The problem of youth unemployment has rightly been highlighted as one of the major issues facing European countries today. The newspapers have fastened on the shocking statistic that the unemployment rate among Spaniards and Greeks aged 15 – 25 is about 50 per cent, while the rate for the EU as a whole is about 20 per cent. These are alarming numbers, but they are also somewhat misleading.
As Stephen Hill pointed out in a piece in the Financial Times on June 24th, the unemployment rate may not be the best measure of labour market conditions among young people who have opportunities to stay in the educational and training systems rather than entering a depressed labour market. For this reason, an alternative measure, the unemployment ratio, has gained currency.
The conventional unemployment rate is the numbers ‘unemployed’ as a proportion of the ‘labour force’. The ‘labour force’ is the sum of the employed and unemployed. The ‘unemployed’ are those actively seeking work, but not at work. (For young people it is of interest to break unemployment down into those ‘looking for first regular job’ and those who are ‘unemployed having lost or given up previous job’.)
The problem with using the unemployment rate to measure labour market conditions among young people is that the denominator does not include those who are in the educational system or on full-time training courses. During a recession, the higher the proportion of a youth cohort that stays on in school or college or in training, the smaller the labour force and the higher the unemployment rate. This is perverse.
By using the whole cohort as the denominator, the unemployment ratio avoids this pitfall and it may be argued that it therefore provides a clearer picture of hardship being caused by the lack of employment. (Of course this is subject to the reservation that increased educational participation may involve putting square pegs in round holes, with some young people taking courses in which they have no interest.)
The limitations of the unemployment rate as a measure of labour market conditions among the youth population is acknowledged by Eurostat, who now publish both the ratio and the rate for the population aged 15-24. (Their recent figures for Ireland for 2011 are low and may not reflect the latest Census returns.)
The distinction between the unemployment rate and ratio certainly matters. Data in the recently-released 2011 Census of Population volume This is Ireland Part 2 show the population classified by ‘principal economic status’. These reveal an unemployment rate of 38.7 per cent among the population aged 15-24 compared with an unemployment ratio of 14.2 per cent. While the ratio of 14.2 per cent gives no grounds for complacency, it is less alarming than the headline rate of almost 40 per cent.
It is perhaps even more important to note that the unemployment ratio has not risen as dramatically as the unemployment rate since the onset of the recession in 2008. The Figure displays the three concepts based on the 2006 and 2011 Census data.
(The Table at the end provides more details.)
Whereas the unemployment rate rose by 140% the ratio rose by 90%. Thus, the rate tends to overstate both the level of unemployment among young people and the rate at which it has risen.
It may, however, be objected that the unemployment ratio includes all those who are not in the labour force in the denominator but excludes discouraged workers and similar forms of disguised unemployment from the numerator. This bias would certainly be significant among older workers, who are more likely to cease looking for work and to drop out of the labour force because no jobs are available. Its effect on the youth data, however, is smaller because labour force categories other than ‘employed’, ‘student, and ‘unemployed’ are relatively unimportant among the young. In 2011 less than 2 per cent of population aged 15- 24 are classified as ‘looking after home/family’!
None the less, to take account of ‘dsicouraged workers’ it is worth looking at another concept that has gained some currency . This is the NEET ratio. It refers to the proportion of the population that is Not in Employment, Education or Training. To calculate this ratio for Ireland I have assumed that those in ‘(full-time) training’ are classified as ‘students’ in the Census. The resulting ratio must, by definition, fall between the unemployment ratio and the unemployment rate. From the Figure we can see that it lies closer to the unemployment ratio. Moreover, it has risen less rapidly than either the unemployment rate or ratio. In 2011 the NEET ratio was ‘only’ 65 per cent above it 2006 level.
It is striking that the widely-used unemployment rate is so much higher, and has risen so much more, than the alternative – and arguably better – measures of the situation in the youth labour market.
The reason why the unemployment rate overstates both the level and rise in Irish youth unemployment is the high level of educational participation and its marked increase over the past five years. The proportion of the 15-24 year-old population in the educational system rose from 50.1 per cent in 2006 to 60.5 per cent in 2011. While not all of the additional years of schooling will be as productive as we would wish, being in the educational system is less wasteful than being unemployed. This aspect of the adjustment to the present crisis is concealed by the conventional youth unemployment rate.
None the less, we cannot lose sight of the collapse of employment among the youth population. In 2006 39.5 per cent of the population aged 15-24 was in employment. By 2011 this percentage had fallen to 22.5. Among those aged 20-24 the rate declined from 60.0 to 39.0. While the youth unemployment crisis may not be as severe as suggested by the headline youth unemployment rate, it is a crisis.
34 replies on “Measuring Youth Unemployment”
“Whatever.” Youth unemployment is pretty far down the list of concerns of European government’s and is set to remain so. The generation that wrecked the continent are far more concerned with preserving their handsome pension pots and other forms of undeserved wealth garnered during the credit boom.
The youth of the continent are to sacrificed without limit to sate the banking Moloch, so that it might belch out funds for E-class mercedes and Mediterranean retirements for a few more years. This great burning of the future will end only when the current decision-making generation finally drop dead and their pensions no longer have to be paid. Only then can recovery begin.
Crisis for who? The people who expect the young to pay for their retirements? Frankly I think everyone under the age of 40 should go on strike until this thing is sorted out. See how big the lump sums will be then!
What would youth unemployment be in Ireland without emigration?
A huge number of unemployed youth are locked into third level. Are there accurate figures on graduate unemployment and emigration?
A central objective of policy urging investment in further education over the past decade and beyond was precisely to stave off a return to ingrained youth unemployment and emigration.
This policy has been a failure empirically but collectively the government sing its praises at every corner in the road. To an outsider it must look like a determined effort to redefine black as white. There have been a few lottery winners along the way, but making a serious dent in unemployment…?
Having drunk deeply from the fount of expensive amniotic fluid surging from the public womb, the policy has delivered very little Why isn’t third level shrunk to produce the required focus? Any official answer is spun into sophistry arguing the the policy ‘really is working’.
The numbers are shocking but have there any initiatives to do any about them?
How about reducing the maximum 48 hour week to to 42 hours, redefine it to make it more meaningful and rigourously police it, thereby increasing demand to some extent. [There are so many exemptions currently for breaks etc, that it is somewhat of a joke.]
And it not policed at all.
Certain PS are exempted from it. Gardai etc. Is this necessary or desirable. What was the reason for original for exemption. Was it merely to placate union pleadings for existing employees so that they could hold onto excess overtime. Dept of Agriculture used to be a great place to clock up overtime. Probably still is.
Eliminate double jobbing completely in the PS-Or do not pay at all for second, third, jobs. This is a country that had a marriage ban not so long ago. But we now seem to think it is ok for many people to do several jobs paid by the public purse while hundreds of thousands are unemployed. This type of activity is especially evident amongst the top ranks of policy makers and advisors.
Lets be frank here, how many economists do we know that have a second or third PS funded role of some kind?
Does it make sense to spend ~ 1billion each year on consulting, legal, advice, to already grossly overpaid people. Is it not time to bring some expertise into the PS at lower levels.
The well paid advice form these externals did nothing to prevent the country from catapulting itself into the mire, so what value did the advice have?
Extend the duration of jobbridge within the PS and gradually increase the payments so that participant contributions is not abused.
Relax the career break criteria in the PS to 3 months/ 6months and take on some of the jobbridge people fill the gap.
You are correct. It is still a crisis.
The response to date have been shameful.
Policy makers and advisers must take the responsibility for that.
They were and are too busy protecting their own well lined pockets.
Surely this is largely meaningless. Is the true question not ‘how many people cannot operate a fully functioning house on what they gain from whatever source’.
Where they won’t go is the tradional family home and how effiecent it was for society.
DON’T GO THERE …. For God sake man.
Its the biggest sin in New Ireland to question such things. Noooooooo….
Its a form of consumerist blasphemy.
We could not question Charlie Mcs indivdualist polices back in the day because it was a sin you see.
Father and Mother working working working to pay for their dream home 50 miles from Dublin.
We could not question why you need to have so many inputs into just living because the economic priests said it was BAD.
Lack of jobs but Father and Mother working = no work for their product.
Hope you are enjoying a Nietszschean ‘recurring’ of your work in the 1980s .. and staying away from those dodgy roightwinded tinktanks …
Key point: The Human Capital Losers here (in the 15-24) are the underclass and intermittent working class segment of the population that The (regressive) Education System fails to educate to a respectable standard. This is ‘the economic aporia’ ….
In the ‘slow_learning smart economy’ I see no reason for any young Irish citizen to cease formal education or training at age 15.
In absolute terms, there are approximately 56,000 people under the age of 24 who are unemployed. And approximately 100,000 more in 25-34 year old age bracket (last QNHS below). As far as I can find, there is not public information as to the extent to which this would be increased if we counted people in this age-group who have migrated and it would need a lot of debate as to how to count people living in other countries in this age group.
I dont dispute the value of breaking down the statistics as Brendan has done but I also dont think we know from this whether youth unemployment rates overestimate the extent of the crisis. David Bell makes some good points in response to a previous article on this in the UK context. Some of his points include (better to read his short post linked below): youth unemployment is, full stop, the best measure of how hard it is for a young person to get a job; why would we make this adjustment for young people and not for other groups?; there is substantial evidence for the UK that young people are facing much worse labour market conditions in terms of being demoted, being hours constrained etc.. If we are making adjustments one way then we should probably consider whether these factors add to the young labour market problem.
Nothwithstanding the debate about the severity of youth unemployment, looking at the wider measures opens whether one potential benefit of the recession will be a cohort of young people who stayed in school. Others have raised the point that one negative consequence of the bubble in construction was that it may have led a group of people to cut short education in search of, what turned out to be, temporarily inflated wages.
Apologies, “aged 15 to 24” rather than “under the age of 24” in the first sentence above.
“Where they won’t go is the tradional family home and how effiecent it was for society.
DON’T GO THERE …. For God sake man.”
And where else will they not go?
– any possible negative effects of immigration.
Discussing youth unemployment in Ireland, UK, med countries without discussing immigration is ridiculous.
I guess one reason for changing the denominator for young people is that so many of the them are in school, which is not the case in older age groups.
What sense does it make to say, as emerges from Brendan’s table, that the unemployment rate among males aged 15-19 is 61% ?
For older people the problem is ‘discouraged workers’ who are not counted in the labour force. Therefore it makes sense to look at the NEET ratio for these groups.
Peter, I agree that presenting the figures as Brendan does teaches us more but yes it still makes sense to think of youth unemployment using the normal measure. Open to arguments as to what age it is most meaningful to start (e.g. Why are 15 year olds included?) but in general, as pointed out in the Bell article, the rate is a measure of how many people who are in a given age category who are looking for a job can find a job.
I recall not so long ago, when the government were counting the number of employed people, they included the 16-18 age group but when they were counting the numbers of unemployed, the 16-18’s were excluded.
Whatever, While we are sitting around arguing the toss about this split hair and how this, that and the other is being measured over there, many young lives are being trashed and I’m sure many have resolved never to come back to Ireland if they can find a way to avoid doing so.
I don’t see any concrete (government) policies out there that are going to make a difference and I’m not aware of employing companies playing an active role in this area (social responsibility is only good for shouting about in your PR if it is achieving good results or is one of those things that can’t be measured but looks good to be doing) other than seeing how they can take advantage of it and replace older more expensive employees with the lower paid or in the case of so-called interns, with free labour.
In my line of work, I’ve come across loads of interns recently doing the work of journalists for free and the employer laughing because it saves them having to go out and hire either the usual freelancer or another staffer. There are loads of desperate experienced freelance journalists and sub-editors out there who normally take up the slack – because employers avoid hiring staffers if they can – and haven’t been able to find work/money for a couple of years because it’s all being done by desperate interns working for free.
So we are getting to a situation where everyone is desperate. I don’t think self-employed freelancers show up in the unemployed stats and can’t draw SW and there’s plenty of them out there not earning, from painters to change management specialists. God knows how they survive. You wouldn’t believe the number of letters I get begging me for work and offering to work for free.
Liam, the unemployment rate for any given group is probably not a very good measure of that probability though: it’s not designed for that. A marginal job will not be allocated randomly. so the average is not the marginal or the average marginal.
One of the striking features of the labour market recently is the stickiness of nominal wages. I wonder is this true for young workers. It would be interesting to see which of these ratios best explains wage levels/changes.
Following up on Kevin’s point, if the safety blanket of higher education were torn away the unemployment rate among young adults would soar.
What would happen to the wage level for labour market entrants if 40% of the (male) population aged 20-24 were seeking work rather than 40% of the labour force? That is, 59,000 unemployed young males rather than 38,000.
Good question Peter though naturally I prefer to think that my students are, in fact, deeply committed to the study of economics & not merely dodging unemployment . Seriously, it’s not black or white:some at the margin opted for ed’ over the labour market. The same happens at the other end with people retiring early – though they might come back.
I think this discussion forces us to think about what question a particular statistic is the best answer to.
Actually, I think it is misleading for Brendan to say that ‘the higher the proportion of a youth cohort that stays on in school or college or in training, the smaller the labour force and the higher the unemployment rate’.
Say there are 100 people aged 20-24 in the population.
If 25 of them are still in the educational system, 25 at work and 50 looking for work, the unemployment rate would be 50/75 or 67%.
If 25 of those looking for work return to the educational system, the unemployment rate falls to 25/50 or 50%.
In the FT article to which Brendan refers, Stephen Hill gives a hypothetical example where he starts from a situation with 20 ‘jobless workers’ out of a labour force of 200, so an unemployment rate of 10%. Then he posits that ‘of the 200 workers, 150 enter a university’. Now the labour force shrinks to 50 but the numbers unemployed remain at 20, so the unemployment rate quadruples, rising to 40%. This result crucially depends on the assumption that all those going back to university were ‘at work’ rather than ‘unemployed’.
Perhaps I am missing something?
“Why does one want (need) to work anyway?” “Well?”
” Money? ”
“Why does one need money?” “Well?”
“Food, lodging, clothing and perhaps some diversions.” “Also useful for taxes I believe”.
Waged labour is a nice idea provided there are labour slots available (ie. demand). Its a large-scale social experiment with real people. Maybe there is a lowest payment level. The ones ‘working for free’ are being subsidized (probably) by parents. Please try not to be ‘disagreeably suprised’ if the outcomes of the experiment are not as anticipated.
If you want to intellectually amuse yourself with an interesting mathematical expression that I believe may have some relevance to the nature of the labour market: Michelis-Menten for catalytic activity of enzymes. The enzyme is the labour market; individuals the substrate and inhibitor. You can mess around with this expression all you want and no one will get hurt.
@ PR Guy
In countries such as Germany and Denmark, business generally have had a formal role in training and apprenticeship compared with Anglo Saxon countries including Ireland. Even so, Der Spiegel last year reported that US online retailer Amazon appears to be systematically cashing in on German job creation subsidies. Critics accuse the company of repeatedly rehiring temporary workers who come with a two-week ‘tryout phase’ paid for by German authorities. The practice is concentrated in holiday rush periods.
The Institute for Work, Skills and Training (IAQ) at the University of Duisburg-Essen says innovation in the form of a dual study programme – – a hybrid method in which learners obtain vocational certification in the dual system of vocational education and training parallel to an academic degree at university – – has proved a success. The number of dual study programmes grew by over 70% between 2005 and 2011, to 929. Over 61,000 students have used this option to acquire an education that is both integrated and modular. Obviously, what counts for today’s generation of students is practical relevance. But not only for them – – also for their future employers: in a survey of companies conducted by Germany’s Federal Institute for Vocational Education and Training (BIBB) 45% of the firms said they would have jobs for all their apprentices in dual study programmes once they graduated.
Education in general is held up as a mantra for the West to compete with the rest of the world…but it’s a delusion that everyone has the chance to get reasonably paid work in a globalised world.
The numbers of young people leaving education early, in 2010, was highest in Spain, Portugal and the UK.
We hear a lot of guff about moving up the value chain and the knowledge economy but ‘Digital Taylorism,’ named after Frederick Winslow Taylor, the promoter of ‘scientific management,’ is only what many can aspire to.
‘It’s more important to get great talent, since the differential value created by the most talented knowledge workers is enormous,’ say McKinsey Consultants.
There are some interesting presentations here:
Returning to the ‘real’ as distinct from context_less abstractions ….
End of June a relevant Report here on the dole/work transition …. mentioned by the EC Review and By the IMF 6th review …. and noted on the blog in the little teacup ripple launced by the light touch regulation in the esri and the Crilly, Pentecost & Tol ‘Working Paper’ …. and DATA & MEASURING
Transcript of a Conference Call on Ireland
NOW KEY POINT
Strengthening growth and job creation is critical to the success of the program. Stronger support for job seekers in obtaining jobs is needed, where private providers of case management and employment services may have a useful role to play. It is also important to make sure that the structure of social payments does not contribute to long-term unemployment, and this is the topic of a cross-departmental review.
JUST WHAT DATA IS BEING CONSIDERED IN THIS CROSS-DEPARTMENTAL REVIEW? WHO IS CONSIDERING IT? WHAT DATA SETS ARE BEING USED? HOW ARE THEY BEING ALALYSED. AND HOW CAN ONE TURN A SILKEN POLICY PURSE OUT OF A SOW’S EAR OF SUPPOSEDLY SH1TE* DATA?
Pretty relevant …. Can anyone shed any light on this?
*A meta of the debate suggests that Irish data is sh1te.
School/Training to Work or Dole/Work Transition for Young Citizens really matters ….
I’m signing out for the next couple of months – off to finish writing my bonkbuster in France. Back in September.
Good luck with the (real) Irish economy and as Dave used to say, “may your God go with you.”
Try not to fight too much while I’m away. Hug an economist now and then.
And remember one thing about the financial services sector….. they all tell lies and are constantly framing things to suit themselves so treat everything you read with a pinch of salt.
Accurate LIBOR rate anyone?
@Brian Woods Snr
Mercator by Nick Crane
Chapter 1 :A little town called Gangelt
“In Gangelt they were locked into the fate of the peasant, who was currently enduring rural Europe transition from an ancient feudal system to a money economy ,where the freedom to work for a wage came at the cost of dispossession from the land , as owners consolidated their estates for commercial production”
The rising prices of farm produce benefited the large farmers and estate owners,but crippled the peasants who were forced to work more ,for lower wages for crops that were not theirs.
As larger farms became more viable ,the ancient privileges which gave peasants the wherewithal to live off the land was eroded.
A new term emerged ,”roboten” , meaning drudge ,toil ,fag , sweat.
The peasant became a wage slave ,a Robot.
To the daily drudgery was added punitive taxes and periodic demands for men and horses to fight the emperors campaigns”
That was the early 16th century after the population bounced back from the plague of 1347-51…where almost all of the scrub that had regrown had been reclaimed.
You lucky sod
Yes yes….. I worked down in the Irish ferries like bowls back in the day.
They care not a jot for the average Lithuanian and his missus – they are a conduit for capital like the rest of us , the lower the wage in the physical act of making the higher the return and consumption at the back end.
People must get it into their middle class skulls this multicultural experiment has nothing to do with great happy clappy world that has been foisted on them post 87 especially.
As more wealth is destroyed in this process of labour arbitrage they themselves will become victims of this nothingness.
Its merely a matter of time.
You open up borders to capital flows and the Labour will follow….its that simple in many ways.
The added benefit of such a system is that there is no us and them anymore as all trust in your neighbour is lost via a cultural gulf as Humans despite all the propoganda to the contary are tribal in nature especially when the shit hits the fan.
Therefore when they are alone in their flat they can be more easily picked off.
It has nothing to do with creating wealth , multiculturalism is a weapon of war.
As “our man” Sutherland put it but not in quite these words – its all about cracking open society so that you can be the last to suck its marrow.
These guys have got quite good at this stuff since Cromwells day & Before – having refined the political double act to perfection.
Indeed These Islands have never recovered fully from the last great experiment…..the nation state.
@ Dork: Thanks for the ref. Will follow it up.
@PR Guy: God speed and good health!
@ MH: “… but it’s a delusion that everyone has the chance to get reasonably paid work in a globalised world.”
Opps! That might energize a few folk. They must be putting Delusion into our water supply. 😎
@The Alchemist Says
What would Youth Unemployment be without emigration you ask?
Interesting question but if you ask that then you have to ask the following as well. In 2012 34000 people emigrated from the state and 31000 immigrated in.
That puts the dramatic stories about emigration to rest. There is no big loss of people is there.
Other thing is if the economy is so bad then why are 34000 people coming here.
So how does emigration affect youth unemployment and likewise how does immigration affect it.
@The dork of Cork,
Dork! Are you seriously saying that Peter Sutherland’s support for multi-culturalism in Europe is not drive by the high motive of improving the lot of European nations?
Why would a multi-millionaire who works for Goldman Sachs not be driven by the same motives as your average progressive in Europe?
Its almost like the idea of creating a vast reserve labour force as per the aims of Thatcherite Britain was still their goal and not the idea of a diverse society.
Now thats a shocker and I dont buy it.
An unpleasant reality is that most folk develop a set behaviours that are not congruent with each other: we believe something, but say something different. And, suprise suprise, we are (with very few exceptions) completely unaware of this. Probability is on Dork’s side on this one.
The realization that this imbalance between belief and performance is widespread is like Devlin’s “Appalling Vista”. It is real.
Not asking you to ‘buy it’. Just start to pay much closer attention to what folks say in public and then observe what they actually do. You”ll get a nasty shock.
@ Dork. Interesting bit in to-day’s IT Business about a railway in your part of the empire. Love the two critters standing in the loco cab. That might not pass our current Health and Safety stuff.
okay i will keep the mind open and look for contrasts between words and actions.
I’ll take a look at Peter Sutherland’s record. His comments on multi-culturalism place him left of left but whats his agenda and is it right of right and multi-culturalism is just a tool for him to achieve it, just like the unfortunates on the dole serve their use as well for the progressive Peter.
Just because Peter is the Prime EZ Fixer for the matrixsQuid does not mean that I cannot agree with him at times – as in his comments on multiculturalism and cosmopolitanism – and particularly in a little_irelander parochial context …
merkozian and dodgy financial system outcomes …
Joblessness in the euro zone rose to a new record high in May, pushed up by lay-offs in France, Spain and even stable Austria, as the debt crisis continued to eat away at the currency region’s fragile economy.
Around 17.56 million people were out of work in the 17-nation euro zone in May, or 11.1 per cent of the working population, a new high since euro-area records began in 1995, the EU’s statistics office Eurostat said.
Spain has the highest unemployment at 24.6 per cent, with more than one in two people under 25 without work.
Greece was next at 21.9 per cent, followed by Latvia at 15.3 per cent and Portugal at 15.2 per cent in May. Ireland has fifth highest unemployment in the area with a rate of 14.6 per cent. Austria has the lowest rate of joblessness at 4.1 per cent.
any newz on dat report?
Thanks to Liam Delaney, Kevin Denny and Peter Stapleton for constructive comment.
I think the point made by Peter is correct. It is misleading to imply that moving people from unemployment to education raises the unemployment. If the increase in educational enrollment comes from those who would otherwise be unemployed, the result is a fall in the unemployment rate.
I think it is probably best to concentrate on the population aged 20-24.
Here are the most relevant data for 2011 and 2006:
Population aged 20-24
At work 116.0 205.4
Unemployed 61.8 31.2
Students 105.8 90.9
Others not in Labour Force 13.6 15.0
Total 297.3 342.5
(It’s impossible to get the data well-formatted in a comment – when I have time I’ll amend the original post to include a pie-chart of these numbers.)
We can see that the NEET ratio rose from to 13.5 to 25.3, whereas the unemployment ratio rose from 13.2 per cent to 34.8 per cent.
@ wow: Apologies for the somewhat late response.
Note your comment. Best of luck. “Follow the money!”
@Contexts in Destruction
Two-thirds of young men jobless in Limerick
By Ann Cahill, Europe Correspondent
Tuesday, July 03, 2012
Up to two-thirds of young men are now out of work in some of the country’s main urban centres, adding to the growing bill for social welfare payments and threatening the country’s recovery.
Young, largely unskilled men are the hardest hit and in places like Limerick two-thirds of youths aged 16 to 24 are NEITHER AT WORK, IN TRAINING OR EDUCATION (emphasis added).
The spiral of unemployment in the country’s towns and cities is in danger of creating massive social problems for the future and a lost generation.”
Another factor which could disguise the actual unemployment ratio is the JobBridge internship.
Anyone on this scheme is excluded from the Live Register figures (even though these people are still receiving social welfare payments during the course of their internship).
[…] Walsh, former professor of economics at University College Dublin (UCD), wrote last June about the issue of measuring youth […]