Mobility in Europe 2012

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2 This publication has been prepared by the European Job Mobility Laboratory (EJML), which is a network of academics and labour market practitioners established to support the Commission s work in mobility issues by providing capacity for research and as a vehicle for testing and validating labour market interventions and experiences with policy makers and practitioners alike. The work is co-ordinated by a consortium of Applica Sprl (Brussels) and Ismeri Europa (Rome). For more information on the activities of the EJML see: The work of the EJML is supported by the European Union Programme for Employment and Social Solidarity - PROGRESS ( ). This programme is implemented by the European Commission. It was established to financially support the implementation of the objectives of the European Union in the employment, social affairs and equal opportunities area, and thereby contribute to the achievement of the Europe 2020 Strategy goals in these fields. The seven-year Programme targets all stakeholders who can help shape the development of appropriate and effective employment and social legislation and policies, across the EU-27, EFTA-EEA and EU candidate and pre-candidate countries. For more information see: Neither the European Commission nor any person acting on behalf of the Commission may be held responsible for use of any information contained in this publication. Editors Andy Fuller (Alphametrics Ltd., UK) & Terry Ward (Applica Sprl., Belgium). Researchers Duncan Coughtrie (Alphametrics Ltd); Erhan Ozdemir, Nirina Rabemiafara and Fadila Sanoussi (Applica Sprl). Expert contributors Labour movements between EU Member States Hermine Vidovic, The Vienna Institute for International Economic Studies wiiw (Austria); Timo Baas, University of Essen (Germany); Izabela Grabowska-Lusinska, University of Warsaw (Poland). Policies to promote youth employment Niels Ploug, Statistics Denmark (Denmark); Timo Baas, University of Essen (Germany); Manos Matsaganis, Athens University of Economics and Business (Greece); Ágnes Hárs, Kopint-Tárki (Hungary); Izabela Grabowska-Lusinska, University of Warsaw and Brian McCormick, Department of Social Protection (Ireland); Begoña Cueto Iglesias, University of Oviedo (Spain) European Union, 2012 Reproduction is authorised provided the source is acknowledged. November

3 Table of contents Executive summary... 5 European labour markets still in crisis: few signs of any turnaround... 5 Recent developments in labour movements between EU Member States... 6 Young people in the labour market... 9 Policies to promote youth employment...12 Youth transitions into employment...14 Section I: The labour market context for mobility European labour markets still in crisis: few signs of any turnaround The economic context...19 Employment developments since the crisis...21 The impact on different sectors of the economy...23 The impact on different groups in the population...28 Section II: Recent trends in labour mobility Labour movements between EU Member States recent developments Labour flows between the EU12 and EU15 during the crisis...34 Employment rates over the crisis period...36 Consequences of opening the German labour market to EU8 countries...38 Consequences of opening the Austrian labour market to EU8 countries...42 Movements of young people from Poland to the EU Section III: The situation of young people in the labour market Young people in the labour market Introduction...51 Changes in employment, unemployment and economic activity over the crisis period...53 The scale of youth unemployment...55 Economic inactivity among young people...61 Registration with the Public Employment Services...66 Education attainment levels of the young unemployed...70 The transition of young people into employment...74 The kinds of job taken by young people...81 Methods of job search...88 Concluding remarks on developments...93 Policies to promote youth employment Summary of case studies...95 Policies to promote youth employment: Germany Policies to promote youth employment: Denmark Policies to promote youth employment: Spain Policies to promote youth employment: Ireland November

4 Policies to promote youth employment: Greece Policies to promote youth employment: Hungary First transitions from education to employment Age of leaving education to find a job Women remain in education longer than men Education attainment levels Time taken to find a job Work experience Method of job search Annex November

5 Executive summary European labour markets still in crisis: few signs of any turnaround The difficult economic situation confronting Europe is well known. From the turn of the century until mid-2008, the European Union enjoyed a period of more or less continuous economic growth which underpinned an increase of nearly 10% in the number of people in work. However, by mid-2009, the downturn had taken hold across the European Union and the recessionary conditions experienced in almost all Member States resulted in large-scale job-losses and rising unemployment. Despite some respite in terms of some limited economic growth over the next two years there was little positive impact on labour markets. Indeed, in the year to mid both the employment rate and the unemployment rate continued to deteriorate and although there was an improvement in both rates in the year to mid-2011 the changes were slight. Moreover, any faint hope of recovery was soon wiped out as the economies of many Member States contracted again in the year to mid-2012 and GDP growth went into reverse. As a result, the situation in European labour markets is still extremely challenging and the very latest figures (3rd quarter of 2012) show that the seasonally adjusted unemployment rate has reached 10.6%, a new high in this century. The employment situation: sectoral trends and the prevalence of part-time jobs Prior to the crisis the number of people employed around the EU had been increasing steadily to the point where almost two thirds of people of working-age were in work. Developments over the subsequent four years to mid-2012 have seen the number in working-age people in employment fall by 4.8 million but this tells only part of the story. The number of people working full-time has actually fallen by much more (7.4 million) and the overall figure is only lower because of a continuous rise in the number of people working part-time (+2.6 million) over the period. The downturn was initially concentrated on the construction sector but as it spread, manufacturing was hit especially hard. The overall decline in employment between mid-2008 and mid-2012 was therefore driven by massive job losses in construction and in industry (combined total of 6.8 million), though jobs were also lost in basic services (1.4 million) and agriculture (0.3 million). However, these declines have been offset to some extent by gains in communal services (+3 million) and to a much lesser extent in advanced services (+0.3 million). The construction sector is the only one to have experienced a continuous and significant decline with nearly one in six jobs lost between mid-2008 and mid-2012 (- 15.7%). On the other hand, the majority of the declines in industry, basic services and agriculture took place before mid-2010 (or even mid-2009) and employment levels have since fluctuated. Meanwhile, the number of people employed in communal services has risen progressively over the four year period (+4.3%). This includes many public sector workers in areas such as health, education, and public administration and with austerity measures hitting public expenditure it is noticeable that the rate of job increases in the sector has slowed and there must be a concern that it may now start to contract. The advanced services sector, which covers areas such as information, communication and financial services, has grown most over the last two years (+2.9%) but as it accounts for only 7% of total employment it contributes only a limited amount to the level of employment overall. In the declining sectors it is full-time jobs that have gone and the basic services sector was the only one where a rise in part-time employment (+0.9 million) contributed November

6 significantly to offset the fall in full-time employment (-2.3 million). Even in the growth sectors, the number of full-time jobs created has been limited with the proportion of new part-time jobs exceeding the prevalent level of part-time employment in the sector in all cases. In fact, over the last year (mid-2011 to mid- 2012) the number of full-time jobs in communal services actually fell. It is clear, therefore, that even in expanding sectors employers remain reluctant to create (or even retain) full-time positions. The groups affected: young, male and low-skilled hit hardest The crisis hit some sectors more than others and this impacted directly on the characteristics of the workers affected. Although changes in the two years to mid differ from those in the previous two years, the groups faring the worst (or best) remain the same. The severe impact on construction and industry, where men dominate the workforce (over 75%), meant that men have been hit much harder than women. Indeed, men account for all of the 4.8 million fall in employment over the four years to mid-2012 and the number of women in work has not changed. Full-time employment declined for both men and women but whilst the numbers working parttime increased by around 1.3 million for both sexes, this increase was sufficient to cancel out the decline in full-time employment only for women. The jobs lost as a result of the crisis were concentrated among those under the age of 50. Indeed, the number of older workers (those aged 50-64) rose every year between mid-2008 and mid-2012 so that the number employed in this age-group was up by just over 5 million at the end of the period (+9.6%). Twice as many jobs were lost from the age-group (6.2 million) than the age-group (3.6 million) but as the latter is smaller, the decline in employment among the youth group was much more severe (-16.3% compared to -6.3%). In addition, any additional part-time jobs were concentrated among those over the age of 25. Job losses have also been concentrated among those with lower levels of education. Whilst the number of workers with tertiary level education (ISCED 5-6) rose consistently between mid-2008 and mid-2012, adding an extra 7.4 million (+12.8%), the number of workers with low (ISCED 1-2) or medium (ISCED 3-4) levels of education fell by 8.9 million (17.3%) and 3.4 million (3.1%) respectively. Although the situation of low-skilled workers is clearly of great concern, it should be noted that the crisis has simply exacerbated a longer-term trend as the number of workers with low levels of education has been in decline since Moreover, it is not just job-losses that have been concentrated in this group as any additional part-time jobs created during the period have been concentrated among those with at least upper secondary level of education. Recent developments in labour movements between EU Member States The chapter updates the analysis contained in the 2010 and 2011 Mobility in Europe reports on return or circular labour movements between the EU12 countries those that have entered the EU since 2004 and EU15 Member States and the effect of the removal in May 2011 of the 7-year restrictions in Germany and Austria on entry of workers from these countries. It also considers movements of young people in Poland who choose to look for their first job abroad rather than at home. Labour flows between the EU12 and EU15 during the crisis Before the crisis, there were large-scale movements from the EU12 into the EU15, especially after EU enlargement in 2004 and particularly to the UK, Ireland and November

7 Sweden, which removed restrictions on employment on workers from the new entrants. There were also major inflows from Romania and Bulgaria into southern EU15 countries. In Ireland since the onset of the crisis there has been a net outflow of young people under 25 back to the EU10 (countries which joined the EU in 2004). There has been little change, however, in the relative number of year-olds from EU10 living in Ireland. In the UK, a net outflow of those under 25 back to the EU10 in 2009 was followed by net inflows in both 2010 and A slowdown in net inflows of those aged from the EU10 in 2009 was also followed by increases in 2010 and In Sweden, small net inflows of both age-groups have continued. Austria also experienced small net inflows from the EU10 in 2010 and 2011 after a net outflow in 2009, though larger net inflows from Romania and Bulgaria. In Spain, the share in the population of those under 25 from Romania and Bulgaria has fluctuated since 2008 implying variable flows in and out. Net inflows of those aged 25-49, however, have continued though at a slower pace. This is also the case in Greece. In Italy, on the other hand, net inflows of both age-groups have continued over the crisis period at much the same rate as before. The same is true in Cyprus. Employment rates over the crisis period Before the crisis, there was little sign of inflows of workers from the EU12 causing problems in the labour market for those born in the countries concerned. This is also the case over the crisis period in half the 8 countries which experienced the largest inward movement of workers. In Ireland, Spain, Italy and Sweden, therefore, the employment rate of those aged born in the country declined by less over the period than for those born in the EU12, or in the case of Sweden, increased slightly while those of EU12 nationals fell. In the other countries, the picture is less clear. In Greece, the employment rate of native-born Greeks declined by more than for those born in Bulgaria and Romania. In Cyprus, Austria and the UK, the employment rate of those from the EU12 rose between 2007 and 2011 while that for those born in the country declined, or in the case of Austria, rose by less. In all four cases, it is not necessarily the case that workers from the EU12 have suffered less from the crisis than native workers. Instead, those losing their jobs may have returned home to be replaced by others entering with jobs to go to. Consequences of opening the German labour market to EU8 countries There was much concern in Germany that the removal of the restriction on labour inflows from the EU8 (the mainland countries entering the EU in 2004) would drive down wages, especially in sectors where temporary agency work (a means of avoiding collective agreements) is common. Partly in response, regulations were tightened up on such work and a minimum wage was applied. In the event, there were marked inflows of workers from the EU8 into temporary agency work sectors as well as into construction, manufacturing and hotels and restaurants. In total, there was a net inward movement from the EU8 of over 100,000 in the first year after the removal of restrictions, 60,000 more than the year before. Most came from Poland but there were also large inflows from Hungary and Slovakia. This is perhaps because of the effect of the crisis there coupled with the favourable labour market conditions in Germany, which may have increased the scale of November

8 movement. Nevertheless, the increase in net inflows was in line with the lower range of previous projections. Since new arrivals are substitutes for migrants already living in the country, economic theory suggests that the opening-up of the labour market could lead to an increase in unemployment among EU8 nationals, which indeed has occurred, though on a small scale. The inflows, however, have not led to any obvious distortions of the labour market, most workers entering relatively prosperous parts of Germany with good labour market conditions. Overall, they have tended to smooth out labour market imbalances, reducing labour supply in places where jobs are scarce and increasing it in places where there are labour shortages. Consequences of opening the Austrian labour market to EU8 countries Following removal of restrictions in May 2011, the number of EU8 nationals working in Austria increased rapidly in the first 4 months but then more slowly, so that the rise was much as expected (34,400 in the first year, 78% due to removal of restrictions). Two-thirds of the new entrants were in the east of the country, close to their own countries. The increase raised the number of EU8 nationals working in Austria to around 105,600, 63% of whom were men, 35% commuters, 40% from Hungary and 25% from Poland. Many had at least upper secondary education and were overqualified for the jobs they took up. Indeed, many of the jobs taken by EU8 migrants are seasonal and/or marginal. To improve the recognition of qualifications, the social partners and PES in Austria, Slovakia, the Czech Republic and Hungary launched the Jobtour crossborder initiative, which is co-financed by the ERDF, to provide information on 150 vocations. Almost 75% of the increased employment of EU8 nationals in the year to April 2012 was in construction, temporary agency work, tourism, distribution and manufacturing. There is little evidence of the increased inflows pushing wages down or worsening conditions of employment or increasing unemployment. Longer-term consequences remain unclear and will depend on the economic situation in both Austria and the EU8 countries. Movements of young people from Poland to the EU15 Around 63% of those who have moved from Poland since EU entry were under 30, many of them university graduates finding a first job abroad and many remaining in the country of destination rather than returning after a year or two. Many graduates are over-qualified for the jobs they take up, which are often routine, manual and lowskilled. A number of factors contribute to this they look for jobs on the spot and rarely use employment agencies; their command of the language is often poor; and their qualifications are often in subject-areas for which demand is limited. The UK has been a favourite destination since EU-entry, especially for the young and better educated, which can be divided into three groups. The first are recent graduates of British universities, 80% of whom remained in the UK. There are a number of reasons for this, including the fact that they can earn more, often have loans from British banks, in some cases need to work for a time in companies which have financed their studies, may find their degrees not recognised in Poland or find it difficult to work there because of the culture in the work place. The second group are recent graduates of Polish universities, some of whom may have taken up low-skilled jobs on arrival, but whose overall aim was to develop their careers abroad, perhaps by first improving their qualifications through further November

9 education or training in the UK. Others, however, might have been seeking to earn enough to invest in Poland before returning. The third group are those from poor towns or villages, forced to move because of a lack of opportunity at home, who have learned English at school and who might be able to count on support from social networks in the UK. Young people in the labour market The youth unemployment rate - defined as the proportion of those aged who are in the labour force and unemployed in the sense of actively looking for a job has been consistently above 20% in the EU since the financial and economic crisis led to large-scale job losses in Excluding Germany, which has succeeded not only in keeping unemployment down but reducing it, youth unemployment has risen to over 25% and shows little sign of coming down in most countries. In Greece and Spain, it is now well over 50% and in Italy, Ireland and Portugal, around 35%. These figures tend, on the one hand, to exaggerate the problem since in many countries only a minority of young people under 25 are in the labour force, most being in full-time education or vocational training. On the other hand, they understate the problem since many young people unable to find a job have withdrawn from the labour force or delayed their entry to the labour market and have returned to, or remained in, education or training instead. Moreover, large numbers are neither in the labour force nor in education or training. They are not employed or studying to improve their chances of finding a job. The fact that in many countries unemployment among other age groups has risen as much as those under 25 has tended to mean that policy attention has focused on the unemployed as a whole and not specifically on the young, as indicated by the review of policies in selected countries summarised below. Although much of the rise in youth unemployment has been among those with inadequate qualifications, there has also been a big increase in those who are relatively well qualified, including among university graduates. This poses new challenges for policy and the PES. The additional challenge is to help the people concerned not only to find jobs but jobs which are full-time rather than part-time and permanent rather than temporary. Moreover, these challenges are often being faced in the context of cutbacks in budgets. Unemployment among those aged Although the youth unemployment rate is defined to cover those aged 15-24, the great majority of those aged under 18 are in full-time education or training throughout the EU. The few who are not tend to have inadequate qualifications for finding a stable job. Unemployment, therefore, is high among them though this was also the case before the crisis unemployment rates being around 40% or more in 13 of the 27 EU countries. However, they account for less than 9% of the total unemployed under 25 in the EU and 5% or less in many countries. In most cases, moreover, the appropriate policy response for this group is straightforward to help them acquire adequate qualifications. The main problem therefore relates to those aged 18 and over, who may have completed upper secondary education, an initial vocational training programme or even a university degree course. Unemployment rates among these had reached close to 25% in both the EU15, excluding Germany, and the EU12 in 2011, and were around 45% in Greece and Spain. The high rates in some countries, however, again tend to exaggerate the numbers affected because most young people are not in the labour force and those that are include a disproportionate number of drop-outs from the November

10 education system. In terms of population in the age group rather than those in the labour force, therefore, the unemployment figures are much lower. Nevertheless, unemployment still averaged over 10% of those aged in the EU and over 13% in the EU15 excluding Germany (where the figure is only 5%), and reached 25% in Spain and 19% in Greece. Unemployment was lowest in relation to population in three countries Germany, Austria and the Netherlands where participation in the labour force was relatively high, mainly because education and training is combined with work experience. Although unemployment in the group has historically been higher among women than men, the concentration of job losses during the crisis on manufacturing and construction has meant that in the EU as a whole unemployment of men has risen above that of women. This is the case in most EU15 countries but In EU12 countries the rise in unemployment of women has, on average, been much the same as that of men and in Poland, it was larger. In 2011, men accounted for 56% of the unemployed in the age group in the EU, more than before the crisis (53%), and close to 60% in the EU12, largely because of a lower participation rate among women. Education and training received by those aged On average, only around a quarter of the unemployed in the age group across the EU receive education or training and in many countries the figure is less than 20%. The only countries in which more than half were involved in some form of education or training in 2011 were Denmark, Finland, Sweden and the Netherlands. The number of young people in this age group not in the labour force has risen over the crisis period in nearly all countries, in some (Ireland, Spain, Latvia and Slovakia, in particular, substantially), in most, though less in the EU12 than in the EU15, reversing the trend towards increasing participation before the crisis. While most of the economically inactive in this age group were in education or training, this was far from universally the case. In the EU as a whole, around 7% of those aged were inactive and not receiving education or training in 2011, which together with the 9% who were unemployed and similarly not in receipt means that 16% of the age group were NEETs not in employment or in education or training1. This figure rises to 29% in Bulgaria and 24% in Greece and was over 20% in Spain, Italy, Ireland and Romania. At the other extreme, it was only around 7-8% in Denmark, Austria and Slovenia and 4-5% in Luxembourg and the Netherlands. The number of NEETs in the age group has risen over the crisis period, mainly because of the increase in the number of unemployed which has not been matched by a parallel increase in their participation in education or training. Only in Germany, Luxembourg, the Netherlands and Austria did the number decline between 2007 and 2011 as a share of those aged On average, just over 40% of those in the EU in 2011 who were inactive and not in education or training cited caring, family or personal responsibilities as reasons for not looking for work and 15% disability or illness, together accounting for 4-5% of the age group. Only in Bulgaria and Romania did a significant proportion (just over 4% of the age group in both cases) report not looking for work because they believed that no jobs were available. Despite the crisis, in all other countries the number of young people of this belief was less than 1% of the age group. 1 It should be noted that the measurement of NEETs here uses all the information in the Labour Force Survey, and not just for those participating in education or training during the four weeks preceding the survey, to identify those receiving education or training. November

11 Registration at Public Employment Services In the EU as a whole, 61% of the unemployed aged were registered with public employment services (PES) in 2011 although there are significant variations between countries. The implication is that a substantial number of young unemployed - around half or more in 11 Member States are not being helped by the PES to find work. Around 16% of the inactive not in education or training were also registered, suggesting that they were looking for work but not actively enough to be recorded as being unemployed. In addition, some of those already in work were registered, so that overall, the unemployed in the sense of those actively seeking work made up only around 60% of those aged registered with the PES. The figure was much higher in the EU12 (almost 80%) than the EU15 (59%), while it was less than 40% in Belgium, Austria and Italy, where most of the young people registered with the PES were not recorded by the LFS as actively seeking work. Education attainment levels of the young unemployed The difficulty among those aged to find work during the crisis is by no means confined to the low qualified but extends to the more highly educated too. The unemployment rate of young people with a university degree or equivalent increased over the crisis period in the EU by 6 percentage points to 17% and by much more in many EU12 countries as well as in Greece and Spain. The more important rise, however, has been among those with only basic schooling, particularly in Spain, Ireland and Lithuania and amongst men. This group made up around 40% of all unemployed in the age group in 2011, while those with tertiary education accounted for only around 10%. Nevertheless, those with at least upper secondary education i.e. those who, as a minimum, had completed a programme of education or training of at least 3 years after compulsory schooling made up the majority of the unemployed in the age group in the EU as a whole and in most countries. This has obvious implications for the type of support which is likely to be effective to help the young people concerned into employment. For most of the unemployed in most countries, it is not simply a matter of giving them the opportunity to acquire qualifications as such. This is even more the case for those aged 25-29, for whom on average those with tertiary qualifications made up over a quarter of the unemployed in the age group. The transition from education into employment The crisis has significantly lengthened the time it takes young people to find a job. In the EU as whole, around a quarter of those aged enter the labour market each year and attempt to make the transition from education into employment. In 2007, around 77% of these managed to find a job in the course of a year but in 2011 this figure had reduced to 70% and in some countries considerably less. The increasing difficulty of finding a job is as evident among those with tertiary education as among those with lower levels. Nevertheless, it was still the case in 2011 that a much smaller proportion of the unemployed with tertiary qualifications (17% on average in the EU) had been looking for a job for over a year than among those upper secondary education (28%) and even more so than those with only basic schooling (40%). The kinds of job taken up by young people A significant proportion of those aged who are in work are employed in temporary jobs. This proportion declined slightly in the initial year of the crisis as those in such jobs tended to be laid off first but has since risen to nearly 39% in 2011 as employers have been reluctant to take people on under permanent contracts. The situation was quite different in the EU15 (35% excluding Germany where around 54% November

12 worked in such jobs) and the EU12 (just over 13%) but in the latter a substantial number worked as self-employed or as family workers (19% on average, 5% in the EU15), who in most cases were in a similarly precarious position as those working as employees on a fixed-term contract. Taking the two situations together, just over 45% of young people in the EU were working in precarious employment in 2011 and this figure is significantly higher for those moving from unemployment into work, 64% of whom work on a temporary contract or as self-employed. The main reason for young people being employed in a temporary job varies. In Germany, Denmark and Austria the majority were on a training contract but elsewhere the main reason was most often that they had been unable to find a permanent job. Many young people also move into a part-time rather than a full-time job when they make the transition from unemployment to work. The relative number has risen over the crisis period, in some countries, markedly. On average in the EU, just over a quarter (26%) of those aged making this move between 2010 and 2011 went into a part-time job compared to a fifth (20%) of those making the same transition 4 years earlier. Methods of job search In 2011, just under 60% of the unemployed aged in the EU made use of the PES to look for a job, the proportion varying considerably between countries and generally being larger in the EU12 than in the EU15. This is broadly in line with the proportion registered with the PES, described above, but much less than those who studied adverts, asked friends, relatives or associates or applied directly to employers (the three most common methods). Private employment agencies were used by less than a quarter of young unemployed, though more often in the EU15 than in the EU12. Although the PES are commonly cited as being used to help look for a job, relatively few of those who succeeded in finding a job over the year before the 2011 survey reported the involvement of the PES in their placement. Only 8% did so in the EU as a whole, the proportion being slightly higher in the EU12 than in the EU15 (in line with the use of the PES for job search). Changes over the crisis period were mixed, with the proportion reporting PES involvement increasing or decreasing in around half of countries each. Policies to promote youth employment Six countries with differing experiences over the crisis period were chosen to examine the policy response across the EU to youth unemployment: Germany, where unemployment has fallen over the period; Denmark, historically a country of low youth unemployment where it has risen; Spain and Ireland, which have been among the worst affected by the crisis; Greece, which has been hit hardest of all; and Hungary, where unemployment is high among the few young people economically active. Denmark is the only one of the six where major initiatives have been specifically focused on young unemployed. In Ireland, Spain and Greece, measures have been targeted largely at the unemployed in general and the long-term unemployed especially, though with some focus on young unemployed in some recent measures. In Hungary, youth unemployment was not considered a priority until very recently and no measures have been introduced, though some are now under consideration. In Germany, success in reducing youth unemployment is partly due to the dual system and efforts to give every young person access to suitable education/training to November

13 prepare them for working careers, but mainly to the competitive strength of the economy and the jobs created as a result. The role of the PES In Germany, the PES provides a range of support services, including a guarantee of an apprenticeship, training place or job for every young unemployed. In Denmark, the PES manages the new measures for assisting young people. In Ireland, the Pathwaysto-work initiative encourages an individual relationship between the PES and the unemployed, with profiling to assess their chances of finding work and identify the best way of getting them into employment. In Spain, new legislation was initiated in 2011 with a similar aim, though cutbacks in the PES budget have made it difficult to ensure more personalised support. Partly in response, legislation in 2012 strengthened the role of private employment agencies to complement the PES. In Greece, the role of the PES in assisting the young has not changed much and budget constraints limit PES activities. In Hungary, PES activities also remain limited in terms of the number of young people assisted and support provided. Education and training programmes In Germany, vocational training was increased after the crisis hit and career start advisers were introduced in schools in In Denmark, education is seen as the main means of combating youth unemployment, with a focus on reducing school dropouts, helping the unemployed aged to obtain suitable qualifications and improving access to apprenticeships. In Ireland, the Pathways-to-work initiative is focused mainly on training, as are the recent measures introduced in Spain. In Greece, there is a focus on improving the link between the education and training provided and labour market needs (e.g. by establishing career and entrepreneurship centres in universities and training institutes and organising work experience places in companies). Training vouchers for acquiring basic ICT skills have also been introduced. Apprenticeships In Germany, apprenticeships remain central for preparing young people for vocational occupations, as they do in Denmark, where they were strengthened in 2009 by the Ice-breaker initiative to encourage firms to take on university graduates as apprentices in the crisis. In Greece, a one-year subsidy was introduced for employers taking on year-olds as apprentices. In Ireland, a scheme was introduced in 2010 to subsidise employers taking on apprentices made redundant so that they could complete their on-the-job-training. In Spain, the new training contract for those aged with no qualifications (plus those of so long as unemployment is over 15%) combines training with work experience, with employers entitled to reduced social contributions. In addition, a law was introduced in Autumn 2012 laying the foundations for the progressive implementation of a dual scheme. Specific programmes for early school leavers In Ireland, the Youthreach programme, established in 1989, provides basic skills training and practical work experience. In Spain, the Initial Vocational Qualification programmes (PCPI), provides training to prepare early school leavers for regular VET courses. Employment incentives In Denmark, new initiatives were introduced in November 2012 to help young graduates into work, including increased subsidies to SMEs for hiring them and November

14 funding for public authorities providing jobs, e.g. in schools and hospitals. In Ireland, both the Pathways-to-work programme and the JobBridge scheme, launched in 2011 for two years, fund work experience. In Spain, the Contrato de apoyo a emprendedores, introduced in 2012, subsidises SMEs to take on the unemployed through reduced social contributions (for three years if they are aged 16-29). In Greece, wage subsidies were recently introduced for employers taking on unemployed university graduates together with more general subsidy schemes, in the form of reduced social contributions, for employers taking on the unemployed. In Hungary, the Start Card scheme, introduced in 2006, subsidises employers taking on education leavers aged under 25 for 11 months. The PES is involved in running several wage subsidy measures, introduced in response to the crisis, aimed at the unemployed generally. Support for entrepreneurship In Greece, schemes have recently been introduced to help the young unemployed set up in business: one aimed at those aged 22-32, another for graduates under 34, and a third for young people starting an agricultural business. In Spain and Germany, start-up schemes exist for the unemployed more generally, with relatively few of those supported being under 25. In Hungary, proposals have been made for a scheme aimed at those aged though nothing has so far been introduced. Youth transitions into employment The 2009 European Labour Force Survey included a special module on the transition of young people into employment, which collected details from those aged of the age they left the education and training system and their experience in finding a job. The analysis focuses on the experience of those who made the transition at some point during the period , which was a period of widespread economic growth and significant net job creation across the EU. Any difficulties experienced during this relatively favourable period for starting a working career are, therefore, likely to be magnified in most countries in the present post-crisis period of limited or no job creation. Age of leaving education to find a job The age at which young people leave the formal education and training system to enter the labour market varies greatly across the EU. Over the period , on average, around one in 40 left before they were 15, but one in 12 in Bulgaria and Romania and hardly any in Germany, the Netherlands and Poland. Similarly, over 20% left before the age of 18 but the figure ranged from almost half in Malta and 43% in the UK to under 10% in Germany, Lithuania, Poland and Slovenia and was generally much less in the EU12 (under 15%) than in the EU15 (22%). In nearly all countries, men are more likely than women to leave the education system before they reach 18 (23% as against 18%), especially in the south of Europe (40% against 26%). Malta and the UK apart, most young people make the transition between the ages of 18 and 24, around 32% of between 18 and 20 and 30% between 21 and 24. In some EU12 countries (Czech Republic, Slovakia, Bulgaria and Romania as well Malta), 60% or more had left education before reaching 21. In the EU15, this was only the case in Austria and the UK. By contrast, 60% or more were 21 or older before they left in Poland, Cyprus and Slovenia in the EU12 and Luxembourg, the Netherlands, Portugal and Denmark. November

15 In most countries, most of those remaining in education after 20 left before reaching 25. Nevertheless, in Denmark, Germany, Italy, the Netherlands, Portugal, Finland and Sweden in the EU15 and Poland and Slovenia in the EU12, around a quarter or more remained in education after 25, in Denmark 45%. By contrast, in France, the UK, Romania, Slovakia and Malta, less than 10% remained in education after 25. Education attainment levels The differences in the age of leaving education are not reflected in similar differences in the qualifications obtained. On average, almost half of those leaving before 18 did so without obtaining upper secondary qualifications. In the UK, where over 40% left before 18, the figure was only 22%, in Malta, where even more left before this age, it was over 75%. In the UK, therefore, almost two-thirds of young people with upper secondary level qualifications had left education by the age of 18, as compared with an average of under a quarter in other countries and under 15% in most. Most of those leaving education between 18 and 20 did so with upper secondary qualifications, only 8% doing so with no qualifications and under 5% in most countries. In Portugal, however, the figure was over a third, so that 58% of those leaving education before 21 had only basic qualifications. Most of those leaving education between the ages of 21 and 24 (three-quarters on average) did so with a university degree or equivalent. Almost all the rest left with upper secondary qualifications and under 2% with no qualifications at all, though in Portugal, the figure was 8%. In Germany, over two-thirds left with upper secondary qualifications and in Denmark, around 55%. In Germany and Denmark, therefore, it took longer for people to obtain a university degree than in other parts of the EU. In Denmark, 77% of those with tertiary qualifications left education at the age of 25 or older and in Germany, 66%. The figures were also high (55-62%) in Austria, Finland, Sweden, Italy and Slovenia. Elsewhere, people tended to obtain university degrees at a younger age (only a quarter or less of graduates left education after 25 in the rest of the EU15 and a third in the EU12). In sum, differences in education and training systems means that young people make the first transition into the labour market at very different ages across the EU. Time taken to find a job Over the three years 2004 to 2006, around half of those leaving education in the EU found a job in less than 3 months and another 7% within 6 months, but for over a third it took over a year and for 20% over two years. The proportion finding a job within 3 months, however, ranged from 70-75% in the Netherlands, the UK and the Czech Republic to below 30% in Italy and Greece. In the latter two countries over half took more than a year and only slightly fewer in Spain, Bulgaria and Romania. The time taken to find a job tends to decline with age, especially in the EU12. In the EU15, the proportion finding a job within 6 months of leaving education was just over 40% for those aged 18, 55% for those aged and 63% for those aged Figures for the EU12 were 31%, 46% and 66%, respectively. In some countries, however, the time between leaving education and starting a job varies relatively little with age. In the Netherlands and the UK the time is relatively short for all groups whilst in Greece and Italy it is comparatively long. There is, in general, relatively little difference in the time taken by men and women to move from education into employment. November

16 The type of job found For a significant number of young people (just over a third in the EU12, 30% in the EU12), the first job they move into from education or training is a temporary one or a permanent but part-time one. In addition, some 5% in both the EU15 and EU12 became self-employed, which for many involves working for a single employer and is just as precarious as a fixed-term job. In the EU12 a further 4% became unpaid family workers in small agricultural holdings or small shops. There is relatively little difference in the types of job that people move into between those leaving education later as opposed to earlier, except in the EU12 where many more became family workers if they left school before 18. In the EU15, the proportion taking up a temporary job ranged from over 60% in Spain and over 55% In Portugal to only around 10% in Austria and the UK. In the EU12, it varied from almost half in Poland to only around 6% in the three Baltic States and 3% in Romania. The number becoming self-employed was relatively high in both Greece (10%) and Italy (15% and over those leaving after 20), most of the people working on a contract basis for a single company, primarily to save the latter the costs of employing people under standard contracts. In Greece also, a significant number (9% and 15% of those leaving before 21, 20% for men) became family workers. In both countries, therefore, only around half of those leaving education moved into a permanent job. In both Bulgaria and Romania, 11-14% of men leaving school before 18 became selfemployed, while in Romania a further 44% of men together with 57% of women became family workers. Accordingly, in Romania, under 40% of those leaving school before 18 and going into employment took up a permanent job. This was equally the case in Portugal and in Sweden, where the figure was only slightly over 40%, while in both Spain and Poland, the proportion was around a quarter. In addition, many of the permanent jobs taken up were part-time, especially for women, though much more in the EU15 (22% of women moving into permanent jobs) than the EU12 (4%). The proportion was particularly large in the UK, Sweden and, above all, the Netherlands (46%). The proportions were even larger for temporary jobs (29% for women in the EU15 46% in Sweden, 59% in the Netherlands 14% in the EU12). Fewer men than women went into part-time jobs, though the proportion was still significant in the case of temporary employment (14% in the EU15, 10% in the EU12), especially in Ireland (23%), Sweden (26%), Cyprus (28%), the Netherlands (34%), Malta (50%) and, above all, in Slovenia (62%). Work experience Just over half of young people in the EU, though more in the EU15 (59%) than the EU12 (39%) reported having had some work experience during their formal education or training. This was the case for 80% or more in Denmark, the Netherlands, Austria and Finland and 70% or more in France and Sweden. In the EU15 the figure was below 40% only in Spain, Portugal and the UK (where many left school before 18 without the chance of work experience). In the EU12, the figure was less than 40% in half the countries but over 60% in Cyprus and only just below in the Czech Republic and Slovenia. Having work experience tended to reduce the time taken to find a job. In the EU15, over two-thirds of those with such experience (68%) found a job within 3 months of leaving education as against less than half (46%) of those without and the difference was even wider in the EU12 (80% and 52% respectively). This difference is equally evident for those leaving education at different ages. November

17 Methods of job search Relatively few young people (just over 5%) reported using the Public Employment Service (PES) as the main method to help them find a job. The most common methods used were family or friends (30%) and applying directly to employers (28%). Use of the different methods of job search varies to some extent with the age at which people make the transition from education to employment. More of those leaving education before 18 reported relying on family and friends than those leaving later. Slightly more of those leaving before 18 also reported using the PES as the main method in the EU15 but the reverse was the case in the EU12. November

18 Section I: The labour market context for mobility The Mobility in Europe report aims to present an analysis of the current situation and trends around mobility related issues in the European Union in a way that will feed and stimulate debate amongst labour market policy makers and actors. Each year the first section of the report is a general analytical section giving an overview of some key issues and trends in the labour market which set the context for mobility. This year the focus is on the impact of the recession on the structure of labour markets around Europe and to see if there are any signs of recovery. The analysis investigates where jobs have been lost or gained, the types of jobs affected, and the impact on different groups of workers. November

19 European labour markets still in crisis: few signs of any turnaround The economic context From the turn of the century until mid-2008, the European Union enjoyed a period of more or less continuous economic growth. This underpinned a steady increase in employment with the result that just over 19 million jobs were created over the period. This additional capacity in the labour market was filled through a reduction of 4 million in the number of unemployed and an increase of 15 million in the active population. The jobs created resulted in the number of working-age people (15-64) in employment rising by 9.7% but because the population of this age group also grew by 11 million over the period there was a much smaller impact on the employment rate, which rose by only 3.8 percentage points to reach 65.9% 2. By mid-2008 the number of people employed around the EU had reached million but at this point the impending downturn in the economy had become all too evident. Indeed, within a year real GDP had fallen by just over 5.6% for the EU as a whole (Q2 in 2009 compared to Q2 in 2008), reflecting declines in output in almost all Member States. As a result, the employment rate fell from 65.9% to 64.7% and the unemployment rate rose from 6.9% to 8.9%. Whilst there was significant economic growth in the subsequent 12 months, the employment rate continued to fall and the unemployment rate continued to rise albeit at a slower pace than during the previous year. Economic growth persisted through to mid-2011, but at an inferior rate, whilst the employment rate rose slightly (64.2% to 64.5%) and the unemployment rate fell slightly (9.6% to 9.4%). However, this improvement was not to last and real GDP fell by 0.7% between mid and mid-2012 as economic activity contracted in just over half of Member States and the rate of growth also slowed in those where it was still positive. This caused both the employment rate and unemployment rate to worsen again (reaching 64.3% and 10.4% respectively). The economic situation therefore remains precarious and offers little hope for a swift recovery in the labour market. Figure 1 Change in real GDP compared to the same period in the previous year (%), EU-27, 2000Q2-2012Q2 Source: Eurostat, National accounts (online data code: namq_gdp_k) Note: Data not seasonally adjusted 2 All figures in this document refer to the age group unless otherwise specified. November

20 Figure 2 - Employment rate (%), EU-27, 2000Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_ergan) Figure 3 - Unemployment rate (%), 15-64, EU-27, 2000Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_urgan) Despite worsening labour market conditions in terms of falling employment and rising unemployment since mid-2008, the activity rate in the EU has continued to rise more or less constantly from 70.8% to 71.8% in mid-2012 (Figure 4). This suggests that increasingly difficult conditions have not put people off wanting to work. Indeed, the combined effects of financial concerns causing people to delay retirement and policies to promote longer working lives in order to combat the economic impact of an ageing population are keeping people in work longer and therefore boosting activity rates amongst the older age groups in particular. Activity rates have not risen in all countries, however, with declines being observed in eight countries, most notably in Ireland where the activity rate of persons aged fell from 71.9% to 69.6%. Figure 4 Population by status and activity rate (%), 15-64, EU-27, 2000Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data codes: lfsq_argan, lfsq_egan, lfsq_ugan, lfsq_igan) November

21 Employment developments since the crisis In the run up to the crisis the number of people in employment had been increasing substantially. Between the second quarter of 2007 and the same period in 2008 the total number of people employed in the EU increased by 1.2% - equivalent to an extra 2.6 million (Figure 5). Then in the following year, as the initial impact of the crisis struck European labour markets, a total of 3.6 million jobs were lost leading to a decline in employment of 1.7% by the second quarter of This decline continued into 2010 as the number in employment fell by another 1.2 million. There was some recovery between 2010 and 2011 but this was short lived and further job losses occurred into Overall, there were 2.2% (4.8 million) less people in employment by the second quarter of 2012 than in the same period in Figure 5 Change in employment, 15-64, EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) The fall in employment, occurred at very different rates across the Union. In mid-2012 there were only nine countries where the numbers in employment were higher than four years earlier (Figure 6). In Germany and Poland as well as in the smaller economies of Luxembourg and Malta, there was no decline in employment at all during this period. Meanwhile, declines in employment in Belgium, Cyprus, Austria, Hungary and Sweden in particular periods were offset by more substantial gains in others. The differing rates of job loss were partly a reflection of the differing rates of decline in output but also of the differing extent and scale of the measures adopted to protect jobs (e.g. short-time working arrangements). They were equally a reflection of very different expectations about how severe the recession was likely to be and about the timing and pace of any subsequent upturn. Figure 6 - Change in employment (%), 15-64, 2008Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data codes: lfsq_egan) November

22 Total employment conceals an important change in the structure of employment. Since mid-2001 there has been a notable rise in the contribution of part-time employment from 15.7% of total employment to 19.3% by mid-2012 (Figure 7). The most dramatic increases (more than 6 percentage points) have mainly taken place in central and northern Member States (BE, IE, LU, NL and AT) and Italy where, in general, part-time employment was already significant. Meanwhile, part-time employment has fallen among a number of Eastern European Member States (BG, LV, LT, PL and RO) where, in general, its importance has been more limited. Whilst the importance of part-time employment has been increasing since mid-2001 the rate of change has varied. Between mid-2004 and mid-2008, in the lead up to the crisis, the rate of change flattened out. However, as the effects of crisis took hold the relative importance of part-time employment began to increase again (Figure 7). Figure 7 - Part-time employment (% of total employment), 15-64, EU-27, 2000Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_eppga) This increasing incidence of part-time employment since mid-2008 reflects the fact that the crisis affected the number in full-time and part-time employment very differently (Figure 5). By mid-2012, there were 7.4 million less people in full-time employment (-4.1%) than four years earlier but 2.6 million more in part-time employment (+6.7%). Not surprisingly, since it accounts for more than 80% of all employment, changes in full-time employment follow a similar pattern to changes in total employment with significant declines between the second quarters of 2008 and 2010 (6.2 million), followed by a brief rise in the year to the second quarter of 2011 (0.5 million) and then a renewed decline to the same period in 2012 (1.7 million). However, in stark contrast, the numbers of people engaged in part-time employment rose by an average of 0.6 million each year throughout the period 2008 to 2012, offsetting some of the decline in full-time employment. To some extent the destruction of full-time jobs as opposed to part-time ones relates to the nature of the recession and its effect on particular sectors of activity. The economic downturn was very much concentrated initially on the construction and then on other sectors in industry and these are characterised by a predominance of full-time jobs. On average, less than 7% of employment in these sectors is part-time. At national level, the share of part-time employment rose between the second quarters of 2008 and 2012 in all Member States except Sweden and Poland (Figure 8). This demonstrates that the increase is not solely concentrated among countries where part-time work was already relatively common. Between the second quarter of 2008 and the same period in 2012 the number of people employed part-time grew in all EU countries except three (PL, SI and SE), whilst the number in full-time jobs fell in all November

23 but five countries (DE, LU, MT, PL and SE). In Germany, Luxembourg and Malta, where employment grew overall, more part-time than full-time jobs were created. The main contributors to the decline in full-time employment in Europe between mid and mid-2012 include Spain (-3.2 million), Italy (-1.0 million), Greece (-0.8 million) and the United Kingdom (-0.8 million) whilst the main contributors to the rise in part-time employment include Germany (0.6 million), Italy (0.5 million), and the United Kingdom (0.4 million). Even though the contributions of smaller Member States are less significant in gross terms, the relative changes have been quite dramatic in some cases. Part-time employment rose by more than 50% in Estonia, Hungary and Slovakia and by more than 20% in four other countries (CY, LV, LT and LU). Figure 8 - Part-time employment (% total employment), 15-64, 2008Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) The impact on different sectors of the economy The economic downturn, initiated by the crisis in international financial markets, was concentrated initially on the construction sector, which had over-expanded in a number of EU countries. As the recession spread to other sectors, it hit manufacturing especially hard, most notably the investment and production goods industries as expenditure on capital equipment and durable goods, which can most easily be postponed, was cut back. As would be expected, therefore, the 4.9 million decline in employment between mid and mid-2010 stemmed almost entirely from job losses in industry (-3.8 million), construction (-2 million) and basic services (-1.5 million), declines that were only partially dampened by an job gains in communal services (+2.1 million). Changes in other sectors were much less significant (Figure 9). Between mid-2010 and mid-2012 the picture was more mixed with numbers in employment remaining almost unchanged. During the first year of this period, total employment rose by one million. This was mainly due to further job gains in communal services (+0.7 million). However, notable contributions were also made by basic services (+0.5 million), industry (+0.3 million) and advanced services (+0.3 million). These were slightly offset by continued declines in construction as well as in agriculture (both fell by 0.4 million). In the second year, as parts of Europe entered a double dip recession, total employment fell by 0.9 million. This stemmed primarily from continued falls in employment in construction (-0.5 million) but also a renewed decline in industry and basic services (both fell by 0.4 million). November

24 Box 1 - Sectoral aggregation Data on sectoral changes are based on the NACE rev.2 classification system. To simplify the analysis some 1-digit sectors were aggregated into groups as follows: Aggregates NACE rev.2 1-digit sectors Agriculture Industry (except construction) Construction Basic services Advanced services Communal services A - Agriculture, forestry and fishing B - Mining and quarrying C - Manufacturing D - Electricity, gas, steam and air conditioning supply E - Water supply; sewerage, waste management and remediation activities F construction G - Wholesale and retail trade; repair of motor vehicles and motorcycles H - Transportation and storage I - Accommodation and food service activities R - Arts, entertainment and recreation S - Other service activities T - Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use U - Activities of extraterritorial organisations and bodies J - Information and communication K - Financial and insurance activities L - Real estate activities M - Professional, scientific and technical activities N - Administrative and support service activities O - Public administration and defence; compulsory social security P - Education Q - Human health and social work activities Figure 9 Change in employment by sector (in millions), EU-27, 2008Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgn62) Construction is therefore the only sector to have experienced a continuous and significant decline throughout the four year period. By mid-2012 there were 15.7% fewer people employed in the sector than in mid-2008 (Figure 10). Industry experienced a similar significant decline to construction up until mid-2010 but stabilised thereafter so that overall the numbers employed were down by 9.4%. Agriculture and basic services also suffered an initial decline up until mid-2009 or even mid-2010 and then fluctuated thereafter. Employment in these sectors was down by around 2-3% by the second quarter of The fact that the limited recovery between mid-2010 and mid-2011 occurred most in industry and basic services November

25 suggests that these sectors are likely to be the first to react once sustained economic growth returns. Meanwhile, the communal services sector is the only one to have experienced a continuous increase over the period, with the numbers employed 4.3% in mid-2012 than four years earlier. Indeed the numbers employed rose in all sub-sectors (see Box 1) except that related to public administration where there was a decline of 3.5% (0.5 million jobs lost), probably a reflection of the austerity measures being applied in various Member States. In the communal services sector as a whole the rate of job growth has slowed over time. This slowdown appears to stem from lower growth in human health and social work activities and in administrative/support service activities as well as the job losses noted in public administration, defence and compulsory social security. This places some uncertainty on future employment growth in this sector. Advanced services is the only other sector where the numbers employed in mid-2012 were higher than in mid-2008 (+1.8%). Here, employment growth in second half of the period more than made up for the decline in the first half. In fact, jobs have been created at a higher rate in this sector (+2.9%) than in any other sector over the past two years. This growth mainly derives from increases in sub-sectors related to information/communication (+4.9%) and real estate activities (+5.6%). However, the sector accounts for only 7% of total employment so whilst there may be prospects for further growth, the potential impact on the overall situation is limited. Figure 10 Change in employment by sector (Index 2008Q2=100), EU-27, 2008Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgn62) The changes in employment by sector since mid-2008 mean that the structure of employment has shifted away from construction and industry, which used to contribute to 27.5% of employment and now only accounts for 24.9%, towards communal services and advanced services, which now account for 40.9% of all employment (up from 38.5%). Destruction of full-time jobs but creation of part-time ones There were clear differences between sectors in terms of the destruction and creation of full- and part-time jobs (Figure 11). In the two sectors where employment contracted most from , namely construction and industry, there was large scale destruction of full-time employment (-6.8 million) with almost no change in parttime employment. The basic services sector was the only sector where a significant decline in full-time employment (-2.3 million) was at least partly offset by a rise in part-time employment (+0.9 million), jobs that were created mostly in accommodation and food service activities and to a lesser extent in activities related November

26 to wholesale and retail trade, the repair of motor vehicles and motorcycles, and transportation and storage. Full-time employment declined in all of these sub-sectors over the same period and it is possible that some full-time jobs were cut to part-time employment, something that did not occur industry or construction. Of the 3 million or so jobs created in communal services over the period around 50% were part-time employment, twice the prevalent rate of part-time employment in the sector (approximately 25%). Similarly, just over 22% of the additional jobs created in advanced services (+0.3 million) were part-time, again well above the part-time employment rate of the sector (14%). Interestingly, part-time jobs continued to be created in this sector between mid-2011 and mid-2012 while the number of full-time jobs declined. This further highlights the uncertainty regarding future prospects for job growth in the sector. Figure 11 - Change in employment by sector and working time (in millions), EU-27, 2008Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgn62) Situation among the Member States Breaking down changes in employment at the sectoral level by country shows that whilst the EU trends are not driven solely by one or two large countries, some countries do provide particularly large contributions to the job losses and gains observed in different sectors at different points in time. Between mid-2008 and mid-2010 the numbers employed at EU level fell most dramatically in construction and in industry and less so in basic services. During this period declines in these sectors occurred in more than three-quarters of Member States (Figure 12) but Spain, in particular, and the United Kingdom experienced such significant declines that together they accounted for 30% of total job losses in industry, 59% of job losses in construction and 46% of those in basic services. During the following two years (mod-2010 to mid-2012), employment in construction continued to decline, but at a lower rate than before, whilst employment in industry and basic services stabilised. This is reflected at national level as a smaller proportion of Member States (50-60%) experienced job losses in these sectors (Figure 13) reflecting a greater variety of situations across the Member States. Spain remained the largest contributor to declines in these sectors, joined this time by Greece and together they accounted for more than 45% of the jobs lost. The communal services sector created the most jobs between mid-2008 and mid-2012 and there were job gains in 19 of the 27 Member States (Figure 14). The largest contributions came from Germany, the United Kingdom and Poland, which together November

27 accounted for almost 70% of the jobs created. The advanced services sector also expanded overall, despite in the first half of the period. In fact, employment in this sector grew in 18 Member States with the major contributions coming from Germany and Poland, which accounted for 50% of the additional jobs. Figure 12 Change in employment by sector and by country, 2008Q2-2010Q2 A - Agriculture Country Change in name / thousands Number of countries B-E - Industry (except Country Change in name / thousands Number of countries F - Construction Country Change in name / thousands Number of countries G-I + R-U - Basic services Country Change in name / thousands Number of countries J-L - Advanced services Country Change in name / thousands Number of countries M-Q - Communal services Country Change in name / thousands Number of countries Top 3 largest increases Other increases Total increases Top 3 largest decreases Other decreases Total decreases Total change 1 RO MT 1.7 PL 85.8 PL DE DE FR 47.1 FR 23.4 BE 41.1 PL UK IT 43.8 SE 1.1 CY 15.0 FR 40.3 PL PL ES ES ES UK IT DE UK UK UK ES NL ES IT IE NL NL BG Source: Eurostat, Labour Force Survey (online data code: lfsq_epgn62) Notes: Data on J-L advanced services not available for MT Figure 13 - Change in employment by sector and by country, 2010Q2-2012Q2 A - Agriculture Country Change in name / thousands Number of countries B-E - Industry (except Country Change in name / thousands Number of countries F - Construction Country Change in name / thousands Number of countries G-I + R-U - Basic services Country Change in name / thousands Number of countries J-L - Advanced services Country Change in name / thousands Number of countries M-Q - Communal services Country Change in name / thousands Number of countries Top 3 largest increases Other increases Total increases Top 3 largest decreases Other decreases Total decreases Total change 1 HU 33.1 DE DE IT UK DE DE 19.6 UK AT 44.0 DE DE 84.0 FR UK 9.9 CZ 78.9 DK 13.4 RO RO 32.9 BE RO ES ES ES DK UK ES EL IT EL BG EL EL PT EL PT PT -8.7 IT Source: Eurostat, Labour Force Survey (online data code: lfsq_epgn62) Notes: Data on J-L advanced services not available for MT Figure 14 - Change in employment by sector and by country, 2008Q2-2012Q2 A - Agriculture Country Change in name / thousands Number of countries B-E - Industry (except Country Change in name / thousands Number of countries F - Construction Country Change in name / thousands Number of countries G-I + R-U - Basic services Country Change in name / thousands Number of countries J-L - Advanced services Country Change in name / thousands Number of countries M-Q - Communal services Country Change in name / thousands Number of countries Top 3 largest increases Other increases Total increases Top 3 largest decreases Other decreases Total decreases Total change 1 RO AT 12.4 DE PL DE DE IT 48.8 PL 84.0 IT PL UK FR 32.9 AT 16.4 RO 67.4 RO 41.4 PL PL ES ES ES ES IT ES IT UK EL NL NL BG UK EL UK UK EL Source: Eurostat, Labour Force Survey (online data code: lfsq_epgn62) Notes: Data on J-L advanced services not available for MT November

28 The impact on different groups in the population The employment crisis in the EU impacted unequally across the population. Many of the differences between different subsets (e.g. by gender, age or level of education) reflect the types of jobs lost in the sectors hardest hit by the crisis and some groups have largely been unaffected. Whilst changes between mid-2010 and mid-2012 differ from those in the first two years of the crisis period, the groups faring the worst (or best) remain the same. Gender: men hit more than women In terms of employment, the recession affected men more than women (Figure 15 and Figure 16). This stems from the way that it affected particular areas of activity with men accounting for more than 75% of those employed in the two hardest hit sectors - construction and industry. The differential impact on the sexes was most apparent in the early stages of the crisis. While the number of men in employment declined by 2.7%, or around 3.2 million, between mid-2008 and mid-2009, the number of women fell by only 0.4% or 400 thousand. Between mid-2009 and mid-2010 the number of men and women in work continued to fall, though both at a declining rate (around 0.8% and 0.2% respectively). In the next 12 months to mid-2011 there was some recovery but again women (+0.6%) did better than men (+0.3%).in the numbers of both men and women employed but for both sexes. Then, as recession bit again, between mid-2011 and mid-2012 the numbers of men in work fell by 0.7% while the number of women remained unchanged. By mid-2012, therefore, the number of men in employment was 4.8 million less than it had been four years earlier (4% decrease), whilst the number of working women was virtually unchanged. In all Member States except Romania, and including those where employment grew, men fared worse than women in terms of the relative change in the number in employment. Between 2008 and 2012 the numbers of men and women working part-time both rose by around 1.3 million. However, because part-time work was previously much less prevalent amongst men the relative increase was much larger for men (14.7%) than for women (4.4%). For men the increase in part-time employment partly offset the massive decline in full-time employment whilst for women the smaller decline in fulltime employment was fully offset resulting in no change overall. Figure 15 - Changes in the employment of men (15-64), EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) November

29 Figure 16 - Changes in the employment of women (15-64), EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) Age: job losses concentrated among workers aged below 50 The recession affected people of different ages very differently (Figure 17, Figure 18 and Figure 19). The jobs lost as a result of the crisis were concentrated among those under the age of 50 to such an extent that the number of people aged in work actually rose every year between mid-2008 and mid-2012, resulting in an overall increase of 5 million or 9.6%. This pattern of change applied in three-quarters of EU Member States, with employment in this age-group falling in just six countries (CZ, DK, IE, EL, LV and PT). Of the jobs lost between 2008 and 2012, as many as 6.2 million went from the group of prime-age workers (those aged 25 to 49) and 3.6 million from the youth age-group (15-24). However, since the youth age-group contributes a much smaller share of employment overall the relative impact was much more severe with a 16.3% decline in the number in work compared to 6.3% for the prime-age group. The EU-level picture was repeated in almost all Member States with youth age-group affected more than the prime-age group in all countries except the Netherlands and Denmark. Any increases in part-time employment were also concentrated among those aged over 25. Whilst the number of 15 to 24 year olds working part-time barely changed (+0.2%) between mid-2008 and mid-2012, the number of prime-age workers in parttime jobs increased by 4.4%, thereby offsetting some of the decline in full-time employment among this group, and the number of older people working part-time rose by 15.7%, adding to the increase in full-time employment within the group. Overall, these figures indicate that the youth age-group was by some way the hardest hit and that the employment impact of the crisis lessened with age. It is important to note, however, that these observations are influenced in part by demographic changes. Over the period mid-2008 to mid-2012 the size of the population aged fell by 4.8% and that aged by -1.1% whilst the age-group increased by 6.0%. These changes are all in the same direction, but smaller than, the changes in employment. As a result, employment rates for all those below the age of 50 declined, most notably for young people, whilst the rate for those aged rose (+2 percentage points to 58.6%). November

30 Figure 17 - Changes in the employment of people aged 15-24, EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) Figure 18 - Changes in the employment of people aged 25-49, EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) Figure 19 - Changes in the employment of people aged 50-64, EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) November

31 Level of education: employment impact reduced with level of education The recession affected people with different levels of education quite differently (Figure 20, Figure 21, and Figure 22). Job-losses between mid-2008 and mid-2012 were concentrated among those with either low (ISCED 3 0-2) or medium levels of education (ISCED 3-4) whilst the number of people in employment with a high level of education (ISCED 5-6) rose steadily. Across the EU as a whole, the number of people in work with tertiary level education rose by 7.4 million or 12.8% and increases occurred in all Member States except Bulgaria and Spain. During the onset of the recession, between mid-2008 and mid-2009, there were similar levels of job-loss among those with low and medium levels of education (2.8 and 2.6 million respectively). Thereafter, job-losses were less severe for both groups but whilst the decline in the medium educated group dissipated relatively quickly (employment even rose between 2010Q2 and 2011Q2), significant declines persisted amongst those with at most lower secondary education. On average, the number employed from this group fell by 2 million each year between mid-2009 and mid Over the whole period, the number of people employed with lower levels of education fell by 17.3% whilst the number with medium levels was down by only 3.1%. The low educated group fared worst in every single Member State. In fact the number of people in work with at most lower secondary education has been in decline for some time (over 25% down since 2001) and it appears that the crisis has simply intensified the longer term trend. It is interesting to note that the employment trends for groups with different levels of education levels are strikingly similar to those for different age groups, suggesting that they could be linked. However, analysis of the situation within age-groups shows that the impact of different education levels generally still holds. The increase in part-time employment observed for the population as a whole was concentrated among those with at least upper secondary education (ISCED 3+) and number of people in work with only lower secondary education actually fell by 5.2% between mid-2008 and mid Part-time employment increased by 5.8% for those with upper secondary education and 23.4% for those with tertiary education. In part, the observed changes by level of education can be linked to the sectoral impact of the crisis as hard hit sectors like construction tend to employ workers with manual skills ahead of educational qualifications. Another part of the explanation relates to the underlying trend for people to stay in education/training longer and enter the labour market with more qualifications than in the past a phenomenon that was itself increased by the crisis as there were very few job opportunities for young people. The population with low levels of education fell by 9.4% between mid and mid-2012 whilst the highly educated group increased by 15.3%. The population with medium levels of education has remained more or less stable. These changes meant that employment rates actually fell for all education levels, even the high educated. However, the size of the decline reduced with level of education. The employment rate of those with low levels of education fell by 4.2 percentage points from 48.1% to 43.9%, by 2.3 pp for those with medium levels (70.8% to 68.5%) and just 1.8 pp for those with high levels (83.9% to 82.1%). 3 ISCED: International Standard Classification of Education. See November

32 Figure 20 - Change in employment, ISCED 0-2, 15-64, EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) Figure 21 - Change in employment, ISCED 3-4, 15-64, EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) Figure 22 Change in employment, ISCED 5-6, 15-64, EU-27, 2007Q2-2012Q2 Source: Eurostat, Labour Force Survey (online data code: lfsq_epgaed) November

33 Section II: Recent trends in labour mobility The Mobility in Europe report includes each year an analysis of recent trends in labour mobility. This year, the chapter updates the analysis contained in the 2010 and 2011 Mobility in Europe reports on return or circular labour movements between the EU12 countries those that have entered the EU since 2004 and EU15 Member States and the effect of the removal in May 2011 of the 7-year restrictions in Germany and Austria on entry of workers from these countries. It also considers movements of young people in Poland who choose to look for their first job abroad rather than at home. November

34 Labour movements between EU Member States recent developments The 2010 Mobility in Europe report contained an analysis of return or circular migration, with a particular focus on movements between the EU12 countries, which have entered the EU since 2004, and the EU15 Member States and the way that these flows were affected by the economic recession. The 2011 Report included an update of the analysis, examining developments in The concern here is to update the analysis further by examining developments in 2011 when most of the EU15 countries to which people from the EU12 countries had moved in large numbers, continued to experience low rates of growth of GDP or even a decline, little if any net job creation and rising unemployment. The 2011 Report also considered the short-term impact of the removal of restrictions in Germany and Austria on inward migration of workers from the EU10 countries those that joined the EU in These two countries had imposed transitional barriers on movements from the latter countries into their labour markets and these came to an end in May 2011, 7 years after EU enlargement. The longer-term consequences of the removal of these barriers in the two countries are also examined here to see to what extent they have led to large-scale movements into two of the few countries in the EU which have enjoyed reasonable rates of economic growth and job creation over the past year or two. In addition, the chapter considers return and circular migration among young people in Poland, where large numbers of those making the transition from education into the labour market choose to look for their first job abroad, especially in the EU15 rather than at home. Labour flows between the EU12 and EU15 during the crisis Before the onset of the crisis, there were large-scale movements from the EU12 countries in Central and Eastern Europe into the EU15 which intensified following the entry of 10 of these countries into the Union in May The countries experiencing the biggest inflows from these 10 countries were the UK, Ireland and Sweden, all of which had opened up their labour markets to people from these countries as soon as they joined the Union, the only countries to do so. At the same time, there were significant inflows into Spain, Italy and Greece, as well as Cyprus from Romania and Bulgaria despite the fact that they remained outside the EU until the beginning of In the initial part of the crisis, which began with the global recession which hit the EU during 2008, there was some evidence of a return movement of young people under 25, who had moved from the EU12 countries to the EU15 to work or to study, back to their home countries. Such a movement, however, was less evident for those of 25 and over, many of whom had moved with their families to take up residence in the EU15. In 2010, the data from the Labour Force Survey suggested that there was less generally less change in the numbers from the EU12 living in the EU15 countries and a continuing reduction, though smaller in size, of those aged 15-24, implying that outflows from the EU15 countries back to the EU12 exceeded new inflows. The latest LFS data indicate the developments in 2011 as well as showing some revisions to the figures for They show that in Ireland the decline in the number of young people aged under 25 from the EU10 resident in the country continued in 2011, reducing their share of population in this age group by some 3 percentage points, or 45% (Table 1). There was also some net outflow of those born in Bulgaria and Romania, but a small increase of young people born outside the EU. (It should be noted that the changes between November

35 years in the figures shown in Table 1 which relate to the proportion of resident population accounted for by those born outside the country, indicate the net inflows or outflows of those in the two age groups in the intervening period.) There was little change, however, in the relative number of people from the EU10 aged resident in Ireland, which was much the same as in 2009 after the reduction from the 2008 peak level. Any outflows were, therefore, match by inflows among this age group. Table 1 - People aged and born outside the EU15 living in EU15 Member States in relation to population, % Population in each age group in country EU10 Romania+Bulgaria Non-EU Ireland Greece Spain Italy Cyprus Austria Sweden UK Ireland Greece Spain Italy Cyprus Austria Sweden UK Source: Eurostat, Labour Force Survey Note: EU10 refers to the Central and Eastern European countries which entered the EU in 2004 In the UK, the net outflow of young people aged under 25 from the EU10 countries in 2009 has been followed by the resumption of net inflows in both 2010 and At the same time, although there was a slowdown in net inflows of those aged from the EU10 in 2009, net inflows from these countries were significant again in both 2010 and While the initial recession, therefore, seems to have deterred movements of workers from the EU10 to the UK, the effect appears to have been temporary and inflows have resumed despite the sluggish state of the economy and the absence employment growth, There was also a significant net inflow of people in both age groups from outside the EU in In Sweden, there have been continuing small net inflows of young people under 25 from the EU10 over the crisis period and even smaller net inflows of those aged In both cases, the main inflows have been of people from outside the EU, which have been relatively large for the older age group, increasing their share of population of this age by 3 percentage points over the three years In Austria, there was also a small net increase over the two years in those born in the EU10 resident in the country after a reduction in The main net inflows since 2009, however, have been of those aged from outside the EU as well as from Bulgaria and Romania. In Spain, the inflows from the rest of the EU concern mainly people moving from the Romania and Bulgaria. Here there is a difference in the pattern of change as between November

36 those under 25 and those aged While the share of population that the former represent has fluctuated over the crisis period, implying a similar fluctuation in net inflows, the share of those aged has risen throughout the period, even if at a slower rate than before, indicating that the inward movement of people in this age group has consistently exceeded the outward movement. Moreover, this has been accompanied by a net outflow of migrants from outside the EU. In Italy, where Romania and Bulgaria are also the main source of inward movements of workers from the rest of the EU, there is little sign of the crisis having any depressing effect on these inflows. The share of those from these two countries in the resident population of both age groups, therefore, increased continuously over the period , in the case of those aged to the same proportion as in Spain. In addition, unlike in Spain, this was accompanied by continuing net inflows of migrants from outside the EU. In Greece, net inflows from Bulgaria and Romania of those aged have continued over the crisis period, though at a low rate, while there was a sharp reduction in 2011 in the share of population accounted for by those born outside the EU, especially among those aged under 25. This suggests that the crisis has led to a significant net outflow of the latter. In Cyprus, by contrast, net inflows from Romania and Bulgaria of those aged both under 25 and continued at a high rate throughout the period, accompanied by inflows of those aged from EU10 countries as well as from outside the EU up to Employment rates over the crisis period As was evident from the LFS data up to 2010, there is little sign in general that the inflows of people from the EU12 Member States have themselves increased problems in the labour market for those born in the countries concerned. In half the 8 countries to which inward movement of workers has been most significant over recent years, therefore, the employment rate of those of working-age (15-64) born in the country have tended to decline by less than those who have moved from EU12 Member States. In the other half, however, the picture is more mixed In Ireland, employment rates of those born in the country declined by much less than those born in the EU10 between 2007 and 2009 and though they fell by more in the subsequent two years, the difference was very small (Table 2). In Spain, it was even more the case that the employment rate of those from Romania and Bulgaria has fallen by more than those born in the country over the crisis period, the sharp decline in the employment rate of the former in the two years being followed by a reduction on a similar scale in the In Italy, the decline in the employment rate of those from Romania and Bulgaria was much less than in Spain in both the two sub-periods but was, nevertheless, significantly more than among those born in Italy. In Sweden, the employment rate of those born in the countries declined between 2007 and 2009 as the recession hit while that of those born in the EU10 countries rose, Since then, however, the reverse has been the case, so that over the period as a whole, the employment rate of those born in Sweden increased slightly while the rate for those from the EU10 fell. November

37 Table 2 - Employment rates by country of birth in selected EU Member States, IE EL ES IT CY AT SE UK % of population, % point change Same EU Non-EU Same EU Non-EU Same EU Non-EU Same EU Non-EU Same EU Non-EU Same EU Non-EU Same EU Non-EU Same EU Non-EU Source: Eurostat, Labour Force Survey In Greece, the employment rate of those born in Bulgaria and Romania declined consistently over the period but the rate for those born in the country declined by more, especially between 2009 and 2011, though by much less than the rate for those from outside the EU. In the other three countries, Cyprus, Austria and the UK, the employment rate of those from other EU countries increased over the four years while that for those born in the country declined, or in the case of Austria, increased by less. It cannot necessarily be concluded from these opposing changes, however, that workers from other EU countries have suffered less from the labour market effects of the crisis than native workers. It may be the case, for example, that those who lost their jobs returned home to be replaced by others who moved in who may have had jobs to In the UK, employment among migrants from the EU10 fell by less than among native Britons between 2008 and 2010 and indeed by less than among those from outside the EU. This does not necessarily mean that they have suffered less employment reductions during the crisis period than people born in the UK since it may well be the case that those who lost their jobs returned home, the ones who remained being November

38 predominantly those still in work, while those entering the country seem in the main to have had a job to go to. Consequences of opening the German labour market to EU8 countries Before the 2004 and 2007 enlargements, it was agreed that every EU15 country could, if it chose to, protect their labour markets from the entry of workers from accession countries for a period of up to 7 years in order to prevent serious imbalances. In May 2011, this transitional period ended in respect of the 8 mainland Central and Eastern European countries which entered the EU in 2004 (termed the EU8 in what follows) and the German labour market was fully opened to workers from these countries. Even before then, however, there were exceptions in the case of academics, students and a limited number of posted workers, while skilled workers could apply for a work permit to the Federal employment agency. The transitional arrangement, therefore, did not fully prevent labour movement from the EU8 countries. In addition, under freedom of establishment regulations, people from these countries could open businesses in Germany and Polish companies were able to operate in Germany with their own workforce 4. In view of these exceptions, the effect on the German labour market of the removal of restrictions is unclear. The concern was that the opening of the labour market would tend to drive down wages in particular in sectors where temporary agency work is prevalent, since such work is regarded by trade unions as a form of avoiding collective labour agreements. Partly in response to this concern, temporary employment agency work was made subject to tight labour market regulations and a minimum wage was applied. In the event, workers from the EU8 did indeed enter the temporary agency work sector in disproportionate numbers event though labour market regulations were intensified. There was also a marked increase in construction, manufacturing and the hotels and restaurant sector. In total, over 260,000 workers entered Germany from the EU8 in 2011 and 158,000 left, so that net inward movement of people amounted to over 100,000, an increase of 60,000 compared to the previous year. In the first four months of 2012, net inward movements were up by 6,000 so that over the year as a whole, they can be expected to total over 110,000. Inflows from the EU8 into Germany after May 2011 According to the Federal statistical office, of the 260,000 people entering Germany from the EU8 in 2011, 130,000 came from Poland, 42,000 from Hungary and 12,000 from Slovakia. While Poland was the main country of origin of workers entering the country before the opening of the labour market, the large inflow from Hungary and Slovakia is new. A possible reason is that both countries have been heavily affected by the European debt crisis and since the economies of both countries are experiencing either a decline in GDP (Hungary) or a slowdown in growth (Slovakia), inflows could continue for some time. Since there was a small outflow of Hungarians from Germany, net inward movement from Hungary amounted to around a fifth of that from Poland in 2011, but in the first four months of 2012, it amounted to over two-thirds (Table 3 and Table 4). 4 Restrictions preventing the supply of temporary workers and the posting of workers applied only in some sectors. These were construction, the cleaning of buildings and public transport systems as well as the surface care and temporary-employment agency work. However, even in those sectors, the owner of a company from EU-8 countries could provide services with his key employees and a migrant could open their own business. November

39 Table 3: Net inward movement of EU8 nationals to Germany in 2011 Jan. Feb. Mar. Apr. May Jun. Jul. Estonia Latvia Lithuania Poland Slovakia Slovenia Czech Republic Hungary EU Bulgaria Romania EU Jul. Aug. Sep. Oct. Nov. Dec Estonia Latvia Lithuania Poland Slovakia Slovenia Czech Republic Hungary EU Bulgaria Romania EU Source: Federal statistical office (Destatis) Table 4: Net inward movement of EU8 nationals to Germany in 2012 Jan. Feb. Mar. Apr. Change from 2011 Estonia Latvia Lithuania Poland Slovakia Slovenia Czech Republic Hungary EU Bulgaria Romania EU Source: Federal statistical office (Destatis) The increase in overall net inward movements in the first four months of 2012 is not a result of the change in institutional settings alone. The net inward movement of people from Romania and Bulgaria, which are still subject to restrictions on entry, increased by 6,200, which may be partly due to economic turmoil in Spain and Italy, the countries to which Romanians and Bulgarians have tended predominantly to move to in recent years. Moreover, favourable labour market conditions in Germany and a worsening of the conditions in other EU countries have undoubtedly had an effect on November

40 the scale of movement. These developments make it hard to quantify the impact of the removal of restrictions in itself. Nevertheless, despite these developments, the increase in the inflow of people from the EU8 can still be described as moderate and is in line with the lower range of projections made beforehand. While the increase is similar to the medium scenario of Baas and Brücker (2010), it is well below the projections of the Institute of the German Economy (IW), which forecast a net inflow of 466,000 in In some of the Baltic countries, however, labour market conditions have eased resulting in a reduction in the movement of workers to Germany. After a net-inflow of 10,800 from these countries in 2011, the number coming from Estonia and Latvia declined in the first four months of 2012 compared to the same months in the previous year. Given that labour markets were not opened before May 2011, the movement from these two countries in 2012 could be below that in Employment of people from the EU8 The number of people with EU8 citizenship in employment was 104,000 higher in April 2012 than the year before (Table 5). Table 5: Regional breakdown of employees with EU-8 citizenship Change relative to previous year Numbers Change Difference in change Apr-11 Apr-12 Apr-11 Apr Germany 227, ,000 23, ,000 81,000 West-Germany 199, ,600 18,000 89,300 71,300 East-Germany 27,600 42,000 5,000 14,400 9,400 Schleswig-Holstein 5,900 8, ,400 1,900 Hamburg 7,200 9, ,600 2,100 Lower-Saxony 23,200 33,500 2,900 10,300 7,400 Bremen 2,100 2, North Rhine-Westphalia 48,000 65,200 3,600 17,200 13,600 Hess 20,400 30,100 1,800 9,700 7,900 Rhineland-Palatinate 12,700 18, ,600 4,900 Baden-Württemberg 31,300 45,700 3,000 14,400 11,400 Bavaria 47,000 72,600 4,700 25,600 20,900 Saarland 1,500 2, Berlin 10,500 15,000 1,800 4,500 2,700 Brandenburg 6,700 9,500 2,200 2, Mecklenburg-W. Pomerania 1,500 2, , Saxony 4,500 7, ,000 2,600 Saxony-Anhalt 2,200 3, ,400 1,300 Thuringia 2,100 3, ,600 1,500 Source: BA Statistic, rounded values The increase was disproportionately high in the western part of Germany, some 7 times higher than in the eastern part, almost twice the difference in population. Fears among East-Germans that the majority of people from the EU8 would go to the lessdeveloped border regions seem to be unjustified. Instead, the main movement has been to Bavaria, Lower-Saxony and North Rhine-Westphalia as well as Baden- Württemberg. The last two regions are the industrial core of Germany, while labour market conditions in Bavaria are more favourable than elsewhere and Lower-Saxony is home to the automotive industry and large parts of the agricultural industry, where a large proportion of Poles work. November

41 Most of these (94,000) were employed in jobs subject to social security contributions (Table 6) and only a minority in short-time employment. Given that the share of women among workers from the EU8 has risen and that these tend to be employed in short-time jobs much more than men, the big increase in regular employment is a welcome development. Table 6: Employment subject to social security contributions Apr-11 Apr-12 Difference Germany 167, ,000 94,000 West-Germany 149, ,900 80,200 East-Germany 17,800 31,000 13,200 The sector most affected by the increase in employment of EU8 citizens is the other services sector, which includes temporary employment agency work (Table 7). As this sector was the only one where their employment could be effectively prevented before, an increase was to be expected, the more so because the sector was one of the fastest growing, employment more than doubling between 2004 and In expectation of a strong increase in employment of EU8 citizens, trade unions feared that they would drive down wages (i.e. that there would be wage dumping ). In December 2011, therefore, the posting of workers law was introduced in the sector, increasing the extent of employment protection, and in January 2012, a minimum wage was applied. Table 7: Increase in employment in the most affected sectors, April of each year Total 23, ,000 Other services 2,600 28,400 incl. Temporary employment agency work 1,300 17,600 Construction 1,500 14,500 Manufacturing 1,900 13,400 Hotels and restaurants 2,500 10,000 Source: BA Statistics In addition to a big increase in temporary employment agency work, employment in the other services sector rose by 10,800, still more than in most other sectors. This sector also includes the employment of women in household-related services which might explain the size of the increase. Employment also increased markedly in manufacturing and in hotels and restaurants. The gender balance among workers from the EU8 has also changed since the removal of restrictions, with men making up around 64% of the overall increase in inflows between April and December 2011 (Table 8), but the share of women in inflows increasing from 34% in May 2011 to 38% a year after. Table 8: Increase in workers in Germany from the EU8 by gender and age, April- December 2011 Total 39,534 Men 25,226 Women 14,308 Below 25 7, to 49 27, to 64 4, and over 186 November

42 Most workers are aged 25-49, with a peak of those in their 30s, which is older than in the case of those moving to the UK. In economic theory, new arrivals are seen as substitutes for migrants already living in the country 5, which suggests that the opening-up of labour market tends to result in an increase in unemployment. As new figures from the BA suggest, unemployment of EU8 citizens and especially of Poles has indeed risen (Table 9), contrary to the overall tendency in Germany. As new workers arrive, this does not necessarily mean that the unemployment rate will increase, since the total number of unemployed from the EU8 (2,217) represents only 2.4% of additional employment. Table 9: Change in number of unemployed by citizenship, April 2011 to April 2012 Total -114,731 EU8 nationals 2,217 Estonia -2 Hungary 204 Latvia 146 Lithuania 302 Poland 1,567 Slovakia 79 Slovenia -145 Czech Republic 66 Source: BA Statistics Concluding remarks One year after the opening-up the labour markets, the inflow of workers into Germany from the EU8 has been moderate compared to most prior estimates, despite the incentive given by very different economic developments in Germany and the counterpart countries. Nor has the removal of restrictions led to any obvious distortion of German labour markets, most workers heading for relatively prosperous parts of Germany with good labour market conditions. Accordingly, the movement of labour, though modest, has tended to smooth out labour market imbalances, shifting excess labour in areas where people find it hard to get jobs to those where labour is scarce, as in some of the German Länder. Consequences of opening the Austrian labour market to EU8 countries After the expiry of the 7-year transitional restrictions, the Austrian labour market along with the German was opened up in May 2011 to the 8 mainland countries which entered the EU in 2004 EU. Restrictions remain in place, however, on workers from Bulgaria and Romania until Developments since May 2011 Following the removal of restrictions, the number of EU8 nationals working in Austria increased rapidly up to August but rose only moderately after then. The increase was, therefore, very much in line with expectations prior to the liberalisation. The increase in inflows occurred mainly in the eastern part of the country (in Lower Austria, Vienna and Burgenland) which absorbed close to two thirds of the new entrants. In the 5 Brücker, H. And Jahn, E.J. (2012). November

43 tourist-oriented western part of the country and in Carinthia in the south, there was a rise in inward movements of EU8 nationals at the beginning of the winter season. According to the Public Employment Services and the Ministry of Labour, between April 2011 and April 2012, the number of EU8 nationals working in Austria increased by 34,385, 26,736 of these due to the removal of restrictions. If all those economically active are included t (the unemployed, those in vocational training and those in marginal jobs as well as employees and the self-employed), there were 29,493 more people from these countries in April 2012 than a year earlier. Among these, there was a decline in the number of self-employed, since self-employment was not covered by the transitional arrangements before May 2011 and was accordingly used to circumvent regulations. After the removal of restrictions, self-employment became less attractive and a number of people switched to becoming employees. On the other hand, there was an increase in the number of workers holding marginal jobs, which was particularly high in Burgenland, accounting for around a quarter of the total expansion of employment of EU8 nationals, while in the western part of Austria it was below 14% (Huber and Böhs, 2012a). Data available on gross (rather than net) inward movements show that between April 2011 and April 2012, 75,510 workers entered Austria, but nearly half of them - many of these in the tourist regions were no longer economically active in April Around 60% of the new entrants from the EU8 were men aged 25-44, while some 45% were women, more than the share among existing residents in the western part of Austria, particularly in Salzburg, Tyrol and Vorarlberg. In April 2012, just under 105,600 people from the EU8 countries worked in Austria (Table 10). Table 10: EU8 national employed in Austria, April 2011 to April 2012 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Dec-11 Jan-12 Apr-12 Hungary 26,390 32,202 35,981 38,063 39,509 39,819 41,522 42,846 41,390 Poland 18,293 21,568 23,092 23,627 24,606 26,155 21,082 22,268 25,808 Slovakia 12,621 12,818 14,528 15,252 15,850 16,152 16,285 16,843 16,703 Slovenia 6,507 7,514 8,017 8,233 8,744 9,662 8,174 8,619 9,772 Czech Rep. 6,803 6,818 7,285 7,305 7,644 7,978 7,603 7,771 7,967 Lithuania Latvia Estonia Total 71,124 84,855 92,959 96, , ,888 98, , ,591 Source: bmask including AMS data warehouse Of these, men accounted for 63% of the total; slightly more than a year earlier. Just over a third (35%) were commuters (i.e. people living in the EU8 but working in Austria), 4 percentage points more than in April A breakdown by country of origin shows that in April 2012 the majority of EU8 nationals came from Hungary (40%), 3 percentage points more than in April 2011, the month prior to the full liberalisation of the labour market. The second largest group were workers from Poland (25%), followed by those from Slovakia and Slovenia (16% and 9.5%, respectively). The proportion from the Czech Republic declined by nearly 2 percentage points compared with April 2011, while the share of those from the three Baltic States remained small and unchanged (at less than 1%). Almost two thirds of the workers from the EU8 were concentrated in the three eastern regions of Austria (Vienna, Lower Austria and Burgenland) (Figure 23). Another 12% were employed in Styria, bordering Slovenia, and 10% in Upper Austria, in the centre north of the country bordering the Czech Republic. Most of the workers were November

44 employed in the regions closest to their home country 62.5% of Hungarians work in Burgenland, Vienna and Lower Austria, two-thirds of Czechs in Lower and Upper Austria and 77% of Slovenians in Styria and Carinthia. Those from Poland, which has no common border with Austria, are primarily employed in Vienna (over half of them) and Lower Austria. Figure 23 - EU8 nationals by Austrian region in April 2011 and April 2012 (% Total) Source: bmask including AMS datawarehouse According to a recent study (Huber and Böhs, 2012a), employment of EU8 nationals is mainly of a seasonal nature with most of the entrants working in the border regions of the eastern part of Austria, many of them commuting from their home countries (in Burgenland, for example, 88% of workers from the EU8 had their permanent residence in their home country). Information on the education attainment level of the new entrants from the EU8 is not yet available. Given the sectoral pattern of employment, however, it is likely that the level is lower than before the removal of restrictions, when only 7% of EU8 nationals working in Austria had only basic schooling, 68% had upper secondary qualifications and 25% tertiary education. Many of them were overqualified for the work they did. In this respect, the recognition of qualifications of EU8 nationals is considered to be a problem by both employers and labour market experts. To counter the lack of information about the qualifications obtained in different countries for particular occupations the Jobtour cross-border initiative 6 has been set up by the social partners and the PES in Austria, the Czech Republic, Slovakia and Hungary with co-financing from the European Regional Development Fund. The database construction provides cross-border information on 150 vocations selected by the social partners and the PES in the respective countries regions, covering collective agreements, recognition of occupations and general details of labour and social legislation. Sectoral distribution of EU8 workers The distribution of EU8 nationals between sectors was much the same after the opening of the labour market as before, with the largest shares of employment being in tourism and construction (around 16% of the total in each), manufacturing and the distributive trades (Figure 24). Other support services, including Placement and provision of personnel and Services to building and landscape activities are the main exceptions, their share of employment rising from just under 6% to close to 10%. The share of employment in construction increased from 14.5% to almost 16%, while the share of employment in manufacturing fell by 1.5 percentage points. 6 November

45 Figure 24 - Employment of EU8 nationals by sector of activity, April 2011 and April 2012 Source: bmask including AMS datawarehouse Almost three quarters of the increase in employment between April 2011 and April 2012 occurred in five sectors construction, temporary agency work, tourism, distributive trades and manufacturing (in the last despite the fall in the share). As compared with Austrian nationals, EU8 nationals are overrepresented in tourism, construction and agriculture. A study analysing the changes on the Austrian labour market after the removal of restrictions (by Riesenfelder et al. (2012b), found that the posting of workers from EU8 countries has increased in importance in respect of both the number of enterprises involved and the number of workers. Posting was already common in construction prior to May 2011 and has expanded further since. It is concentrated particularly in regions bordering EU8 countries, almost half of postings being accounted for by three regions (Vienna, Lower Austria and Upper Austria). Posting is mainly short-term; around a third of postings being limited to a month or so. The study also concluded that the legislation introduced against wage and social dumping appears to have had a preventive effect, since there was little change in the extent of the various forms of dumping after the removal of restrictions. There was an increase only with respect to claimed part-time work, i.e. people being registered at the social insurance institute as part-timers but working much longer hours in practice, which was especially the case in agriculture. During site checks by social insurance officials, complete wage records (payslips) were often found not to be available, though under-payment of workers was less of a problem. Concluding remarks Although the lifting of the transitional restrictions on the inflow of workers from EU8 countries into Austria was followed by a rapid increase in inflows, this lasted only for four months or so and one year afterwards, the number of workers entering from these countries was only slightly higher than forecast. As expected beforehand, most of the inflows were into tourism, construction and temporary agency work, much of November

46 the employment being of a seasonal nature. Many of the workers taking up jobs are commuters employed in eastern regions bordering Hungary, Slovakia and the Czech Republic. So far the entry of EU8 nationals has had only a minor impact on unemployment, though there might have been more significant effects in some local labour markets (in Burgenland especially) or on low-skilled groups. Given the concentration of EU8 workers in a small number of sectors and regions, substitution effects between the new entrants and the domestic workforce, as well as EU8 national already living in Austria (i.e. the former displacing the latter) cannot be excluded. The longer-term consequences are still unclear, but will certainly depend on the economic situation in both Austria and in the EU8 countries. Movements of young people from Poland to the EU15 Of the people who moved from Poland during the period since its accession to the EU, just over 8% were aged 15-19, just under 28% and just over 27% were aged Accordingly, around 63% were under 30 (Fihel and Kaczmarczyk 2009 ; Fihel 2011 ). Although people who move between countries typically tend to be young, this represents a significant increase in the proportion of people in this age group as compared with the years before The main increase is among university graduates whose first job is now very often abroad. According to LFS data (Anacka 2010), Poles under 30 are more often than not likely to take up residence abroad rather than returning home after a year or two, which may be because they are able to be more flexible, have some English (White 2012) and have no dependents at home, as well as perhaps resuming their education in the country they have moved to. Analysis has shown that those aged who return to Poland usually remain inactive when they do so, which in practice means that for the most part they return to education. Those aged who return tend to behave differently, 87% of them continuing to be economically active. (Fihel and Grabowska-Lusinska 2012). Analysis also shows that those aged who move abroad tend to experience the biggest breaks in their career paths as compared with other age groups, in the sense that the jobs they subsequently take up are often not closely related to those they worked in abroad, resulting in a kind of occupational patchwork. This is so in the case of 57% of mobile workers in this age group (Grabowska-Lusinska 2012 ). Equally, people in this age group often work abroad in jobs which are below what their formal qualifications make them capable of. Graduates from Polish universities, therefore, in many cases find that the skills and know-how they have acquired are not easily transferable to the labour market in the country to which they have moved. Their first job abroad can consequently involve routine, manual and relatively low-skilled work. The situation is exacerbated by a number of factors: they tend to look for jobs on the spot when they arrive, rarely make use of employment agencies and are usually in a hurry to start work; their command of the language in the country is relatively basic and tends not to extend to the vocabulary of the profession they have been trained for; their education is often in disciplines for which there is limited demand in the country they have moved to (such as social sciences, humanities or law, which tends to nationally specific (Currie 2007; Trevena in press ; Grabowska- Lusinska 2012). November

47 Transition from education into first jobs abroad According to post-accession surveys (Grabowska-Lusinska 2012), almost every third person moving from Poland abroad was looking for their first job in the country concerned i.e. they had not worked before in Poland. Indeed, the people concerned had not even tried to find a job at home, many of them looking for work abroad immediately after graduation or while they were still studying. Most of them were unmarried and without dependents. The majority took up non-seasonal work (55% as compared with 40% of mobile workers as a whole; two-thirds of them moved abroad only once rather than several times (as against 57% of mobile workers as a whole). Those who returned to Poland more frequently started their own business than other mobile workers, usually in the service sector (Grabowska-Lusinska 2012). As shown by research (Ann White, 2012), for most young people in this age group, taking up a job abroad, especially for those from small towns or villages, was the beginning of their working careers rather than a gap year or an interlude before embarking on a career in Poland 7. The young people concerned who were studied who came from disadvantaged areas tended to perceive moving abroad as a necessary life choice, forced by the situation in their home town or village. For many, moving to another town or city in Poland to work or to pursue their education further was much less of an option than going to work abroad. The UK a favourite destination for young Poles Since Poland entered the EU, the UK has been a favourite destination for young Poles (White 2010 ), the median age of those moving to the UK in the year being around 25 as compared with 30 for those going to Ireland and 46 for those going to the US (Fihel and Kaczmarczyk 2009 in: White 2010). Moreover, those who went to the UK were usually better educated than those going to other countries (Anacka and Okolski 2012). There are, however, three distinct groups of young Poles in the UK in the British labour market: (1) recent Polish graduates of British universities; (2) recent graduates of Polish universities; (3) those with secondary education or lower usually from small towns and villages. As regards the first group, according to the UK Higher Education Statistics Agency (HESA) among 920 Polish graduates from UK universities who were surveyed in 2010, 80% remained in the UK. There are a number of reasons for this. First, they can count on a higher return from the investment in education they have made capital in the British labour market rather than the Polish one. Secondly, many of them have education loans from British banks which they need to pay back. Thirdly, those with traineeships with companies during their studies may have an obligation to work for these for a time after graduation. Fourthly, some of them may encounter problems with their degrees not being recognised in Poland because the courses they took may have Polish equivalents. Fifthly, some of them reported having tried to work in Poland but were unable to tolerate the different culture of work and employer relations. In addition, some also reported that after many years spent in the UK they no longer had social networks in Poland which could help them find employment and provide support (Pszczolowska 2012). The second group, recent graduates of Polish universities (Trevena 2010), consists of two sub-groups, one of those who upon arrival worked in low-skilled jobs and decided to upgrade their education by enrolling in British universities and colleges, the other of those who remained in low-skilled jobs, perhaps because of an inability to upgrade 7 The My First EURES Job initiative seems to be well suited fitted to the needs of the young people in Poland moving straight from education into the labour market abroad. The programme in Poland is at a preliminary stage. Two regional labour offices are involved, one in Mazovia which is cooperating with the German ZAV and one in Lodz which is cooperating with the Danish PES. November

48 their qualifications (Grabowska-Lusinska 2012). In a recent study of this group (Trevena, in press), three types of person were distinguished: (1) target earners: aiming to accumulate large sums of money to invest in Poland; (2) career seekers: looking to develop their career abroad; (3) drifters: pursuing goals other than career advancement or saving for investment; which is typical of the initial stages of migration, who have no problem about performing low-skilled jobs (e.g. cleaning or bartending) (Engbersen et. al ). The third group are those from poor towns and villages with high incidence of migration (White, 2010), usually with at most upper secondary vocational education, who, it is argued are forced into moving abroad because of a lack of local opportunity. The UK seems the easiest destination for these because so many have learned English at school and because over recent years, social networks have built up to provide local support (White and Ryan 2008). Many also come from households where this is a history of migration, mostly to Germany (Kaczmarczyk 2008), which tends to encourage movement. Even though they might be miserable if their own parents work abroad, this does not necessarily diminish children s sense that it is desirable to live in a foreign country (White, 2010). In a number of cases, in fact, parents invite children to join them in working abroad, perhaps in a seasonal job, and this is how the child acquires the taste for working in a foreign countries (ibid.). Moving abroad seems, therefore, to be a frequently accepted option in many of the poorer parts of Poland and the main way of escaping local unemployment. References Anacka M. (2010). Poakcesyjni migranci powrotni w Badaniu Aktywności Ekonomicznej Anacka M., Okólski M. (2010). Direct demographic consequences of post-accession migration for Poland, w: R. Black, G. Engbersen, M. Okólski, C. Panţîru (red.), EU Enlargement Labour Migration. Amsterdam: IMISCOE-AUP. Baas, T. and Brücker, H. (2010). Wirkungen der Zuwanderungen aus den neuen mittelund osteuropäischen EU-Staaten auf Arbeitsmarkt und Gesamtwirtschaft. WISO Diskurs September Brücker, H. And Jahn, E.J. (2012). Migration and wage-setting * reassessing the labor market effects of migration. Scandinavian Journal of Economics Currie S. (2007). De-skilled and devalued: The labour market experience of Polish migrants in the UK following EU enlargement. The International Journal of Comparative Labour Law and Industrial Relations, 23(1), Engbersen G., Grabowska-Lusinska I., Leerkes A., E. Snel, J. Burgers (in press), A Typology of Labour Migration. On the Differential Attachments of Migrants from Central and Eastern Europe, Journal of Ethnic and Migration Studies. European Commission (2011), Mobility in Europe 2011, Employment, Social Affairs and Equal Opportunities, November. Fihel A. (ed.) Recent Trends in International Migration in Poland. The 2011 SOPEMI report. CMR Working Paper, Nr 52(110). Warsaw. Fihel A., Grabowska-Lusińska I. (in review). Labour Market Transitions of Circulating Polish Migrants: A Sending Country Perspective, manuscript. Fihel A., Kaczmarczyk P. (2009). Migration: a threat or a chance? Recent migration of Poles and its impact on the Polish labour market. In: Burrell K. Polish migration to the UK in the new European Union: after 2004, Farnham: Ashgate. Grabowska-Lusinska I. (2012). Migrantow sciezki zawodowe bez granic [Migrants boundaryless careers]; Warsaw: Scholar. Huber, P. and G. Böhs (2012a), Auswirkungen der Liberalisierung des österreichischen Arbeitsmarktes für die StaatsbürgerInnen der EU8 auf die Regionen Österreichs, Study November

49 commissioned by AMS Österreich, Final Report, August. Huber, P. and G. Böhs (2012b), Monitoring der Arbeitsmarktauswirkungen der Zuwanderung aus den neuen EU-Mitgliedsländern im Regime der Freizügigkeit, Begleitende Beratung und Analyse, Österreichisches Institut für Wirtschaftsforschung, Study commissioned by the Ministry of Labour, Social Affairs and Consumer Protection, April. Jones G. (1999). The same people in the same places?. Socio-spatial identities and migration in youth. Sociology, 33(1), Kaczmarczyk P. (ed.) (2008). Współczesne migracje zagraniczne Polaków. Aspekty lokalne i regionalne [Contemporary international migration of Poles. Local and regional aspects]. Warsaw: Centre of Migration Research, University of Warsaw. Ludności, w: I. Grabowska-Lusińska (red.), Poakcesyjne powroty Polaków. CMR Working Papers, nr 43/(101). Warszawa. Pszczolkowska D. (2012). Absolwenci nie wracaja [Alumni do not return], Gazeta Wyborcza, June. Riesenfelder, A., S. Schelepa and P. Wetzel (2012a), Liberalisierung (EU 8) des österreichischen Arbeitsmarktes für die Regionen Österreichs zum , Study commissioned by AMS Österreich, Final Report, June. Riesenfelder, A., S. Schelepa and P. Wetzel (2012b), Monitoring der Arbeitsmarktöffnung Auswirkungen auf Beschäftigungsformen und auf Lohndumping, L&R Sozialforschung, Study commissioned by the Chamber of Labour Vienna and the Ministry of Labour, Social Affairs and Consumer Protection, March. Schweighofer, J. (2012), Gab es auf regional-sektoraler Ebene Verdrängungseffekte im Gefolge der Arbeitsmarktöffnung vom Mai 2011? Trevena P. (in press). Why do highly educated migrants go for low-skilled jobs? A case study of Polish graduates working in London, w: B. Glorious, I. Grabowska-Lusińska, A. Kuvik (eds.), Mobility in Transition: Migration Patterns after EU Enlargement. Amsterdam: Amsterdam University Press White A. (2010). Young people and migration from Poland, Journal of Youth Studies, Volume 13, Issue 5, pp White A., Ryan L. (2008) Polish temporary migration: The formation and significance of social networks, Europe-Asia Studies, 60:7, pp November

50 Section III: The situation of young people in the labour market The Mobility in Europe report each year includes one or more focus sections dedicated to detailed analysis of a particular mobility related issue. This year the focus is on the situation of young people, which is of particular interest given the high levels of youth unemployment around the EU. The section is divided into three sub-sections: the first gives an overview of the labour market situation of young people, the second looks at some recent policy responses, and the third looks in more detail at the allimportant first transition from education to work. November

51 Young people in the labour market Introduction The EU economy has been slow to recover from the global recession which struck in GDP fell sharply from around mid-2008 to mid-2009, though the downturn began earlier in some countries, such as Ireland, Spain and the Baltic States as the construction boom came to an end, and later in others, such as many of the other EU12 countries (i.e. the Member States which joined the EU since 2004) which were hit by the EU market shrinking. The result was large-scale job losses in many countries followed by a continuing decline in employment as employers reduced the rate of new job creation and put off replacing workers retiring. Young people have borne the brunt of the reduction in employment, particularly those finishing their education or initial vocational training, who have faced an acute shortage of job openings as they entered the labour market. As a consequence, youth unemployment increased steeply virtually throughout the EU, while at the same time, many young people remained in education and training longer in the hope of the job situation improving. Over four years after the onset of the recession, there is little sign of the steady rise in youth unemployment coming to an end, or, indeed, of any imminent upturn in the economy on a significant scale which might push up the rate of job creation. According to the figures in August 2012, therefore, the rate of youth unemployment, defined as the number of people aged in the labour force who are unemployed, had climbed to an average of almost 23% in the EU, nearly half as high again as in 2007 before the recession struck (Figure 25). There are marked differences, however, between the experience in Germany, which is large enough to have a pronounced effect on the average EU figures, and that in most other countries. Germany is the only EU country, apart from Belgium (where the reduction was relatively small) in which youth unemployment was lower in 2012 than 5 years earlier. Its inclusion in the aggregate EU figures, therefore, tends to mask the scale of the increase which has occurred over the crisis period. Excluding Germany, youth unemployment in the EU15 stood at just under 27% in August, over 10 percentage points higher than in The average figure in the EU12 was only slightly lower and shows a very similar pattern of increase since the onset of the crisis, though it has risen by marginally less in the past two years, reflecting the better performance of most of the EU12 economies (though not all). For comparison, the rate of unemployment of those aged 25 and older has risen in much the same way, though to a level which is only a third to half as high as for those below 25 (Figure 26). Again, the much better performance of the German economy, and the decline in unemployment which this has led to, disguises the extent of the increase in the rest of the EU and the fact that for this age group, unemployment in the EU15 excluding Germany has continued to rise over the past two years whereas in the EU12, ii has stabilised. Within the EU aggregates, although youth unemployment rates have risen in nearly all countries, the rate of increase has varied markedly depending to a large extent on how seriously the economy has been hit by the crisis. In Greece and Spain, youth unemployment stood at well over 50% in August 2012 (55% in the first and 53% in the second), in both cases considerably some percentage points higher than 5 years earlier and in both cases too, significantly higher than one year before (Figure 27). In neither country, therefore, is there any sign of the increase coming to an end. This is also the case in the other southern EU15 Member States, Italy and Portugal, as well as in Ireland, where the rate of youth unemployment is also well above average (at around 35-36%). November

52 Figure 25 - Youth unemployment in the EU, August 2007 to August 2012 (% labour force, 15-24) Source: Eurostat, Harmonised unemployment rates Figure 26 - Unemployment rate of those aged 25 and over in the EU, August 2007 to August 2012 (% labour force, 25+) Source: Eurostat, Harmonised unemployment rates Figure 27 - Youth unemployment rates in EU Member States, August 2007 and August 2012 (% labour force, 15-24) Source: Eurostat, Harmonised unemployment rates Notes: EU-15 excludes DE. November

53 Elsewhere in the EU15, apart from Germany, youth unemployment was below 15% only in the Netherlands, Austria and Denmark, and in the last only marginally so. In the EU12, it was above 15% everywhere and below 20% only in Malta, Slovenia and the Czech Republic and above 30% in Slovakia and close to it in Hungary, Latvia and Bulgaria. These figures, however, tend on the one hand to overstate the problem of youth unemployment since a large though one that varies substantially across countries proportion of young people aged are not in the labour force at all but still completing their education or initial training. In Italy, for example, only just over a quarter of young people aged were in the labour force in August 2012 in the sense of being employed or actively seeking work and in Greece, less than 30%. In Denmark and the Netherlands, by contrast, the proportion was over twice as large at over two-thirds, reflecting the large numbers combining education or training with employment. On the other hand, the increase in the rate of unemployment which has occurred over the crisis period tends to understate the growth of the problem since, as the rate of job creation has remained low, many of those in the age group have either withdrawn from the labour force or postponed entry. Outline The aim here is to examine the situation and how it has developed over the crisis in more detail, to investigate the characteristics of the young people concerned, the length of time they have been looking for work, the methods they use to do so and the types of job they take up. The focus is on the situation in 2011 since there are more annual data available than monthly, though the main features of the situation are likely to be much the same at present. The main focus is also on the age group rather than those younger than this, since although unemployment rates can be very high for those under 18, in most countries the number in the labour force is small. Moreover, a clear policy solution to unemployment among those under 18 is to encourage those unable to find jobs to return to education in order to acquire qualifications. This is not necessarily the case for those of 18 and over, many of whom will already have at least upper secondary qualifications. The analysis begins, however, by reviewing the changes in employment of the broader age group, 15-24, over the crisis period and how these not only fed into the increase in unemployment which occurred but were accompanied by a widespread decline in economic activity among young people. Changes in employment, unemployment and economic activity over the crisis period Over the period i.e. from the year before the crisis hit to the latest full year for which data are available employment of young people aged in the EU declined from just over 37% of the age group to just under 34%, a fall of almost 4 percentage points (or around 10% in terms of numbers) over these four years. This contrasts with an increase of just over 1 percentage points over the preceding four years. Moreover, as indicated above, the extent of the decline in employment over the period is disguised by the very different experience in Germany where instead of falling, the proportion of young people in paid work increased by 2.5 percentage points. Excluding Germany, the employment rate of those aged in the EU15 fell over these four years from almost 40% of the age group to just under 34%, a reduction of 6 percentage points (or around 15% in terms of numbers). Although the decline in the EU12 was significantly smaller in absolute terms, even if Poland where employment of young people was less affected than elsewhere is excluded just over November

54 3 percentage points it was only slightly less in proportionate terms given the smaller number of young people in work (from just over 26% of those aged to 23%). This decline in employment, however, was by no means fully reflected in a rise in unemployment. Instead, in most countries, economic activity among young people declined as more of them either remained in education longer or returned to education or, indeed, in the case of some, withdrew from the labour market without participating in education or training. In the EU as a whole, therefore, around 40% of the overall decline in employment among those aged took the form of a reduction in the proportion who were economically active rather than of a rise in unemployment and in the EU15, excluding Germany, almost half (Figure 28). (In the figure, the change in unemployment is shown by the opposite sign i.e. as a reduction in the case of an increase and the overall length of the bars indicates the change in employment, except where unemployment and activity change in the same direction, in which case it is given by one minus the other. In the case of Belgium, for example, employment declined by 1.5 percentage points but economic activity fell by more by almost 2 percentage points so that unemployment fell instead of increasing. The same was the case in Malta and Austria.) The decline in economic activity was particularly large in Ireland, where it accounted for over two-thirds of the sharp reduction in employment as many young people withdrew from the labour market instead of trying to find jobs, the number of which had shrunk dramatically as GDP fell. A decline in the employment rate of over 22 percentage points, therefore, led to a rise in unemployment of less than 7 percentage points, still large but much smaller than it might have been. In Spain too, there was a substantial reduction in economic actively among the young (of around 7 percentage points), but much smaller than in Ireland, which meant that a smaller reduction in employment gave rise to a bigger increase in unemployment. Figure 28 - Changes in employment of those aged divided between changes in unemployment and economic activity, (% of population aged 15-24) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL. The decline in economic activity was also relatively large in the Netherlands (4 percentage points), where it meant that unemployment among the young rose by comparatively little (by only 1 percentage point) despite the fall in employment being bigger than the EU average. The same was the case in Slovenia and Finland, where a large decline in activity also served to reduce the increase in unemployment to below November

55 the EU average, while in Slovakia, an equally large decline in activity reduced the latter to only slightly more than the average. In Belgium, Malta and Austria, as noted above, the fall in activity meant that unemployment fell over the period even though employment also declined. In a number of EU12 countries, however, economic activity among those aged continued to increase over the crisis period, so having the opposite effect of pushing up the rise in unemployment as employment fell. This was the case in Estonia and Lithuania, in particular, where in both a rise in activity (of around 2 percentage points) meant that unemployment increased by more than the fall in employment among the age group (by just over 5 percentage points and almost 8 percentage points, respectively). In Germany, on the other hand, the rise in employment over the period meant that economic activity could increase and unemployment fall at the same time. The scale of youth unemployment Unemployment among those aged Although the focus is on those aged 18-24, it is interesting, first, to examine unemployment among those under 18, which as in the case of those older has tended to rise in the EU since the onset of the recession, but by no means universally. The rate of unemployment among those aged in the labour force is, in many countries, higher than among those aged In Slovakia, it averaged 85% in 2011, in Latvia, 70% and in Spain, 66%, while in the Czech Republic and Portugal, the figure was over 50% ( November

56 Table 11). In each case, however, as elsewhere, only a small proportion of the population of this age were in the labour force, though the proportion varied markedly across countries. It was particularly small in Slovakia, where unemployment amounted to only 0.5% of those aged 15-17, well below the EU average, whereas it was larger in Spain, where unemployment was 4% of the population in this age group. Indeed, because of the substantial variation in the rate of labour force participation of the young of this age, there is very little relationship between the unemployment rate as normally measured and the unemployed as a proportion of population. The latter was highest, therefore, in Denmark and the UK, at over 9%, in both of which participation is also relatively high. It was high as well in Finland, Sweden and the Netherlands (7-8%). In all these countries, apart from the UK, however, a relatively high rate of labour force participation is associated with education being combined with employment for many young people, either through an apprenticeship system or something similar. Accordingly, almost all of the unemployed were engaged in some kind of education or training programme. In Denmark, the Netherlands, Finland and Sweden, therefore, those who were unemployed and not in receipt of education or training amounted to under 1% of the age group in 2011, well below the EU average. This was less the case in the UK, where 3.5% of the age group was unemployed and not in education or training, Malta, where the proportion was over 4% and Spain and Austria, where it was 2-3%. In all other Member States, except Greece and Portugal (just over 1% in both), the proportion was less than 1%. November

57 Table 11 - Unemployment of those aged relative to labour force and population, 2011 Unemployed aged % of age group not % labour force % age group in education Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden UK EU EU EU Source: Eurostat, Labour Force Survey Unemployment among those aged In 2011, the unemployment rate of those aged averaged just over 21% in the EU (Figure 29). As noted above, however, the rate was reduced significantly by the low rate in Germany, of under 9%, Excluding Germany, the rate was just below 24% in the EU15, which was slightly less than the average in the EU12 (25%). In Greece and Spain, the rate was around 45%, well above anywhere else in the EU, while in Lithuania and Slovakia, it was around 33%, higher than in the other EU12 countries. In four of these, however Hungary, Poland, Bulgaria and Latvia it was between 26% and 29%, higher than the EU average even excluding Germany. The picture is somewhat different if account is taken of the varying rates of participation of young people of this age in the labour force, reflecting the differing tendency for them to remain longer in the education and initial training system and/or the differing extent to which education and training are combined with employment. If unemployment is expressed in relation to the population in the age group instead of in relation to the labour force, therefore, Greece and Spain still have the November

58 highest figures (19% and 25%, respectively), but the difference with other countries is reduced markedly. Slovakia and Lithuania, no longer have the next highest figures indeed, because of the low rate of labour force participation of those in this age group, the unemployed represented only just over 13% of the population concerned in 2011, much the same as in the EU15 excluding Germany. Both, moreover, have lower figures than the UK or Sweden, where the unemployment rate is substantially less but where more young people are economically active, whether this is combined with education and training or not. Figure 29 - Unemployment of those aged relative to labour force and population, 2011 Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. Nevertheless, despite the high rate of labour force participation of those in the age group in Germany, Austria and the Netherlands, unemployment was lower than elsewhere in the EU whether expressed in relation to the labour force or population (only around 5-6% in terms of the latter). In other words, the early entry of young people in these three countries into the labour force does not result in them experiencing serious problems of youth unemployment, mainly because of the way the education and initial training system is combined with economic activity. On the contrary, it helps to keep youth unemployment down. This is less the case in Denmark, Finland and Sweden, where economic activity among young people in this age group is also relatively high but unemployment in relation to population was close to or above the EU average. Unemployment of men and women Unemployment rates among the age group have historically been higher for women than for men. The crisis, however, has led to a larger increase for men than for women in most countries, though by no means all, reflecting in large measure the differential impact of the recession on sectors of activity and, in particular, the greater effect on manufacturing and construction in which many more men than women are employed. In the EU as a whole, therefore, the average unemployment rate for men of this age increased from 14.7% in 2007 to 21.8% in 2011, while the rate for women went up from 15.6% to 20.2%, i.e. to a level below that of men. The reversal in the relative levels of unemployment was especially marked in the EU15, where, excluding Germany, the average rate for men rose from 14.3% to 24.6%, a rise of over 10 percentage points, while for women the rise was from 16.1% to 22.5%, an increase of November

59 over 6 percentage points. Though large, this was still significantly smaller than for men (Figure 30). Figure 30 - Change in unemployment rates of men and women aged 18-24, (percentage point change) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL. In the EU12, by contrast, the increase for men and women was much the same if Poland is excluded (around 9 percentage points) and the rate for men remained slightly higher than that for women (25% as against just over 24% in 2011). In Poland, on the other hand, unemployment is higher among women than men (29% as opposed to 24%) and the increase between 2007 was also larger for women than for men. The rise in unemployment of young men relative to young women was particularly large in countries where the overall rise was large in Spain, Ireland and Lithuania but it was also significant in some countries where the overall rise was smaller in Hungary, Denmark, the UK and Finland while in Belgium, the rate for women fell whereas that for men increased. Although the unemployment rate for women, on average, was higher than for men in most parts of the EU in 2007, and in the EU15 especially, the slightly lower rate of labour force participation among women meant that the number of men among the unemployed in the age group was larger than for women. Men, therefore, made up 53% of the unemployed of this age in the EU in 2007, though more in the EU12 (almost 60%) than in the EU15 (just over 51% if Germany is excluded, the figure in the latter being relatively high, 57% Figure 31). The larger rise in unemployment among men than women increased their share of the total to just over 56% in the EU as a whole in2011. In 6 countries (Bulgaria, the UK, the Czech Republic, Lithuania, Ireland and Slovakia, the share of men among the unemployed in the age group has increased to over 60%. By contrast, in Romania, Malta and, above all, in Estonia, it fell from above 60% to below 8. In only three Member States Luxembourg (where it was only 40%), Greece and the Netherlands was the share of men below half in In Greece, this was the case despite a large rise in unemployment among men over the crisis period, which highlights the very 8 In Estonia, the rise in the unemployment rate was much the same for men as for women, but in proportionate terms, because the rate for men was much higher than for women in 2007, the increase was significantly smaller for men than for women. November

60 small share of men among the unemployed before the onset of recession (only just over 37% in 2007). Figure 31 - Share of men in total unemployed aged 18-24, 2007 and 2011 (%) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL. Education or training of the unemployed aged While some of the unemployed in the age group receive education or training during their spell out of work, most tend not to, though the situation again varies across countries. According to the Labour Force Survey, therefore, less than 3% of young people of this age were unemployed in the EU in 2011 and had received any education or training during the four weeks preceding the survey, whereas three times as many, 9%, were unemployed and had received no education or training (Figure 32). The latter figure was particularly high in Greece and Spain (around 17% of the age group) and only slightly lower in Ireland (just over 14%). It was also over 10% in Portugal and the UK in the EU15 as well as Latvia, Lithuania, Slovakia and Cyprus in the EU12. On the other hand, it was only around 5% in Germany, Luxembourg, Finland and Slovenia and less than 4% in Austria, Denmark and the Netherlands (just 2% in the last). The proportion was also relatively small in Sweden (6%), despite the number of unemployed among this age group being relatively large. Figure 32 - Proportion of those aged unemployed by whether or not receiving education or training, 2011 (% of age group) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. November

61 Economic inactivity among young people Young people aged not in education or training As indicated above, the increase in unemployment among young people over the crisis period is only part of the story initiated by the reduction in employment of those under 25. In addition to unemployment rising, the rate of economic activity of those concerned fell at the same time. The concern here is, first, to put the latter fall into perspective by examining the trends evident before the onset of the recession, though focusing on the extent of economic inactivity instead of the reverse. Secondly, it is to examine the extent to which those who were not economically active were in education or training and, thirdly, to investigate the situation of those who were neither economically active nor in education or training. Again the focus is on those aged Trends in economic inactivity among those aged The rate of participation in the labour force of those aged shows very different patterns of change in the growth years leading up to the crisis period. In some countries, participation declined as more young people remained longer in education or initial vocational training, in others it increased, since despite this tendency, more of the young people concerned combined education with employment or work experience. In the EU as whole, these two opposing tendencies cancelled each other out and there was no change in the rate of economic activity or inactivity of those in this age group (Table 12). In the EU15, however, the latter tendency was slightly stronger and the rate of inactivity declined as more people combined employment with education. This was particularly the case in Denmark, Germany and Austria, countries where the dual system is dominant, but also in Ireland, Spain and Sweden. It was not at all the case in Greece and Italy, where the rate of economic inactivity among those aged increased markedly over the three year In the EU12, as in Greece and Italy, the prevailing tendency was for the rate of economic inactivity, which was already higher in most countries than in the EU15, to increase further. The exceptions to this were three Baltic States, Cyprus and Slovenia, in all of which inactivity declined over this period. In the subsequent four-year period, the rate of inactivity increased in nearly all countries irrespective of the trend beforehand. The rate declined only in Germany, France, Lithuania and Poland, in each only slightly. It increased sharply, as noted above, in Ireland, Spain and Latvia, in each case after declining markedly in the precrisis period. Moreover, there is little sign of any general tendency for the increase in inactivity coming to an end as the crisis has gone on. In most countries, therefore, the increase in the rate in the two years 2009 (the year when the recession was at its worst) to 2011 was larger than in the preceding two years in most countries (in 18 of the 27). November

62 Table 12 - Proportion of those aged not economically active, 2004 to 2011 % total aged Percentage point change BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat, Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. The inactive not in education or training Although most of the young people in the age group across the EU who are not economically active are still in full-time education or initial vocational training, a significant number are not. In the EU as a whole, around 7% of young people of this age were neither economically nor in education or training in 2011, adding to the 9% who were recorded as being unemployed and who also were not receiving education or training. Accordingly, the so-called NEETs those neither in employment nor in education and training made up 16% of people of this age (Figure 33). In general the proportion of young people not economically active or in education was larger in the EU12 than in the EU15 (10% as opposed to just under 7%), though there were significant differences between countries in both groups. The proportion was much bigger in Bulgaria than anywhere else in the EU - around 20% - meaning that, together with the large number of unemployed not receiving education or training, almost 29% of the age group were NEETs in The proportion was also well above average in Romania and Italy (11-12%), increasing the number of NEETs to 21-22% of the age group in both cases. While the relative number of the inactive not in November

63 education was smaller in Greece and Spain, it still meant that 22-24% of young people of this age were NEETs. Figure 33 - Young people aged neither employed nor in education or training, split by those unemployed and those inactive, 2011 (% age group) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL. At the other extreme, the proportion of the age group who were inactive and not in education tended to be relatively small in the countries where the proportion who were unemployed and not in education was also small, in the Netherlands, Luxembourg and Slovenia, in particular. Overall, however, there were only 7 countries these three plus Austria, Germany, Denmark and Sweden, where the number of NEETs made up less than 10% of those aged Calculation of NEETs The number of young people neither employed nor in education or training is based on data from the EU Labour Force Survey. The starting point is those recorded as being, on the one hand, unemployed, defined as those not in employment but available for work and actively seeking work, and, on the other, those recorded as inactive, as defined by being neither employed not unemployed. In each case, the number reporting not receiving any education or training during the four weeks preceding the survey is then taken initially to distinguish those not in education or training. However, given that someone can be in education without actually receiving education in a four-week period, the calculation is refined on the basis of two further pieces of information in the LFS. First, those reporting their status as being a pupil or student (rather than being employed or unemployed) are deducted; secondly, those reporting not seeking work because of education or training (but in this case, only for those reporting their status as being other inactive ) are also deducted. In the case of Germany and the UK, where there are no data on self-reported status, only those reporting the reason for not seeking work being education or training are deducted. As a result, the figures for Germany and the UK are not entirely comparable with those for other countries and may be slightly overstated. Changes in NEETs over the crisis period The relative number of young people aged neither in employment nor in education or training increased in the EU between 2007 and 2011 from 13% to almost 16%, the number increasing in all countries apart from Germany, Austria, the Netherlands and Luxembourg (Table 13). November

64 The increase was mainly a result of the rise in unemployment among the young people concerned and the fact that many of them did not receive education or training when looking for jobs 9. This was the case in both the EU15 and EU12 countries in the latter, with the exception of Romania (though there us a possible problem here with the consistency of the data for 2011 with those for earlier years). Indeed, in most countries (17 of the 27), the proportion of this age group who were inactive and not in education or training was either smaller in 2011 than in 2007 or much the same and only in Bulgaria and Ireland, apart from Romania, was the increase between the two years more than 2 percentage points. In the countries where the rise in NEETs over the crisis period was especially large, therefore in Ireland, Spain, Cyprus, Latvia and Lithuania the increase was predominantly due to an increase in the unemployed and to the fact that most of them were not receiving education or training. This may in part be due in turn to many of the young people concerned being out of work only for a comparatively short period of time, a possibility examined below. Table 13 - Proportion of those aged not in employment or education or training, 2007 and 2011 % population, Unemployed NEET Inactive NEET Total NEET BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat, Labour Force Survey Notes: NEET=Not in employment or education and training. See Box for method of derivation (note slightly different methods for DE and UK). EU15 excludes DE and EU12 excludes PL. 9 There is a potential difficulty here insofar as to be recorded as unemployed young people need to be available for work as well as actively seeking work. Their participation in a training programme, however, might well preclude this since it may be the case that they are neither actively seeking work nor available to take up a job until they have completed the programme. In strict terms, therefore, such people ought to be recorded as inactive rather than unemployed, though it is open to question whether they are in all cases. November

65 The situation of the inactive not in education or training Information collected by the LFS gives an insight into the situation of those aged who are neither in the work force nor in education or training and the reasons why they were not actively looking for a job. According to the 2011 survey, around 15% of the people concerned in the EU i.e. just over 1% of the population in this age group - were ill or had a disability, slightly more than in 2007 (Table 14). The figure was particularly high in Portugal (2.5% of those of this age), where it had risen markedly over the crisis period, and well above average (just under 2% in each case) in Italy, Lithuania and Finland, in all of them higher than in It was well below average, on the other hand, in Germany, France, Luxembourg and Slovenia, all countries in which the overall proportion of people who were inactive and not in education was also relatively small. Table 14 - Situation of those aged not economically active or in education or training, 2007 and 2011 % population, Disability/illness Caring/family tasks Believe no work Other BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat, Labour Force Survey Notes: Caring/family tasks includes domestic and personal responsibilities. 'Believe no work' refers to a belief that no work is available. EU15 excludes DE and EU12 excludes PL. Almost three times as many young people reported not being economically active because of caring, family or other personal responsibilities around 3% of this age November

66 group, much the same in 2011 as before the onset of the crisis. Here the proportion was especially large in the EUI12 countries, in Bulgaria and Romania particularly, but also in Estonia, Latvia and Poland. It was much smaller than average, by contrast, in Luxembourg, the Netherlands, Denmark and Sweden, all countries in which caring facilities are well developed, though in Portugal and Slovenia too, where it is less the case. The proportion reporting that they were not actively seeking work because they believed no jobs were available was larger than elsewhere in Bulgaria and Romania as well and in this case markedly so. Indeed, in all other countries, the proportion was less than 1% of those in this age group and, except in Hungary, much less. Moreover, despite the crisis, apart from in Bulgaria and Romania, and to a lesser extent, Hungary, there was little increase in this proportion between the two years. Other non-specific reasons for not looking for work were reported by around 2.5% of year-olds across the EU, the proportion being particularly large in Italy as well as in Bulgaria. Many of the people concerned, and many more than in other countries, reported themselves to be unemployed even they were not actively looking for work and, therefore, did not conform to the ILO standard definition of unemployment. As compared with other countries, therefore, the rate of unemployment as officially measured at EU level was much further below the self-reported rate in Italy, so that there were many more people out of work and looking for jobs, even if not actively, than the figures referred to above imply. Whereas, therefore, in nearly all EU countries, the proportion of year-olds recorded as being unemployed according to the international convention is larger than those reporting their status as being unemployed mainly because many regard themselves as being students rather than unemployed even though they may be looking for work in Italy, as in Bulgaria, the reverse is the case. In Italy, therefore, just over 16% of those in the age group reported that they were unemployed in 2011 as against just under 11% who were recorded as being unemployed in the sense of actively seeking work, while in Bulgaria, just under 14% reported being unemployed as opposed to the recorded figure of just under 10%. Registration with the Public Employment Services Registration of the unemployed Not all the young people recorded as being unemployed are registered with the Public Employment Services (PES) indeed, in a number of countries, the proportion is less than half. This is the case in respect of the unemployed defined according to the international convention as those out of work, who are available for employment and who are actively seeking employment. It is equally so, however, for those reporting themselves to be unemployed even though they might not be recorded as actively seeking work. In the EU as whole, around 61% of those aged who were recorded as unemployed on the standard definition reported being registered with the PES in 2011, the figure being higher on average in the EU15, excluding Germany, than in the EU12, excluding Poland (60% as against 50% Figure 34). The proportion registered varies markedly across countries, from around 85% in Slovakia and just under in Belgium to below 30% in Malta and Romania in It was less than half in 9 Member States and above two-thirds in only 7. The extent of registration partly reflects the regulations in force in the different countries and the alternative means of job search. It does not seem to be related, however, to receipt of benefit, which in most countries applies only to a small minority of people in this age group only in the Austria, the UK, Belgium and Germany was the figure over a third of the unemployed and only in Germany, over half. (Note that the figure the UK is not November

67 directly comparable with that in other countries because it only includes those receiving benefits). Figure 34 - Proportion of the unemployed (ILO definition) aged that is registered with the Public Employment Services, 2011 (% total) Source: Eurostat, Labour Force Survey Notes: No data for IE and NL. Data for DE and AT is for EU-15 excludes DE. EU-12 excludes PL. Registration of the economically inactive It is not only those recorded as being unemployed who are registered with the PES but also those who are recorded as being economically inactive in the sense of being out of work but not actively seeking a job, as well as some of those recorded as being employed (which in the LFS, according to the international convention, means anyone working at least one hour during the reference week). In the EU as a whole, just over 14% of the economically inactive aged who were not in education or training were registered with the PES in 2011 and just over a third of these received some form of benefit (Figure 35) The proportion in this category that were registered was much larger, on average, in the EU15 countries than the EU12, especially if Poland is excluded from the latter (just over 16% as compared with only just over 4%). Figure 35 - Proportion of the inactive aged not in education or training that is registered with the Public Employment Services, 2011 (% total) Source: Eurostat, Labour Force Survey November

68 Notes: No data for IE and NL. Data for DE and AT is for EU-15 excludes DE. EU-12 excludes PL. The proportion registered ranged from just under 30% in Finland and Sweden to under 2% in Romania and Malta, with the figure being below 10% in all the EU12 countries apart from Slovenia and Poland and above 10% in all the EU15 countries apart from Greece, Luxembourg, the UK and Denmark. Relative number of year-olds registered As the above figures imply, the proportion of the age group registered with Public Employment Services varies markedly across EU Member States and not necessarily in line with the scale of unemployment among the young people concerned. In total, the proportion of young people of this age registered with these Offices was much the same in the EU as a whole as the proportion unemployed, around 11.5%. This was also the case, on average, in the EU15 countries. It was, however, much smaller than the proportion unemployed in the EU12 countries, especially if Poland (where the proportions are very similar) is excluded (only around 6.5% as against just under 10% Figure 36). Figure 36 - Proportion of year-olds unemployed and proportion registered with the Public Employment Services in 2011 (% age group) Source: Eurostat, Labour Force Survey Notes: No data for IE and NL. Data for DE and AT is for EU-15 excludes DE. EU-12 excludes PL. In the EU12, therefore, there is only one country, Slovakia, where the proportion of the age group registered was greater than the proportion unemployed and then only slightly. In the EU15, by contrast, this was the case in 7 of the countries. Among these, the difference is particularly large in Germany, Italy, France and, above all, in Belgium, where the proportion of young people registered was more than double the proportion unemployed. As a result, the proportion was the second largest in the EU after Spain, whereas the relative number unemployed on the conventional definition was well below the EU average. (The proportion unemployed on a self-defined basis in Belgium was larger than as conventionally defined but only slightly so just under 9% in 2011 as against just over 8%.) Overall, therefore, the scale of registrations of those aged with the PES does not in many countries reflect the scale of unemployment among this age group as usually measured. More important, as implied by the fact that only around 60% of the unemployed are registered, a substantial number of the unemployed are not being November

69 assisted by the PES 10. However, there is some a need for caution here since it may be the case that young people may come into contact with the PES without being registered, or more precisely, not being recorded as being registered by the LFS. This is clearly the case in the UK, where only those receiving benefits are recorded as being registered, but it might also be the case in some other countries. Labour market status of those aged registered While most of the year-olds registered with the Public Employment Services are unemployed (60% in the EU in 2011), a significant number are inactive or employed (Figure 37). Figure 37 - Division of those aged registered with the Public Employment Services by status, 2011 (% age group) Source: Eurostat, Labour Force Survey Notes: No data for IE and NL. Data for DE and AT is for EU-15 excludes DE. EU-12 excludes PL. The proportion of young people unemployed who were registered with the PES was much larger in general in the EU12 countries than the EU15, exceeding 80% in Estonia, Cyprus, Lithuania, the Czech Republic and Slovakia. It was also over 80% in Greece and the UK in the EU15. On the other hand, the proportion was below 40% in Belgium, Austria and Italy, in the last reflecting the significant number of the economically inactive regarding themselves as unemployed while not complying with 10 This is in line with the findings in the 2011 Mobility in Europe Report, which found that on average only 55% of job-seekers aged were registered with the PES. November

70 the ILO criteria for being recorded as such in EU-level (and internationally comparable) statistics, though in practice only a minority of these were registered (26% in 2011). In Belgium, Austria and Italy, therefore, most of the young people registered with the PES were recorded as being either economically inactive or employed, while in Denmark, Germany, France, Luxembourg and Finland, almost half (around 45%) were similarly not recorded as being unemployed. The remainder of the analysis focuses on the unemployed, or those defined as such in EU-level statistics, largely because there is more information about them than others who might also be looking for employment. It begins by considering the education levels of the young people concerned and the extent to which they lack educational qualifications. It then examines the length of time they have been looking for work and how this is affected by their qualifications and goes on to consider the methods used to find a job and the extent to which they use the Public Employment Services for this. Education attainment levels of the young unemployed The crisis has made it more difficult virtually throughout the EU for young people to find jobs irrespective of their qualifications. Employment rates have, therefore, declined among university graduates with tertiary qualifications as well as among those with only basic schooling who have always been disadvantaged on the labour market in most EU Member States. The number employed among those aged with tertiary education in the EU fell from just over 62% in 2007 to just under 56% in 2011, a decline of over 6 percentage points and almost twice the decline in the total employment rate among those in this age group (Figure 38). Figure 38 - Change in employment rates of those aged in total and with tertiary education, (percentage point change) Source: Eurostat, Labour Force Survey Notes: Data unreliable for EE, CY, LU, MT, SI and FI. EU-15 excludes DE. EU-12 excludes PL The decline for young people with tertiary education was especially marked among those in the EU12 countries, exceeding 20 percentage points in Romania and reaching almost 40 percentage points in Slovakia. It was also relatively large in Spain (over 18 percentage points) and in Ireland (15 percentage points) though in the latter it was less than the reduction in the overall employment rate for the age group. Ireland, however, was one of the few countries where the decline in the employment rate of November

71 those with tertiary qualification was significantly less than for the age group as a whole (the others being Lithuania, Italy and Denmark). The reduction in employment among young people with tertiary education clearly reflects a tendency for those concerned to delay their entry into the labour market because of the shortage of jobs. But it also reflects the increasing difficulties of those who do enter to find employment once they begin searching or if they lose their existing job, which may in turn reflect the relative increase in the number of young people with tertiary education. These difficulties are indicated in the unemployment figures for the age group. In the EU as a whole, therefore, the rate of unemployment of young people aged with tertiary education rate increased from 11% in 2007 to 17% in 2011, an increase which was larger than for those with upper secondary education, though still less than for those with only basic schooling (Table 15). Table 15 - Unemployment rates of those aged by education level, 2007 and 2011 (% labour force) Percentage point change Basic Upper 2nd Tertiary Basic Upper 2nd Tertiary Basic Upper 2nd Tertiary BE BG CZ DK DE IE EL ES FR IT LV LT HU NL AT PL PT RO SK SE UK EU EU EU Source: Eurostat, Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. Data unreliable for EE, CY, LU, MT and SI. As in the case of the decline in the employment rate, the increase in unemployment was especially pronounced in the EU12 countries, excluding Poland, where It rose from just over 12% to 22%, a bigger rise than for either those with upper secondary education, if only marginally, or those with basic schooling. The rate for those with tertiary education increased in all countries except Germany and Austria and most especially in Greece, Spain and Lithuania. While in most countries, the rise in the rate was less for those with this level of education than for those with lower levels, this was not the case in Denmark, the Netherlands or Romania. November

72 Nevertheless, the increase in the unemployment rate was most marked among those with only basic schooling, exceeding 30 percentage points in Ireland and Spain, where in both cases the rate rose to over 50% of those with this level of education in the work force, as well as in Lithuania. The rise was, for the most part, slightly smaller for women than for men especially among those with basic schooling. This was particularly so in Ireland and Spain, where the unemployment rate for men with this level of education increased by close to 40 percentage points over this four-year period, almost twice the increase for women, and, where accordingly, the rate was just under 60% in the former and almost 55% in the latter. The increase was also smaller for women than for men in Greece, though still larger than 20 percentage points, increasing the rate to around 55% for women with only basic schooling, though here the rate for women with both upper secondary education and tertiary education was over 50% as well. Division of the unemployed by education level Despite the relatively high unemployment rates among those with tertiary qualifications, it is still the case that the number with these qualifications among the unemployed is relatively small, reflecting the comparatively small number of university graduates among the age group. In 2011, those with tertiary education represented only around 11% of the unemployed of this age in the EU (Figure 39). Figure 39 - Unemployed aged by education level, 2011 (%) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL November

73 Young people with only basic schooling made up just under 40% of the total unemployed in this age group while just over half were those with upper secondary education. The proportion with basic schooling was much smaller in the EU12 countries (only around 23%) than in the EU15 (around 42% if Germany is excluded), as was the proportion of those with tertiary qualifications, so that over two-thirds had upper secondary education. The division was similar in most EU12 countries, with only Estonia, Latvia and, above all, Malta, with more than a third of the unemployed having only basic schooling. In the EU15, the proportion of the young unemployed in this age group with only basic schooling was particularly large in Spain (57%) and was also well above average in Germany and Luxembourg (54% in each) as well as Portugal (51%). These four countries apart, however, the proportion was less than 40% in all cases except Denmark and Belgium (where it was only marginally above 40%), and it was only around a quarter or less in Greece and Ireland, where youth unemployment was especially high. Since those with tertiary education made up only around 15% or less of the unemployed of this age, the biggest group in terms of numbers in most EU15 countries all apart from Germany, Spain, Portugal and Luxembourg were those with upper secondary qualifications. In general, therefore, with only a few exceptions, the majority of the young people unemployed in the age group had at least upper secondary qualifications and a small but significant proportion had a university degree or the equivalent. This has obvious implications for the types of active labour market measure which are required to provide effective support for those concerned, in the sense that it is not simply a matter of giving them the opportunity to acquire qualifications as such. Moreover, while the relative number of unemployed under 25 with tertiary qualifications may be small, it has risen over the crisis period in most countries, implying a need for support that historically has not been required on any significant scale. This is more especially the case for the slightly older age group than that which is the focus here, namely those aged 25-29, for whom the unemployment rate has also risen significantly over the crisis period, including among those with tertiary qualifications, especially in the EU12 countries (from 15% to almost 23% between 2007 and 2011 Figure 40). Indeed, in 201i, the proportion with tertiary qualifications was over a quarter of the total unemployed aged in most Member States, over a third in Lithuania and Poland, well over 40% in Greece and Luxembourg (where the number involved, however, is relatively small), and over 60% in Cyprus. Figure 40 - Share of those with tertiary education among the unemployed aged 25-29, 2007 and 2011 Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL November

74 The transition of young people into employment From education into the labour market As the crisis has gone on, so the length of time it takes young people to find a job has increased. This is reflected, on the one hand, in the increasing numbers who go from education or initial vocational training into unemployment and, on the other, in the declining numbers who take less than a year to move from unemployment to work. In the EU as whole, just over a quarter of young people aged attempt to make the transition from education into employment each year. In 2007, just over 20% of those who were students in the preceding year were employed at the time of the Labour Force Survey while 6% were unemployed (Table 16). In other words, around 77% of those moving from education into the labour market managed to find a job in the course of the year. In the EU12 countries, only around half the proportion made the transition (13%) and a slightly smaller proportion (74% - 9.8% relative to 13.1%) had found a job over the year leading up to the survey. The relative number making the transition was much higher than elsewhere in Denmark, the Netherlands, Finland and Sweden, which reflects the large proportion of the age group combining employment with the continuation of education or training. Table 16 - Proportion of those aged who were students the year before the survey and who were employed or unemployed in 2007, 2009 and 2011 % students previous year Percentage point change Employ Unempl Employ Unempl Employ Unempl Employ Unempl Employ Unempl BE BG CZ DK DE EE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat, Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. Data for BG for 2007 relate to November

75 In 2009 and the onset of the recession, the relative number making the transition from education into the labour market was slightly smaller (just over 25%) and the proportion who managed to find a job in the course of the year smaller still. Between 2007 and 2009, therefore, there was a fall in all countries apart from the Czech Republic and Luxembourg in the proportion of those who were studying the year before who were employed at the time of the survey and a counterpart increase in the proportion who were unemployed in all countries apart from Germany and Malta. The fall in the proportion employed was particularly large in Spain, Lithuania and Ireland, which were among the hardest hit by the recession, but also in Sweden. In 2011, two years after the economic downturn, the proportion of young people in the age group in the EU making the transition into the labour market was slightly larger (just over 26%) and the relative number who succeeded in finding employment in the course of the year was also marginally higher. In both cases, however, this was due to an increase in Germany. In the rest of the EU15 and the EU12, the proportion of those in education the year before who were in jobs was smaller than in 2009 and the proportion who were unemployed larger. In addition to Germany, the proportion employed was higher and the proportion unemployed lower in France, Sweden, Estonia and Latvia. In all other countries, the proportion employed was smaller and/or the proportion unemployed larger. The increase in the difficulty of moving from education into employment over the crisis period is evident for those with both upper secondary and tertiary qualifications, especially the latter. In 2011, around 18% of those aged in the EU with upper secondary qualifications, who were students the year before, were employed by the time of the survey. This is some 1.5 percentage points less than in In the EU15 excluding Germany, the decline was around 2 percentage points and in the EU12, almost 3 percentage points (Table 17). The decline was especially large in Denmark, Latvia, Cyprus and Bulgaria. The decline in the proportion employed was much bigger in the case of those with tertiary education, averaging 6 percentage points in the EU as a whole and as much as 22 percentage points in the EU12, with even larger reductions in Romania and Slovakia. Apart from Germany, the decline was common to all countries 11. Table 17 - Proportion of those aged who were students the year before the survey and who were employed in 2007 and 2011 % students previous year Percentage point change Upper secondary Tertiary Upper 2nd Tertiary BE BG na na -8.4 CZ DK na na DE EE na na -2.6 EL ES FR IT CY na na -9.8 LV na na This may reflect in part a relative increase in the number of people with this level of qualification, insofar as it might have led to more university graduates looking for a given number of jobs. November

76 % students previous year Percentage point change Upper secondary Tertiary Upper 2nd Tertiary LT na na -1.0 HU NL AT PL PT RO SI na na -1.5 SK FI na na -1.9 SE UK EU EU EU Source: Eurostat Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. Data for BG for 2007 relate to No data for IE. na=data unreliable. From unemployment into employment The transition from unemployment into employment shows the same kind of increase in difficulty over the crisis period, with little general sign of the difficulty easing since the recession in In the latter year, therefore, less than a third of those aged in the EU who had been unemployed the year before were in paid work at the time of the survey as compared with around 42% in 2007 (Table 18). The reduction in the proportion was common to all countries apart from Germany and Greece and was particularly pronounced in Spain and the three Baltic States. It was also well above average in Sweden and the UK. The proportion successfully moving from unemployment to employment over the year preceding the survey declined further between 2009 and 2011 in the EU as a whole though there was some increase in the EU12. This was especially so in Estonia and Latvia reflecting the improvement in the economic situation. In the EU15, there was also an increase in Finland, Sweden, Belgium, France and Austria, though a substantial decline in Greece and Portugal as well as a smaller though still significant one in Spain. Table 18 - Proportion of those aged who were unemployed the year before the survey and who were employed in 2007, 2009 and 2011 % unemployed previous year Percentage point change BE BG CZ DK DE EE EL ES FR November

77 % unemployed previous year Percentage point change IT LV LT HU AT PL PT RO SK FI SE UK EU EU EU Source: Eurostat, Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. Data for CY, LU, MT and SI unreliable. No data for IE and NL. The increased difficulty of moving out of unemployment into a job applies equally for those with different levels of educational attainment. Indeed, the reduction in the probability of someone unemployed with tertiary education successfully finding a job within a year seems to have been larger than for those with lower education levels 12. In 2011, therefore, only around 45% of those aged in the EU with tertiary qualifications who were unemployed the year before were in employment at the time of the survey (Table 19). (It should be noted that it is not possible to present the data for individual countries apart from Spain because of data unreliability problems due to the small number of observations for those unemployed with tertiary education in this age group.) This compares with 68% in 2007 before the onset of the recession. The reduction in the proportion was especially marked in the EU15 countries (from 72% to 47%) and even more so in Spain (from 73% to 39%). Table 19 - Proportion of those aged who were unemployed the year before the survey and who were employed in 2007 and 2009 % unemployed previous year Percentage point change Basic Upper second Tertiary Basic Upper 2nd Tertiary ES EU EU EU Source: Eurostat, Labour Force Survey Notes: EU15 includes DE and EU12 includes PL. The reduction was also substantial for those with lower levels of education in Spain. In the EU as a whole, though the reduction was much smaller for those with only basic education than for those with tertiary, it was still large. It means that in 2011, less than a quarter of those with this level of education who were unemployed the year 12 Again perhaps party because of the increase in their numbers. November

78 before the survey had found a job at the time of the survey and less than 20% in the EU12. The duration of unemployment The reduction in the relative number of young people succeeding in making the transition from unemployment into work over the crisis period is reflected in an increase in the time taken to find a job. In 2007, over two-thirds of the unemployed aged in the EU15 excluding Germany had been looking for a job for less than 6 months. By 2011, the proportion had declined to 59% (Figure 41). In the EU12, excluding Poland, the decline was even larger from 71% to 58%. Figure 41 - Unemployed aged seeking a job for less than 6 months, 2007 and 2011 (% unemployed 18-24) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL. These figures, moreover, tend to understate the increased length of time it takes young people who enter the labour market or lose their job to find work, since they do not allow for the continuing inflow of people looking for work either for the first time or to replace a previous job. In addition, they do not take account of people abandoning their search for a job and withdrawing from the labour market completely. Even so, the decline between the two years in the relative number unemployed for less than 6 months was around 30 percentage points or more in Ireland, Spain, Latvia, Lithuania and Bulgaria and almost 25 percentage points in Estonia. While, therefore, there were only three countries Hungary, Romania and Slovakia where the proportion of those unemployed for less than 6 months was below 50% in 2007, in 2011, there were 10 and another 7 where the proportion was below 60%. On the other hand, in Finland, the Netherlands, Austria, the Czech Republic and, above all, in Germany, the proportion unemployed for less than 6 months increased between these two years. It also increased in Hungary, though here the proportion was still well below 50% in This widespread decline in the proportion of those in this age group unemployed for less than 6 months was mirrored by an increase in those out of work and looking for a job for a year or more, even though again the extent of the increase in the length of job search is disguised by the flow of new entrants into unemployment. In 2011, therefore, some 22% of the unemployed aged had been out of work for over 12 months in the EU15, excluding Germany, as opposed to 16% in 2007 before the onset November

79 of the crisis. In the EU12, the increase was larger, from 13% in 2007 to 23% in 2011 (Figure 42). The increase was particularly pronounced in Bulgaria and Ireland (over 30 percentage points in each case) and only slightly less so in Spain and Latvia (over 20 percentage points). In 9 Member States, over 30% of the unemployed had been looking for a job for more than a year in 2011 as against three in The same 6 countries which experienced an increase in the proportion unemployed for less than 6 months also showed a decline in the proportion unemployed for over a year, though the decline was marginal in the Netherlands and in Hungary, the proportion remained at over 25%. Figure 42 - Unemployed aged seeking a job for over a year, 2007 and 2011 (% unemployed 18-24) Source: Eurostat, Labour Force Survey Notes: EU-15 excludes DE. EU-12 excludes PL. Duration of unemployment by education level The lengthening of the time for the young unemployed to find a job over the crisis period has tended to affect those with only basic schooling in particular but those with tertiary education have not escaped. At the same time, there are some differences. In the EU as a whole, around 40% of the unemployed aged with basic schooling has been out of work for less than 6 months in 2011 as compared with 49% four years earlier, while a similar proportion had been out of work for over a year, up from 34% four before (Table 20 for selected Member States). This increase in the duration of unemployment for those with this level of education, however, largely occurred in the EU15 countries. In the EU12, the tendency was much less widespread and in both Poland and Romania, the opposite was the case. In the EU15 excluding Germany, therefore, the proportion of the unemployed with basic schooling out of work for less than 6 months fell from 56% to 40%, while the proportion out of work for a year or more increased by almost as much to over 40%. Nevertheless, despite the opposite tendencies in the EU15 and EU12, it is still the case that the length of time young people with basic schooling spend unemployed was on average much longer in the latter than the former in 2011, with over half of the unemployed concerned being out of work for over a year. Within the EU15, the increase in the duration of unemployment for year-olds with this level of education was especially marked in Spain, where the relative number unemployed for less than 6 months halved between the two years while the proportion November

80 unemployed for over a year rose by over three times. In Greece, on the other hand, the duration of unemployment changed comparatively little, with the proportion of this age group out of work for more than a year rising by only just over 3 percentage points, though it was relatively large anyway. Here, however, the number of unemployed rose rapidly over the period, in itself tending to reduce the average duration of unemployment. Table 20 - Proportion aged unemployed for less than 6 months and over a year by education level, 2007 and 2011 (% of age group and percentage point change) Basic schooling <6 months >1 year <6 months >1 year DE EL ES FR IT PL RO UK EU EU EU Upper secondary <6 months >1 year <6 months >1 year DE EL ES FR IT PL RO UK EU EU EU Tertiary <6 months >1 year <6 months >1 year DE EL ES FR IT PL RO UK EU EU EU Source: Eurostat, Labour Force Survey Note: EU15 excludes DE. EU12 excludes PL and RO. November

81 For young people with upper secondary qualifications, the length of job search tends to be shorter on average than those with only basic schooling. Moreover, in most countries, though there was an increase in the time taken, it was less than for those with lower education levels. In the EU15 excluding Germany, the proportion of the unemployed aged with upper secondary education who had been out of work for less than 6 months declined by just over 6 percentage points between 2007 and 2011 while the proportion looking of work for over a year increased by the same amount. In the EU12, excluding Poland and Romania, the proportions changed in the same direction, though by slightly less. It was still the case, however, that the proportion unemployed for less than 6 months was much smaller in the EU12 than the EU15 in 2011 (40% as against 56%) and the proportion unemployed for over a year much larger (38% as against 27%). Accordingly, in the EU12 excluding these two countries, it took significantly longer, on average, for someone unemployed in this age group and with upper secondary education to find a job than in in the EU15. In Romania, in fact, the average duration of unemployment was longer than in the rest of the EU12, though the LFS data suggest that it shortened between 2007 and In Poland, the average duration of unemployment for someone with these characteristics was shorter than in other EU12 countries and similar to that in the EU15 and, as in Romania, it shortened further over this 4-year period. Within the EU15, the duration of unemployment for those with upper secondary qualifications lengthened considerably in Spain, though by less than for those with only basic schooling, while in Greece, the average duration declined slightly, though as for those with only basic schooling, it still meant that the duration was much longer than in most other countries, with over 40% of the unemployed aged with this level of education out of work for over a year. Indeed, in Greece, unlike in most other parts of EU, the average duration of unemployment for this group seems to be similar to those of those with basic schooling, which is also the case in Romania. In these two countries, therefore, having upper secondary qualifications as opposed to no education beyond basic schooling does not appear to speed up job search significantly. Tertiary qualifications, on the other hand, do seem to speed up job search even in Greece and Romania, though the people in this age group concerned still experienced an increase in the duration of unemployment in most countries. In the EU15, the increase was similar to that for those with upper secondary education, while in the EU12, again excluding Poland and Romania, the increase was larger, the proportion of the unemployed with this level of education out of work for less than 6 months declining by almost 12 percentage points between 2007 and 2011, from a level similar to that in the EU15 to one which was much lower. In Greece and Romania, though the proportion of the unemployed with tertiary education in this age group out of work for over a year is smaller than for those with lower education levels, it was still around a third in 201, much larger than in other countries. In Spain, the increase over the crisis period meant that the proportion, which was less than the EU15 average in 2007, was pushed up above the average. The kinds of job taken by young people Employment in temporary jobs Many of the young people who move either from education or unemployment into work go into temporary, or fixed-term, jobs. In 2011, almost 39% of those aged in the EU were employed in such jobs, up slightly from before the onset of the crisis in However, there was a bigger increase from 2009 when job losses were most severe. Between 2007 and 2009, therefore, there was an overall decline in the November

82 proportion employed in temporary jobs as in many cases these were the first to go as the recession hit and fixed-term contracts were not renewed. This is particularly evident in the figures if Germany, where there was relatively little fall in employment, is left to one side. The proportion then rose again as the downturn in the economy came to an end but there was at best hesitant recovery and continuing uncertainty about future prospects, making employers reluctant to take on permanent staff. This can be seen most clearly in Spain, where the share of those aged employed in temporary jobs fell from 57% of the total in work in 2007 to 50% in 2009 and then increased again to 59% in 2011 (Table 21). The pattern is also evident in a number of other Member States, though in many, the share continued to rise in the first two years of the period, but by less than subsequently. Table 21 - Employment of those aged in temporary jobs and as self-employed, 2007, 2009 and 2011 (% of total employed in the age group in each year and percentage point change) Temp S-empl Temp S-empl Temp S-empl Temp S-empl Temp S-empl BE BG CZ DK DE IE EE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. Data for BG for 2007 relate to S-empl=self-employed which includes family workers. The relative number of young people employed in temporary jobs, however, tends to be smaller in the EU12 than the EU15, though Poland along with Slovenia is an exception (with some 57% of those aged employed in such jobs in the former in 2011 and 65% in the latter). The figure is particularly small in Bulgaria and Romania, November

83 where in the latter a much larger proportion of the young people in work than elsewhere are self-employed or family workers (41% in 2011). These consist mainly of people working in agriculture, especially in small holdings, many of them subsistence farmers. The proportion of self-employed is also relatively large if much smaller than in Romania in Poland, Slovenia, Slovakia and the Czech Republic in the EU12 and in Greece and Italy in the EU15. In Greece, the situation is similar to that in the EU12 countries, with young people working in the family business, many of them in small shops as well as agriculture and with no formal contract of employment as such. In Italy, in particular, many of the self-employed in this age group work on a contract basis for one company, which is a means of reducing non-wage labour costs for the company concerned and increases their flexibility in respect of staffing, it means that the people employed in this way tend to be in much the same precarious situation as those on fixed-term contracts. If the self-employed and family workers are included along with those employed on fixed-term contracts, the proportion of those aged in work who are employed in relatively precarious positions in 2011 ranged from 77% in Slovenia, 70% in Poland and 65% in Spain to under 15% in Bulgaria, Latvia and Lithuania. Much the same proportion of men as women are employed in temporary jobs across the EU and the change over the crisis period has been similar for both. Young people moving from unemployment into employment, however, are even more likely to go into temporary jobs rather than permanent ones. This is especially the case in the EU12 countries. Moreover, the proportion has tended to rise over the crisis period. In 2011, therefore, 56.5% of those in the age group in the EU who were unemployed in the previous year and who had found a job were employed on temporary contracts, while a further 7.5% or so were self-employed (Table 22). Both figures were higher than in 2007, the increase being common to most Member States. The proportion of those in this age group who were unemployed the year before and were in work and employed in either temporary jobs or as self-employed or family workers in 2011 was over 90% in Spain, over 85% in Portugal and Poland and over 75% in Slovenia. The proportion was over half in 17 of the 27 EU countries and over a third in all but 6 countries. Table 22 - Proportion of those aged who were unemployed the previous year in work and employed in temporary jobs and as self-employed, 2007 and 2011 Temp (%) %-point change Self-empl (%) Temp (%) Self-empl (%) Temp Self-empl ES PT PL SI DE FR IT SE EL BE SK HU CZ November

84 Temp (%) %-point change Self-empl (%) Temp (%) Self-empl (%) Temp Self-empl FI RO UK DK BG AT LV LT EE EU EU EU Source: Eurostat, Labour Force Survey Note: EU15 excludes DE. EU12 excludes PL. Data for BG for 2007 relate to Data unreliable for CY, LU and MT. The reasons for working in temporary jobs Around 40% of those aged in the EU working in a temporary job in 2011 reported doing so because no permanent job was available. This figure is reduced, however, by the very small proportion reporting this to be the main reason in Germany (only 9%), where the great majority were in temporary jobs because of being on training contracts (Table 23). The same was the case in Denmark and Austria. Excluding Germany, half of the young people employed in temporary jobs in the EU15 did do because these were the only types of job available. In the EU12, the figure was even higher (almost 60%) and had risen over the crisis period. In Spain and Slovakia, the figure was well over 80% and in the Czech Republic, Cyprus and Portugal, over 75%. In 18 of the EU countries, the figures increased between 2007 and 2011 and in 20 countries it was main reason reported. Table 23 - Proportion of those aged employed in temporary jobs by main reason, 2011 and change Period of training Period of probation 2011 (% temporary) Percentage point change No perm Perm job not Period of Period of No perm job job avail wanted training probation avail Perm job not wanted BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT November

85 Period of training Period of probation 2011 (% temporary) Percentage point change No perm Perm job not Period of Period of No perm job job avail wanted training probation avail Perm job not wanted PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. Data for BG for 2007 relate to For those moving from unemployment into work who take up temporary jobs, the predominant reason is even more their inability to find permanent employment. Over two-thirds reported this to be the main reason in 2011 and almost three-quarters in the EU12, excluding Poland, and in the EU15, excluding Germany, and this was the main reason in all but four of the 27 EU countries (the only exceptions being Germany, Austria, Estonia and Lithuania) (Table 24). In most countries, the proportion so reporting was significantly larger than in Table 24 - Those aged unemployed the year before and employed in temporary jobs by main reason, 2011 and change Period of training Period of probation 2011 (% temporary) Percentage point change No perm Period of Period of No perm job avail training probation job avail Perm job not wanted Perm job not wanted BE BG CZ DK DE EE EL ES FR IT LV LT HU AT PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat Labour Force Survey Notes: EU15 excludes DE. EU12 excludes PL. Data for CY, LU and MT unreliable. November

86 On average, only 11% of young people in the EU15 excluding Germany who had moved from unemployment into a temporary job reported that the main reason for being in such a job was that it involved a period of training, much less than before the crisis, and just 4.5% in the EU12. Employment in part-time jobs As well as many young people being in temporary jobs, many are also employed parttime rather than full-time. In a number of Member States, many of the people concerned combined employment with training, in particular under the dual system in Germany, Austria and Denmark. A significant proportion of those moving from unemployment into work, however, also moved into part-time jobs which were less likely to involve formal training as well as employment as such. Moreover, the number concerned has risen significantly over the crisis period. In 2011, some 26% of all those aged in employment in the EU who were unemployed the previous year worked part-time rather than full-time, just over 31% in the EU15 excluding Germany, though only just over 13% in the EU12 (excluding Poland where the figure was slightly smaller than in the rest of the EU12) (Figure 43). Both figures were significantly higher than in 2007 before the crisis began. The proportion of the people concerned working in part-time jobs was particularly large in Sweden, the UK and Spain (well over a third in each case and over 40% in Sweden), the figure in the last more than doubling over the 4-year period. It was also above average in Greece, where it was well below average 4 years earlier. Once again Germany, and to a less extent Austria, showed the opposite tendency to other countries, the proportion declining markedly over the period. Figure 43 - Proportion of those aged employed in 2011 and unemployed the year before working in part-time jobs (%) Source: Eurostat, Labour Force Survey Notes: Data for LU and MT is unreliable. No data for IE and NL. EU-15 excludes DE. EU-12 excludes PL. The proportion moving from unemployment to part-time jobs was below the EU15 average in all EU12 countries and was around 15% or below in all but Slovakia and Cyprus. In all of them except Poland and Romania, however, the proportion increased between 2007 and As might be expected, the proportion is larger among women than men, reflecting the much greater tendency for women of all ages to work in part-time jobs whether they move from unemployment or not. In 2011, some 37% of women in the EU aged who were in employment but unemployed the year had part-time jobs (Figure 44). November

87 Again the figure was much higher in the EU15 than the EU12 (45% as against 14%) and significantly above the figure in Figure 44 - Proportion of women aged employed in 2011 and unemployed the year before working in part-time jobs (%) Source: Eurostat, Labour Force Survey Notes: Data for CY, LU and MT is unreliable. No data for IE and NL. EU-15 excludes DE. EU-12 excludes PL. The ranking of countries in terms of the proportion employed part-time was much the same for women as for all those in the age group, with the proportion being 50% or above in Sweden, Belgium and Spain but below the EU15 average in all EU12 countries (well below in all but Estonia). Again nearly all countries have experienced an increase in the proportion over the crisis period, the only exceptions being Germany and Austria, as for all in the age group, and in this case Finland. There has also, however, been an increase in the proportion of young men employed part-time. Though much smaller than in the case of women, the proportion of men aged moving from unemployment into work and being employed in part-time jobs is, nevertheless, significant in many EU countries. The proportion averaged over 20% in the EU15 in 2011 and was over 30% in Sweden and the UK (Figure 45). Although the proportion was again much smaller in the EU12 than in the EU15, the difference was less pronounced, largely because there was a less of a difference in EU12 countries between the proportions of men and women employed part-time. Indeed in Romania where around twice as many men as women moved from unemployment into part-time jobs Slovakia and Latvia, the proportion was larger than in many EU15 countries. November

88 Figure 45 - Proportion of men aged employed in 2011 and unemployed the year before working in part-time jobs (%) Source: Eurostat, Labour Force Survey Notes: Data for CY, LU and MT is unreliable. No data for IE and NL. EU-15 excludes DE. EU-12 excludes PL. While the increase in the proportion over the crisis period was slightly less widespread than in the case of women, it was still significant in many countries, including in particular the UK, Sweden and Spain as well as Slovakia and Latvia. Methods of job search The methods used by the unemployed in the age group to find a job vary across the EU. According to the Labour force Survey, which asks respondents about the methods used over the preceding four weeks, in 2011, around 58% of young people recorded as being unemployed (on the international standard definition) across the EU contacted a public employment office (Table 25). This was significantly less than those who studied advertisements in the media (the most commonly-used method), asked friends, relatives or associates (the second most common) or made direct applications to employers (third most common). The use of the public employment services (PES) for job search was more common in the EU12 even excluding Poland where the proportion doing so was well above the EU average than in the EU15, especially if Germany is excluded where the use is also well above average. This, it should be noted, is despite a smaller proportion of young people registering with the PES in the EU12 than in the EU15, as noted above. Asking friends and relatives was equally much more common in the EU12. In both cases, however, the proportion of the young unemployed reporting using these methods varied markedly within the two groups. The use of public employment services was, therefore, especially prevalent in the Czech Republic, Hungary, Slovakia and Lithuania, but was reported by less than 40% of people in Estonia and Latvia and by less than 30% in Bulgaria and Cyprus. In the EU15, the proportion reporting using the PES was over 70% in Germany, Austria and the UK but less than a third in Italy, Denmark and the Netherlands. Similarly, asking friends, relatives or associates was reported by over 95% of young people in Greece and Ireland and by 90% in Spain but by only around a third in Belgium and just over a quarter in Sweden. In the EU12, on the other hand, there was less variation, the proportion using this method averaging 85% and exceeding 70% in all countries and 80% in 8 of them. November

89 Table 25 - Unemployed aged using different methods of job search in 2011 (% reporting) PES Private agency Direct applic Friends, relatives Replied advert Studied adverts Interview, test Awaiting reply Awaiting PES call BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU EU EU Source: Eurostat, Labour Force Survey Note: EU15 excludes DE. EU12 excludes PL. The use of private employment agencies to look for a job was, by contrast, more prevalent in the EU15 than in the EU 12, though the proportion exceeded 40% only in Belgium, France, Portugal and the Netherlands, in the last being reported by more people than the public employment services and by only a slightly smaller number in Portugal and Spain. On the other hand, less than 10% reported using private agencies in Greece and Sweden and less than 1% in Denmark. In the EU12, the proportion was less than 10% in half the countries, but almost 40% in Hungary and 47% in Malta. There is little systematic variation in the use of different methods of job search between those aged with different education levels out of work and looking for a job (Table 26). There is an overall tendency for the use of the PES to be more prevalent in the EU15 among the less well-educated and less prevalent among those with tertiary education, though this is not the case in Greece or the Netherlands, while in Italy, the use of the PES is more common among those with tertiary education 13. In the EU12, the use of 13 This broadly concurs with the finding in the 2011 Mobility in Europe Report (see p.36). November

90 public employment services to help with job search is more prevalent among those with upper secondary education than among those with lower education levels. Table 26 - Unemployed and inactive aged using different job search methods by education level, 2011 (% reporting in each group) PES Basic schooling Private agency Direct applic Friends, relatives Replied advert Studied adverts Interview, test Awaiting reply Awaiting PES call CZ DE EL ES FR IT HU NL PL UK EU EU EU Upper secondary education CZ DE EL ES FR IT HU NL PL UK EU EU EU Tertiary education CZ DE na na na na na na na na na EL ES FR IT HU na na na na na na na na na NL PL UK EU EU EU Source: Eurostat, Labour Force Survey Note: EU15 excludes DE. EU12 excludes PL. na=data unreliable. The use of private employment agencies, as might be expected is more common among those with tertiary qualifications. The use of friends, relatives or associates for November

91 help shows little systematic variation with education level. In Italy, it is more prevalent among those with only basic schooling and least common among those with tertiary education; in France, the reverse is the case. Men are more likely than women in most of the EU15 countries to use the PES to look for jobs, most especially in Germany, Austria, the Netherlands and the UK (where the difference was around 10 percentage points or more in 2011). In the EU12, the reverse is the case, though the difference is less marked. Use of the public employment services by young people finding jobs As the above would suggest, the involvement of the public employment services in successfully helping those in the age group to find a job varies markedly across countries. In the EU as a whole, in 2011, around 8% of those finding a job within the past year reported that the PES were involved in some way in helping them to do so, the figure being slightly higher in the EU15 than in the EU12 (Figure 46) 14. The proportion so reporting, however, varied from 24% in Slovenia to only around 2% in Cyprus and the Netherlands (which is in line with the small proportion of people reporting using these offices for job search). In 11 of the 26 countries for which data are available, the proportion was below 5%. In around half the countries, there was an increase in the proportion over the crisis period, in half a decline. Figure 46 - Proportion of those aged reporting that the PES were involved in helping them find a job within the past year, 2007 and 2011 (% reporting) Source: Eurostat, Labour Force Survey Notes: Data for LU is unreliable. No data for FI. EU-15 excludes DE. EU-12 excludes PL. Much the same proportion of women as men in the EU as a whole reported the involvement of public employment offices, though slightly more men than women in the EU12 if Poland, where the reverse is the case to a significant extent, is excluded (Figure 47) Again the overall figure is in line with the 2011 Mobility in Europe Report. 15 These findings are again in line with the 2011 Mobility in Europe Report. November

92 Figure 47 - Proportion of men and women aged reporting that the PES were involved in helping them find a job within the past year, 2011 (% reporting) Source: Eurostat, Labour Force Survey Notes: Data for LU is unreliable. No data for FI. EU-15 excludes DE. EU-12 excludes PL. In line with the lack of any systematic variation of the use of public employment services for job search between those with different education levels, there is relatively little tendency for the involvement of the PES in helping young people to find a job to vary with the occupation concerned. This is less the case, however, in the EU12, especially if Poland is excluded, where the involvement of the PES is reported by a much larger proportion of people employed in elementary jobs than others (Table 27, which shows the data for selected countries where the reliability of the data is less of a problem) 16. Overall, there is some tendency for the PES to be less involved in helping people to find managerial and professional jobs, though it is not the case in all countries Greece and Sweden being exceptions. There is also some tendency for them to be more involved in helping those in this age group to find clerical and office work than other types of job, though again not in all countries. Table 27 - Proportion of those aged reporting that the PES were involved in helping them find a job within the past year by occupation, 2011 (% reporting) Managers. professionals Clerks, office workers Sales, service workers Skilled, semiskilled manual Elementary workers Total employed CZ DE EL ES FR IT HU NL PL In the 2011 Mobility in Europe Report it was found that involvement in placement was particularly high (compared to overall rate in the country) for low educated in Slovakia and Hungary and, to a lesser extent, in Latvia and Bulgaria, which is consistent with the PES being involved more for elementary occupations in the EU12 (see Table 8 of the report). November

93 Managers. professionals Clerks, office workers Sales, service workers Skilled, semiskilled manual Elementary workers Total employed PT RO SE UK EU EU EU Source: Eurostat, Labour Force Survey Note: EU15 excludes DE. EU12 excludes PL Concluding remarks on developments The above analysis indicates that youth unemployment, which was a problem in some countries even before the onset of the global recession, has become a major problem in nearly all EU Member States. The very few exceptions are those countries Germany is the most notable example which have succeeded in achieving reasonable rates of economic growth, and job creation, since In many countries, however, the unemployment figures do not reveal the full scale of the problem, since a large number of young people under 25 have withdrawn from the labour force and stopped actively searching for employment. Some of these have remained in, or returned to, education and initial vocational training, but significant numbers have not and are neither improving their qualifications and chances of finding work nor, it would appear, trying hard to find a job. This group in particular represents a major challenge for policy. The increase in unemployment among young people has affected the more highly educated as well as those with inadequate qualifications. Although the latter have tended to experience the largest increase, the rise in unemployment among university graduates and those with upper secondary qualifications (gained after at least three years tuition or training after compulsory schooling) has also been substantial in most countries. This poses new challenges for policy which in the past has tended to focus on improving the employability of young people unemployed though helping them to improve their qualifications and has not usually had to deal with large numbers who are already relatively well qualified. The crisis has been marked not only by growing numbers of young people unable to find employment and taking longer to do so but also by a significant proportion of the jobs that they do manage to find being temporary or part-time. The implication is, therefore, that the decline in employment of young people under 25 has been accompanied by a deterioration in the quality of jobs that they do, which from an EU Employment Strategy perspective can be regarded as equally important. The PES clearly has an important role to play in helping young people find employment, though how effective they are in the prevailing circumstances is not so clear. While a large proportion of those under 25 in most countries report making use of the PES to help them search for a job, particularly in the EU12 countries, relatively few who have succeeded in finding one report that the PES was involved in the process. Nevertheless, the PES are responsible for many of the initiatives which have been launched across the EU over the crisis period to assist the unemployed. In many countries, however, these have been aimed at all age groups and not just at those under 25 or under 30, reflecting the fact that unemployment has generally risen by more among those above this age than among those below, even if, as indicated November

94 above, the unemployment figures for young people tend to give only a partial picture of the scale of the problem. These initiatives and the other measures implemented in 6 selected EU countries, which are broadly representative of the policies adopted across the EU in response to the effect of the crisis on the employment of young people, are examined in the next section. November

95 Policies to promote youth employment Summary of case studies Introduction Six countries were chosen for more detailed study, focusing in particular on the measures in place to combat youth unemployment and to assist young people to find jobs. These countries include ones which have experienced very different developments over the crisis period. They consist of: Germany, which has managed not only to keep down youth unemployment since the global economic recession hit during 2008 but even to reduce it below its pre-crisis level; Denmark, which has historically been a country of low youth unemployment as well as one which has traditionally had an extensive range of labour market policies to help people of all ages into employment but which seen unemployment increase over the crisis period; Spain and Ireland, which are among the countries worst affected by the crisis and which have experienced large-scale job losses and a substantial increase of unemployment among young people but also older ones; Greece, which has also been hit hard by the crisis but more by the financial aftermath and the consequences of excessive budget deficits and government borrowing which have led to severe austerity measures, steep declines in GDP, falling employment and rapidly rising joblessness, especially among young people; Hungary, where the proportion of the age group in employment (at only 20%) was the lowest in the EU before the onset of the crisis and has declined further since though it been superseded by Greece but where the rate of unemployment is above average, signifying that those who do enter the labour market have severe difficulty finding work. The focus here is on both the institutional setting which was in place before the crisis struck and the related policy stance towards the employment of young people and assisting them to make the transition from education and initial vocational training into work and the action which has been taken over the crisis period to strengthen this assistance. In practice, Denmark is the only country of the six in which a major package of initiatives has been implemented in response to the crisis specifically to help the young unemployed. The focus is mainly on the provision of education and apprenticeships though it includes measures to help university graduates to find employment as well as general wage subsidies to encourage employers to take on young people registered as unemployed. In Ireland, Spain and Greece, the majority of the measures in place are targeted at the unemployed in general rather than at young people among them as a specific problem group, with the long-term unemployed being a particular focus of activation measures. Nevertheless, some of the measures implemented have assisted the young unemployed in particular, though a number of these have only recently been introduced after 4 years or so of mounting problems for young people in the labour market: in Ireland, a new Pathways-to-work programme has been introduced which attempts to formulate a strategy for each person individually and which, November

96 though not targeted at young people specifically, is especially important for them; in Spain, a new training contract for the young unemployed was established in mid-2011 and a new general recruitment incentive for employers to take on the unemployed was introduced in 2012, with half of those taken on being young people; in Greece, a wage subsidy programme is targeted at young university graduates, but this is the only measure aimed specifically at young people. In Hungary, youth unemployment and easing the transition of young people from education into work was not considered a priority until very recently and no specific measures have yet been introduced, though some are under consideration at present. In Germany, as indicated above, youth unemployment has been kept down and even reduced since the onset of the crisis in This can be attributed in part to the institutional arrangements which have been in place for some time to try to ensure that every young person has access to suitable education or training before entering the labour market, in the form, in particular, of the dual system which combines formal training with work experience for those not pursuing the educational route to university and a professional career. It is also attributable to a large extent, however, to the competitive strength of the German economy which enabled it to recover much more quickly from the global recession through expansion of exports, especially to emerging markets, and so create the jobs for young people to move into. The two, it can be argued, are related insofar as German competitiveness rests in large measure on the skills of the work force, which in turn are fostered by the education and training system in place. The role of the PES In Germany, the PES plays an important role in assisting the young unemployed by providing a range of support services in job centres for those under 25 to help them find employment. This includes guarantees that each of the young people concerned will either obtain an apprenticeship or be given a place on a training programme or be found employment of some kind. In addition to a growth in the number of apprentices, there has also been a significant increase in the number of people receiving counselling and guidance over the crisis period. In Denmark, the PES manages all the measures newly established to assist young people to make the transition from education into work, while the social partners are also involved at all levels national, regional and local in developing specific labour market policies best suited to providing effective support. In Ireland, the Pathways to work approach was launched in February 2012 to establish a more individual relationship between the PES and the unemployed and to encourage the formulation of tailor-made strategies designed to provide the best means of getting someone into work. The focus is particularly on the long-term unemployed with the aim of helping 75,000 of them find employment by the end of This involves profiling each person in order to assess their chances of finding employment and to interview each of them separately to pass on advice and guidance based on the profiling. An objective of the programme is to improve the capabilities of the PES to deliver better services to those unemployed and as part of this the provision of employment services and benefit payments is in the process of being integrated into a single unit. In Spain, the aim is also to strengthen the role of the PES through a similar approach. New legislation was initiated in 2011 (Royal Decree-Law 3/2011) to develop more personalised employment pathways for each person unemployed, including the young. November

97 Details on the implementation of the legislation are still to be announced, but whatever they are, the challenge faced to make the intended strategy effective is formidable given the considerable growth in the number of unemployed and the limited budget available. Partly in response to this, another piece of legislation was passed in 2012 to strength the role of private employment agencies to complement the PES. In Greece, the role of the PES does not appear to have changed much with regard to the assistance provided to young people, largely because youth unemployment, though high, is not considered a priority given the high levels of unemployment across all age groups. Moreover, budget constraints severely limit the resources available to finance PES activities, which are increasingly dependent on funding from the ESF. In Hungary, despite the Council recommendations of to strengthen the capacity of the PES to improve the quality and effectiveness of job-search assistance, individualised services and training for disadvantaged groups, job clubs and counselling programmes for young people have remained limited in terms of the numbers assisted and support provided. Education and training programmes In Denmark, education is seen as the main means of combating youth unemployment. Clear national targets have been set to reduce drop-out rates and to ensure that 95% of all young people complete at least upper secondary education and 50% attain a tertiary qualification. The number of participants in the Demand for education programme, initiated in 2006 to help the low educated aged receiving social benefits to obtain suitable qualifications, has increased significantly during the crisis. In addition, two further programmes were introduced in this regard in 2009, the first to provide basic literacy courses as well as mentors for young people at university; the second to provide guidance to those aged not ready to continue studying after basic schooling with the aim of keeping them in the education system. In Autumn 2012, a package of new measures was introduced for those aged with inadequate levels of education to help them to return to schooling and to improve the apprenticeship programme for those aged In Ireland, under the Pathways to work initiative, a total of 457,400 places in training and education is intended to be financed in 2012, which is slightly less than in 2011 as a consequence of budget constraints. Priority on these places is given to the long-term unemployed, including those under 25, whose number is increasing. In Spain, one of the objectives of the labour market reform of February 2011 is to improve coordination between education institutions and the PES in order to increase the number of young people with qualifications. While number of those under 30 participating in general training programmes has declined during the crisis (from around 109,500 in 2008 to 91,800 in 2010), the number in training programmes specifically targeted at young people increased. In Greece, the skills taught by education and training institutions are considered on the whole to be out of line with those demanded by employers (which generally tend to be relatively low). Partly in response, career and entrepreneurship centres have been established in universities and vocational training institutes (with a budget of EUR 21 million). In addition, some 19,500 scholarships for university student (cofinanced by the ESF, with a total budget of EUR 134 million) have been introduced, while around 2,500 young people participate each year in vocational training programmes organised by the PES after completion of secondary education. There are also temporary work placements for students in their last year of technical courses, with the PES paying half of their wage (the budget totalling EUR 23 million). More recently, a training voucher has been introduced to help young people acquire basic November

98 skills in ICT (the number of recipients expected to be around 38,000 persons and the budget amounting to EUR 44 million). In Germany, vocational training was increased after the crisis hit. Although youth unemployment has tended to fall in the past three years as growth in the economy resumed and a relatively high net rate of job creation was achieved, there remains a policy concern to facilitate the transition of young people from education into employment. In April 2012, therefore, Career start coaches were introduced in schools to help students to select the most suitable course of training for them. Apprenticeships In Germany, apprenticeships remain a central element of the system to prepare young people for vocational occupations and programmes are in place to help those who are disadvantaged, as well as young people generally, to find a place. In Denmark, apprenticeships have traditionally been a major part of the education and training system and they were strengthened further in 2009 in response to the crisis by the introduction of the Ice-breaker initiative to encourage enterprises to take on young university graduates as apprentices because of the increased difficulty they faced in finding jobs. In Greece, in addition to the apprenticeship scheme which is part of general secondary education (with about 11,500 participants each year), a one-year programme, targeted at those aged 16-24, was introduced to provide subsidies to employers taking on apprentices, which can be extended for a further year if the apprenticeship is converted into an employment contract. In Ireland, the Redundant Apprentice Placement Scheme was introduced in 2010 to provide an opportunity for apprentices made redundant to complete their on-the-jobtraining in particular sectors (construction and engineering in particular), employers participating receiving a subsidy (initially of EUR 340 a week and subsequently of EUR 250). By the end of 2010, 2,359 people had been helped by the scheme. In February 2011, the scheme was extended to enable apprentices to complete on-thejob training at more advanced levels. In Spain, a new training contract was introduced in August 2011 for those aged with no qualifications (Nuevo contrato para la formación y el aprendizaje). As a transitional arrangement, those under 30 are eligible as long as the overall unemployment rate is over 15%. Under the scheme, which combines training with work experience, employers taking on young people receive a reduction in their social security contributions (up to 100% for SMEs i.e. firms with less than 250 employees 75% for larger firms). The scheme, however, does not appear to be as successful as expected, since in July 2012, around 6,700 people were employed on such contracts, which is only slightly more than under the scheme which preceded it. In addition, new legislation (Royal Decree 1529/2012) was adopted in November 2012 laying the foundations for the progressive implementation of a dual employment plus vocational training scheme. Specific programmes for early school leavers In Ireland, the Youthreach programme targeted specifically at unemployed early school leavers (aged 15-19) has been in place since 1989 to provide basic skills training and practical work experience. At the end of 2010, 3,367 participants were recorded to be in the programme, which was around 30% fewer than at the end of 2007 when the crisis was just beginning. In addition, at the end of 2011, 2,241 young people aged 16-21, who were also low qualified and had left school early, were November

99 recorded as being in Community Training Centres, which had been established in 1978 for much the same purpose. In Hungary, the lack of work experience at school is regarded as a major factor underlying the difficulty of young people making the transition from education into employment. Little has been done to tackle this problem, except through the provision of significant wage subsidies for employers taking on school leavers. Since 2006, this has been done through the Start Card scheme, which has assisted around 45,000 school leavers a year, providing support for around 11 months on average, though half of those assisted are college and university graduates rather than those with lower qualifications. In Spain, the Initial Vocational Qualification programmes (PCPI) was introduced several years ago, in cooperation with the PES, to give early school leavers the possibility of undertaking training courses for a period of one or two years to prepare them for entry onto a regular VET course. Employment incentives In Denmark, the response to the rise in youth unemployment was to extend apprenticeships and to introduce wage subsidies to encourage employers to take on young people. More recently, in November 2012, a series of new initiatives came into force (totalling EUR 51 million) to help young graduates into employment, including through the job rotation scheme (which enables unemployed graduates to temporarily replace employees on training leave), increased subsidies to SMEs hiring graduates or those under 30 with craft skills and funding for public authorities to provide jobs for graduates in schools, hospitals and other public institutions. In Ireland, the new Pathways to work programme includes funding for over 85,000 places in job placement and work experience schemes in 2012, while the JobBridge scheme, launched in July 2011 for two years, provides work experience for the unemployed to help them find more permanent jobs. In September 2012, just over a quarter of the 10,326 participants were under 25. In Spain, under the 2011 labour market reform, young people with low qualifications were designated as a priority group, along with people with disabilities, the long-term unemployed, older workers and those previously employed in construction. A new general measure (Contrato de apoyo a emprendedores) was launched in February 2012 to encourage small firms to take on those unemployed on full-time permanent contracts through reducing their social contributions for three years if they are aged In June 2012, over half of the 43,000 people taken on were in this age group. In Greece, a new wage subsidy programme (totalling EUR 75 million), targeted at unemployed university graduates under 35, was recently introduced, giving employers taking on graduates EUR a day and aimed at 5,000 jobs. A similar scheme for small firms with less than 50 employees, though not confined to young unemployed, is intended to create 25,000 jobs through reducing social contributions by 80% for two years, while a more general four-year programme (with a budget of EUR 501 million) is aimed at creating 40,000 jobs. A significant number (42%) of the unemployed so far taken on under the scheme are under 30. A re-integration voucher programme has also been introduced (in March 2011) to convert unemployment benefits received into financial support for finding a job or entering a training programme. In Hungary, the PES and the National Public Employment Foundation (OFA) have launched several programmes, mainly based on wage subsidies, in response to the crisis, though none is specifically targeted at young unemployed. The Start Card programme described above, however, is aimed, as noted, at helping those under 25 to get their first job through reducing employers social contributions. November

100 In Germany, various general measures (such as Integration subsidies or Community service jobs) are in place to help the young unemployed, along with other target groups, into work. Support for entrepreneurship In Spain, under the Capitalisation of unemployment benefits programme (which dates back to 1985), the unemployed under 30 are able to receive 100% of their unemployment benefits (60% for those older) as a lump-sum payment to help them set up a business. In 2010, however, only around 2% of those doing so were under 25. The Government has recently submitted to Parliament a Strategy for Entrepreneurship and Youth Employment, , but the details are not yet known. In Greece, there are a number of general schemes to support entrepreneurship, some with quotas reserved for young people. In addition, a few schemes specifically targeted at the young unemployed have also been recently implemented. One is targeted at those aged (with a budget of EUR 116 million) and has so far assisted 5,645 people. Another for unemployed graduates aged under 34 (with a budget of EUR 126 million) has supported 6,275 people, while a third (with a budget of EUR 177 million) is aimed at helping young people start up an agricultural business and up to now has financed 12,600 people. In Hungary, a proposal has been made to introduce a programme co-financed by the ESF to help young people aged to set up their own business (with a budget of EUR 25 million and a target of assisting 2,000 people) through advice and guidance as well as financial support. A programme of Starting Support for young farmers, cofinanced by the EU Agricultural Fund for Rural Development, has also been proposed, in this case to start in Neither programme has yet been agreed. In Germany, a general programme exists to support people setting up as selfemployed, though the number of young people under 25 participating has declined markedly over the recent past (from 18,357 in 2007 to 8,232 in 2011). Policies to promote youth employment: Germany After reunification, the German apprenticeship system was in crisis and was unable to cope with the demand for apprenticeships. To solve this problem, the trade unions called for a second, state-run apprenticeship system that would be funded by firms that did not offer enough training positions. The employers federation was vehemently opposed to this suggestion, and for the government a second apprenticeship system was an option of last resort. Instead, it initiated a range of programmes (Jump, Jump plus, etc.) to reduce youth unemployment, while a labour market reform Commission (the Hartz Commission) suggested guaranteeing each young unemployed person a job, an apprenticeship or a training course promoted by the Federal employment agency. As a result, the agency began to operate job centres (or departments within job centres) for the young unemployed (those under 25); these have a higher staff-client ratio and tougher targets than job centres for the unemployed of 25 and over. The specific targets are intended to ensure that everyone under 25 who is unemployed is placed in a job, receives training or gets an apprenticeship. With this institutional structure in place, the job centres and the local employment offices stepped up the promotion of vocational training when the economic and financial crisis hit Germany in As with the short-time working scheme, these services kept young people out of unemployment. Since the tension on November

101 the apprenticeship market eased in 2010, there has been a major reduction in the promotion of vocational training. The labour market for young people during the crisis Recession usually affects young people more than older age groups. During the economic and financial crisis, the employment rate of women aged was largely unaffected by the economic turmoil, continuing the upward trend evident before the recession. The rate for men went down slightly in 2009 when the recession most affected employment, but increased in the subsequent two years (Table 28). Young people under 25, as elsewhere in Europe, were affected more, the employment rate falling in 2009 both for men and women, though much more for the former than the latter, especially in relation to the previous upward trend. Employment of both young men and women, however, began to recover in 2010 and increased significantly in The effect was to increase the unemployment rate of men aged in 2009 (to 12.5% of those in the work force) but not the rate for women as the small decline in women was more than offset by fewer women coming on to the labour market or withdrawing from it. The subsequent growth of employment has led to a fall in unemployment for both men and women, pushing the rate in 2011 down to the lowest in the EU. Well over half (54%) of those aged who were unemployed in 2011 (who accounted for 95% of all those unemployed aged 15-24) had no qualifications beyond basic schooling, the largest proportion in the EU except for Spain and Malta. Lack of qualifications, therefore, is a key factor underlying youth unemployment. Table 28 Employment rates and unemployment rates Total Employment rate (% age group) Unemployment rate (% labour force) Unemployed as % Men Employment rate (% age group) Unemployment rate (% labour force) Unemployed as % Women Employment rate (% age group) Unemployment rate (% labour force) Unemployed as % Source: Eurostat, Labour Force Survey In Germany, there has been no clear trend during the crisis for young people to shift from vocational training to schools or universities. Among young people aged 15 24, the share of university students has increased steadily, while the share of students in secondary schools hovers around %. It might seem surprising that the share of young people in apprenticeships has not declined during the crisis: the lowest share of apprenticeships was reached in 2005 and the figure has recovered since (Table 29). November

102 One reason for this might be that the PES (Bundesagentur für Arbeit BA) has stepped up the promotion of vocational training during this period. The number of people in employment subject to social security contributions is a critical issue in Germany, since the increasing amount of marginal employment 17 has provoked fears that young people are getting sucked into a low-pay, no-pay cycle. Table 29 Young people aged in education and vocational training (% total) School students Students in vocational schools Students at universities Apprentices Source: Federal Statistical Office; BA statistics; author s calculations The financial and economic crisis led to a decline in the proportion of those aged liable for contributions in the first quarter of 2010 to its lowest level since The lowest figure for young people under 20 was reached in the second quarter of 2011 (Table 30) and is still below the figure for the previous year. As the share of young people in education is rising, the number of young people aged below 20 in employment might decline further. Table 30 Employment subject to social security contributions Quarter/ Year Number aged % total aged Number aged % total aged Q1/2007 2,317, , Q1/2008 2,415, , Q1/2009 2,394, , Q1/2010 2,396, , Q1/2011 2,477, , Q2/2011 2,497, , Q3/2011 2,569, , Q4/2011 2,536, , Source: BA statistics, employment statistics, July 2012 As the recession forced more young people into unemployment, the share of young unemployed out of work for less than 3 months increased, while the share of those remaining longer in unemployment declined (Table 31). In 2010, however, unemployment started to fall, and in 2011 the share of the long-term unemployed (of 8.5%) was similar to the pre-crisis figure in Additionally, the number of unemployed fell substantially relative to both 2007 and the crisis peak in Marginal employment is a specific form of employment in Germany with an income threshold of below EUR 410 per month. In contrast to regular employment, marginal employment is subject to reduced fixedrate social security contributions. November

103 Table 31 Duration of unemployment % Total Unemployed Less than 3 months 3-12 months Over 12 months , , , Unemployed Less than 6 months 6-12 months Over 12 months , , (to July) 271, Source: BA statistics, unemployment statistics, July 2012, December 2011, 2010, 2009, 2008, 2007 In 2011, 83.5% of young unemployed left unemployment before 6 months, 11.8% were unemployed for between 6 months and a year and 4.6% for more than one year. The share of long-term unemployed leaving unemployment was, therefore, lower than in 2007 (5.3%) and higher than in 2009 (3.8%). The average duration of unemployment for those leaving was around 15 weeks, compared to 14 weeks in 2007 and almost 16 weeks in There is a group of young people who leave unemployment but are not covered by the employment agency and are neither in employment nor in in the education system. In 2012, 12,021 young people leaving unemployment were incapable of work and 17,182 were unwilling to cooperate with the Federal employment agency or were not available for training. While the number of young people not capable of working is roughly constant over time, the number of young people who are uncooperative or unavailable increased from 6,032 in 2007 to 22,718 in 2009, since when it has declined. The peak in non-cooperative young unemployed is due to the high number of training places provided by the Federal employment agency in 2009: as some young unemployed do not find services from the agency useful, they do not show up and so lose their entitlement to unemployment benefits. The characteristics of youth unemployment (especially the gender and educational composition) remained broadly unchanged during the financial crisis. In 2009, however, the share of young unemployed with further vocational training was, at 50%, much higher than in either 2007 or 2012, indicating that even young people with vocational training had problems finding a job that year. In the case of migrants, however, the share of the unemployed with vocational training (10.5%) in 2009 was some two percentage points lower than in 2012 and much the same as before the crisis. The risk of becoming unemployed is highest among high-school dropouts and young people with only lower secondary education. In terms of gender, men have a higher risk of becoming unemployed than women. November

104 Table 32 Characteristics of young unemployed aged 15-24, December 2011 Number Share of unemployed (%) Change from previous year Change from previous year (%) Gender Men 135, , Women 104, , Nationality German 208, , Foreign 31, Qualifications No further education 139, , Vocational training 89, , University degree 2, No answer 8, Education High-school dropout 36, , Certificate of secondary 109, , education General certificate of 61, , secondary education Polytechnic degree 10, , University-entrance 8, diploma No answer 12, Source: BA statistics, unemployment statistics The apprenticeship system in the aftermath of the economic and financial crisis The aftermath of the financial and economic crisis can be seen in the apprenticeship market. At the beginning of the apprenticeship year starting in August 2011, the number of unsuccessful applicants was 9.7% down on the previous year (Table 33). The end of compulsory military service in December 2011, the establishment of a social year 18 and a reduction in the number of school years from 13 to 12, however, increased the number of applicants in spring and autumn compared to previous years and reduced the number of applicants during the summer. In general, the number of successful applicants has been rising, as has the number of applicants with outside options, 19 while the number of unsuccessful applicants declined strongly in the summer and increased slightly in autumn and spring. Table 33 Applicants seeking apprenticeships Number Applicants Change from year before (%) Successful applicants Applicants with outside options Not (yet) successful applicants Number Number Number Change from year before (%) 2010 Oct. 167, ,660 15, , Nov. 223, ,625 19, , Dec. 272, ,685 21, , Jan. 307, ,974 23, , Feb. 351, ,795 25, , Mar. 391, ,195 27, , Apr. 424, ,079 30, , May 449, ,434 32, , Jun. 476, ,214 35, , Jul. 500, ,628 40, , Aug. 524, ,451 52,894 87, Sept. 542, ,582 60,821 11, The social year takes the place of civil and military service and is a co-funded specific form of employment. Employees do additional social work and get a living allowance for up to one year. 19 Applicants with outside options usually have a university entrance diploma and start studying if not selected. November

105 Number Applicants Change from year before (%) Successful applicants Applicants with outside options Not (yet) successful applicants Number Number Number Change from year before (%) Oct. 169, ,179 15, , Nov. 230, ,810 20, , Dec. 284, ,669 23, , Jan. 323, ,748 27, , Feb. 366, ,450 29, , Mar. 408, ,822 33, , Apr. 439, ,724 35, , May 469, ,659 39, , Jun. 493, ,322 41, , Jul. 518, ,059 47, , Source: BA statistics, apprenticeship statistics, July Policies during the economic and financial crisis The Federal employment agency is the main figure in combating youth unemployment. Together with the municipalities (Gemeinde), it operates job centres (or departments of job centres) that are dedicated to people under 25 and it provides a specific service for the young who become unemployed. Job centre officials decide not only on the delivery of services, but also on the cost of living allowance to be provided. This gives a job centre the possibility of sanctioning clients by reducing their allowance. In general, officials from the Federal employment agency in the job centre are responsible for job placement and for the provision of job-related services, while officials from the municipality are responsible for providing subsistence allowances, childcare services and advice for drug addicts. Given this institutional setting, services related to job placement are administered by the centralised Federal employment agency either in job centres or in agencies. This means that similar services were provided throughout the country during the crisis. It also means that, by and large, there was an increase in services provided: as the budget of the agency had been in surplus before the crisis, there were enough funds available to increase expenditure (Figure 48). In 2008, the crisis began to affect the labour market; the Federal employment agency started increasing the services provided and had to spend more on unemployment benefit. In 2009, the efforts were intensified and expenditure reached EUR 48 billion, leaving the agency with a budget shortfall. The improved labour market in 2011 meant that measures to reduce the employment impact of the crisis, such as the short-time working scheme, could be scaled back and the budget rebalanced. The services provided for unemployed under-25s as indeed was the case even before the financial crisis focus primarily on promoting apprenticeships and on the provision of training for jobseekers (see Table 7). The Federal employment agency assisted 542,420 young unemployed people in 2009; more than 348,000 of these received counselling and the offer of apprenticeships. This includes apprenticeships for disadvantaged young people (131,146), preparatory education services for apprenticeships (78,230) and help for school leavers to find an apprenticeship (52,750). There was also a big increase in services to help young people cover the costs of embarking on an apprenticeship (99,934), such the cost involved in taking up one far from home. November

106 Figure 48 - The Federal Employment Agency budget, EUR million Source: BA budget, 2011 Measures to improve the qualifications of young people increased from 2008 to 2009, but dropped thereafter. These measures largely involved further training (Table 34). From 2007 to 2009, however, this included screening with training, which in 2010 shifted to the category of counselling and guidance for jobseekers. These screening services diminished in 2009 but recovered in subsequent years. The number of cases of counselling and guidance for jobseekers rose after the peak of the crisis in 2009 due to an increase in screening. This involves screening the unemployed, identifying obstacles to job placement and improving their employability. As the labour market started to recover in 2010, these services increased in importance, while the promotion of apprenticeships was cut back. Surprisingly, jobcreation for young people did not increase during the crisis and has not risen since. Table 34 Participation of young unemployed in various measures Measures ** Counselling and guidance 12,513 9,175 20,222 51,253 40,891 33,206 for jobseekers* Vocational training 41,173 37,470 43,063 27,290 19,301 12,921 Career counselling and promotion of apprenticeship Promotion of employment on regular labour market Promotion of selfemployment Job-creation services (publicly funded employment) 299, , , , , ,248 24,264 22,367 25,364 20,534 13,483 9,129 18,357 13,406 9,809 10,089 8,282 5,470 54,518 44,529 49,993 45,226 29,515 16,659 Other promotions 64,573 59,458 45,928 32,392 26,137 3,745 Empowerment of disadvantaged x x x x x 58,787 Total 510, , , , , ,165 * From 2010 on, the category changes to Placement supporting services. ** In 2012, the categories change due to the introduction of a category for the empowerment of those disadvantaged. Source: BA, labour market policy statistics, July 2012 November

107 The expenditure of the Federal employment agency mirrors the number of people assisted (i.e. expenditure goes up as the number rises). A strong increase can be seen in expenditure on the promotion of vocational training (Figure 49). A slight increase can also be seen for similar services dedicated to disadvantaged young people (i.e. with an unfavourable social background). As counselling of jobseekers is much cheaper than the provision of vocational training (i.e. co-funding the salary of an apprentice), the increase in expenditure on young people is driven by the cost of promoting vocational training. Figure 49 - Expenditure on the promotion of vocational training, EUR million Source: BA statistics, BA budget, 2011 Conclusions Youth unemployment was of major concern to the public and the government in the years prior to the economic and financial crisis. Together with municipalities, the Federal employment agency, as the major actor in combating youth unemployment, operates job centres (or departments of job centres) dedicated to those under 25. The targets that placement officers in these job centres and employment agencies are expected to meet are tougher than those for other age groups. Additionally, sanctions are imposed more often and with greater consequences. Given that the institutional structure already focused on the young unemployed, there was no need for a significant change in policy during the financial crisis. To meet the targets and to follow the initiative on qualifications announced by the government, the number of cases of vocational training has increased by 100,000 compared to the precrisis level, and the Federal employment agency s expenditure has also increased because of this. Screening activities have also increased, but the promotion of apprenticeships has outpaced this. Measures to combat unemployment in general such as the short-time working scheme considerably increased the expenditure of the Federal employment agency and were much more prominent than measures focused specifically on the young unemployed. Youth unemployment varies significantly between the German Länder. It is generally much higher in the east of the country (10.8%) than in the west (6.5%), but as eastern Germany was less affected by the financial crisis, the regional division has remained virtually the same over the past five years. Demand for the services provided by the Federal employment agency varies from region to region, even if the measures available are broadly the same. In some states, November

108 such as Lower Saxony and Bavaria, there have been specific programmes in place during the crisis to increase the employability of high-school dropouts. These programmes however, were not intended to deal with the effects of the crisis; their starting dates merely coincided with it. Measures were already in place before the crisis struck to ease the transition of young people into the job or apprenticeship market. There were services for school students to develop the skills needed for the apprenticeship market; services for unsuccessful applicants to develop their skills and improve their education and services to increase the mobility of young people by subsidising the cost of living. So, in general, there was no real reason to introduce new services; the PES had only to increase the number of young people assisted. Policies to promote youth employment: Denmark There is a long tradition of politicians in Denmark focusing on unemployment, including youth unemployment. There is cross-party consensus that youth unemployment should be avoided if at all possible, especially if it is long-term. Education is at the core of the policy efforts in this regard. Labour market analysis shows a significant link between levels of education and positions in the labour market. Skilled workers and people with further education have much lower levels of unemployment than unskilled workers. This old truth has been challenged during the crisis, however, as university graduates have been hit especially hard by unemployment. There is talk among researchers and policymakers in Denmark that it might be particularly difficult in the future for young, low educated men to find jobs, because the traditional male-dominated areas of work in industry are disappearing. Youth unemployment and active labour market policies during the crisis The rate of youth unemployment, which has historically been low in Denmark, has increased markedly during the crisis, from 8.6% in mid-2008 before the crisis began to affect jobs to 14.2% in August This is still well below the EU average, but since a much larger proportion of young people are economically active in Denmark (over two-thirds) than in other Member States, it represents a larger share of the population of this age (9.6%) than the average. Moreover, it is also the case that the number of young people under 25 unemployed represent a significant proportion of the total out of work around 30%, among the highest figures in the EU (behind only the other two Nordic Member States, Finland and Sweden, the UK and Malta). This figure is increased to over 42% of the total unemployed if the age group is extended to Moreover, the increase in youth unemployment understates the employment problem of young people in Denmark since the rise has been accompanied by a fall in the participation of those aged in the labour force as lack of jobs has led people to remain in education and training longer. The upward trend in participation evident before the crisis was, therefore, replaced by a reduction of some 3.5 percentage points of population in this age group between 2007 and Although the crisis, and the job shortages which it has given rise to, has hit those with low levels of education the most, it is still the case that the rate of unemployment of university graduates or the equivalent below 25 has risen sharply, to almost 15% in November

109 2011 from under 6% in This is a bigger increase than for those with lower education levels, though the numbers involved are relatively small since many young people tend to remain in university beyond the age of 25. A substantial proportion of the unemployed aged 15-24, therefore, have no qualifications beyond basic schooling, around 47%, one of the highest figures in the EU. Men under 25 have been harder hid by unemployment than women over the crisis period, reflecting the larger numbers of them in manufacturing and construction, the two sectors in which jobs losses have been largest. Since 2010, however, the proportion of women under 25 unemployed has continued to rise while that of men has fallen slightly. Nevertheless, it is still the case that the relative number of men unemployed (10.5% of those aged 15-24) was higher than that of women (8.5%). The role of active labour market policies (ALMP) has become especially important during the crisis. The total number of participants in ALMP programmes in the and age groups increased from 15,000 in the first quarter of 2007 to more than 34,000 in the first quarter of This increase was particularly large for young men aged (in line with the concerns noted above about their future employment prospects) (Figure 50). Figure 50 - Participants in ALMP , by age and sex Source: Statistics Denmark, Register-based labour market statistics The organisation of ALMP in Denmark The overall purpose of ALMP is to increase labour supply and to help the unemployed move into employment. This task is handled at three different levels: Locally there are 91 job centres run by municipalities. The jobcentres hold meetings with the unemployed and maintain contact with local employers with job vacancies. There are four employment-regions, which monitor the work of the job centres, as well as developments on the regional labour market in general. At the national level, the National Labour Market Authority (Arbejdsmarkedsstyrelsen) and the Minister of Employment have overall responsibility for labour market policies. At all three levels, employer and worker organisations are involved in the development of labour market policies through their membership of local, regional and national employment councils. November

110 Measures to fight youth unemployment For many years there has been a political focus on the labour market challenges facing young people. Education is seen as the main means of getting young people into employment. The Danish educational system is relatively formalised and essentially consists of: basic schooling up to the age of 16; youth education in the form of either education in preparation for further studies at university level, or else vocational training (i.e. general upper secondary education and vocational upper secondary education); further education at university level (short-course higher education years; medium-course higher education 3 years; and long-course higher education 5 years). For many years it has been a cross-party political goal for 95% of all young people to have education to at least upper secondary level. This objective has lately been supplemented by a target that 50% should have some kind of university-level education and 25% should go on to academic education at tertiary level. Studies show significant links between education and employment. The major burden of unemployment is born by people without qualifications. Education therefore plays a central role in ALMP for the young unemployed. In response to the crisis, the government introduced in 2009 three initiatives that were targeted at the young unemployed (Youth Packages (ungepakke) 1, 2 and 3). The title of the package was A new chance for youth and the initiatives were targeted at everyone below the age of 30. The focus on education is evident in all three of these initiatives: Initiative 1 contained (among other things) courses in reading and writing for those with literacy problems; the opportunity for young people to have a mentor; and help for university graduates. Initiative 2 was targeted at young people aged who were not ready for education after basic schooling. Prior to this initiative, the ALMP system would encounter these at 18, when they were eligible for social assistance and the purpose was to meet them much earlier, at 16, when they were still undergoing basic schooling, and guide them through the education system. Initiative 3 was focused on getting young people into firms as apprentices. Part of the initiative was centred specifically on university graduates, who have been hit especially hard by the crisis. A special scheme the ice-breaker initiative was set up to put them in touch with SMEs that have little or no tradition of employing graduates. In November 2012, the government adopted another package of initiatives in view of the number of people aged receiving social assistance or unemployment benefit, which, according to the government, had increased by 35,000 during the crisis, to reach a total of 100,000 in The package contained measures under two headings: support for young people with no education (with funding of EUR 35 million) and support to get graduates into employment (with funding of EUR 51 million). Total expenditure on these two new initiatives represents less than 3% of total active labour market expenditure in Support for young people with no education consists of the following: 20 Source: Eurostat Labour Market Policy database. November

111 Building a bridge to education (EUR 6 million) to smooth their transition into education by, for example, giving them a taste (or a pre-trial) of some specific form of education; Advice to help young people find a trainee position; Improvement in apprenticeship arrangements for those over-25 (EUR 24 million); An education fund (EUR 3 million) for long-term unemployed, both skilled and unskilled. Support to get graduates into employment consists of the following: Increased job rotation (EUR 36 million for the period ), enabling a graduate to fill a job temporarily while the person in the job participates in some form of supplementary training; A crafts pilot scheme (EUR 2 million), giving subsidies to SMEs to employ a graduate under 30 for a period of 6 12 months as a skilled worker; A strengthening of the knowledge pilot scheme (EUR 12 million) to subsidise SMEs employing a graduate; Partnership for graduate jobs (EUR 0.8 million) to support the creation of partnerships between unemployment funds, municipalities and public authorities that have job openings, such as in schools and hospitals. The role of education Education plays a crucial role in combating youth unemployment. Denmark experienced very high rates of unemployment throughout the 1980s and learned then that people with qualifications were much less prone to unemployment than those without. As mentioned above, the overall goal is, therefore, to ensure that almost all young people (95%) receive some kind of education after basic schooling and that more and more of them obtain qualifications. The focus is not only on when young people should leave compulsory schooling. For some time, there has been discussion on how to raise the standard of basic education, so that young people are better prepared to go on to further education. This debate has been inspired, for example, by Denmark s mediocre PISA performance. Measures in relation to the transition from education to employment Job rotation, the knowledge pilot scheme and the new crafts pilot scheme are examples of measures designed to ease the sometimes difficult transition from education to employment. The extension of the knowledge pilot scheme (which began in 2005) and the launch of the crafts pilot scheme show that politicians are aware of the problems of transition. Two programmes aimed at getting the unemployed (including the young) into work involve them being taken on as apprentices in an enterprise and/or in subsidised jobs. The number of young people aged who took part in this kind of ALMP increased from just over 3,000 in the first quarter of 2007 to nearly 13,000 in the first quarter of 2012 (Figure 51). November

112 Figure year-olds in apprenticeship and/or on wage subsidy programmes, Source: Statistics Denmark, Register-based labour market statistics Evidence of success In 2006, a demand for education scheme was introduced as part of ALMP. This was targeted at those aged on public assistance (unemployment benefit or social assistance) who had no qualifications and no dependants. The basic idea was that the job centre determines at interview whether the individuals concerned are capable of undertaking an education course leading to a qualification on normal terms. If so, under the demand for education, they are encouraged to find a suitable course and complete it (if they do not, they are liable to lose their benefits for a period). An evaluation of the demand for education initiative was published in April It showed that the initiative was used for half of the target group of unemployed on social assistance and to a lesser extent for those on unemployment benefit. Though the initiative had been in place since 2006, its use increased in 2010 and 2011, i.e. after the crisis broke. Because of the crisis, the evaluation found it difficult to come up with hard evidence about the effects of the initiative, but in general, job centres find it useful for getting the target group into education. The evaluators (Deloitte) proposed that the target group should be broadened to include those aged and that extra efforts should be made to ensure that those who begin a course actually complete it. An evaluation of the knowledge pilot scheme conducted by the Ministry of Research shows a positive effect for SMEs that took someone on under the programme. 22 On average, their profits increased by EUR 54,000 after two years as a result i.e. their profits were this much larger than those of similar enterprises that did not participate in the scheme. 21 Deloitte (2012) Analyse af uddannelsespålæg. Anvendelse og effekt af redskabet, April 2012 Afrapportering. 22 Forsknings- og Innovationsstyrelsen (2010) Effektmåling af videnspilotordningens betydning for små og mellemstore virksomheder, Analyse og evaluering 4/2010. November

113 Policies to promote youth employment: Spain Youth unemployment is one of the most serious problems facing the Spanish labour market and its importance has been recognised during the current crisis through reforms and new programmes. However, the overall scale of unemployment (24.6% of the work force in the second quarter of 2012) makes it difficult to target just one group for specific measures. The employment rate of young people aged which showed a strong upward trend up to the onset of the crisis in 2008, declined markedly as recession hit, falling from 39% in 2007 to only 22% in The result was a sharp and protracted increase in unemployment, which more than doubled over these four years as a proportion both of the labour force (from 18% to almost 47%) and population in the age group (from just under 9% to 19%, by far the highest level in the EU). Unemployment has continued to rise during 2012 increasing to 53% of the labour force in August Even this, however, understates the scale of the youth employment problem in the country, since at the same time a significant number of young people have withdrawn from the labour force, the rate of participation falling from 48% in 2007 to 41% in Not all of these have remained in, or returned to, education and training. Indeed, some 10% of those aged were neither in the labour force in the sense of being in work or actively looking for work nor in education or training. Moreover, an even larger number of those recorded as being unemployed were not receiving education or training either, so that almost a quarter of the age group in 2011 were so-called NEET not in employment or education and training. Employment problems have affected the better educated as well as those with only basic education, the employment rate of those in the age group with a university degree or the equivalent falling by almost as much as for those with lower education (from 59% to 40% between 2007 and 2011) and unemployment increasing by only slightly less (to 36% of the labour force with this level of qualification). Nevertheless, over 60% of the unemployed aged have no education beyond basic schooling, the highest figure in the EU apart from Malta. Accordingly, even if there is an acute shortage of jobs in the Spanish economy, it is still the case that the lack of qualifications of a substantial number of young people unemployed potentially represents a major constraint on them finding work as and when the economy recovers. At the same time, as indicated at the outset, the high overall rate of unemployment in Spain, standing at around 25%, makes it difficult to single out young people for special attention. Indeed, partly because of significant numbers of young people withdrawing from the labour market, unemployment has risen by more over the crisis period for older age groups than for those under 25, who represent only 18% of the total number of unemployed, despite the substantial numbers of them. The share of young people among the unemployed rises to 32% if the age group is extended to 15-29, though this still means that over two-thirds of the unemployed are in older age groups. November

114 Recent policy measures to reduce youth unemployment The labour market reforms of 2011 changed the priority groups in order to help young people, especially those with low qualifications. 23 The 1/2011 Act 24 (February 2011) introduced two new temporary schemes: The Programa excepcional de empleo para la transición hacia la contratación estable is targeted at people under 30 unemployed for at least 12 of the 18 months before. Firms hiring such people benefit from a reduction in social security contributions if the contract is part time and open ended (or is fixed term with a duration of more than six months). The Programa de recualificación profesional de las personas que agoten su protección por desempleo, under which the unemployed who have exhausted their entitlement to unemployment benefit have the right to individual and personalised pathways, to participate in active labour market policies and to receive a subsidy. To receive this subsidy, participation in active labour market schemes is mandatory (249,902 people received it in 2011 and 70,818 in 2012, though the number of young people is not known). In a press notice, the Ministry of Employment reported an evaluation of the programme: 66% of the beneficiaries did not have any job after the scheme, 18% found employment of more than 2 months duration, and less than 1% obtained a permanent contract. Only 7.2% of beneficiaries participated in training and 1.9% participated in schemes related to entrepreneurship. The 10/2011 Act 25 (August 2011) states that youth unemployment is a more severe problem because of the low qualifications of many of those concerned. It introduced a new training contract (Nuevo contrato para la formación y el aprendizaje) for the unemployed aged with inadequate qualifications to replace an existing programme. The upper age limit was raised from 21 to 25 (though, as a transitional measure, people under 30 are eligible until the unemployment rate falls below 15%); the minimum duration was reduced (from 12 to 6 months) and the maximum duration increased to 3 years (from 2). The programme offers a combination of work experience (maximum 75% of total working time during the first year and 85% thereafter compared to 75% previously) and training. Employers are entitled to a reduction in social security contributions (100% for firms with fewer than 250 employees; 75% for larger companies), the aim being to make the transition from school to the labour market easier. Moreover, converting this contract into a permanent one entitles the company to a reduction of EUR 1,500 a year in payroll taxes for three years. The 3/2012 Act, 26 however, limited these incentives to those registered with the PES before January The reform does not appear to have had much of an impact as yet (Figure 52 which shows the number of training contracts signed since January 2009). 23 Other priority groups are long-term unemployed, people over 45, disabled workers and unemployed workers previously employed in construction. 24 Urgent actions to promote transition into stable employment and the professional retraining of the unemployed (Real Decreto-ley 1/2011, de 11 de febrero, de medidas urgentes para promover la transición al empleo estable y la recualificación profesional de las personas desempleadas). 25 Urgent action to promote youth employment and job stability and to maintain the programme of retraining for people who have exhausted their entitlement to unemployment benefits (Real Decreto-ley 10/2011, de 26 de agosto, de medidas urgentes para la promoción del empleo de los jóvenes, el fomento de la estabilidad en el empleo y el mantenimiento del programa de recualificación profesional de las personas que agoten su protección por desempleo). 26 Urgent action for reform of the labour market (Real Decreto-ley 3/2012, de 10 de febrero, de medidas urgentes para la reforma del mercado laboral). November

115 Figure 52 - Number of training contracts Source: Annual Labour Statistics (Anuario de Estadísticas Laborales). Ministry of Employment and Social Security. Notes: From August 2011, the data refer to the new training contracts; before that, they relate to the old training programme. In November 2012, a new piece of legislation (1529/2012 Act 27 ) was passed laying the foundations for the progressive implementation of a dual scheme combining vocational training with employment, partly to facilitate the transition of young people from education to work. The 3/2012 Act points out that job losses have had a greater effect on certain groups, especially those under-25. One of the objectives of the Act is to foster permanent contracts, particularly in SMEs, as well as to encourage the hiring of young workers. It created a new type of contract to support entrepreneurship the Entrepreneurs Support Contract (Contrato de apoyo a emprendedores) targeted at firms with fewer than 50 employees, the contracts needing to be open ended and full time. If the worker is aged 16-29, there is a reduction in social security contributions for 3 years.28 There are no statistics to indicate how many people have been taken on under this type of contract since it was introduced. But a press release from the Ministry of Employment states that, up to June 2012, 43,000 contracts to support entrepreneurship had been signed, 52% of them with young people. There is information, however, on how many subsidised contracts involve a reduction in social security contributions ( 27 Real Decreto 1529/2012, de 8 de noviembre, por el que se desarrolla el contrato para la formación y el aprendizaje y se establecen las bases de la formación profesional dual. 28 EUR 83 a month (EUR 1,000 a year) for the first year; EUR 92 a month (EUR 1,100 a year) for the second year and EUR 100 a month (EUR 1,200 a year) for the third year. November

116 Table 35 Subsidised contracts). Changes in the groups subsidised and in the statistics make it difficult to have a long data series labour market reforms have reduced the number of groups subsidised. Alongside workers with disabilities and new mothers, young people are one of the main groups targeted by employment incentives. In February 2012, young people made up around a quarter of the total subsidised, though more recently their share has tended to decline relative to workers with disabilities. November

117 Table 35 Subsidised contracts Young people in firms < 50 employees Women underrepresented in firms with <50 employees Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul ,273 3,872 3,548 3,116 2, Total subsidised contracts 18,946 20,733 18,165 19,539 18,276 17,975 Youth subsidised contracts as % total Source: Annual Labour Statistics (Anuario de Estadísticas Laborales). Ministry of Employment and Social Security. Young people are also favoured if they participate in the Capitalisation of unemployment benefits programme. This scheme gives the unemployed the possibility of receiving their contributory unemployment benefits as a lump sum, allowing them to set up a business. In the case of men under 30 or women under 35, they can receive 100% of the amount (the normal limit is 60%). 29 The Ministry recently announced a new programme to improve the employability of young people Strategy for Entrepreneurship and Youth Employment (Estrategia de Emprendimiento y Empleo Joven ). In a press notice in July 2012, it was stated that the aim of the strategy was (a) to reduce the youth unemployment rate, (b) to increase the quality of jobs, (c) to promote entrepreneurship, (d) to reduce school drop-out rates, and (e) to integrate young people at risk of exclusion into the labour market. The programme will be co-financed by the European Social Fund, and it will attempt to involve local authorities, autonomous communities, associations and private partnerships. In September 2012, the Ministry announced that the strategy was to be submitted to Parliament in the coming weeks. Early school-leaving Early school-leaving is a major problem in Spain. Two measures managed by the regional authorities were launched several years ago with the cooperation of the national PES: The Programa de cualificación profesional inicial (PCPI) offers early school leavers of 16 and over (i.e. those who have not completed compulsory schooling) the opportunity to enrol in one- or two-year training courses to acquire vocational skills, entitling them to the equivalent of a certificate of secondary education (this allows them to enrol later on in a regular vocationaltraining course). The Reconocimiento de las competencias profesionales adquiridas is a programme designed to increase the employability of workers without formal training qualifications, by certifying the skills acquired through work experience. The workers concerned detail their skills and competences in a report which is then assessed by an evaluation Commission, which certifies their competences and this is then ratified by the Education authorities. If accreditation is not possible, the Commission can recommend a training programme for the person concerned. 29 During 2011, 147,467 people participated in this programme. Unfortunately, the statistics do not provide figures broken down by age (though in Eurostat s Labour Market Policy Database, 2.3% of participants in the Capitalization of Unemployment Benefits programme were aged <25 in 2010). November

118 Number of young people in training As has been pointed out, policies have focused especially on financial subsidies for companies that hire young people and/or convert temporary contracts into permanent ones. Nevertheless, training programmes and personalised pathways into employment have also been implemented. Table 36 shows the number of participants in training during the period The total number of young people aged increased slightly between 2008 and 2009 but then fell in 2010, though the total number under 30 declined throughout the period and more significantly as a proportion of the total number of people being trained (from almost 45% in 2008 to 36% in 2010), in line with the fall in the share of young people in total unemployment. Table 36 Participants in training by sex and age group All * <20 29,708 21,578 19, ,428 31,714 31, ,361 41,609 40,193 <30 109,497 94,901 91,798 Total 243, , ,339 <30 (% total) Men Women * * <20 16,444 12,730 12,423 13,264 8,848 7, ,492 16,025 16,889 20,936 15,689 14, ,190 19,821 20,266 23,171 21,788 19,927 <30 52,126 48,576 49,578 57,371 46,325 42,220 Total 100, , , , , ,761 <30 (% total) Source: Annual Labour Statistics (Anuario de Estadísticas Laborales). Ministry of Employment and Social Security. Notes: * Data for Andalucía are not available. Another programme especially aimed at young people is the School workshops and crafts training (Escuelas Taller y Casas de Oficios), which provides training for the unemployed under-25 leading to a period of work placement. The programme lasts for between one and two years. The number of participants increased over the period , especially in school workshops (Table 37). Table 37 Participants in school workshops and crafts training, School workshops Crafts training ,144 1,363 1, , Total 2,476 2,761 3, Source: Annual Labour Statistics (Anuario de Estadísticas Laborales), Ministry of Employment and Social Security. The role of the Public Employment Services Moreover, the 1/2011 Act states that public employment services (PES) are responsible for contacting young low-skilled unemployed (as well as long-term unemployed of 45 and over and construction workers) to offer them ways of improving their employability through individual and personalised pathways ( Acciones de mejora de la empleabilidad que combinen actuaciones de orientación profesional y formación para el empleo ). There is also an objective to improve coordination between education administrations and the PES, in order to reduce the rate of early school leavers, as well as to improve the qualifications of young people without the need for formal training certificates. According to some regional PES, lifelong learning should be strengthened in cooperation with the formal education institutions. November

119 The 3/2011 Act 30 (February 2011) introduced reforms of active labour market policies and strengthened the role of the PES. The objective was to develop a model of personalised assistance to the unemployed and to specify individual pathways to employment for them. New rules were also introduced as to how to do this in practice. Financial and human resources in employment offices, however, are not sufficient to cater for all the unemployed as the legislation requires. In a subsequent Act (3/2012), the government acknowledged this and strengthened the role of private employment agencies, but these are only now in the process of being authorised, and so there is as yet no evidence on how it will work. Regional measures Since responsibility for active labour market policies is decentralised to the autonomous communities, 31 several of these have developed their own programmes. As Table 38 shows, these programmes are similar to the national ones. In some cases, they are targeted at young people as a whole who are out of work, while in others, they focus on those with low qualifications or those looking for their first job. Table 38 Specific regional measures for young unemployed Region Programmes Andalucía Nuevo Programa Integral de Empleo Joven Programa Motiva : targeted at the unemployed, long-term unemployed and the low-qualified: Vocational guidance, support for entrepreneurs, personal interview to assess employability Training Work experience Help with mobility Incentives for self-employment and entrepreneurship. Baleares Jóvenes en formación : incentives to conclude training contracts with those aged and to convert training contracts into permanent ones. Jóvenes profesionales : incentives to conclude training contracts with the higher -skilled aged and to convert training contracts into permanent ones. Jóvenes en relieve : relief contracts for those aged and transition to stable contracts. Jóvenes estables : incentives to conclude permanent contracts with those aged Canarias Incentives to hire young unemployed ( Dale una experiencia laboral ). Extremadura Training pathways: for those aged with low levels of qualification (drop-outs). The programme combines counselling, employment guidance, training and unpaid work placements. Madrid Support of firms that generate permanent jobs for young people. Stable employment growth in existing firms for those under 35. Valencia Salario-Joven : subsidies to encourage hiring of the unemployed under 30 with no previous work experience. Asturias Salario-Joven : financial incentives for municipalities that hire young unemployed looking for their first job. Conclusions Policy-makers are aware of the severity of youth unemployment in Spain, though the overall unemployment rate shows that it is a significant problem for all sections of 30 Urgent actions to improve employability and to reform active labour market policies (Real Decreto-ley 3/2011, de 18 de febrero, de medidas urgentes para la mejora de la empleabilidad y la reforma de las políticas activas de empleo). 31 There are also great differences in regional unemployment rates (see Table A1 in the annex). November

120 society. Specific programmes and new measures have been developed to tackle youth unemployment. However, most of these are existing ones that have been modified to target this group. Some officials in the regional PES consider that the young unemployed are not a policy priority and, with only slight modification, the programmes are the same as for others unemployed as well as being similar to those that existed before the crisis. The PES have an increasing role to play in helping young people find a job. They are supposed to provide personal pathways to employment for them, but since their resources are limited in terms of both funding and staff so are the services they provide (Table 40). The government budget for 2012 has reduced the funding for active labour market policies by 21% and for training by 34%. For the regional PES, this means a big fall in their resources at a time when the number of unemployed is increasing, all of which limits possibilities for providing personalised services. Current statistics have not yet been adapted to collect all the information needed to assess the impact of policies. In several cases, only the number of participants is known and programmes have not been evaluated. In addition, account should be taken of the fact that results are affected by the current economic situation (the economy is not yet generating jobs). Fiscal constraints are another factor, since resources have been reduced and expenditure on active labour market policies is being cut. In this sense, PES officials are aware that a reduction in unemployment and the success of active labour market policies also depend on resolving the financial crisis. Additional tables (Spain) Table 39 Unemployment rate by age group and autonomous community Q2 2012Q2 2005Q2 2012Q2 Aragon Navarra Madrid Baleares Cantabria Asturias País Vasco Galicia Murcia Castilla y León Cataluña C. Valenciana Castilla - La Mancha La Rioja Andalucia Canarias Extremadura Total Source: LFS Table 40 Expenditure on active labour market policies (in EUR million) Labour market services and , , ,319.5 administration Information services Labour counselling Experimental programmes for vocational integration Administration of active programmes Administration of benefits Other services Training 1, , , , ,908.9 November

121 Vocational training in sectors at risk of job losses Incentives for training contracts Training for unemployed workers , Training in the workplace Job rotation and sharing Employment incentives 3, , , , ,699.9 Incentives to disabled workers Direct job creation Start-up incentives , , ,225.4 Total 7, , , , ,465.9 Source: Annual Labour Statistics (Anuario de Estadísticas Laborales), Ministry of Employment and Social Security. Policies to promote youth employment: Ireland Problems of youth unemployment and policy responses Ireland is experiencing one of the most serious problems of youth unemployment in the EU. In general, young people tend to be more vulnerable to unemployment than others during an economic downturn because of their concentration in temporary jobs and cyclically-sensitive industries. The problem is particularly acute in Ireland as a result of its relatively young population and the flexible labour market where it is comparatively easy to lay off workers, particularly young ones who have been in their jobs for only a short period of time. Before the crisis hit, the employment rate of young people aged in 2007 had risen to just over 50% but by 2011 it had fallen to only just over 28%, a reduction of some 170,000 in the number in work. This led to an increase in the unemployment rate from 9% to over 29% over this 4-year period, though at the same time to a reduction in the activity rate from over 55% to just 40% as substantial numbers of young people withdrew from the labour market. Accordingly, although there was a steep rise in the proportion of the age group unemployed, it was moderated considerably by the large-scale reduction in economic activity among young people. The number of unemployed, therefore, increased from 5% of those aged in 2007 to just under 12% in 2011, an increase which was less than half the rise in inactivity. Focusing on the youth unemployment figures alone therefore conceals the scale of the employment problem among young people in Ireland and the lack of jobs for them. Some of the young people that withdrew from the labour market remained in education longer or returned to education or training, but more did not. In 2011, some 16% of those aged in Ireland were economically inactive and not in education or training as compared with only 6% in At the same time, the great majority of those recorded as being unemployed were not receiving training, so that in total the number of NEETs (neither in employment not in education or training) represented over a quarter (26%) of young people in this age group in 2011, one of the highest figures in the EU, as against 10% four years earlier. Although, therefore, the rise in youth unemployment has been less over the crisis period than the increase in unemployment among other age groups and the proportion of those under 25 of the total unemployed has fallen, this masks the severity of the problems experienced by young people. Moreover, among the unemployed in the age group, in 2011 some 55% had been looking for a job for over a year (as compared with 24% in 2007) and 29% for over two years (8% in 2007). November

122 In addition, taking the age group, who represent 94% of all those unemployed aged i.e. very few of those aged are economically active and those unemployed tend to be drop-outs from school only just under a quarter were low educated in 2011, in the sense that they had no qualifications beyond compulsory schooling (as against a third in 2007). Most (almost 59%) had upper secondary qualifications (i.e. had successfully completed a course of general education or initial vocational training of at least three years) and over 15% were university graduates or the equivalent. Accordingly, for the great majority of the unemployed, lack of education or qualifications does not seem to be the main factor underlying their predicament, though, of course, their qualifications may not be in line with the demand on the labour market, such as it is. Measures taken during the crisis and the role of the PES The policy initiatives that have been undertaken by the Irish government in recent years to address youth unemployment need to be viewed in the specific context of Ireland. There has been a very severe deterioration in the Irish labour market in the past few years, and a dramatic rise in unemployment among different age groups. In fact, Ireland now faces unemployment on a scale last seen in the depths of the recession of the 1980s, when the Irish migrated en masse to the UK and major labour market reforms were introduced. During the crisis, the government has not yet undertaken any specific policy initiatives targeted at young people. Moreover, the evidence suggests that many of the young people not in employment are not in education or training either. However, in the recent past, the Irish government has published its Action Plan for Jobs, which envisages the net creation of 100,000 jobs by In addition, the Pathways to Work programme has been developed to enable as many as possible of these new jobs to be filled by those who are registered as unemployed. 33 The challenge for Pathways to Work is to ensure that the creation of new jobs results in a reduction in unemployment particularly long-term unemployment so that individuals do not become permanently disenfranchised within [Irish] society. The programme, which was launched in February 2012, has five strands: (1) more regular and on-going engagement with the unemployed; (2) greater targeting of places on active labour market measures with e.g. a new Labour Market Education and Training Fund to help the long-term unemployed, with a total budget of EUR 20 million, the aim being to assist up to 6,500 people; (3) giving incentives to the unemployed to encourage them to take up opportunities (e.g. under the JobBridge scheme, participants receive a EUR 50 top-up to their social welfare benefits); (4) giving incentive to employers to provide more jobs for the unemployed (e.g. by removing the need for them to make Pay Related Social Insurance (PRSI) contributions for 12 months); and (5) reforming institutions to deliver better services to the unemployed (e.g. with SOLAS replacing FÁS as the education and training authority). 34 The key aim of the Pathways to Work approach, which is targeted at all age groups, is to transform the nature and level of engagement between the employment services 32 Department for Jobs, Enterprise and Innovation (2012). Action Plan for Jobs: 2012: 33 Government of Ireland (2012). Pathways to Work: Government policy statement on labour market activation: 34 Complex roles previously carried out by FÁS are to be divided equally between the Department of Social Protection and the Department of Education and Skills. The Department of Social Protection takes over such programmes as the Community employment schemes, while further education and training goes to the Department of Education and Skills. There is to be a bigger role for vocational education committees, which now take over the running of some courses previously organized by FÁS. November

123 and the unemployed or in simple terms, to involve more public employment services (PES) in combating unemployment on a case by case basis (Figure 1). The approach implies a clear reorientation to supporting jobseekers find employment, whereas in the past the approach has been more passive than in many other EU countries: One of the consequences of this... was the development of a significant core of long-term unemployed, even in the midst of an economic boom, and the deskilling of many people in the labour market. This new approach requires work-focused social welfare payments and the effective provision of targeted services through the National Employment and Entitlements Service (NEES), established in The approach is supported by the Expert Group on Future Skills Needs and relevant empirical data, including evaluation data. Figure 53 - The Pathways to Work approach Source: Pathways to Work The FÁS employment services have been integrated with the Department of Social Protection since January 2012 and a new means has been introduced to assess the status of the unemployed on the Live Register more effectively the Probability of Exit (PEX) Profiling. 35 This assesses the risk of long-term unemployment and rates it as being low, medium or high. The government s aim is to ensure that those in particular who have been made redundant from construction and retail sectors (which were hit hard by the recession) receive special attention. It has set targets for the roll-out of PEX profiling (from 40% of local employment local offices in April 2012 to 95% in December 2012) as well as for Group Engagement (95% throughout 2012). In 2012, government plans involve profiling 150,000 people, for 30,000 people to participate in Group Engagement after three months of unemployment and for 130,000 one-to-one advice and guidance interviews to take place. A number of job placement and work experience initiatives are in place (providing a total of 85,650 places in 2012). These tend to attract the young unemployed even if 35 In relation to the profiling of Irish unemployed, see also: O Connell, P. J., McGuinness, S., Kelly, E. and Walsh, J. (2009). National Profiling of the Unemployed in Ireland: November

124 they are not specifically targeted at those under 25 (e.g. the Back to Education Allowance Scheme, the Back to Work Enterprise Allowance Scheme, JobBridge, Tús, 36 the Community Employment Scheme and the Rural Social Scheme). The plan, in addition, is to have 457,400 training and education places available by the end of 2012, with priority given to the long-term unemployed and school leavers (especially early school leavers). This figure includes 75,000 FÁS/SOLAS places, 37 12,000 Training Education Support Grant places, 8,000 places through Skillnets (enterprise-led learning networks), 38 6,500 places through the Labour Market Education and Training Fund, ,000 further (mainly vocational) education places, 170,000 tertiary education places and 5,900 Springboard places (free, part-time courses in higher education) 40. Specific measures targeting young people and facilitating transitions 41 Youthreach (created in 1989) The Youthreach programme provides two years of integrated education, training and work experience for unemployed early school leavers who have no qualifications or vocational training and who are aged Basic skills and practical work training and general education are features of the programme. There is a strong emphasis on personal development, on the core skills of literacy, numeracy, communications and IT, along with a choice of vocational options and a work experience programme. Almost 6,000 places are available nationwide under the Youthreach umbrella, 3,700 of them provided by the vocational education committees (VECs) in over 100 Youthreach centres. Most of the remaining places are provided by FÁS in over 40 Community Training Centres (established in 1978) and there are 10 Justice Workshops (for young offenders at risk ). At the end of 2010 (the latest figures available from the Department of Education and Skills), there were 3,367 participants in Youthreach programmes run by VECs (on which a possible 3,700 places are available). At the end of 2011, there were 2,241 participants in the Community Training Centres. JobBridge (applicable from 1 July 2011 to 30 June 2013) JobBridge is a National Internship Scheme, providing work experience placements for trainees (there is no age restriction) for a period of 6 or 9 months. The National 36 Gaelic for start : 37 As described above, SOLAS is being set up and will replace the FÁS Education and Training Authority; SOLAS is the Further Education and Training Authority (Seirbhísí Oideachais Leanunaigh Agus Scileanna). 38 More details at: Skillnets funds and facilitates training through networks of private sector companies, in a range of sectors and regions. Each network delivers training that is relevant to specific industry and member company needs. 39 More details at: The Labour Market Education & Training Fund (LMETF) is part of the Government s 2012 Action Plan for Jobs initiative. The Department of Education & Skills has committed EUR 20 million to fund a range of education and training interventions for up to 6,500 individuals who are long term unemployed Springboard offers a choice of 220 free, part-time courses in higher education from certificate, to degree, to post-graduate level. 41 For more on youth transitions in Ireland, see: Smyth, E. (2008). Just a phase? Youth unemployment in the Republic of Ireland, Journal of Youth Studies, Volume 11, Issue 3. The analysis shows that unemployment is a very common feature of youth transitions in Ireland even in boom times. Male and female school leavers are equally likely to experience unemployment in their first year out of school. Background factors are important here: upper-secondary education facilitates the initial transition into employment, but does not have a significant impact on the rate of job loss or exit in the initial period after leaving school. Transitions are facilitated when school leavers possess soft skills, such as: self-presentation and self-confidence. What is most notable in this analysis is the continuing labour market disadvantage of young people who leave school without any qualifications, who are more vulnerable to cyclical fluctuations in the labour market. The gap between the qualified and the unqualified tends to widen during economic downturns. November

125 Internship Scheme is aimed at breaking the cycle of jobseekers being unable to get a job without experience, either as new entrants to the labour market after education or training or as unemployed workers wishing to acquire new skills. The scheme gives people an opportunity to gain experience and to bridge the gap between education and the beginning of their working lives. The scheme provides for up to 6,000 work experience placements in the private, public and voluntary sectors. Trainees receive an allowance of EUR 50 a week on top of their existing social welfare entitlement. Between the launch of the scheme in July 2011 and September 2012, only 28% of the places were taken up by people of under 25. Work Placement Programme In 2009, the government introduced a Work Placement Programme, one steam of which was devoted to graduates and those under 25. The scheme, however, has effectively been superseded by JobBridge. At the end of 2011, there were only 152 people aged under 25 on the programme. Apprenticeship Apprenticeships are the recognised means by which people are trained as craftsmen or women. Apprenticeship is a demand-driven, workplace and classroom, educational and training programme for the unemployed, which is aimed at developing the skills needed by employers. The main craft trades have been designated by FÁS and come within the scope of the Statutory Apprenticeship system, which is organised by FÁS in cooperation with the Department of Education and Skills, employers and trades unions. The curriculum for each apprenticeship programme is based on uniform, prespecified standards that are determined and agreed by industry. On successful completion of an apprenticeship, a FETAC 42 Advanced Certificate is awarded, which is recognised internationally. At the end of 2011, there were 439 apprentices. Redundant Apprenticeship Placement Scheme FÁS has introduced a number of measures to assist redundant apprentices with training both on and off the job: It amended the apprenticeship rules to permit those concerned to progress to the next off-the-job phase of their apprenticeship. In 2010, some 3,551 attended FÁS and Institutes of Technology under these revised rules. It introduced the Redundant Apprentice Placement Scheme (RAPS) in April 2010 to enable apprentices made redundant to complete their on-the-job training. The scheme gives employers a subsidy of EUR 250 a week for each apprentice to help cover their employment costs. By the end of 2010, 2,359 apprentices who had been made redundant had participated in the scheme. In February 2011, RAPS was extended to enable apprentices to complete more advanced stages of on-the-job training. Under Recognition of Prior Learning arrangements put in place by FÁS, apprentices who have an insufficient period of on-the-job training period but who have work experience in Ireland or abroad can submit an application and a portfolio of evidence to the FÁS Redundant Apprentice Accreditation Committee for assessment, with a view to obtaining their Advanced Craft Certificate. Apprentices made redundant can also enrol on existing specific skills training courses and evening classes available at FÁS training centres to improve their skills and accordingly their employability. 42 Further Education and Training Awards Council. November

126 Evidence of the effectiveness of the different policies It is too early to assess all the policy initiatives introduced by the Irish government to combat unemployment, especially long-term unemployment. Many of the initiatives are on-going and have been affected by the integration of FÁS employment services into the Department of Social Protection. However, there has been some evaluation of the well-established Youthreach programme, 43 which was launched long before the current crisis and which seems to have worked well, even during the crisis period. Participants rate their experience of Youthreach highly and many would recommend the programme to others. 44 Reviews of learner outcomes before the recession consistently showed over 75% of all Youthreach participants progressing to employment, education or training, with the figure rising to 85% among those who had completed the programme. No evaluation of Youthreach, however, has been carried out since the crisis hit. Policies to promote youth employment: Greece The nature of youth unemployment The employment rate of young people aged in Greece was low as compared with other EU Member States even before the present crisis and unlike in most other countries was tending to decline further as more of the young remained longer in education. The crisis, however, has reduced the rate sharply, from 24% of the age group in 2007 to only just over 16% in 2011, the lowest rate in the EU. As a consequence, the unemployment rate almost doubled over these four years from 23% of those in the workforce to 44% and has continued to increase since, climbing to over 55% in summer 2012, the highest in the EU. Since, however, the rate of participation of people of this age in the labour force is also among the lowest in the EU, the unemployed represent a much lower proportion of the population in the age group than the unemployment rate suggests some 13% in Nevertheless, this is the second highest figure in the EU behind Spain and substantially higher than in 2007 before the onset of the crisis (7%). At the same time, because of the steep rise in unemployment among other age groups, the share of those aged in total unemployment has declined over the crisis period to only 16% of the total in 2011, the lowest figure in the EU, which does not make youth unemployment any less of a problem but it almost inevitably affects the extent of policy focus on it. A distinguishing feature of youth unemployment in Greece is not just the numbers involved but the fact that, in sharp contrast to nearly every other country, the chances of being unemployed are greater for those with university education than those with lower levels. For those aged who account for 97% of the unemployed aged the unemployment rate of university graduates or the equivalent was almost 49% in 2011 as against a rate of below 43% for those with only basic schooling and much higher than anywhere else in the EU. Some 42% of university graduates in this age group were, therefore, unemployed as opposed to just over 15% of those with 43 Information available at: it work? 44 One young Galway man who left school at 14 said: Since leaving Youthreach I have never been out of work and I am currently serving my apprenticeship as a motorbike mechanic. I have always loved motorbikes and it s great to be able to work at something I really like. I still keep in touch with the staff at Youthreach and really appreciate all the opportunities their help and support have given me. November

127 upper secondary qualifications. Unemployment among women was even higher 52% of those in the labour market were unemployed or 46% of women of this age with this level of qualification. The situation is similar for those aged 25-29, who, of course, include more people with university degrees. Almost a third of those in the work force (32.5%) were unemployed in 2011, representing 30% of all those in the age group with this level of education, over three times the EU average. Accordingly, 42% of all the unemployed aged had university education and 50% of the women. Reducing unemployment in this age group, therefore, is not primarily about increasing qualification levels, though it may be that the nature of the qualifications is out of line with labour market needs. Young Greeks tend to live with their parents for longer than most other Europeans. The figure was higher in the mid-2000s than it was one or two decades earlier, and the crisis is likely to have increased the proportion further. In view of the above, and leaving rhetoric aside, policy makers do not seem to consider youth unemployment to be any more pressing a problem than overall unemployment (or, for that matter, than unemployment among primary wage earners in households). Policy measures to reduce unemployment among young people The European Commission document entitled Tackling youth unemployment: using EU Structural Funds to help young people (provisional outcome as of 21 May 2012) provides the following example of concrete action : 45 In Greece, working with the dedicated Commission Task-Force for Greece and the other related Commission services, an action plan with 180 priority projects with a budget of about EUR 11 billion is being implemented, which is expected to create around 100,000 jobs, notably in the construction sector. Following the work of the youth action team in Spring 2012, new targeted actions are being initiated for youth and SMEs including a new liquidity instrument of EUR 500 million (guaranteeing for EIB SME loans in Greece) signed on 23 March More specifically, ΟΑΕΔ (the Greek public employment service, PES) has introduced a wage subsidy programme targeted at unemployed university graduates under 35. All private firms are eligible to apply, provided they have made none of their employees redundant in the three months prior to their application. The wage subsidy is set at EUR 20 a day for jobless graduates aged under 25 and at a EUR 25 a day for those aged Participating firms must commit to keeping the workers on for at least three months after the end of the programme. The scheme aims to help create 5,000 jobs. So far 3,509 applications have been submitted, of which 1,305 have been approved. The budget is EUR 75 million. In addition, ΟΑΕΔ runs various programmes which subsidise social contributions. One two-year programme aims to help create 25,000 jobs. The businesses eligible are those employing fewer than 50 workers, provided they have made none of their employees redundant in the six months prior to the application. The subsidy is set at 80% of social contribution costs for the first year and 60% for the second year (after which it comes to an end). A ceiling of EUR 751 a month applies. This is a general programme, i.e. it is not restricted to young people unemployed. Nonetheless, workers under 30 are a priority group and eligible for a higher subsidy: 80% for the duration of the programme. Participating firms must commit to keeping the worker on for at least 12 months after the scheme ends. So far 36,209 applications have been 45 November

128 received, of which 20,622 have been approved (9,115 of them involving unemployed under 30 i.e. almost 45% of the total). The budget is EUR 171 million. A similar four-year programme aims to help create 40,000 jobs. So far 29,055 applications have been submitted, of which 15,884 have been approved (6,662 involving those under 30, or 42% of the total). The budget is EUR 501 million. ΟΑΕΔ also runs an apprenticeship programme, targeted at unemployed aged All private firms are eligible to apply, provided they have not made any of their employees redundant in the previous six months. The scheme works by subsidizing the social contributions of the workers taken on, at a rate of 80% of the minimum wage (which for this age group now stands at EUR 511 a month). After 12 months, firms willing to convert the apprenticeship into an employment contract can apply for a subsidy of 70% of social contributions (up to a ceiling of EUR 751 a month), for a further 12 months provided they agree to keep the workers on for at least six months after the scheme ends. The programme aims to help create 5,000 jobs. So far 2,264 applications have been submitted, of which 759 have been approved. The budget is around EUR 27 million. Similar apprenticeship programmes are run by ΟΑΕΔ as part of formal secondary education, targeted at the unemployed aged Programmes are determined locally, after consultation with social partners and private firms. Some 11,500 students participate each year. The annual cost is EUR 75 million funded by ΟΑΕΔ, plus EUR 35 million funded by the European Social Fund, ESF. Another special programme to promote youth employment has been run by ΟΑΕΔ since 2008, which is aimed at creating 10,000 jobs. So far 11,662 applications have been submitted, of which 6,367 have been approved. The budget is around EUR 101 million. In addition, a National Network of Social Interventions aimed at the unemployed under 30 is apparently being introduced, though not much is known about how it is to be implemented. The budget is EUR 40 million. On the whole, the skills taught by schools, technical education institutions and universities are generally regarded as being out of line with the skills demanded by firms. As a result, unemployment is high among (certain types of) university graduates. Given the structure of the Greek economy, the skills demanded by firms tend to be relatively low. A possible exception is the shipping industry, which has repeatedly lobbied for the expansion and upgrading of merchant navy colleges. The provision of 2,000 scholarships for merchant navy college graduate (see below) is seen as a response to this demand. In the context of ESF initiatives to support life-long learning, scholarship programmes have been introduced for university graduates (4,000 scholarships with a budget of EUR 33.9 million), technical education graduates (5,000 scholarships with a budget of EUR 39.1 million), vocational training certificate holders (4,500 scholarships with a budget of EUR 8.7 million), and vocational trainees (4,000 scholarships with a budget of EUR 35.2 million) as well as merchant navy college graduates (2,000 scholarships with a budget of EUR 16.7 million). In addition, a number of career and entrepreneurship centres have been created at universities and technical education and vocational training institutes. These measures have a combined budget of EUR 21 million. Various programmes to promote entrepreneurship have been introduced. Target groups include the unemployed aged (8,287 applications and 5,645 beneficiaries with a budget of EUR million) and unemployed graduates up to the November

129 age of 34 (42 in the case of mothers) (6,981 applications and 6,275 beneficiaries with a budget of EUR 126 million). Other programmes to promote self-employment are general in scope, but have a number of places reserved for young people. One such programme, in place since 2009, aims to create 4,500 jobs, at least 1,500 of them for those aged (7,436 applications and 4,368 beneficiaries with a budget of EUR 87 million). Another more recent scheme is intended to create 2,500 jobs, at least 1,250 of them for those aged (4,541 applications and 2,309 beneficiaries with a budget of EUR 60 million). Similar programmes promoting social entrepreneurship and the creation of firms producing innovative products have involved 1,500 unemployed young people with a budget of EUR 18 million. Funding has also been made available for support of 6,500 business start-ups by unemployed young people (with a budget of EUR 72 million) and for 5,000 other new firms created by women, young people and other vulnerable groups (with a budget of EUR 52 million). Similar programmes in the context of ESF initiatives to support entrepreneurship and competitiveness have targeted 1,150 unemployed young people (with a budget of EUR 72 million), as well as 1,000 women (with a budget of EUR 31 million) and 500 unemployed of over 18 (with a budget of EUR 30 million), to create innovative firms, goods and services. Finally, 12,600 young people are being funded to settle in rural areas to start up agricultural businesses (with a budget of EUR 177 million). So far as new programmes are concerned, ΟΑΕΔ is planning to introduce a voucher scheme for reintegration of people into the labour market. All private firms will be eligible to apply, provided they have not made any of their employees redundant in the six months prior to their application. The programme is aimed at creating 10,000 jobs. In Stage I, a subsidy is payable equal to unemployment benefit for the duration of the benefit (which depends on the worker s contribution record, but cannot exceed 12 months). In Stage II, the subsidy is set at 90% of social contributions for 24 months (from the beginning of Stage I) up to a ceiling of EUR 751 a month. If Stage II includes training, the subsidy is extended to 100% of social contributions for 30 months with the same ceiling. A socially useful works programme already in operation has provided employment to 56,850 registered unemployed (or to farmers, if they are regularly insured). Regions with higher unemployment receive a larger share of programme resources (e.g. 18,950 places, or a third of the total, are reserved for Macedonia). The programme is not specifically aimed at unemployed young people but is thought to benefit a number of them (though no figures on this are currently available). Many of the programmes described above build on previous ESF-supported programmes, the socially useful works scheme being a notable exception. The role of the public employment services Efforts to streamline ΟΑΕΔ seem to have intensified. In addition, ΟΑΕΔ has organised a Jobs Forum in three cities, in an effort to involve local stakeholders. Other than this, the role of the organisation does not seem to have changed significantly. (It should be noted, however, that there has been speculation that the current Minister of Labour and Social Security is seeking ways of bypassing ΟΑΕΔ in carrying out ESF-supported projects although just how this might be managed remains unclear.) As regards the balance of emphasis on young relative to older workers, for reasons explained above, this is unlikely to have shifted much. November

130 As regards local variations, the regional allocation of ESF funding to support active labour market policies usually takes account of the intensity of labour market problems in each region, though not in an explicit way. Obviously, local variations in the number and composition of the unemployed also determine how unemployment benefits are distributed between regions, though unemployment benefit remains a national programme, with identical eligibility conditions and rules applying throughout the country. With regard to available resources, ΟΑΕΔ is effectively a social insurance organisation, funded mainly from employer and employee social contributions (though partly subsidised by central government). Because of this, the crisis has adversely affected it: on the one hand, job losses (and wage cuts) have reduced its income from contributions; on the other, demand for unemployment benefit has risen. As a result, fewer resources are available for active measures rather than more. It should be noted that unemployment benefit is contributory (new entrants to the labour market and informal workers are not eligible) and of limited duration (a maximum of 12 months, so that the long-term unemployed are not covered). Consequently, while the number of unemployed has risen by 97% in the past two years, the number of unemployment benefit recipients has increased by a mere 5%. As a result, in the second quarter of 2012 only 19% of the unemployed received unemployment benefit, compared to 35% two years earlier. The financial pressures on ΟΑΕΔ, however, primarily affect the level of funding available for passive policies (i.e. unemployment and other benefits) since active labour market policies are mostly funded by the ESF, though co-financing is still required. Specific measures to help young people make the transition from education or initial vocational training into employment Vocational training offered by ΟΑΕΔ is targeted at young people who have completed formal secondary education. Around 2,500 students participate each year at an annual cost of EUR 3 million (funded by ΟΑΕΔ). ΟΑΕΔ also subsidises work placements with private firms for final-year technical education students (for whom such placement is a precondition for obtaining their degree). Private firms pay trainees an amount equivalent to 80% of the statutory minimum wage (i.e. EUR 409 a month), half of which is funded by ΟΑΕΔ (the budget is around EUR 23 million). A recent ΟΑΕΔ initiative involves the introduction of a training voucher redeemable at in a training centre of choice, in order for people to acquire basic skills in ICT. Around 38,000 young persons are expected to benefit. The budget is around EUR 44 million. Other vocational training programmes include the placement of young unemployed in training centres for the promotion of job creation in environmentally sustainable activities, as well as some of the measures mentioned above, such as the apprenticeship programme. Evidence of the success of the policy measures A recent Ministerial report (not released yet) summarises the formal evaluation of active labour market policies targeted at the young unemployed in the recent past. Its main points are: Both spending on active labour market policies and the number of participants are among the lowest in the EU. November

131 Most recent programmes, including those targeted at the young unemployed, are aimed at the direct creation of new jobs either in firms or through selfemployment (rather than at increasing employability through the upgrading of skills). The current emphasis is on subsidies in the form of reduced social contributions to avert job losses. Action to support short-time working arrangements has been negligible. Measures to integrate young graduates into the labour market are of limited duration (and, it can be argued, serve mostly to provide firms with cheap labour and participants with formal proof of work experience though not necessarily real skills). Many (up to 60% and an estimated average of 50%) of the places available in programmes to create new jobs remain unfilled. Around half (49%) of new jobs created in , including in the public sector, were supported by social contribution subsidies. It remains unclear whether the (mostly ESF-supported) active labour market policies implemented in Greece in recent years (i.e. including prior to the current crisis) have actually created new employment once displacement effects are taken into account. Policies to promote youth employment: Hungary The youth unemployment rate in Hungary is high in international terms and has risen markedly over the crisis period. In August 2012, it stood at 29% of the labour force aged under 25, some 11 percentage points higher than in the same month in 2007 and significantly above the EU average (23%). This, however, tends to exaggerate the scale of the problem, since less than a quarter of young people in this age group are economically active, the lowest figure in the EU, reflecting the very limited extent to which those in education or initial vocational training combine tuition with employment or are exposed to work experience. Accordingly, the number of those aged who are unemployed is only around 7% of the population in the age group, well below the EU average. On the other hand, by no means all of the great many in the age group who are not economically active are in education or training. Indeed around 19% of the total were neither in the labour force or in education or training in 2011, while almost all of the unemployed were not in receipt of training either. Overall, therefore, a quarter of young people of this age were so-called NEETs not in employment nor in education or training one of the highest figures in the EU. The high rates of youth unemployment reflect the difficulties faced by young people who are on the labour market. The essential problems underlying the figures are structural, and the main employment policy measures applied by the public employment service (PES) before and during the crisis only partly tackle the root causes of the problem. In particular, there has been little discernible effort in the form of education and training to help young people make the transition into work. November

132 The main factors underlying youth unemployment Expansion of schooling, low participation of young people and lack of work experience among full-time students The school system has changed significantly since the early 1990s and the start of the transition to a market economy. Hungary has witnessed a considerable expansion of full-time upper secondary and tertiary education. This process was completed by the mid-2000s and the result was that young people postponed their entry into the labour market (Figure 54). The Hungarian vocational school system, unlike the dual system in Germany, Austria or Denmark, offers little work experience in school, which makes entry into the labour market long and difficult. In addition, the availability of other kinds of work experience (managed by the school or by special non-profit organisations) is also limited. In short, because they now spend longer at school, young people have a low rate of participation in the labour market; which in itself leads to a low level of employment among the young as well as to the difficulties inherent in later entry into the labour market. Figure 54 - Expansion of upper secondary and tertiary full-time education, Hungary, Source: CSO online, based on administrative education statistics The labour market situation of young people The participation rate as well as the employment rate of those aged fell markedly in the years leading up to the crisis, as a declining number of young people combined education with work experience. Partly as a result of this lack of experience, the unemployment rate of those in the labour force almost doubled during the first half of the 2000s to around 20% and though it declined slightly between 2005 and 2007, it was still well above the EU average (Figure 55). The share of young people under 25 in the total unemployed was under 20% before the onset of the crisis, the lowest figure in the EU, reflecting the low rate of labour force participation of this age group. It has declined further over the crisis period to only just over 16% in 2011 as the number unemployed among those older increased at a faster rate. The share in the total unemployed of those aged has also November

133 declined over this period but only slightly and their unemployment rate has risen closely in line with the overall rate (Figure 56). Figure 55 - Employment, unemployment and participation of those aged 15 24, Hungary, Source: Hungarian Labour Force Survey Figure 56 - Unemployment rate of youth and share of youth among total number of unemployed (age vs ), Hungary, Source: Hungarian Labour Force Survey Level of education matters to youth unemployment Education has a strong influence on the position of young people on the labour market. Those with a low level of education (compulsory schooling or less) are in the most unfavourable position, since there are hardly any jobs for them and their unemployment rate is extremely high. The employment rate of those with upper secondary education but without a skill is also low. During the financial crisis, unemployment has increased across the board, irrespective of education levels. Figure 57 also shows the age group, which is in a better position on the labour market, implying that the transition from school to work is generally completed by the age of 25. The extremely unfavourable position of the low skilled, however, does not improve much with age. November

134 Figure 57 - Employment and unemployment rates by level of education, Hungary, Source: Hungarian Labour Force Survey Measures taken to tackle the problem, and the role of the PES As noted above, the main problem of young people on the labour market is their low participation rate and limited work experience while at school, which adversely affects November

135 transition into employment. Since the latter is not really supported by schools, the burden of helping young people into the labour market falls mainly on the PES. Depending on the level of education, the transition period can be quite long, especially for those with no qualifications. Various labour market measures have been introduced to assist young people to find work and to tackle the problem of youth unemployment. These are managed largely by the PES. Particular schemes are targeted mainly at school-leavers and other vulnerable groups, such as the low skilled, women with small children, and people with disabilities. Around 60% of the unemployed under-25 registered with the PES are recent school leavers or university graduates (many of whom might also be older than 25). Although youth unemployment has always been a focus of labour market measures, it has never been a major element of labour market policy in other words, young people are considered to be just one of the vulnerable groups at which specific measures are directed. Measures targeting youth unemployment With increasing unemployment in the early 1990s, unemployment benefit for school leavers was introduced (for 6 months and restricted to secondary school leavers and university graduates). This measure encouraged people to register as unemployed; and it was terminated in The benefit was replaced by a school leavers placement support programme, which offered relatively generous wage support for employers taking on school leavers (for at least 9 12 months) and which lasted until Wage subsidies are a very common form of support for vulnerable groups in general and are regarded as being effective. The reason why these programmes are widely accepted is that wages are heavily taxed and in early 2000 the minimum wage in Hungary was increased to an unprecedented level, so deterring the employment of low-wage workers as well as young people. The programmes have constantly been modified as policy preferences for various active measures have changed, which makes it difficult to present them in a consistent way. While the share of young people in active labour market programmes has steadily increased, there are still no specific programmes targeted specifically at young people. Instead, each programme focuses on vulnerable groups as a whole, young people being one of these. In October 2005, a general scheme for subsidised employment was introduced the Start Card programme. The scheme was initially launched to help school leavers find their first job. Although it was later extended to include other vulnerable groups (Start Plus, Start Extra, etc.), the scheme for school-leavers remains by far the most successful in the programme. Under the scheme, assistance is provided for up to two years, during which preferential contribution rates are available to employers taking on young people with a Start Card. The programme is managed by the PES, although registration of data is managed by the National Tax and Customs Administration (NAV). Start Card holders can participate in various active labour market programmes launched by the PES, as well as in other schemes. There are also important general programmes (which existed before the crisis) that support non-market jobs (totalling around EUR 380 million). These are designed to create temporary jobs that are socially useful and of benefit to the community while giving the unemployed work experience. Of these, the most important in terms of expenditure is Employment in activities of public interest. The amount spent on this increased considerably between 2009 and 2010 (from EUR 183 million to EUR 301 November

136 million). In 2010, around 15% of participants (86,175) were under Despite government policy statements, however, the scale of such measures has remained much the same since Participants and success of the programmes Evaluation of the programmes is poor and is inadequate to gauge their effectiveness. Nevertheless, there is some evidence on the participants and focus of the programmes. The school leavers placement support programme ran for about 10 years ( ) and, with its good placement results, is considered to have been the most successful programme for school leavers and graduates. According to the PES 2007 report, of the 18,000 participants in the previous year, 32% were university graduates, 28% secondary school leavers with some skills, and 19% vocational school leavers. Less than 10% were unskilled, with basic schooling or less. Given the youth unemployment situation, the programme was relatively successful, though there was a significant deadweight effect, in the sense of placing those who anyway had a good chance of finding a job. A large proportion of the participants in training programmes (around 25%) are also young people. In 2006, before the crisis, the share of unskilled young people was large (55%) among school leavers aged without jobs but much less so among the age group (20%, with a further 20% from vocational schools, 33% with skills from upper secondary schools and 9% with tertiary education). Programmes, therefore, provided more support to those with higher qualifications and so better chances on the labour market. Evidence from the Start Card programme paints a similar picture. The programme has been in place since 2006, and each year a fairly constant number of around 45,000 school leavers are assisted. Half of them, however, are college and university graduates. The average period of assistance is estimated to be 10.8 months, mostly in the business sector, and the average amount of wage support is around EUR 690 per person. 47 Though there has been no systematic evaluation of the programme, it has the disadvantageous effect that, while it helps young people into a job, they are likely to be fired once the eligibility period is over and support comes to an end. Table 41 presents data on various programmes in which young people represent a larger or smaller share of participants. While school leavers as such are hardly involved at all in the schemes, the proportion of young people under 25 involved in active labour market programmes is significant, amounting to around 27% in training programmes and 23% in wage-support programmes. In 2010, 15% of all registered unemployed were under 25, which suggests that young people are well represented on these programmes (though less so on the Support for entrepreneurship programme). Schemes like job clubs or counselling are also available to the young, but they are of marginal significance. 46 Spending figures and participant data for this programme come from the Eurostat Labour Market Policy database (LMP); the latest data available are for Own calculations using NAV data on the Start programme. November

137 Participants who completed the programme (persons) % completions % employed among successful completions % employed of all participants average duration (months) support/person (HUF) support/person in job (HUF) support/person/mo nth (HUF) Table 41 - Share of young people and school leavers in various programmes, 2010 Training for unemployed Wage support Support for wage costs Support for entrepreneurship Public works School leavers (% total participants) Those below (% total participants) Total 40,632 13,140 17,083 4,687 15,219 (Number of participants) Source: PES statistics Notes: Wage support, created in 1991, provides subsidies of % of wage (for a maximum of 1 year) to employers hiring the unemployed. Support for wage costs, launched in 2007, provides subsidies of up to 100% of wage costs (for a maximum of 3 years) to employers hiring the unemployed. School leavers are those under 25 (or under 30 in the case of university graduates) who are registered as unemployed and are not eligible for jobseeker s allowance or jobseeker s assistance because of their lack of previous work experience. Compared to other participants, young people spend longer on training programmes, but there is little difference in the proportion of those who complete the programmes or in placements. Although the support per person per month is lower for young people, it costs more to support their training through to them finding a job because the period tends to be longer. In the case of wage support, young people cost less because of their wages being lower, though the duration of the programme is similar (Table 42). Table 42 - Monitoring and cost of those programmes where young people represent a relatively high share, 2010 School leavers Others <25 Training for unemployed 2, ,093 1,364, ,081 11, ,018 1,230, ,348 Total 40, ,112 1,146, ,358 School leavers Others <25 Wage support , ,828 46,387 3, , ,820 44,360 Total 13, , ,214 47,475 Source: PES statistics Notes: The share of participants who obtained a job relate to their situation 6 months after participation in the programme. Measures during the crisis Employment of young people fell sharply and youth unemployment increased rapidly as the crisis hit. Unlike other EU or OECD countries, Hungary failed to introduce any early active measures to tackle the problem of vulnerable groups, particularly young people (e.g. in the form of training). A new general programme (so not specifically targeted at the young unemployed) was launched in 2009, to run in parallel with other crisis programmes aimed at maintaining jobs through wage support. Called New Perspectives, it sought to support training, guidance and other measures (excluding November

138 wage support) to help people keep their jobs or maintain their employability during the crisis. (The programme was initiated, along with a number of other crisis measures, by the non-profit National Public Employment Foundation (OFA), in collaboration with the Ministry of Employment.) The programme, however, had to be withdrawn for lack of interest (not one person applied). The PES also initiated programmes during the crisis in collaboration with the above mentioned OFA projects. These were also general schemes not targeted at young people, combining wage support and labour market services, though only in few cases (e.g. support for commuting). Training, guidance and other services were included but in practice provided only to a very limited extent. Wage support schemes generated great interest unlike the other kinds of support (e.g. training or mobility allowances) potentially available. EU-co-financed programmes during the crisis eventually made it obligatory to include training, though no evidence is available as to its effectiveness. It should be pointed out, in addition, that, in line with general layoffs during the crisis, PES staff was also reduced. The programmes launched during the crisis were aimed mainly at employers and sought to maintain the jobs of those already in work. Accordingly, they did not extend to school leavers. Moreover, even those under 25 in employment tended to miss out since the programmes targeted employees in stable jobs which excluded many of these. Consequently, young people have had to rely for support over most of the period largely on programmes established before the crisis. Recent measures for transition from school to the labour market There is some expectation that recently introduced measures will reduce youth unemployment, though as yet there is no evidence one way or the other. Some of them run counter to measures previously proposed and may actually increase the relative number of unemployed unskilled young people (the main problem group). The new measures include shorter compulsory schooling and a reduced curriculum for training in vocational schools, with obligatory work experience very early on. The share of the budget that goes to PES training programmes has been cut, and public works programmes (with increased budgets) are the preferred option among labour market measures (to be eligible to participate in such programmes, a person must be receiving social benefits). Other measures might help young people on the labour market, e.g. a minimum wage for them, though not necessarily increase the number in employment. Their overall effects, however, remain uncertain. A new package of temporary measures (co-financed by the European Social Fund) is being considered for possible implementation in 2012, in order to reduce youth unemployment: support for an apprenticeship-type programme for young people, to make it easier for them to find a job after vocational training (proposed EU financing of EUR 33 million in ); support for business start-ups by young people (EU financing of EUR 25 million in ), the aim being to assist around 2,000 people; support for the employment of young people, especially those disadvantaged, in civil society organisations (EU financing of EUR 17 million in ); start-up support for young farmers (EU financing of EUR 14 million), though this is unlikely to start before If introduced, these measures might replace (or lead to a reduction in the size of) existing programmes for young people, but so far nothing has been decided and the national source of co-financing for the programmes remains unclear. November

139 First transitions from education to employment (an analysis of the LFS ad hoc module) The analysis here is based on information collected by the EU LFS ad hoc module on the transition of young people into employment in The module covered everyone aged 15 to 34, who were asked details of the age they left the formal education (and initial training system), how long it took them to find a job, what kind of job it was, how they found the job, whether or not they had work experience when in the education system and the highest level of educational attainment they reached. In order to reduce the possibility of people s memory becoming less reliable the longer ago they made the transition from education to work, the analysis is restricted to those that left the education system for the last time less than 5 years ago. It, therefore, covers those that moved from education into paid employment or at least attempted to do so at some time during the period This period, it should be emphasised, was for the most part one of growth with relatively high job creation, which of course changed radically in the last year or so. It was, accordingly, a relatively favourable time for young people to find a job. It, therefore, differs markedly from the present when over most of Europe, this is far from the case. The interest in the analysis is, consequently, to gain an insight into the comparative situation in different EU countries before the recession struck, into the relative ease or difficulty of young people making the transition from education to work, which should provide a starting-point for considering the present difficulties. Accordingly, as emerges from the analysis, there a number of countries where this transition was difficult and prolonged even before the crisis hit and problems can only have worsened since then indeed, the analysis of developments over the crisis period, which has also been carried out, confirms this. These underlying problems inevitably affect the scope for assisting young people into employment in the present situation and the chances of success and they will remain to be resolved as and when economic conditions improve. The analysis begins by examining the age at which young people left education to look for their first job and how this it varies across countries. It goes on to consider the length of time it took them to find a job and the factors which seem to influence this as well as the nature of the job concerned and the methods used in the process. Age of leaving education to find a job The age at which young people left the formal education system to begin their working career varied markedly across Member States over the period and, since the situation is unlikely to have changed greatly since, much the same differences can be expected to exist at present. Although the acute shortage of jobs may have led to some young people attempting to delay making the transition, there are limits to how far this is possible and it is unlikely to have changed the situation significantly. On average, around one in 40 young people across the EU left education before they were 15, the figure reaching around one in 12 in Bulgaria and Romania. On the other hand, in Germany, the Netherlands and Poland, it was less than one in 250 (Figure 58). Although more young people than ever before in the EU stay in education well beyond compulsory schooling to obtain the qualifications needed to find a decent job, it was still the case over this period that over 20% of people on average left school before the age of 18. The figure, however, was much higher than this in Malta, where it was almost half, and the UK, where it was around 43%. By contract, the figure was under 10% in Germany, Lithuania and Poland, and under 5% in Slovenia. Indeed, in the EU12 (those countries in Central and Eastern Europe which have entered the EU November

140 since 2004), the average proportion was under 15% and over a third less than in the EU15 (22%). Figure 58 - Proportion of young people leaving education system at different ages, Source: Eurostat, Labour Force Survey ad-hoc module 2009 Malta and the UK apart, the peak age from young people to make the transition from education and work in nearly all EU countries is from 18 to 24, with a fairly even split on average between those doing so before they reach 21 and those doing so between 21 and 24. Overall in the EU, 32% of people left education between the ages of 18 and 20 (i.e. before they reached 21), while 30% did so between 21 and 24. There is some divide between countries in the relative numbers leaving education before the age of 21 as opposed to later. In a number of the EU12 countries, where there is a strong tradition of most young people undertaking a programme of vocational training before entering the labour market, 60% or more had left education before they reached 21. This was the case in the Czech Republic, Slovakia, Bulgaria and Romania as well as Malta (where the figure was 75%, much higher than anywhere else in the EU). In the EU15, it was only the case in Austria and the UK (where the figure was around two-thirds in both). In stark contrast, the proportion was around 40% or below in three other EU12 Member States Poland, Cyprus and Slovenia as well as in Luxembourg, the Netherlands, Portugal and, most of all, Denmark (where the figure was less than a third). November

141 In the majority of countries, most of those remaining in education beyond the age of 20 left before they reached 25. The exceptions in the EU15 are Denmark, Sweden and Italy, where more continued in education after 25, while in German, Portugal and Finland, around a half did. In the EU12, only in Slovenia did most of those remaining in education beyond the age of 20 stay on after they reached 25. Accordingly, in all these countries, around a quarter or more (slightly less in Sweden) of young people were still in education after the age of 25 and were still to make the transition to employment. This was also the case in the Netherlands and Poland. In Portugal and Finland, the figure was around 30%, in Germany, only slightly below 30% and in Denmark, almost 45%, by far the largest proportion in the EU. On the other hand, in most of the other countries, less than 15% of people remained in education beyond this age and in 5 Member States (France, the UK, Romania, Slovakia and Malta), 90% or more had left education before they reached 25. Women remain in education longer than men In nearly all countries, men are much more likely than women to leave the education system before they reach 18, and indeed before they reach 15. In only two Member States, Bulgaria and Germany, is the reverse the case. In the EU as a whole, almost 3% of men had left education by the time they were 15 as against just over 2% of women, while 23% of men but only 18% of women had left before they were 18 (Figure 59). Figure 59 - Proportion of men and women leaving education before the age of 18, (% Total) Source: Eurostat, Labour Force Survey ad-hoc module 2009 In Bulgaria, 10% of women as against 7% of men had left education by the age of 15 and over 31% before they had reach 18 as opposed to 28% of men. In Germany, the figures were much closer (8-9% for each) but were marginally higher for women. By contrast, the difference in the opposite direction was much bigger in a number of countries, especially those in the south of the EU. In Spain, around 40% of men had left education by the time they were 18 as opposed to just 26% of women, in Cyprus, the respective figures were 27% and 11%, in Portugal, 24% and 14%, in Greece,24% and 15%, and in Italy they were 21% and 13%. They were equally large in Latvia (17% and 5%) and Romania (34% and 24%). This difference tends to widen further in respect of those leaving education before they reach 21. In the EU as a whole, an average of 57% of men were no long in the formal education system at this age as compared with 48% of women, with the gap November

142 being much wider in the EU12 (55% as against 40%) than in the EU15 (57% as opposed to 50% Figure 60). Figure 60 - Proportion of men and women leaving education before the age of 21, (% Total) Source: Eurostat, Labour Force Survey ad-hoc module 2009 The difference is common to all Member States without exception, though it is relatively small (2 percentage points or less) in Germany, Austria, Ireland and the UK. It is especially wide in each of the three Baltic States, Denmark and Finland, as well as in the southern EU Member States. Education attainment levels Those leaving school before 18 The differences in the length of time that young people remain in the formal education system before entering the labour market are not necessarily reflected in similar differences in the level of education reached, or more accurately, the qualifications gained. Many young people may remain in education well beyond compulsory school age but that does not invariably mean that they complete upper secondary or tertiary programmes successfully, Across the EU as a whole, almost half of those leaving school before the age of 18 did so without obtaining upper secondary qualifications (Figure 61) 48. The figure is slightly higher in the EU12 than the EU15 (50% as opposed to 45%), though it varies markedly between countries in each of them, reflecting differences in the way the education and initial training system is organised and, in particular the length of programmes. In the EU15, the proportion of people leaving education before this age without qualifications was only around 22% in the UK, where the relative number leaving education before 18 was larger than in most other countries, but over 70% in Spain, where a significant number (a third of the total) also left school before reaching 18, 85% in Portugal and almost 90% in Denmark. In both the latter two countries, however, less than 20% had left school before this age (less than 15% in Denmark). 48 In practice, the data for education attainment relate to the situation at the time of the survey, or up to 5 years after the date of leaving the education system. It is, therefore, possible that in some cases, the people concerned might have obtained their highest level of education after leaving the system, though the evidence suggests that the number is likely to be very small. November

143 In the EU12, the variation between countries was equally wide, with only around 20% of those leaving education or training before the age of 16 doing so with no qualifications beyond basic schooling in the Czech Republic and 30% in Slovakia but over 75% in Estonia and Malta and over 80% in Latvia and Lithuania. The numbers involved, however, were very much greater in Malta, where around half had left school before they reached 18. Figure 61 - Distribution of those leaving education before 18 by educational attainment level Source: Eurostat, Labour Force Survey ad-hoc module 2009 In the latter countries, therefore, the implication is that young people have to remain in education or training programmes longer if they are to obtain upper secondary qualifications, whereas in the UK, in particular, a substantial number of young people succeed in acquiring such qualifications before they are 18. In the UK, almost twothirds (64%) of young people with upper secondary level qualifications had left education by the age of 18, a much larger proportion than in any other EU country. Indeed, the EU average proportion was under a quarter and the figure was above a third only in Spain (35%), Malta (36%) and Cyprus (48%). In most countries, the figure was under 15%. Accordingly, the great majority of people in nearly all parts of the EU were 18 or over by the time they obtained upper secondary qualifications. In most countries too, not only did more women than men remain in education beyond the age of 17 but a larger proportion of those who did leave before then did so with upper secondary qualifications than in the case of men (58% as against 52% in the EU as a whole). This was not the case, however, in many EU12 countries, including Bulgaria, Romania, the Czech Republic, Hungary and Slovenia, as well as in Germany, Austria and Luxembourg. Those leaving education at age 18 and older The great majority of young people leaving education from the age of 18 to 20 (I.e. before reaching 21) did so with upper secondary qualifications. Across the EU as a whole, only around 8% of those concerned did so with no qualifications beyond basic schooling and the figure was only 2% in the EU12 (Figure 62). Indeed, in most countries, the figure was less than 5% and it was greater than 15% only in the Netherlands, Sweden, Malta, Spain and, above all, in Portugal. Indeed, in Portugal, the figure was over a third (34%), much higher than in any other country, implying that 58% of the young people that left school before the age of 21 had only basic November

144 qualifications. Moreover, the figure was even higher for men (68% as against 47% for women). Figure 62 - Distribution of those leaving education at age by educational attainment level Source: Eurostat, Labour Force Survey ad-hoc module 2009 Most of the young people leaving the education system between the age of 21 and 24 (i.e. before reaching 25) did so with tertiary qualifications. In the EU as whole, this was the case for almost three-quarters (74%) of those concerned and in the EU12, 81% (Figure 63). Almost all the rest left with upper secondary qualifications and less than 2% with no qualifications at all, though in Portugal, the figure was 8%, twice as high as in any other country. Again, however, there are wide variations between countries in the relative numbers leaving the system with upper secondary as opposed to tertiary qualifications. Figure 63 - Distribution of those leaving education at age by educational attainment level Source: Eurostat, Labour Force Survey ad-hoc module 2009 In Germany, over two-thirds of those leaving education between these ages had upper secondary rather than tertiary qualification and in Denmark, well over half (54%), and November

145 the figure was also over 40% in Austria and Finland. In these countries, therefore, well over half of the people obtaining tertiary qualification had remained in education beyond the age of 24 in order to do so (See Annex). In Denmark, 77% of those with tertiary qualifications left education at the age of 25 or older, in Germany, 66%, in Austria, 57% and Finland 55%. The figure was also around 55% in Sweden and Italy and in Slovenia, it was some 62%, In most of the other EU15 countries, however, it was around a quarter or less, though in the EU12, slightly higher at around a third. In sum, therefore, the differences in education and training systems means that young people make the transition from school or college into the labour market at different ages across the EU and with different levels of educational attainment when they do so. While there are differences between the EU15 and EU12 countries, in large part reflecting the very different nature of the education system in the latter in the pretransition years, there are equally large, if not larger, differences within each of the groups between Germany and Denmark, in both of which young people remain much longer in the system to attain upper secondary or tertiary qualifications, and most other EU15 countries, and between Slovenia and Romania or Malta. Time taken to find a job The majority of those leaving the education system and entering the labour market over the years 2004 to 2006 (i.e. 3-5 years before the survey was undertaken in 2009), when net job creation was relatively high in most parts of the EU and conditions therefore relatively favourable for those seeking work, took less than 6 months to move into employment defined here as a job which lasts more than 3 months. In the EU as a whole, around half of the young people concerned had made the transition from education into work in less than 3 months, in many cases, almost certainly moving directly from school or college into work, while a further 7% had found a job within 6 months. On the hand, over a third (34%) took over a year to find employment and one in five, over two years. (It should be noted that people may not necessarily have been looking continuously for a job some may have taken tie off to travel, for example but it is likely that the large majority would have been.) The picture is very similar, on average, in the EU15 countries and the EU12. In the latter, a slightly larger proportion than in the former (just over half as opposed to just under half) found jobs in 3 months or less, but, on the other hand, a slightly larger proportion took over a year to find employment (35% as opposed to just under 34%) Figure 64). This is, however, a marked variation between countries within both groups, most especially in the EU15. Here, the proportion of young people finding jobs within 3 months ranged from 74% in the Netherlands and 71% in the UK to only 29% in Italy and just 25% in Greece. While in the former two countries, 14-15% of young people took over a year to find a job after leaving education, in Italy, the figure was just over 53% and in Greece, just over 61%., with well over a third of people making the transition from education to employment taking over two years to do so. In Spain, the figures were only slightly lower, with 46% taking over a year to find a job and 30% over two years. In these three countries, therefore, the norm, even in favourable labour market conditions, was for young people to take a long time to find a job lasting more than 3 months once they had finished education. In the other EU15 countries, the time taken to find a job was also relatively long in France, Portugal and Finland, where only around 60% of young people had found employment within 6 months and over a quarter took over a year to do so. In the EU12, the proportion of young people finding jobs (again of at 3 months duration) within 3 months ranged from around 70% in the Czech Republic to 40% in Bulgaria and 34% in Romania. In between, however, the figures were concentrated November

146 between around 60% and 50%. In Bulgaria and Romania, there was also a relatively large proportion for whom it took over a year to find employment (45% in the former and almost half in the latter), while in the Czech Republic, this was the case for only around 19% of people. In all the other EU12 countries, the proportion was around a quarter or more, in Poland and Malta, over 30%, and in Cyprus and Slovenia, over 35%. Figure 64 - Distribution of those leaving school 3-5 years before survey by time taken to find a job Source: Eurostat, Labour Force Survey ad-hoc module 2009 A similar picture in terms of the differences between countries in the time taken to move into employment from education emerges if the focus is confined to those that left the education system two years or less before the survey. The figures are for the most part higher for those finding a job within three months, but this may be affected by jobs becoming scarcer and, accordingly, by young people tending to remain in education for longer unless they had a job to move into. The time taken to find a job varies with age As might be expected, the younger a person leave the education system and enters the labour market, the more time it tends to take them to find a job, reflecting the effect of qualifications on the ease of transition. In the EU15, an average of just over a third of those leaving education before the age of 18 found a job within three months and just over 40% within 6 months (Table 43, November

147 which is confined to those leaving education 3-5 years before the survey). This compares with 48% of those leaving education between 18 and 20, most of whom with upper secondary qualifications, who found a job within 3 months and 55% who did so within 6 months. For those leaving between the ages of 21 and 24, the proportion finding jobs within three months increases to 55% and within 6 months to 63%. There is only a small further increase, however, in those finding jobs within a relatively short period of time for people leaving education at 25 or older. Even for those leaving education from the age of 21 on, who for the most part have tertiary level qualifications, over a quarter took over a year to find a job and 15% over two years. Table 43 - Division of those leaving education at different ages by time taken to move into employment (% of total in each age group) Total EU15 Number of months: EU12 Number of months: 3 or less or less Below Total Men Below Total Women Below Total Source: Eurostat, Labour Force Survey ad hoc module, 2009 In the EU12, the time taken to find a job after leaving education tends to decline more appreciably as the age of leaving education increases. Less than a third of young people leaving school before they reach 18, on average, found a job within 6 months and almost two-thirds had not found employment a year after finishing education, 44% taking over two years to find a job. For those leaving education from the age of 18 to 20, more were in employment within 6 months but the proportion was still well under a half and over 45% took over a year to move into a job, around a quarter, more than two years. On the other hand, almost two-thirds of those finishing education from the age of 21 to 24, again mostly with tertiary qualification, had found a job within 6 months and less than a quarter had taken over a year, while well over three-quarters of people leaving education at the age of 25 or older had found a job within 6 months and only 17% had taken over a year. The pattern in individual Member States is very similar, in that in virtually all cases, the time taken to find a job declines as the age of finishing education rises, but the graduation, or the extent of the difference between age groups, varies markedly. In some, such as nearly all EU12 countries, the difference between age groups is substantial, in others, such as Greece, Italy, the Netherlands and the UK, it is relatively small. In the last two, even for those leaving education before the age of 18, November

148 the proportion finding a job within 6 months was around two-thirds or more, while 80% or more of those in each of the older age groups when finishing education found a job within this time. In Greece and Italy, however, even those leaving education well into their 20s took a long time on average to move into employment. In Italy, only 35% of those aged 21 to 24 when finishing education found a job within 6 months and for those aged 25 and over, the proportion was still well under a half, with 43% taking over a year. In Greece, less than a third of those leaving education both aged 21 to 24 and 25 and older found a job within 6 months and, in both cases, well over half took longer than a year to move into employment, a third over two years. In general, there are relatively small differences in the time taken by men and women to move from education into employment, though for those leaving education before reaching 18, a slightly smaller proportion of women than men in the EU15 had found a job within 6 months and more took over a year to find one, whereas in the EU12, the reverse was the case. The type of job found A significant number of young people when they made the transition from education into employment moved into a temporary rather than permanent job. Many of the permanent jobs, moreover, were part-time rather than full-time. In the EU as a whole, just under a third of young people moving from education into employment initially took up a temporary job (i.e. one with a fixed -term contract), the figure being slightly higher for EU15 countries, on average (just over a third) than for EU12 countries (around 30% Figure 65). In addition, some 5% of those concerned in both the EU15 and EU12 became self-employed which for many, as noted, below, represents a precarious form of employment and is not so different from being an employee while 4% in the EU12, though just 1% in the EU15, became unpaid family workers (i.e. moving into the family business which in most cases is likely to have been a small agricultural holding or a small shop. For the most part, there is a relatively small difference in the types of job that people take up between those leaving education at different ages, the main exception being for those leaving before they reach the age of 18 in the EU12, a much larger proportion of these (22%) becoming family workers than for those leaving in the older age groups (though the numbers involved are relatively small). There is also a tendency for the proportion going into self-employment to increase as the age of leaving education rises, which is particularly marked for those leaving after they reached 25 in both the EU15 and EU12, though in the latter, much more so for men than for women. The average figures, however, conceal wide variations between countries. In the EU15, the proportion of young people taking up a temporary job ranged from over 60% in Spain, over 55% In Portugal and over 40% in France, Finland and Sweden to only around 11% in Austria and 9% in the UK, In the EU12, it varied from around 48% in Poland and over 40% in Slovenia to only around 6% in each of the three Baltic States and just 3% in Romania. In the rest of the EU12, the proportion was relatively small, exceeding 20% only in the Czech Republic and Cyprus, and then only slightly. November

149 Figure 65 - Distribution of young people by first job after leaving education Source: Eurostat, Labour Force Survey ad-hoc module 2009 The proportion becoming self-employed was small in most countries, exceeding 6% only in Lithuania (marginally), Greece and Italy. In Greece, it was around 10% and in Italy, 1%% (over 20% for those leaving over the age of 20). These figures, however, do not necessarily imply that those concerned set up small businesses. In Italy, in particular, they instead largely reflect the tendency for young people to work as selfemployed for a single company, so enabling the latter to avoid paying social contributions as well as the other obligations which come from being an employer. As such many of the people in this position are not so different from employees on temporary contracts and arguably are more precariously placed. Taking these into account along with those reporting to be in fixed-term jobs implies that around half or more of the young people who succeeded in finding work took up temporary employment. In Greece, account also needs to be taken of those who moved from education to become family workers. This amounted to 9% in total and to 14% for men and to even more for those leaving education before the age of 21 over 15% in total and 20% for men. Accordingly, only just over half of young people who made the transition into work took up jobs with permanent contracts of employment. In both Bulgaria and Romania, unlike in other counties, the proportion of those taking up employment who became self-employed was, in the case of men, much larger for those leaving education before reaching 18 than for those remaining beyond 18 (11% November

150 in Bulgaria, 14% in Romania), which suggests, as in Greece and Italy, that they did not necessarily set up businesses. In Romania, too, a substantial proportion of people leaving school before they were 18 became family workers, almost half overall and in this case more women than men (57% as against 44$). In consequence, less than 40% of the young people leaving school at this age in Romania who moved into employment took up a permanent job. This was equally the case in Portugal and in Sweden, the figure was only slightly above 40% - while in both Spain and Poland, the proportion was only around a quarter. In all these case, however, the reason is the large number of people in temporary jobs rather than unusually large numbers of self-employed or family workers. Employment in part-time jobs Many of the jobs that young people took when moving from education into work were part-time, in the case of both permanent and temporary ones and particularly in the case of women. This was especially the case in the EU15, where, on average, 22% of women moving into permanent jobs were employed part-time, whereas in the EU12, the figure was only 4% (Figure 66). In the EU15, however, the proportion was above the average only in three countries the UK, Sweden and, above all, the Netherlands. In the U12, the figure was 10% or below in all countries. Figure 66 - Proportion of young women moving from education into employment taking up part-time jobs Source: Eurostat, Labour Force Survey ad-hoc module 2009 The proportion in the EU15 for women was even larger in respect of temporary jobs (29%), though it was also much larger in the EU12 (14%). II the former, the figure was above 30% in three countries - Ireland (35%), Sweden (46%) and the Netherlands (59%) and below 20% only in Portugal and Finland. In the EU12, the proportion of women moving into temporary jobs which were part-time was around a third in Estonia and over half in Slovenia, but under 20% in all other countries, apart from Cyprus (23%). For men, the figures were smaller, as might be expected, though it was still the case that 14% of men who found temporary jobs in the EU15 were employed part-time and 10% of those in the EU12 (Figure 67). In the EU15, the figure was above 20% in the EU15 only in Ireland (23%), Sweden (26%) and the Netherlands (where it reached 34%), though it was above 15% in Belgium, Denmark, Greece, Austria, Luxembourg and the UK. In the EU12, the figure was above 20% in Cyprus, Malta (50% and, above November

151 all, in Slovenia (62%), but elsewhere, below 10% in all countries apart from Hungary (13%). Figure 67 - Proportion of young men moving from education into employment taking up part-time jobs Source: Eurostat, Labour Force Survey ad-hoc module 2009 Work experience Many young people had some work experience during their formal education or initial training, the number concerned increasing the longer the period spent in education. In the EU as a whole, just over half (53%) of those who had left education and had entered the labour market reported having such experience either as an integral part of their studies or as a job separate from these, the figure being significantly higher in the EU15 (59%) than in the EU12 (39% Figure 68). The figure was also slightly higher for women than for men, especially in the EU15 (62% as against 57% - in the EU12, it was just under 40% as against just over 38%). Figure 68 - Proportion of young people who had entered the labour market with work experience during their period of formal education Source: Eurostat, Labour Force Survey ad-hoc module 2009 The proportion was especially large (80% or more) in Denmark, the Netherlands, Austria and Finland and was also well above average (70% or more) in France and November

152 Sweden. In the EU15, it was below 40% only in Spain, Portugal and the UK (in the latter, partly reflecting the larger number than elsewhere leaving education before the age of 18). In the EU12, the figure was less than 40% in half the countries only around 30% in Hungary and Slovakia and around 15% in Romania. On the other hand, the proportion with work experience was over 60% in Cyprus and only just below in the Czech Republic and Slovenia. As noted above, the proportion with work experience tend to increase with the length of time spent in education, so that for those leaving school before the age of 18, only 22% had such experience in the EU12 and 32% in the EU15, though the figure was still over 80% in Austria (reflecting the strength of the dual system), over 75% in Finland and around 60% in Denmark, the Netherlands and Cyprus. It was well under 10%, however, in Romania, Latvia and Lithuania, though the number leaving education below 18 was small in the last two. For those leaving education from the age of 18 to 20, most of them with upper secondary education, the proportion with work experience was significantly larger in the EU15 (58%) than for those leaving at a younger age, though much less so in the EU12 (29% (Figure 69). Once again, the proportion was much larger than average in Austria (over 90%), Finland and Denmark and well below average in the EU15 in Portugal (under 20%), though less so in the UK (just under half). In the EU12, it was above half only in Cyprus and Malta and it was well under 10% in Romania. Figure 69 - Proportion of young people who had entered the labour market at age with work experience during their period of formal education Source: Eurostat, Labour Force Survey ad-hoc module 2009 Time taken to find a job for those with and without work experience Young people who had some experience of work during their period of education, either as part of their course or separate from their studies (such as a part-time job to pay tuition fees or living expenses), tended to spend less time in finding a job after leaving education. In the EU15, just over two-thirds of those with work experience found a job (of more than 3 months duration) within 3 months of leaving education and over threequarters within 6 months. This compares with well under half of those with no experience finding a job within 3 months and only around 56% within 6 months (Table ). Moreover, while over 30% of those without work experience took over a year to find employment, this was the case for only 13% of this with experience. 49 It should be noted that these figures cover only those surveyed who reported on whether or not they had work experience during their education. They, therefore, differ from those for the time taken to find a job November

153 In the EU12, the difference was equally marked, 80% of those with work experience finding a job within 3 months as against 52% of those with no experience, and whereas only 9% of the former group had taken over a year to find a job, the figure for those without work experience was 28%. Table 44 - Proportion of young people with and without work experience during education by age of leaving education and by time taken to find a job EU15 With work experience Number of months: Without work experience Number of months: 3 or less or less Below Total EU12 Below Total Eurostat, Labour Force Survey ad-hoc module 2009 The same kind of difference is evident for those leaving education at different ages. In both the EU15 and EU12, the difference is as pronounced for those leaving education before the age of 18 as for those leaving after they reach 25. It is equally as evident for women as for men. Method of job search Young people across the EU use a variety of methods to look for jobs, though relatively few use the Public Employment Service (PES) or any form of labour market intermediation. In the EU15, the most common methods of job search reported by those surveyed were through the help of family or friends (which around 29% reported as the main method) and applying directly to employers (reported by 26%). Consulting adverts in the press or on the internet was the third most reported method (by just over 12%), while less than 5% relied mainly on the PES to find a job (Table 45). The use of informal methods is even more common in the EU12, where around a third reported making direct applications to employers as the main method and only slightly less reported using family and friends, with about the same proportion reporting relying mainly on adverts in the media. Although use of the PES was reported by more of those surveyed than in the EU15, the proportion was still less than 7%. Within the EU15, reliance on families and friends to find a job was particularly common in Greece (where it was reported by 57% of those surveyed) and Italy (45%) and least common in Belgium and Ireland (less than 20% reporting this). In Ireland, applying directly to employers was reported by more than anywhere else (43%) and It was also relatively common in France (37%) and Portugal (34%), though less than a quarter of people reported this as being the man method in all the other EU 15 examined earlier which cover everyone surveyed who reported on this, irrespective of whether they gave information about their work experience or not. November

154 countries apart from Belgium and the UK. A quarter of those surveyed in Denmark reported consulting adverts as the main methods and just over 20% in Luxembourg but i10% or less in Finland, Spain, Greece and France. Table 45 - Main methods used for job search by young people moving from education into the labour market (% of total reporting) Via school or college Via PES Via ad in media Directly applied to employer Via family and friends From work experience Set up business Other Belgium Bulgaria Czech Republic Denmark Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden UK EU EU EU Eurostat, Labour Force Survey ad-hoc module 2009 Use of the PES was reported to be the main method of searching for a job by just over 15% in Finland and around 10% in both Sweden and Luxembourg, but in other EU15 countries, apart from Belgium (just under 8%), the proportion was less than 6%. In Denmark, Ireland and Greece, the figure was less than 3% and in Italy and the Netherlands, less than 2%. Other methods were also for the most part reported by a relatively small proportion of people in each of the countries, the main exception being obtaining a job through work experience, which was reported by over 20% of those surveyed in Austria, 20% in the Netherlands and around 18% in both Denmark and Sweden, all countries where apprenticeships are common. In the EU12, reliance on family and friends to find a job was reported by well over half of those surveyed in Latvia and by over 40% in Bulgaria, Cyprus and Hungary and November

155 elsewhere, the proportion was over 30% except in the Czech Republic, Lithuania and Poland (where the figure in each case was just over a quarter). Applying directly to employers was reported to be the main method of job search by over 40% in the Czech Republic and by around a third or more in most of the other countries, though by under 10% in Slovenia. Consulting adverts in the media, including on the internet, was most common in Hungary (reported by 20%) and nowhere, apart from the Czech Republic (marginally) was the proportion reporting this to be the main job search method less than 10%. In Poland, around 10% of young people surveyed reported using the PES as the main job search method and in Slovenia, around 8%, but apart from Lithuania (just under 7%), less than 6% reported relying on the PES in all the other EU12 countries. In Cyprus, the figure was less than 2% and in Estonia and Latvia, less than 1%. Use of the different methods of job search varies to some extent with the age at which people leave education and start looking for employment. In particular, more of those leaving education before the age of 18 reported relying on help from family and friends (41% in the EU15 and 50% in the EU12). Use of the PES was reported in the EU15 to be the main method by slightly more of those leaving education at age 17 or younger than those leaving at 18 or over, while in the EU12, by contrast, a larger proportion of those leaving education at 18 or over reported using the PES than those younger than this (Table 46). Table 46 - Main methods used for job search by young people leaving education in the EU by age group (% of total reporting in each group) EU15 Via school or college Via PES Via ad in media Directly applied to employer Via family and friends From work experience Set up business Other 17 or less EU12 17 or less Eurostat, Labour Force Survey ad-hoc module 2009 November

156 Annex Figure A.1 Distribution of those with only basic schooling by age of leaving education Eurostat, Labour Force Survey ad-hoc module 2009 November

157 Figure A.2 Distribution of those with upper secondary qualifications by age of leaving education Eurostat, Labour Force Survey ad-hoc module 2009 November

158 Figure A.3 Distribution of those with tertiary qualifications by age of leaving education Eurostat, Labour Force Survey ad-hoc module 2009 November