Precarious work and high-skilled youth in Europe

During the current great recession, probably for the first time, we are witnessing a waste of highly educated youth in most European labour markets. This paper seeks to contribute to the debate on the increasing precariousness, temporary work, disconnected transitions, over-qualification and skill mismatch trends affecting most high-skilled youth labour markets in Europe. High-educational levels have usually played an important role in protecting individuals against both unemployment and underemployment: recent data show that the protection effect of higher education has been eroded by the crisis. Nowadays this is a crucial issue for the European Union. Although inactivity and unemployment are more widespread among young people with low educational attainment, a growing share of young graduates are also ending up there, while those having jobs are increasingly employed in temporary and low-qualified positions. There are, however, appreciable differences across Europe, the Southern countries showing the worst labour market conditions. The effects of precarious employment are particularly negative and persistent on young workers, as difficult early experiences of transition into work are likely to be associated with deterioration in long-term life chances (scarring effect). The prolonged labour market difficulties of young highly educated workers will also have relevant negative effects on the socio-economic growth potential of European countries. There is however little research on this specific segment of the labour force. The paper presents the main results of a comparative research on “Risk Transitions and Missing Policies for Young High-Skilled Workers in Europe”, funded by the European Commission, which considers the labour market conditions of youth with tertiary education –ISCED level equal to or greater than 5– who have been experiencing precariousness, deskilling and unemployment in recent years, and it provides an overview on the current European labour market conditions and policies for graduates, with specific focus on selected countries (UK, Spain, Italy). The analytical approach is mainly based on the transitional labour market literature (Schmid 2000, 2008) which assumes that individual pathways and careers are neither linear nor standardised. We consider key institutional factors affecting school-to-work transitions and labour market mobility: the role of higher education systems and apprenticeship training, the role of temporary work, the quality of ports of entry into the employment market. The paper analysed the transitions -often disconnected- between standard and nonstandard employment contracts, between employment and unemployment or inactivity (discouraged pathway). The starting research question is to what extent tertiary education still represents a protection against unemployment and underemployment risks. To what extent do both the assumptions of the ‘human-capital theory’ in economics and the ‘educational-credentials theory’ in sociology still work? Answering these questions requires analysis in greater depth to avoid easy generalisations and assess the long-term structural consequences of the current crisis for economic growth and social conditions. Two main aspects are to be considered in a general perspective: the quantity and quality of the labour demand and the characteristics of the higher education systems, especially in terms of their ability to meet rapidly changing labour market needs. Rising educational levels have proved to be among the most important trends in the changing nature of the labour force through time. From the economic perspective we can safely assume that the key drivers of the relative demand for more educated workers are linked to technological change – favouring highly educated and skilled workers – and heightened international competition, which has been detrimental to low-skilled or “superfluous workers” (Gans 2011). We can also say that the nexus between educational system growth and its influence on economic development has become more uncertain. The existing gap between demand and supply of highly qualified human resources represents one of the possible explanations for over-qualification, vertical skill mismatch (when available jobs do not require tertiary education) and horizontal skill mismatch (when jobs are not related to the field of study) to be seen now in the majority of European labour markets. The research methodology consisted in: 1) a comparative analysis of the employment conditions of young high-skilled workers in the EU27 Member States based on available Eurostat data and literature; 2) three country case studies including a quantitative analysis of national micro-data and a qualitative investigation, based on in-depth interviews (about 30 young people with tertiary education employed on temporary contracts) and focus groups with relevant institutional actors; 3) an assessment of the main measures adopted to support the employability of young workers. Eligibility for welfare and unemployment benefits is also considered. The paper will present the main research findings as well as some important research questions that arise from the analysis and call for further research. Four main findings emerge from the comparative analysis. The first is that for tertiary education leaver who find a job, temporary employment seems to be the norm in most European countries. Youth employment is generally characterised by high levels of temporary contracts, low wages, undeclared work and unpaid overtime, leading to a vulnerable position in the labour market, to some extent regardless of their educational attainment and skills. In fact, high-skilled workers are also highly likely to be employed in temporary jobs. Especially the Southern countries, the incidence of temporary work for high skilled youth workers exceeds the average. Secondly, temporary workers have been particularly hard hit during the recent recession and the relative concentration of temporary jobs among younger workers (15-24) has resulted in significant increases in youth unemployment and inactivity rates. The third finding is that the transition period between school and jobs which guarantee a stable income, career perspectives and social protection, tends to be fairly long in some European countries, also for the highly educated. The evidence suggests that the expected time to find a permanent job is positively correlated with the overall strictness of regulation on permanent employment. This is particularly the case in temporary-work countries – such as Italy and Spain – that have adopted two-tier labour market reforms based mainly on the deregulation of entry contracts. But a similar trend is occurring in the UK, which represents the ideal-typical of liberal and flexible labour market. Even in Member States like the UK and some Nordic and Continental countries, where young workers have better chances of moving into permanent contracts, skill mismatches remain frequent and the current recession has increased the incidence of precarious work and the time needed to find a stable job. Finally, the qualification mismatch is becoming an ever greater challenge for most EU countries. In Southern Europe over-qualification among youth is considerable and tertiary education does not allow a guarantee against unemployment and/or precarious employment, with young graduates showing the highest unemployment and temporary employment rates. In both countries, negative labour market experiences induce many young highly skilled workers to migrate abroad – the brain drain – with the loss of qualified resources which could affect growth potentials when not offset by attracting equivalent skilled human resources from abroad. From the subjective perspective the research results show some dissimilarities in the way the problems are perceived by youth themselves. Different national pictures have emerged - in Italy persistent precariousness and skill mismatch; in Spain disconnected pathway in the labour market; in the UK longer labour market transitions and deskilling- reflecting different cultural approaches and institutional regulation models. Most EU countries lack a comprehensive policy addressing the needs of young high-skilled workers, considering that training programmes, start-up and employment incentives usually focus on low-skilled workers. Only in very recent years in the face of rapidly rising graduate unemployment have some European countries introduced programmes aimed at graduates, which either promote subsidised internships, wages and social security contributions.