Blog/Opinion

European Youth Needs Action Now As The Skills Gap Is Too Wide

Author:
Stephen Pope
Source:
Forbes
Contributor:
Publication Year:
2020
May 06, 2020
  • SDG 8 - Decent Work and Economic Growth

The Youth Unemployment Rate (YUR) in the euro zone remained unchanged at 15.60% in November from October 2019. The level of YUR in the region averaged 19.31% from 1993 until 2019 and reached an all-time high of 24.80% in February of 2013 and a record low of 14.80 percent in March of 2001.

In the wider EU the current YUR stands at 14.2%, a level that is too high when measured against the U.S. rate of just 8.10% in December 2019.

 

The Call For A Youth Guarantee

The new European Commission has vowed to implement reforms to the European Youth Guarantee to tackle youth unemployment in the EU. An admirable ambition for sure, however, what might be the best way of shaping the reformed program?

Following the global financial crisis that had its roots in 2007-2009 and the ensuing European sovereign debt crisis, the level of unemployment rose dramatically in Europe. The situation was particularly challenging for young people.

The situation was especially acute in Greece and Spain where at the start of 2013 the respective levels of YUR were 59.50% and 55.90%. The situation was so dire that the generation of people aged from 18 to 25 years were known as “the best educated and least hopeful.”

Knowing that employment can be a catalyst to enduring growth the EU launched in 2013 the European Youth Guarantee, including the Youth Unemployment Initiative.

The current program is drawing to a conclusion and yet as the level of youth unemployment remains stubbornly high the new European Commission President, Ursula von der Leyen has asked Nicolas Schmit, who in charge of Jobs and Social Rights in her cabinet, to oversee an amendment to the program so as to make it fir for purpose in the current circumstances.

In a letter to Schmit, Ursula von der Leyen said: “We must do more to give children and young people the care, education and opportunities they need.”

In response, Schmit said: “This was a very useful tool in times of crisis and it made a contribution to reducing, in many countries, youth unemployment, and accelerated the access to the labour market for many young people, ... but I think now we are in a different situation.”

It cannot be disputed that youth unemployment remains extremely high in some regions in Europe and this needs to be addressed: Greece 33.0%, Spain 32.2%, Italy 27.1%, Sweden 19.7%, Croatia 19.3% and France 19.2%

 

Skills Gap

Schmit has pointed out that in his opinion it is the skills gap which is the main issue that keeps the YUR so high.

According to the “Skills For Jobs” database by the Organisation for Economic Co-operation and Development (OECD), at least 80 million workers in Europe suffer from a mismatch in terms of qualifications.

The result is that workers lack the proper qualification for the job they have been hired to do, either because they are under-qualified or overqualified. The OECD suggest that this is the case for 42% of workers in Greece, 41% in Portugal or 37% in Germany.

This “skills shortage” is proving to be a fetter to economic growth and has a serious impact both on workers and wages, business and profits. 

Workers performing tasks they are not qualified is not at all healthy and they tend to earn up to 24% less than those properly qualified. In real money this results in salaries reduced by €4,000 per year in Italy ($4450) and around €8,000 ($8900) in Germany.

According to the 2019 annual economic survey by Eurochambres, a representative of the business communities in Europe, the lack of skilled workers is one of the biggest challenges faced by European companies.

There is a wider effect as well as the OECD data says countries with labour market imbalances also show lower productivity levels.

This is supported by the European Centre for the Development of Vocational Training (Cedefop) who report that 40% of businesses in the EU report difficulties finding staff with the right skills.

To the extent that such vacancies reflect skill shortages, which have adverse consequences for the productivity and competitiveness of European enterprises.

 

New Program Or Typical European Delay?

Is a new dawn and a road to recovery on the cards? One certainly must hope so and we look to Nicolas Schmit who tomorrow (Tuesday, January 14) is expected to unveil the roadmap for a Social Europe.

I hope it sets the right tone to address the needs of Europe’s youth, however, I am sceptical as the word is that a new updated Skills Agenda will not be mentioned tomorrow. Rather the youth will have to wait for an announcement later this year.

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