Introduction and keynote remarks by Angel Gurría, OECD Secretary-General, delivered at the conference
"Youth Employment – A Call for Change"

 

Paris, 14 December 2011

(As prepared for delivery)

Ladies and Gentlemen,
Let me welcome you to the session on “Future Prospects for Young People in the Labour Market”. I want to thank the European Youth Forum for organising this important conference here at the OECD on what we consider to be one of the most important policy challenges for the years to come.

Youth unemployment is an unmitigated tragedy. The famous writer Mark Twain once said: “There is no sadder thing than a young pessimist.” Indeed, I could not agree more, because pessimism leads to paralysis. The current economic panorama for youngsters in many countries does not leave much room for hope. How can we build a more optimistic future for our youths?

In many countries, the overall labour market situation is not encouraging and, according to our recent economic outlook, economic recovery is stalling. This is bad news for job creation in the short term. More than 200 million people are unemployed worldwide and 45 million of them are in OECD countries.

The situation is even more dramatic if we look at young people. In countries where unemployment has increased, the most vulnerable - and in particular the youths - have been among the main victims.

Even before the crisis in 2007 and early 2008 when the OECD economies were at their strongest and the overall unemployment rate was less than 6%, average youth unemployment remained stubbornly high, at over 15%. Today, it stands at about 20%. The situation is worse still in some countries: one in four youths currently in the labour market in France or in Italy is jobless. Youth unemployment in Spain has risen to close to 49%.

So why are young people bearing such a disproportionate share of the jobs crisis? Despite being well-educated, competent and mobile, they are unfortunately facing huge barriers to entering the labour market. For example, potential employers often expect the youth to have previous work experience, even for entry-level positions. So, in many cases, young people can’t get a job because they have no work experience. And yet, they can’t get work experience, because they aren’t being offered any jobs!

On top of that, young people are also expected to have “soft skills”, such as communication, teamwork and presentation skills, which the education system does not generally provide. Even when young people manage to overcome these obstacles, the jobs they find are often temporary and offer no career prospects or social protection.

The hardship goes far beyond joblessness. Evidence from past recessions shows that many unemployed youths today are at high risk of prolonged “scarring effects”. These include long-term difficulty with finding employment and persistent pay differentials with their peers. Moreover, many youths are discouraged and risk dropping out of the labour force after long spells of unemployment. This has to change. We cannot allow this crisis to produce a sinking generation. We need to improve the employability of young people to re-invigorate them with hope and confidence.

It is no surprise that young people played a prominent role in the recent social movements, including the Arab Spring, the Indignados in Spain, and the Occupy Wall Street Movements in the US, the UK, and elsewhere. Young people want a world economy that is more just, more equal and more human.

The question is: how to make it happen?

Governments must tackle youth unemployment with a combined set of policies in a holistic way. This means we should review all options that policymakers, employers, trade unions, youth organisations and young people themselves can pursue. And we should work on all dimensions: from education to apprenticeships and internships; from job-search counselling to first-time jobs; from youth entrepreneurship to reforms in social, employment, education and other policies. All relevant measures must be pursued as a package - not in isolation.

While the challenge of youth unemployment is common to many countries, the employment barriers facing young people differ across countries, as do the policy options to remove those barriers. This means that we also need an in-depth understanding of country-specific issues.

To do so, the OECD has prepared a major series of country reviews such as Jobs for Youth and Learning for Jobs. Together with the ILO we also prepared a report on youth employment for the G-20 Employment and Labour Ministerial meeting in September. In future, we will provide support to the new G20-Task Force on Employment, which will also focus on youths.

Let me highlight some of our recommendations.

First, renewed job creation is essential. This requires rebuilding confidence by tackling the euro zone crisis, exploiting existing room for manoeuvre on the fiscal and monetary policy fronts, vigorously pursuing structural reforms to boost potential growth, and implementing credible medium-term plans for fiscal consolidation. Despite fiscal pressures, it is also crucial to take cost-effective measures to boost job creation for youth.

Second, targeted labour market programmes, including effective counselling and job-search assistance can make a difference. Specific measures to encourage employers to hire youths are likely to improve their prospects in the labour market, including targeted wage subsidies and more balanced employment protection between temporary and permanent jobs.

Third, targeted investment in human capital is crucial and must begin early, even in the pre-schooling years. It should then be sustained through compulsory enrolment into third-level education and transition into the world of work. Since young people may well have to change employers and occupations during their working lives, they must be able to manage uncertainty and change. We thus need to equip them with both occupation-specific and general skills.

Fourth, we need more effective career guidance and measures to promote closer links between the education system and the labour market. This will enable us to reduce the mismatch between available skills and those in fact needed in the labour market.

Fifth, we should expand opportunities for “study and work” programmes, such as apprenticeships, internships and other dual vocational, education and training programmes. We must also ensure that these programmes do not serve as cheap labour. Written contracts between interns and host organisations can help set the duration of internships and learning objectives.

Finally, entrepreneurship is an increasingly important alternative for youths. It enables them to be active in the labour market. But youths need support to put such an ambition in practice. We need to facilitate their access to business advice, mentoring and finance. We should also encourage early integration of entrepreneurship in school curricula.

Ladies and Gentlemen,
We can neither accept nor afford a lost generation. Your people and their job prospects must be right at the centre of the policy agendas of our member and partner countries. Investing in youths must be a key policy objective. Youth organisations must have a voice.

This is why your discussion over these two days is so important. Our “go social” mantra does not just mean that we need to find ways to support and include the most vulnerable – “go social” means that we need to invest in our future. So let’s work towards this common goal.

Let me now invite Ms Emilie Turunen, Member of the European Parliament, to kick off the Panel. I wish you all great success and fruitful discussions.
Ms Turunen, the floor is yours.