This week, Steven Hill published a
piece in the FT where he argues that
these figures are simply not true and that such numbers are inflated because they include
everyone not in the workforce, even those who are in training programs or in
school (this is traditionally why youth unemployment figures are higher than
the overall total.) He prefers to use the ‘youth unemployment ratio’, which is
# of unemployed youth____
total population aged 15-24
Using this measure, the numbers look quite different:
Spain’s youth unemployment is 19% compared with 13% for Greece. These figures are a little older than May so
there may have some deterioration recently but the point is, that using the
ratio, the situation doesn’t seem as dire.
Does it matter? To a
certain point, yes. It gives us a better
picture of life on the ground in the countries hardest hit by the crisis. This helps explain in part why there is not
the sort of social unrest that one might expect with over half the population
out of work. Southern European
unemployment rates for decades have been hard to interpret. In the 1980s, well before the boom years,
Spanish unemployment was in the double digits but no-one really thought 16-18%
represented reality because of the thriving underground economy. In the last few months, a number of Spanish
politicians have remarked to me that if total unemployment were really around
25%, there would be social chaos.
But from another perspective, it seems more of an academic
debate. Hill notes that the German youth
unemployment ratio is 4.5%. So, Spain’s level is still more than four times
higher than Germany’s. Plus, surely some young people in the South are in
training programs and universities because there simply are no jobs – the classroom
rather than the café as the refuge for the discouraged worker.
While much of the current debate centers on getting through
the short term manifestations of the crisis – the bond yield roller coaster,
for example, an important question is what the long-term implications of the
crisis are for Europe’s struggling countries. Young qualified workers are leaving. In the
first half of 2012, Catalonia saw net out migration for the first time ever and
was the Spanish region that lost the largest population – over 37,000
inhabitants. The International
Federation of Catalan Organizations estimates
that the majority of those leaving are young, college educated people who in
many cases are going abroad. Reducing unemployment by having young workers flee
the country is not something many politicians would see as a win.
There are likely to be long-term demographic implications as
well. Italy, Greece and Spain already have some of the lowest birthrates in the
world. Recessions typically have the
effect of lowering the birthrate as couples delay childbearing until their
economic situation improves.
Historically, this has not
usually altered total fertility, just postponed it. But there is some
reason to think that the protracted economic crisis may have far more serious
consequences for the crisis of fertility in Southern Europe.
That is because these are also countries where the age at
first birth is exceedingly high. Spain,
for example, has the highest
age in the world at 29, with Italy close behind at 28. Postponing childbearing under such
circumstances is likely to reduce it further as women begin to push up against
their biological clocks, in spite of advances in fertility treatment.
Lower birthrates will mean rapidly aging populations and a higher dependency ratio. Without large numbers of new immigrants, there will be fewer people of working age to pay for the elderly, which will in turn put greater pressures on the state and lower benefits.
So, while the common measure of unemployment may overstate
the actual numbers of young people who are out of work, the job situation in
Southern Europe is likely to have long-term consequences that lock the region into a vicious cycle.
