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Youth in Europe have major labor market problems despite lower unemployment

Press Release of November 2, 2017

The youth unemployment is still much higher than the unemployment of those aged 25 years and older – Decrease in unemployment primarily due to a drop in the number of young people and the greater number remaining in education – Political measures against youth unemployment prove ineffective

Although the youth unemployment rate in the EU has plummeted in recent years, it is still difficult for teens and young adults to find employment. For example, the unemployment rate in the 15-24 age group is still 2.5 times as high as that of person aged 25 years or more. The decrease in unemployment is primarily caused by the demographic shift and a lower participation in the labor market due to changed education behavior. Political measures for countering youth unemployment, such as the EU Youth Guarantee, do not have recognizable effects. These are the main findings of a current study by the German Institute for Economic Research (DIW Berlin). Newly created employment opportunities for young people are almost exclusively fixed-term jobs. The share of part-time jobs has also increased. Due to their more practical training, young people in Central Europe have fewer problems finding employment than persons 25 years and over, unlike the situation in other parts of Europe – particularly in the south.

Pool of employable young people contracts

In spring 2013, youth unemployment in Europe reached a zenith in the wake of the financial and economic crisis, affecting 5.5 million people. The EU member states adopted measures to counter youth unemployment – the flagship program was the Youth Guarantee, designed to place unemployed young people in a job or qualification program within four months. Since then, youth unemployment has decreased: by the second quarter of 2017, it was more than one-third lower, affecting 3.8 million people. The unemployment rate fell from 23.5 to 16.9 percent.

The economic upswing played a major role, however, as both the unemployment rate and the number of unemployed persons decreased. Counter to the general trend, the pool of employable young people is contracting. This is due to the demographic shift (fewer young people) and a change in behavior with regard to employment and education. Due to the poor labor market situation, many young people remain longer in the education system. This was the case in Spain, for example, where more and more young people have rejected the labor market. Overall, the number of employed young people in the EU is still around 20 percent lower than it was before the crisis. Among adults, the number of employed persons is now somewhat higher than it was before the crisis.

Leveraging the vocational training system

“Political measures have had little effect,” said Karl Brenke, DIW labor market expert. “They probably overestimated the options of the ‘active labor policy’ again. Based on past experience, it is simply not able to create jobs in the mainstream labor market.” Policy needs to leverage the vocational training system. In most regions of Europe, vocational and professional training is decoupled from company practice. Without know-how and practical experience, young people find it extremely difficult to access the labor market – unlike the situation in Central European countries with their dual systems for education and vocational training. 

And 90 percent of all newly created positions for young people are based on fixed-term contracts; 40 percent are part-time jobs. Nowadays, virtually one in three employed young persons in the EU has a part-time job. Among adults, the figure is 19 percent. The gap is even wider with regard to employment contracts: 44 percent of young people have a contract of temporary employment, whereas only 12 percent of adults do. In some countries, for example Poland and Spain, the proportion of young employed people with a fixed-term contract is around 70 percent.


Karl Brenke

Research Associate in the Forecasting and Economic Policy Department