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News : EU Economy Last Updated: Aug 12, 2015 - 2:27 PM

High EU youth unemployment rate not as bad as it seems
By Michael Hennigan, editor and founder of Finfacts
Aug 12, 2015 - 7:03 AM

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During the crisis years the official EU (European Union) youth unemployment rate, in particular in respect of Greece and Spain, has been stunning but it's not as bad as it seems.

This is for example a recent comment from the Guardian: "The crisis has hit Greece hard, but none harder than its young people. With nearly 60% unemployed, many are living in limbo, waiting for life to restart." The Daily Telegraph reported: "Youth unemployment in Greece stands at a staggering 50% right now. Alongside them, the group that has been hurt the most is those in their late thirties and early forties, professionals who are way into their professional lives, making them too expensive to employ compared to the young coming on to the job market with great qualifications, but not senior enough to challenge the boomers who, like in most of Europe, got off lightly compared to everyone else.

Equally spread between men and women, the ailments of the Greek economy have brought medical and social issues to the forefront. Heart attacks among the under-45 have jumped by 74.5%. The greatest increase was amongst women, at 86.5%. In 2014, there were 802 new cases of HIV infection, of which 86.8% were men."

Meanwhile on August 1, Business Insider reported on Eurostat's jobless data for June 2015: "Italian youth unemployment broke a new record today, hitting the eye-watering level of 44.2% in June’s figures. That’s despite the fact the Eurozone is clearly now recovering (slowly) from years of recession and stagnation. Only two European countries have higher youth unemployment than Italy. Greece’s rate is 53.2% and Spain’s is 49.2%.

Last month, The New York Times noted Greece's "youth joblessness now topping 50%."

On Tuesday to mark International Youth Day, Destatis, the German federal statistics office, reported that Germany had the lowest youth unemployment rate in Europe at 7.7% in 2014 with roughly 330,000 young people aged 15 to 24 years unemployed in Germany, according to results of the labour force survey.

The Eurostat data for June 2015 shows 4.7m under 25s jobless in the EU 28 and 3.2m in the Euro Area giving respective rates of 20.7% and 22.3% — down about 400,000 and 220,000 persons in 12 months.

The rates cited above are based on a denominator that mainly excludes young people aged 15 to 24 years who are in education and official training programmes.

In 2013, Eurostat did an analysis of the 2012 data comparing the youth unemployment rate with the youth unemployment ratio, which has the same numerator as the youth unemployment rate, but the denominator is the total population aged 15 to 24.

The EU28 had a youth unemployment ratio of 23% and an unemployment ratio of 9.7% while the Euro Area (then comprising 17 countries) levels were at 23.1% and 9.6%.

Greece was at 55.3% and 16.1%; Spain was at 53.2% and 20.6%; Ireland was at 30.4% and 12.3% and Germany was at 8.1% and 4.1%.

Eurostat notes an overlap between education, employment and unemployment as employment is defined by the International Labour Organisation (ILO) as having paid work of at least 1 hour per week, and unemployment as looking for such work.

Eurostat says:

A 25% youth unemployment rate does not mean that '1 out of 4 young persons is unemployed'. This is a common fallacy. Also, the youth unemployment rate may be high even if the number of unemployed persons is limited. This may be the case when the young labour force (i.e. the rate's denominator) is relatively small. This is not an issue for the unemployment rate of the whole population of working age due to the higher participation of that population in the labour market (43% at ages 15-24, compared to 85% at ages 25-54, 2012 EU-28 estimates)."

In June 2015, there were 760,000 unemployed 15-24 year olds in Spain; 712,000 (April) in UK; 682,000 in Italy; 639,000 in France; 295,000 in Germany, and 155,000 (April) in Greece.

These are not insignificant numbers.

However, the main message here is that while the media and commentators generally understate the real adult rate of unemployment by only citing the official rate (see here in respect of Ireland; see here in respect of Portugal), they overstate what the public would view as the real youth unemployment rate.

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