Characteristics and Challenges of Youth Unemployment Ton Wilthagen Stockholm, 16 October 2014

Geography 2

What causes youth unemployment? Strong relationship with macro-economic situation Labour market is “entry tournament” (Marsden): youth unemployment rates usually twice average unemployment (and more among non-nationals and low- educated groups) Smooth and effective school-to-work employment prevent youth unemployment – structural skills mismatches exist (up to 3.5 of total unemployment) High Employment Protection Legislation levels correlate with youth unemployment rates and temporary contracts 3

Youth unemployment 15-25yr NL

NL-SE similarities and differences Job mobility in SE higher than NL; employment security high in both countries (decreased during crisis); youth unemployment relatively high in SE (20.1%) and low in NL (11.0%) School-to-work transition quick and rather successful But time to 1st job longer in SE (4.4 month) than NL (3.5 month) and lower % employed 1 year after completing education in SE (80.4) than NL (88.2) Proportion of school-leavers in permanent full-time job 40% or less High proportion of students who combine work and education, plus students are older

Challenges and consequences Youth unemployment can result in long-term scars, such as increased risk of future unemployment, reduced levels of future earnings, loss of human capital, less capacity and motivation to found a family (and buy a house), contributing to negative demographic trends. Moreover, in both NL and SE temporary employment amoung youth is growing High costs of NEETs (NL 0.77% GDP; SE 0.34%) This young generation – declining cohorts! - should carry our economies for the next 45 years Wrong to make this human capital “rust” – their future is our future 6

Solutions: Dutch youth measures Welfare: Investing in Youth Act Welfare: 4 weeks search period -> 4 consecutive fixed-term jobs Small jobs arrangement € 80 mln regional youth unempl Sectoral job plans Action Plan Youth Unemployment

COUNCIL RECOMMENDATION of 22 April 2013 on establishing a Youth Guarantee 2013/C 120/01 Ensure that all young people under age of 25 years receive good-quality offer of employment, continued education, an apprenticeship or a traineeship within period of 4 months of becoming unemployed or leaving formal education. Not just crisis related: embark on structural reform – plan to be submitted to DG EMPL Countries that already have formal YG do not necessarily perform better … 8

The “Youth Employment Free Zone” Policies should aim at early intervention and prevention Evidence based: good data &knowledge of “stock and flows” of young people, from primary school onwards Monitoring their careers and the “turns” they take Involving all stakeholders Building more productive roads towards employment – avoiding and blocking wrong turn 9

The Work Experience Grant ( 10

Work Experience Grant (Starterbeurs in Dutch) Trainee contract 32h/week during max 6 months for job seekers up to age of 27, with basic qualification Based on evaluation and strengthening of youngster’s competences Grant: €500/month (€ 100 organization, € 400 municipality – eligible for ESF) Budget for further training education: €100/month Fully digitalized procedure for both parties Started in Tilburg and Rotterdam, over 150 Dutch municipalities have joined scheme, still expanding

Competencesdeveloped* Professional networkexpanded* Labor market positionimproved* Employment (after 1 month)52% match level of education77% match content of education60% * Self-report Work Experience Grant: preliminairy results

What works In bad LM situation wage subsidies for employers work, but effect modest All measures that enhance job seekers work experience and their professional networks Any way to get job seekers in direct contact with companies … An ounce of prevention …starting at young age Regional – triple helix – coordination, responsive to smart specialisation Baking a bigger cake … 13

Degrees of policy learning/transfer Inspiration Selective imitation Synthesis (internal/external) Hybrid (new modality) Adaptation Copying Photo copying 14

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