Unemployment in the European Union hit a record high in May. According to data provided by Eurostat, the unemployment rate in the 17 EU economies hit 11.1%, up from 10% the year before. There are now a quarter of a million more unemployed people in Europe than there were a year ago. During that period, the unemployment rate in those countries for those 25 and younger jumped from 20.5% to an unbelievable 22.6%. Meanwhile, in the United States, the youth unemployment actually fell from 17.2% to 16.1%.
Despite the improvement in the U.S., the worsening trend of unemployed young people highlights the severity of the issues facing many of Europe’s major economies. 24/7 Wall St. reviewed the 29 nations included in the report (most of which are in Europe, but they also include the U.S. and Japan) and identified the 10 nations with the highest unemployment rates among those 16 to 25.
With a few exceptions, most of these countries have been hit hardest by the recession. The so-called PIIGS countries of Portugal, Ireland, Italy, Greece and Spain — infamous for their contribution to the European sovereign debt crisis — are on the list. The remainder are not as infamous but nonetheless have been hit harder than the rest of the developed world.
Some of the countries with the highest youth unemployment rates — which in several cases exceed 50% — also have some of the highest overall unemployment rates as well. Spain, which tied with Greece for the highest youth unemployment rate (52.1%), also had the highest total unemployment rate of the 32 countries examined. All of the other countries on our list for which data is available had among the top 10 overall unemployment rates in May.
As evidence of the level of fiscal difficulty some of these governments are in, their sovereign credit ratings are among the worst in Europe. Nine of the 15 with the worst youth unemployment rates have a Baa3 rating or worse. Ireland and Portugal both have Ba ratings, while Greece is the only country in Europe with a C, or junk, rating. Countries with the lowest youth unemployment rates are almost without exception rated well by Moody’s. Only one of the 15 countries with the lowest rates has a worse rating than A1.
The countries with this severe unemployment also experienced the worst GDP contractions the European Union has seen in its brief history. In 2009, the gross domestic product of nearly every country in Europe (as well as Japan and the U.S.) fell. Latvia and Lithuania, which have two of the highest youth unemployment rates, had the highest single-year contractions in the EU in recent history, at 14.7% and 18%, respectively. In 2010, the most recent for which data are available, most of these economies bounced back, with the exception of five, which continued to contract. These five — Lithuania, Greece, Croatia, Spain and Ireland — are all on this list.
Relying on 2012 unemployment data for the most recent available month published by Eurostat, which records data for sovereign European nations, the U.S. and Japan, 24/7 Wall St. identified 10 countries where young people cannot find a job. Eurostat defines unemployed persons as being aged 16 to 74, without work, able to start within two weeks, and having actively sought work in the past four weeks. Youth unemployment rates specify a narrower age range of 16 to 25. GDP data, including annual growth rates, come from the World Bank, which uses current U.S. dollars. 24/7 Wall St. also consulted Moody’s Investor Service’s sovereign credit ratings as of July 2012.
These are the countries where young people cannot find a job
> Youth unemployment rate: 27.7%
> Overall unemployment rate: 13.7%
> GDP in 2010: $36.3 billion
> GDP growth in 2010: 1.33%
> Moody’s credit rating: Baa1
In May, Lithuania’s unemployment rate for those under 25 was 27.7% — more than double the country’s unemployment rate for its total workforce. The country’s economy was hit particularly hard during the 2008 financial crisis. GDP fell from $47.25 billion that year to $36.85 billion in 2009. The levels of central government debt also have risen considerably in recent years, from just 18.36% of GDP in 2008 to 43.16% in 2010. But the Lithuanian economy began recovering in 2010, with GDP rising 5.8% in 2011, according to the CIA. As the economy grew, so have job opportunities for the youth. And although youth unemployment rate is still high, it is down from the January rate of 31.7%.
> Youth unemployment rate: 28.1% (Q1)
> Overall unemployment rate: 15.3% (Q1)
> GDP in 2010: $24 billion
> GDP growth in 2010: -0.34%
> Moody’s credit rating: Baa3
Like Lithuania, Latvia is a former Soviet state with a small economy that was heavily impacted by the financial crisis. In 2008, the total unemployment rate was 8%, while the youth unemployment rate was 14.5%. By 2009, overall unemployment rate had risen to 18.2%, while youth unemployment rate had jumped to 36.2%. The small nation pegs its currency to the euro and hopes to join the eurozone in 2014. Latvia’s youth unemployment rate has fallen from a high of 37.2% in 2010, while in the eurozone the unemployment rate for those under 25 has risen from 20.9% in 2010 to 22.6% in May.
> Youth unemployment rate: 28.5%
> Overall unemployment rate: 14.6%
> GDP in 2010: $206.61 billion
> GDP growth in 2010: -0.43%
> Moody’s credit rating: Ba1
Ireland’s youth unemployment rate remained between 8.4% and 8.9% from 2002 to 2007. But beginning in 2008, youth unemployment skyrocketed, eventually reaching a high of 31.1% in January 2012. However, following a period from 2007 to 2009 when GDP declined from $260 billion to $223 billion, and central government debt rose from 28.37% to 70.48% of GDP, the situation in Ireland has been slow to improve. Up to 100,000 young people have emigrated from Ireland since the start of the recession, suggesting the youth unemployment rate in the country possibly understates the actual rate. Since July 2009, Moody’s Investor Services has downgraded Ireland’s credit rating five times, from Aaa to Ba1.
> Youth unemployment rate: 29.2%
> Overall unemployment rate: 12.2%
> GDP in 2010: $47.71 billion
> GDP growth in 2010: 0.2%
> Moody’s credit rating: Baa2
Bulgaria’s youth employment rate has worsened considerably in recent years, rising from 15.1% in 2009 to 29.2% this past May. This was coupled with a stagnation in GDP. After a 5.5% contraction in GDP in 2009, the Bulgarian economy grew just 0.2% in 2010, and it is forecast to grow an anemic 0.6% in 2012, according to the World Bank. In its annual credit report on Bulgaria, Moody’s Investor Services cites corruption and poor expansion in industrial output as potential concerns for the Bulgarian government. According to the Sophia Globe, just 673 internships were offered to young unemployed Bulgarians, a number that is actually double April’s tally.
> Youth unemployment rate: 36.2%
> Overall unemployment rate: 10.1%
> GDP in 2010: $2.06 trillion
> GDP growth in 2010: 1.54%
> Moody’s credit rating: A3
Since 2000, the youth unemployment rate in Italy consistently has been double that of the general population. By May 2012, Italy’s youth unemployment rate was well more than triple that of the general population. In fact, the current unemployment rates for both the total workforce and those under 25 are the worst registered in Italy in more than a decade. On July 2, the Italian General Confederation of Labour, Italy’s largest trade union, declared that youth unemployment in the country is a “dramatic national emergency.”
> Youth unemployment rate: 36.4%
> Overall unemployment rate: 15.2%
> GDP in 2010: $228.57 billion
> GDP growth in 2010: 1.38%
> Moody’s credit rating: Ba3
Portugal’s unemployment rate has increased from 14.7% in January to 15.2% in May 2012. This trend is far more exacerbated among Portuguese youth. In 2000, youth unemployment rate in Portugal was just 10.5%, but has risen consistently since. This year, the country’s monthly youth unemployment rate has frequently exceeded 35%. Portugal has emerged as one of the areas of greatest concernin the European sovereign debt crisis, its credit rating from Moody’s having been downgraded five timesin the past three years. In order to combat its rising youth unemployment, Portugal promised to reimburse companies for up to 90% of social security contributions made for workers between the ages of 16 and 30 if they had previously been unemployed for more than four months.
> Youth unemployment rate: 38.8%
> Overall unemployment rate: 13.6%
> GDP in 2010: $87.27 billion
> GDP growth in 2010: 4.24%
> Moody’s credit rating: A2
In recent years, Slovakia featured among the highest unemployment rates in all of the European Union. Yet, like many other European countries, unemployment in Slovakia has risen dramatically in recent years, reaching a post-financial crisis peak of 14.5% in 2010. Though the total unemployment rate declined shortly thereafter, the youth unemployment rate has continued to rise. In April, youth unemployment rate jumped to 39.7% from 34.5% the month before. Slovakia’s new prime minister, Robert Fico, is reportedly considering constructing public housing facilities and providing subsidies in order to reduce youth unemployment.
> Youth unemployment rate: 41.6%
> Overall unemployment rate: 15.8%
> GDP in 2010: $60.85 billion
> GDP growth in 2010: -1.19%
> Moody’s credit rating: Baa3
Although unemployment rose considerably following the financial crisis, young Croatian workers have had a particularly difficult time. Since 2008, Croatia’s youth unemployment rate has nearly doubled from 21.9% in 2008 to 41.6% in May. The former Yugoslav nation’s GDP fell by 5.99% in 2009 and by 1.19% 2010, and problems still persist. In late 2011, the World Bank announced Croatia was likely to reenter a recession, and early indications suggest the economy is once again contracting. This probably will exacerbate unemployment concerns for both the general population and young Croatians alike.
1. Greece (tie)
> Youth unemployment rate: 52.1% (March 2012)
> Overall unemployment rate: 21.9% (March 2012)
> GDP in 2010: $301 billion
> GDP growth in 2010: -3.52%
> Moody’s credit rating: C
As Europe’s sovereign debt crisis has unfolded, Greece was revealed as one of the countries with the worst problems. The country’s overall unemployment rate increased from 7.7% in 2008 to 21.9% in March 2012. Since December 2009, Moody’s has downgraded Greece’s sovereign credit rating seven times, from A1 to C. In 2009, central government debt reached 141.97% of GDP, while GDP fell by 3.25% — before falling again by 3.52% in 2010. This has severely affected Greece’s youngest workers, 52.1% of whom were unemployed as of March. In Greece’s June national election, much of the youth vote flocked to SYRIZA, a leftist and antiausterity party promising to deal with the youth unemployment.
1. Spain (tie)
> Youth unemployment rate: 52.1%
> Overall unemployment rate: 24.6%
> GDP in 2010: $1.4 trillion
> GDP growth in 2010: -0.14%
> Moody’s credit rating: Baa3
Since 2010, Spain has maintained the highest overall unemployment rate of all countries surveyed. In May 2012, the country’s youth unemployment rate caught up to that of Greece’s 52.1%, the highest rate in the study. Recent indicators suggest increasing economic weakness in Spain: the Markit Spain Manufacturing PMI, which tracks manufacturing growth, registered the lowest score in 37 months and the fifth-consecutive negative month. On June 13, rating agency Moody’s downgraded Spanish government debt from A3 to Baa3, and placed it on review for future downgrades. The effect of all this is a generation that, despite being well educated, has nowhere to work and lives with parents longer than ever.
Mike Sauter and Alexander Hess
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