High unemployment in Europe caused by govt policies

Editors note: The following article is a translation by Chen Longxiang of a column in the 21st Century Business Herald.

High unemployment among European youth is a result of welfare policies in social security, labor protection and employment promotion.

Youth unemployment is one of the subjects of this year's International Labor Conference in Geneva. According to the ILO direc-tor-general, high youth unemployment is because of a lack of government policy and youth participation in the process of policymaking.

It is really naive to view the relationship between policy and its social effects in such a way, as if additional congresswomen or female ministers means improved gender equality on the whole.

In fact, the issue of youth employment has never been ignored.

In several European countries with high youth unemployment, it has been an important topic of elections and policy debates over the years. A large number of specific regulations were introduced to address the issue, but it did not work as desired and exacerbated the problem.

It can be predicted that as long as European government policy is based around welfare, youth unemployment will only worsen.

In fact, the crisis is a result of welfare policies in social security, labor protection and employment promotion.

Social welfare reduces the incentive for employment. Minimum-wage laws exclude low-productivity workers from the job market. Finally, the stringent laws ensuring job security causes enterprises to not want to hire personnel and prefer to use machines instead of human labor or outsource to other countries.

These policies increased overall unemployment, which has greatly affected youths. In some European countries, youth unemployment is more than twice the average and is even higher during recessions.

The reasons are not hard to determine. The minimum-wage laws in European countries deny employment opportunities for low-productivity workers. Due to lack of professional experience, labor productivity of youths often is not as high as middle-aged workers. At the same time, the cost of job turnover and marriage and maternity leave is high, so when employers want to lay off employees, younger workers are the most vulnerable.

In addition, labor laws in Europe greatly limit the ability of employers to reduce their workforce by increasing the cost of dismissal. So employers are extremely cautious when hiring.

The early period of a young individual's career is an important time for them to establish their specific fields, social position and personality. Excluding youths from the job market not only deprives them of opportunities for development, but also creates unnecessary social unrest.

Ironically, the results are caused by regulations and policies aimed at promoting public welfare and social stability. Even worse, some emerging economies are following suit since these policies are viewed as a result of greater experience.