Exploring the the socio-economic backround of NSRF-developments targeting youth unemployment decrease

1. Exploring the the socio-economic backround of NSRF-developments targeting youth unemployment decrease Balázs Szepesi Hétfa Research Institute 30 April 2013

2. Contents • Employment situation of young people aged 15-24 (basic data, characteristics, trends) • Situation in the EU • Approaches • National policies • National development policy 2007-2013 • Young people and entrepreneurship • Recommendations – „Young people are not a problem, they are the future”

3. Employment situation of young people aged 15-24 - basic data, characteristics • Activity - in 2011 218.300 young people (aged 15-24) were employed in Hungary - out of 100 young people, 18 were working.- In the EU this is 34 % - To reach the EU level of employment, the labour-market integration of approximately 100 thousand young people would be necessary • Youth unemployment –directly affected 77 thousand people in 2011, among the job-seeking young people every fourth were not able to find a job (EU 21 %). • Inactivity (NEET) – out of 100 Hungarian young people, 13 neither had a job nor participated in the education in 2011 – this is 164 thousand people. This is equal to the EU average. • The labour market possibilities of the young people are strongly determined by their level of education: in 2011 5% of the young people with low-level education, 29,1% with mid-level education and 57,5% with degrees were employed. • No significant differences can be observed between regions in Hungary. The difference of employment and salary prospects of men and women is smaller in the age group between 15 and 24, than in older age groups. • The most important employers of young peopleare the processing, trade, catering and tourism sectors.

4. Employment situation of young people aged 15-24 - trends • The employment rate of the Hungarian youth has significantly decreased since the economic crisis, since 2009 there is constant stagnation. • In Hungary in 2011 nearly 300 thousand less young people were employed than in 1998. • The proportion of those young people who are in the education has greatly increased in the 2000’s.50 % of the 15-24 year old ones participated in education in 2000, this rate is 67 % in 2011. • The size of this age group decreases:: 2000 – 1,5 million; 2011 – 1,25 million; 2020 – 1 million

5. Situation in the EU • for the age group between 15 and 24 the EU-27 average 2007→ 2011: unemployment rate + 36 %; NEET +18 %activity - 3,4 %employment - 10 % • most significant negative changes:Ireland, Greece, Spain, Lithuania and Latvia • apart from negative trends, in certain countries there were positive changes: in Germany indicators have improved compared to 2007; in the Netherlands, France and Austria the situation of young people has been approximately the same

6. Approaches I.

7. Approaches II.

8. National policies Strategic objectives: supporting the employment of young people who have finished school, facilitating conscious career planning, establishing strong linkages between education and the market sector, motivating entrepreneurship and promoting flexible employment structure. Various instruments - Especially important: social contribution benefits for employers of young people, supporting the knowledge acquisition of young agricultural entrepreneurs and building a career guidance system. Policy interventions: • Training support, • Wage subsidy, • Wage benefits, • Support for promoting work experience, • Developing labour services. Government intention to improve youth employment before the crisis: most important were the launch of the Start Card, and later on the Start programmes.

9. National policies 2007-2013 • Youth unemployment in the 2007-13 period: - young people as a social group with specific employment difficulties, - employment difficulties of low-skilled young people The SROP tracks back the labour market problems of young people primarily to the problems of education and the weaker labour market position of the disadvantaged. Education: the segregation of public education, the problems of vocational training standards and the school dropout. Classical labour market mechanisms: promoting career guidance, increasing the practical aspects and standards of vocational training and guiding dropouts. The 2011 Action Plan has allocated 50 billion forints to mitigate problems connected to Youth unemployment.

10. National policies 2007-13 II. Handling youth unemployment does not really appear as an independent element in NSRF measures Young people appear explicitlyas target groups in two instances: due to their disadvantaged position (dropouts, living in poor regions, Roma, linked to crime), and in measures increasing their social responsibility. In addition, promoting youth unemployment decrease is strongly present in the logic of interventions financing vocational training development and information and career guidance systems.

11. „Young people are not the problem, they are the future!” – Recommendations I The dominantly social perspective should be broadened - more emphasis should be put on approaches based on competitiveness and generational specificities It is adviseable to seperate the governmental actions and developments by their duration - short term, long term, failure management system.

12. „Young people are not the problem, they are the future!” – Recommendations I Short term Actions that contribute to credible presentation of their abilities- employers cannot assess youngsters’ ability to create value. (student work, independent activities, certification system) Breaking down administrative obstacles ofemployment– Globalisation, ICT. (Support and organisation employees working abroad, strengthening of activities without organisational structure, establishment of flexible possibilities between long term employment and entrepreneurship, abolition of unnecessary educational prerequisites) Long term • Designing an educational system that promotes value-creating abilities • Strengthening small and medium-sized enterprises having a key role in employment • Creating and disseminating legal business models and non-profit or public entities employing low-skilled workers • Promotion of young people’s entrepreneurial activity

13. „Young people are not the problem, they are the future!” – Recommendations III Institutional framework to mitigate labour market failures for the youth (1) incentives for employment, (2) operating specific channels between employers and employees, (3) supporting the supplement of skills and knowledge required for employment. Appropriate institutional framework Activities that can be precisely regulated, and tasks requiring individual decisions and innovative solutionsshould be differentiated. The former tasks call for effective implementation, the latter calls for successful organizational framework that functions even under uncertain circumstances. Information, adaptation In order to be successful, the policy to tackle youth employment problems should build on the real situation, the characteristics of the target group and possess adequate information. It calls for better knowledge on young and requires a system that supports to assess the effectiveness of measures.

14. Thank you for your attention! Hétfa Research Institute H-1051 Budapest Október 6. utca 19. www.hetfa.hu