Youth Employment and Opportunities on Europe’s Southern Coast
08 Jun 2023 – Written by Sarah Hunter
Summary
- The current average unemployment rate across Europe is at 6%, but is considerably higher in Spain (13%) and Greece (11.6%).
- Employment levels across Southern Europe took a hit as a result of the 2008 economic crash and the subsequent austerity measures taken across these nations.
- Unemployment in Spain and Greece remain high today due to issues with the tourism industry after the global pandemic, the lack of vocational training available and lower levels of funding in education.
- The European Union are taking initiatives to help youth unemployment rates specifically in Spain and Greece and this is being done through training programmes and grants.
- These initiatives need to continue being put into practice and expanded to try and raise employment levels in both Spain and Greece.
Introduction
This article examines unemployment rates across Southern Europe and assesses the reasons why both Greece and Spain have failed to bring their unemployment rates closer to the European average. The article will first start by discussing the recent historical background of unemployment across Southern Europe with a focus on the employment levels in Greece and Spain during and after the 2008 economic crisis. The essay will then move on to analyse current unemployment statistics and the reasons why Spain and Greece still have the highest unemployment rates across the European Union. Finally, the article will move on to look at EU policies surrounding unemployment and measures that the Union has taken or plans to take to try and bring employment levels up in both Spain and Greece.
The average unemployment rate across Europe is currently at 6%, down from 6.2% in 2022, with Eurostat estimating that over 13 million people across the European Union are unemployed, this number being even greater across the euro area (Unemployment rates – die Europäische Kommission, 2023). The average unemployment rate across Europe had decreased by a significant amount before the coronavirus pandemic, and reduced from almost 12% in 2012 to 6.5% by the beginning of 2020. However the pandemic saw a rise in overall unemployment rates again, hitting almost 8% mid way through 2020. Therefore, the current almost 2% drop in the past three years has been a celebrated achievement across Europe as is noted in the European Commission annual growth survey 2023: “Unemployment has reached a record low and employment a record high” (European Commission, 2022).
Spain and Greece however, have unemployment levels significantly higher than the EU average, the unemployment rate in Spain currently falls at 13% and 11.6% in Greece. Furthermore Italy and Portugal, who had also suffered a large hit to employment rates similarly to Greece and Spain in the aftershock of the economic crises that hit Europe in 2008 and 2012, are now more in line with the EU average. Italy’s unemployment rate currently sits at 7.9% and Portugal at 7.1%. (O’Neill, 2023) Whereas Czechia, Poland, Germany and Malta are the four countries with the lowest unemployment levels in the EU, falling at; 2.5% (CZ), 2.8% (PO) and 3% (GR and MA).
Recent historical unemployment rates across Southern Europe
In 2008 Europe experienced what has been referred to as the ‘Great Recession’, arising due to an extremely unhealthy balance of payments; overspending by many European governments putting them further into a budget deficit; a greater debt to GDP ratio; and from a banking and financial institution collapse. This crisis swept through the whole of Europe and saw further pressure put on to the euro, with many countries needing economic bail-out’s from institution’s such as the European Central Bank and the International Monetary Fund in return for the implementation of austerity measures. Petmesidou and Guillén (2014) note that “The latest crisis broke out in 2008 in SE (Southern Europe) and lasts to date. The credit crunch, turned into a sovereign debt crisis in SE, has intensified the challenges and tensions faced by the SE welfare states”. Moreover, with increasing levels of national debt already mounting pressure on public services and the welfare states across Southern Europe during this time, the subsequent austerity measures taken intensified these pressures further and led to an underfunding of public services.
Austerity measures refer to a reduction in government spending to try and improve national debt and the governments budget deficit. Zamora-Kapoor and Collier (2014) state that austerity “policies have reduced the state’s participation in the economy and, in turn, increased unemployment rates”.
Such measures taken by the Southern European nations subsequently led to an average reduction in household income by between 5% (Spain) and 16% (Greece) (Zamora-Kapoor & Coller, 2014). Less government spending leads to an overall reduction in household income due to the cuts presented to public sector jobs, the lack of benefits and pensions received by individuals, less funding within transportation which damages geographical and occupational mobility and the lack of accessibility to healthcare and education.
Austerity measures only increase the gap between the wealthiest and poorest across a nation, and highlight inequalities in the distributions of income. The individuals who suffer from a drawback in government spending are those who need further assistance from the government in the first place, and austerity measures put greater pressure on the public services utilised mostly by the citizens of a nation who do not sit in the top percentage of earners. The austerity measures taken shortly after the great recession of 2008 only saw a rise in Spain and Greece’s Gini index numbers, an index that highlights the levels of poverty within a Nation. These measures have notably caused negative results for Greek and Spanish economies and, as Serapioni and Hespanha (2019) note, austerity has created further social consequences, such as “an increase in unemployment, economic precariousness, large emigration flows of qualified workers; and the worsening of poverty, social exclusion and income inequalities”.
Sweeping austerity across Southern Europe adopted as a result of the financial bail-outs needed after the 2008 economic crisis therefore led to a wider social crisis led to a wider crisis in government spending and public services. This in turn increased unemployment levels across these areas, due to the lack of supply side investment from the government including spending on education, in turn creating a further gap in unemployment.
The table in Figure 2 highlights the devastating levels of national debt faced by Greece, Portugal, Spain, Italy and the Eurozone more generally from 2008-2014, and highlights again the after affects of this economic crisis on the Eurozone as a whole and within the four Southern European Member States.
Greece and Italy had the highest percentage of national debt compared to GDP during this time, with Greek national debt representing 126.7% of GDP in 2009, and Italian national debt at 112.5% of GDP in the same year, shortly after the affects of the crisis began to take its toll on European economies. Similarly as can be seen in Figure 3, the unemployment rate grew rapidly in the Southern European Nation States following the 2008 crisis, with Italy and Portugal’s unemployment levels almost doubling, and Spain and Greece’s rising even more so. Therefore in the case of Spain and Greece, national debt was greater than the level of aggregate demand within the economy, which accounts for the value of consumer and government spending, investment, imports and exports. With a large drop in both consumer and government spending, major issues of unemployment arise due to the lack of capital circulating around the economy, and this can therefore be applied to the case of Southern Europe.
Southern Europe Now
As mentioned earlier in the article, the unemployment rate for Greece currently sits at 11.6%, and Spain at 13%. The largest demographic affected by the higher than average unemployment rates are the youth (this refers to people between the ages of 15-24) of both Mediterranean countries. Both Spain and Greece have an almost 30% youth unemployment rate, and this similarly to the overall unemployment rate of these two nations, sits above all other EU member states and therefore the EU average also.
The peak of the global pandemic in 2020 saw a drastically high rise in youth unemployment across Spain and Greece partly due to the amount of young people who work under temporary contacts within the tourism industry specifically. Both economies rely heavily on their tourism exports with international tourism flows representing “a key determinant of developments in the Spanish economy. Specifically, in 2019 tourism exports accounted for 5.7% of GDP, 3 percentage points (pp) more than in the euro area as a whole” (Esteban et al., 2023). The restrictions placed on travel resulted in major impacts on the tourism industry and this caused major economic shocks specifically across Southern Europe where tourism is most popular.
Moreover, the youth unemployment levels are also high in both Greece and Spain due to the lack of funding in education and training, leaving many young people missing out on the qualifications needed to enter into the job market. Furthermore “across the south, notes Stefano Scarpetta of the OECD, employers offer less vocational training and fewer apprenticeships than in Germany or the Netherlands” (The Economist, 2019).
The lack of funding in supply side areas again such as vocational training and education leads to greater levels of unemployment and harms national GDP and export levels as a result of less labour in the production of goods and services – labourers who would usually gain such qualifications though more vocational training. The OECD (2018) state that labour productivity growth is low in Greece, reflecting the lack of investment between 2010-2016, and the Greek education system is presented with many inequalities with students ranging from excelling to doing rather poorly.
As discussed above, the austerity measures taken after 2008 by the Southern European nations have directly affected levels of employment today. Labour productivity suffers when austerity measures are applied due to a lack of resources available in the production process and the lack of government investment in business as well as again educational training allowing workers to specialise in certain areas of the production process and work at a more productive level.
Spain and Greece are both still faced with the after effects of the great recession of 2008 and the subsequent austerity measures applied in the Southern European nations, and both nations continue to experience issues with inequalities in education and the amount of more vocational training undertaken by their citizens.
EU Policy on Unemployment
The European Commission have noted that long term unemployment seems to be the main form of unemployment faced by individuals across the EU, meaning that most unemployed persons are so for more than 12 months. According to the Commission “long term unemployment is one of the causes of persistent poverty” (European Commission, 2023). As the majority of people who are unemployed remain so for a longer time period, highlighting that the issues faced in the EU are less frictional and more structural issues. In response, the European Union has tried to employ multiple initiatives to lower the rate of unemployment, specifically across Southern Europe.
The European Union runs a Youth Unemployment Initiative, which is applied alongside national policies for Member States where youth unemployment rates are greater than 25%, including both Spain and Greece. The Initiative works to support “young people who are not in education, employment or training, including the long-term unemployed or those not registered as job-seekers” (European Commission, 2023). The initiative does so by providing further funding to education and training to create a more highly qualified youth and attempt to close the youth unemployment gap, therefore working to lower overall unemployment levels. It would be greatly beneficial for Spain to take advantage of such funding provided by the EU as “a third of young Spaniards leave school without any qualification, while only a quarter of school-leavers enter vocational training” (The Economist, 2021).
In 2022 Greece used such funding to run a digital training programme for over 1000 unemployed young people, as this is a skill set that a large number of Greek employers are currently looking for in employees. “Thanks to funding from the European Union’s Youth Employment Initiative (YEI), around a thousand unemployed young people have improved their job prospects” (European Commission, 2023). It is promising to see that Greek government officials are using the grants provided to them to work on increasing levels of employment and presenting greater opportunities for younger people to enter the labour market.
In addition to initiatives like the YEI, between 2021-2024 Spain will receive 70 billion euros worth of grants from the EU’s next generations recovery scheme. Such grants are to be spent in improving the digital economy, as well as on “vocational training, and for active labour-market policies to help the unemployed find jobs” (The Economist, 2021).
This grant should help to create further opportunities for young Spanish individuals and ultimately work to improve the Spanish economy through raising GDP. The more workers who have been provided with further levels of training, as mentioned above, the greater the levels of labour productivity and number of goods being created within the economy. Further employment would also raise GDP through the increase in disposable income and subsequent higher levels of consumer spending within the economy.
Conclusion
In conclusion, both Spain and Greece are still falling behind the European average employment rates due to multiple structural issues. These problems have largely occurred due to hits taken to Spanish and Greek industries, particularly the tourism industry over the peak of the global pandemic. However, there are also structural issues due to disparities in education and training. The austerity measures taken by both governments as a result of the 2008 economic crisis led to a reduction in the rates of government spending to try and reduce national debt and this in turn led to greater levels of unemployment within the nations. A retraction in public spending on supply side policies creates an under-funded public education system and leads to a lack of public infrastructure, both of which affect labour productivity and capacity within an economy, further putting pressure on employment levels. The European Union alongside Greece and Spain must continue to work to reducing the detrimental affects of both the 2008 crisis and the wave of austerity taken shortly after to close the unemployment gap with the rest of Europe and allow for a stronger workforce across Southern Europe.
References
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Hunter, S. (2023) Youth Employment and Opportunities on Europe’s Southern Coast, IDRN, 08 June. Available at: [Accessed: dd/mm/yyyy].