Youth employment conditions in the Nordic countries – an example to the rest of Europe?

by Edgaras Mascinskas. Originally published on 2013/12/26

Since the financial crisis of 2008, youth unemployment has increased dramatically across Europe. While only few states experienced minor changes, others, in particular Spain and Greece, have witnessed one of the highest surges of youth unemployment in their modern history. According to international media, Europe’s lost generation of jobless youth could ruin the continent´s economic recovery (Tse, 2013; Chan & Dodge, 2013).

Therefore, earlier this year a joint letter by the Prime Ministers of Finland, Sweden and Denmark expressed that the Member States’ best practices facilitating entry into employment for young people should be shared and utilised in other Member States (Statsradest Kansli, 2013). However, which practices are the best to be shared remains open for debate. Some have suggested that the Nordic welfare state model, based on combining a transparent market economy with equality and social well-being, can offer good practices for improving employability of young Europeans (“Nordic countries have set an example”, 2012; Djernaes, 2013). However, while Norway (non-EU member) and Denmark experience relatively low youth unemployment rates (between 9-13 percent), Sweden and Finland do not (20-25 percent). It seems that even though the Nordic countries demonstrate similarities in terms of socioeconomic and social conditions, there is much that separates them in terms of youth employment. Therefore, the aim of this article is to review recent research on the differences between Nordic countries against the background of variations in institutional conditions in the area of education and labour market policy. In doing so, this article aims to identify good practices that ensure smooth transition into employment for young people, which later could be utilised in other member states.

Recent evidence suggests that (Olofsson & Wadensjo, 2012) upper secondary school education shows clear differences between the countries’ employment conditions for youths. Whereas Sweden and Finland offer mainly school based vocational training programmes, the rest of the Nordic countries offer apprenticeship training linked to a more regulated system of trade licences (Olofsson & Wadensjo, 2012). In the case of Sweden, youth unemployment is in part negatively affected by the high number of students with immigrant background. This also relates to another important issue – rising income inequality in Sweden. Between 1985 and the 2000s, Sweden’s growth in inequality was the largest among all OECD countries (OECD, 2011). In addition, Sweden is also experiencing high levels of inactivity (neither in employment nor in education and training) among young adults, which is a result of the fairly modest resource allocation for special youth measures in the framework of labour market policy (Olofsson & Wadensjo, 2012).

According to Olofsson and Wadensjo (2012), when comparing Sweden and Denmark it becomes evident that vocational training and labour market policy in Denmark is based on coordination, individual adaptation and generous funding conditions. Whereas in Sweden, educational measures and labour market policy are more characterised by a division of responsibility between school, labour exchange (services) and social services, strict demarcations between standard education and youth measures, and an emphasis on general or academically oriented upper secondary school education (Olofsson & Wadensjo, 2012). Another key difference is that Denmark, Finland and Norway provide more multifaceted training options at various levels and there is also no time limit for upper secondary studies completion.

The overall effectiveness of the practices facilitating entry into employment for young people cannot be exactly estimated. However, several improvements were identified by the researchers. According to Olofsson and Wadensjo (2012), Swedish measures for unemployed and inactive youth would benefit from closer coordination between different actors: the school (introductory programmes), labour exchange (services) and social services. Also more opportunities should be granted to young adults (over age 20) to participate in initial vocational training. Researchers conclude that vocational training in various forms and at different levels should be provided in the framework of the Swedish upper secondary school and that general university admission should not be the overall objective of all education programmes.

At the moment the lowest youth unemployment rate in Europe is in Germany (around 8 percent). The reason why youth unemployment in Germany is low is due to the specific German education system which is linked to economic output. The German university enrolment ratio is one of the lowest in Europe. The gross enrolment rate (tertiary level) in Germany is only 46%, whereas in Sweden and Finland it is around 75-94%. The gross enrolment ratio (tertiary level) is the total enrolment in tertiary education expressed as a percentage of the total population. There is a small correlation between enrolment and youth unemployment. In the case of Sweden and Finland, a high number of students participating in tertiary education leads to higher youth unemployment, whereas in Germany it is the opposite. The dual training system in Germany provides an opportunity for young adults to gain practical experience in a company. Due to this system, German students are less interested in pursuing academically demanding education. In addition, the German model also provides help to disadvantaged adults through various training schemes. The differences between Denmark, Germany, Sweden and Finland demonstrate the importance of education and labour policy coordination.

The argument presented by Olofsson & Wadensjo (2012) does not indicate that apprenticeships guarantee employment. However, the German model demonstrates that a closer coordination of education and labour policy can be quite successful. The different practices used by the Nordic countries indicate that it is difficult to define which practices are the best to tackle youth unemployment. Research on the effectiveness of some of the practices (youth guarantees) is quite limited. Therefore, what is clear is that Member States should provide a variety of measures at different levels. It is important to ensure that the resources available for such practices are generous, because youth unemployment is affected by various factors; ranging from economic crises to immigration and income inequality.

Further reading:

Youth, Education and Labour Market in the Nordic Countries

Divide We Stand: Why Inequality keeps Rising

Youth guarantees: a response to the youth employment crisis?

The Nordic countries the next supermodel

Bibliography

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Chan S., P. & Dodge, S. (2013). Youth unemployment could tear Europe apart, warns WEF. The Telegraph.

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