Youth Unemployment in Mediterranean Countries: Nature of the Problem and Possible Ways Forward

image

Youth Unemployment in Mediterranean Countries: Nature of the Problem and Possible Ways Forward

Paz Arancibia

Freelance Consultant
Former ILO Youth Employment Expert - Maghreb Region

Youth Unemployment Patterns in Mediterranean Countries

Youth unemployment is one of the major challenges the world is facing at present. At all levels, awareness is being raised on the arduous situation young people are facing. Data lend support to the premonitory signs of alarm: according to the International Labour Organization (ILO), almost 74 million young people are unemployed, constituting around 37% of the total global unemployed. Though recent trends point to a slight decrease in youth unemployment, the fact is that “overall, two in five economically active young people are still either unemployed, or working yet living in poverty.”[1]

Prospects for Mediterranean countries are not encouraging. In southern Europe, the global financial crisis has left a legacy of high unemployment and underemployment, with disproportionate effects on young people. There is a significant gap between European countries that have low youth unemployment rates (such as Germany, where the unemployment rate for 15-24 year olds is 7.2%) and southern Europe (youth unemployment rates stand at 51.4% in Spain, 50.6% in Greece, 44.8% in Croatia and 42% in Italy). [2] There is also widespread job precariousness among those young people who do have a job. And, a new class of young working poor is emerging.

Likewise, in 2014, North African and Middle Eastern countries had the highest rates of youth unemployment in the world.[3] A recent ILO report on Tunisia shows that more than one third of active young people – of which graduates form an important part – are unemployed, while most of those who do have a job are employed in the informal economy.[4] The expectation that education would open the way to a good job is often not met. Furthermore, the labour market position of young women is particularly difficult in the region. The unemployment rate of young women is over 20 percentage points higher than that of young men. 

That said, the sociopolitical context in the region makes the task of tackling youth unemployment extremely complex. Several countries are subject to destabilizing political forces, exacerbating insecurity and hurting the business climate which is so important for job creation. Libya and Syria have been immersed in a crisis for the past five years. Three Mediterranean countries are absorbing the bulk of Syrian refugees, namely Jordan (654,100 refugees), Lebanon (1.1 Million) and Turkey (1.5 Million).[5]  

The facts are well known. The point is whether policy makers in Mediterranean countries will have the capacity to act and the willingness to look for solutions that go beyond the view that economic growth will solve all problems. For instance, in Tunisia, youth unemployment coexisted with relatively high economic growth in the early 2000s. So, economic growth, important as it is, is not enough. Likewise, partial interventions, which are often mentioned in the debate, are not up to the challenge. These include active labour market policies and targeted measures that address some of the worst symptoms of youth unemployment – without however tackling the problem as a whole.

Consequences of Youth Unemployment

Before looking at the possible policy approaches, it is important to examine the consequences of inaction. Indeed, there is not enough recognition of the perverse consequences of youth unemployment in Mediterranean countries.

Youth Unemployment, a Major Impediment to Economic Growth and Development…

To start with, youth unemployment represents a major drag to economic growth and development in the region. It is a waste of human resources, especially when qualified young people are not able to realize their human capital potential. When compared with other regions, most Mediterranean countries suffer from overly high unemployment among well-educated youth. Therefore, part of the investment in education and training of young people is wasted. This is particularly problematic for young women, who tend to perform better than their male counterparts – and yet their career prospects are, on average, worse than those of young men. 

To some extent, the situation can be addressed through the emigration of young people to low-unemployment regions like northern Europe, the United States and, until recently, Latin America. However, emigration is a second best solution. And, in any case, many host countries are increasingly reluctant to accept new immigrants.

The economic consequences of youth unemployment go well beyond the waste of human capital. Indeed, as is well known, young people are often the most innovative group. They often bring new ideas and novel ways of working. In some cases, this is expressed in the form of entrepreneurship and business start-ups, notably in the new technology sector. More generally, young people can help adapt workplaces to the ongoing transformations in the world of work. Much of the success of innovative places like Silicon Valley owes to their ability to attract and retain young talent.

Facts are well known. The point is whether policy makers in Mediterranean countries will have the capacity to act and the willingness to look for solutions that go beyond the view that economic growth will solve all problems

Importantly, in the presence of high and persistent youth unemployment, Mediterranean countries will face significant difficulties in coping with demographic challenges. In most of these countries, the size of youth cohorts is shrinking compared with older cohorts. This means that, in principle, there are fewer young entrants into the labour market than retirees who exit it. However, in the presence of barriers to youth employment, this demographic dividend is often not realised.

… and a Threat to Social Cohesion and Political Stability

Youth unemployment also represents a major challenge to social cohesion. It is a factor of social inequalities. In a number of Mediterranean countries, young people from high-income families enjoy easier access to quality education and good jobs than their low-income counterparts. And the situation has tended to deteriorate. This breaks the basic social pact that used to govern these countries, and, furthermore, a lack of decent jobs also hampers social mobility, thus weakening that social pact. For a number of years, low- and middle-income families believed that their children would benefit from improved living standards. However this is less and less the case, fuelling discontent. The fact is that there is an empirical relationship between social unrest and youth unemployment.[6]

Even among young people who do work, the employment situation is increasingly precarious. In most Mediterranean countries, the incidence of temporary work, informal arrangements and atypical forms of employment are high and growing (these patterns are more pronounced than in other regions). The result is that young people, even among those who work, are not able to borrow and invest in housing, leading to considerable frustration – all the more so because housing ownership is an important aspiration in the region.

There is not enough recognition of the perverse consequences of youth unemployment in Mediterranean countries

These trends undermine political stability as well. In high-unemployment European countries like Greece, Italy, Portugal and Spain, there have been major demonstrations of public anger among youth. The political spectrum has become more fragmented as a result, complicating the task of forming government coalitions.

Possible Policy Responses

Youth unemployment is not a fatality. There are ways to tackle it, provided the right diagnosis is made. This section examines these broad policy requirements, before turning attention to what is the most important obstacle to youth employment, namely weaknesses in governance arrangements – both within Mediterranean countries and between them. 

Various Policies Exist to Tackle Youth Unemployment in Southern Europe… 

Thus, in southern European countries young people with low levels of education, mainly NEETs (not in education, employment or training) form the backbone of youth unemployment. Therefore these countries require, first and foremost, policies that enhance educational attainment, improvements in the school-to-work transition and employment programmes targeted on NEETs, such as the Youth Guarantee.

The latter represents an interesting recent innovation. Drawing on European Structural Funds, Youth Guarantees provide an opportunity to all NEETs – whether a subsidised job, a second chance at school, support to set up a new business or reinforced job-seeking services. 

… and North Africa and the Middle East 

By contrast, in North African and Middle Eastern countries, young people with tertiary education are more likely to be unemployed than their low-educated counterparts. The problem in these countries is lack of demand in general and a mismatch between the skills acquired in education on the one hand, and labour market needs on the other.

The economic consequences of youth unemployment go well beyond the waste of human capital. Indeed, as is well known, young people are often the most innovative group

Strengthening framework conditions for economic growth, stimulating investment and spurring regional integration are therefore of paramount important for boosting demand and job creation. Also, these countries require an overhaul of their education systems and a new partnership with enterprises with a view to tackling skills mismatch. The establishment of well-functioning apprenticeship pathways may be an interesting way forward in this regard.

The National Employment Strategy of Morocco, though still in an early phase of implementation at the national level, is a case in point. It focuses on the labour market problems of youth and women through a broad range of economic, employment and social measures. Importantly, it has been discussed extensively with social partners and involves key ministries, notably finance, employment and social affairs, and education.     

The Real Challenge Lies in Improving Governance within Countries… 

While there is a certain consensus around some of the measures mentioned above, the fact is that action in terms of adopting them is typically slow. This mainly reflects a lack of a clear strategy and weak policy coherence and other limitations in internal governance arrangements.

To start with, few Mediterranean countries have a comprehensive youth employment strategy, thus reducing the effectiveness of specific policy initiatives. There are some recent exceptions, however. For instance Morocco has developed a National Employment Strategy which pays considerable attention to the various factors of youth unemployment.

As part of the strategy, it is also important to set aside public budgets and an inter-ministerial coordination body to avoid fragmentation of efforts and build synergies – in particular among education, labour and employment, and finance ministries.

The involvement of social partners is important for the success of the strategy. Recent labour market reforms in Italy and Portugal, and the New Social Contract in Tunisia concluded in the aftermath of the Arab Spring are interesting examples in this respect.   

… and across Them, Notably through Coordination Action in the Mediterranean Region

There is significant scope for enhancing policy coordination in mutual learning across Mediterranean countries, as part of a broad youth employment strategy. This is not only because there are similarities among countries in the nature of labour market imbalances, but also because acting together will magnify benefits compared to countries acting in isolation.

Strengthening framework conditions for economic growth, stimulating investment and spurring regional integration are of paramount importance for boosting demand and job creation

For instance, there could be grounds for a coordinated youth guarantee programme in North Africa. By pooling resources – some of them funded from the donor community and the African Development Bank for example – and implementing a youth guarantee in a coordinated manner, these countries could usefully supplement other national policies. The EU has recently embarked on a similar exercise, which may explain the slight reduction in youth unemployment over the past year or so.

There is also much to gain from the detection and sharing of good practices. The IEMed could play a major role in this respect, for instance by organizing periodic knowledge sharing meetings on youth employment issues. One way to achieve this would be by establishing a Mediterranean employment and migration observatory. This body would be in charge of an analysis of trends in youth employment and migration, the development of a culture of monitoring and evaluation and peer reviews of different policy approaches.

To Conclude

The situation of youth in the Mediterranean region is much more difficult than in neighbouring countries. This not only entails a major economic drag, but also threatens the socio-political stability of the region. There is however growing awareness of these risks, and indeed governments, social partners and civil society are considering innovative strategies for tackling them. There is no doubt that, by sustaining efforts and engaging in international cooperation, a significant dent in youth unemployment can be made. The Mediterranean region, with its many untapped resources, can thus become a hub of global leadership and innovation in the future.

Notes

[1]ILO: Global Employment Trends for Youth 2015.International Labour Organization. Geneva. 2015. p.1

[2] All data fourth quarter 2014 from : http://europa.eu/rapid/press-release_MEMO-15-4102_en.htm

[3] ILO: Global Employment Trends for Youth 2015.International Labour Organization. Geneva. 2015.

[4] Charmes, J. La jeunesse tunisienne et l’économie informelle, Bureau International du Travail. Tunis. 2015.

[5] UNHCR: World at War. Global trends forced displacement in 2014. The Office of the United Nations High Commissioner for Refugees. Geneva. 2014 http://unhcr.org/556725e69.pdf

[6] See ILO, World of Work Report. various issues. Geneva. 2013.