Measuring unemployment

Youth jobs count – but how?

The latest EU figures show a further increase in youth unemployment, but there has been some debate in the past over whether to express those levels in rates rather than ratios. What is the difference between the two, and which, if any, is a more precise measurement?

Comment | 02 November 2012
By Ekkehard Ernst, head of the ILO Employment Trends Unit

Ekkehard Ernst, Chief of ILO Employment Trends Unit
GENEVA (ILO News) - Whichever way one looks at it, global youth unemployment is cause for major concern. But the figures can at times seem confusing.

Spain, for example, has a staggering youth unemployment rate of more than 54 per cent, but a youth unemployment ratio of close to 21 per cent. In Germany, the rate is about 8 per cent and the ratio 4 per cent.

The difference is the denominator: The rate measures the whole youth labour market – those young people who are working or looking for a job. The ratio takes the entire 15 to 24 age group, including full-time students.

So, if one looked at 200 young people, of whom 100 are studying and another 50 have jobs, the unemployment rate would be 50 per cent, while the ratio would be 25 per cent.

Applying the ratio can be useful in cross-country comparisons of youth unemployment, since there are significant differences in the way countries record youth labour participation.
Comparing youth unemployment rates across countries can give a misleading picture."

Countries with a well-developed vocational training system, like Germany, consider young people in such education to be employed because it includes workplace training. Elsewhere, only those who have completed a degree or have dropped out of school and are seeking work are typically considered part of the youth labour force.

Hence, comparing youth unemployment rates across countries can give a misleading picture. At the same time, it can make undue suggestions as to the effectiveness of certain forms of educational systems to lower youth unemployment.

While they can be useful tools, ratios tend to underestimate the extent to which joblessness prevails among young people, in particular when youth labour force participation is low and youth unemployment rates are high.

In many developing and emerging economies, both the rate and the ratio often understate the problems young people face in the labour market.

In these countries, labour force participation rates are typically higher among youth than in developed economies. That’s because many young people take up any job they can find.

As a result, figures tend to suggest a youth employment situation that is better than what it actually is. But the reality is that many young people in developing countries have poor-quality jobs and very limited access to social protection.