States of Uncertainty: Youth Unemployment in Europe

Youth unemployment is one of the biggest problems facing Europe. It has increased substantially in most countries since the 2008–2009 financial crisis, but has been rising relative to the unemployment rate of older adults for far longer. This report presents new statistical analysis of the problem, and uses the results to assess the different roles that education and training, business behaviour and labour market institutions play in young people’s transition from compulsory schooling to a job suitable to their level of skills and qualifications. It concludes that policymakers need to focus on this transition in its entirety, rather than on narrow labour-market measures, if they are to reduce youth unemployment and improve the prospects of young people across Europe.

There were 5.5 million unemployed young people (15–24 year-olds looking for work but unable to find it) in the EU in the first quarter of 2013. Even more worryingly, there were more than 7.5 million young people not engaged in employment, education or training – over 13 per cent of the EU’s youth population. While the EU, and in particular the group of countries that comprise the eurozone, has begun to recover from recession in economic terms, the outlook for youth unemployment is more uncertain. There is also little sign that rates of long-term unemployment among the young – the group most at risk of long-term ‘scarring’ from unemployment – have even begun to decline: in the UK, the proportion of unemployed young people who have been looking for work for more than a year stood at 30 per cent in the first quarter of 2013, and in Spain this number was almost 40 per cent.

Just as the recent brightening of European countries’ economic fortunes has not yet driven an improvement in young people’s labour market prospects, the surge in youth unemployment since 2008–2009 masks longer-term issues in the youth labour market. In fact in many countries, and for many years before the recession, youth unemployment was rising both in absolute terms and when compared to the unemployment rate for older adults (aged 25–49) even during the period of stable economic growth between 2000 and 2005.

It is clear, therefore, that a return to economic growth will not itself be enough to fix the problems of European youth labour markets. So what policy options are there?

At a meeting of EU leaders in June 2013, €6 billion was pledged towards tackling the youth unemployment problem with a ‘youth guarantee’, intended to ensure that every young person has access to a job, training or apprenticeship within four months of leaving education. While action at this highest level of the EU is welcome, this paper demonstrates that the problems that young people face, and the root causes of them, vary substantially between different countries. The necessary solutions will be found at the country level, and not through a one-size-fits-all EU policy.