The financial crisis that erupted three years ago has revealed a number of structural challenges in many Western economies that will optimistically take years to resolve. Among the principal bones of contention remain the sustainability of ever-rising government debt leading to crushing austerity measures, the stability of our present banking system and, last but not least, the challenges of job creation, especially for the young.
In most parts of Europe and the US the recession has severely impacted on employment growth, especially in the youth category. Almost everywhere in Europe the last three years saw declining employment rates that have hammered young people’s expectations for the present but more so for the future. No more is this more pronounced than in the countries of southern Europe. Ironically, as the younger generations become more educated it appears they end up being overqualified and essentially under-employed! This is leading to a frustrated generation unable to get on with their lives and future plans.
This situation further compounds another pressing issue. Europe’s demographic reality has rapidly spread around the Mediterranean. The fact is people are living longer and having fewer children. A growing legion of unemployed youths will further pile pressure on an already stretched welfare system and creaking pension edifice as fewer contributions are made to state coffers.
Young people in Greece, Italy, Portugal and Spain nowadays feel increasingly shut out of their own futures. Experts concur this trend could have calamitous consequences on social stability and state tax revenues. In recent weeks and months, unrest among southern Europe’s young has become even more pronounced.
Since Greece faced up to its fiscal realities, the country has been in constant turmoil. In Italy, a spate of anarchist letter bombs has put the country on edge. Tens of thousands of students demonstrated in anti-government protests in Rome, culminating in several violent scenes.
Admittedly the incidents are sporadic and disparate but they have continued to contribute to a growing sense of volatility, especially in these southern European countries. Essentially, the most highly educated generation in the history of the Mediterranean hits the worst job market. An Italian woman, a lawyer with a Master’s degree but without a steady job or income, dryly commented on her predicament: “I have every possible certificate except a death certificate!”
The economic crisis that has hit the region further highlights the difficulties young people have generally faced in these societies where low growth and a questionable, and sometimes absent, system of meritocracy has long posed innumerable challenges to young people in Greece, Spain, Portugal and Italy. As the crisis continues to bite, the introduction of severe austerity measures further complicates the situation. As fewer opportunities arise many are left fighting to establish themselves in the labour market.
Youth unemployment has hit hard, especially in Spain and Italy. Spain has a rate of youth unemployment that reaches 40 per cent. Italy does not fare much better considering they have a rate of 28 per cent. The International Labour Organisation estimates the global average rate of youth unemployment is about 13 per cent. This is a far cry from the Spanish and Italian averages.
Strict and arcane labour laws continue to add pressure as youths find it challenging to replace older workers. Older workers enjoy conditions and long-term contracts reflecting a different economic reality of the past. Furthermore, any changes to national working contracts involve complex negotiations between governments, businesses and labour unions. To boot, firing full-time workers involves hefty compensations that businesses loath.
This has continued to strengthen the option of low-paid, short-term contracts. Effectively, young people are being exploited by the very system devised years ago to combat unemployment and inflexible working conditions. This is clearly unsustainable in the long term with its implications on social welfare and future pension payouts.
Thankfully, Malta’s youth unemployment is much lower at about 13 per cent. The threat of massive increase in the general unemployment figures in our country was averted especially last year with the rapid intervention of the government and the steadfastness and maturity of both unions and businesses displayed during the most difficult months of 2009.
Malta has returned to stable growth and it is likely the worst is over. Although we do not have the severe problems of our neighbours, it is abundantly clear that lessons should be learnt. If anything, our demographic trend is very similar to theirs. It is high time the long-awaited pension reform kicks off so as to thwart unappetising situations evidenced by countries like Greece and Italy. Evidently there is no time to lose!
info@carolinegalea.com
The author is a member of the executive committee of the Nationalist Party.