“The short term prospects for youth unemployment in the OECD countries remain rather gloomy”, according to a new OECD working paper.
Unemployment among young people is set to keep rising in the months ahead and stay at the same high double digit level across the OECD to the end of 2011. “Many unemployed youth are likely to experience a prolonged period of joblessness.”
Youth unemployment rates in Europe will remain close to 20% well into 2011, according to forecasts based on the OECD’s November 2009 Economic Outlook.
OECD's Stefano Scarpetta explains what governments should do to avoid a lost generation of jobless young people.
Animated graphs showing the impact of the crisis on young people and the outlook in the months ahead.
Across the OECD area, the unemployment rate among the young (15-to-24-year-olds) has historically been just over double that of people aged over 25. But in 2008, the ratio rose to 2.8 on average but with large differences between countries: Germany has the lowest ratio (1.5), largely because its apprenticeship system works well in helping most young people find work after school. The ratio was between 2 and 3 in most OECD countries and between 3 and 4 in seven (Denmark, Finland, Italy, Korea, New Zealand, Norway and the United Kingdom). Only in Iceland and Sweden was it above 4.
The report’s message is that governments need to do much more to help young people. Some have benefitted from broader efforts to help the unemployed. But more policies are needed that target young people, especially those with poor education and skills. These “at-risk” youngsters now account for between three and four out of ten of all young people in the OECD and are at risk of long-term joblessness and reduced earnings.
In the short term, a priority must be to provide income support to unemployed young people. In two-thirds of OECD countries school-leavers are not eligible for unemployment benefits unless they have worked a certain period of time (from four months in France to one year more generally).
Another promising avenue is apprenticeship contracts for low-skilled young people. These could pay a “double dividend”: securing the transition towards employment and lowering labour costs compensated by a training commitment from the employer. Governments could provide subsidies to promote apprenticeships and help apprentices made redundant to complete their training.
The paper also looks at the number of young people on temporary contracts and finds they are over-represented among workers. And while for many these contracts are stepping stones into permanent jobs, for others they tend to be dead ends. Reducing the gap between regulations for temporary and permanent contracts would help, together with lowering the cost of employing low-skilled youth in their first job.
Youth unemployment rates should remain high in 2010 and 2011
For comment or further information, please contact Stefano Scarpetta, head of the OECD’s Employment division (tel. + 33 1 45 24 19 88)
The working paper, “Rising youth unemployment during the crisis: how to prevent negative long-term consequences on a generation”, is available at http://www.oecd.org/dataoecd/10/8/44986030.pdf
More information on OECD work on the challenges facing government to tackle youth unemployment are available at http://www.oecd.org/employment/youth/forum
An OECD Factblog, with commentary and data, on the issue is available at https://community.oecd.org/community/factblog/blog/