The challenge for the Youth Guarantee

A solution to a structural problem?

Almudena Moreno, Professor of Sociology,
University of Valladolid

Youth unemployment presents a very diverse profile by age and educational level, as well a being a structural phenomenon that has persisted in the Spanish labour arena since 1995. This article reflects on the effectiveness of employment policies designed to reduce youth unemployment, focusing attention on the Youth Guarantee, which is a European Council Recommendation.

1. Introduction

The increase in youth unemployment as a consequence of the economic crisis, especially marked in Spain, has led to intense academic and insti­tutional debate regarding contributing factors and the most appropriate measures for reducing it (García, 2011; Garrido, 2012; Dolado, 2015; Moreno Mínguez, 2015). However, the numerous diagnoses made have had no clear impact in terms of transfer into the design of policies for promoting youth employment, or at least, the results that could have been expected are not being obtained.

Answers as to why the policies designed are not functioning adequately should be sought in the diversity shown by unemployed young people. As a general rule, their status has been qualified as “youth unemploy­ment” as if this were a uniform phenomenon. Employment policies have been defined based on this unidimensional concept, overlooking in part the numerous dimensions linked to the structural weaknesses of Spain’s labour market, as well as to age, to young people’s education level and, to a lesser extent, to their sex. 

In Spain, the ratio between youth unemployment and general unemployment surprisingly shows relative stability since 1995, in contrast with other European countries.

In this sense, in reports and academic documents what appears to be missing is a critical reflection that offers a response to the possible in­effectiveness of employment policies designed for young people. In this article, we will focus on the Youth Guarantee (YG), a European Union Recommendation with a substantial budget allocation whose objective is to stimulate youth employment in all European countries. Specifical­ly, the aim of the article is to analyse the effectiveness of the YG based on the diversity that characterises youth unemployment. For this purpose, it will include a descriptive analysis of the data available from sources such as Spain’s Economically Active Population Survey (EAPS) and data provided by the PES and the European Commission. 

2. The peculiarities of youth unemployment

The reports consulted raise the question of whether the youth popula­tion is substantially different to the adult population with respect to its motivations and qualifications for finding and holding down employ­ment, or whether youth unemployment is rather the result of a dysfunc­tional economic model that has affected youth and adult populations alike, but is more highly visible among young people during times of economic crisis. To offer an approach to answering this question, we present two indicators: the youth/adult unemployment ratio and the combination of age and education level from a longitudinal perspective. 

Graph 1 reflects the historical evolution of the ratio between general unemployment and youth unemployment in Spain since 1995, compar­ing it with other European peer countries. Surprisingly, in the case of Spain a certain stability is observed from the mid 1990s, which seems to indicate either that the impact of the crisis has affected youth unem­ployment and total unemployment equally, or alternatively that youth unemployment is a structural phenomenon accentuated by the destruc­tion of employment generated by the economic crisis.

In other countries, for example the Nordic countries, Germany and the United Kingdom, the crisis does indeed seem to have had a clear incre­mental effect on youth unemployment compared with the total unem­ployment ratio. These results could be an indication that unemployment in Spain is a structural phenomenon maintained over time that affects all ages, which points to the Spanish labour market having deficiencies associated with the productive structure.

Nonetheless, the fact that youth unemployment can be explained partly by a dysfunctional production model does not explain why employment policies are not functioning adequately to combat it. In this respect, the data in Graph 2 provide evidence of the well-known phenomenon whereby the lower the age and the lower the education level, the higher the youth unemployment rate; this tendency has been accentuated dur­ing the crisis (Requena, 2016). However, unemployment has not only affected the youths (16-29 years) with low education levels, but also slightly older young adults without qualifications.

It is usual to talk about unemployment among youths who have dropped out of the education system without formal qualifications and basic competencies, but the group of slightly older young adults with lower levels of education are referred to less commonly. This has significant social implications, as it alerts to the difficulties that these young people aged over 25 years are going to face in securing employment if no in­vestment is made in their training. It should be added that these young people are at a typical age for finding a long-term partner and forming a family, therefore non-reduction of unemployment for this age group may have consequences in terms of the economic vulnerability, fertility rates and possible situations of poverty for these families. 

The data point towards the diversity characterising young unemployed people, beyond the qualification of “youth unemployment”. Although unemployment rates are consistently higher in the 15-24 age group, the difference according to education levels is very significant and shows a similar evolution in the two groups over the course of time. 

3. The role of active youth employment policies: the case of the Youth Guarantee

To tackle the high rate of youth unemployment, numerous Active Em­ployment Policies (AEPs) have been developed, with uneven and in some cases disputable results, due – among other reasons – to the fact that they omitted to take into account the diversity characterising youth unemployment. 

The measures, managed by Public Employment Services (PES), consist of training policies, job search advice policies, hiring incentives and the development of training programmes. International studies highlight a proportionally lower number of young unemployed people participating in the AEP programmes in Spain than in other European countries with lower youth unemployment rates, for example France, Germany and Aus­tria (Caliendo and Schmidl, 2015). This may be an indicator of the poor visibility of these types of policies among young people, or alternatively, point to AEP programmes designed for adults not being operational to the same extent for young people (Caliendo and Schmidl, 2015). 

According to the European Commission 2016 report on the functioning of the PES, despite advances taking place, access to these services by the most vulnerable young unemployed people remains insufficient. In fact, as shown in Graph 3, it is precisely those young people who have less training and are therefore more likely to experience situations of pov­erty and social exclusion, that register least as job-seekers together with young people with higher education, although perhaps for very different reasons: the former, because they have fewer skills and competencies for job-seeking, in addition to being demotivated; and the latter, because they have no faith that they will find employment through these services.

As can be seen in Graph 4, the young people who use employment of­fices most are those who completed secondary education. Moreover, it has been shown that this group has benefited most from the implemen­tation of the YG in those European countries where these policies have been evaluated, such as Finland (Hämäläinen et al., 2015).

The European Council adopted the Recommendation known as the Youth Guarantee on 22 April 2013. The aims of the AEPs are aligned with the proposals of the YG but are different in the fact that the former are funded by national budgets and the latter by the European Union. Within the framework of this Recommendation, all the Member States committed to guaranteeing that young people aged under 25 years (29 years in the case of Spain) would have an offer of employment or train­ing within four months from completion of their studies or their regis­tration as unemployed. 

The application of the Youth Guarantee is set within the framework of the European Youth Strategy (2010-2018). This programme, supported financially by the European Union, seeks to promote training and em­ployment opportunities for young people aged under 29 years, as well as their social inclusion and active citizenship. The PESs are the institutions charged with implementing the employment and training programmes defined in the YG through the autonomous communities and local gov­ernment authorities. France and Spain have intensified partnerships with non-governmental organisations working in local spheres for the pur­pose of registering those young people who do not use the PESs.

The Nordic countries were the first to implement these measures in the 1980s and 1990s (Sweden in 1984; Norway in 1993, Denmark and Fin­land in 1996). The measures contemplate improving training and pub­lic employment services, as well as developing enterprise and start-up programmes. In Spain, this initiative started to be implemented in 2014; 80% of the YG actions have been funded through the European Youth Employment Initiative, with an assignment of 943,496,315 euros for the 2014-2020 period. One of the main problems with the application of these measures in Spain is the limited participation of young people, despite the increase experienced since their commencement. 

Graph 5 presents three indicators: 1) the percentage of young people aged 16 to 29 years registered with the YG with respect to the total num­ber of young people seeking employment and registered at the employ­ment offices, 2) the percentage of individuals registered with respect to the total number of unemployed young people accounted for by the EAPS and 3) the percentage of young people who neither work nor study registered with the YG with respect to the total number registered, calculated based on data from the EAPS. 

First of all it can be seen that the percentage of people registered has increased considerably since August 2015 (the month in which the age range was extended to 29 years), but it is still limited. In the case of people registered as job-seekers, the percentage of people registered for the YG was 52.9% in the third quarter of 2016. Taking as a reference the number of young people unemployed according to the EAPS, barely 30% had registered. Finally, the percentage falls to 14% of young NEETs, a number calculated based on data from the EAPS by combining the sum of NEETs and that of young unemployed people in the same situa­tion. These data appear to confirm the YG’s limited capacity for reaching young NEETs and unemployed people. 

The possible reasons for this apparent ineffectiveness in attracting young people may lie, firstly, in the limited visibility of the advertising campaigns among the population of young people and, secondly, in the limited administrative, budgetary and personnel capacity that the PESs have available for effective outreach among young people in Spain (Eu­ropean Commission, 2016). Proof of this, as can be seen in Graph 6, is that only 25% of young Spanish people were aware, in April 2016 (date of the interview) of the European Youth Guarantee initiative to combat unemployment, in comparison with 51% of young Finnish people. 

In 2015, only 32% of young people in Spain had secured employment after six months registered with the Youth Guarantee, as opposed to 87% of their peers in France and 71% in Sweden.

Prior experiences in other countries conclude that success of the Youth Guarantee is based on the effective functioning of the PESs on a local lev­el (European Network of Public Employment Services, 2016). Accord­ing to the European Commission Report of 2016, one of the problems with its application in Spain is the inefficiency of these public services in tackling youth unemployment. The Report also indicates that these ser­vices do not have sufficient resources for contacting young people who have dropped out of the education system without any basic secondary education qualification, among other reasons because generally the lat­ter are not registered with the services. Finally, it is worth highlighting the lack of indicators and measures for evaluating and monitoring the efficiency of the PESs and of the YG, despite these being contemplated in their initial design (Cabasés and Pardell, 2014; Dolado, 2015). 

Taking into account that we do not yet have any data on the monitoring of the YG in Spain, the evaluations effected in this first phase in other countries highlight the fact that the young people most benefited by em­ployment policies and specifically by the YG are aged between 15 and 24 years and have completed secondary education; women to a greater extent than men and young unemployed people to a greater extent than inactive people with lower levels of education (European Commission, 2016; Hämäläinen et al., 2015). The groups that have registered least with the YG are precisely the most vulnerable ones. They run the greatest risk of ending up in situations of poverty, therefore these results should serve as a lesson learned in order to avoid committing the same errors in Spain. 

Finally, an indicator that could account for the relative ineffectiveness of the YG actions is that referring to the percentage of young people who, six months following registration, have found employment or a place on a training action geared towards employment. Graph 7 shows that only 38% of young people registered with the YG in Spain in 2015 (last data available), had, six months later, either found employment or were participating in a training action, against 71% of Irish young people and 68% of their Italian counterparts. In the specific case of Spain, the distribution of that 38% of young people who had met with success was as follows: 30% had found employment after six months registered with the YG, 55% were in training, 12% were apprentices and 1% were doing work experience. 

These data contrast with those of France, Finland and Sweden, where the YG is more effective (see Graph 8), and alert us to the need for a reformulation of the YG application criteria before 2020, the year when it should, in principle, come to an end.

4. Conclusions

The reflection contributed here highlights, firstly, the structural nature of youth unemployment, and secondly, how age and education level at­tained influence unemployment. Active employment policies and spe­cifically the application of the YG do not seem to be obtaining the results expected. Among other reasons this is due to the heterogeneous profile of young unemployed people not being taken into account by the YG and the difficulties of the PESs in reaching young people who could ben­efit from it. The data show that unemployed and inactive young people with limited training have a reduced participation in the programmes designed by the YG, with Spain being one of the EU-28 countries with the poorest performance by the YG (European Commission, 2016).

This reduced participation in registration with the YG and in PESs pro­grammes alerts us to the need to develop coordinated actions with the public and private spheres, such as promoting meetings between youth experts from the different municipalities, youth associations and private enterprises, with the aim of informing and advising unemployed young people about the possibilities that registering with the YG offers. This is a vulnerable group of young people that requires special attention to neutralise the negative effects of the precarity and poverty that they are heading towards.

In relation with Spain, the different European reports highlight the lim­ited functionality of both its Public Employment Services and interme­diary organisations to fulfil the objectives proposed in the YG’s initial design. They also highlight the slow process of modernisation of these services, as well as the lack of the human and financial resources needed to achieve successful implementation of the actions.

Therefore, imminent modernisation is required based on greater pro­fessionalisation of their staff, a larger assignment of financial resources and ongoing evaluation of the results obtained. The delay in the intro­duction of evaluation and monitoring systems for youth employment policies and specifically the YG scheme in Spain alerts to the need to develop coordinated mechanisms between local authorities and private organisations (enterprises and non-governmental organisations) to correct possible deficiencies and optimise as far as possible the results of youth employment policies.

Almudena Moreno, Professor of Sociology

University of Valladolid

5. References

Cabasés, M.A., and A. Pardell (2014): Una visión crítica del Plan de Implantación de la Garantía Juvenil en España, Madrid: Bomarzo.

Caliendo, M., and R. Schmidl (2016): “Youth unemployment and active labor market policies in Europe”, IZA Journal of Labor Policy, 5(1).

Dolado, J. (ed.) (2015): No country for young people? Youth labour market problems in Europe, London: CEPR.

European Commission (2016): The Youth Guarantee and Youth Employment Initiative, SWD (2016) 323 final, DG Employment, Social Affairs and Inclusion, Luxembourg: Publications Office of the European Union.

European Network of Public Employment Services (2016): Report on PES implementation of the Youth Guarantee, September 2016.

García, J.R. (2011): “Desempleo juvenil en España: causas y soluciones”, BBVA Research, Documentos de Trabajo, 11/30.

Garrido, L. (2012): “Para un diagnóstico sobre la formación y el empleo de los jóvenes”, Cuadernos Empleo Juvenil, 2.

Hämäläinen, K., U. Hämäläinen and J. Tuomala (2015): “The labour market impacts of a youth guarantee: lessons for Europe?”, VATT Working Papers 60, Helsinki: Government Institute for Economic Research.

Moreno Mínguez, A. (2015): “La empleabilidad de los jóvenes en España: explicando el elevado desempleo juvenil durante la recesión económica”, Revista Internacional de Investigación en Ciencias Sociales, 11(1).

Requena, M. (2016): “The social elevator. To what degree does education improve social mobility?”, Social Observatory of ”la Caixa”.

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Almudena Moreno, Professor of Sociology,
University of Valladolid

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