Friday

25th May 2018

Opinion

Jobless youth - southern Europe's ticking time bomb

  • Indignados: Young Spaniards have it the worst, with 46.4 percent of them out of work (Photo: M. Martin Vicente)

As Europe hangs on every public statement about the possibility of more bailouts from the European Central Bank or German Chancellor Angela Merkel, some investors don't see the wood for the trees.

The focus on short-term stability ignores southern Europe's powder keg of jobless youth which is set to undermine workforce productivity and pension affordability over the next decade.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Spain, Greece, Portugal and Italy top the list in eurozone youth unemployment.

According to Eurostat data, young Spaniards have it the worst - 46.4 percent of them are out of work. Italian youth, the relatively fortunate ones among their southern European neighbors, still face a dismal 29.1 percent unemployment rate - well above the 20.8 percent euro-area average.

At the same time, the share of total employment for all five-year age groups between ages 15 and 29 plummeted by over 40 percent in each southern country during 2000-2012.

Spain experienced the largest drop in this age range, at 50 percent. The overall aging trend is most notable in Italy, which saw a drop in the employment share of all age groupings from 15 all the way to 39.

In contrast, Germany experienced a mild 6.9 percent decrease in the employment share of people aged 15 to 29, while employment in the 20 to 24 age bracket actually increased by 7 percent.

Southerners also have some of the lowest birth rates in the eurozone.

Between 1990 and 2010, Spain averaged 1.29 children per woman, according to Eurostat. That's rock bottom. Portugal averaged the highest rate, at 1.44, which is still below the eurozone average of 1.58.

Not only can young people not find jobs, but there are fewer and fewer of them each year.

With every passing month that young people remain unemployed, they lose valuable opportunities to enhance their skills. Many are forced to work on temporary contracts, which give employers more scope to fire people, to give smaller perks and to pay lower wages.

According to the European Commission, the proportion of workers under 25 on temporary contracts in Spain, Portugal and Italy are all above the EU average. Spain and Portugal exceed the average by more than 20 percent. Greece is the only southern country with a lower-than-average incidence of temporary contract labor.

Employers have little incentive to invest in the education and training of employees who won't stick around for very long.

As a result, Spain, Portugal and Italy have the lowest levels of "human capital" in Western Europe, according to a 2006 Lisbon Council report (there was not enough data to rank Greece).

Already lacking in skills compared to the rest of Europe, the southern countries will fall even further behind once older workers retire over the next 10 years and the young - having been shut out of regular employment during their youth - become mature workers but with little experience.

The southern countries' labour forces appear to be doomed to regress in terms of productivity if the trend continues.

Pensions will become less affordable for southern European governments as workforces age.

The low birth rates compound this dilemma, as the worker/retiree ratio gets progressively smaller in the coming years. Raising the pension age can buy time, but it is ultimately no use unless young workers replace retirees both in terms of sheer numbers and in terms of skills.

Southern Europe is not helpless in the face of the problem.

Countries need to liberalise their labour markets to make giving proper, full time jobs for young employees more attractive to employers.

Germany did this between 2003 and 2005 when it deregulated self-employment and project contracts and cut back the unemployment benefit system to incentivise work. German youth unemployment has been falling since 2005.

There is plenty of room for reform.

The International Monetary Fund lowered Greece, Italy, Portugal and Spain's grades on labour market efficiency in 2010.

Despite some reforms undertaken since then, courts in Italy and Spain still squeeze employers by forcing them to pay up to two years of severance pay if they fire people for "economic" reasons. Italian businesses are still forbidden from sacking people for poor performance of their duties.

The terrible irony is that many young people strongly oppose the reforms that would help them.

Most recently, Portuguese Prime Minister Pedro Passos Coelho scrapped a plan to equalise pension contributions for employees and employers after a huge protest march in Lisbon. The pensions burden currently falls mostly on businesses, discouraging them from hiring more staff.

Meanwhile, southern Europe's economic time bomb of jobless youth keeps ticking. It's not too late to defuse it, but there is no time to waste.

The writer is the Warren T. Brookes journalism fellow at the Competitive Enterprise Institute in Washington DC. He blogs at openmarket.org

Portugal in crisis after 1mn say No to austerity

Portugal is in political crisis as it struggles with a major popular backlash in the face of troika-approved austerity measures that would raise social contributions for employees.

Integration of Syrian refugees in Europe needs scrutiny

Most refugee-related services are outsourced to the private sector and NGOs, which are not adequately monitored and evaluated. When governments and EU institutions provide funding for refugee projects, they should scrutinise the NGOs and private players they work with.

Europe's last wild rivers under threat at Balkans summit

The EU is prioritising motorways and gas pipelines across the potential accession Western Balkan countries, plus hydropower energy projects which threaten one of the world's freshwater biodiversity hotspots.

More commitment to renewables from Council, please

More and more consumers are likely to invest in solar panels in the future as it becomes simpler to produce one's own electricity, writes Monique Goyens, director general of BEUC, the European Consumer Organisation.

News in Brief

  1. Italy set to pick eurosceptic finance minister
  2. UK foreign minister fooled by Russian pranksters
  3. Rajoy ally gets 33 years in jail for corruption
  4. Close race as polls open in Irish abortion referendum
  5. Gazprom accepts EU conditions on gas supplies
  6. Facebook tells MEPs: non-users are not profiled
  7. Commission proposes ending France deficit procedure
  8. UK households hit with Brexit income loss

Stakeholders' Highlights

  1. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  2. Centre Maurits Coppieters“Peace and reconciliation is a process that takes decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  3. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  4. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  5. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  6. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  7. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments
  8. International Partnership for Human RightsAnnual Report celebrates organization’s tenth anniversary
  9. Nordic Council of MinistersNordic Cooperation Needed on Green Exports and Funding
  10. Mission of China to the EUPremier Li Confirms China Will Continue to Open Up
  11. European Jewish CongressCalls on Brussels University to Revoke Decision to Honour Ken Loach
  12. Sustainable Energy Week 2018"Lead the Clean Energy Transition"- Register and Join Us in Brussels from 5 to 7 May

Latest News

  1. Green stadiums at the 2018 FIFA World Cup
  2. Visegrad Four 'nothing to hide' on rule of law issue
  3. GDPR does not (yet) give right to global oblivion
  4. Privacy Shield less relevant given GDPR, says data chief
  5. Unknown academic to lead Italy into EU clash
  6. 'Killer robot' projects eligible for EU defence fund
  7. Funding for European values needs radical changes
  8. Feeble EU format deflates Zuckerberg 'hearing'

Stakeholders' Highlights

  1. EU Green Week 2018Green Cities for a Greener Future. Join the Debate in Brussels from 22 to 24 May
  2. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  3. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  4. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  5. Mission of China to the EUProgress on China-EU Cooperation
  6. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  7. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  8. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  9. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  10. UNICEFCalls for the Protection of Children in the Gaza Strip
  11. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  12. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight