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Europe’s Youth Unemployment Isn’t as Dire as Typically Claimed

Europe's Youth Unemployment Isn't as Dire as Typically Claimed

(Bloomberg) --

Sky-high youth unemployment in nations such as Italy, Spain and Greece has been cited by populists as evidence that established parties are failing younger generations. A closer look at the data suggests the situation isn’t quite as horrific as typically claimed.

Eurostat, the European Union’s statistics office, says figures for the 15-24 age group are frequently misunderstood. A 25% youth unemployment rate doesn’t mean one in four are out of work.

The reason is that youth unemployment is calculated as the number of young people looking for work divided by the total number of that demographic in the labor force. Yet the latter group excludes those who are unavailable to work because they are studying full time.

Europe’s Youth Unemployment Isn’t as Dire as Typically Claimed

Eurostat points to another measure known as the youth unemployment ratio. It also counts the number of young people looking for work, even if they are students at the same time, but divides it by the total number of 15-24 year olds. By definition, that rate is lower -- and can be dramatically so.

In Spain, often cited as an example of acute youth unemployment since the global financial crisis, the jobless rate among 15-24 year olds was 34.3% in 2018, while the ratio was 11.3%. Greece -- arguably the worst-affected nation -- had a rate of 39.9% but a ratio of 9.3%. Italy’s rate of 32.2% compares with a ratio of 8.4%.

Europe’s Youth Unemployment Isn’t as Dire as Typically Claimed

That’s still a social problem, but it shows youth unemployment is much closer to national jobless rates across the entire workforce. While Eurostat acknowledges that young people were “severely hit” by the global financial crisis starting in 2008, the unemployment ratio for the EU has since fallen to a record low of 6.3%.

Aline Schuiling, a senior economist at ABN Amro Group NV, calls the youth unemployment rate “a big exaggeration.” One positive effect of the financial crisis was to encourage young people with little prospect of employment to stay in education for longer, she added.

“Just after the crisis it looked very problematic, but now their chances in the labor market have increased,” Schuiling said. “Employability increases the higher your education.”

To contact the reporter on this story: Kristie Pladson in Frankfurt at kpladson@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Iain Rogers

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