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Youth unemployment – Euro League of Shame

Unemployment amongst young people ie in the EU stands at 20.5%, a figure based on the statistics for the 15 to 24 age group in June. This average, however, conceals wide variations,

as was discussed in an analysis by Therese Larsson in Svenska Dagblad on 22 August.

Spain is top of the list with 45.7%, and with a generally good standard of qualifications, many are emigrating in the hope of finding a job abroad. Next comes Greece with 38%, where many young people are flooding into university courses where they can study free of charge, for an average of seven years. Latvia is another black spot, with 32.6% of the 15-24 age group unemployed. There has long been an exodus of poorly qualified young people from Latvia but it is now experiencing a “brain drain” as well.

Of the other major countries, the figure for Italy is 27.8% and Britain 20%. Bottom of the league is Germany with 9.1% youth unemployment, due to its relatively strong economy and an apprenticeship system; in the south of Germany there is even a shortage of young people in relation to the jobs available. Indeed, in both Germany and Luxembourg, youth unemployment is actually lower than it was at the start of the financial crisis. The figure for Sweden, 23.1%, conceals wide differences both from a geographical point of view and according to how well individuals are qualified. However, there is good access to training courses and the government is attempting to address the problem with a reduction in the present employment taxes, which are punitive.

Spending the first of one’s working years unemployed is not a good start to adult life, especially where unemployment is the reward for years of study. The widespread discontent this engenders could lead to dangerous political instability. The continent-wide extent of the problem points to a failure at policy level.

At the root of this failure lies the almost universal belief in Job Creationism – the notion that, somehow, jobs have to be created. Since human desires and talents are for all practical purposes unlimited, the notion that jobs have to be created is nonsense. If everyone has the opportunity to apply their skills to best advantage, then they will undoubtedly be able to produce goods and services which they can exchange with each other – which is what would happen naturally in a healthy market economy is all about. If it is not happening, it must be concluded that people either are being prevented from applying their skills, or that it is not worth their while.

We would argue that they are prevented from doing so because land is not freely available at the margin, and that it is not worth their while because of the structure of the tax and benefit system. These are the two sides of the same coin, and that the only remedy is to reform the tax system so that the annual rental value of land is the principle source of public revenue. This would make land freely available at the margin and allow people to keep the full product of their labour. It is, unfortunately, not a policy that is much discussed in those circles responsible for making fiscal and economic policies across Europe. But it needs to be if the sort of disturbances seen in Britain last month are not to spread and worsen.