Youth Insertion on Labor Market - Core

Available online at www.sciencedirect.com

ScienceDirect Procedia Economics and Finance 32 (2015) 1020 – 1026

Emerging Markets Queries in Finance and Business

Youth Inserttion on Labor Market Eliza M Mihaela Spatarelua,* a

Institute of National Economy, NIER, Romanian Acaademy, 13th September Street, District 5, 050736, Bucharest, Romania

Abstract Recent studies about Romanian youth labor market ooutlines the importance of preoccupation for understanding proccess of transition from learning to working. Despite increassing general emphasis on youth employment, unemployment among a youth is very high. For this study will be analyzedd several indicators like youth unemployment rate, activity ratte and NEET. In appearance, Romania has not serious matteer with youth unemployment rate, but a careful study changes th he data of the problem. The high rate of the NEET needs morre responsibility. © 2015 Authors. The Authors. Published by Elsevier B.V.isThis is an open access articlethe under the CC BY-NC-ND Published by Elsevier B.V. This an open n access article under CC BY-NC-ND license license (http://creativecommons.org/licenses/by-nc-nd/3.0/). (http://creativecommons.org/licenses/by-nc-nd/4.0/). Selection and Emergging Markets Queries in Finance and Business local organization. under responsibility responsibilityof ofthe Asociatia Grupul Roman de Cercetari in Finante Corporatiste Selection and peer-review peer-review under Keywords: youth unemployment rate; activity rate; NEET

1. Introduction f The young people represent the power thatt society must use with the best consideration for our future construction, for our safety and for our security. They represent that part of population that is bearing in it the o be a spark of renewal, change and becoming. This sppark may be the beginning of a large decline or may also step for evolution by setting in motion the hhuge unknown mechanisms that are transcending all social evolution laws and leading to progress, develop ment and evolution. The transition from learning to work king is with youth issues. The process of finding a job is difficult. This one of the most important subjects connected w is the most important step for integration in com mmunity. The youth needs to learn how to find a job, how to prepare for labor market and how to keep their jjobs. Their success in this domain is a prove of quality off their education. A good education is leading to a goodd job and to a good place in labor market. Recent studies about

* Corresponding author. Tel.: +40-744-804-979. E-mail address: [email protected].

2212-5671 © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

Selection and peer-review under responsibility of Asociatia Grupul Roman de Cercetari in Finante Corporatiste doi:10.1016/S2212-5671(15)01563-4

Eliza Mihaela Spatarelu / Procedia Economics and Finance 32 (2015) 1020 – 1026

Romanian youth labor market outlines the importance of preoccupation for understanding process of transition from learning to working. Despite increasing general emphasis on youth employment, unemployment among youth is very high. It is necessary to analyze this subject with more attention both in national and in international context. The implications of this problem are very deeply connected with many aspects from economy to education, finance, welfare and safety or security. 2. Literature review There are more issues related with unemployment among youth. These can include the transition from education to work, informal employment, external mobility, brain drain, segmentation, employment precariousness, income disadvantages (Vasile & Vasile, 2011), characterization of the labor force market youths in the development regions in Romania, education level and genders of the NEET groups under the impact of the economic-financial crisis (Balan, 2014). Other subject in relation with these is the role of education and how it influences labor market performance (Dimian, 2011). The level of education is positively linked not only to the employment rate, but also to the income level (Diaconu, 2014). The high-level of education contributes to increasing the quality of life. But the education is dependent on the youth’s living condition (Aceleanu, 2011). More, social adaptation in childhood, cognitive evolution and economic and financial status has important influence on future adaptation on labor market (Silles, 2010). The lack of correlation between curriculum and labor market is another area of interest, closely related to the topic under discussion. It is overloaded and don’t develop creativity, initiative, logical thinking and competence for teamwork (Vasile, Prelipcean & Sandru, 2010). Besides this, the students are attracted for zone which don’t offer more places on labor market. In this case, is necessary a new specialization. Because of this, investments in education are still profitable for educational institutions (Varga, 2006). Mobility on international labor market is a major right for European citizens. In spite of this, our country needs to capitalize with more attention the national potential. Permanent loss of human capital in special young people tend to affect national economy, GDP level, demand for goods and service, the demographic structure of population and emphasizes structural deficits of labor force, depending on age and profession (Vasile & Vasile, 2011). Employment depending on gender is another research topic. National and European statistics show that NEET rate is higher for female than male. The high level of NEET (not in employment, education or training) may have severe consequences both at individual and community level, for long and short term. These consequences may be financial or social like isolation, poverty and physic or psychic degradation (Balan, 2014). Concern for education and integration of young people in the society is one of the most important elements that must be taken into consideration at this moment. As a result, we’ll have higher level of youth employment in our country and they will be able to provide better service for community. 3. Methodology For this research will be analyzed several indicators such us the youth unemployment rate, the activity rate and NEET. All date will be taken from Eurostat. The youth unemployment rate is calculated for people aged 15 to 24. This indicator takes into account only the active population that includes both employed person and unemployed person. Someone is considered unemployed if they meet tree important conditions. First, they are not employed. Secondly, they are ready to start on the next weeks. Finally, they have been looking for a job in recent weeks. The activity rate is the second indicator used in this paper. It is calculated for people aged 15 to 64. They must be economically active. This category includes both the employed and the unemployed people.

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Employed people are considered those that work during de reference week. This work may be at least one hour, may be in family profit. The person that is in period of sick or annual leave is considered employed. This indicator is calculated for people aged 15-24 too. The last indicator is NEET, which is mean young people not in employment, education and training. This refers to people aged 15 to 24. They must meet tree conditions. First, they should not be employed. Secondly, they should not be in education four weeks before. Finally, they should not in training four weeks before. This indicator includes both active and inactive population. 4. Data analysis One of the most important indicators that need to be analyzed in discussion about youth insertion on labor market is youth unemployment rate. The rate of youth unemployment for Romania is 23,7 of active population (Table. 1). Table. 1 Youth unemployment rate - % of active population Countries

2013 Youth Unemployment rate

Belgium

23.7

Bulgaria

28,4

Czech Republic

18,9

Denmark

13,0

Germany

7,9

Estonia

18,7

Ireland

26,8

Greece

58,3

Spain

55,5

France

24,8

Croatia

50,0

Italy

40,0

Cyprus

38,9

Latvia

23,2

Lithuania

21,9

Luxembourg

16,8

Hungary

27,2

Malta

13,0

Netherlands

11,0

Austria

9,2

Poland

27,3

Portugal

38,1

Romania

23,7

Slovenia

21,6

Slovakia

33,7


Finland

19,9

Sweden

23,6

United Kingdom

20,5

Iceland

10,7

Norway

9,1

Turkey

17,1

Source of data: EUROSTAT

Comparative with other European country, Romania is just a little above European average (23, 3%). It is possible to think that is a good score, but if it is analyzed the trend of the last years, it can be seen that the trend is ascending, as can be followed in Table. 2. It can be noted that the rate decreased only a few percent in 2003, 2005 and 2012. The lowest level of unemployment was recorded in 2008, at 17, 5%. Referring to other European countries in first figure, we observe that it can be made three groups: (1) countries with high percentage of unemployment like Greece, Spain, Italy; (2) countries with middle percentage of unemployment like Hungary, Bulgaria, Poland and France and (3) country with low percentage of unemployment like Germany, Austria and Netherlands. Romania is part of the middle group. With regard to evolution trend of unemployment rate, the situation of the other European countries may differ compared to Romania. Therefore, Germany has a descendant trend with 15, 5% in 2005 and 8% in 2013. Italy has an ascendant trend with 15, 5% in 2005 and 55% in 2013. Bulgaria which has a similar situation Romania, maintains the same trend, with 12% in 2008 and 28% in 2013. Table. 2 Youth unemployment rate - % of active population in Romania Year

Romanian Youth Unemployment rate

2004

20,5

2005

19,1

2006

20,2

2007

19,3

2008

17,6

2009

20,0

2010

22,1

2011

23,9

2012

22,6

2013

23,7


The situation needs to be analyzing in-depth. Maybe our country has a good score in appearance, but this percentage is referred to active population. And, Romania hasn’t a good activity rate. Analyzing data from Table. 3, we observe that it can be made five groups. The first group contains countries that have very lowlevel of active population such us: Hungary, Italy and Poland. The second group contains countries that have low-level: Bulgaria, Ireland and Greece. The third group contains countries with medium level: Slovenia,

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France and Portugal. The fourth group has countries with high-level of active population: Finland, Spain and United Kingdom. The last group has countries with very high-level of active population: Sweden, Germany and Netherlands. Romania is part of the first group. Table. 3 Activity rate, 2014 Countries

Activity rate (15-64 years)

Activity rate (15-24 years)

Belgium

67,5

31,0

Bulgaria

68.4

29.6

Czech Republic

72.9

31.5

Denmark

78.1

61.7

Germany

77.5

50.9

Estonia

75.1

39.8

Ireland

69.8

39.7

Greece

67.5

28.4

Spain

74.3

37.8

France

71.2

37.5

Croatia

63.7

29.9

Italy

63.5

27.2

Cyprus

73.6

38.4

Latvia

74.0

39.4

Lithuania

72.4

31.5

Luxembourg

69.9

25.9

Hungary

65.1

27.2

Malta

65.0

52.8

Netherlands

79.7

70.0

Austria

76.1

59.3

Poland

67.0

33.3

Portugal

73.0

35.0

Romania

64.6

30.8

Slovenia

70.5

33.8

Slovakia

69.9

30.8

Finland

75.2

51.8

Sweden

81.1

54.5

United Kingdom

76.6

58.7

With regard to data from second column, it can be seen a large variation between countries. The active population rate for 15-24 years down by half. This fact is normal for a population that learning is the principal activity. But, there are countries that have high-level for youth activity rate: United Kingdom (78.7), Austria (59.3), Netherlands (70.0), Denmark (61,7). Romania is among countries with very low-level of youth activity rate (30.8) with Slovakia, Slovenia, Poland, Italy, Croatia, Bulgaria, and Belgium. Because youth unemployment rate is referred on active population and Romanian youth activity rate is very low, it is necessary to find a new indicator that can integrate the inactive youth. The reality may not be well captured in these data. Youth inactive population rate have a segment of population that are not occupied


with learning. This part needs to be added with youth unemployment rate from youth active population rate. Since the last information change the dates of the problems, there is a need for a different type of indicator that can include both unemployment rate and active population. NEET can do this because it refers to entire population not only to active population like the unemployment rate. NEET is mean young people not in employment, education and training. This refers to people aged 15 to 24. They must meet tree conditions. First, they should not be employed. Secondly, they should not be in education four weeks before. Finally, they should not in training four weeks before. Table. 3 contains data for NEET. Table. 4. Young people not in employment, education or training (% of total population) 2013


Countries

(NEET 15-24 years) 2013

Belgium

12.7

Bulgaria

21.6

Czech Republic

9.1

Denmark

6.0

Germany

6.3

Estonia

11.3

Ireland

16.1

Greece

20.4

Spain

18.6

France

11.2

Croatia

19.6

Italy

22.2

Cyprus

18.7

Latvia

13.0

Lithuania

11.1

Luxembourg

5.0

Hungary

15.4

Malta

10.0

Netherlands

5.1

Austria

7.1

Poland

12.2

Portugal

14.1

Romania

17.2

Slovenia

9.2

Slovakia

13.7

Finland

9.3

Sweden

7.5

United Kingdom

13.3

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According to this information, Romania is located in group of countries with high NEET along with Italy, Bulgaria, Greece and Spain. The countries with middle level of NEET are Portugal, Poland, Belgium and United Kingdom. The countries with low-level of NEET are Denmark, Germany, Netherlands and Luxembourg. Comparing indicators, youth unemployment rate, youth activity rate and NEET for Romania, it can be seen that rate of unemployment youth from both activity and inactivity population is 7.3. If the NEET is 17.2 percent of total population (15-24 years) it follows that around 10 percent of inactive population is not in training or in education. The level of the NEET is very important because it points to a large category of population with same characteristics and with same disadvantages. This population is largely destined for social exclusion. 5. Conclusion In appearance, Romania has a medium rate of youth unemployment, which leads us to believe that shouldn’t be worried. In this light, countries like Spain, Italy or Greece, who have very high rate of youth unemployment rate need to be more worried than us. But the truth is that our concern should be the same, for all of us which have high rate of NEET. This is more than a problem for affected person. This problem is related to society and the economy too. To fight to this is a great step in order to introduce young people into the labor market. The concern for this problem is important not just for young people, but also for everyone’s future (Eurofound, 2012). The economic costs are important, but also important is civic participation of youth. The benefits of concept like NEET need to be outlined. The society should be more careful to youth problems. The community needs to know their vulnerabilities. A limit of this study is the concentration on data provided only on official information from Eurostat. The future research needs to bring and to analyze data from other various sources, which includes qualitative data and direct investigation of the population. In order to increase the youth chance to integrate on labor market, qualified institutions need to elaborate new strategies and make more steps for their fulfillment. Their programs for youth professional counseling should give more responsibility for integration in active life in society. Alongside with increase number of jobs, it is necessary to encourage the youth population to engage in volunteering projects. This will help them gain experience, courage and important skills for active life. This will develop their citizenship and will shape the next basic citizens of Europe. References Aceleanu, M. I., 2011. The relationship between education and quality of life. Implications of the labour market in Romania. Journal of International Scientific Publications: Educational Alternatives, 9(2), 171-182. Bălan, M., 2014. Youth Labour Market Evolutions at Level in Romania. Internal Auditing & Risk Management, 2(34), 29-37. Diaconu, L., 2014. Education and labour market outcomes in Romania. Eastern Journal of European Studies,5(1), 99-114. Dimian, G. C. (2011). The role of education in explaining youth labour market imbalances in CEE Countries. Journal on Efficiency and Responsibility in Education and Science, 4(3), 105-115. Eurofound, 2012. NEETs – Young people not in employment, education or training: Characteristics, costs and policy responses in Europe, Publications Office of the European Union, Luxembourg. Silles, M., 2010. Personality, Education and Earnings. Education Economics, 18(2), 131-151. Varga, J., 2006. The Role of Labor Market Expectations and Admision Probabilities in Student Application decisions on Higher Education: The case of Hungary. Education Economics, 14(3), 309-324. Vasile, V., Prelipcean, G., ‫܇‬andru, D. M., 2010. Îmbunătă‫܊‬irea competen‫܊‬elor profesionale în rândul absolven‫܊‬ilor ‫܈‬i tinerilor: o ‫܈‬ansă pentru viitor. Proiect SPOS - Institutul European din România, Bucure‫܈‬ti. Vasile, V., Vasile, L., 2011. Youths on labour market. Features. Particularities. Pro-mobility factors for graduates. Elements of balanced policy for labour migration. Romanian Journal of Economics 32(1(41)): 97-123. http://ec.europa.eu/eurostat/