The Youth Unemployment Spike

An examination of youth unemployment trends in the US and select European countries:

The Economist examines reasons why, globally, almost 290 million young people are unemployed:

Youth unemployment is often at its worst in countries with rigid labour markets. Cartelised industries, high taxes on hiring, strict rules about firing, high minimum wages: all these help condemn young people to the street corner. South Africa has some of the highest unemployment south of the Sahara, in part because it has powerful trade unions and rigid rules about hiring and firing. Many countries in the arc of youth unemployment have high minimum wages and heavy taxes on labour. India has around 200 laws on work and pay.

Deregulating labour markets is thus central to tackling youth unemployment. But it will not be enough on its own. Britain has a flexible labour market and high youth unemployment. In countries with better records, governments tend to take a more active role in finding jobs for those who are struggling. Germany, which has the second-lowest level of youth unemployment in the rich world, pays a proportion of the wages of the long-term unemployed for the first two years. The Nordic countries provide young people with “personalised plans” to get them into employment or training. But these policies are too expensive to reproduce in southern Europe, with their millions of unemployed, let alone the emerging world. A cheaper approach is to reform labour-hungry bits of the economy—for example, by making it easier for small businesses to get licences, or construction companies to get approval for projects, or shops to stay open in the evening.