Flexible Employment is Key

GLATTBRUG, SWITZERLAND – Rising youth unemployment, especially in Europe, is making headlines worldwide. Roughly 5.5 million Europeans under the age of 25 are unemployed. More than 7.5 million people aged 15-24 are “NEETs” – not in employment, education, or training. The youth unemployment rate exceeds 25% in 13 European countries, amounting to roughly 30% in Italy, Ireland, Bulgaria, Cyprus, Latvia, Hungary, and Slovakia, and surpassing 55% in Greece and Spain.

Furthermore, more than 30% of jobseekers under 25 have been unemployed for more than 12 months, and their chances of finding employment remain low. Less than one-third of young people who were unemployed in 2010 found a job in 2011, and their chances continue to decline.

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According to a recent report by Eurofound, the economic cost (benefits paid plus tax-revenue lost) of young NEETs exceeds €150 billion ($196 billion) annually – more than 1.2% of the European Union’s total GDP. In some countries – such as Bulgaria, Cyprus, Greece, Hungary, Ireland, Italy, Latvia, and Poland – youth unemployment costs more than 2% of GDP.

If allowed to continue, Europe’s labor-market crisis will inflict lasting damage on an entire generation, with unforeseeable medium- and long-term effects on employment, productivity, and social cohesion. Reversing this trend will require concrete proposals and decisive action. Countries must pursue solutions that help companies to create jobs by becoming more flexible, thus increasing their competitiveness.

The European Commission has placed youth unemployment high on its agenda. Indeed, last month, European Commissioner László Andor announced the adoption of the “Youth Employment Package,” a set of proposals designed to help EU member states and relevant stakeholders to tackle youth unemployment and social exclusion.

A key recommendation is the creation of national “youth guarantee schemes,” which would ensure that all citizens under 25 can obtain a job, an apprenticeship, or a traineeship within four months of leaving formal education or becoming jobless. Given the potential of such schemes to narrow the gap between education and work, and to improve young people’s employability, member states should pursue this recommendation earnestly, by implementing measures aimed at enabling labor integration and forging partnerships with stakeholders.

Private employment agencies are already helping to develop comprehensive solutions, connecting industry and business with governing bodies and institutions at all levels – including the EU, the OECD, the G-20, and the International Labor Organization – through national and regional mechanisms and even global platforms like the World Economic Forum. Given that putting people to work forms the bedrock of their business model, such agencies are ideally suited to provide this link. They know that employment opportunities constitute a basic human right, and that work is a source of dignity, giving individuals a sense of purpose and strengthening communities.

Moreover, in balancing companies’ needs with workers’ skills, private employment agencies gain a comprehensive understanding of the labor market. They help workers and companies alike to tackle labor-market challenges, while meeting demand for flexibility (an important potential catalyst for both companies and workers) – that is, if certain structural and regulatory requirements are implemented.

Although regulation poses significant challenges for the staffing industry, among others, properly regulated labor markets are crucial to ensuring that workers are protected and companies remain competitive. Fallout from austerity policies has often hindered needed labor-market reforms, a trend that must be reversed.

The private employment industry has pledged to help 75 million young people to enter the labor market. But, this promise can be fulfilled only if multinational companies support the effort, empowering staffing agencies to deliver quality employment. Companies worldwide – whether in countries experiencing jobless or job-poor economic recovery, or in thriving countries where the mismatch between available positions and workers’ skills worsens daily – must recognize that creating additional flexible jobs will advance their business and boost their competitiveness.

Employment – particularly among young people – must top the global economic agenda. With the right tools and support, private employment agencies can help to arrest the downward spiral of youth unemployment. But they cannot do it alone. It is time for all stakeholders to devise and implement measures that give young people the opportunity to make a better life through better work.