The dangers of continuing youth unemployment in Europe

Transcript for video with Professor Dr Michael Wohlgemuth

Why does youth unemployment continue to remain so high in Europe?

Professor Dr Michael Wohlgemuth:

I think there are two reasons. Obviously because there is almost no growth in the EU, especially in the eurozone. The European Commission has just reduced its forecast for GDP growth of this year to 0.8 per cent. And without a serious recovery, there will be no new jobs.

And the second reason is because many governments still shy away from labour market reforms. Others are just now beginning to implement some of those, but even then these take time to have an effect on labour demand.

So the problem is not only due to the economic crisis in the periphery of the eurozone. If you look at the figures before the introduction of the euro, you had youth unemployment in Spain of around 40 per cent, and in Greece around 30 per cent. So there has long been structural problems in these labour markets and that still needs to be addressed.

The longer people are unemployed, the more unemployable they become. How will European countries deal with this ‘lost generation’?

Professor Dr Michael Wohlgemuth:

Each country will have to find its own way to deal with it. But there are three points which I think apply to most.

First, the key is to open labour markets for newcomers, for young people, with less protection for the insiders. And that might imply to reduce dismissal protection and minimum wages for young job seekers.

Secondly, would be to offer on-the-job training for young people. And the German apprenticeship system might be a model for these other countries.

And a third option is to have a true European labour market with much more mobility.

Youth unemployment is not the same all over Europe, especially in Germany and Austria where the levels are rather low. And there is an increasing demand for skilled young labour.

And one can already see that something is already happening. There are so many young people from Spain, Greece and Portugal now trying to learn German – which is not easy to learn – and to also find jobs where they are. At least this is, I think, a good thing.

What are the long-term dangers of sustained high levels of youth unemployment?

Professor Dr Michael Wohlgemuth:

The danger is that there will be a ‘no future’ generation with all its frustrations and this can turn into either resignation or political radicalisation.

So the economic and political dimensions are both quite important. You see so many young people now with academic degrees who have no jobs, who are unable to live on their own and are forced to live at their parent’s place. They must be really frustrated.

One can also see across Europe young voters are really turning away from established parties towards radical alternatives – both on the left and the right. And these political movements promise very easy solutions, even more protectionism and more government spending, and therefore in the end the young generation might end up with too little income, and lots of debt – public debt and private debt.

So both economically and politically this can become very dangerous.

(photo credit:dpa)