Labour market situation of young people in Central and Eastern Europe

1
Labour market situation of young people in
Central and Eastern Europe

• Sandrine Cazes
• ILO-SRO, Budapest

2
Outline of the presentation

• Overview of labour Market trends in Central and
  Eastern Europe over the 1990s
• Young people in the labour market gt which LM
  outcomes?

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Labour market trends in CEE over the 1990s

• Decline in employment
• Shrinking labour force participation rates
• Persistent high unemployment despite economic
  growth, employment did dot recover

4
Labour market trends in CEE over the 1990

• Growth of informal sector
• Insecurity of employment and income has sharply
  increased in the transition period.

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Labour market trends in CEE over the 1990

• Characteristics of unemployment
• High long-term unemployment
• Large regional disparities in unemployment
• Most hard hit groups youth, low-skilled, people
  with disabilities, certain ethnic minorities

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Labour market trends for youth

• Falling labour market participation
• Decline in labour force participation rates of
  young people deeper than for any other age group
  of the population.
• Reasons increased participation in education and
  higher discouragement of young workers

7
Youth unemployment

• What is the size of problem?
• Different indicators can be used to measure youth
  unemployment, each representing different aspect
  of the problem (see Table)

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Youth unemployment
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Youth unemployment

• High unemployment
• Important disparities in youth u rates within the
  region
• - 10 in Hungary 40 in Poland and Slovakia
• Youth u rates high relative to adult rates
• 2.5 times higher
• Most vulnerable young women with small children,
  unskilled youth and socially disadvantaged youth
  (Roma)

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Labour market trends for youth

• High incidence of flexible forms of employment
• Part-time employment
• Time-limited labour contracts
• Non-labour contracts
• Self-employment
• Multiple job holding
• Informal employment

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Labour market trends for youth

• High labour turnover and short job tenures
  characteristic for young workers
• - 2 years on average for a sample of 8 CEE
  transition countries compared with 8.5 years for
  the whole working population
• Duration of unemployment tends to be shorter

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Trends in education of youth

• Education levels of young age groups are
  increasing
• Shift from secondary vocational education to
  general education
• More young people in universities, shift away
  from technical disciplines to economics, business
  management, social studies, etc.
• Too narrow specializations have been overcome but
  faced with the creation of new skill mismatches
• In some transition countries large dropouts
  threat for the future

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Unemployment its effect on youth

• Risk of poverty (income)
• Alteration/loss of Human Capital (LTU)
• Delay to entry into labour market
• Risk of migration (brain drain)
• Informalization
• Human trafficking,
• Increases of risky behaviour

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Conclusions

• Young people on average more educated, more
  flexible and mobile, able to learn new skills and
  adapt to new conditions of work, lower paid
  (therefore cheaper), for employers worth the
  longer-term investment in their training.
• All this increases their employment chances in
  the longer run.

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Conclusions

• However, young people are less experienced at
  work and therefore less productive, often with
  non-matching skills for the vacant job and then
  more costly in terms of training needs, less
  reliable, often changing job, with family
  responsibilities lowering their flexibility, time
  at work and sometimes productivity.
• All this decreases their employment chances in
  the short- to medium run.

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Conclusions

• Many of the latter real or presumed disadvantages
  can and need to be addressed by appropriate
  education, labour market, social and family
  policies.

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Determinants of outcomes-some tracks

• General LM conditions
• Aggregate demand
• Skill mismatch
• Role of Labour market institutions regulations

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Determinants (cont.)

• More specific to young people
• Demographics (youth cohort)
• Education
• Wages / Labour Cost
• Reluctance to hire first job seekers
• Barriers to access self-employment
• Role of Labour market regulation

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Youth unemployment