Issue 42

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1 Debates: Pissarides speaks on youth unemployment

Christopher Pissarides, professor of economics and political science at the London School of Economics introduced a Seanad discussion on youth unemployment on 8th November   (Seanad Eireann, Debates, 8th November 2012, 308-327).  He opened his remarks by drawing attention to the fact that half of all young people in Greece and Spain were out of work, followed by a third of young people in Ireland, Portugal and Slovakia.  Something must be done to avoid a lost generation and the negative implications for employment and economic growth. Long duration unemployment and the poverty that goes with it were terrible for young people.  Those who have been through it suffer slower career progression, lower wages and higher risk of subsequent unemployment.  It was like a criminal record, a great negative event in one’s life, like death or family break up.   Governments must step in and offset the poor outcomes of the labour market by providing alternatives to idle unemployment.

 

Christopher Pissarides went through the various tools open to government.  The first was education and training beyond secondary school, especially to help young people into work in the new technology companies.   School curricula should be adapted, because there are employers complaining that young workers do not have enough general training to prepare them for the world of work.   The second was to invest in higher education, even more so than in normal times – even though his went against the austerity measures currently compounding the European crisis.  More support should be given to colleges that offered shorter and more practical training courses.   The third was job creation, especially in infrastructure projects.  We had given too much weight to austerity and not enough to job creation, for such investment paid for itself.  There were many ways of subsidizing jobs for young people, as had been done in Sweden and Germany.  Unemployment compensation can be passed to a new employer, which is still cheaper than the basic payment in the long term. Investment spending should not be included in current spending lists, for it gives revenue and return in the future.  In the future company size would be smaller, emphasizing the importance of the Small and Medium Size Enterprise (SME) and self-employment sectors.  New jobs would be in information technologies, green jobs like insulation, care, health and retail.  Ireland had many unemployed construction workers who could green our buildings.  The Schröder reforms in Germany provided start-up money for new businesses for the unemployed, with unemployment payments continued for a while and had proved successful and self-financing.  

 

Fidelma Healy Eames (FG, labour) pointed to the efforts being taken in Ireland to address the crisis, such as the Pathways to work programme, the action plan for jobs, Job Bridge and the Europe 2020 agenda.  She wanted, though, to see much more education for self-employment, for creating entrepreneurial pathways in education and questioned if other countries had done more here.  Mary White (FF, industrial & commercial) spoke of a presentation by the expert group on skills needs, which found that we had 100,000 vacancies across nine occupations and 8,500 new vacancies every month, despite the level of unemployment.    Our public sector was not adding anything to the country, for the future jobs would come from SME indigenous Irish companies.  We were especially weak in learning foreign languages here and we needed people who were intellectually agile in science, technology, engineering, maths and languages.

 

Ivana Bacik (Lab, Dublin University) drew attention to the way in which cuts in job seeker allowances may cause spiralling poverty.  There had been good news that morning which was that 90% of students were now staying on to complete secondary education.  She favoured the type of short, very labour market focussed programmes developed by FAS, such as in computer-aided design.  She drew attention to the planned youth guarantee, whereby all young people would be offered a training place, combined work or training offer or apprenticeship within four months of being out of work.  

 

Kathryn Reilly (SF,  industrial & commercial) spoke of how many people of her age, friends, family, colleagues from work and school were out of work or forced to emigrate: this was no country for young men or women.  Her party strongly favoured an economic stimulus, using the National Pension Reserve Fund.  According to David Norris (ind, Dublin University), Ireland was like in the famine, when rigid economic theory was applied from the centre on defenceless people who were now suffering:  1.3m people now had less than €50 disposable income each month.

 

Concluding, Christopher Pissarides spoke of the approach in the Nordic countries, which was to create public sector employment, with an average tax take in the range 53% to 55% of GNP.  This worked in countries where the government was trusted to do a good job in creating work in social care, but he didn’t see it working in Greece or Britain.  It would be more acceptable to have something like the system in the Netherlands, which is less interventionist than in Scandinavia.  A lot of the new jobs have been in health and education, which are publicly funded, but making new jobs in the private health sector, the American way, is even more expensive, seven times more so.  Germany had been successful with job sharing schemes.    Another approach was to give incentives to employers not to lay off their workforce, for it is not too expensive for government to do that and less expensive than unemployment benefits.  

> See also Seanad Eireann, Debates, 22nd November 2012, 739-741 (Presidential initiative on young people)