August 14, 2011 6:53 pm
If proof were needed of the incendiary consequences of persistently high youth unemployment, it has been in ample supply recently – most dramatically in the Arab uprisings. There were, of course, many factors behind that region-wide explosion of popular discontent. But among the most potent was the seething frustration with a system in which upwards of 40 per cent of youths could not find work.
High youth unemployment is not just a North African problem. The looting that ravaged English cities last week happened in a country where one in five young people is jobless. The picture in the US is no better. In continental Europe it is worse. More than 45 per cent of young Spaniards and 38 per cent of young Greeks are out of work. With developed economies facing years of austerity and sluggish growth, the picture is unlikely to improve in the near future.
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It is not surprising that young people have a harder time than their elders in finding a job. They are, on the whole, less skilled and less experienced. They are also often more able to wait around for the right job than older workers with families to feed and mortgages to pay.
This does not mean that governments can afford to ignore the problem, however. High youth unemployment is associated with ills such as higher crime rates and lower health levels. A year of unemployment early in a career can permanently reduce a worker’s earning power. A cohort of such individuals working their way through their careers can dampen their country’s economic potential. Bringing down youth unemployment is just as crucial a post-crisis challenge for global leaders as repairing the public finances.
So what can be done? For starters, politicians should avoid the populist trap of blaming immigrants for the woes of indigenous youngsters. Not only is it a fallacy to assume that the number of jobs in an economy is fixed; there is no evidence linking immigration and high youth unemployment. Recent FT research found that, in Britain, youth unemployment was highest where the non-UK population had a lower share.
Better would be to give employers incentives to take on and train apprentices, as a recent report recommended in the UK. Even if firms do not keep youngsters once they cease to receive support, they will have gained valuable labour market experience. The catch is that with public purses around the world overstretched, subsidies may not be widely feasible.
Structural reform, by contrast, should be – although its nature should vary by country. In North Africa, it means cutting through the thicket of monopolies and regulations that artificially restrict productive activity. On the north shore of the Mediterranean, it means ending two-tier labour markets where excessive protections enjoyed by permanent employees create a class of overwhelmingly young economic outsiders with little hope of finding work. In countries such as the UK, it means ensuring that the youth minimum wage is not set too high: youngsters’ chances in the job market are especially sensitive to pay.
Everywhere, however, it means boosting the skills of young workers. Such reforms are time-consuming and unglamorous – Tony Blair once quipped that he could hide a declaration of war in a skills speech without it being spotted – but crucial. Governments should pay special attention to the lowest third of achievers, since these are most likely to struggle to find jobs.
As populations age, their political priorities shift away from the young. But today’s youth will work longer than past generations, enjoy less generous pensions, and pay more for education and to support ageing parents. The least yesterday’s youngsters can do for those of today is to allow them the economic opportunities they will need to foot these bills.
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