Worry less about the young than older unemployed

Frankly Speaking

Picture of Giles Merritt
Giles Merritt

Founder

France’s hard-pressed president François Hollande last week heaved a sigh of relief at the news that unemployment in his country just dropped more sharply than at any point in the last 15 years. If France’s stubbornly high 10% joblessness is starting to fall, maybe there’s light at the end of the tunnel for the 25 million unemployed people around Europe.

Stop the average person and ask what Europe’s biggest problem is, and the reply is likely to be jobs in general and youth unemployment in particular.

As we head into the tenth year of the economic doldrums triggered by the Wall Street crisis of 2007, it’s time we took a long, hard look at jobs – what are they, who can get one and with what sort of know-how? “Greying” Europe’s health and wealth will depend on the answers.

They may well not be what we think. To begin with, the jobs crisis we worry about most isn’t the major problem. It’s not youth unemployment we should be focusing on but the way older people are being condemned never to work again.

The number of young jobseekers has shrunk by approaching half a million

This isn’t to say the difficulties young people have in finding work are not a very real problem. Whether school leavers or university graduates, they face a much tougher time than earlier generations. Yet the picture painted by the headline statistics is gloomier than the reality.

To quote Eurostat, “a 25% youth unemployment rate does not mean that one out of four young persons is unemployed. This is a common fallacy.” And it’s a misperception that reflects the statistical nightmare of figures that don’t, unless you delve more deeply, distinguish between people just between jobs and those most probably doomed never to find work again.

Dig deeper and you’ll find that the proportion of jobless young people in relation to Europe’s overall unemployment total has declined steadily since 1995; in that year, Eurostat reported almost four unemployed under-25s for every ten older jobseekers. Now that’s heading for a 3:10 ratio.

It’s important to recall that Eurostat calculates youth unemployment in two ways. When it does so as a proportion of the total youth population, that produces a figure of 9.7% for the EU as a whole, rather than the 23% rate that results from dividing the number of unemployed into the total labour force.

Of the EU’s total 21.5 million unemployed people, some 5.6 million are young people looking for work. On top of that, almost 2 million are so discouraged and demotivated that they’re no longer counted as part of the active workforce.

The ‘structurally’ unemployed generally have lost out to new technologies or tougher market forces

Over the last year or so, the number of young jobseekers has shrunk by approaching half a million. But that underlines the bad news for older people. Receding unemployment amongst the under-25s is highlighting long-term joblessness amongst older workers.

There are now more than 12 million people in Europe who have been out of work for more than a year. They are the ‘structurally’ unemployed who generally have lost out to new technologies or tougher market forces. It’s going to be very hard to get them back to work. That’s going to be the greatest challenge of all.

Thirty years from now, Europe’s labour shortages will be devastating – the forecasts are that 20 million skilled jobs are going to be unfilled in an EU where a third of the population is over 65 years old.

Unemployment is a scourge. It’s a disaster for many people and it’s also a political weapon in the hands of populist politicians. But we need to look beyond the crude statistics and pay closer attention to the different types of joblessness – frictional unemployment when people are between jobs isn’t the same as structural unemployment when finding another job is unlikely. Above all, we must focus more on the future, when the problem will be too few workers rather than too few jobs.

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