Youth jobless rate scandal risks a lost generation

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

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

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.

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