Labour market situation of young people in Central and Eastern Europe Sandrine Cazes ILO-SRO, Budapest

Outline of the presentation  Overview of labour Market trends in Central and Eastern Europe over the 1990s  Young people in the labour market => which LM outcomes?

Labour market trends in CEE over the 1990s  Decline in employment  Shrinking labour force participation rates  Persistent high unemployment: despite economic growth, employment did dot recover

Labour market trends in CEE over the 1990  Growth of informal sector  Insecurity of employment and income has sharply increased in the transition period.

Labour market trends in CEE over the 1990  Characteristics of unemployment –High long-term unemployment –Large regional disparities in unemployment –Most hard hit groups: youth, low-skilled, people with disabilities, certain ethnic minorities

Labour market trends for youth  Falling labour market participation –Decline in labour force participation rates of young people deeper than for any other age group of the population. –Reasons: increased participation in education and higher discouragement of young workers

Youth unemployment  What is the size of problem?  Different indicators can be used to measure youth unemployment, each representing different aspect of the problem (see Table)

Youth unemployment CZESHULVLTPLSKSL Youth u rate (%) Youth /Adult u ratio Share of youth/ total u

Youth unemployment  High unemployment  Important disparities in youth u rates within the region - 10 % in Hungary; 40 % in Poland and Slovakia  Youth u rates high relative to adult rates -2.5 times higher  Most vulnerable young women with small children, unskilled youth and socially disadvantaged youth (Roma)

Labour market trends for youth  High incidence of flexible forms of employment –Part-time employment –Time-limited labour contracts –Non-labour contracts –Self-employment –Multiple job holding –Informal employment

Labour market trends for youth  High labour turnover and short job tenures characteristic for young workers - 2 years on average for a sample of 8 CEE transition countries compared with 8.5 years for the whole working population  Duration of unemployment tends to be shorter

Trends in education of youth  Education levels of young age groups are increasing  Shift from secondary vocational education to general education  More young people in universities, shift away from technical disciplines to economics, business management, social studies, etc.  Too narrow specializations have been overcome but faced with the creation of new skill mismatches  In some transition countries large dropouts – threat for the future

Unemployment & its effect on youth  Risk of poverty (income)  Alteration/loss of Human Capital (LTU)  Delay to entry into labour market  Risk of migration (brain drain)  Informalization  Human trafficking,  Increases of risky behaviour

Conclusions  Young people on average more educated, more flexible and mobile, able to learn new skills and adapt to new conditions of work, lower paid (therefore cheaper), for employers worth the longer- term investment in their training.  All this increases their employment chances in the longer run.

Conclusions  However, young people are less experienced at work and therefore less productive, often with non- matching skills for the vacant job and then more costly in terms of training needs, less reliable, often changing job, with family responsibilities lowering their flexibility, time at work and sometimes productivity.  All this decreases their employment chances in the short- to medium run.

Conclusions  Many of the latter real or presumed disadvantages can and need to be addressed by appropriate education, labour market, social and family policies.

Determinants of outcomes-some tracks  General LM conditions –Aggregate demand –Skill mismatch –Role of Labour market institutions & regulations

Determinants (cont.)  More specific to young people –Demographics (youth cohort) –Education –Wages / Labour Cost –Reluctance to hire first job seekers –Barriers to access self-employment –Role of Labour market regulation

Youth unemployment AL*BiHBUHRMAMOROSM Youth u rate (%) Youth /Adult u ratio Share of youth/ total u 46.0 **