Youth jobless rate scandal risks a lost generation
With youth unemployment in Europe and Australia twice the overall jobless rate, and at more than 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?" he asked.
"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."
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 less casual work, 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," Mr Bali said, adding that even the cost of taking a Certificate IV course at TAFE had soared.
Mr De Maeseneire's comments, made on a visit here, came weeks after Ford Australia said it would cease manufacturing in 2016, with the loss of about 1200 direct jobs.
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 first had a job, Mr De Maeseneire said.
In April, the unemployment rate for Australian teenagers between 15 and 19 was 15.8 per cent, and 11.7 per cent for those aged 15 to 24. The overall jobless rate that month was 5.5 per cent.
In March, the European jobless rate for under-25s was 23.5 per cent. In Greece it was more than 59 per cent and in Spain more than 55 per cent.
The high youth unemployment rate has set off alarm bells in Europe, as the eurozone endured its longest recession since the economic region was established in 1999.
The issue is expected to top the agenda of European Union leaders when they meet later this month.
German Finance Minister Wolfgang Schaeuble said the youth jobless rate was a "catastrophe", while Italy's Labour Minister Enrico Giovannini said it was "not acceptable" that their best-educated generation was being placed "on hold".
Mr De Maeseneire said he supported permanent positions rather than temporary ones but he warned that Europe demonstrated that 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]," he added.
In Europe, fiscal austerity and inflexible labour market policies have been blamed for the so-called "lost generation" of unemployed young people.
He said countries such as Australia also needed to maintain industrial and manufacturing jobs in the country 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 [resources] 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 said of a bigger domestic manufacturing base.
He used the example of Spain, where a 17 per cent difference in salaries had enticed Ford to move from Belgium to Spain and said the global financial crisis had given countries an opportunity to transform their economies and learn from the lessons in Europe.
"This is not a plea for low salaries. It is about investing in productivity, in differentiation and innovation," Mr De Maeseneire said, saying Australia's manufacturing wages were still within a competitive range, unlike Europe's, and should be kept at that level for several years.
Frequently Asked Questions about this Article…
The article describes rising youth unemployment as a major social and economic concern. It notes European and Australian youth jobless rates are roughly twice the overall rate, with under-25 unemployment in Europe at about 23.5% in March and rates topping 59% in Greece and 55% in Spain. In Australia the article cites April figures of 15.8% for 15–19 year‑olds and 11.7% for 15–24 year‑olds, versus an overall unemployment rate of 5.5%.
According to Adecco chief Patrick De Maeseneire quoted in the article, solutions include rethinking minimum wage rules (he suggested reducing barriers at the entry level and pausing automatic inflation‑linked increases), expanding training programs, and maintaining onshore manufacturing jobs to create entry‑level opportunities and build a competitive workforce.
The article reports that Australian Workers' Union national vice‑president Stephen Bali rejects lower wages as a solution, citing Australia's high cost of living. He instead calls for more permanent jobs, fewer casual roles, affordable training for young employees, and stronger apprenticeship pathways.
The article quotes Adecco's chief arguing that a service economy needs an underlying industrial base. Keeping manufacturing and industrial jobs onshore gives unskilled young people opportunities to enter the labour market, gain experience and add value domestically rather than exporting raw resources to be finished abroad.
Yes. The article cites a Danish study of youths from 1995–2010 showing those unemployed at a younger age were less likely to be employed later or earned substantially less than peers who held a first job early on, suggesting early unemployment can have lasting negative effects.
The article notes Mr De Maeseneire's comments came weeks after Ford Australia announced it would cease local manufacturing in 2016, with about 1,200 direct job losses. That example is used to underline how shrinking domestic manufacturing can remove entry‑level jobs and worsen prospects for young workers.
The article points to fiscal austerity and inflexible labour market policies in parts of Europe as contributors to very high youth unemployment and the notion of a 'lost generation'. European leaders and ministers described the youth jobless crisis as a catastrophe and said it was a top agenda item for policy discussion.
The article suggests investors may want to monitor trends in youth unemployment rates, changes to minimum wage and labour‑market flexibility policies, announcements affecting domestic manufacturing (such as plant closures), and government moves on training and apprenticeships — all of which can influence long‑term workforce participation and economic productivity.
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