Generational impact of jobs crisis is an age-old issue

Analysis: The best thing the Government could do for the young would be to end the public-sector hiring freeze

Wed, Jul 3, 2013, 08:23

The young – always and everywhere – suffer most when jobs markets turn down. Those out of work find it harder to get work owing to their limited experience, and because those in jobs are more tentatively ensconced than their older, more skilled and better-networked counterparts, they are more vulnerable to lay-off when companies need to downsize.

So it has been in Ireland. And because the slump here has been one of the deepest anywhere, the impact on the young has been proportionately greater than most other countries.

Perhaps the best reflection of the generational impact of the jobs crisis has been the changes in the numbers of under-35s at work over the past half-decade compared to those 35 and older.

Among the older group, a relatively small decline in numbers working after the crash has been reversed. As of the first quarter of 2013, there were 1.2 million older people working, just shy of the bubble-era peak. By contrast, fewer than 650,000 under-35s were in employment, down by a massive one-third from the one million at work in 2007.

Among the under-25s – the group upon which this series of articles focuses – the impact has been even greater. As the graphic illustrates, the number of that age group in employment at the end of last year was down by more than half compared to the beginning of 2007, when talk of recession was still distant. Over that period, only in Spain and Greece have the young been squeezed out of employment to a greater extent.

Worse still for Irish youth, the broader turnaround in the labour market since the middle of last year has not benefited them. While the total number of people of all age groups at work in the economy rose for three successive quarters up to the first three months of 2013, the number of under-25s in employment continued to fall.

Not straightforward
What has this meant for youth unemployment? As the accompanying box explains, this is not as straightforward as it might seem. That said, out of an all-age group total of 292,000 people who are formally unemployed, just over one in five is under 25.

What of the Government’s response to the youth unemployment problem? The first thing to note in any such discussion is that scope for action is limited. Most jobs are created by private companies. If businesses are facing difficult trading conditions, they simply won’t hire. Trading conditions have been brutal for most businesses since 2008.

It is true that governments can spend money on incentivising private-sector job creation, but the evidence on such schemes is mixed at best. Besides, given that the Government is so cash-strapped, the scope for incentivising private-sector employers to take on more workers is limited in the extreme.

Action plan
Having noted the constraints, the Government has not been sitting on its hands. The many measures in its Action Plan for Jobs have helped – to some extent at least – everyone’s job prospects, including those of the young.

Of the measures targeted at youth unemployment specifically, the National Internship Scheme – or JobBridge – has been the centrepiece of the Government response. It has been in existence for exactly two years, but its efficacy is uncertain.

In April, a report on JobBridge found that as of the end of November 2012, 12,560 internships had commenced. These figures exceeded the original targets.

But while this appears positive, two issues immediately arise. Given that there are more than 50,000 young people formally unemployed and 69,000 on the dole, the number of internships provided under the scheme is modest.

Real difference?
A second, more serious, issue is whether the scheme makes any real difference in helping young people find work.

Essential in trying to understand the benefits (or otherwise) of any government programme is the establishment of a control group of people who do not access the scheme so that a comparison can be made with those who do use it. The April report – curiously – did not include a directly comparable control group.

But whatever the benefits of the Coalition’s programmes, the closure of the public sector – by far the biggest employer in the State – to new entrants under the terms of the Croke Park pay deal and its successor has been unquestionably bad for the young. These deals are classic examples of older insiders being protected at the expense of younger outsiders.

While it is understandable that young people don’t protest against the recession – all the marches and demos in the world will not turn bust to boom – it is much harder to understand why they don’t get out to demand their fair share of the public-sector jobs pie.

How high is youth unemployment here?

Rates of youth unemployment in southern Europe exceeding 50 per cent have made headlines around the world in recent years, while Ireland’s somewhat less drastic rate of 31 per cent has been a cause for much concern here.

However, these figures need to be treated with some caution, in part because no single indicator gives a
rounded picture of something as complex as the labour market.

This is particularly true for the young, mainly because many under 25s are studying rather than working or looking for work.

In the first quarter of 2013, there were 540,000 15-24-year-olds residing in the Republic. As the chart shows, this is a very significant decline – of about 120,000 – on pre-recession times. A fall in the numbers of births two decades ago and the return of emigration in recent years explains this.

The chart also shows that the most dramatic change has not been an increase in the number of young people formally unemployed (up by just under 25,000 between 2007 and 2013), but a fall of 180,000 in the number in employment over the same time period.

Emigration and a decline in the population of that age explain much of the difference. Also important is an increase in the number of students, which has reached a record high, and – less positively – more young people who have dropped out of both education and the labour force.

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