Promoting Youth Employment:
Policy Lessons from a Trade Union Perspective

A TUAC Discussion Paper Submitted to the
OECD/UK Ministerial Conference
On Youth Employment

London 8 - 9 February 2000


Executive Summary

1. Persistent unemployment in many OECD countries and growing insecurity across most of the OECD remain social time bombs. But the persistence of youth unemployment is particularly grave. It represents a waste of the most precious resource - the ingenuity and dynamism of young people and is a direct threat to social cohesion. 

2. The decline of youth unemployment in some countries is welcome. However, levels of youth unemployment remain far too high. 

3. The fight against youth unemployment is therefore a challenge confronting both governments and the social partners. Workable responses to this challenge mean that policy initiatives have to move beyond the simplistic ideas of the past based on reducing relative youth wages, cuts in benefits and coercive measures to force young people into jobs. Any short-term gains from following this path would only risk long-term problems. The solution lies in a concerted approach between governments, trade unions and employers. Each have different roles and responsibilities, but new approaches are needed for new times founded upon a comprehensive strategy of demand and supply side measures, including:-

- The implementation by OECD authorities of co-ordinated strategies to support balanced demand, global growth and job creation. Youth unemployment is directly related to economic growth;

- “Joined up” action by both Education and Labour Ministers so as to integrate policies around lifelong learning and active labour market policies; 

- A combination of increased family support and early intervention in measures such as targeted job creation, employment subsidies, job search assistance, individual counselling, with enhanced pathways between education facilities and the world of work;

- The active involvement of participants themselves, trade unions, business, local authorities, public employment services, and community groups in the design, implementation and monitoring of such programmes.

 Unemployment: A Global Challenge

4. More than 33 million people remain unemployed across the OECD with many more underemployed. The economic recovery remains fragile. 

5. OECD countries bear a particular responsibility in developing an effective policy response to restore world-wide demand led growth and job creation and to lift the spectre of crisis, especially for developing countries. Macroeconomic measures aimed at expansion must be underpinned by a new global financial architecture, and accompanied by increased financial support for social safety nets in those countries in the front line of the crisis, with debt relief and write-offs for the poorest developing countries.

TUAC welcomes the OECD-UK Conference on Youth Employment

6. TUAC welcomes the decision made by the OECD and the UK Department of Education and Employment to organise a focused policy discussion among Ministers on issues related to the transition from full-time education to the labour market and on policies aimed to promote youth employment. The current climate requires the broad and clear thinking that such a conference can bring to address the problems faced by young people when entering volatile and insecure labour market. The contributions made by academics, labour, business representatives and policy makers to the 1999 OECD-United States Washington Conference on youth employment provide a good starting point to develop the required responses in the fields of economic and employment policy, labour market, education and training.

7. The youth unemployment challenge facing us today is a daunting one. Estimates suggest that at current more than 10 million young people are unemployed across the OECD. The economic, social and psychological consequences of that are potentially devastating. The effects go beyond lost output to include unmeasurable ones such as that posed by social exclusion and the marginalisation of large numbers of young people from society itself. Poverty and unemployment feed off each other and combined lead to a potential time bomb. In such circumstances, democracy itself and the political process that many take for granted could also become casualties. Extremist parties and groups are ever willing to offer an alternative, however abhorrent, to societies, which have rejected young people. 

The Need for a Comprehensive and Integrated Approach

8. The Conference provides an opportunity to learn the lessons of the past two decades of what does and does not work in dealing with youth unemployment. A TUAC statement to the 1977 OECD youth unemployment conference stated: “it is important to recognise that all these problems can only be tackled in the context of an overall employment strategy”, based on “a more comprehensive and integrated approach”. The necessity of such an approach was underlined by warnings of the statement against efforts “to isolate youth unemployment as if it were independent of the overall employment position”. To implement isolated measures “would not only reinforce the impression that (young people) represent a marginal group, but also run an unacceptable risk of merely switching unemployment between groups.”

9. One key lesson is that many policy makers were misguided by implementing restrictive monetary policies along side coercive supply side labour market policies as a panacea for unemployment in general and youth unemployment in particular. Experience has shown that a sustained high level of economic activity is a precondition to increase the demand for labour and thereby lead to durable reductions in youth unemployment. Such an environment would also help to create sufficient numbers of quality jobs needed to sustain developed economies, while helping emerging and transition economies to develop in a balanced way. 

10. Cutting youth wages provides no solution. Minimum wages and youth entry wage levels have fallen both relatively and absolutely across the majority of OECD countries over the last two decades. Despite this, the gains in terms of increased youth employment have not matched the expected outcomes. Trade unions have made tough choices here both in terms of negotiated or legally determined minima and in the negotiation of training wages. As such, existing pay systems in general now take sufficiently into account productivity differentials between both young and older workers, either due to a seniority system or due to skill related wages and pay. Policy makers need therefore to revise their policies in light of experience and where necessary take countervailing action. Young people don’t want any job however bad they want a decent job with prospects of advancement as the ILO has said “Decent Work”. 

11. Deregulated labour markets have a cost. This can be seen in terms of increasing insecurity and inequality at the work place. In turn such policies have undermined social cohesion and further undermined the ability of companies and countries to innovate and to develop competitive advantages based upon human capital investment. Future competitive advantage will lie with those countries that have strong social cohesion built on education and training, health care and a sound industrial relations system. Within this, the most successful countries will be those that are able to balance and rebalance the market pressures of flexibility and dynamism with the social pressures for security and dignity. 

Integrating Different Government Agencies To Develop And Deliver Youth Employment Programmes

13. In many OECD countries there is excessive segregation between the bodies responsible for designing and delivering programmes. Experience shows that programmes work best when the bodies charged with their delivery co-ordinate their activities. Moreover, such co-ordination should go beyond traditional thinking to incorporate agencies, for example, dealing with family support measures and education. This would require new thinking and co-operation between Labour, Education and Social Ministers so as to integrate family support measures, policies around lifelong learning and active labour market policies to include:- 

- Targeted employment measures. These are meaningful instruments to tackle youth unemployment, and particularly important for those young workers who are in danger of becoming permanently detached from the labour market. A fruitful avenue for this may lie in expanding the social economy. Measures to fulfil unmet social and environmental needs could be an important source of employment for the young. The 1999 European Union Employment Guidelines in this area would be a useful model for others to follow. Several national programmes have already been put in place: the UK’s New Deal, the creation of “emplois-jeunes” in France, and the German project to reduce youth unemployment. Such measures could also include employment subsidies to help reintegrate young unemployed workers into the labour market and to give them a foot hold onto the world of work more generally;

- Experience shows that job search assistance, job clubs and individual counselling play an important role in helping the young unemployed to find work. Such assistance though should be on a voluntary basis, and reach out to the young unemployed, rather than be of a coercive nature; 

- Whatever the mix of policies adopted at the national or local level it is important that they gather widespread support. This would require requiring the active involvement of the young unemployed themselves, trade unions, business, local authorities, public employment services, and community groups in the design, implementation and monitoring of such programmes.

13.  Irrespective of whether education and training are integrated into a wider policy framework, they represent essential preconditions to enable young people to enter the labour market. But they must go beyond the development of skills and the ability to adapt to changing demands of employers. Education and training must also contribute to the personal development and the appropriate integration of young people into society. Moreover, they must enable young people to develop a lasting capacity for the renewal of vocational skills and to keep pace both with a changing knowledge base and technological change. As such, specific education measures are necessary to assist in improving employment opportunities:- 

- Inequalities in education, which often start at pre-school level and continue throughout all levels of education, must be eliminated. Equal access to education must be ensured for all;

- Young people from disadvantaged families must be ensured to reach the required levels of education and training to get access to employment;

- The number of young people leaving the school early without basic literacy and numerically skills necessary must be reduced, the quality of both school and education systems must be improved.

14. Vocational training has a central role in promoting youth employment and to ease the transition from school to work. Indeed, the evidence suggests that highly developed vocational training systems contribute to higher youth employment  . Across the OECD a plurality of systems exist to deliver vocational training. When measured against each other most findings indicate that those countries with well-developed two tier vocational training systems, linking both school and shop floor training have performed better than other countries. Similar findings apply also to gender differences of unemployed young people; where functioning vocational training systems are put in place the gap between young unemployed women and men is more narrow. While it would be unrealistic to expect all countries to adopt a single system, best practice should nevertheless be taken and adopted to national circumstances. This could include, for example, the development of quality work experience for the schooling system.

 Investing in Human Capital and Modernising Work Organisation - Contributions of Business and Employers

15. When the hype over the “new economy” and the “dot.com phenomenon” has calmed it will become clear that in a knowledge-based economy competitiveness will be increasingly determined by the extent to which governments and business invest in skills development. Too many view expenditure in this area as a cost and not as an investment. On the one hand while many governments are looking toward the market to take over their traditional role, market participants are withdrawing from their responsibilities. Trade unions are playing a leading role in this area through the negotiation of innovative collective agreements that prioritise work place education and training. However, trade unions cannot alone deliver the necessary skills revolution required to make the transition to a truly knowledge-based economy. That will require a partnership approach where all actors work together. TUAC would challenge governments and business to deliver on their social responsibilities in this area. 

16. TUAC would repeat that challenge over the need to adapt and modernise the organisation of workplaces, in accordance with the increasing skill demands of workers, and the requirement of ever shorter product life-cycles. The modernisation of work organisation in close co-operation with workers and their trade union has become a prerequisite to boost productivity and competitiveness. 

Strengthening Equal Opportunities and Social Justice

17. Attempts to reduce youth unemployment must go hand in hand with efforts to reduce the gap in unemployment rates between women and men. The stereotypes of “feminised professions” must be changed to allow far greater integration of young women as well as young men into broader economic sectors. To promote equal employment opportunities and to increase the participation of women in the labour market a re-design of family friendly policy approaches is required.

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