Last week, new employment data in Europe was published and reported that the eurozone’s seasonally-adjusted unemployment rate was 11.8 percent in the month of March. According to Eurostat, the European Union’s statistics office, close to 19 million people remain unemployed in the 18-nation eurozone and the jobless rate has remained about the same for the past year.
One demographic continues to experience the biggest setback: youth (individuals aged 25 and under). The youth unemployment rate held steady at 23.7 percent in March, but there were some positive signs that it’s improving: the number of young people out of work across Europe fell by 166,000 jobs.
In Europe’s largest economy, Germany, the youth have a better time attaining employment as the jobless rate there is 7.8 percent, compared to the United Kingdom’s immense 19.1 percent for those aged 16 to 24 years old. Austria had the second-lowest with 9.5 percent.
“The cross-country divergence is still very, very significant, much more so than in other data,” said Frederik Ducrozet, a senior euro zone economist at Credit Agricole, in an interview with Reuters. “There is a lag right now which is usual, but unless there is another shock to the economy, the unemployment rate should decline”
Spain’s youth unemployment has risen to a record 57.7 percent. In order to stimulate the labor market for the under-25 demographic, the Bank of Spain has recommended a temporary suspension of the minimum wage to spur hiring practices among businesses in the dwindling economy.
“The successes due to the labor law in internal flexibility and moderating wages are positive,” the bank said in a report on the state of the economy last year. “But the effect on boosting new hires is insufficient, even though this is very likely an area where the measures need more time be fully effective.”
The eurozone economy has been growing at a slower rate than in other parts of the world. The European Central Bank (ECB) has been urged to turn on the printing presses with quantitative easing (QE) because it is facing inflation rates below its objectives. If the unemployment rate drops then any QE initiatives would decline.
Many feel that due to the global economic collapse the youth without work today could very well be described as a “lost generation.” This is also a concern in the United States as numerous leaders and officials in the public and private sectors have called for action to address the situation.
Speaking at the World Economic Forum in January, Muhtar Kent, CEO of Coca-Cola, warned that the unemployment rates for youth and teens represents a much direr problem and it could incite a global financial crisis.
“Seventy-five million [young] people [globally] are unemployed, do not have the opportunity to work at the moment. That’s bigger than France. It’s a terrible thing when people are coming into the workforce in their late teens and early 20s and don’t have opportunities to create value,” said Kent. “If we’re not successful in creating better opportunities, I think there’s a real danger that the social peace and fabric of the world is in danger. It’s the obligation of government, it’s the obligation of civil society to come together to find solutions.”
A report entitled “In This Together: The Hidden Cost of Young Adult Unemployment” highlighted that youth unemployment costs the U.S. approximately $25 billion per year in net losses.
This has caused elected representatives to urge Washington to implement tax credits, grants, reforms in education and other government legislation that would make it easier for high school and college graduates to gain employment. However, some libertarians argue that the best way to improve employment for youth is to eliminate the minimum wage, get rid of government regulations that hinder business and revamp the employment insurance model.
Today, it has become rather common for the average college graduate to have a diploma, be indebted and either be unemployed or work at a low-wage job that is not at all affiliated with their field of study.
