Youth unemployment hurts communities, its time for a new deal, says Andor [Advocacy Lab Content]

Youth unemployment stings and weakens communities, said László Andor, Former EU Commissioner for Employment. Andor spoke with Euractiv’s Christoph Schwaiger at the StartNet conference, he called for new EU-level regulation to deal with the impact of the digital revolution on work.

CH: Youth unemployment is still an issue in the EU. What’s causing it?

LA: It’s always been an issue. In the market economy, unfortunately a systemic problem is that there is unemployment and there is always youth unemployment as well. So, I don’t think we should be under the illusion that youth unemployment can be solved once and for all, and no further intervention would be needed.

CH: What are the main drivers behind youth unemployment?

LA: It’s a capitalistic system, right? The enterprise system tries to economise with labour. There are business decisions that are made with the intention to save costs at micro level, but the macro effect is that the overall demand for labour gets restricted. When there is a crisis, companies lay off workers in larger numbers.

Unemployment is a very cyclical phenomenon and youth unemployment is even more cyclical than the average. This is why in any crisis, what you find is that the youth unemployment rate is much greater than the average in most places.

CH: You’re saying it’s cyclical. So, in the recent past, what trigger happened that made you think that rising youth unemployment is once again going to be an issue?

LA: The point is that in youth unemployment there is a greater cyclical component than in the average unemployment. Because they’re younger, less experienced, and less protected. They’re very often employed in temporary jobs rather than permanent jobs.

So, it’s easier to use the younger generation as a buffer when there is a downturn in the business cycle. And at this stage there is an enormous uncertainty in the European economy.

We don’t know what kind of economic policy the incoming European Commission will pursue. There is a lot of talk about competitiveness. But what we saw last time, when competitiveness was at the centre of the policy, it was rather a synonym for austerity.

For a lot of people, it simply meant cutting labour costs in various ways, either cutting real wages or cutting the number of people employed to boost the competitiveness of some enterprises which considered themselves more labour-intensive.

At the end, however, what might have been a temporary advantage for a few, it became an overall disadvantage for all of Europe, due to the harmful effects of mass unemployment.

CH: You’ve tried to tackle this topic in the past. So, what are some things that we know and have evidence on that they do actually work?

LA: The Eurozone crisis was quite a different crisis than what we have today. Basically, it originated from two sources, one was the general instability resulting from the inadequate regulation of the financial system. And the second factor was the incapacity of the European monetary union to deal with the cyclicality of the economy and the asymmetries of Europe.

The lack of automatic stabilisers in the monetary union, and several short-sighted decisions, altogether resulted in the polarisation and destabilisation of the monetary union.

We were in a situation in 2010, 2011, and 2012 where Germany had high surpluses and falling unemployment, while in the southern European countries, there was an economic disaster with sky-rocketing unemployment and also rising poverty.

Young people were on the receiving end of this financial crisis.

So, a fundamental question was how to stabilise the economy but then in the meantime, how to address the shortcomings of the labour market conditions through either reforming the labour markets by making them more dynamic, or through improving the protection of labour, or upgrading the institutions that provide young people with skills and job opportunities.

Countries like Austria and Finland, countries typically in the Eurozone centre, offered good examples of labour market solutions. But the challenge was to transfer the good models to the Eurozone periphery, with the support of the European Union. The Youth Guarantee was thus a key measure to strengthen cohesion among Eurozone countries.

CH: During the StartNet conference, you described the average experience of youth unemployment as sort of more damaging than an average person’s experience with unemployment. What did you mean by that?

LA: Yes, I think that is a very important observation. If young people don’t find appropriate employment, which is also providing sufficient income but also integration in society, then.

the damage for the young people themselves and also their communities and families can be greater.

Young people may have smaller social networks to rely on and usually have much less experience with using the social safety net to access various opportunities which the state or local communities can provide. The demoralising effect of unemployment also comes faster for young people than for those with more experience.

CH: During the conference, some panellists also mentioned the evolving concept of work. Firstly, do you agree that the concept of work is changing or that it needs to be changed?

LA: Well, it depends on what people mean by it. There is one interpretation about the changing nature of work that is linked to digitalisation and technology that offers a lot more flexibility.

The risk here is that technological innovation, which otherwise may boost productivity, is blurring the lines between work and private life.

If people, for example, use digital technology for the sake of connectivity for their work, it’s sometimes very difficult to disconnect. So, the new world of work sometimes creates these new situations.

On the one hand, the same technology creates new opportunities including for new business but on the other hand it can undermine the stability of the labour situation and of social security as well.

I think it’s important that new regulation is delivered at EU-level. Because in that case it’s less likely that the new regulation is seen as something that threatens economic competitiveness.

CH: Does the EU have the competence to ban unpaid internships?

The EU definitely can legislate in this area, just like it has legislated in various other areas where people thought it would be very tricky, like the question of minimum wage coordination.

Some ten years ago, people would have thought the EU could not legislate on minimum wage coordination and now it has happened. So, if stakeholders agree on the rationale, it is easier to find the appropriate legal basis.

CH: And lastly, if you had to take a look at what the Commission is doing now for youth unemployment, what is it getting right? And similarly, what can use some improvement?

LA: I really appreciate that at the time of the Covid-19 recession the Commission came forward with a reinforced version of the Youth Guarantee, and widened the age group in which it can be applied.

We already were facing requests to increase the age ceiling, but my position at the time was that first the model should prove itself for those under 25 before we go to 30. It is also important that again and again, as it is the case also now, there is a new strategy for skills.

The justification is that most of the demand for skills is defined by business, and the rise of new technologies and other structural changes redefine the skill set that is needed for economic productivity. What the policy makers need to bear in mind is that schooling and training are for longer than just a business cycle, and the build-up of horizontal skills also always needs to be pursued.

The third point I would like to make is about mobility.

I think through the past decade the EU has been on the right track to support young people’s capacity to exploit the benefits of the Single Market and access job opportunities in other countries.

But now in his famous report, Enrico Letta is warning us that opportunities also need to be created locally, to provide a “right to stay”.

This cannot happen without ensuring that public employment services are active in all regions, especially in those facing economic decline, and in such areas, there is additional support for connecting the SME sector, the training and education institutions, but ideally also social economy actors for developing diverse models of local prosperity.

This interview has been edited for clarity and brevity.

[By Christoph Schwaiger I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

This article is part of our special report Election radar – how can Europe get its youth into work?

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