Youth unemployment and Austerity

Why should we be concerned about youth unemployment?

Young people bear most of the social cost of the financial and economic crisis. High youth unemployment, poverty and social exclusion have come to characterise a time of high uncertainty and insecurity for young people in the labour market and in their personal life. Even if the youth unemployment rates have improved over the last two years, they remain significantly higher than for other age groups[1][2]. The effects of poverty and unemployment at a young age are long-lasting: Lower wages and job quality but also reduced personal wellbeing and health are well known results[3].

Youth unemployment and austerity

The numbers show that youth unemployment had been steadily rising until 2014. Budget cuts in many countries have pushed the rate further up instead of reducing it. Cuts in the education sector, in employment policy, health and other parts of the welfare states which went hand in hand with deregulation of employment laws, have worsened the situation of young people. A historical perspective is helpful in understanding these changes: Youth’s precarious situation did not just pop up with the crisis, but dramatically worsened. The fact that it already existed to some extent can be explained with the development of the service economy and the establishment of a neoliberal ideological hegemony. Since the 1990s reforms aiming to deregulate the labour markets (often called Flexibilisation) in order to push more people into the labour market have been common. Cuts in social benefits and increasing conditionality of benefits often went along with that.[4] Additionally, there has been an increase in income and wealth inequality since the 1980s which in combination with the labour market reforms has led to more precarious living situation of many people in Europe. Young people have been hit the hardest by these economic and social changes[5].

The development of the youth unemployment rate

Youth Unemployment Rates. , Eu 28 and EA-19, January 2000- April 2016, Eurostat 2016
Youth Unemployment Rates, EU-28 and EA-19, January 2000 – April 2016. Source: Eurostat 2016
  • 2000-2004 – Labour market reforms

The youth unemployment rate was between 18 and 19 percent at the beginning of the 2000s, which had been more or less the steady rate since the 1980s. Youth unemployment is on average always considerably higher than the general unemployment rate, which is a result of growing social inequalities and neoliberal, deregulating labour market reforms (as described above) reinforcing each other. An example was the expansion of limited contracts which were introduced to create better labour market entry opportunities, but resulted in the disproportional (ab)use of youth as flexible workers[6].

  • 2004-2008: Risky economic growth

There was a reduction in the number of unemployed youth from 2004-2008 due to economic growth. That growth was not built on firm grounds however and ended up in the biggest recession for decades. In Spain, for example, a construction boom since the 1990s caused many young people to leave school in order to work on construction sites, where jobs were temporary and offered little social security. When the housing bubble collapsed in 2008, the construction sector did too and many young people without education lost their jobs. Many of those who had more education but still just temporary contracts were also amongst the first ones to have their jobs cut. The development was similar in other crisis countries.

  • 2008-2011: The breakdown

The outbreak of the financial and economic crisis in 2008 resulted in a massive job loss for many young people. Lack of experience, social capital and company-specific knowledge influence the higher rate of redundancy amongst youth. The deregulated conditions in the labour market which developed in the years before 2008 allowed employers to cut their jobs more easily. A north-south divide also became clear: While in countries like Spain, Portugal and Greece the youth unemployment rate increased rapidly and reached over 50% in Greece and Spain, it stayed under 10% in Austria and Germany. Put into relation with all young people, this means that one in five young people aged 15-24 was unemployed in Greece compared to one in twenty in Austria. This gap is a consequence of different impacts of the crisis and the varying political responses but also the education and training systems and labour market regulations. It must be noted here that the unemployment rate for young people who were not born in the EU rose even more rapidly than for others, which exemplifies their particularly vulnerable position in the labour market.

  • 2012-2014: The effects of austerity politics

There was another rise in average youth unemployment from 2012 to the beginning of 2014, a clear sign of the faults of neoliberal budget cuts. Decreased funding for employment seekers support programmes for young people, for the education system and also the Troika-led efforts towards more flexibility (aka deregulation) in the labour market, have produced devastating results. Not just unemployment is a big problem, but also underemployment. Underemployment, also called involuntary part-time employment describes those who would like to work full time but can’t find a full time job that suits them. From 2007 to 2013 the quota of underemployed youth rose from 7% to 34%. Especially high increases could be found in Spain (34%), Ireland (30%), Italien (26%), and Greece (20%). Another indicator for the voluntary conditions of young people are the so-called NEETs (=not in education, employment or training; 15-29 years):The EU average increased among 15-24 year olds from 11 to 13% and among 25-29 year olds from 26 to 30%. Just as with underemployment, the increases of NEETs were higher amongst those countries which were ordered to adopt an austerity programme: In Greece the number of NEETs rose from 20 to 42%, in Italy from 16 to 22% and in Spain from 12 to 18,6%. NEETs are especially at risk of poverty and social exclusion, which is why they need policy efforts directed at them. There is also a gap between migrants and the native population, which widened from 7,4 to 10% throughout the crisis.

  • 2014-2016: Economic growth and policies against youth unemployment

In the last two years we could see a reduction in youth unemployment across Europe. One the one hand this is a result of light economic growth and on the other hand it seems that policies against youth unemployment showed effect. While the EU has always promoted a neoliberal approach to the labour market, since 2012 the notion of social security has gained ground again and is mentioned more in the policy documents. Nevertheless the neoliberal emphasis on labour market flexibility still dominates. The EU is currently pushing their Skills Agenda which aims to match the skills taught in the education systems more with labour market needs. Discussions on the stimulation of job demand and the situation of young people in the labour market are too often ignored. Additionally the skills-discourse does not recognize enough that the youth of today is far from being unqualified, in contrast, they are the best qualified generation ever. It is thus necessary to focus on the labour market itself more instead of just the education system to make sure that the conditions are good enough to make use of the existing skills and qualifications.
A positive example of EU measures against youth unemployment is the Youth Guarantee. States are encouraged to grant all young people a job or training placement within 3 months of becoming unemployed. This works really well in Austria, for example, but due to a lack of clear EU regulations and guidelines there are huge national differences. Overall, it is evident that without reforms in the education system and the labour market we will not be able to build a sustainable and more secure future for young people.


  • Fair school systems: To prevent youth unemployment it is essential to work against inequalities which already exist in school systems. It must be ensured that every child has access to free quality education and that all school students have equal chances.
  • Expand youth guarantee: Every state must guarantee that a young person up to 24 years gets a training, apprenticeship or job placement. Hereby it is essential to ensure that the placements are of high quality to combat the precarious situation in the labour market.
  • Active labour market policy: Besides the Youth Guarantee we also need other services to advice young people on their way back into the labour market. These should not be built on conditionality and punishment through cutting payments, for example, but on personal support to allow a good and sustainable entry.
  • Measures to support reflation: The number of available vacancies in both the private and public sector are an essential factor for the decrease of youth unemployment. Governments must thus be pressured to implement measures which create more vacancies.
  • Labour market regulations: Temporary contracts and low minimum wages are amongst the labour market rules which disadvantage young people disproportionately. It is thus necessary to analyse the disadvantages of young people in the labour market and create better regulated conditions for their jobs. Every worker has a right to good wages, quality and security at work!
  • Participation of young people: Nothing should be decided for young people without involving them in decision making processes. Young people affected by youth unemployment, workers unions, school student organizations and other representatives should be considered as stakeholders in the questions around youth labour market and education reform. This allows the policy-makers to create well-suited policies and also pushes transparency and democracy.

[1] Eurostat 2016a

[2] Note on the statistical measurement of youth unemployment: According to the ILO a person aged 15-24 is seen as unemployed when they are without work at the moment but have been actively looking for work in the past four weeks and are ready to start working in the next weeks. The number of all people of that age who are in the labour market (employed or unemployed) is divided by the number of those young people who fit the criteria of unemployment. The rate of youth unemployment is often misunderstood. It needs to be acknowledged that not all young people are in the labour market (some are in education, for example) and thus having a youth unemployment rate of 25% does not mean that 1 in 4 young people is unemployed. The youth unemployment ration tries to avoid distortion by dividing the number of all young people by the number of young unemployed people, resulting in a lower rate. In 2012 for example, the youth unemployment rate was at 23% while the ratio was at 9,6%. This means that 1 out of 5 economically active young people and 1 out of 10 of all young people were unemployed. Youth unemployment is nevertheless higher than for other age groups and requires special attention and policies.

[3] Bell and Blanchflower 2011

[4] Mizen 2003; Clasen and Clegg 2011

[5] Higgins and Porcaro 2013

[6] Eichhorst, Hinte, Rinne 2013