May 30, 2013 1:34 pm

OECD warns on deteriorating youth unemployment

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Youth unemployment is set to rise further in the hardest-hit developed nations, the OECD, a club of mostly rich countries, warned on Thursday.

The organisation’s 34 member states agreed at their annual ministerial meeting to step up job creation efforts and measures to help young people break into the labour market.

The number of young people out of work in the OECD area is nearly a third higher than in 2007. The organisation said it was set to rise still further in most of the countries with already very high unemployment in the months ahead.

Youth unemployment rates exceeded 25 per cent in nine OECD countries at the end of the first quarter, including Ireland, Italy, Portugal, Spain and Greece.

Long-term unemployment among young people has increased sharply since 2007, with more than one in five 15 to 24-year-olds out of work for more than 12 months. Even countries that have escaped the worst of the economic crisis, such as Australia, New Zealand and Sweden, have seen a significant rise in long-term joblessness.

Ministers agreed on the need to focus attention on the most disadvantaged, including the low-skilled and immigrants, who are at most risk of long-term unemployment and social exclusion.

“Immediate action is needed to stop the crisis further damaging young people’s prospects,” said Angel Gurría, OECD secretary-general. “Governments must strengthen their efforts to promote the creation of jobs for youth, push ahead with their labour market reforms, and improve their education systems to give young people the opportunities they need to succeed.”

The proportion of the young unemployed who have been out of work for more than a year has risen in Japan from 20 per cent in 2007 to 30 per cent in 2012, in the UK from 15 per cent to 27 per cent and in the US from 6.5 per cent to 18 per cent.

The OECD said jobless totals did not capture the full hardship, because many who have left education no longer appear in official unemployment statistics. Around 22m young people are “Neets” – not in employment, education or training.

It said two-thirds of these have given up looking for work and are likely to experience long periods of joblessness and lower pay than their peers over the course of their lives.

In the short term, in addition to tackling weak aggregate demand and boosting job creation, ministers agreed that countries should provide adequate income support for unemployed youths until labour market conditions improve.

The OECD said this would help young people, especially the disadvantaged who leave school early with few or no qualifications, stay in touch with the labour market. In exchange, they must engage in active job search and participate in training programmes if needed.

It urged countries where possible to expand “active” labour market measures such as counselling, job-search assistance and entrepreneurship programmes. It said employers should be encouraged to expand quality apprenticeship and internship programmes, including through extra financial incentives if necessary.

Longer-term, it pressed for reforms to education and training systems. One in five young people leave school without the skills they need in for the job market. The OECD said reducing school dropout rates, eliminating grade repetition and measures to give a second chance to those who have not completed secondary education would help.

The quality and relevance of vocational training programmes also needed to improve, it said.

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