Labour ministers up the fight to prevent a lost generation

"It is awful how many long term unemployed are young. For us this is an entirely new phenomenon," said Árni Páll Árnason, Iceland's Minister for Labour and host for the meeting on 11 November 2009.

The finance crisis has hit all the Nordic countries. Unemployment has risen sharply year on year. Sweden, Finland and Iceland are hardest hit. Denmark has seen a sharp increase in unemployment over the past six months, albeit from an historically low level. The same can be said to a certain degree about Norway, yet unemployment there is still lower than in the other Nordic countries. 

Labour market outlooks offer no signs of improvement. Unemployment will continue to rise in the coming year. It is uncertain whether it will turn in 2010 or 2011, but most believe the crisis is temporary. What's more, the large post-war generations will soon retire. And when things start looking up, labour markets will need competent manpower.

"We have never experienced this level of unemployment, so it is useful for us to learn from the experiences in other Nordic countries," said Árni Páll Árnason, Iceland's Minister for Labour and Social Affairs.

Árni Páll Árnason’s new idea is to involve the whole of civil society to help activate the unemployed. Important players would be the Red Cross, sport organisations, the church, trade unions and others. The important thing is to avoid people becoming passive. Yet youth on state benefits are not always motivated, said Árni Páll Árnason. Many young people end up with too much cash, because they have no dependents. The government is now looking at ways to make some of the unemployment benefit dependent on young people's participation in education, courses or voluntary work.

On the look-out for young people

"We go looking for young people who are not in education or work. This is true. That's how we do it nowadays," said the Finnish Minister for Labour Anni Sinnemäki.

Finnish municipalities have spent time actively looking for those who are not in education and who have failed to find work. Because these young people are not registered anywhere, this is not a routine job. It's been a positive experience, she said.

"When you talk to young people one-to-one, nearly all of them say they want something to do."

One year ago 20,000 young people under 25 were out of school and out of work in Finland. Today there are 35,000.

The Finnish government has led an expansive economic policy and introduced tax cuts as its two main incentives to stimulate growth. The government has subsidised salaries to make it more tempting for employers to hire young people. But education remains a focus.

"We have increased the number of vocational school places. We try to tempt young people into education by offering a flexible start so that those who still don't know what they would like to do can try various subjects," said Sinnemäki.

She is on the hunt for more ideas. One is to create more flexibility around unemployment benefits, so people can keep receiving it even when they study.

Starting adult life - as an outsider

These are dramatic times.

An estimated 10,500 young people between 15 and 17 in Denmark have no job and is not in education. The government has decided to target this group with special or individual help via job centres.

"If young people don't join in they'll struggle with this for the rest of their lives. There is a real risk they will never fully join the labour market," warned Bo Smith, Permanent Secretary at the Danish Ministry of Employment. Denmark is still in the grip of the economic crisis, he said.

"The Danish government has led an expansive economic policy and used tax incentives while keeping an eye on vulnerable groups, especially the young."   

Analysis show there is a need to strengthen efforts to reach young school drop-outs who can't find a job. The Danish experience has been that active measures rather than passive ones increase the number of people who find a job. 

The government recently reach an agreement with opposition parties to strengthen measures aimed at reaching young people. The main principle is to get young people with an education into jobs and young people without one into education.

Post-traumatic shock

EU Commissioner Vladimír Špidla also attended the meeting, and focused on the psychological results of unemployment. 

"After being unemployed for 60 days the reaction can be compared to post-traumatic shock; people turn completely passive. So psychological support for the unemployed is very important. You need to map the psychological reaction from day one and try to rebuild the person in a situation which to them will be completely new. We must also not forget there are possibilities within all systems," he said.

Norway fares better

Unlike other Nordic countries, Norway has not used tax cuts but the government has increased public spending. Municipalities have benefited because they are not hit by job losses. That has mainly been a problem for the private sector. Higher unemployment has been fought with increased labour market measures and an improvement of redundancy rules to prevent companies loosing valuable expertise. 

State Secretary at Norway's Ministry of Labour, Jan-Erik Støstad, said Norway had not been particularly hard hit by the crisis because of high oil revenues and the government's policies to fight the downturn.

He was more concerned about the cost of incapacity benefits, pensions and an increase in sick leave. There aren't many young people who are out of work, he said. 

Nevertheless, young people do represent a vulnerable and hard hit group in the labour market. Unemployment for 15 to 25 year-olds stand at nearly 10 per cent, up two per cent on 2008.

"It is hard to interpret this number," said Jan-Erik Støstad.

"We need to get hold of and identify unemployed school drop-outs and get close enough to them to prevent them from remaining permanently outside the labour market."

One tool the Norwegian government uses to target youth is the Youth Guarantee. It aims to offer labour market measures to those under 20 who are not in education and without a job. Those between 20 and 24 who have been unemployed for more than three months are entitled to motivational follow-ups helping them with job seeking and personal activity. 2009 saw the introduction of an action guarantee for young people who have been unemployed for more than six months. In addition to all this, said Jan-Erik Støstad, there is a need to create  a more comprehensive youth policy.

Activation + education

Sweden has the highest unemployment of all the Nordic countries. Youth unemployment is above the EU average. There were 126,000 fewer people between the ages of 15 and 74 in work in 2009 compared to the previous year. Men and young people are hardest hit. Youth unemployment (for those between 15 and 24) hit 22.2 per cent in the third quarter of 2009 - up 5,9 per cent on 2008.

"The numbers might shock you," admitted Sweden's Minister of Employment Sven Otto Littorin, but when you look closer nearly half of the unemployed are full-time students looking for jobs while finishing their education. Swedish youth also spend less time being unemployed compared to other countries. Some 30,000 of them are in danger of ending up as permanently unemployed. Our challenge is that we don't know who they all are, said Littorin. 

"So what do we do about it? Firstly, we don't believe this crisis will be long term. Secondly, we're about to have a generation change. To keep young people active we focus on education and activation programmes," the Swedish minister said.

Like all Nordic countries, Sweden too has developed policies to fight the economic downturn. Job centres have been given the task to execute labour market measures aimed at both the short and long term unemployed. There will be more money to fight unemployment in the 2010 budget

Young people will be offered coaching from day one, and the youth guarantee which comes into effect after three months of unemployment will be strengthened. The government has also cut employers' fees for young employees and focused on "new start jobs" for the long term unemployed. There are also tailored courses to get those who have dropped out of secondary education or college back into education. Over-20s will also be allowed to benefit from the government's job guarantee, part time, while attending adult education. And young people are being encouraged to start their own businesses. 

"We have a record number of young people in various programmes. All this helps lower the threshold for getting into the labour market," said Littorin.

"Powerful measures within the education system combined with active labour market measures give youth the chance to increase their competence, making them better prepared for the future and preventing them from becoming a lost generation," Sweden's Minister of Labour Sven Otto Littorin concluded.