Lower wages call to tackle youth 'jobs scandal'

Rising youth unemployment is the "scandal of our times" and should be tackled by removing the minimum wage, introducing more training programs and maintaining an onshore manufacturing workforce, the global head of hiring firm Adecco says.

Rising youth unemployment is the "scandal of our times" and should be tackled by removing the minimum wage, introducing more training programs and maintaining an onshore manufacturing workforce, the global head of hiring firm Adecco says.

With youth unemployment in Europe and Australia at twice the overall jobless rate, and above 50 per cent in Greece and Spain, Adecco chief executive Patrick De Maeseneire said countries had to rethink how they constructed their economies or "lose a generation for whom we are not creating a future".

"What can we do to create an economy where there is a future for everybody?" Mr De Maeseneire, who heads one of the world's biggest recruitment firms, said during a visit to Australia.

"We have to dare to get away from minimum wages ... and from the yearly increases because of inflation. We have to build a competitive workforce at the lower level just to get them started. A couple of years later they will be above that minimum, but let them start and build up their experience."

But Australian Workers Union national vice-president Stephen Bali said lower wages were not a solution given the high cost of living.

Instead, he called for more permanent jobs and a move away from casual work, as well as affordable training for younger employees and apprenticeships.

"You don't need cheap wages. Even if you halve the wages in Australia, would it save one job? No. The cost of living in Australia is a lot different to other countries," he said. Even the cost of taking a Certificate IV course at TAFE had soared.

Mr De Maeseneire's comments came after Ford said it was ending its local manufacturing operations in 2016 as the cost of producing cars in Australia had become uncompetitive. About 1200 jobs were expected to be lost, with positions in related industries also affected.

Mr De Maeseneire said a Danish study of youths between 1995 and 2010 found those who were unemployed at a younger age were less likely to be employed when they were older, or earning much less than those who initially had a job.

In Australia, the unemployment rate for teenagers between 15 and 19 was at 15.8 per cent in April. It was 11.7 per cent for those aged between 15 and 24. The overall jobless rate in April was 5.5 per cent.

In Europe, the jobless for those under 25 was 23.5 per cent in March. It passed 59 per cent in Greece and 55 per cent in Spain.

The high rate has set off alarm bells and is set to top the agenda of European Union leaders when they meet in late June.

German Finance Minister Wolfgang Schaeuble said the youth jobless rate was a "catastrophe", and Italy's Labour Minister Enrico Giovannini said it was "not acceptable" the best-educated generation was being placed "on hold".

Mr De Maeseneire said he supported permanent positions rather than temporary ones but warned that Europe showed higher minimum wages and inflexible employment practices meant "nobody hires anybody any more. If you lower that barrier, companies will say, what's the risk [in hiring these youths]."

In Europe, fiscal austerity as well as inflexible labour market policies have been blamed for the so-called "lost generation" of unemployed young people.

Mr De Maeseneire said countries such as Australia also needed to maintain industrial and manufacturing jobs to keep unskilled youth involved in the economy.

"You cannot have a service economy without an underlying industrial economy," he said. "You dig that stuff out of the ground, ship it in big tankers and have it transformed in China into final products - or you could do that yourself and create a lot of added value for the country."

He cited Spain, where a 17 per cent difference in salaries enticed Ford to move out of Genk, Belgium, to Valencia, and said the global financial crisis had given nations the opportunity to transform their economies.

"This is not a plea for low salaries; it is about investing in productivity, in differentiation and innovation," he said. Australia's manufacturing wages were still within a competitive range, unlike Europe's, and should be kept at that level for several years.

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