The President of the European Central Bank (ECB) told the Trinity crowd that youth unemployment “isn’t just structural” but “highly pro-cyclical”.
Mr Draghi urged governmental action across the continent to combat the ill-effects felt by the youth in the EU which has fallen “disproportionately” upon them to a crowd at the Henry Grattan Lecture hosted today by Trinity College Dublin’s School of Social Sciences and Philosophy.
He also stated that, “Cyclical unemployment can turn structural if people remain unemployed for a long time” and that “Youth unemployment is also costly in terms of long-term productivity”.
During the financial crisis, people with low-education credentials were hit with an increasing unemployment rate from around 11% in 2008 to 21% in 2013 in the euro area. In Ireland the unemployment rate of young people with an education below secondary level was 27.5% in 2016, while it was around the 11% mark for people with tertiary education.
Mr Draghi put youth unemployment down to a host of issues, including labour-market rigidity, temporary contracts in dual markets and segmentation of the labour market along with poor vocational training in countries hit severely by the financial crash such as Greece, Spain, Italy and Portugal.
“Europe’s role in addressing the problem is primarily defined by its single market that has removed many barriers to the free movement of goods, people, services and capital”, Mr Draghi said. He went on to say that the single market requires firms to be more productive so productivity and youth employment can grow.
Education and sharing of ideas is also a key part to combat this major issue: “There is a second way in which European integration can support youth employment: by fostering the exchange of ideas and knowledge as researchers, students and technologies move across Europe.”
Around 17% of people between the ages of 20 and 24 in the euro area were neither in employment, education or training in 2016, with Ireland being close to the euro-area average. In the likes of Greece and Spain, the figures are 23% and 21%, respectively.
The youth unemployment rate in Ireland has averaged at 18.35% from 1983 to 2017, reaching an all-time high in June 2012 of 31.2%. It increased in July 2017 to 12.3% from 12% in June 2017.