What would your employment ad sound like, young man? The variety of crises (financial, economic and debt crises) that clouded over the EU triggered intense youth employment debates. At the Centre for European Studies we carried out in-house research that paves the way to solutions.

Figure 1: Employment rate, age 15-24 years, EU28 and Turkey, 2002-2012 Source: Eurostat, extracted Sep. 2013
Youth employment (age 15-24) in EU-28 shows a downward trend ever since 2002. There was an increase to 37.3% between 2004 and 2008 when the economic boom created higher youth employment rates. When the system plunged into crisis, youth employment rates decreased by a large margin. The crises aggravated a structural problem of youth employment. In 2012 youth employment rate in EU-28 (32.8%) come close to the rate in Turkey (31.5%).

Figure 2: Employment rate, EU-28, age 40-64 years, 2002-2012 Source: Eurostat, extracted Sep. 2013
Our analysis shows as well that elderly employment increased rather steadily since 2002 (from 62.6% to 67.6% in 2012). The pre-crises economic development boosted the employment rate to 67.5%. The 2012 numbers indicate a clear recovery path for the EU-28. This shows that young people took the burden of the crises. In addition to that, more and more elderly people remain active in the labour market. This is a key achievement of the active ageing policies.

Figure 3: NEET rate, EU-28, 2002-2012. Source: Eurostat, extracted Nov. 2013
EU-28 NEET rate (young people not in employment, not in formal/informal education and training) shows no improvement since 2002. Again, the pre-crises economy delivered some relief. In 2002 the NEET rate (age 15-29) was 15.6% and 15.9% in 2012. The number of young people that are not employed or do not participate in a training has remained unchanged. This indicates that more and more young people stay in education and training programmes to compensate for not finding a proper employment.

Figures 4, 5 & 6: NEET rates, selected countries, 2000-2012. Source: Eurostat, extracted Sep. 2013
When we zoom in at individual countries, growing divergence in the EU surfaces. We distinguish three groups.
The outperforming Denmark, Germany, Luxemburg, the Netherlands, Austria and Sweden where we see a clear recovery trend in terms of NEET rates.

The average Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia where NEET rates are high (especially in Bulgaria). The lagging Greece, Spain, Italy and Portugal where NEET rates increased sharply and are still increasing.

The negative youth employment trend and continuously high NEET rates is one thing but there is more to it. Our research points out few other burdensome trends – labour mobility, unpaid internships and temporary employment.

Labour mobility within the EU rests very low, according to OECD data. Important causes for this are bureaucratic procedures, the burdensome recognition of qualifications and language barriers. These issues lead to the bigger problem – the incompleteness of the European labour market.

Unpaid internships are the second chunk of the youth employment issue. A survey by the European Youth Forum reveals that approximately half of the internships in the EU are unpaid. Without remuneration, fewer young people will be able to afford a traineeship due to the cost of living. Thus fewer youngsters will stand a better chance of being employed. Another effect of unpaid internships is that there are no contributions to the social security and tax systems.

Temporary employment rates for young people in the EU are very high, soaring over 42% in 2012, according to Eurostat data. The main issue here is the lack of sustainability and high uncertainty among youth. This for instance prevents many young people from establishing families.

Conclusions

• The crises were a wakeup call. The EU youth employment rate is a long-term negative trend and a result of structural problems.
• NEET rates today will hit back on EU’s economy like a boomerang. Simply put, the economy will be held back by the growing size of the EU’s lost generation.
• Europe is like a car with wheels spinning at different speeds. There is a great country-to-country difference within the EU in terms of youth employment and NEET rates. Instead of convergence, we witness divergence.
• Labour mobility, unpaid internships and temporary employment are overlooked topics. However, these are crucial bits of the youth employment issue.
• Blame-it-on-Brussels attitude was and still is a popular excuse for many governments. However, social, labour and youth policies are foremost in the hands of the Member States.

Recommendations

• Implement reforms. Southern Europe and especially the former Socialist countries should address the low youth employment rates and high NEET rates. The 2014-2020 Programming Period offers funding tools for such reforms.
• Bridge business and universities. Start-up platforms and initiatives, spin-off companies and clusters should be prioritised by governments through public and private investment (risk capital).
• Update education and skills. Introduce: 1. Vocational training to the bachelor’s and master’s degrees; 2. Entrepreneurship education and training in secondary and tertiary education; 3. Digital literacy and transversal skills such as creativity, critical thinking, self-learning and communication.
• Support youth labour mobility. 1. Cut the labour mobility red tape through labour legislation. 2. Revision of national labour regulations should be encouraged more by the European Commission. 3. Full implementation of the European Qualifications Framework. 4. Improve the foreign language skills of the young Europeans.
• Restrain unpaid internships. There should be more tax relief for companies that employ interns but no unpaid internships.
• Limit temporary employment. There are two main priorities in this field – ensuring more, permanent but flexible work contracts and deepened social partnership.
• Proactive young people. Knowledge is widely and freely accessible nowadays – the internet. Accumulating skills and knowledge makes you more competitive with a better chance of being employed. This is not a front row ticket to employment but at least you are getting closer to it.