Is youth unemployment and school-to-work transitions the coming major issue?

Chronicles/analysis | 2012-05-01
Questions concerning youth unemployment and difficulties with school-to-work transitions remain in the political centre. However, there are claims that the statistics about young people´s unemployment and difficulties are hard to interpret and that the situation of young people are significantly better than Cassandra´s claim.

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The usual argument is that the definition of unemployment is better suited for those in the core labour force, and less so for those entering or exiting the labour market. Moreover, there are obstacles in determining whether a young person is unemployed or rather outside the labour force. Not surprisingly, it seems that politicians and organized interests adjust their approach to statistics from the position and the interest they are asked to defend.

A snapshot of the statistics in 2011 indicates that approximately one of four youngsters (15-24 years) is unemployed, which of course is an alarming figure. Of the 616 000 that were in the labor force 460 000 were employed and 156 000 were unemployed. But this fact must be related to the number outside the labor force: 631 000 young people, ie. more than those in the workforce. With those facts the unemployment size is suddenly halfed. On top of this, we also know that the unemployment duration often is quite short among youngsters.
On the other hand some young people who are very far away and distant from the labor market are not included in the statistics and that underestimates the problems. The statistics thus have lots of sources of error and is measured in different ways depending on which group that is in focus. Thus, it is a brilliant opportunity to cobble together an own version depending on the message you want to send.

Can we still, with better facts than the ones mentioned, argue that the youth unemployment and difficulties with school-to-work transitions are alarming? Yes probably, if we choose other ways to compare. Let's begin by looking at the past and take a historical perspective on the employment of young people. One way to measure the establishment in the labor market is to see at what age 75 percent of a cohort is employed. With this measurement the age of entry has risen dramatically in Sweden, from 21 in 1990 to as much as 28 in 2010. Part of this increase is due to the fact that Swedish young people study longer periods than before, but partly also because of the actual school-to-work transition have become more complex in recent decades.

Another way to measure young people's establishment, albeit difficult, is to compare unemployment rates over time, meaning those who are unemployed according to SCB's definition. According to that measure, unemployment has risen for every major recession and stabilized at a new higher level in the following economic upturn. In this way, youth unemployment has risen from about 3 to about 25 percent since the 1970s – although a statistical change of definitions in 2005 cloud the overall picture.

If we look beyond Sweden, there are some interesting observations to make. First of all, that Sweden belongs to the group of EU countries with the highest youth unemployment along with some crisis-hit southern and eastern European countries. We do not reach Greek or Spanish levels of almost 50 percent unemployment, but that is of little comfort. Also with regard to the relative unemployment: ie. young people - compared to the core workforce of Sweden - performs badly compared to other EU countries. And worse, the trend is heading in the wrong direction for Sweden.

Henrik Lindberg is researcher at the Ratio Insitute.


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