Youth Unemployment in Greece: Measuring the Challenge D AVID B ELL D IVISION OF E CONOMICS S TIRLING M ANAGEMENT S CHOOL U NIVERSITY OF S TIRLING D AVID B LANCHFLOWER D EPARTMENT OF E CONOMICS D ARTMOUTH C OLLEGE

A Deep-Rooted Problem [Youth unemployment is] "perhaps the most pressing problem facing Europe at the present time.... It is highly regrettable that parts of the economic elite assume so little responsibility for the deplorable situation” Angela Merkel, July 2013

EU Policy Response The Youth Guarantee Member states of the European Union should "ensure that all young people under the age of 25 receive good quality offer of employment, continued education, apprenticeship or a traineeship with enough period of four months of becoming unemployed were leaving formal education." (Council of the European Union, 2013) The Council created the Youth Employment Initiative through which €6 billion will be made available to NUTS 2 regions with an youth unemployment rate above 25% in These monies have to be distributed between 2014 and The Youth Guarantee is intended to provide young people with a job, training or education over a defined period. The entitlement is generally given by public institutions such as the public employment service, sometimes acting in concert with private or third sector organizations.

Effectiveness of Interventions to Mitigate Negative Effects of Youth Unemployment Evidence of Success Limited –Differences between countries in the types of programs, which succeed or fail –Scaling up – management problem –Time horizon – how long should evaluation last? (may have to rely on cohort studies or administrative data) –Programs evolve – complicating evaluations –Evaluations tend to focus on narrow range of measures –Understanding how allocation to programs may affect outcomes

Scarring Effects of Youth Unemployment Experience of unemployment when young –A temporary disturbance that is part of the search and matching process for those inexperienced in the labour market –A negative experience that changes the beliefs and preferences of the young about the nature of the labour market and has long-lasting negative effects on their labour market experience Most of the evidence supports the latter explanation

Greece and the Youth Guarantee Greece is intending to implement a national youth action plan using €517 million, with the aim of benefiting up to 350,000 young people. Measures under the plan include a temporary hiring program for unemployed persons below the age of 35 in community-based work programs. In July 2013 it introduced a youth internship and employment voucher program under the youth action plan aimed at supporting occasional training and internships for a six-month period for 45,000 people up to the age of 29. €1.2 billion is being allocated to help small and medium-sized companies meet liquidity requirements and so assist with the expansion of youth employment.

Analysis Using the European Labour Force Survey and Eurostat Comparators –Spain and Portugal - southern European countries that, like Greece, have hit particularly hard by the recession –The Republic of Ireland has also been hit hard, but has a quite different labor market –Even though its economic performance has been much stronger, Sweden has experienced persistently high levels of youth unemployment –Germany, the UK and France to give a perspective on unemployment trends in the European Union as a whole.

Greek Unemployment Rates by Age Group largest increase among year olds Greece had a substantial youth unemployment problem prior to the Great Recession

Greek Employment to Population Ratio by Age Group largest decline among year olds

Rates can give a misleading impression of magnitudes

Table 3: Unemployment, NEET and Educational Status in selected European Countries among those aged 16-29, 2012 (000s) GreecePortugalSpain Student Non- studentTotalStudent Non- studentTotalStudent Non- studentTotal Employed ,1202,466 Unemployed ,3941,766 Inactive , ,193 Total , ,6713,0164,0337,049 Unemployment Rate53.5%42.8%43.6%38.8%25.5%27.4%51.8%39.7%41.7% NEET Rate 27.8% 17.7% 25.8% GermanyFranceSweden Student Non- studentTotalStudent Non- studentTotalStudent Non- studentTotal Employed2,7975,4238, ,2245, Unemployed ,0041, Inactive4, ,5094, , Total7,4166,80314,2185,0936,11311, ,753 Unemployment Rate4.3%8.7%7.3%10.4%19.2%17.9%28.7%13.0%17.4% NEET Rate 9.6% 16.9% 11.0%

Older NEETs pose a huge challenge for Greece Source: Eurostat Percent NEET (Not in Employment, Education or Training) by Country and Age Group 2013

Youth (16-24) to adult ratio is relatively low in Greece. Greece Spain Sweden

Youth cohort has been declining very rapidly in Greece GreeceSpain UK

Gender differences?

How does staying at home influence labour market outcomes?

Change to EmploymentUnemploymentInactivity Share of Cohort No formal qualifications -4.0%11.5%-7.5%0.7% Primary -11.6%7.4%4.2%6.9% Lower Secondary -6.5%2.0%4.5%25.7% Upper Secondary -11.9%10.1%1.8%2.9% Upper Secondary with quals -6.7%5.1%1.6%39.5% Non-tertiary post- sec -12.5%11.3%1.2%7.5% First stage tertiary -8.3%10.7%-2.4%16.6% Second stage tertiary 7.7%0.1%-7.7%0.1% The Role of Education

Long-term unemployment Greece had a substantial long- term unemployment problem prior to the Great Recession

Long-term Unemployment in Greece The average age of the long-term unemployed is lower in Greece than in our comparator countries with the exception of the UK and Ireland Among our comparator countries Greece has the highest proportion of females among the long-term unemployed Other Sources of Variation in Long-term Unemployment –Education –Nationality Conditional probability of (lt) unemployment by age

Amongst our group of countries, Greece experienced the largest fall in well-being with the recession Changes to Age Group All All All Greece Germany France Spain UK Ireland Sweden But it was not concentrated among the young Source: Eurobarometer

Conclusion In general, the evidence that ALMPs work is not strong. Careful evaluation in the correct context is essential. The age group in Greece is probably of greatest concern Student (part-time) employment and unemployment is less common in Greece than in other European countries The European Labor Force Survey indicates that numbers in Greece in the age group have fallen sharply Gender differentials in the Greek labor market are more marked than in many other EU states. Greek youths are much more likely to live at home than are young people in Northern Europe. Greece has the highest proportions of the young unemployed that have been without work for more than a year The decline in Greek well-being since the beginning of the recession has been the most rapid in Europe.

0 - Pre-primary education; 1- Primary education or first stage of basic education; 2- Lower secondary education or second stage of basic education; 3 - Upper secondary education; 4 - Post-secondary non-tertiary education; 5a - First stage of tertiary education (theoretical); 5b - First stage of tertiary education (technical, practical); shorter 6 - Second stage of tertiary