EU27 Youth Unemployment Hits 23.5%

We are told that it’s the youth that is our future. These are the people that supposedly will be governing us one day not in the not too distant future when we sit comfortable doing whatever we have to (or rather, will be able to) do as retirees. That means we will be probably grafting hard to pay for the money that the state won’t be able to pay us because the pensions have all gone topsy-turvy and we won’t be sitting on the stash of cash like some people might have been able to do in the past.

But, when those young people of today get to power (if by some pure stroke of luck there is any money left) will probably turn around and say something like this: “Where were you when we needed you?”

How right they will be! New figures that have just been released on youth unemployment in the EU27 have seen an increase yet again for the first quarter of 2013. Unemployment for young people aged between 15 and 24 edged higher yet again and now stands at 23.5%. And they dare tell us that we are seeing an improvement in the economic situation, that the light at the end of the tunnel?

Perhaps they should ask nearly two thirds of Greeks in that age bracket (58%) that are not currently in employment. Spain comes in at a close second place with 55.8%. What sort of prospects do those young people have? It’s probably not surprising that unemployment in the top four countries in the ranking are those that have the worst economic situation, at the present time. Portugal is third with a figure of 38.2%, closely followed by Italy in fourth position (36.9%).

In the top ten countries that are suffering from high unemployment for young people seven of them belong to the Eurozone. Clearly, the knock-on effect has had drastic consequences for young people. But, it’s high time that Mrs. Merkel, Mr. Hollande and Mr. Cameron (to name but a few) actually took decisions that were going to create jobs. At the present time, we can only see budget cuts and austerity measures. We hear of how we must grin and bear it and hold on and things will get better. France has an unemployment rate for young people aged 15-24 years old at 26.3%. The UK has 20.6% of its youth unemployed at the present time and Germany is the best of the bunch (top of the class?) with just 7.6%.

While youth unemployment has increased in overall terms across all countries, it has in fact, however, declined in Germany, Austria and Finland, for example in the past three years. There are some out there that are saying that youth unemployment is a myth, however. Perhaps they might like to jump on a plane to Greece or Spain and ask the young people there.

Greece has 39% of those that are in this bracket that are long-term unemployed. Spain stands at 35.6% long-term unemployed. Germany has 23.3% of long-term unemployed. That means unemployed for more than 12 months. This is not a myth. This is not scaremongering. This is the reality of people aged between 15 and 24. In the majority of countries of the EU, we have a ratio of young people to total population that represents approximately 7%.

Merkel and Hollande think that they have the answer (but don’t they always?). They have announced a plan that will save the youth of the EU27. It has just been unveiled in Paris. They are going to provide cheaper credit to companies in the EU and thus ease unemployment for the youth and create jobs (on a massive scale no doubt). Higher company financing has been the object of all criticism from both the German and the French Finance Ministers (Schaeuble and Moscovci). That’s what’s stopping economic recovery. Easy! Why didn’t we think of that way before? The Franco-German solution is to get the EIB (European Investment Bank) to leverage 6 billion euros (nearly $8 billion) to yield 60 billion euros in loans for SMEs. The EIB is already on target to release more than 70 billion euros in funds between now and 2016 to boost the EU.

There are 6 million unemployed young people in the EU today. The answer for Merkel and Hollande is to make money available, increase availability of loans and that will generate business and create employment. If it were that easy, we would have done it long ago. Create as many loans as you wish Mrs. Merkel and Mr. Hollande, but will that create jobs? It’s not throwing money at companies that creates jobs. It’s far more complicated than that. Hollande already promised to create 150, 000 jobs for the young as an electoral pledge. He hasn’t succeeded.

Changing the system in various countries might mean that young people get better chances of being employed. France has the highest rate of university education in the EU (42.8%), but that hasn’t stopped the youth becoming unemployed. The countries that have the highest rates of unemployment for young people are those that are the most educated, in fact. They have young people that are over-educated and a limited supply of jobs in certain sectors. Young people out-bid themselves in the market and they are over-qualified in the race to get more and more university degrees. Greece has 30.9% of its young people that are university educated. Spain is at over 39%. They offer few programs of apprenticeship (contrary to Germany, which has a low unemployment rate). Manual jobs are looked down upon in countries like France, where you have to go to a Grande École. It’s a shame that the jobs are not so grand at the end of it for the youngsters of today!

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tothetick

Professional team of writers/analysts analyzing the financial markets.

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