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"Fighting youth unemployment"

Keynote by Jörg Asmussen, State Secretary of the Federal Ministry of Labour and Social Affairs, on the occasion of the "Symposium on Youth Employment and Employment Creation", organised by the embassy of the Republic of South Africa in Berlin and McKinsey & Company, Berlin on 9./10.11.2015

Honorable Ministers,
Ladies and Gentlemen,

Thank you for the opportunity to speak to you today. Fighting youth unemployment is the topic of this symposium and it is a key issue on the international agenda.

Optimism and the excitement about economic independence – feelings you will probably remember when starting your first job. Unfortunately, at the moment, too many young people around the globe do not experience this kind of excitement. Too many young people are unable to find an adequate job enabling them to support themselves or to support their families.

According to the World Bank, 621 million young people worldwide are not employed or in education or training today. Globally, young people are up to four times more likely to be unemployed than adults. This is not only a problem, because potential for the whole economy is wasted, but also because it affects the individual young person in terms of his or her professional biography and social well-being at a very early stage.

And this challenge will live on: Projections for the next ten years based on demographics say that 1 billion young people will enter the job market - of whom only 40% will actually be able to enter jobs that currently exist. To keep employment rates constant, 600 million jobs will need to be created over the next ten years - this means 5 million jobs a month! It shows quite clearly the scale of the global task we face.

In Europe, fighting youth unemployment also remains of central concern. The economic downturn severely hit young people. From the second quarter of 2008 onwards, the youth unemployment rate in the EU raised to a peak of 24% in the first quarter of 2013. Meanwhile, it went down to 21% - still meaning that one out of five young persons in Europe is without a job. The situation is even more dramatic when we look at individual EU countries. In 2014, youth unemployment in Spain was 53%, in Greece 52%, in Croatia 45% and in Italy around 44%.

Short spells of unemployment do not necessarily need to be a problem. For many of the youths, entering and re-entering the labour market does not need to be the cause for financial or personal distress. But unemployment spells with a duration of longer than 12 months can very well cause problems like skills erosion or rising social exclusion. This is why the following figure is alarming: In 2014, in the European Union more than one in third of the unemployed youth was looking for a job for longer than a year. And this rate is increasing. The overall situation therefore poses a substantial challenge for policy makers. The key question is: How can we possibly manage to integrate so many young people into the labour market as soon as possible?

"It always seems impossible until it's done." This encouraging quote is of the remarkable former president of South Africa and Nobel Peace Prize laureate, Mr. Nelson Mandela. It can provide us with respectable guidance for our discussion on potential solutions.

On a multilateral level, the governments of our countries work closely together within the G20 process to address the challenge of youth unemployment. In September this year, the G20 Labour Ministers agreed a quantitative goal: the reduction of the number of "young people most at risk of being left permanently behind" by 15% until 2025. Here we mean young people with low educational attainment, young people caught up in the informal sector, or young people not in employment, education or training. Reducing the number of people in this group not only provides a direct benefit to the individual but also has a macro-economic dimension as well: For the EU, we have data that the economic loss due to the non-participation of young people in the labour market makes up 1.25% of EU GDP per year. So how do we establish better framework conditions for young people to enter the job market - both internationally and nationally?

I was asked to present some ideas and best practices from Germany. Please let me give you some explanations from the point of view of the Ministry of Labour and Social Affairs. Even knowing that German best practices are not simple applicable 1:1 on other country specific circumstances.

In Germany, we are actually in a situation that is quite positive - compared to the rather grim situation in other parts of Europe specifically or in parts of the world. In 2014, Germany was the only Member State with a youth unemployment rate below 10%. With an annual average unemployment rate of 7.7% for young people under 25 in 2014, Germany had the lowest rate of all EU Member States. Still, we had some lessons to learn ourselves. In 2005, we had a youth unemployment rate of 15%, and it took great efforts to reach today´s numbers.

Why is the situation in Germany better than before - also compared to other countries? General conditions like the good economic situation in Germany and the situation on the labour market have a strong impact here. The demographic development in Germany is an important factor too. Due to a constantly very low fertility rate of 1.4 children per women since the end of the 1960th and the ongoing retirement of the so called baby boomer generation from the 1950th and 1960th with fertility rates above 2 we currently experience labour shortage for specific professions.

However, a key element is our system of dual vocational training. We believe that it provides an excellent starting point for a young person’s professional life. It is currently receiving a lot of attention, also internationally. The core idea is to combine school and workplace learning: apprentices have a contract with their training company and spend only around two days a week in vocational schools. Upon completion, they get a certificate, which is officially recognized by all businesses in Germany. Half of the young people in Germany in any given birth year start a dual vocational training programme in one of the about 330 recognized professions. More than 60% of the young people receive an employment contract in their training company directly at the end of their apprenticeship.

In the international context, we are frequently asked why our employers are doing this: Why do they pay salaries to their apprentices? Why do they go through the challenge of training them over the course of two or three years - depending on the profession? Why do employers’ associations and chambers engage in preparing the curricula of the vocational training courses and revise them regularly? Why do chambers organize standardized exams for all 330 professions?

Let me mention two points:
First: Training is fine-tuned to real-world needs! Employers get the qualifications that are really needed in the economy. On an individual level, this is ensured by the fact that apprentices spend a lot of time doing in-firm training instead of just going to school. On an institutional level, the engagement of employers’ associations and chambers in the preparation and revision of curricula ensures that training is always on the cutting edge of technological and economic development. And because training courses and exams are standardised, certificates upon completion of a dual vocational training course are recognised all over the country.

Second: A tailored fit! Employers get the young personalities they need in their companies. Participants in a dual vocational training programme become part of the companies naturally, take on more responsibility month by month and know "their" companies and their requirements. And employers get to know the employees who will carry the company in the future both as skilled workers and as human beings.

In Germany, there is a broad consensus on the advantages of this system. Educating young people is a matter of course for companies, ranging from small tradesmen's shops to large corporations. German businesses are investing billions of euros in training and the required infrastructure. This is because they know that it pays off!

From the perspective of the apprentices it is important that a vocational degree opens many career paths! Dual vocational training courses are not narrow in scope. It is not just on-the-job training. Quite the contrary: Dual training provides a solid basis for earning good money doing skilled work. And it is an excellent starting point for further education, taking on leadership responsibilities and forging a career.

But the successes of the past are no guarantee for the future. The attractiveness of the dual system in Germany is not automatic. The continuing trend towards more academisation, demographic developments and technological progress make constant evolution and adaptation necessary. Although many companies are now desperately looking for trainees, many training places still remain unfilled. This shows that even in Germany there are always new areas for action and challenges that must be tackled. The demographic changes in Germany alone, with longer life expectancy and fewer young people, make it necessary for us to exploit all our potential if we want the success of our economy to continue in the future.

Here I come to another crucial point: Better transition from school to work. How can we ensure that no one is left behind, that everyone get’s his chance within the dual system? Here we are talking especially about the so called NEETs - young people who are not in employment, education or training. In Germany 6.4% of the 15-24 year olds belong to this group. NEETs face a particularly high risk to be left behind permanently, if we don’t provide them with proper guidance into employment.

The Federal Ministry of Labour and Social Affairs implements active labour market policies to support young people at the transition from school to work and during the time of vocational training. In order to strengthen cooperation between national and local services, the Federal government will further promote the concept of so-called "youth employment agencies". As you might be aware, youth employment agencies are aimed at establishing a "one-stop-shop" system of guidance on public measures and support available for youth on the local and regional level. This involves public employment agencies, job centres, youth service organisations and - increasingly - also schools. You can see: We are willing to go an extra mile to give every young person a chance. And we are convinced: It will pay off in the long run!

Although South Africa and Germany are in many ways not comparable, we face the same challenge on one point: Without a skilled workforce we cannot be successful in driving our economies forward! Our ongoing collaboration within the G20 process has proven to be very fruitful in this regard, and we look forward to continuing the close bilateral dialogue. We are more than willing to share our experiences to help foster youth employment, and to make use of the great potential our young people have to offer.

Let me finish with another quote from Nelson Mandela: "Education is the most powerful weapon which you can use to change the world". In this spirit I am looking forward to our discussion.

Thank you!

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