From Statistics Explained
This article explains how youth unemployment in the European Union (EU) is measured and how youth unemployment rates are affected by the transition of young adults from education to the labour market. Two factors are particularly relevant. First, there is a steep rise in participation in the labour market between the ages of 15 and 24. Second, young people in education are often also employed or unemployed, so there is an overlap between the labour market and education.
The article is part of a set of two: while this one focuses on measures of youth unemployment, a second one called 'Participation of young people in education and the labour market' further develops the interplay between education and labour market participation. The latest Eurostat data on youth unemployment can be found here.
Definition of unemployment and youth unemployment indicators
A person's labour force status falls into one of three categories: employed, unemployed or economically inactive. Eurostat uses the International Labour Organisation (ILO)'s definitions of employment and unemployment. The labour force, also called the active population, comprises those employed or unemployed. These concepts are explained in detail under EU - LFS methodology. The definitions apply to young people just as they do to any other age group.
People are classified as being employed or unemployed irrespective of whether they are in education or not. In other words, Eurostat unemployment statistics, in line with ILO standards, do not exclude students from unemployment just because they are students. The same criteria that apply to the rest of the population also apply to them. This means that the fact that someone is in education is irrelevant for his/her status regarding employment or unemployment. However, participation in education of the population as a whole has an indirect effect on youth unemployment indicators, as will be shown below.
The main indicator of youth unemployment is the youth unemployment rate for the age group 15-24. This uses the same standard definition as the unemployment rate for the population of working age. For a given age group, it is the number of those unemployed divided by the total number of people in the labour market (employed plus unemployed). In the EU-28 in 2012, there were on average 5.6 million unemployed persons aged 15-24 and 24.4 million persons of that age group in the labour market, according to the EU labour force survey. This gives a youth unemployment rate of 23.0 %.
Because not every young person is in the labour market, the youth unemployment rate does not reflect the proportion of all young adults who are unemployed. Youth unemployment rates are frequently misinterpreted in this sense. A 25 % youth unemployment rate does not mean that '1 out of 4 young persons is unemployed'. This is a common fallacy. Also, the youth unemployment rate may be high even if the number of unemployed persons is limited. This may be the case when the young labour force (i.e. the rate's denominator) is relatively small. This is not an issue for the unemployment rate of the whole population of working age due to the higher participation of that population in the labour market (43 % at ages 15-24, compared to 85 % at ages 25-54, 2012 EU-28 estimates)
Another indicator of youth unemployment published by Eurostat is the youth unemployment ratio. This has the same numerator as the youth unemployment rate, but the denominator is the total population aged 15 to 24. It thus gives an unemployment-to-population measure. The size of the youth labour market (i.e. the size of the young labour force) does not trigger effects in the youth unemployment ratio, contrary to the unemployment rate.
In the EU-28 in 2012 there were 57.5 million persons aged 15-24, of whom 5.6 million were unemployed. This gives a youth unemployment ratio of 9.7 %. Table 1 shows youth unemployment rates alongside youth unemployment ratios for 2012. Data are based on the EU labour force survey.
The youth unemployment ratio is by definition always smaller than the youth unemployment rate, typically less than half of it. This difference is entirely due to the different denominators.
Young persons' participation in the labour market
As explained above, unemployment rates and unemployment ratios differ because the former include in the denominator only the part of the population that is in the labour market. There is also a strong link between labour market participation and status in education, which becomes particularly clear when looking at young people's situation at different ages. This section analyses this issue in more detail.
At 15 years of age, nearly 100 % of the population in the EU is still at school. As the young grow older, many move into the labour market, becoming employed or unemployed, or remain outside the labour market. Not all young people make this transition at the same age, so there is a gradual rise in the number of the young people on the labour market. Figure 2 below shows the proportion of young people in education and/or on the labour market at each year of age (data for EU-28, 2012). Those persons in education are colour-coded in blue, and those not in education in pink. There is a steep rise in labour market participation, from some 5 % at age 15 to some 80 % at 24. This steep increase explains the difference between the youth unemployment rates and youth unemployment ratios, introduced in the previous section. This is a distinctive feature of the young population and it has no equivalent at other ages, except for the gentle decrease in labour participation by older workers as they retire. Figure 2 is based on EU labour force survey data. Figure 2 counts all those who state they have been in formal education or training during the previous four weeks as being in education, and does not include people who participated exclusively in non-formal training sessions such as attending a course, a seminar or taking private lessons.
A second feature in Figure 2 is that many young people join the labour market before they finish their studies or they participate in education while already on the labour market. This means that people can be simultaneously in education and on the labour market. (It is noted that participation in the labour market, according to ILO definitions, occurs by working as little as 1 hour in the week, or looking and being available for such work). Otherwise said, those in education and those on the labour market are not always different groups, an overlap exists. The transition from education to the labour market is not a simple switch of status but a complex overlap of different situations. This is developed in two separate Statistics Explained articles (Participation of young people in education and the labour market and School to work transition statistics)
Figure 2 shows that most young unemployed are not in education, but many are (respectively 4.3 million and 1.3 million persons aged 15-24, in the EU-28 in 2012). There are also many young employed while in education (6.7 million). As can be seen, there are more young employed in education than young unemployed (whether in education or not).
Figure 3 below shows visually which groups are involved in the calculation of the youth unemployment rate and youth unemployment ratio. It is a visual presentation of the definitions described in Figure 2 above.
As can be seen, both indicators use the same numerator but the denominators differ.
The interplay between education and labour market participation is further developed in a separate article (Participation of young people in education and the labour market).
The effects of the crisis on youth unemployment
The economic crisis has had effects that go beyond a significant increase in youth unemployment. Video 1 below shows a sequence of charts like Figure 2 to visualise the changes in one specific country, Spain, between 2007, immediately before the onset of the crisis, and 2012.
First, the statistics show that the proportion of the population in education at a certain age has increased, meaning that young people remain in education longer before joining the labour market, or may even return to education. This is shown in the border between the areas colour-coded in blue and red moving upwards.
Second, since 2007, the proportion of those employed in education and the unemployed in education increased. Together, they account for a small increase in the proportion of those who are simultaneously in education and on the labour market (area blue-coded). Part of this could be due to those who are unemployed returning to (or remaining in) education, while primarily focused on finding a job. The biggest change in Spain, however, is the surge of young unemployed not in education, at the expense of a decrease in those employed and not in education (area red-coded). There are similar patterns in other countries strongly affected by the crisis.
Young people are a priority for European Union’s social vision, and the current crisis compounds the need to sustain the young human capital. In November 2009, the Council of Youth Ministers adopted the EU Youth Strategy for 2010-2018 which has two overall objectives:
- To provide more and equal opportunities for young people in education and in the labour market
- To promote the active citizenship, social inclusion for all young people
The Open Method of Coordination supports the implementation of the strategy which should create favourable conditions for youth to develop their skills, fulfil their potential, work, and actively participate in society. In this framework youth statistics are an essential tool to support evidence-based policy-making in the various domains covered by the strategy.
The focus on young people was even reinforced with the adoption in June 2010 of the Europe 2020 strategy for smart, sustainable and inclusive growth which includes a number of concrete initiatives to support them in getting jobs and dealing with related challenges during this crisis. Quality education and training, successful labour market integration and more mobility of young people are key to unleashing all young people's potential and achieving the Europe 2020 objectives. Youth on the Move presents a framework of policy priorities for action at national and EU level to reduce youth unemployment by facilitating the transition from school to work and reducing labour market segmentation. Particular focus is put on the role of public employment services, promoting the Youth Guarantee scheme to ensure all young people are in a job, in education or in activation, creating a European Vacancy Monitor and supporting young entrepreneurs.