Friday, 01 June 2012

The youth unemployment crisis: is there a skills mismatch?

The youth unemployment crisis: is there a skills mismatch?

Following the financial crisis of 2008, the global youth unemployment rate saw its largest annual increase on record. According to the ILO, the jobless rate amongst 15- to 24-year olds rose from 11.8 to 12.7 per cent between 2008 and 2009. This reversed the pre-crisis trend of declining youth unemployment rates since 2002.

Most people agree that youth unemployment is unacceptably high. However, there is a growing debate over why so many young people can’t find work. While youth unemployment rates remain stubbornly high, some politicians and economists now point to jobs that are going unfilled because employers cannot find workers with the right skills. The implication is that there is a growing “mismatch” between what the education system teaches students and what skills are actually needed by employers.

There are several things wrong with this line of thinking. First, across the world today we have the most educated and skilled youth cohort in history. It’s difficult to see any shortage of talent and skills.

Secondly, the fact that there are jobs that go unfilled at any given moment shouldn’t come as a terrible shock to anyone, let alone economists. Labour markets are dynamic.  Jobs are routinely being created as some employers expand and new businesses take root. At the same time, other firms are simultaneously eliminating jobs as they scale back or go out of business. The difference between these gains and losses over a given period is what either raises or lowers overall employment growth.

The point is that as long as there is this flux and churning in the labour market, there will always be job vacancies unfilled at any point in time. To call this a “mismatch” or a skills shortage is absurd.

That’s not to say that there aren’t sector-specific and localized shortages of skilled labour – think of the booming oil industry in the Canadian and American West or the mining industry in Australia where employers are truly having difficulty finding skilled workers. Even in so-called normal times, when new jobs are created there is always a bit of a lag before new positions are filled as workers need time to be trained to adjust to any innovations in production or service delivery. 

However to interpret these exceptions as proving the rule that there is a generalized skills shortage is simply wrong-headed. As U.S. Federal Reserve chair Ben Bernanke noted in a speech last month, the fact that labour demand is weak across most industries suggests there is a general shortfall of aggregate demand rather a worsening mismatch of skills and jobs.

Teachers’ unions need to be especially wary of the skills mismatch argument. Flawed as it is, it is nevertheless being used by many to push regressive reforms to public education. For instance, a report released in March 2012 by the conservative Council on Foreign Relations warned that the U.S. education system is not preparing students with the skills needed for an increasingly global work force. Their solutions to this alleged crisis in education read like a rogue’s list of failed policy options: more “competition”, greater parental choice, more alternatives to public schools, and yet more rigorous student and teacher assessments.

There is a further problem arising if policymakers accept the skills mismatch argument. By seeing youth unemployment as a structural issue rather than what it is – a failure of the economy to create enough decent jobs – government’s risk being able to develop an effective youth jobs strategy. Clearly, the focus should be on stimulating aggregate demand and expanding education and training opportunities. Sadly, many governments are going in the opposite direction, imposing strict austerity measures and cutting funding for education and training.

The G20 leaders will be meeting this year in Mexico to discuss, amongst other things, ways to boost employment. Teachers’ unions have a central role to play in pressing for a jobs-led growth strategy that recognizes and addresses the real cause of youth unemployment. In the meantime, the world’s youth are still waiting - and occupying.

Last modified on Thursday, 31 May 2012
David Robinson

David Robinson is a special advisor on higher and vocational education and training with EI. He is also the associate executive director of the Canadian Association of University Teachers, representing academic and general staff at colleges and universities across Canada.

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