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Jan 11, 2013 | 11:00 GMT

Europe: The Complexities of Youth Unemployment

Protesters demonstrate against austerity reforms in Madrid on Dec. 13, 2012.
PIERRE-PHILIPPE MARCOU/AFP/Getty Images

Although statistics on youth unemployment in Europe can be misleading, joblessness among Europe's young people, particularly in the eurozone's peripheral economies, is a real problem. Support systems such as family and educational institutions have mitigated the effects of the crisis. However, as Europe's safety nets strain under the weight of austerity measures, more social and political unrest could arise. 

Dramatically higher unemployment has been one of the main social consequences of the European crisis. Average unemployment in the European Union reached 10.7 percent of the labor force in November 2012, a significant increase from the 7.2 percent unemployment recorded in the third quarter of 2007, before the crisis began. The crisis has had an even greater impact in the eurozone, where unemployment reached a record 11.8 percent of the labor force in November 2012, up from 7.6 percent in the third quarter of 2007. All told, more than 26 million people are out of work in the European Union.

Overall unemployment is spread unevenly across the Continent. The countries in the eurozone's periphery have the highest unemployment rates in Europe, with Spain, Greece and Portugal at the top of the list. By contrast, central and northern European countries (Germany, Austria and the Netherlands) have the lowest unemployment rates. This unequal distribution of unemployment affects the way the different countries view the crisis and the strategies each government wants to use to overcome it.

These high unemployment rates jeopardize Europe's stability. At the national level, persistent unemployment is threatening the survival of the traditional political elites. The pervasiveness of high unemployment provides fertile ground for ideas and parties on both the right and the left that reject the establishment.

At the European level, the current economic crisis has greatly weakened the promise of prosperity — one of the cornerstones upon which the European Union was built.

Unemployment Rates Versus Ratios

Although there is no question that unemployment in Europe is high, the situation is more complex than statistics show. The unemployment rate only reflects the percentage of the active population that is looking for a job and unable to find one. The active population — also known as the labor force — does not include those who are not looking for a job, such as children, students and retirees. These sectors of the population are grouped into a different category known as the inactive population.

This distinction is particularly important in determining the level of youth unemployment. The European crisis has had a particularly strong effect on members of the workforce aged 15 through 24. Statistics and anecdotal evidence show that the crisis has made it more difficult for young people to enter the labor market. According to Eurostat, youth unemployment reached 56.9 percent in Greece, 54.1 percent in Spain and 39 percent in Portugal in the third quarter of 2012. However, Eurostat — following standards set by the International Labour Organization — defines the youth unemployment rate as the percentage of people between the ages of 15 and 24 (inclusive) who are unable to find a job. This does not take into account the significant numbers of people in that age group who are full-time students, neither working nor looking for employment, and thus not part of the labor force.

Youth Unemployment in the European Union

With this in mind, the European Union offers a second kind of data: the youth unemployment ratio, which uses the total population between the ages of 15 and 24 — not just those who are part of the labor force — as the denominator. In other words, the youth unemployment ratio measures a larger population segment than the youth unemployment rate. Therefore, the unemployment ratio looks less dramatic than the unemployment rate. Spain's youth unemployment ratio is at around 19 percent of the total 15-24 age cohort, while the ratio is at around 13 percent in Greece and 12 percent in Portugal. That does not mean that youth unemployment is not a growing problem; in 2009, the youth unemployment ratio was 17.1 percent in Spain, 8 percent in Greece and 7.9 percent in Portugal. This means that, no matter how it is measured, youth unemployment is a key challenge for the eurozone periphery.

Europe's Social Safety Nets

Since the beginning of the crisis, young Europeans have found numerous safety nets to help them cope with the economic downturn. Statistical and anecdotal evidence shows that the family is an important support system for young people in Europe. More and more young Europeans are deciding to either stay in or return to their parents' homes in order to access their parents' savings or pensions.

The crisis has also increased emigration rates in the European periphery. Initially, this emigration consisted largely of foreign workers returning to their home countries, but as the crisis deepened more people began leaving their home countries to look for better work opportunities abroad. Irregular economic activities — such as informal labor and tax evasion — have also provided some relief in these countries.

The education system has become an additional safety net. The relatively low cost of education in Europe is leading young men and women to prolong their education before attempting to enter the labor market. Spain is a good example of this trend: The total number of students in the tertiary education system grew by 9 percent between 2007 and 2011 (in contrast, between 2003 and 2007 it had decreased by 4 percent). The median age of university students has also increased in Spain, from 21.7 in 2002 to 22.6 in 2011. In Greece, the number of tertiary students grew by 8 percent between 2007 and 2010, and the median age grew from 20.6 in 2002 to 23.5 in 2010.

The Effects of Austerity

However, these safety nets are currently in jeopardy. The austerity measures implemented by the governments of the eurozone periphery are reducing real wages and pensions and weakening the welfare state. This is reducing European households' purchasing power along with their ability to support unemployed youths. Meanwhile, many European governments have planned cuts to education budgets and in some cases have increased university fees. All of these processes are weakening the support systems and likely reducing the choices available to young people in Europe.  

The role of universities as safety nets creates another set of challenges. Although attending a university gives some people a sense of purpose, it could also generate unrest in the long term as Europe educates a large pool of people with high qualifications who likely will be unable to find a job. Europe could experience a brain drain; many of the men and women who have emigrated from the EU periphery recently are highly skilled. 

Moreover, universities are hubs for organizing protest movements and opposition against the political elites.

A growing number of European youths are neither working nor studying. This group is commonly referred to as "not in employment, education or training." According to the latest Eurostat data available (2011), 13 percent of Europeans aged 15 through 24 (7.5 million people) and 20 percent of Europeans aged 25 through 29 (6.5 million people) are excluded from the labor market and education in the European Union. These rates have increased from 11 percent and 17 percent, respectively, in 2008. This population threatens social stability the most, since these young men and women have fewer prospects for improving their lives.

The European crisis has been going on for just longer than four years, and many of the social safety nets helping jobless young people are still in place. However, these safety nets are beginning to fray, and there is little evidence that they will be strengthened in the short term. The situation is more nuanced than it seems at first glance, but there is no doubt that the crisis has affected the lives and prospects of an entire generation of Europeans. The European Union has managed in recent months to contain the financial aspect of the crisis, but the social aspect is still deteriorating.

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