Policy Brief: Spain: Youth, COVID-19, and the Struggle of Unemployment

Written by Júlia Rovira Munté, EST Working Group on Youth Employment

Abstract

This policy brief is aimed at Spanish government officials and policymakers. The main issue discussed is the high unemployment rate young Spaniards are currently facing, exacerbated due to the effects of the COVID-19 pandemic. 

Being a Member State of the European Union, Spain’s unemployment figures of people younger than 25 years old pose an issue. Therefore, this policy brief offers possible recommendations or areas of improvement focusing on how the global pandemic has worsened the situation for the younger Spanish population, which was not already ideal to begin with.  

Introduction

Unemployment is a noun used to describe a situation where a person does not have a job but is actively searching for work. Therefore, the unemployment rate is the proportion of people who do not have a job in contrast to the whole labour force (Murphy & Topel, 1997, p.295). Employment gives people material security, a sense of self-realisation, and utility in society, and young graduates looking for their first job after graduation are one of the most vulnerable groups in the labour market (Lambovska et al, 2021, p. 55).

Spain, a member of both the European Union and the Organisation for Economic Co-operation and Development (OECD), currently has the highest youth unemployment rate of the region. According to Eurostat (2021), Spain went from a 35.6% rate of youth employment (15 to 29 years) in 2017 to a 32.4% in 2020. Moreover, Spain’s 2011 youth employment rate, three years after the 2008 global economic crisis, was 38.1%, higher than 2020’s (Eurostat, 2021), as shown in Figure 1. 

Moreover, according to the OECD, Spain’s unemployed population aged 15 to 24 grew from 501.000 in 2019 to 548.000 in 2020 (OECD.Stat, 2021). Finally, to finalise this data review, Spanish National Statistics Institute reports that 58.23% young people ranging from 16 to 19 years old were unemployed in the first trimester of 2021, while the figure decreases to 36.52% for young people aged 20 to 24. 

Figure 1

Spain’s youth employment rate from 2008 to 2020

Note.  Linear graph of Spain’s youth employment rate by percentage and year. From Data Browser: Youth employment rate by sex, age, and country of birth by Eurostat, 2021, Eurostat (https://ec.europa.eu/eurostat/databrowser/view/YTH_EMPL_020__custom_1828791/default/line?lang=en). In the public domain.

The Effects of COVID-19 and Current Efforts

The COVID-19 pandemic has shaken the lives of millions of people, creating a so-called “new normality” without precedents that has forced everyone to adapt to a new life in a time record. It has also propelled an economic and unemployment crisis in most countries of the world, and one of the most affected sectors of the population has been youth, which was already vulnerable before this crisis. In the International Labour Organisation (ILO) report called World Employment and Social Outlook – Trends 2020, it is highlighted that age is another feature of labour market inequalities, and that temporary employment has impaired the quality of the jobs available in regions like Europe (International Labour Organisation, 2020, p.14). 

European Union countries like Greece, Italy or Spain already had high unemployment rates, but even in countries like the Czech Republic, youth unemployment doubled from the end of 2019 to the end of 2020 (Lambovska et al, 2021, p.55).

However, the European Union has taken measures to tackle this ongoing issue. In the past year, the European Youth Guarantee has been reinforced, broadening its target group, now including all young people under 30 years old. The reinforced Youth Guarantee wants to ensure that all young people receive a good quality offer of employment, continued education, an apprenticeship, or a traineeship within four months of becoming unemployed or leaving formal education (Council of the European Union, 2020, p.4). It plans to do so by increasing the funding via the Recovery Plan for Europe and the instrument ‘Next Generation EU’ (Council of the European Union, 2020, p.5). Moreover, it is said that the key financial resource for the implementation of the Youth Guarantee is the European Social Fund Plus (ESF+), which has a budget of €99 billion (European Commission, n.d.).

On Spain’s side, measures are also being taken to tackle the issue in line with the European Union’s objectives. Spain has implemented the new National System of Youth Guarantee via its Public Service of State Employment (SEPE in Spanish), which goes in line with the newly proposed Shock Plan for Youth Employment 2019-2021. The Spanish Youth Guarantee is formulated around six axes: guidance, training, employment opportunities, equal opportunities in employment access, entrepreneurship, and improvement of the institutional framework, and has a funding of almost €5 billion (Pérez, 2021). 

Shortcomings and Recommendations

The previous Spanish Youth Guarantee failed to reach the set objectives because it was not truly inclusive, it did not create enough job opportunities, and it did not solve structural issues like excessive market flexibility, amongst other issues (Unión Sindical Obrera, 2021). With the new Spanish Youth Guarantee, approved in June 2021, issues like flexibility and trust in the administration’s response, an intersectional approach and a sustainable view are included and tackled, but there are still some improvements that could be made. 

Firstly, there needs to be a broader spread of information and awareness. Many young people do not know of the existence of these policies, because the government fails to promote them and advertise them properly. The issue only worsens when looking at the socially excluded youth. Secondly, these policies fail to address one of the main issues of Spain’s youth unemployment: market’s flexibility. There may be spikes of job opportunities, but these are mostly composed of fixed-term contracts, which often are paired with low wages that are impeding Spain’s youth from such basic needs as leaving their parents’ homes (El Economista, 2021). 

The main two issues, inclusivity and an excess of flexibility, can be solved via a governmental incentive policy. If a company sees that hiring a young person on the verge of social exclusion will benefit them due to the incentive policy, they will start to consider investing in young workers. Moreover, incentives could also fix the problem of fixed-term contracts: the government must assure the company that hiring a young person with a long-term contract is more beneficial than with a fixed-term contract. This investment could be justified via incentives: when a company has a certain percentage of long-term contracts, it receives an incentive, for example a tax deduction, from the government. 

Conclusions

This policy brief was aimed at exposing the current situation of youth unemployment in Spain in a clear and concise manner, as well as identifying what were the main policies to tackle the issue at the European Union and Spanish level. It also wanted to identify some of the shortcomings of these policies and offer guidance to resolve them. 

Firstly, the situation is critical: the pandemic has not subsided; thus, temporary influxes of aid and funding cannot solve a structural problem that is being aggravated as years pass. As this recession has been going on for more than a decade, policies like the Spanish Youth Guarantee can be beneficial and help mitigate the effects of a crises like the COVID-19 pandemic, but on a long-term scale, there needs to be a reform that puts a stop to excessive flexibility, low wages, and poor labour conditions. 

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References

Council of the European Union (2020, November 4). Council Recommendation of 30 October 2020 on A Bridge to Jobs – Reinforcing the Youth Guarantee and replacing the Council Recommendation of 22 April 2013 on establishing a Youth Guarantee 2020/C 372/01. OJ C 372, p. 1–9, ISSN 1977-091X.

El Economista (2021, August 28). Los Jóvenes Españoles Logran independizarse con casi 30 años de media. Retrieved December 30, 2021, from https://www.eleconomista.es/actualidad/noticias/11370168/08/21/Los-jovenes-espanoles-logran-independizarse-con-casi-30-anos-de-media.html 

European Comission (n.d.). Employment, Social Affairs & Inclusion: EU-level support for the implementation of the Youth Guarantee. Retrieved December 31, 2021, from https://ec.europa.eu/social/main.jsp?catId=1099&langId=en 

Eurostat (2021). Data Browser- Youth employment rate by sex, age and country of birth. Retrieved December 27, 2021, from https://ec.europa.eu/eurostat/databrowser/view/YTH_EMPL_020__custom_1828791/default/line?lang=en

Instituto Nacional de Estadística (2021). INEBase – Tasas de paro por distintos grupos de edad, sexo y comunidad autónoma. Retrieved December 23, 2021, from https://www.ine.es/jaxiT3/Datos.htm?t=4247

International Labour Organization (2020). World Employment and Social Outlook: Trends 2020.  ISBN 978-92-2-031407-4.

Murphy, K. M., & Topel, R. (1997). Unemployment and nonemployment. The American Economic Review, 87(2), 295-300. http://www.jstor.com/stable/2950934 

Lambovska, M., Sardinha, B., & Belas, J. (2021). Impact of Covid-19 Pandemic on the Youth Unemployment in the European Union. Ekonomicko-manazerske spektrum, 15(1), 55-63. DOI: 10.26552/ems.2021.1.55-63

Organisation for Economic Development and Co-Operation (2021). OECD.Stat – Short-Term Labour Market Statistics: Unemployed Population. Retrieved December 27, 2021, from https://stats.oecd.org/Index.aspx?DatasetCode=STLABOUR#

Pérez, G. R. (2021, June 8). El Gobierno Aprueba UN Plan de 5.000 millones contra el Paro Juvenil, “Uno de los mayores problemas del país”. El País. Retrieved December 24, 2021, from https://elpais.com/economia/2021-06-08/diaz-es-la-mayor-inversion-para-acabar-con-uno-de-los-problemas-mas-grandes-de-este-pais.html 

Unión Sindical Obrera (2021, November 18). España Encabeza El Paro Juvenil en Europa, pero no es algo nuevo. Retrieved December 31, 2021, from https://www.uso.es/espana-encabeza-el-paro-juvenil-en-europa-pero-no-es-algo-nuevo/