1. Youth In and Out of the Labour Market: The Impact of the Economic and Financial Crisis on Youth Employment in the European Union and North America Niall O’Higgins CELPE, LABESS & DiSES, Università di Salerno & IZA, Bonn

2. Today Overview of the situation of Youth in (and out) of the labour market – in the EU & North America – Recent developments – Policy responses – Some Comments on Policy issues A couple of general points – Youth (15-24) vs. Adults (25-64)– simply a convention – Distinction between countercyclical measures and structural longer term measures

3. Introduction: The Recession Global Recession has hit young people hard – But, something of a misunderstanding: Not that more young people than adults are affected by the recession, But that young people are more affected than adults by the recession Majority of young people are in education Real problem is the potential long-term consequences of an early interuption in working lives – Life-time employment & earnings – Crime – Unhappiness – Social exclusion: Freeters in Japan emerged after recessuion in the 1990s

4. Employment rates fell unevenly during the recession…

5. Percentage change in employment by age and sex, Italy 2007Q3 – 2009Q3

6. And Unemployment rose…..

7. Youth unemployment rates were already high compared to adults prior to the recession…

8. And, not infrequently, thry worsened during the recession

9. With some exceptions, long-term unemployment fell during the recession

10. The recession often hit more educated young people harder

11. With some notable exceptions temporary employment fell during the recession, but its incidence often didn’t

12. Incidence of temporary employment by age and sex, Italy, 2007Q1 – 2010Q1

13. Programmes and policies for young people in the context of the crisis Macro Policy: Throughout the EU & NA, most countries adopted substantial expansionary fiscal policies. An example is instructive

14. Example of Germany & Italy

15. Education Some countries have extended support for young people remaining in education – Piecemeal Good time to take such action – Desirable in any event – part of the (old and) new EU 2020 strategy – Recession – opportunity costs of educational participation are relatively low – Support for recovery – Help prevent increases in the hardcore of ‘excluded’ youth Costs of inaction – higher youth unemployment and joblessness with connected direct and indirect costs

16. Labour Market Policy Much variety in the response to the crisis – Expansion of passive income support common – and short-time working or partial unemployment for employees Sometimes combined with training measures – clearly a fruitful avenue to pursue – Many countries have introduced subsidised training for young people, however, it needs to be linked to private sector employment opportunities

17. Labour Market Policy Job Search Assistance & more efficient PES – Improving the efficiency of JSA is typically seen as a very cost effective means of enhancing the employment prospects, particularly, of young people But, in the context of a recession, the usefulness of such measures is limited

18. Employment Protection Legislation Often argued that too strong EPL limits opportunities for Young People – Mediteranean countries since the 1980s (Spain) and 1990s (Italy), moves towards flexibility at the margin But

19. Employment Protection Legislation 1.Correlation between the percentage change in unemployment rates and the strictness of employment protection legislation (EPL) is negative and moderately strong (-.20) for both young men and young women 2.Correlation between the youth-adult raio of changes in unemployment and OECD EPL index is positive (+.20) for males (+.20) and females (+.23) Taken at face value, suggests that strong EPL mitigated the negative effects of the recession – for both young people and adults – but that stronger EPL tended to worsen the relative position of young people (compared to adults) – May be a partial explanation of the Italian experience

20. Employment Protection Legislation Moreover, Not much evidence to support the idea that recessions are shorter in countries with more flexible labour markets Much evidence to suggest that recessions are deeper in countries with more labour market flexibility Implication: now is not the right time to put an emphasis on flexibility (although there are a great dela of cross-country variation) – worrying trend – some countries reacted to the recession by

21. Key Issues 1.Question of the job prospects of YP entering the labour market during the recession – the ‘youth left behind’ – Above-all low educated young people who are more susceptible to the scarring effects of unemployment and joblessness 2.Job Quality: Type of employment available to young people – dangers associated with the wide diffusion of temporary employment forms. Inter alia have a number of costs – Less training – Greater insecurity – Less satifìsfactory jobs

22. Concluding comments No one size fits all Risk of exclusion is greater for the low educated Problem of dual labour markets & job quality for young people Combination of passive and active LMP A more radical approach to educational reform?