Italy's youth unemployment just hit a new record high - here's what's going wrong
Italian youth unemployment broke a new record today, hitting the eye-watering level of 44.2% in June's figures. That's despite the fact the eurozone is clearly now recovering (slowly) from years of recession and stagnation. Only two European countries have higher youth unemployment than Italy. Greece's rate is 53.2% and Spain's is 49.2%.
So what's going wrong for Italy's young people?
Here's how it looks:
Fred
Italian unemployment overall is higher than eurozone unemployment, at 12.7% - the figure for the whole bloc is 11.1%.
The eurozone's youth unemployment, at 22.5%, is about twice as high as the overall level. In Italy's case it's nearly 3.5 times higher than the headline rate, suggesting a pretty brutal future for the country's young people - and that something is seriously wrong with the labour market.
Take a look at the different rates in comparison to one another (up until the end of 2013, when the Federal Reserve Bank of St. Louis' data seems to end):
Fred
In the grand scheme of things, the Italian and eurozone total unemployment rates aren't very far apart. In fact, Italian unemployment was below the eurozone in general until 2012.
But youth unemployment levels have very clearly separated from one another - Italy's was always higher, but more than 20 percentage points separate the two now. So what's going on with Italy's young people?
A recent publication by Centre for Economic Policy Research (CEPR) suggests at least three potential causes:
- The sort of contracts young people work with: Part of the problem is the country's dual labour market, something that's not unique to Italy. Young workers tend to get temporary contracts and veteran company insiders get the more rigid, long-term deals. When it's time to let some workers go (in a recession), you can guess who's first out of the door.
- Some go to university instead of working. More young people often choose higher education during a recession, as an alternative to a touch jobs market. As the CEPR article says "the decline in the participation rate of the young mechanically increases the measured youth unemployment rate."
- Young Italians have struggled to get into work at the best of times. As the chart below shows, even during 2002-2010, a period in which the eurozone was generally growing, Italy stood out with the highest NEET (not in employment, education or training) level in the EU. It's followed closely by Greece and Spain.
CEPR
All in all, Italy's young people are in a pretty bad place. Though Prime Minister Matteo Renzi has pushed for reforms that would liberalise the country's labour market, that's likely to be a slow process.
What's more, the economy is still pretty weak. Without the effect of the weaker euro and oil prices declining, Italy would still be in recession, according to French investment bank Natixis. In short, without any significant economic growth, don't expect that eye-watering rate to tumble any time soon.