion between the speakers and audience, the event raised many questions in need of urgent answers and action. If effective strategies for tackling youth unemployment can begin to show necessary results, a steady and open channel of communication and a sharing economy of knowledge must exist between policymakers, researchers, employers and workers.

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