Youth jobs crisis

Statement by the ILO's Director-General at the Tripartite Seminar on Youth Employment

Statement by Guy Ryder at the Tripartite Seminar on Youth Employment in Europe organized by Hungarian Ministry for National Economy and the ILO, to examine the challenges of labour market integration of young people in Europe. (Check against delivery)

Statement | Budapest | 11 January 2013
Minister of State for Employment, Dr Czomba

Commissioner Andor
Heads of UN agencies in Budapest
Members of the diplomatic corps
Representatives of the ILO’s tripartite constituents in Hungary
Representatives of youth and other civil society organizations

Dear friends,

It gives me great pleasure to be here with you in Budapest at this National Tripartite Seminar on Youth Employment. I cannot think of a more important subject to start the year than youth employment, which we are addressing here.

Five years after the onset of the global and financial crisis, the high and persistent levels of youth unemployment in Europe, the increasing difficulties that young women and men face every day to access a stable and decent job months and years after leaving school, are matters of serious concern and they risk leaving long-lasting scars on the very fabric of our societies.

I do not think that statistics reveal the social and human drama behind these numbers.

Our latest data show that the global crisis impact on labour markets is taking a bigger toll on young women and men than any other group. There are nearly 75 million unemployed youth aged 15 to 24 in 2012 worldwide and there are approximately 5.5 million unemployed youth in Europe and the average unemployment rate of youth is above 22 per cent. This is more than double the unemployment rate of adults. More worrying is the increase in long-term unemployment among young people in the EU as a consequence of the global economic crisis. Youth now represent 30 per cent of the long-term unemployed in Europe – those who have been seeking work for more than 12 months. Before the crisis, this phenomenon affected mainly adults.

If you are unemployed in the first year of your career, it affects your entire life, it affects your health. We have to look at the quality of jobs. Young people are the most vulnerable; they are five times more likely to be in temporary and part-time employment compared to adult workers in European Union countries.

Clearly, countries with highly segmented labour markets are weathering the crisis with greater difficulty, and we are witness to increasing vulnerability of youth to unemployment and poverty.

Some 14 million young people, more than 15 per cent of European youth aged between 15 and 29, are estimated to be in this infamous new category called “NEET”, those neither in employment nor in education or training, those who have not found a job or have even given up looking for a job altogether and lost interest in improving their skills. It is shocking that the incidence of NEET has almost doubled in only two years.

We cannot and should not let that happen before our very eyes.

It is time for action, for immediate and targeted action, as called for by the ILO’s global tripartite constituency at our last International Labour Conference in June 2012.

The 2012 ILO Call for Action came up as a very strong call to policy makers to respond to the unprecedented youth employment crisis. It is also accompanied by a policy portfolio of possible and tested measures from around the world, that were debated and evaluated long and hard during the Conference discussions.

The 2012 ILO Call for Action recognizes that there is not one single solution, no “one-size-fits-all” approach that is applicable to every country. What works in Hungary might not work in other countries. Second, we need a “multi-pronged strategy” that is based on pro-employment macroeconomic policies.

We also need to pay attention to skills development youth entrepreneurship and labour rights that can help young people in their transitions to decent work, including and especially in times of crisis. We need active labour market policies targeted to young people. We need to be attentive to the right of young workers. Since taking office, I have assigned the highest priority to youth employment and to ILO support to our constituents in this area.

It is imperative that appropriate anti-crisis measures are put in place to prevent young people from disconnecting from the labour market for long periods. We need to enable them to catch-up on their skills’ deficit, especially for the low-skilled and disadvantaged youth, and we need to support their employment through temporary subsidies.

These measures should be for a period of not less than one year; shorter periods will perpetuate the precarious and volatile nature of youth employment. It is also imperative that young workers’ rights are respected and upheld and discriminatory practices are prevented because of their higher vulnerability and limited experience.

For countries undergoing austerity measures, these are not easy issues. It is important that labour market measures addressing youth are ring-fenced from budgetary cuts and investments on these programmes are increased. We need to see these as investments, and these investments will pay off in a long term. Investing in these measures is far less costly than dealing with the consequences through unemployment benefits, anti-social behaviour or a more permanent disconnect from the labour market.

This is why I welcome and support the new package of measures proposed by the European Commission last December in Brussels.

I have extended ILO support and have agreed with Commissioner Andor to fully cooperate in the implementation and evaluation of the effectiveness of different measures and schemes promoting youth employment at the European level.

I want to highlight that we are also supporting the bipartite negotiations between European employers’ and workers organizations for a framework action plan on youth employment. Let me congratulate the Ministry for National Economy of Hungary for the new programmes they are introducing as we heard this morning. The Hungarian National Youth Strategy 2009-2024 recognizes the challenges that young Hungarians face in the labour market, and highlights priority target groups for action, including early school leavers, those with educational and skills deficits, young women with children and the high proportion of youth in unregistered employment. It also points to potential areas for focusing attention, the structural reforms in vocational training and entrepreneurship development. Inevitably, the challenge for such a wide-ranging strategy lies in its implementation.

The 2012 ILO Call for Action on youth employment also calls for renewed and reinforced social dialogue to confront youth employment. Tripartite action is the key to establishing the enabling environment for the successful implementation of labour market policies for young people. Governments, employers’ and workers’ organizations all have their part to play, both through fulfilling their own specific mandates and through concerted, joint efforts. Today is the time to strengthen social dialogue, not to weaken it.

Today’s Conference is an opportunity to measure progress in Hungary and to review good practices from Europe and other country experiences that could inspire further action. Let me mention a few concrete ideas.

Apprenticeships, skills training and work-training programmes, such as the dual apprenticeship system, can improve young people’s chances of finding a job; the combination of skills development with work experience. These are major lessons of international experience that have proven effective also during the recent crisis. The ILO review of apprenticeships recently considered by the G20 Task force on Youth Employment showed that apprenticeships for low-skilled youth can reduce labour costs for low-productive and inexperienced workers and improve their longer term employability.

Government interventions in the form of wage subsidies, and other incentives such as tax or social security exemptions for a limited period for private sector employers who hire young people, can help raise labour demand during economic downturns. Evaluations show that time-bound and well designed, well-targeted subsidies can have a positive employment impact, especially when combined with training and work experience.

Promoting entrepreneurship, social enterprises and cooperatives can provide options for young people including during times of crisis if the current credit crunch and access to finance for SMEs and social enterprises can be overcome. This is one way to move forward.

Public Employment Programmes, especially in disadvantaged regions and communities, are widely being implemented as a last resort.

These all are areas with a large growth potential in Hungary and in other countries as well.

Our assessment shows that single measures are, however, likely to have a limited impact in the short-term - targeted packages of measures are more effective.Youth guarantee schemes are an example of packages of labour market measures and part of the EC proposal announced by Commissioner Andor a month ago .

The ILO has also contributed considerable preparatory work in this respect. Our assessment shows that youth guarantee schemes are more effective when they provide universal access to training or employment for a well-defined target group of unemployed or low-skilled. Well-designed programmes, with well-functioning delivery systems through employment services and local authorities, and targeted to low-skilled and disadvantaged groups, show good results including in the medium-term.

I am often asked but how much would these measures cost? And can we afford them? I am often tempted to reply by asking another question: What is the cost of inactivity, allowing long-term unemployment to grow and NEETs to finally disconnect from the labour markets and ultimately from society!! Can we afford these costs? No, we cannot, as they sow the seeds of social unrest and violence, destroying the hopes for social cohesion and sustainable economic growth, and thus generate risks for the European Social Model.

Let’s face it, these are much needed but remedial options in the present context of low aggregate demand and global slowdown. Our econometric research clearly shows the impact of macroeconomic determinants on youth employment: the higher the investment, the lower the youth unemployment rate, in both industrialized and low- and middle-income economies.

Confronting the youth employment challenge is an immediate and urgent responsibility – for governments, for employers’ organizations, for workers’ organizations and for civil society actors focused on young people. Successfully attacking the problem is not only a critical economic, social and human necessity but it is also a test of what kind of a society we are and want to be. The ILO believes that only through joint tripartite action can this battle be won.

Thank you for your kind invitation. I wish you all every success in your endeavours.