Youth Unemployment in Greece: Measuring the Challenge

1
Youth Unemployment in GreeceMeasuring the
Challenge

• David Bell
• Division of Economics
• Stirling Management School
• University of Stirling

David Blanchflower Department of
Economics Dartmouth College
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A Deep-Rooted Problem

• Youth unemployment is "perhaps the most
  pressing problem facing Europe at the present
  time.... It is highly regrettable that parts of
  the economic elite assume so little
  responsibility for the deplorable situation
  Angela Merkel, July 2013

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EU Policy Response

• The Youth Guarantee
• Member states of the European Union should
  "ensure that all young people under the age of 25
  receive good quality offer of employment,
  continued education, apprenticeship or a
  traineeship with enough period of four months of
  becoming unemployed were leaving formal
  education." (Council of the European Union,
  2013) 
• The Council created the Youth Employment
  Initiative through which 6 billion will be made
  available to NUTS 2 regions with an youth
  unemployment rate above 25 in 2012. These monies
  have to be distributed between 2014 and 2016. 
• The Youth Guarantee is intended to provide young
  people with a job, training or education over a
  defined period. The entitlement is generally
  given by public institutions such as the public
  employment service, sometimes acting in concert
  with private or third sector organizations.

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Effectiveness of Interventions to Mitigate
Negative Effects of Youth Unemployment

• Evidence of Success Limited
• Differences between countries in the types of
  programs, which succeed or fail
• Scaling up management problem
• Time horizon how long should evaluation last?
  (may have to rely on cohort studies or
  administrative data)
• Programs evolve complicating evaluations
• Evaluations tend to focus on narrow range of
  measures
• Understanding how allocation to programs may
  affect outcomes

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Scarring Effects of Youth Unemployment

• Experience of unemployment when young
• A temporary disturbance that is part of the
  search and matching process for those
  inexperienced in the labour market
• A negative experience that changes the beliefs
  and preferences of the young about the nature of
  the labour market and has long-lasting negative
  effects on their labour market experience
• Most of the evidence supports the latter
  explanation

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Greece and the Youth Guarantee

• Greece is intending to implement a national youth
  action plan using 517 million, with the aim of
  benefiting up to 350,000 young people.
• Measures under the plan include a temporary
  hiring program for unemployed persons below the
  age of 35 in community-based work programs.
• In July 2013 it introduced a youth internship and
  employment voucher program under the youth action
  plan aimed at supporting occasional training and
  internships for a six-month period for 45,000
  people up to the age of 29.
• 1.2 billion is being allocated to help small and
  medium-sized companies meet liquidity
  requirements and so assist with the expansion of
  youth employment.

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Analysis

• Using the European Labour Force Survey and
  Eurostat
• Comparators
• Spain and Portugal - southern European countries
  that, like Greece, have hit particularly hard by
  the recession
• The Republic of Ireland has also been hit hard,
  but has a quite different labor market
• Even though its economic performance has been
  much stronger, Sweden has experienced
  persistently high levels of youth unemployment
• Germany, the UK and France to give a perspective
  on unemployment trends in the European Union as a
  whole.

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Greek Unemployment Rates by Age Grouplargest
increase among 15-19 year olds
Greece had a substantial youth unemployment
problem prior to the Great Recession
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Greek Employment to Population Ratio by Age
Grouplargest decline among 25-29 year olds
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Rates can give a misleading impression of
magnitudes
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Table 3 Unemployment, NEET and Educational
Status in selected European Countries among those
aged 16-29, 2012 (000s)
  Greece Greece Greece Portugal Portugal Portugal Spain Spain Spain
  Student Non-student Total Student Non-student Total Student Non-student Total
Employed 32 479 511 89 652 742 346 2,120 2,466
Unemployed 36 359 396 57 224 281 372 1,394 1,766
Inactive 729 131 860 681 94 776 2,674 519 3,193
Total 676 970 1,646 701 970 1,671 3,016 4,033 7,049
Unemployment Rate 53.5 42.8 43.6 38.8 25.5 27.4 51.8 39.7 41.7
NEET Rate     27.8     17.7     25.8
  Germany Germany Germany France France France Sweden Sweden Sweden
  Student Non-student Total Student Non-student Total Student Non-student Total
Employed 2,797 5,423 8,221 793 4,224 5,017 229 731 960
Unemployed 127 517 644 92 1,004 1,096 92 110 202
Inactive 4,646 863 5,509 4,208 885 5,093 582 93 675
Total 7,416 6,803 14,218 5,093 6,113 11,206 819 934 1,753
Unemployment Rate 4.3 8.7 7.3 10.4 19.2 17.9 28.7 13.0 17.4
NEET Rate     9.6     16.9     11.0
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Older NEETs pose a huge challenge for Greece
Percent NEET (Not in Employment, Education or
Training) by Country and Age Group 2013
Source Eurostat
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Youth (16-24) to adult ratio is relatively low in
Greece.
Greece
Spain
Sweden
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Youth cohort has been declining very rapidly in
Greece
Greece
Spain
UK
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Gender differences?
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How does staying at home influence labour market
outcomes?
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The Role of Education
Change 2005-08 to 2009-2012 Change 2005-08 to 2009-2012 Change 2005-08 to 2009-2012
Employment Unemployment Inactivity Share of Cohort
No formal qualifications -4.0 11.5 -7.5 0.7
Primary -11.6 7.4 4.2 6.9
Lower Secondary -6.5 2.0 4.5 25.7
Upper Secondary -11.9 10.1 1.8 2.9
Upper Secondary with quals -6.7 5.1 1.6 39.5
Non-tertiary post-sec -12.5 11.3 1.2 7.5
First stage tertiary -8.3 10.7 -2.4 16.6
Second stage tertiary 7.7 0.1 -7.7 0.1
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Long-term unemployment
Greece had a substantial long-term unemployment
problem prior to the Great Recession
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Long-term Unemployment in Greece

• The average age of the long-term unemployed is
  lower in Greece than in our comparator countries
  with the exception of the UK and Ireland
• Among our comparator countries Greece has the
  highest proportion of females among the long-term
  unemployed
• Other Sources of Variation in Long-term
  Unemployment
• Education
• Nationality

Conditional probability of (lt) unemployment by
age
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Amongst our group of countries, Greece
experienced the largest fall in well-being with
the recession
But it was not concentrated among the young
    2000-07 2000-07     2008-2012 2008-2012   Changes 2000-2007 to 2008-2012 Changes 2000-2007 to 2008-2012 Changes 2000-2007 to 2008-2012 Changes 2000-2007 to 2008-2012
  Age Group Age Group Age Group Age Group Age Group Age Group Age Group Age Group Age Group Age Group Age Group Age Group
  15-24 25-29 30 All 15-24 25-29 30 All 15-24 25-29 30 All
Greece 2.89 2.8 2.59 2.66 2.68 2.51 2.27 2.34 -0.21 -0.29 -0.32 -0.32
Germany 2.9 2.89 2.9 2.9 3.1 3 3.01 3.02 0.2 0.11 0.11 0.12
France 3.02 3 2.9 2.93 3.14 2.97 2.92 2.95 0.12 -0.03 0.02 0.02
Spain 3.15 3.09 3.01 3.04 3.07 2.88 2.85 2.88 -0.08 -0.21 -0.16 -0.16
UK 3.19 3.16 3.2 3.19 3.33 3.22 3.26 3.26 0.14 0.06 0.06 0.07
Ireland 3.25 3.21 3.25 3.24 3.23 3.15 3.24 3.23 -0.02 -0.06 -0.01 -0.01
Sweden 3.36 3.37 3.36 3.36 3.52 3.42 3.45 3.46 0.16 0.05 0.09 0.1
Source Eurobarometer
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Conclusion

• In general, the evidence that ALMPs work is not
  strong. Careful evaluation in the correct context
  is essential.
• The age group 25-29 in Greece is probably of
  greatest concern
• Student (part-time) employment and unemployment
  is less common in Greece than in other European
  countries
• The European Labor Force Survey indicates that
  numbers in Greece in the 15-29 age group have
  fallen sharply
• Gender differentials in the Greek labor market
  are more marked than in many other EU states.
• Greek youths are much more likely to live at home
  than are young people in Northern Europe.
• Greece has the highest proportions of the young
  unemployed that have been without work for more
  than a year
• The decline in Greek well-being since the
  beginning of the recession has been the most
  rapid in Europe.

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0 - Pre-primary education 1- Primary education
or first stage of basic education 2- Lower
secondary education or second stage of basic
education 3 - Upper secondary education 4 -
Post-secondary non-tertiary education 5a -
First stage of tertiary education (theoretical)
5b - First stage of tertiary education
(technical, practical) shorter 6 - Second stage
of tertiary