Credit Suisse-Youth Unemployment: Europe's Bigst Burden?

Submitted By BDBooker
Words: 1744
Pages: 7

Credit Suisse - Youth Unemployment: Europe's Biggest Burden?

Home > News and Expertise > News > Economy > Europe

Youth Unemployment: Europe's Biggest Burden?
Cushla Sherlock, Corporate Communications

If preventative action against youth unemployment is not taken quickly, Europe's youth may become a lost generation, experts cautioned at a Credit Suisse panel discussion on the topic during the World Economic Forum in Davos.

Youth unemployment is at staggering levels in the European Union. Every fourth young person in the region aged between 15 and 24 is unemployed, amounting to around 5.5 million young adults without a job. In Spain, recent employment data indicate that the number has risen to 60 percent, a new record. The figures serve as a blatant reminder of the fundamental problems within some of Europe's southern economies. "The real crisis we are going through is a labor crisis," Patrick De Maeseneire, CEO of Adecco Group, the world's leading staffing company, said during a Credit Suisse panel discussion on the topic at the World Economic Forum. "We expect conditions in Europe to remain challenging at least in the first half of 2013. The first hope that we have for Europe is in 2014." Paying the Price for a Lost Generation Compared to the average unemployment rate, youth unemployment is about twice as high in many European countries, reflecting the enlarge difficulties faced by young people in finding jobs. In Italy it is around three times higher and in Greece around 2.5 times higher. "Countries like Germany, where youth unemployment is only about 1.4 times as high, are better off because of apprenticeship programs and other youth unemployment initiatives," Christopher Pissarides, Professor at the London School of Economics and Political Sciences and 2010 Nobel Prize winner, told the audience in Credit Suisse's pavilion. The issue comes with a high price tag that Europe will likely be paying for many years to come. Patrick De Maeseneire, CEO Adecco Group

1 of 4

4/29/2013 2:19 PM

Credit Suisse - Youth Unemployment: Europe's Biggest Burden?

"Working creates a social status, a future and an income for people. It's a very sensitive issue for me because we are really losing a generation and this will have an impact on future generations too," De Maeseneire said. "We need to bring these youngsters into the workforce at whatever price." The "Scar" of Youth Unemployment The roots beneath youth unemployment are many and varied and it is a problem Europe has been struggling with since long before the onset of the sovereign debt crisis. Early school leavers are at particular risk. "Young workers have a handicap," Professor Pissarides explained. enlarge Starting out from school, they lack job experience and have not yet identified their own strengths. "They first have to go job shopping to find out what they are good at and what they enjoy," he said. But the inflexibility of labor markets in Europe makes test-driving jobs almost impossible for the masses of unemployed youngsters. "When they don't get a chance to experiment in jobs they end up being unemployed for too long and losing the talents that they learned before," Professor Pissarides warned. It's then that the knock-on effect occurs. "They become disillusioned, feel as though they're not wanted, perhaps decide to withdraw from the labor market completely or resort to violence – as we have seen in Athens and Madrid." Such a long stretch of unemployment leaves a "scar" on young people, which can affect their learning prospects and ability to find a job for years to come. Christopher Pissarides, Professor at the London School of Economics and Political Sciences Skills Mismatch Makes Matters Worse The movement of many manufacturing jobs to Asia has further crippled the numbers.