Youth Unemployment and Youth Employment Policy – Lessons from French Experience

The last crisis has merely amplified what has become a quasi structural phenomenon: in the last 30 years, the youth unemployment rate in France has never dropped below 15% and has regularly exceeded 20%. And yet, youth integration into the labour market has been an ongoing public policy objective since the end of the 1970s. This column examines youth unemployment causes in France, taking into account the lessons from 40 years of public policy.

The first part begins with a critical approach of the youth unemployment rate indicator, especially applied to France where the activity rate is low among young people (40%), compared to other countries. When INSEE publishes a 22.8% unemployment rate for 15-24 year-olds in March 2011, this only applies to 40% of the active population. Then, a diagnosis of youth over-unemployment from the point of view of their particular position on the labour market is presented. The high concentration of youths in insecure jobs (short-term contracts and temporary work) explains their job-unemployment sensitivity to the economic cycle. Due to labour market segmentation, youths are integrated into sectors with a high labour rotation rate or in less skilled jobs.

The second part of this analysis describes the demographics in France and the role of the education system which both contribute to explaining the significant drop in the number of working youths in the last 30 years and in the meanwhile sharp rise in the proportion of young graduates. However still 17% of the school leavers don’t successfully complete their upper-secondary education programs and are strongly exposed to long-term unemployment.

In the third part, the position of young women is be examined in light of the inertia in both educational and professional career choices, but also the existence of job discrimination. The discrepancies between men and women can be observed at all levels of initial schooling although the gap reduces with higher level diplomas: higher risk of unemployment, higher rate of part-time work, lower wages, more difficult access to management positions. When women have nonetheless chosen more ‘masculine’ career paths such as mechanics, electricity, public works, physics or IT, they are still not on an equal footing with men.

The fourth part examines the hypothesis of excessive labour market rigidity and suggests potential responses although these hypotheses have been called into question due to the crisis.

In the fifth and last part, the role of public policy on youth professional integration is re-examined, emphasizing numerous potential levers of action. Since 1975, more than 80 different schemes have been created, replacing or adding to previous measures. In the backdrop to the flurry of new acronyms there is more stability than one would think. The main policy consists in special work contracts which apply to the market or non-market sector. At the end of 2010, close to one quarter of the under 26 age group, benefited from government subsidized work contracts in other words, compared to 4% for the entire active population. The growing share of state-subsidized contracts in youth employment has contributed to temporary work having now become the main access pathway to the job market and is seen as commonplace.

The drop in labour costs has been the main common denominator with no commitment on the part of employers to avoid the windfall or deadweight effect or to enable these first jobs to become part of a real upwardly mobile career path for the youth. Moreover, the most fragile youth, in particular the dropouts without a diploma are not able to gain access to subsidized jobs in the market sector. Indeed for these youth without skills or qualifications, the real challenge lies upstream in the school system. That is why the author suggests that subsidized contracts could be more concentrated on the most disadvantaged groups and above all governed by collective bargaining agreements in order to ensure that they remain statutorily transient and that they lead to recognized qualifications.

The contract between generations to be implemented by the new government following recent Presidential elections can be considered as an innovative incentive for employers to train youth using their senior employees. However it would no doubt be risky to continue extending substandard work contracts to a population with a higher and higher level of education. Although with the increase in age the proportion of part time or temporary jobs tends to decrease, the deeper structural effects of these long periods of work under sub-standard contracts must be stressed. Each generation occupies fewer stable jobs than the previous generation. In other words, the structural effects of today’s youth job market give us a preview of what lies ahead. In this context, the main challenge for employment policy is invent and promote a new professional status for the entire body of active people based on secure professional pathways.

 This column is part of a project on youth unemployment in Europe run by the Friedrich-Ebert-Stiftung and Social Europe Journal.