Labour market situation of young

people in Central and Eastern Europe

Sandrine Cazes

ILO-SRO, Budapest

Outline of the presentation

Overview of labour Market trends in Central and Eastern Europe over the 1990s

Young people in the labour market => which LM outcomes?

Labour market trends in CEE over the 1990s

Decline in employment Shrinking labour force participation

rates Persistent high unemployment: despite

economic growth, employment did dot recover

Labour market trends in CEE over the 1990

Growth of informal sector Insecurity of employment and income

has sharply increased in the transition period.

Labour market trends in CEE over the 1990

Characteristics of unemployment

– High long-term unemployment– Large regional disparities in

unemployment– Most hard hit groups: youth, low-skilled,

people with disabilities, certain ethnic minorities

Labour market trends for youth

Falling labour market participation– Decline in labour force participation rates

of young people deeper than for any other age group of the population.

– Reasons: increased participation in education and higher discouragement of young workers

Youth unemployment What is the size of problem?

Different indicators can be used to measure youth unemployment, each representing different aspect of the problem (see Table)

Youth unemployment

CZ ES HU LV LT PL SK SL

Youth u rate (%) 16.6 22.2 10.8 20.7 41.0 39.1 16.2

Youth /Adult

u ratio

2.4 2.0 2.2 1.8 2.7 2.5 3.7

Share of youth/ total u

25.7 21.3 23.9 18.1 17.7 28.1 31.5 30.9

Youth unemployment High unemployment Important disparities in youth u rates within the

region- 10 % in Hungary; 40 % in Poland and Slovakia

Youth u rates high relative to adult rates - 2.5 times higher

Most vulnerable young women with small children, unskilled youth and socially disadvantaged youth (Roma)

Labour market trends for youth

High incidence of flexible forms of employment

– Part-time employment– Time-limited labour contracts– Non-labour contracts– Self-employment– Multiple job holding– Informal employment

Labour market trends for youth

High labour turnover and short job tenures characteristic for young workers- 2 years on average for a sample of 8 CEE transition countries compared with 8.5 years for the whole working population

Duration of unemployment tends to be shorter

Trends in education of youth

Education levels of young age groups are increasing

Shift from secondary vocational education to general education

More young people in universities, shift away from technical disciplines to economics, business management, social studies, etc.

Too narrow specializations have been overcome but faced with the creation of new skill mismatches

In some transition countries large dropouts – threat for the future

Unemployment & its effect on youth

Risk of poverty (income) Alteration/loss of Human Capital (LTU) Delay to entry into labour market Risk of migration (brain drain) Informalization Human trafficking, Increases of risky behaviour

Conclusions Young people on average more educated, more

flexible and mobile, able to learn new skills and adapt to new conditions of work, lower paid (therefore cheaper), for employers worth the longer-term investment in their training.

All this increases their employment chances in the longer run.

Conclusions However, young people are less experienced at

work and therefore less productive, often with non-matching skills for the vacant job and then more costly in terms of training needs, less reliable, often changing job, with family responsibilities lowering their flexibility, time at work and sometimes productivity.

All this decreases their employment chances in the short- to medium run.

Conclusions Many of the latter real or presumed disadvantages

can and need to be addressed by appropriate

education, labour market, social and family policies.

Determinants of outcomes-some tracks

General LM conditions– Aggregate demand– Skill mismatch– Role of Labour market institutions &

regulations

Determinants (cont.) More specific to young people

– Demographics (youth cohort) – Education– Wages / Labour Cost – Reluctance to hire first job seekers– Barriers to access self-employment– Role of Labour market regulation

Youth unemployment

AL* BiH BU HR MA MO RO SM

Youth u rate (%) 43.1 38.4 37.3 56.1 16.2 17.5 49.6

Youth /Adult

u ratio

2.2 3.5 2.2 2.8 3.6 ..

Share of youth/ total u

46.0**

21.3 34.4 28.1 30.1 34.9 ..