Understanding and resolving high youth unemployment

The failure of companies, education institutions and young people to understand one another is one of the reasons why employers are not getting the skills they need and there are now 5.6 million young people jobless across Europe, according to a report by McKinsey & Company.

A total of 7.5 million young people are neither being educated nor working, according to Education to Employment: Getting Europe’s youth into work. “To cite our 2012 report, they operate in ‘parallel universes’,” said the global consulting firm in a summary of the study.

“In Europe, 74% of education providers were confident that their graduates were prepared for work, but only 38% of youth and 35% of employers agreed. The different players don’t talk to one another and don’t understand one another’s expectations and needs.

“Only in Germany and the United Kingdom did most employers report that they communicate with education providers at least several times a year. In Portugal, only a third did. And only in Spain did most employers report that their interactions with providers were actually effective.”

Obstacles

Authors Mona Mourshed, Jigar Patel and Katrin Suder found that young people faced three major obstacles: enrolling in post-secondary education, building the right skills and finding suitable jobs.

In further education, the biggest barrier in Europe was cost. Despite university tuition fees usually being highly subsidised, the costs of living while studying were too expensive to sustain. In some countries, non-academic vocational courses were not subsidised at all.

Students also lacked information: except in Germany, less than 25% percent said they received sufficient information on post-secondary courses and careers to guide decisions.

The transition to work is another difficulty for many youngsters.

“One-third fall into interim jobs after graduating, and many more struggle to find a job at all. Many lack access to career support services at their post-secondary institution. Many more do not pursue a work placement, in spite of this being a good predictor of how quickly a young person will find a job after his or her studies are completed,” said the report.

Of the young people interviewed for the study, only one segment – the ‘high achievers’, representing 10% of those surveyed – found good jobs. A total of 79% were frustrated by lack of support and unhappy at their prospects.

“They had different responses to these circumstances, from fighting for every opportunity they could get (but rarely succeeding) to losing heart and leaving education as soon as possible.”

To make rational decisions, suggested the report, young people needed to think far more strategically.

“This is particularly important in Europe, where students often have to make life-defining decisions about their educational future by age 15 – the time when many choose whether to pursue academic or vocational tracks. Students need more and better quality information about different career paths, and need to be motivated to use it,” according to the authors.

The report said that in contrast to the findings of a previous global survey, in Europe small firms were more likely than large ones to report problems in business due to lack of skills. They also had the greatest problems identifying and recruiting new staff and were less likely to work with education providers or other employers to tackle skills problems.

“This phenomenon is particularly acute in Greece, which has both very high rates of youth unemployment and a high reliance on small businesses as a source of employment,” wrote Mourshed, Patel and Suder.

Some recommendations

Recommendations by the researchers included innovative financing to make education more affordable and accessible for students.

For example, governments and private financial institutions could offer low-interest loans to students taking courses with a strong employment record and also explore initiatives allowing them to repay loans in the form of services, like tutoring younger students.

Tracking graduate employment and job satisfaction, and focusing more on what happened to students after they left school, should be a priority for education providers.

To improve student prospects, institutions should work more closely with employers to ensure they were offering courses that really helped youngsters prepare for the workplace.

Also: “Understanding the mix and concentration of employer and youth segments by country is critical – each segment requires a different set of interventions to reach its potential.”

One suggestion was to break up degree or vocational programmes into modules – weeks or months – that focused on specific skills while still counting towards a degree or formal qualification. This would enable “young people to take a break in their studies to work for a period, and then return and pick up where they left off”.

The European Union had a critical role to play in three areas, suggested the report.

It could develop and share a more comprehensive labour market platform incorporating the most up-to-date data to capture employment trends by sector and region, and share practices on matching labour market demand and supply.

It could also make vocational qualifications transferable across borders, as has already been largely achieved by the Bologna process in higher education.

Youth unemployment, the report said, was a huge challenge for Europe’s future – and countries and the EU should recognise this.

“Only by reaching across their parallel universes can all parties affected by the crisis of youth unemployment create an education-to-employment system that works more effectively and benefits all.”