[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 5.9.2007

SEC(2007) 1093

COMMISSION STAFF WORKING DOCUMENT on youth employment in the EU accompanying document to the

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Promoting young people's full participation in education, employment and society {COM(2007) 498 final}{SEC(2007) 1084}

TABLE OF CONTENTS

Introduction 3

1. EU policy context 3

2. The employment situation of young people in the EU 6

2.1. Main indicators of youth employment 6

2.2. Some explanations for youth employment problems 13

2.2.1. Educational attainment of many young people is too low 14

2.2.2. Weak socioeconomic background impacts negatively 14

2.2.3. Gender inequalities prevent young women in particular from unleashing their full potential 15

2.2.4. Disabled youth do not have real opportunities 16

2.2.5. Labour market conditions unfavourable for new entrants 16

3. Member States policy approaches to improve youth employment 18

3.1. 2005 - A new impetus for youth in Member States’ National Reform Programmes 18

3.1.1. Attract and retain more people in employment, increase labour supply and modernise social protection systems 18

3.1.2. Improve adaptability of workers and enterprises 19

3.1.3. Increase investment in human capital through better education and skills 20

3.2. 2006 - Focus on Member States commitments to provide a "new start" to young unemployed 20

3.3. 2007 - Recommendations to strengthen policy coordination 22

4. Bringing forward the fight against youth employment problems 23

4.1. Focus on flexicurity in the next Lisbon cycle 23

4.2. Strengthen governance aspects of youth employment 24

4.3. Use the potential of the European Social Fund to improve youth employment 25

4.4. Improve the knowledge-basis for policy decisions 26

5. Country fiches on the youth employment situation in the EU 26

6. Labour market indicators for youth in the EU-27 55

Annex 92

INTRODUCTION

Youth employment is an issue high on the agenda in all Member States. Policy makers in employment and related policy areas such as education and social inclusion are concerned by problems such as high youth unemployment and unfavourable labour market conditions for young people. Problems are quite similar in many Member States; however there are also large differences among individual countries' situations. Yet there is relatively little analysis available as regards youth employment in an EU perspective. Most studies available take a country-specific approach or focus on other groupings of countries than the EU-27 Member States.[1]

To support policy-makers and stakeholders' efforts to review and improve the situation of young employment in their respective environment in a European perspective, the present working paper elaborated by the European Commission's Directorate-General for Employment, Social Affairs and Equal Opportunities provides an overview on:

- the EU policy context relevant for youth employment issues (chapter 1);

- the employment situation of young people aged 15-24 years old and of young adults up to 29 years old, both in a comparative European perspective and regarding the situation in all 27 Member States (chapters 2 and 5, supported by the indicators provided in chapter 6);

- Member States' policy responses to youth employment problems in the framework of the revised Lisbon agenda for growth and jobs (chapters 3 and 4 plus the Annex).

- The analysis is far from being exhaustive; instead it focuses on recent developments which in the view of the Commission merit special attention. The compendium of indicators relevant for youth employment (chapter 6) can also serve as a reference tool for policy-makers and stakeholders to deepen further the analysis of their own country.

EU POLICY CONTEXT

YOUTH EMPLOYMENT HAS BEEN AN IMPORTANT POLICY ISSUE FOR THE EU AND INDIVIDUAL MEMBER STATES, WITH THE MAIN POLICY FOCUS ON COMBATING HIGH YOUTH UNEMPLOYMENT. WHILE THERE IS BROAD RECOGNITION OF THE VITAL ROLE THE YOUNG GENERATION HAS TO PLAY IN CONTRIBUTING TO SUSTAINABLE DEVELOPMENT IN EUROPE, A CONSIDERABLE PROPORTION OF YOUNG PEOPLE CONTINUE TO BE EXCLUDED FROM EMPLOYMENT, WHICH IS A HUGE WASTE OF POTENTIAL IN ITSELF AND A RISK FOR SOCIAL COHESION. Youth unemployment is stagnating at high levels well above overall unemployment in most Member States, and no real breakthrough in reducing high youth unemployment has been achieved. Even in the current upward economic cycle, young people tend to profit less from employment growth.

The three overarching objectives of the European Employment Strategy, namely full employment, improving quality and productivity at work and strengthening social and territorial cohesion, provide the overall framework for employment policies of the EU and Member States. All three objectives have particular relevance for fostering the labour market integration of young people. The refocusing of the Lisbon strategy in 2005 on growth and employment has strengthened the leading role of the European Employment Strategy in the implementation of the employment objectives of the Lisbon strategy.

The employment guidelines 2005-2008 , as part of the Jobs and Growth package, include a number of policy orientations relevant for youth employment [2]: Particular attention should be paid to the promotion of young people's access to employment within the new intergenerational approach. More efforts should be undertaken to build employment pathways for young people and to reduce youth unemployment. More and better investments in human capital are identified as key to improving young people's opportunities. Considerable attention should be paid to ensuring inclusive labour markets by promoting employment access for disadvantaged people and combating discrimination. This is especially relevant given the fact that disadvantaged youth are particularly exposed to the risks of labour market and social exclusion, and that a growing proportion of unemployed youth are migrants/migrants' descendants or belong to ethnic minorities.

The guidelines also include the targets and benchmarks set in the European Employment Strategy since 2003 for the reduction of early school-leaving, the rise in educational attainment levels and the "new start" for unemployed youth[3]. The education benchmarks are also enshrined in the Education and Training 2010 Work Programme which is implemented by Member States and the Commission under the Open Method of Coordination in the field of Education[4].

Member States have adopted at the Spring European Council 2005 the European Pact for Youth with the aim to improve the education, training, mobility, vocational integration and social inclusion of young Europeans, including a better reconciliation of working life and family life. The Council underlined that young people needed to benefit in particular from the policies and measures of the Lisbon Strategy concerning these areas[5]. The Commission has welcomed this initiative and set out how the action lines suggested in the Pact could be implemented in the framework of European policies[6].

Under the revised Lisbon Strategy , Member States present National Reform Programmes (NRP) outlining their main macro- and microeconomic and employment policies. The programmes presented in autumn 2005 and the implementation reports of 2006 provided the opportunity for the Commission to assess whether and how the Council's political commitments have been translated into concrete policy measures at the national level.

In its Annual Progress Report (APR) put forward to the 2006 Spring European Council, the Commission found that overall Member States' responses to the youth employment challenge needed to be more comprehensive and to be expanded further[7]. The Commission proposed to accelerate the offer of a "new start" for young people. The Council confirmed that Member States should reach the agreed target by 2007 and stressed the need to reduce the period to 4 months by 2010. With regard to the Youth Pact, the Council stressed the need to develop more effective cross-sectoral strategies linking education, training, employment, social inclusion and mobility, including developing links to the newly adopted "European Pact for Gender Equality".

Following the update of National Reform Programmes in 2006, the Commission found that progress in the employment situation of young people was still rather limited, despite the general economic upswing and its positive results for employment overall. Member States have agreed with this analysis in the Joint Employment Report 2006/7 [8] .

The Employment Committee (EMCO) has defined youth unemployment as a rising issue in its current work programme and thus contributed to raise the awareness of Member States. In 2005, EMCO produced a contribution on the role of human capital which included a focus on young people[9]. In the review of Member States National Reform Programmes 2006, EMCO found that although youth employment measures were addressed in most programmes, progress remained limited and was concentrated in a few countries[10].

Youth employment issues have also taken a higher profile in the Community Strategic Guidelines for Cohesion for the period 2007-2013 as well as in the new European Social Fund (ESF) regulation. This provides greater opportunities for appropriate EU support of Member States' efforts to boost youth employment.

Moreover, the Community Strategic Guidelines for Cohesion call upon Member States to pay special attention to "implementing the European Youth Pact, by facilitating access to employment for young people, by easing the transition from education to work, including through career guidance, assistance in completing education, access to appropriate training and apprenticeships".

Member States' priorities in using the ESF to support youth in terms of education and employment are set out in the National Strategic Reference Frameworks (NSRF) and the relevant Operational Programmes (OP) . During the negotiations with Member States, the Commission has paid special attention to how the issue of youth unemployment is addressed. The Commission will have a first indication of figures on how much money will be invested in education and training of young people over the next seven years after adoption of all NSRF and OP (probably by the end of 2007).

In addition, a number of EU funds supporting Member States' structural policies, such as the Rural Development Fund, are also relevant for the promotion of young people's employment.

Youth employment issues also play a role in the European policy frameworks for Social Inclusion, Equal Opportunities, Gender Equality and Antidiscrimination insofar as these policies aim at contributing to improving a number of background factors that impact on young people's employment prospects.

The employment situation of young people in the EU [11]

Main indicators of youth employment

The description of the main trends in youth employment in the EU mostly focuses on the age group of 15 to 24 years old which is usually taken to define youth. However, since the transition from education to employment is increasingly taking place at a later stage due to higher participation in tertiary education, this analysis also includes the employment dynamics of young people between the age of 25 and 29. Unemployment of young people is most commonly expressed in terms of the unemployment rate , which is calculated as a percentage of the youth labour force. The size of the youth labour force negatively correlates to the share of young people being in education, training or inactive for a variety of reasons and thus varies from country to country. This may lead to distortions in the comparison between countries. Similar unemployment rates can mask large differences in the proportion of the overall youth population affected by youth unemployment[12], which is measured by the youth unemployment ratio . An additional potential distorting factor is the way part-time students and apprentices are counted, whether as part of the work force or as 'in education'. In order to present a realistic picture of the youth employment situation, the ILO recommends taking into account youth unemployment in relation to the work force, population and overall/adult unemployment rates[13].

The data presented in the present paper are Labour Force Survey (LFS) spring data (i.e. second quarter of the year). These data may differ from other published data sets, in particular LFS annual, adjusted or harmonized series[14].

Employment rates

While the overall employment policy aims to increase labour supply, and thus employment rates, pursuing this objective with respect to young people is more nuanced matter because encouraging them to stay longer in education today will produce better quality labour supply tomorrow. The EU-27 youth employment rate stands on average at around 36 % over the last years (2006: 35.9%), but it varies enormously between Member States, ranging from around or less than 25% (Bulgaria, Greece, Lithuania, Luxembourg, Hungary, Poland, Romania) to over 60% in The Netherlands and Denmark. The level of the employment rate has to been seen in the context of prolonged education periods of young people. In many countries school is now obligatory until the age of 18, making most of teenage population in effect economically inactive although some 17 and 18 year olds, including those in full time education, are in employment or unemployed. In countries with very low employment rates, it therefore has to be seen to what extent this is due to education or unemployment. Education and employment certainly do not exclude each other after school. In some countries, for instance those with apprenticeship systems and those with a tradition to combine university studies with (part-time) employment, they account for relatively high employment rates, whereas in other countries the study-work-combination is less frequent[15].

There is a significant gender gap in youth employment in the EU, with the employment rate of young women in 2006 being 5.9 percentage points (pp.) lower than that of their male peers. The gap actually exceeds 10 pp. in Estonia, Greece, Spain, Italy and Latvia. The only country with virtually equal employment rates of young men and women is Sweden (2006: men 40.8%, women 40.6%), followed by Finland, Denmark and the UK where the gap is below 2pp. The reasons for gender gaps can be different. The gap indicates that in most Member States young women may face particular difficulties in accessing employment. It has also to be taken into account that low employment rates are in part due to prolonged education, so that the differences may also mirror the gender repartition in education participation. Women today have higher participation rates in the upper levels of education than men. The division of family responsibilities may also be part of the explanation.

While the average EU-27 gender gap in youth employment has not changed greatly since 2000, a number of individual countries have seen considerable changes. Between 2000 and 2006, the gap to the disadvantage of women has increased considerably by 3-6pp. in Italy, Malta and Slovakia, whereas it has decreased by 3-4pp. in Finland, Latvia, Portugal and the UK. In Denmark, the decrease was most pronounced (7.8pp.)

In the age group 25-29, the employment rate has hovered around 72-73% over the years 2000-2005. From 2005 to 2006, it increased pronouncedly by 1.6pp. from 72.7% to 74.3%. Individual Member States range between 65.4% (Italy) and 86.8% (The Netherlands), with 19 countries above the EU-27 average, of which 7 countries have employment rates over 80% (Cyprus, Denmark, Estonia, Ireland, Lithuania, Luxemburg, The Netherlands). In two countries the employment rates are considerably below average (Bulgaria, Italy), and in seven other countries slightly below average (Czech Republic, Germany, Greece, Hungary, Poland, Romania and Slovakia).

Employment gender gap broadens with age

Compared to the age group 15-24, the gender gap to the disadvantage of women broadens considerably for those 25-29. However, the overall trend over the last years was decreasing. On average it currently stands at 12.6pp. (compared to 15.9pp in 2000), but there exist enormous differences between countries. 10 countries are relatively close to the EU average, 9 clearly below and 8 well above. There is no country with a balanced employment situation of men and women. The smallest gap in 2006 was observed in Denmark (5.7pp.). The highest gaps above 20pp. persist in the Czech Republic, Estonia, Hungary, Malta and Slovakia, although these countries – with the exception of Slovakia – have already seen a decrease in the gaps between 2000 and 2006.

An increase or decrease in the gender gap figures does not always coincide with an improvement or worsening of the absolute position of women in the labour market. A number of particular cases can be mentioned. Between 2000 and 2006, in Germany the gender gap in the age group 25-29 strongly decreased by 5pp., not because female participation improved, but due to a decrease in the employment rate of men (-6.7pp.) and a more moderate decrease in the employment rate of women (-1.7pp.). The situation was similar in Romania, with a 4pp. decrease of the gap due to -5.1pp. in the employment rate of men and -1.2pp. in the employment rate of women. In France, the gap decreased by 3.4pp., due to a decrease in the employment rate of men (-2.7pp.) and a slight increase in the employment rate of women (+0.7pp.).

Unemployment rates

Youth unemployment is the most preoccupying symptom of difficulties in young people's transition from education/training to work. In absolute figures, 4.6 million people aged 15-24 years were actively seeking employment in 2006 in the EU, slightly down from about 5 million at the beginning of the decade. Among the 25 to 29 years old around 2.8 million are without a job, down from 3.1 million in 2000. In total, young people aged 15-29 in 2006 represented almost 40% (exactly: 38.5%) of the total unemployed in the EU-27.

The period 2001-2004 was marked by a slight but steady upward trend in the youth unemployment rate from 17.3% in 2001 up to 18.8% in 2004. This contrasts with the development in the unemployment rate of the total working population, which saw a more moderate rise[16]. Since 2005 the upward trend for youth reversed, and youth unemployment is now at 17.5%, back to the level in 2001. While this recent reversal coincides with the positive development of employment overall, it needs to be stressed nevertheless that the benefits young people gain from the economic upswing and from employment creation remain limited and do not go beyond similar cyclic variations in the past. The only silver lining to the unemployment cloud is that young people may tend to have shorter unemployment spells.

Youth unemployment rates in various countries

There are very significant differences in national youth unemployment rates and trends. In 2006, only 5 Member States had rates below 10% (Cyprus, Denmark, Ireland, Lithuania, The Netherlands), 14 had rates of 10-20% and 8 had rates of 20-30%. It is positive to note that in 2006 for the first time over the last ten years there are no more countries with exceedingly high rates of over 30%. Within the overall trend, the comparison of most recent developments (annual changes from 2005 to 2006) gives a diverging picture. In 8 countries youth unemployment rates increased moderately in the order of 0.2 to 2.5pp., while some others saw moderate declines in the order of 2-3pp. (Bulgaria, Estonia, Germany, Hungary, Italy, The Netherlands, Slovakia). In three countries the unemployment rates for youth 15-24 decreased substantially from 2005 to 2006 (Estonia -7.4pp., Lithuania -7.1pp., Poland -8.6pp.). However Poland still has the highest youth unemployment rate in the EU.

The unemployment rate of the 25-29 year olds developed similarly as for the 15-24 year olds with a slight increase over the years 2001 to 2004 and a more pronounced decrease from 2005 to 2006. The EU average in 2006 stands at 10.1%; 3 Member States are situated around the average, 7 have higher unemployment rates and all other countries lower rates than the EU average.

Unemployment ratios

The EU-25 youth unemployment ratio has remained relatively stable in the order of 8% over the period 2000-2005, despite the rising trend in the youth unemployment rate. From 2005 to 2006 it has decreased by 0.5pp. to 7.6%. Approximately one person in twelve in the age group 15-24 is unemployed. This compares with one person in seventeen for the age group 25-54. Variations among Member States are very significant, ranging from less than 5% (Cyprus, Estonia, Ireland, Hungary, Lithuania, Luxembourg, The Netherlands) to over 10% (Finland, Poland, Sweden). In the vast majority of countries, the unemployment ratio is higher for youth (15-24) than for adults (25-54), with the exception of Bulgaria, Germany, Estonia, Hungary, Lithuania and Slovakia.

In the age group 25-29 the unemployment ratio has on average been 1pp. higher than for the 15-24 year olds over the past years at around 9% and similarly decreased between 2005 and 2006 (9.1 to 8.3%). Overall these figures point to the fact that the share of unemployed people is higher in the age group 25-29 than in the age group 15-24. This indicates that labour market integration takes place increasingly at a later stage, and that youth unemployment problems are not solved once young people have passed the age span 15-24 traditionally considered as youth . It may also be an indicator of the increasing difficulties of certain (disadvantaged) groups of young jobseekers to ever integrate into the labour market.

Long-term unemployment

The incidence of long-term unemployment of young people aged 15-24 has on average been decreasing since 2000 with a reduction by 3.9pp. between 2000 (34.0%) and 2006 (30.1%). There are huge differences between individual Member States, ranging from a small number of countries with almost no long-term unemployed youth (Denmark, Finland, Sweden) to countries where half of all young unemployed, or even more, are in this status (Greece, Italy, Romania, Slovakia). In between these two extremes 11 countries have a share of long-term unemployed below or equal to EU average (a range 10-20% in Austria, Cyprus, Latvia, Spain, United Kingdom, and a range 20-30% in Estonia, France, Lithuania, Luxemburg, Malta, The Netherlands). Five countries (Belgium, Germany, Hungary, Portugal, Slovenia) are situated above EU average in the order of a 30-42% share of long-term unemployed among youth unemployed.

In the age group 25-29, the share of long-term unemployed decreased in the EU on average by 3.6pp. from 44.2% in 2000 to 40.6% in 2006, which is very similar to the decrease in the age group 15-24. However, in the year-to-year changes in individual countries trends are quite diverse.

High number of long-term unemployed among youth over 25

In the age group 25-29 the share of long-term unemployed over 12 months is on average 10 pp. higher than in the age group 15-24. In the comparison of long-term unemployment incidence in the age groups 15-24 and 25-29 countries differ greatly in the EU. In the majority of countries the situation is similar to the average EU trend with higher numbers of long-term unemployed in the age group 25-29, however at different levels (Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Finland, Germany, Greece, France, Hungary, Latvia, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, The Netherlands, United Kingdom). In three countries the opposite is the case, with a lower long-term employment incidence in the age group 25-29 (Austria, Lithuania and Luxemburg). In Italy half of the unemployed in both age groups 15-24 and 25-29 are in this status for more than a year. In Estonia a long-term unemployment incidence among young people 15-24 below average is contrasted by a share of long-term unemployed considerably above EU average in the 25-29 age group.

Unemployment dynamics in Member States

Looking at the unemployment dynamics in individual countries between the age groups 15-24 and 25-29, it is remarkable that in the majority of countries the share of unemployed in the total population is higher in the age group 25-29 compared to the 15-24 old ones. This can be in part due to less staying/being in education or a symptom of difficulties in the labour market integration of young people with higher education levels. Another possible reason is that active labour market policies including training measures help to reduce youth unemployment, but that some of the young people fall back into unemployment once they are not any more eligible to support provided to the age group under 25. This is likely to be the case in particular in countries where unemployment among highly skilled young people is low and thus unemployment in the age group 24+ concerns mainly low skilled.

The rather constant level of average youth unemployment in the EU masks however that in a number of individual Member States the situation developed quite dynamically since 2000 . Regarding the unemployment rate, among the now 27 Member States 8 countries with very high rates in 2000 (Bulgaria, Estonia, Greece, Italy, Lithuania, Poland, Slovakia and Spain) saw a considerable decrease between 2000 and 2006. In 10 countries the situation remained relatively stable with variations in the order of +/- 2.5pp., however at different levels (Denmark, Cyprus, Czech Republic, Finland, Ireland, Latvia, Romania, Slovenia, The Netherlands and United Kingdom.). In 9 countries the youth unemployment rate increased considerably (Austria, Belgium, France, Germany, Hungary, Luxemburg, Malta, Portugal, Sweden). The dynamics in the unemployment ratios over the same period are largely similar, with some exceptions. In the Czech Republic the share of unemployed of the whole age group diminished, although the unemployment rate remained stable. In three countries (Austria, France, Malta) the unemployment ratio has increased more significantly than the unemployment rate, which means that in absolute terms the proportion of unemployed youth in the total population of that age group has increased. In Hungary the share of unemployed among the youth population remained stable, but the unemployment rate increased by 5pp.

In the age group 25-29 the unemployment rate has stood on average between 10-11% over the last years, but variations over the period 2000-2006 in individual Member States are as pronounced as in the age group 15-24. Of the 24 EU countries for which comparable data are available[17], 4 countries saw strong reductions bringing them close to the EU average (Bulgaria, Italy, Spain, Slovakia). Five other countries (Belgium, Germany, Portugal, Slovenia and Sweden) are close to the EU average as a result of an increase in their unemployment rates in this age group since 2000. 3 countries experienced a strong decrease in their rate bringing them below EU average (Estonia, Latvia, Lithuania). Two countries improved considerably their situation, but still have unemployment rates well above the EU average (Greece, Poland). In some countries the rates increased, but remain for the moment below EU average (Austria, Hungary).

Gender gaps in unemployment

The gender gap in youth unemployment (age group 15-24) has on average decreased since 2000. In 2006 the unemployment rate of young women was 1.2pp. higher than for young men, but there are significant differences between Member States. In one third of Member States the gap is actually to the disadvantage of young men and situated in the range 0.4-3.8pp., but in countries with gaps to the disadvantage of women these are more pronounced. Nine countries stand out with gaps in the order of 3 to 6 pp. (Belgium, Estonia, Spain, France, Latvia, Poland, Portugal and Slovenia). A singular case is Greece where the gender gap in the youth unemployment rate stands at 17pp.

In the age group 25-29, the situation is similar when looking at the EU average (1.2pp. to the disadvantage of women), but this is masking diverse situations in individual countries which may be different from the age group 15-24. Seven countries have a gap to the disadvantage of men (ranging from 0.5 to 3.3pp.), but these are not all the same countries as for the age group 15-24. The male disadvantage has disappeared in the age group 25-29 in Denmark, Luxemburg, Malta and Finland, while it appears first in Germany, Estonia and Latvia. In seven countries women aged 25-29 are significantly more in unemployment (gap from 3.2 up to 9.7pp. in Greece, Spain, Italy, Luxemburg, Malta, Portugal and Slovenia). Overall the decrease in the gender gap to the disadvantage of women in a number of countries between the age groups 15-24 to 25-29 does not indicate automatically improvements for young women. It may as well be the result of women becoming inactive due to difficulties in entering the labour market (example: Greece, gap 15-24: 17pp., 25-29: 9.7pp.).

Correlations between youth and adult unemployment

There is a strong correlation between youth, adult and overall unemployment ratios across the EU [18]. In general high youth unemployment ratios go hand-in-hand with high adult and overall unemployment ratios, although in two groups of countries the association is less pronounced, either because of unemployment ratios much higher for youth than for adults and the overall population (e.g. UK, Malta, Finland, Italy, Sweden, Spain), or because of much lower ratios for youth (Lithuania).

NEET youth

An additional concern is the proportion of young people who are inactive (inactive population defined as 'out of the labour force') and who are not in education and training during the inactivity spell. These so-called NEET youth ("not in employment, education or training") are difficult to capture statistically. There are estimates that in some countries around 1 out of 10 young people belongs to this group. From the data available it would seem that in the 20-24 age group 20% of the inactive are not in education and training, compared to only 4% of the inactive aged 15-19[19].

Quality and productivity at work

Being in employment does not say much yet about its quality, in particular whether it is stable or precarious. Fixed, temporary or part-time contracts are more and more used for the recruitment of young people; in some countries, the majority of young employees are working under such conditions[20]. Such contracts may have a positive side insofar as they give young people the opportunity to acquire a first work experience, in particular while still being in education, but there is evidence that such contractual arrangements often substitute for stable work contracts over several years even for young people with a strong educational background[21]. Instead of a sustainable integration into the labour market, in-out situations have become more and more frequent. There is evidence that it is crucial for young people to find stable employment around the age of 30, otherwise they bear a high risk to continue to move between unstable jobs for years, if not for most of their working lives[22].

Moreover, young people very often enjoy less favourable conditions than adults in terms of wages, contracts and job quality . The low pay incidence is particularly high for young people (2004: 40%); and the 30% probability for a salary increase comes along with a 22% probability of falling into unemployment or inactivity.

Beyond anecdotal evidence there are no data available on productivity of young employed. One frequent phenomenon is over-qualification of the jobholder; the other is no/low payment.

In summary, these trends contribute to a growing labour market segmentation where the young are often the outsiders or at the margins of the labour market. There is evidence in some countries that this segmentation continues in the age group 25+.

Social and territorial cohesion

Some groups/layers of society are more likely than others to face unemployment and involuntary inactivity. In particular, young people with migrant background are over-proportionately affected by unemployment[23]. The gap between the total unemployment rate and the rate for non-EU nationals for the total working age population (15-64 yrs old) is high (12 to 25 pp.) in some employment immigration countries (Germany, France, Belgium, Netherlands) and in some immigration countries with high levels of immigration for other motives than employment (Finland, Sweden). The situation is similar for the age group 15-24 in those countries. Overall, data availability on the employment situation of non-EU immigrants and their descendants in the EU is very limited. Statistics that distinguish between EU and non-EU nationals do not capture the fact that many young people with a migrant background have the nationality of their new EU home country. The situation is similar for young people from ethnic minorities, in particular the Roma population.

There are regional disparities in youth unemployment within Member States[24]. In economically weak or remote regions there is insufficient labour demand at all qualification levels. Many of Europe's rural areas face a common challenge – their capacity to create high quality, sustainable jobs is falling behind urban areas[25]. Typical consequences are that the young (especially the better qualified) leave, which adds further to economic and social decline (eg. North-East Germany), or that in regions with low mobility the better qualified take up all available jobs, so that there are no employment opportunities for the less qualified (eg. Southern Italy). In disadvantaged urban areas, the high number of low qualified young people is a main factor for high youth unemployment.

Some explanations for youth employment problems

The success or failure of young people in their transition from school to work can be explained by the relevance of individual characteristics, such as educational attainment, socioeconomic background, gender, disability, and by the capacity of labour markets to provide job opportunities.

Educational attainment of many young people is too low

Young people with a low level of education are generally more affected by unemployment than higher qualified. Policies have thus long focused on improving education and training systems to increase young people’s chances. Some progress has been achieved in the EU overall in terms of raising skills levels of young people, but a considerable proportion of young people continues to leave education systems without a solid base of skills and competences. Efforts to step up low educational levels (for example a reduction of school drop out rates) must be maintained and intensified, as those young people would otherwise in the long run risk being excluded not only from employment, but also from participation in society as a whole.

In the middle and higher levels of education the focus would have to be put much more on the quality of investments. The public sector has the primary obligation for investment in quality compulsory schooling and initial training. Despite a general upward trend in public investment since 2000, there are considerable variations between countries in their levels of total public expenditure as a percentage of GDP[26]. The level of public investment into education and training measured in % of GDP is in some countries clearly below the level that would be needed to ensure and deliver sufficient quality and quantity in education and training.

Higher educational attainment levels and better vocational qualifications are traditionally supposed to be the key to labour market success, but despite the progress achieved in education, employment opportunities have not improved accordingly. Empirical evidence shows that there is no linear connection between the accessibility and quality of jobs for young people and their corresponding level and field of educational attainment. A higher qualification as such does not automatically open the door to the labour market; at present in a (small) number of Member States young people with high qualifications risk being unemployed even more than the less qualified (for example Cyprus, Greece, Portugal). These examples should not lead to the conclusion that efforts in human capital investment should be disregarded. Such evidence rather suggests that educational attainment is crucial, but needs to match labour market needs, and that labour demand is also an important factor for labour market integration.

Weak socioeconomic background impacts negatively

The correlation between the socioeconomic background of children and young people and their employment prospects is still strong in many countries, despite all policy efforts to achieve more equity in the distribution of prospects. In a complex setting of poverty, lack of education and social marginalization, the lack of employment prospects is often the result of the accumulation of already existing problems.

Child poverty, currently running at 19% in the EU (as opposed to 16% for the population as a whole) leads to a situation where many opportunities are closed off with the result that poor children frequently become poor young people who become poor adults with poor children. Children from poor families frequently experience poorer health, lower quality education (either because of the quality of schools in poor neighbourhoods, or because of more limited family support, or both), lower levels of employment and career aspiration (both personally and in terms of what is expected of them by peers and others) and, as a result, lower educational achievement. A failure to remain in education or to integrate successfully into the labour market can then be compounded by delinquency and a higher rate of teenage pregnancy, thus making successful social and labour market integration all the more difficult.

One problem to tackle with the utmost urgency in this context relates to the difficulties of youth with a migrant background in finding access to employment. This concerns in particular the second/third generation of migrants from Eastern and Southern Mediterranean countries. Their problems are quite complex and differ also from country to country (for example language is a key issue in Germany, but not in France). Lack of employment prospects is often due to low educational attainment levels, but discrimination towards them also has a significant impact. Discrimination sometimes excludes even highly qualified migrants from appropriate labour market participation.

Gender inequalities prevent young women in particular from unleashing their full potential

Gender aspects of youth employment need to be taken more into consideration, since significant differences exist between young women and young men which eventually amplify over time. The reasons why both women and men are far from developing their full potential on the labour market are different. While women face difficulties in valorizing their human capital on the labour market, young men increasingly lag behind in terms of human capital formation and are thus not sufficiently prepared for entering the labour market.

Women have caught up tremendously in their level of educational attainment; on average, women today represent more than half of all graduates. They are now outnumbering men (80% vs. 74.6%) in having completed at least upper secondary education, while men have a larger tendency to leave school early, with at most lower secondary-level education, than women (17.1% vs. 12.7%). Women are also more active in lifelong learning schemes, 11.7% of them participate in education and training in the 25-64 age-group, compared with 10% of men.

Women's progress in education has not yet translated into an equivalent share of positions in the labour market. As shown above, women are over-proportionately unemployed. In addition, women are strongly underrepresented in job positions at higher levels; their potential to contribute to innovation remains to be unleashed.

While the difficulties women face in valorizing their human capital on the labour market are not mainly related to their level of education, there remain concerns about continuing gender segregation in education, training and employment at the start of the working careers. Women are under-represented in careers such as engineering or science and technology and over-represented in health, education or the humanities, a situation resulting from their choice of study fields. Clearly, the choice for a specific academic study eventually leads to occupational and sectoral segregation of the labour market, which explains in part the persistence of a gender pay gap.

Apart from the problem of gender segregation in the choice of profession and education fields, it appears that young women experience higher unemployment and lower employment rates than young men, even when they are highly qualified. Moreover, when employed, young women are, more than young men, particularly affected by low quality jobs, part-time jobs and fixed-term contract and there is already for young people a pay gap between women and men, although less important than for people older than 30. Women have a lower return on education than men. There is consequently a risk to disincentivise women to be on the labour market if they cannot fully develop their skills and achieve their careers. This is particularly relevant at the age of 25-30 when many women consider the possibility of having children and are confronted with a lack of policies for reconciling work, private and family life.

For young women, problems of gaining access to stable and satisfactory employment may lead in some countries to a high rate of women leaving the labour market for motherhood on a long term basis at a time when their career has not yet been able to fully develop, putting at risk a re-entry into the labour market. When employed, many women are affected by low quality part-time jobs or work in jobs not linked with their original education or which require less qualifications that they actually have.

Disabled youth do not have real opportunities

A specific and often neglected dimension is disability among young people. Disability of young people is mainly linked to physical or mental handicaps or chronic illness. The number of young disabled people approaching working age and being capable of work has increased with advances in medical science. Modern technology, notably in the ICT domain, has also enabled young people with light to moderate disabilities to acquire work-related skills. However, prospects for employment are still low for the young with disabilities. While the educational provision for the disabled has considerably improved in many Member States, the most crucial period for young people is the transition from education to either employment or unemployment. The latter has an adverse effect not only on their future employment prospects, but also increases considerably the risk of social exclusion. Policies to help young disabled (and their families) in the school to work transition are largely not available. A further element is the lack of accessibility to workplaces caused by inappropriate physical environments. Another issue of concern is the increasingly worrying health status of some young people (substance abuse, obesity) which affects negatively their employability.

Labour market conditions unfavourable for new entrants

Young job-seekers are per se in a difficult position as they are newcomers with little experience and reduced productivity. The first step over the threshold into a first job is probably still the most important one to make, and reasons for failure at this level are to a large extent the factors described above. Another factor coming into play is the reluctance of employers to recruit inexperienced young workers and to invest in their training. A vicious circle often sets in at this stage, prolonging unemployment spells. Education and training systems would have to take this factor much more into account and provide more training schemes combining theory and practice[27]. A further important and increasingly difficult transition young people need to make is from a first, often precarious employment to a more stable employment. Transition difficulties at this stage are reinforced due to the (mal)functioning of labour markets that keep young people in positions at the margins through precarious contractual arrangements (fixed contracts), low wages or inappropriate employment protection, and it may take many years before a stable position is reached. In segmented labour markets, the recruitment of young people can be used by employers as a “buffer” to achieve the flexibility they need (from outsiders) to respond to fluctuations in the economic cycle that they cannot obtain from the well protected core work force (insiders)[28].

Specific institutional features that particularly reduce the restrictions affecting the youth labour markets (e.g. youth specific – lower – minimum wages, or lower strictness in temporary contractual forms) may reduce the relative youth unemployment rate at short term, but their long-term effects need to be examined carefully as well. One problem is that young people are employed as long as they are young and eligible for special conditions granted to employers, but this does not always serve as stepping stone to long-term integration. On the other hand, lower average pay makes young people more susceptible to the disincentive effects of high labour tax wedges on employment, particularly when coupled with means-tested benefits systems; data show that in 13 out of 27 EU Member States, including many of those with the least overall taxation level, the tax wedge on low-paid workers exceeds 40%[29].

Moreover, the situation young people experience at the threshold to the labour market influences in various ways their attitude to education and training. The incentives for individuals and companies to invest in education and training and the state of public investment in human capital need to be seen together. Signals that young people and their parents receive from the labour market in terms of career prospects may influence their individual choice in a way that existing problems may even be reinforced. At one end, young people do not invest at all in education or opt out completely from the labour market, and at the other end they prolong high-level education but without increasing their employability.

Young people in precarious employment situations often do not receive support for further qualification from the employer. Frequent shifts in work organization, a high turnover of staff due to temporary work contracts and the risk that other employers poach trained staff promote a tendency by enterprises, especially SMEs, to underinvest in human capital.

The lack of adequate employment opportunities may discourage young people from seeking a job in the national labour market and in particular high potential youth tend to move to other EU countries or even other parts of the world, which in the latter case will affect negatively the potential for innovation in the EU.

MEMBER STATES POLICY APPROACHES TO IMPROVE YOUTH EMPLOYMENT

Since the adoption of the revised Lisbon Strategy for Jobs and Growth, Member States report every year on their policies to improve youth employment in the context of presenting their overall employment policies. Member States have in 2005 also taken the commitment in the European Pact for Youth to improve education, training, mobility, vocational integration and social inclusion of young Europeans.

2005 - A new impetus for youth in Member States’ National Reform Programmes

The following analysis gives an overview of Member States measures reported in the National Reform Programmes under the three priorities of the employment guidelines and with a specific focus on flexicurity issues. An overview of the specific measures in Member States pertaining to flexicurity as outlined in the employment guidelines is given in section 3.1.2. Besides this, the ingredients of flexicurity which have been highlighted in the 2006 Joint Employment Report are reflected in the analysis of Member States' measures in the area of active labour market policies (ALMP) and modernisation of social protection systems (see below section 3.1.1) and life-long learning strategies (see below section 3.1.3).

Attract and retain more people in employment, increase labour supply and modernise social protection systems

A number of Member States concentrate on improving the provision of guidance and counselling in general (Denmark, Greece, Lithuania, Malta, Slovenia, Sweden) or for specific target groups (long-term unemployed in Belgium, groups with multiple disadvantage in UK). In some Member States the improvement of guidance services for young people is part of an overall modernisation of Public Employment Services (Cyprus, Czech Republic, Estonia, Germany, Italy, Portugal).

Some Member States report in a more general manner on the introduction of ALMP packages addressing youth unemployment (Poland, Slovakia, Slovenia).

Another focus is put on improving the access to training . In countries with well-developed vocational systems (Germany, Austria) specific measures are introduced to facilitate access to training for low-qualified young people who do not have sufficient skills and competences to enter a mainstream vocational training path. Three Member States report the development of apprenticeship pathways in vocational training on a larger scale (France, Portugal, Cyprus). Belgium promotes the creation of new jobs in the low-skilled sector through the introduction of service vouchers.

Recurrent features in the NRPs are measures to tackle the lack of practical experience due to a school-based vocational training or university studies. Such measures include: provision of traineeship places in the public or private sector (Hungary, Latvia, Portugal), tax benefits and social security exemptions for traineeships (Hungary), internships with minimum wage and wage support (Latvia).

The Netherlands is the only country reporting a concrete target with regard to the creation of an extra 40 000 jobs for young people over the period 2003-2007.

Measures pertaining to the modernisation of social security systems aim at reducing inactivity traps (Luxemburg – better coordination of unemployment and social benefits systems; Czech Republic – no unemployment benefits for graduates; Denmark – reduced benefits for youth). Contributions to social security systems are sometimes also used as an opportunity to reduce non-wage labour costs (see under 3.1.2). In order to support vocational training within companies for young people, a number of Member States have introduced incentives for employers in the form of reduced social security contributions or tax deductions (Poland, Lithuania, and The Netherlands).

The integrated guidelines include as a target that every unemployed young person is offered a new start before reaching 6 months of unemployment in the form of training, retraining, work practice, a job or other employability measure. Few Member States have reported in their NRPs whether and how they pursue this target. Only 5 countries have explicitly set national targets (Belgium, Germany, Lithuania, Portugal, Slovenia) (see also below chapter III.2).

Improve adaptability of workers and enterprises

Member States have in general paid rather little attention to the issue of adaptability. However, with respect to young people there is a tendency in Member States to ease employment legislation with respect to young people. This increases flexibility, however without increasing either employment security or income security and thus it is a rather partial approach to increasing flexicurity. Such measures seem to increase the risk of labour market segmentation.

In some Member States changes in the legislation affecting the employment situation of young people are part of general changes in labour market legislation (Czech Republic, Italy, and the Netherlands). Wage subsidies are introduced in the form of combined wage (Austria) or combination of part-time work and unemployment benefits (Cyprus). Reduction of the tax wedge for young people is introduced in order to combat undeclared work (Hungary). Non-wage labour costs for employers are reduced through reductions of employers' social security contributions for young employees (Belgium). Ireland and Poland have fixed reduced minimum wages for young employees.

In France, the majority of employment contracts of young entrants into the labour market are subsidized through large-scale subsidy schemes. Germany envisages introducing an option for employers to extend the probation period in new contracts (but with no age limitation).

Financial incentives for engaging young people have been introduced in the Czech Republic for disadvantaged youth, in Greece for recruitment in specific sectors and in Portugal for recruitment of young qualified people.

Only two countries envisage measures aiming at increased employment security for young people: Sweden and Spain envisage promoting the use of indeterminate contracts for young people.

Increase investment in human capital through better education and skills

In all EU Member States reforms of education and training systems are ongoing. At the European level, the Education and Training 2010 Work Programme provides the strategic framework for the modernisation of national systems. From the employment perspective, a key issue in investing more and better in human capital is linking the reforms in education and training to labour market requirements. The actions reported by Member States in the National Reform Programmes on investment in human capital mostly concern reforms of the education and training systems, but there is often insufficient focus on matching education and training with labour market demands and approaches lack on integrated life-long learning perspective.

Reforms in school education at various levels (basic education, secondary education) are under way in a number of countries (Belgium, Czech Republic, Estonia, Italy, Latvia, Lithuania, Netherlands, Poland). Several Member States report measures to establish or improve the vocational training provisions (Austria, France, Greece, Hungary, Luxembourg, Portugal). Two countries (Belgium, Germany) highlight the need to improve the education outcomes of young people with migrant backgrounds.

The integrated guidelines fix a target of an EU average rate of no more than 10% early school leavers. 9 Member States meet the target. Only half of the remaining 14 countries have set a national target. The integrated guidelines fix a target that at least 85% of 22-year olds should have completed upper secondary education by 2010. 14 Member States meet the EU target. Of the remaining 11 only 6 have set a national target (for details on both targets see Chapter 6 tables 2à and 21). Many Member States would need to step up their efforts considerably to reach the targets.

2006 - Focus on Member States commitments to provide a "new start" to young unemployed

In the context of the European Employment Strategy Member States have agreed in 2003 already on the target that every unemployed person is offered a new start before reaching 6 months of unemployment in the case of young people (and 12 months in the case of adults) in the form of training, retraining, work practice, a job or other employability measure, combined where appropriate with on-going job search assistance. This target has been confirmed in the integrated guidelines 2005-2008. The Spring European Council 2006 identified a number of specific actions in four priority areas, among them employment, for Member States to complete before the end of 2007. The implementation of the target for a new start within six months is one of these actions.

According to data available the target is not yet met in the majority of Member States. More than half of the young unemployed in the age group 15-24 are not offered a new start within 6 months of unemployment. The high incidence of youth long-term unemployment of more than 12 months duration (see above chapter I) also indicates that many young people do not benefit from a timely new start offer.

Following the 2006 Spring Council commitment the majority of Member States have reported on their policies to reduce youth unemployment, however with varying degree of detail. A small number of countries have set national targets for the provision of a new start even earlier than within six months. Some other countries have included the European target in their national policies, but there is still a considerable number of countries which do not seem to have set a target at national level. The following overview presents the approaches of those countries which have explicitly referenced the target and reported on the respective measures in their implementation reports on National Reform Programmes of October 2006.

In Austria since 2004 the Public Employment Services have to offer training or a reintegration measure to young unemployed under 25 years old if they have not been offered a job within three months. A number of measures have been introduced to meet this target, such as the Job4Youth work and training programme, catch-up courses for early school leavers, individual job coaching for young people, financial incentives for employers to take apprentices (1000 EURO per recruited apprentice), and the objective to raise participation of youngsters with migrant background in the measures related to the "Jugendausbildungssicherungsgesetz".

Belgium reports that the target for a new start within six months is being pursued, but with regional disparities in the actual provision. According to the national data, in 2005 around 16% of young unemployed were not offered a new start within six months.

In the Czech Republic , the "First Opportunity" programme providing individual action plans to young people under 25 is available in all Public Employment Services offices since 2004. The government is committed to continuing the programme, despite some difficulties in actually meeting the six months target. The use of European Social Fund means is envisaged to strengthen the programme in the future. For very young unemployed adolescents, policies foster their return into the education system to achieve at least the lowest degree of secondary education.

Denmark has introduced a new placement scheme whereby unemployed people having failed to obtain a job through the job offers received during the first three months of unemployment are to be included in systematic placement programmes and to be provided with a number of activation offers after 3 months of unemployment (for over 30 year olds the activation offer has to be made within 9 months of unemployment).

Finland has established a "social guarantee for youth" for early intervention within three months of unemployment.

In Germany two operational targets have been fixed for the Public Employment Services: no young person should be unemployed for more than 3 months, and one advisor should not have more than 75 young jobseekers to supervise. According to national data, the average unemployment spell of youngsters has been 21-25 weeks in 2006, thus meeting at least the European target for a new start within six months. PES are supposed to conclude an "integration agreement" with each young jobseeker; measures offered to the unemployed are either jobs, or vocational education and training, or work opportunities. The government will provide in the next four years 100 Mio. EURO for the "Jobstarter" program to improve the offer of apprenticeship places.

Latvia reported that nearly all young unemployed benefit from active labour market measures within six months of unemployment, and Lithuania reports to have achieved this for 85% of young unemployed (with targets set to reach 91% in 2007 and 100% in 2010).

Luxemburg announced that new legislation to reinforce early activation of young jobseekers has been proposed to Parliament for adoption in September 2006.

In the Netherlands a new start is offered to 84% of young unemployed within six months. Extra jobs for young people are created via the "Task Force for Youth Unemployment" which has reached its target to create 40.000 extra jobs for youth in the 2003-2007 period. The "Operation Young" aims at an integrated approach for disadvantaged youth. An obligation to obtain a qualification in the education system is imposed on youngsters under 18 years old.

In Spain t he national "Agreement for better growth and employment" foresees that the government will ensure a new start for all unemployed within six months, and the agreement entails specific measures to facilitate young people's access to the labour market.

Sweden reported that only a tiny fraction of young unemployed (around 5 %) would not receive a new start within six months.

A number of countries (Cyprus, Greece, Hungary) have expressed in their National Programmes the intention to improve the provision of measures to young unemployed in the future (via new legislation, PES reforms, use of European Social Fund).

2007 - Recommendations to strengthen policy coordination

On the basis of the Commission's analysis of Member States' implementation reports, and in order to pursue the Lisbon strategy for growth and jobs in a coherent and integrated manner, the Council has adopted in March 2007 country-specific recommendations concerning economic policies and employment policies. The Council invited Member States to report on their follow-up to recommendations in their next Annual Progress Report due in October 2007.

Youth employment and related issues have received high attention in the country specific recommendations. One third of all recommendations made to Member States concern education systems and lifelong learning policies; 17 Member States received a concrete recommendation, and 10 Member States have been asked to pay increased attention to education and lifelong learning policies. The recommendations address in particular the need to improve the quality and labour market relevance of education and to reduce high numbers of early school leavers.

As regards employment policies, 2 Member States were explicitly invited to improve labour market integration of young people, and 9 Member States received recommendations which are not youth-specific, but address however general labour market issues which also impact on the difficult situation of young people (reduction of regional disparities, reduction of labour market segmentation, tackle long-term unemployment, develop active labour market policies for disadvantaged groups). 4 Member States were invited to improve the employment situation of young people, in particular of those with low skills and of youth with migrant background, to improve employability of young people and to monitor the impact of measures taken to foster youth employment. 7 Member States were invited to pay more attention to labour market problems which also affect young people, such as labour market segmentation, gender segmentation, regional disparities, and low employment rates of immigrants.

An overview of the recommendations in the area of education and employment is given in the Annex.

BRINGING FORWARD THE FIGHT AGAINST YOUTH EMPLOYMENT PROBLEMS

As shown, Member States have put a variety of measures in place. Yet many actions remain piecemeal. The solution to problems cannot simply rely on youth-specific measures in the different policy areas (education, social and territorial policies, etc.). Unless the overall capacity of labour markets to create jobs of good quality is improved, it is likely that young people will find it increasingly difficult to integrate into the labour market. This raises the more general question of the appropriate combination of flexibility and security in the functioning of European labour markets: good combinations promote higher employment and productivity and quality in work and facilitate transitions including for young people; bad combinations lead to lower employment and foster segmentation and exclusion of young people from good employment opportunities.

Focus on flexicurity in the next Lisbon cycle

Member States need to give more consideration to providing the appropriate conditions for labour market integration of young people within a flexicurity-oriented life-cycle approach to employment. The four dimensions of flexicurity which have been identified in the June 2007 Communication on Flexicurity[30] are of key relevance for the promotion of youth employment:

- Flexible and reliable contractual arrangements (from the perspective of the employer and the employee, of ''insiders'' and ''outsiders'') through modern labour laws, collective agreements and work organisation;

- Comprehensive lifelong learning (LLL) strategies to ensure the continuous adaptability and employability of workers, particularly the most vulnerable;

- Effective active labour market policies (ALMP ) that help people cope with rapid change, reduce unemployment spells and ease transitions to new jobs;

- Modern social security systems that provide adequate income support, encourage employment and facilitate labour market mobility. This includes broad coverage of social protection provisions (unemployment benefits, pensions and healthcare) that help people combine work with private and family responsibilities such as childcare.

Member States should give appropriate consideration to youth employment issues when they address flexicurity in their NRPs. Member States should devise youth policies that address the specific situations and issues faced by both young women and men in their access to employment and should effectively integrate a gender perspective in all action taken.

Flexicurity-oriented approaches to youth employment would also have to be underpinned by reducing existing disincentives to work. High taxes on labour for example are creating a disincentive particularly to youth employment; a shift of taxation from labour to consumption and/or pollution taxes could also be considered as part of a broader youth employment strategy.

Strengthen governance aspects of youth employment

Youth employment is a transversal issue concerning a large number of policy-makers, institutions and stakeholders at all levels from the local to the European. Strengthening the role of institutions having a high potential impact on the labour market integration of young people is therefore important. Three aspects merit special attention in this respect.

European social dialogue promoting action at national and European level

European social partners are highly concerned with youth unemployment; they consider however that the issue cannot be solved by the social partners alone. At cross-industry level, the focus is set on integration of young people through a better tailoring of education and training to labour market needs. National social partner organisations worked on youth questions in the context of their coordination of actions on employment and lifelong learning and reported their initiatives to the European level (more than 350 examples until 2005). According to the European social partners' evaluation, this has given impetus to social partners at national level for new actions, facilitated the exchange of good practices, in particular at company level, and encouraged stronger involvement of social partners in national labour market and education policy-making that had so far, in some Member States, been largely led by public authorities. The follow-up work has also enhanced the perception of competence development as a shared interest. The question of youth integration has been taken up as one of the key challenges by the social partners' work programme for 2006-2008. It will be part of the joint analysis to be carried out, and youth integration issues might be part of the autonomous agreement the social partners plan to negotiate.

At sectoral level, the main focus is on attracting and retaining young workers, and some committees have launched initiatives aimed at improving the image of their sector and issued recommendations on the successful integration of young people in their sector (e.g. construction, horeca, the cleaning industry). For example, social partners in the construction sector have developed tools for “tutoring”, that is to say, the establishment of a preferential and structured relationship between an older and experienced worker and a young recruit. Several sectoral social dialogues have led to guidelines and tools for vocational training. The commerce sector informed the Commission about its intention to start negotiations on the integration of young people in the retail trade labour market.

A strong role for the Public Employment Services

Public Employment Services play a vital role in implementing actions aiming at reducing youth unemployment and creating youth employment. They are the most important labour market institution implementing youth employment policy. PES have direct and immediate contact with the youngsters: they are the first (and often only) organisations that have a regular and face-to-face dialogue with young unemployed. PES need to avail of the human resources and organisational tools which are required to approach the young unemployed, to offer them personalised employment paths, tailor-made services, inform them about the appropriate job opportunities and training possibilities. They also build the main bridge between employers and young jobseekers.

Promote geographical mobility

The constantly high youth unemployment and other difficulties of labour market integration of young people are contrasted by increasing labour shortages in specific sectors and/or countries. Young people need to be encouraged more to seize job opportunities across borders in the EU.

The "Your First Job Abroad" initiative is the start of concrete support activities within the EURES framework to promote specifically the mobility of young workers. On the basis of experience gained, other initiatives for young people will be developed in the context of the Job Mobility Action Plan (2007-2010), aiming in particular to facilitate the transition of young workers from education and training environments to the labour market.

"Your First Job Abroad"

"Your First Job Abroad" is an initiative in the context of the 50 years celebrations of the Treaty of Rome showing the possibilities the European Union offers in the areas of mobility and youth employment. It enables 50 young European workers (at least one from every Member State and from the countries of the European Economic Area) who have never worked outside their own country, to benefit from a mobility experience of at least four months. Participants will be selected through a call for applications on EURES, the European Job Mobility Portal (http://eures.europa.eu).

Use the potential of the European Social Fund to improve youth employment

The new regulation for the European Social Fund (ESF) places greater emphasis on youth employment by introducing specific reference to "preventing youth unemployment" (Article3.1.(b)). The following priority areas for action are identified:

- investment in young people by enterprises through the development and implementation of life-long learning systems and strategies, including apprenticeships (ESF Regulation Article 3.1.(a))

- modernisation and strengthening of labour market institutions in order to address more effectively youth unemployment (Article 3.1.(b))

- active and preventive measures including individual action plans, personalised support, such as tailored training, job search, outplacement and mobility, self-employment and business creation for young people (Article 3.1.(b))

- pathways to integration for early-school leavers (Article 3.1.(c))

- reforms in education and training systems in order to improve the labour market relevance of initial and vocational education and training (Article 3.1.(d)),

- actions to reduce early school leaving (Article 3.2.(a)).

This provides a large scope for Member States to address problems of youth unemployment, but it is up to the Member States to decide to what extent ESF will be used for this purpose. Member States are actually in the final stage of establishing their ESF programming for the period 2007-2013. The Commission's role is to ensure that the policy and investment priorities outlined in Member States' National Strategic Reference Frameworks and Operational Plans are well reflected in the programming of the funds.

The Commission intends to promote further the exchange of best practice in youth employment policies among Member States in order to better inform their choice of the policies and measures which would be most efficient and suitable for their national context.

Improve the knowledge-basis for policy decisions

The present working paper demonstrates that youth employment problems persist in nearly all Member States, however to various extents and for a wide range of reasons, and that developments are quite dynamic. Policy co-ordination on youth employment issues at EU level needs to be based on the one hand on solid data on the current situation, and on the other hand on a better understanding of the effects of policies and measures in place.

As a contribution to strengthening insight into problems of youth employment in the EU, the European Commission has launched the following initiatives:

- The ad-hoc module of the European Labour Force Survey in 2008 will focus on the employment of persons with migrant background in the EU; the data obtained from this survey will also improve our knowledge about the labour market integration of young people with migrant background.

- The ad-hoc module of the European Labour Force Survey in 2009 will focus on the entry of young people into the labour market. The data obtained from this survey will improve our knowledge about the transition process from education to the labour market.

- The Commission has launched a comprehensive study on the labour market integration of young people; the final report will be available in mid 2008.

COUNTRY FICHES ON THE YOUTH EMPLOYMENT SITUATION IN THE EU

The country fiches in this chapter present for each of the 27 EU Member States:

- the main indicators on youth employment on the basis of EUROSTAT Labour Fource Survey spring data[31], and where appropriate additional national data;

- the countries’ policy approaches under the revised Lisbon Strategy for Growth and Jobs on the basis of the National Reform Programmes Member States presented in autumn 2005 and 2006

- the contribution of the European Social Fund to the countries’ policy approaches;

- the challenges and the policy direction to take for each country, on the basis of the Commission’s analysis of the National Reform Programmes in 2005 and 2006 and the Council Recommendations of March 2007.

The information provided in the fiches concerns youth in the age group 15-24, being the focus of youth employment policies in Member States. The country fiches do not aim at being exhaustive; their purpose is to illustrate each country’s current position in relation to the EU average performance and to describe the policy approaches taken in the framework of the Lisbon Strategy for Growth and Jobs.

Belgium

Analysis and trends: Even though participation rates are on a clearly rising trend, the labour market involvement of young people remains low by international standards. The youth employment rate in Belgium (26.2% in 2006) is far below EU average and decreased over the last 6 years (30.3% in 2000). The youth unemployment rate (2006: 18.9%) is almost three times higher than unemployment overall. The low labour market participation of young people can partly be explained by compulsory schooling up to the age of 18 and a relatively high enrolment rate in further education, but it is also linked to regional disparities in the performance of the education system. The percentage of 22 year olds having achieved upper secondary education level is relatively high (82.5% in 2006) and the rate of early school leavers (12.6% in 2006) is below the EU average for the country as a whole, but the EU targets for 2010 have not yet been reached. Significantly higher drop-out rates are noted in the Walloon and Brussels region. Moreover the rate of early school leaving of immigrants is 40% in Flanders.

Policy analysis and ESF contribution: To attract and retain more workers , the Belgian employment strategy includes a series of measures to raise youth employment and tackle youth unemployment. The 2005 Generation Pact focussed on active ageing, but also introduced some new measures to promote youth employment, mainly through financial incentives promoting apprenticeships and through cuts in social security contributions for young workers in general. A further cut in social security contributions has been awarded to young people aged between 19 and 29 in the low-income category. Measures imposing stricter job search requirements and providing intensified guidance for long-term unemployed were in first instance directed towards young people. A first assessment showed some positive results. As a measure to increase adaptability, the service voucher scheme shows good results in creating regular jobs for low-skilled, including a considerable share of young people. Designed to increase their preparedness for the labour market, a programme of in-company placements for young people is being promoted via a tax incentive initiative. Increasing human capital is crucial, since 70% of all young unemployed are low-skilled. Measures have been taken to speed up the classroom-to-workplace transition. Employers are encouraged to recruit school-leavers, even those who are less qualified. Reforms in education systems have been launched in order to tackle segregation and to reduce early school leaving. Technical and vocational education is being reinforced and alternating learning further developed. These reforms are ongoing and have not yet delivered results. Young people are a major target group in the measures for labour market integration supported by ESF .

Challenges and policy direction: T ackling youth unemployment is one of the main goals of the NRP. In order to reach this goal, efforts should be strengthened to ensure all regions meet the EU objective of offering unemployed young people training, retraining, work practice, a job or other employability measure within six months (four months from 2008). Belgium should continue its efforts to limit early school leaving and to raise educational attainment. The reforms in technical and vocational education and the revalorisation of apprenticeships are important measures in the right direction and should be pursued rigorously. Language courses and effective co-operation among regional employment services should facilitate labour mobility, especially in the Brussels region where youth unemployment is much higher than in the surrounding areas.

BULGARIA

Analysis and trends : Since 2000, the youth employment rate has slightly increased from 20.5% to 23% in 2006 (M: 25.3%; F: 20.8%), but remains significantly below the EU average. At the same time, following a peak in 2001 (39.3%), youth unemployment has been steadily decreasing down to 20.5% in 2006 and is expected to decrease further. The corresponding youth unemployment ratio decreased significantly from 13.6% in 2001 to 5.9% in 2006. Long-term unemployment is high among young people, and the share of youth neither in employment nor in education is the highest in the EU. Upper secondary education attainment was 80.5% in 2006, thus above EU average but still below the EU target of 85% in 2010. At 18% in 2006, early school leaving exceeded the EU average, but has decreased since 2003 (22.4%). Early school leaving, as well as youth unemployment, is particularly widespread among Roma youngsters.

Policy analysis and ESF contribution : National policies face two key challenges with regard to youth employment: matching the education and training systems to labour market needs, and reducing early-school leaving. In order to attract and retain more young workers in the labour market, several programmes targeting youth are under way. The "Career Start" programme provides young university graduates with 9-month employment at state administration institutions. Other programmes and measures offer internships at SMEs, apprenticeships, initial computer training. Roma youngsters have benefited from literacy and vocational training programmes, as well as specially designed labour office job search assistance services adapted to their needs. Young people also benefit from large scale national employment programmes, providing mainly subsidized training and employment. To increase adaptability , a new National Classification of Professions was introduced in 2005, and amended in 2006. Vocational training is provided through a network of 410 district-based vocational education centres, licensed under the Vocational Education and Training Act. In 2007-2013, 186 million euro of ESF assistance are expected to support vocational qualification, training and re-training activities for employed persons, including youth. The NRP adopted in 2006 outlines a number of measures to promote investment in human capital through preventive measures and programmes to reduce early school leaving by supporting pupils and their parents; the elaboration and implementation of a life-long learning strategy; development of career centres at higher education institutions and support to research and post-graduate studies in the field of sciences. The quality of school education is planned to be increased through a reform of educational curricula to comply with EU standards and through upgrading teachers' and trainers' qualifications linked to the establishment of a career development system, for which up to 206 million euro will be allocated from the ESF during the 2007-2013 programming period.

Challenges and Policy Direction : Linking education with labour market needs and reducing early school leaving have been recognised by Bulgaria as key challenges to reduce youth unemployment, requiring a strategic policy response. Concrete measures to promote youth employment will have to be based on a comprehensive and sustainable reform of national policies, shifting away from subsidised employment programmes and focusing on activation measures and a holistic lifelong learning approach – in order to respond to the short-to-medium term challenges identified in the NRP.

Czech Republic

Analysis and trends : The youth employment rate is low (27.1% in 2006) and has decreased constantly since 1997 (42.7%). It is significantly higher for men (M: 30.7%, F: 23.3%). The reasons are mainly participation in education and preparation for employment. The youth unemployment rate stood at 17.0% in 2006, but with significant regional disparities. After a peak in 2004 (19.9%), it started to decrease in 2005, mainly as a result of stricter eligibility criteria. The youth unemployment ratio has decreased accordingly by 1.4pp. between 2004 and 2006. The percentage of 22 year olds having achieved upper secondary education level is one the highest in the EU (91.8% in 2006), and the percentage of early school leavers one of the lowest (5.5% in 2006). The main reasons of youth unemployment are insufficient practical knowledge, experience and working habits, insufficient foreign language skills and a mismatch of qualifications and labour market needs. Roma youth unemployment is particularly high, especially due to the low educational attainment. However, there are no statistics available to depict the situation.

Policy analysis and ESF contribution : The NRP pays attention to the young presenting a set of preventive and activation measures. To attract more young people to the labour market, by 2007, every young person is to be offered a new start – a job or training - within six months of becoming unemployed. To that end Individual Action Plans were introduced (2004) in frame of the First Opportunity programme. However, the Plans are only used by approximately one quarter of the young unemployed (about 37% of them found employment in 2005). Employers can obtain a special contribution for employing disadvantaged (including young people) or for creating socially useful jobs. New measures have been implemented for making work pay, such as reducing taxes for low-wage earners, reforming the social benefits and allowing a combination of part-time work and unemployment benefits. Moreover, school graduates are not entitled to unemployment benefits anymore. Attention is paid to prevention and the Information and Advisory Centres were established at the labour offices for pupils and students. To increase adaptability, the new Labour Code allows for more flexibility in the organization of work and employment relationships (for example working time accounts were introduced). To increase investment in human capital , particular priority is given to the ongoing reform of curricula for primary and secondary education. Attention is paid to improving relations between employers and education institutions, to develop pathways between secondary and tertiary education, including vocational training, and to provide a wider access to general courses in order to better cope with changing skill demands on the labour market. Participation in tertiary education has increased (new universities, faculties and study programmes), but more resources and better incentives for both students and tertiary education institutions are still necessary. The significant contribution of ESF to youth policy measures is expected to continue in the programmes for the period 2007-2013.

Challenges and policy direction : The main challenges are to reduce youth unemployment and to better adapt education to the labour market needs. The 2007 Council Recommendation calls for improving efficiency and equity in education and training, especially in their responsiveness to labour market needs and for increasing the diversification of tertiary education supply. More effort is also needed to increase investment in human capital to ensure full implementation of the proposed educational reforms. The ESF can play an important role with the new ESF programmes 2007-2013 on education and employment.

Denmark

Analysis and trends : Youth employment in Denmark is among the highest in the EU. In 2006, 64.6 % of the 15-24 years old were employed (includes also part-time) and more than half of young people under 20 were active in the labour market. Danish youth unemployment is low both compared to other groups in the Danish labour market and in an international perspective. In 2006, only 5.3% of the total group of 15-24 years old were unemployed, and in particular for young persons under 20 the share was significantly lower. The upper secondary education level attainment of 77.4% in 2006 is about EU average, while the share of early school leavers (2006: 10.9%) is close to the EU target for 2010. There are only modest gender differences in employment, unemployment or educational attainment levels, but immigrants still have markedly lower employment rates. Apart from reflecting the general social norms and the overall high employment in Denmark, the positive outcomes for youth can in particular be attributed to successful active labour market programmes over the last decades.

Policy analysis and ESF contribution : While measures to promote youth employment in general are integrated in the programmes of labour market and employment policy, a number of special initiatives have been taken to address youth unemployment. To attract and retain more young workers the main initiatives in recent years are focused around the so-called Youth Unemployment Programme which was launched in 1996, partly financed by ESF, and which introduced a special activation and a reduced benefit regime for young unemployed. Several reforms since then have reinforced the programme by combining "sticks and carrots" to motivate young unemployed to take up training or jobs. An important "youth guidance system" was set up by municipalities to supervise the transition from the basic educational system and into further education. Another initiative was the set-up of "production schools" - with continuous intake and great diversity - established in many municipalities to assist young people under the age of 25, to complete a youth education programme. The aim is to enhance students' personal development and to improve their qualifications with a view to completing a vocational training course. A lifelong learning Task Force was set up in 2004 and high schools have been given more flexibility in their different educational segments.

Challenges and policy direction: Despite good performance, a number of more long-term challenges persist. Firstly, international surveys show that the educational performance only ranks average on a number of key indicators. Secondly, there is still a significant share (29% for men and 21% for women) of each cohort not receiving a formal vocational education and the average age of students is markedly higher than in the EU. Thirdly, youth with an immigrant background have significantly lower employment rates than the average. Recent initiatives taken by the Danish Government are relevant and appropriate and have been effective, especially the programme "A new chance for everybody". Less convincing are the initiatives to improve the educational standard of pupils. So far there are no visible results of these initiatives and it remains to be seen whether their scope is sufficient to reach the ambitious medium term targets.

GERMANY

Analysis and trends : During the period 2000-2005, the youth employment rate decreased continually and fell below EU average, while youth unemployment increased. Due to the recent economic upswing, trends have reversed and youth employment increased slightly (2006: +1.6pp.) and unemployment dropped from 15.5% in 2005 to 13.4% 2006. However, youth with migrant background are overproportionally affected by unemployment. The percentage of early school leavers (13.8% in 2006) is well above the EU target of 10% and the decrease over the period 2001-2004 has stopped. The percentage of 22 year olds having achieved upper secondary education level (71.6% in 2006) has decreased continuously over the last ten years (1995: 79.4%) and fallen well below EU average. Again, youth with migration background are especially affected. School-leavers with lower education levels experience increasing difficulties to enter the mainstream vocational training system and do not find an apprenticeship place.

Policy analysis and ESF contribution : Regarding the need to attract and retain more people , in 2005 the NRP's objective to improve the placement process by attaining, in the Public Employment Service, a ratio of one official to 75 young unemployed (aged 15 to 25) has been reached. However, the NRP's objective, that no young person should be unemployed for more than three months, has not yet been met. Moreover, the demand for apprenticeship places is higher than the supply. The "National Training Pact" between the German government and business associations – which proved to be successful in reducing the shortfall of apprenticeship places - was renewed in March 2007 until 2010. It includes the provision of places for on the job training for young people with limited placement prospects. Various initiatives aim at improving the educational system for which the Länder have the responsibility. A significant share of the ESF programmes is allocated to the young. From 2000 to 2004 € 2.5 bn was spent on programmes to combat youth unemployment with around 650.000 youngsters participating. Young people continue to be a key priority under the 2007 – 2013 programming period, focussing, in particular, on the reduction of school drop out and a smooth transition from school to work.

Challenges and policy direction : The challenge of youth integration in Germany concern in particular youth with less favourable socioeconomic background. In the context of the Lisbon strategy (2007), a Council recommendation was addressed to Germany to provide more effective employment services for young people. Improvements in access to and quality of the education system remain a major challenge. Earlier integration of less-favoured children into the school system, including through pre-school education in the German language, would be a pre-requisite for a successful education and better social and economic integration. As far as apprenticeship is concerned, efforts to increase the number of apprenticeship places via the National Training Pact should be complemented with initiatives to develop alternative forms of training, such as modular approaches for young people who are difficult to place within enterprises. As far as ALMP for young unemployed are concerned, the emphasis could be shifted on measures aiming at improving qualification and finding a job on the regular labour market.

ESTONIA

Analysis and trends : After a strong decline in the youth employment rate between 1997 and 2002 (from 36% to 25.4%), the rate is since then back on the increase and has reached 31.9% in 2006. The unemployment rate of young people was high since 1999 and several times above 20% (23.5% in 2000, 24.2% in 2004), but in 2005 decreased to 15.9% and to 12.9% in 2006. The decrease was much bigger for Estonian speaking youth resulting in a big difference between the unemployment rates for Estonian and non-Estonian speaking youth (9.5% and 29.4% respectively according to national data). The gender gap in youth unemployment reversed between 2000 and 2006 from a disadvantage of men (+2.8pp.) to a more pronounced disadvantage of women (+4pp.). The share of early school leavers is since long in the order of 12.5-14% and stands at 13.2% in 2006. The share of 22-years-olds having achieved upper secondary education level is 82% and thus is relatively close to the EU target for 2010.

Policy analysis including ESF contrib ution: The new Labour Market Services and Benefits Act which came into force in January 2006 foresees several new active labour market measures such as personalised case management, extensive job search assistance and counselling for risk groups including youth, disabled people and non-Estonian speakers. Apprenticeship schemes are foreseen for young unemployed whose access to labour market is restricted due to lack of work experience. Career counselling system is being developed in order to guarantee availability of relevant information for making career choices based on the demands of the labour market. The Youth Work Strategy 2006-2013 has been adopted by the Government, aiming at better integration into society and improved competitiveness in the labour market of young people. - Measures are foreseen to improve the functioning of the labour market, reduce undeclared work, modernise labour relations and improve the working environment for all employees. Amendments have been made to legal acts aimed at increasing flexibility in labour relations. The modernisation of the educational system and an improved quality of education including the level of teaching Estonian to the non-Estonian speaking youth shall contribute to better labour market integration. In order to reduce drop-out from basic schools measures are being implemented such as improving access to education for children coming from risk families and creating flexible forms of education. ESF funding supports the integration of youth into labour market through providing e.g. basic education and basic vocational education opportunities as well as integrated active labour market services, career counselling and work practice.

Challenges and policy direction : Strengthening active labour market measures and targeting the needs of different risk groups as well as improving labour market flexibility remains an important challenge for Estonia. To ensure that the skills of the labour force, including young people, would meet the requirements of the labour market, co-operation between educational institutions and employers should be improved and the quality and flexibility of education increased. The reforms in education and lifelong learning should be reinforced. Reducing school drop-outs and improving access to education would need special attention as well as further developing the career and vocational counselling system.

GREECE

Analysis and trends : Greece is facing serious problems with respect to youth. Employment rates among young people are well below EU average since long. In 2006, the youth employment rate of 24.5 % is the lowest in Greece over the last years, although the overall employment rate picked up. Young women’s labour market participation (18.8%) is particularly week, and the gender gap to the disadvantage of women is the biggest in the EU. The youth unemployment rate (24.5% in 2006) is among the highest in the EU, and young women face a much higher risk of unemployment than young men (gender gap 16.6pp. in 2006). However the corresponding youth unemployment ratio is only slightly above EU average. This is probably due to the low youth activity rate. The percentage of 22-year-olds having achieved upper secondary education level is above EU average and progressed from 73.8% in 1995 to 84.1% in 2005, but in 2006 decreased for the first time (81%). The share of early school leavers decreased from 20.7% in 1998 to 13.3% in 2005, but increased again by 2.4pp. from 2005 to 2006.

Policy analysis and ESF contribution : Policy response has mainly focused on the regulatory and organisational aspects of the provision of services in the fields of education, training and active measures. Various schemes have been launched, aimed at promoting youth employment. These actions include individualised assistance and tailor-made action plans for the registered unemployed, acquisition of professional experience (STAGE) and employment subsidies in various public and private sectors (trade, health and welfare, social security, natural environment) and continuing vocational training including for immigrants. The budget of related ESF projects is around 500m€. However, success appears to have been rather modest. In the field of increasing investments in human capital measures include support teaching classes also for minorities, second chance schools, secondary level technical vocational education, initial vocational training at the post-secondary level and secondary level apprenticeship schemes (alternate training). The budget of the related ESF projects is around 600M€. The measures taken since the latest educational reform (1998) have managed to reduce early school leaving rates and contributed to raising educational attainment levels.

Challenges and policy direction : Transition from school to work takes longer in Greece