Youth unemployment in Western Europe and the Anglosphere appears to be becoming chronic. A bit like that summer cold that just won’t go away, yet it is not a global phenomenon. Some of the causes must be assessed. They are complex and there are no easy solutions, especially in industrial democracies where radical political solutions are electorally difficult to achieve.
A good place to start is a demographic perspective. The western industrial democracies are ageing, the famous ‘baby boomers’ of whom we hear so much, are now all at retirement age, while the dynamic global economies of the Pacific Rim, with the obvious exception of Japan, are young countries. With economic growth even in a bad year at 4 to 5%, unemployment is less of a problem. Great Britain at the beginning of the industrial revolution had a remarkably young population with 75% under 25 years old. The natural assumption would be that this is good for young people, baby boomers retire. But do they? Micro statistics are more difficult to come by in Europe but are readily available in the USA. The economies of Europe and the Anglosphere are not as diverse as they once were and it is reasonably safe to assume a trend in the USA will manifest itself in Europe at some stage, albeit in a mutated form.
Statistics are beginning to tell us that baby boomers are not necessarily retiring. They are staying in the workplace. But why?
The reasons will come as no surprise to anyone with an understanding of human nature. Fit healthy 65-year-olds do not all want to retire, why would they? They still have plenty to offer an employer; experience, reliability and social skills. Attributes youngsters rarely possess. They are likely to work for less, have no mortgage, no children and probably a modest lifestyle. Would it surprise you to know that jobs for the over 55s surged in October while they fell for the under 40s? The numbers coming out of the United States are demonstrating this is a growing phenomenon with some workers continuing well into their 70s.
A surprise to many retirees is just how much money you need to retire. Most workers undershoot their pension target. Saving in a modern society is enormously difficult, rents are high, a property is expensive and children are an expense for the middle classes who actually care about their education. Tax and inflation take their toll. Public sector workers are significantly more shielded from retirement poverty with the taxpayer, subsidised, inflation-proofed annuities. For the last 7 years, central banks in an unholy alliance with politicians and Wall St, have suppressed interest rates making late life saving and capital accumulation impossible. For many therefore staying in the workforce is mandatory.
This leaves the young man or woman without specific skills in a very difficult position. Even a college degree is no guarantee of employment. Think about it, the driving force of any economy is small and medium size businesses, something politicians really don’t understand (having never actually been part of the economy themselves). Imagine you have a small company, never mind what it does, a youngster applies to join you, he has a degree in politics on Keynesian economics; what earthly use is he to you if you don’t have a training facility? They must, and do, go to the Fortune 500 or Footsie companies for a career structure. But as any mum and dad know they are pitifully few and the competition is awesome. It is not just about the degree or any diploma in fact; social skills are seriously weak in some school leavers. Any line manager in the UK will know within seconds if they are dealing with ex-public schoolboys and girls. They will be right 9 times out of 10. These social skills will come with sporting prowess, debating skills and a raft of extracurricular experience and achievement.
The government has consistently manipulated the school leaving age since the war to mask employment failure. The apprenticeship system died out in the 1960s in Great Britain, dealt a double death blow by advancing technology and trade union insistence on the parity of wages with unskilled labour. Why spend 5 years doing an apprenticeship when you can earn more sweeping the shop floor?
All this is made more difficult by a state education system, which has no interest in producing young people fit for the workplace. Arithmetical and writing skills are often dire even in university graduates, save from the top universities and knowledge of history is toe-curlingly non-existent.
Then there is a welfare system, a source of constant amazement to visitors from the Pacific Rim. The western democracies actually pay perfectly fit and healthy young people not to work. This anomaly manifests itself in 25% youth unemployment in parts of both Europe and America when immigrants can step off a bus and pick up a job immediately. Once in work, in employment of any kind, training, promotion and advancement are up to the individual. In the USA, there is a statistical formula called the Beveridge Graph (nothing to do with the 1943 UK Beveridge report), which demonstrates beyond doubt the recruitment problem is skill shortages, as most of us already suspected. The labour market is quite tight and profit margins are narrow.
There is no simple template that can be placed on the problem, one that has been allowed to fester for too long, but two things must be put on the front burner. Our children must be prepared at school for the workplace; this either in academics, where numbers should be few, or in work and life skills, desperately needed by employers. This might mean bringing in guest lecturers from outside the teaching profession who sadly do not seem to possess these skills.
Moreover, last but not least, schools and parents must inculcate a work ethic that is badly missing in a too high percentage of school leavers. This was automatic in the religious schools of yesteryear, Methodist, Presbyterian even Anglican, where children were sent into the world realising their future was in their own hands and no one else’s.