The economic crisis caused by Covid-19 is having profound negative effects on employment and, in particular, youth employment. The sudden contraction of economic activity generated by the pandemic has had two direct impacts on youth employment around the world. The first is the termination of internships and temporary work contracts, which are major engines of job destruction when economic activity slows down. The second is a freeze on hiring university graduates or graduates of vocational programs. The effects of these setbacks will last until uncertainty surrounding the evolution of the pandemic is substantially reduced.
However, the precariousness of youth employment in countries such as France, Italy, or Spain is a perennial problem that predates the health crisis. The global pandemic has reinforced some factors at the root of the problem. The skills gap among young people is the result of the poor adaptation of professional training and college degrees to the real needs of young people, companies and society. The global pandemic and the rise of WFH (work from home) as enabled by technology has widened the skills gap in most countries.
This gap is a bigger problem in countries that lack a strong tradition of collaboration between educational institutions and businesses. It can become particularly large in times of steep technological change, automation of production processes, accelerated innovation and a disintegration of value chains that push companies to specialize and improve efficiency. The slow adaptation of educational goals and outputs to professional needs and insufficient collaboration between educational centers and companies leads to a greater skills gap, which complicates the sustainable creation of youth employment.
Governments also need to play a role in solving this problem. They should not try to plan every single program or degree for the simple reason that they do not have the right information to do so. But they should offer some flexibility to educational centers –within a well-defined set of standards--to adjust to the realities of companies’ demands, encourage collaboration between educational centers and companies, and offer some contracts that encourage companies to invest in the education and development of young graduates.
The recent IESE report The professional skills of the future: An action plan for youth employment in the post-Covid-19 world highlights some aspects of the youth employment crisis. The first is that 83% of the companies surveyed –118 large companies in 15 industries– have serious difficulties in finding young graduates due to the candidates' lack of professional skills. The alarming reality revealed by this data is that there is high youth unemployment, and the companies that want to hire do not find candidates with suitable professional profiles.
The second striking fact of this study is that 70% of companies fill their new jobs with university graduates, regardless of whether university education is necessary for those jobs. In other words, the university degree offers the company that hires a greater guarantee of employability than a vocational training cycle or an alternative educational itinerary. This reflects the limited progress in improving vocational training in recent years, despite the huge public resource allocation to it in the EU. It also highlights the enormous financial effort needed for society to support educational systems and how it hinders results. This situation also illustrates a level of frustration for those university graduates who end up developing professional tasks for which university education is not required.
The third observation is that companies perceive that the skills gap will grow in the next three years unless effective measures are taken to help young people improve their professional competences. The main reason is the acceleration of digital transformation, and the automation and robotization of industrial and service processes. These will create new opportunities, but it will also destroy traditional jobs.
The outlook is not encouraging, but there are some encouraging signs to note and steps that need to be considered to meet these challenges with determination. The first, already underway in some European countries, is to better facilitate collaboration between educational centers and companies in order to tackle this challenge. The second is that more than 90% of the companies participating in this study indicate that collaboration between educational centers and companies is essential and feasible, and that these companies express their willingness to collaborate even more closely on tackling this enormous challenge. The third is that governments can use EU funding for these new vocational programs in a more effective way.
Creating youth employment is a huge social undertaking, but is society's duty to help future generations. Experience shows that it is not easy, and facing it requires profound determination to seek broad consensus and promote public-private collaboration in diagnoses and action plans. The Covid-19 crisis is a deafening call to companies, educational centers and companies to awaken magnanimous attitudes, develop effective policies, and place the common good and good young people above partisan interests.
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