Downturn hits youth hardest - Sweden takes undesirable lead

The downturn has hit Swedish youth harder than any other age group in Europe. Swedish youth unemployment is nearly five times that of other age groups. Denmark has seen the opposite, with 15 to 24 year-olds enjoying the lowest unemployment figures of all age groups.

The economic crisis has not hit the Nordic countries equally hard. For now, Norway and Denmark still enjoy low unemployment figures of around three to four percent, while figures for Finland, Iceland and Sweden climb to eight and nine percent. The gap between the countries widens further if you look at youth unemployment. Sweden's total unemployment is two and a half times that of Norway, while youth unemployment figures are three times higher. This was the situation in July:

Nordic youth unemployment

percentage of the total work force, July*:

Sweden     27.3
Finland      22.6
Iceland      21.9
Denmark   11.2
Norway       8.9

Total EU unemployment was nine percent in July. 19.8 percent of 14 to 24 year-olds were out of work, and the unemployment figure for 25 to 74 year-olds was 7.7 percent.

In Sweden the car industry has been hardest hit by the crisis, suffering a whopping 62.5 percent fall in production during the first quarter of 2009. This led the public debate to focus mainly on Volvo and Saab. Meanwhile the city of Gothenburg has seen a worrying trend of youths setting cars ablaze. 100 cars were damaged in less than a month. Some fear Sweden is sinking into the kind of suburban riots led by disillusioned youths that France experienced in 2005. Others believe it is simply a gangland power struggle.

In July 155,000 Swedish 15 to 24 year-olds had no work. That's 28,000 more than in July 2008.

In Finland it has suddenly become much harder for fresh graduates to find work. Youth unemployment has increased dramatically. In July 43,000 job seekers below 25 had registered with job centers - an increase of 16,000 on last year.

In Iceland the economic crisis has meant young people no longer can afford to study abroad. There has been a 25 percent fall in the number of applicants for loans for overseas studies - the Icelandic Krona is simply too weak. The number of unemployed youth has risen to 4,300 during the second quarter, compared to 3,000 last year.

In Norway more and more young people choose to continue studying rather than trying their luck in the labour market. The number of 15 to 24 year-olds in employment fell by 10,000 during the second quarter compared to 2008. This age group made up 40,000 of the total number of 89,000 unemployed. That is an increase of 7,000 on last year.

Denmark is the exception - both in the Nordic region and further afield. Youth unemployment is still very low. Unemployment figures of under-25s is lower than for the rest of the population. This is much thanks to a targeted program over the past 15 years to help young people enter the labour market - although there is still a slightly higher than average unemployment rate for those aged between 25 and 29. The Danish government has been quick to introduce measures to prevent chronic youth unemployment, promising to spend 1.4 billion Danish kroner - 1 billion of which should create 5,000 new apprenticeships.

Danish graduates celebrating - they also stand the best chance of getting work out of all Nordic youths.

OECD: Bold measures needed

When OECD Secretary-General Angel Gurría launched the annual Employment Outlook on 16 September, he stressed the importance of a joint effort between industrialised nations to keep investing in labour market measures.

- Help young people who have been hardest hit by the crisis, especially those with few or no qualifications. Targeting this group will reduce the risk of a "lost generation" of young people falling into long-term unemployment and losing touch with the job market, he said.

Youth lack the same employment protection enjoyed by older workers. They also have not had time to build up the same level of unemployment protection. Young people often work in businesses which are vulnerable in downturns, and they lack the competence of those who have worked for many years. The OECD does say there are early signs of economic recovery. But unemployment will rise in the short term, and by the second half of 2010 it  will reach a post-war record high of 10 percent, with 57 million people out of work. The lowest rate since the war - 5.7 percent - was recorded no longer ago than 2007.

Modest on labour market policies

Governments have invested enormous sums to prevent a collapse of the financial system, but Angel Gurría is not impressed with what has been spent on active labour market policies.

- If you look at the resources available in national stimuli packages and the magnitude and pace of the job losses, resources for active labour market policies are rather modest in many countries. This looks like a missed opportunity, he says.

There is a risk of long-term unemployment, where unemployment rates do not fall with the easing of the downturn. It has happened before, as the newly unemployed become less active in the labour market - often abandoning the search for new jobs and beginning to suffer from the effects of unemployment: bad health, lower standard of living and depression.

 * The numbers for Norway is June, for Iceland the second quarter.