Youth Unemployment: crisis and educational transformation

Tuesday, 23 February 2010

The job market is too competitive

Even for well-educated young professionals finding a job in the current economic situation means "fighting" each other.

For those younger than 25, worrisome levels of unemployment become a reality. For example, in December 2009, 44.5% of the young Spanish were unemployed, 32.9% in Slovakia, 29.1% in Hungary and 26.2% in Italy (see Eurostat report for the other EU countries). These alarming results are further confirmed by the indicators of some job sites and recruitment agencies such as the 20:1 sent applications to published job offers ratio.

The graduate influx

An analysis of the number of graduates before the economic meltdown helps understand the trend in the qualified job market. Undoubtedly, the recent financial crisis affected most industries. However, other factors intensify competition such as the increasing number of people who successfully complete their university studies. This significant increase in the number of new graduates was registered in 2007, a good year for many businesses in the Czech Republic, Germany, Poland, Portugal, Romania, Slovakia, Switzerland and the United Kingdom. The United States also experienced a growth of young graduates for the 2000-2007 period. As a result, the market competition caused by the crisis is supplemented by the increasing number of graduates.

Why so many graduates?

The responsibility for flooding the job market lies in the transofrmation of the educational system. The last decade has seen a drastic increase in the number of private universities and schools. Education increasingly becomes a business. Private schools around the world offer attractive dual programmes (i.e. MBA + Certificate in Finance) from numerous institutions or apply lax admission criteria for top degrees such as MBA. As a result, the economy is flooded with a myriad of young professionals that compete for a limited number of positions.

Making space for the youth

To get back to the 2007 levels of employment will require more time than analysts expected. Healing the weakened economy will necessitate a substantial financial support from local governments. Immediate actions are necesary to create new job positions. Stimulating the private sector as a whole and the SMEs in particular should be the priority for authorities in each country. Some such as the United States and the UK already give signals of recovery but it may be  the youth unemployment situation will get worse before it becomes better.