Economic downturns wreak havoc in people’s lives, but much more so in those of youths. Having just started a career, with little savings and considerable debt, youths are typically not in a strong position to face recessions. Even if they were doing well in a job, standard redundancy practices such as last in first out, tend to be biased against younger workers.
Academic research is, in fact, very clear in this regard. Both the financial crisis and the COVID pandemic had devastating impacts on young persons. Labour market entry during a downturn tends to reduce earnings for up to 10 years, while the proportion who fail to join the labour market remains high for up to 5 years.
On the other hand, statistics released by Eurostat indicate that last May the youth unemployment rate in Malta fell to 7.4%. In addition to this being the lowest rate ever observed since these data started to be compiled for Malta, this was also the first time that our country had the lowest youth unemployment rate across all countries of the European Union.
Last May the youth unemployment rate in Malta fell to 7.4%.
Across Europe the youth unemployment rate is almost two and a half times that of our country. In the country with the highest youth unemployment rate, Greece, 38% of young people, or more than one in three, are unemployed. This is a rate five times that observed in our country.
While since the start of the pandemic, across Europe the youth unemployment rate has increased by almost two and a half percentage points, in Malta it has fallen by two percentage points. In twenty-three EU countries there has been an increase in youth unemployment due to the economic impact of the pandemic.
The largest percentage increase was in Ireland where there was an increase of seven percentage points. Across the European Union since the outbreak started, more than a quarter of a million young people have become unemployed. More than 63,000 of these were German, while around 54,000 were Italian. Even in Poland, Sweden, and Spain more than 30,000 young people lost their jobs.
In contrast in Malta, we have had a drop of almost 1,300 unemployed youths in 10 months. This means a 40% reduction. This would be very impressive even during an economic boom. During a pandemic it is nothing less than phenomenal. This especially because in previous downturns, Maltese youths fared quite badly.
During the economic crisis of 2009, the youth unemployment rate in Malta had reached 16.3%, or well above twice the current rate. At the time, although the economic blow for our country was much smaller than that exerted by the pandemic, there had been an increase of around 2,000 unemployed young people.
Yet, in the run up to the 2013 election former Prime Minister Lawrence Gonzi had said that youth unemployment was inexistent in Malta. This despite the fact that at the time the country had a rate of 15%, or twice the present youth unemployment. The subsequent leader of the Opposition, Simon Busuttil, went a step further to call the youth guarantee as equivalent to a washing machine guarantee.
Today despite the pandemic, Malta has the lowest youth unemployment rate in history and the lowest rate across Europe. These results show that the country is now reaping the results of the innovative and active labour market policies that were implemented after 2013. It seems that the “washing machine guarantee” was needed after all!