An Accident Waiting to Happen, or 'Ever Closer To The Cliff'!

By: Ian Campbell | Thu, May 17, 2012
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Why Read: Because Youth Unemployment has to be at or near the top of both near-term and long-term economic issues that must be addressed, or if they aren't, bring the 'edge of the economic and societal cliff' ever closer.

Featured Article: A May 14 article focuses on Europe's youth unemployment numbers. The article reports that not only do many European countries currently suffer from serious youth unemployment rates, but also points out that while this may be a somewhat exacerbated problem currently, it is not a new phenomenon in many European countries. For example, the article reports that while youth unemployment rates have reached 51% in Greece and Spain, 36% in Italy, and 30% in Ireland, the average youth unemployment rate for the past 40 years has been:

The article claims that these historic European youth unemployment rates are the result of structural and educational problems - citing Germany's current 'just over' 8% youth unemployment rate and better coordinated school system and industry apprentice programs.

Commentary: That said, irrespective of Europe's past youth unemployment rates, youth unemployment simply has to be a very large and looming societal and economic problem in developed countries. The following table sets out the 2011 GDP, latest reported population, and 2007 and current reported youth unemployment rates for seven of the world's current 10 largest developed economies (2007 statistics for Japan, Russia and Australia not found):

 

  2011 GDP
U.S.$ Trillions
Population
Millions
Current Unemployment
Rate %
2007 Youth
Unemployment Rate %
Current Youth
Unemployment Rate %
United States 15.1 314 8.1 11.7 16.4
Germany 3.8 82 5.6 11.4 7.9
France 2.8 65 10.0 18.3 21.8
United Kingdom 2.4 62 8.2 13.6 21.9
Italy 2.2 59 9.8 21.3 35.9
Canada 1.7 35 7.3 11.0 13.9
Spain 1.5 46 24.4 17.4 51.1
Sources: Wikipedia, various, referenced Guardian article

 

These 2007 and 2012 youth unemployment rate statistics are set out in the following table:

2007 and 2012 youth unemployment rate statistics table

A second article reports on youth unemployment in OECD (Organization for Economic Co-operation and Development) countries. That article, published in The Guardian yesterday, has a number of interesting charts and tables that include many other countries - all of which charts and tables tell the same general story as set out in the foregoing table and chart.

Finally, a March, 2012 article reported the International Monetary Fund as saying the "the average unemployment rate among workers ages 15 - 24 is nearly twenty percent".

The solutions to youth unemployment in developed countries, once one gets past structural issues (meaning improper or inadequate training for available jobs, or jobs not available in proximity to possible employees), in essence are two in number, neither of which is likely to reverse in the next several years:

The consequences that may or will flow from prevalent and increasing youth unemployment include:

The seriousness of this issue cannot be overstated. Unfortunately, like many things today driven by economics, there are no ready practical answers. Once again, it is frustrating to:

Europe's perpetual 'wasted youth'
Source: Business Spectator, Marco Annuziata (VOX EU), May 14, 2012
Reading time: 4 minutes

Also read: Youth unemployment across the OECD: how does the UK compare
Source: The Guardian, Ami Sedghi, May 16, 2012
Reading time: 3 minutes

Also read: Global Youth Unemployment Rate Staggeringly High: 'Lost Generation' Feared
Source: International Business Times, March 16, 2012
Reading time: 3 minutes

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Economic Straight Talk

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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austrian-money-supply/