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A generation doomed to joblessness

Youth unemployment can be reduced only by unifying the dual labor market

Youth unemployment is the most serious problem facing our country today. It threatens to prove an insurmountable obstacle to economic growth, and has doomed a whole generation of graduates and young professionals to joblessness, now and in the future. The youth unemployment rate in Spain has risen to 57 percent, with more than three million young people (under 34) who wish to work and cannot. Youth unemployment is a new phenomenon, which is hitting Southern Europe especially hard. France and Germany, with the collaboration of Spain and the backing of the European Investment Bank (EIB), have implemented a plan against this scourge in which 60 billion euros in soft credits are to be mobilized until 2020. The initiative will be formally announced on May 28 in a session called Europe: the next steps.

The causes of youth unemployment are, in principle, similar to those of unemployment in general. Recession destroys employment either because firms do not expect sufficient demand, or because they do not possess enough capital to enlarge their installations, in the case that they do find demand abroad. But the Keynesian and classical causes of unemployment are in the Spanish case aggravated by another, more refractory problem. This is the duality of the labor market, divided between a class of settled, fixed-contract workers who possess an array of labor rights, and another class of workers who do not have such rights. The continued recession has, firstly, expelled from the labor market the workers with temporary contracts, almost all of them young; and the persistence of the downturn blocks the integration of a whole generation into the Social Security system. We are looking, then, at a large category of displaced professionals, many of whom are resorting to emigration as a desperate solution.

Treatments that are to be effective against unemployment, especially in the case of young people, have to be drastic and ongoing. Stimulus policies to boost hiring must of course be implemented if it is possible to finance them, as is the case with the initiative backed by the EIB. But it is also indispensable to put an end to the duality of the labor market. It is disappointing to observe the reluctance expressed by politicians, businessmen and unions concerning the proposal by the EU employment commissioner, László Andor, to create a universal contract.

A single contract type for new hirings would clear away the bizarre tangle of types of accord, and tend to attenuate the discrimination suffered by the young. It is a serious proposal, and it is puerile to reject it out of hand on the pretext that it is not in line with "constitutional doctrine" (the principle of a fairly ironclad fixed contract, in which there must be a demonstrable reason for firing, being written into the Constitution). If this were the real reason, it would be enough to impose two scales of severance pay, one for unjustified firings and another for justified instances. To cling to the existing duality in the labor market is a serious mistake, and a worse one is to rule out one of the few remedies that exist, without an exhaustive examination of its pros and cons.

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