Do the statistics paint a true picture of youth unemployment?

A new Nordic report, ‘Youths in work in the Nordic region’, explores the question in detail and looks at four different factors which might explain the differences between the countries:

▪ The need for labour

▪ The structure of the education system

▪ The flexibility of workers’ rights

▪ Youths’ salary levels

Åsa Olli Segendorf, the report’s main author, concludes that apprenticeships make a great difference to how many youths can be classified as being employed. ILO’s statistics classify apprentices as being employed, because they are being paid during their time in training.

In Denmark nearly one in four employed youths is an apprentice, in Iceland and Norway the figure is nearly ten percent while in Sweden the number is negligible. Yet the differences in apprentice systems cannot fully explain the different unemployment levels.

Media often quote numbers which show Sweden and Finland having the highest level of youth unemployment. The difference is greatest among the youngest age group; 15–19 year olds:

Unemployment 15-19 year olds. Source: AKU, OECD

Yet comparing an older group of youths – 25–29 year olds – throws up much lower unemployment figures. At the same time it is considerably higher in Denmark, while Sweden and Finland’s figures are lower than the OECD average. The 2008 economic crisis can be seen clearly in the statistics for Denmark and Iceland. Norway still enjoys very low unemployment:

Unemployment 25-29 year olds. Source: AKU, OECD

If you look at employment rather than unemployment, it is higher for 15–19 year olds in the Nordic countries compared to the rest of the OECD. Another difference is the higher number of girls who work compared to boys from that age group, which is not the case elsewhere in the OECD:

Employment rate 15-19 year olds 2012. Source: AKU, OECD

Iceland stands out with a very high number of 15–19 year olds working part time while studying.

Looking at the older age group of 25–29 year olds, the differences even out, while men work more than women:

Employment rate for 25–29 year old women and men, 2012

The report says Sweden has the least flexible workers’ rights for young people. The wage distribution is also narrowest in Sweden.

Young workers are at a disadvantage compared to middle aged workers in the labour market because they have less experience and are therefore often less productive. 

“If you don’t compensate for the difference in productivity by lowering starting salaries for young people, you might end up with a higher relative youth unemployment because employers’ wage costs increase,” writes Åsa Olli Segendorf.

It is nearly impossible to find statistics for the youths’ general salary level, because the minimum wage – which is most often what young people are being offered – is agreed on after negotiations between employers and trade unions, rather than being introduced through legislation like in most other European countries. 

A 2011 Nordic survey of workers in the service and retail industry does, however, throw up rather large differences between the countries, especially for Iceland.

Minimum wage in SEK after purchasing power parity adjustment

The report does not give a final answer to why there are differences in youth unemployment between the countries.

“But possible explanations include institutional differences in education systems leading to different levels of labour market attachment, differences in the flexibility of workers’ rights, differences in minimum wages and the fact that the different countries have different needs for labour,” writes Åsa Olli Segendorf.