There was a headline last week that one can only describe as frightening. It read, ‘Eurozone youth unemployment reaches record high of 24.4%’. In October there were just under 3.6 million under-25s who were jobless, an increase of 15,000 over the previous month.

The news is frightening also because there are no signs that the problem is being resolved.

In fact, adult unemployment has decreased marginally, which indicates a slow, even if fragile, economic recovery, while youth unemployment is continuing relentlessly with its upward movement.

The data on unemployment in the eurozone are showing that Spain’s youth unemployment rate has now increased to 57.4 per cent, only marginally below Greece’s August high of 58 per cent.

Greece’s youth unemployment remains at the highest rate for any country in the eurozone’s history. Italy’s youth unemployment rate rose to 41.2 per cent, from 40.5 per cent the previous month.

In Portugal it rose to 36.5 per cent from 36.2 per cent. The trend is not the same everywhere, as Germany has a 7.8 per cent youth unemployment rate and the Netherlands 11.6 per cent.

The World Economic Forum commented on this development and claimed that “a lost generation of jobless youth in the eurozone could tear the single currency apart if nothing is done to address chronic levels of unemployment”.

Analysts are also fearing an increase in social unrest as a result of such high youth unemployment.

Unless young people are productively employed, crime rates would be expected to rise, the economy would stagnate even further and the social cohesion would be lost.

Moreover, because of the fragility of the economic recovery and the high level of uncertainty, there is now the expectation that things will get worse before they get better.

Another international organisation has also commented on the problem of youth unemployment. The Organisation for Economic Cooperation and Development claimed that high levels of youth unemployment will lead to widespread poverty in old age as young people struggle to save for retirement.

The idea of private pension schemes built around monthly contributions is unsustainable if young people cannot hold on to a job for any length of time, or if they spend a great deal of time living on social benefits.

In addition, the fact that many young people are unemployed also means that they may not contribute enough to state pension schemes, and so will have low retirement incomes when they eventually reach pension age.

One of the aspects that are being mentioned as a hindrance to having more young people moving into work is labour laws. Lack of flexibility at the point of entry into the labour market and lack of flexibility at exit stage is leading employers to shy away from employing new persons.

Such restrictive practices make employers reluctant to take on the additional cost of a new employee, unless they are certain of being able to sustain such costs.

This has meant that many younger workers were hired on temporary contracts, without the same privileges and job security as permanent employees.

Long-term unemployment among youths will also lead to a stronger attitude towards dependence on the state. Thus we could end up in a number of years with a core of the labour force that has grown accustomed to not fending for itself and to lengthy periods of not being productive.

As businesses face the challenge to increase productivity in order to remain competitive, the eurozone may find itself with hordes of unsuitable, unemployable workers. This would happen not because they would not have the appropriate technical skills, but because they would not have the appropriate work ethic.

The sense of helplessness is probably best exemplified by the adjective used by someone recently. He described the current generation of young people not as the “jobless” generation but as the “lost” generation.

However it needs to be said that it cannot be that all is lost. The fact that in the eurozone there are a few virtuous countries (and Malta is one of them) in respect of employment means that it is possible to generate jobs today. What must be understood is that jobs are not created by governments; they are created by the private sector who invests in productive activities.

We must therefore ensure that the right environments are being created to allow key business sectors to flourish, grow and create these new jobs.

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