Youth unemployment stirs debate on Swedish model

Updated 19 November 2012
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Youth unemployment stirs debate on Swedish model

STOCKHOLM: When Adam Lundborg, a 25 year-old business graduate, began handing out flyers on a busy shopping street in central Stockholm this summer, he was selling a product he knew better than most: himself.
The leaflets featured a short presentation of Lundborg and the type of jobs he was looking for: "Any challenges you throw my way."
"I graduated from university with top grades, but when I entered the job market it was like hitting a brick wall," he said.
On his second day of job hunting, Lundborg was offered a job by a company that had read about his plight in a newspaper. But the opening, described in the media as a "dream job", turned out to be a commission-based telemarketing position.
He ended up resigning, choosing instead to spend his time calling chief executives at companies he'd like to work for, hoping to get a chance to introduce himself.
Lundborg is victim of Sweden's persistently high youth unemployment, a hot-button issue in a country that prides itself on egalitarian policies, and that has weathered the financial crisis better than most.
Although Sweden's export-driven economy is beginning to feel the effects of Europe's economic woes, it has posted strong growth since making a quick recovery from the 2008 recession. It also has a low level of government debt.
But youth unemployment has remained above the European average, reaching a seasonally adjusted 23.0 percent in October, compared to 7.7 percent for the population as a whole, according to Statistics Sweden.
Last year, Swedes aged 15 to 24 were more than four times more likely to be without work than the rest of the work force, the highest ratio in Europe according to Eurostat.
Even during the boom years before the crisis, Sweden's youth unemployment hovered around 25 percent.
Last month one town, Soederhamn, went so far as to subsidize people between 18 and 28 to go look for work in Norway.
Swedish employers place the blame squarely on the employment protection laws and high entry level wages championed by the country's powerful unions.
"The barriers to entry to the job market are especially high in Sweden, leaving many young people on the sidelines," said Malin Sahlen, an economist at the Confederation of Swedish Enterprise, who on Tuesday released a book on the subject.
In her book, Sahlen argues that the high cost of firing workers means employers are reluctant to hire people with little, or little known, experience, making it tougher for young people and immigrants to gain a foothold in the job market.
They also bear the brunt of any job cuts in a downturn due to strictly enforced "last in, first out" selection criteria during redundancies.
Moreover, the high level of pay for entry level jobs — in Sweden set by collective bargaining, as opposed to a statutory minimum wage — give companies little incentive to choose young people over more experienced candidates.
It also encourages them to eliminate entry-level positions in order to cut costs, she said.
The Swedish Trade Union Confederation (LO), a close ally of the Social Democratic party, which dominated political life in Sweden for much of the past century, painted a very different picture, saying that the extent of the problem has been exaggerated.
"Many of those between 15 and 19 who are registered as unemployed are full-time students looking for part-time work, and that group of people really isn't a problem," said Oscar Ernerot, an ombudsman at LO.
"Sweden has a higher number of full-time students looking for part-time work," he added when asked about comparisons with countries that have a lower rate of youth unemployment.
Out of those between 20 and 24 years old, the main problem was a growing number of people who have failed to complete their secondary education, and for whom there is little demand in the labor market, Ernerot added, referring to a dwindling number of unskilled labor jobs.
The center-right government should invest more in education and projects that would create jobs for those people, he argued.
Stripping out full-time students and those who have been unemployed for less than a month, Sweden's youth unemployment would fall to around seven or eight percent, the LO ombudsman said.
However, Sahlen maintained that the statistics were accurate.
"It seems odd that Sweden should have more full-time students looking for part-time work than other countries do, given that they all measure unemployment in the same way," she said.
While there is little political appetite to relax Sweden's labor laws, LO has signaled that it may back a government proposal on youth apprenticeships, under which young people would be paid less than is currently mandated by the unions.
"It's not a lower salary, you get the same hourly wage," Chairman Karl-Petter Thorwaldsson yesterday told public broadcaster SVT, referring to a clause that says the apprentice has to spend 25 percent of the time studying.
But he added: "Something isn't working. When young people leave school they are not getting the jobs they have been trained for."
Meanwhile, Lundborg, the 25 year-old graduate, continues to look for work.
"Many of the companies I speak to sound positive towards me as a person, but say they don't need any more staff," he said.


Pompeo says China is engaging in ‘predatory economics 101’

Would China have allowed America to do to it what China has done to America asked US Secretary of State Mike Pompeo. (AP)
Updated 18 June 2018
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Pompeo says China is engaging in ‘predatory economics 101’

  • He said China’s recent claims of “openness and globalization” are “a joke.”

DETROIT: China is engaging in “predatory economics 101” and an “unprecedented level of larceny” of intellectual property, Secretary of State Mike Pompeo told a business audience Monday.
Pompeo made the remarks at the Detroit Economic Club as global markets reacted to trade tensions between the US and China. Both nations started putting trade tariffs in motion that are set to take effect July 6.
He said China’s recent claims of “openness and globalization” are “a joke.” He added that China is a “predatory economic government” that is “long overdue in being tackled,” matters that include IP theft and Chinese steel and aluminum flooding the US market.
“Everyone knows ... China is the main perpetrator,” he said. “It’s an unprecedented level of larceny.”
“Just ask yourself: Would China have allowed America to do to it what China has done to America?” he said later. “This is predatory economics 101.”
The Chinese Embassy in Washington did not immediately respond to a request for comment.
Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others.
“I reminded him that’s not fair competition,” Pompeo said.
President Donald Trump has announced a 25 percent tariff on up to $50 billion in Chinese imports. China is retaliating by raising import duties on $34 billion worth of American goods, including soybeans, electric cars and whiskey. Trump also has slapped tariffs on steel and aluminum imports from Canada, Mexico and European allies.
Wall Street has viewed the escalating trade tensions with wariness, fearful they could strangle the economic growth achieved during Trump’s watch. Gary Cohn, Trump’s former top economic adviser, said last week that a “tariff battle” could result in price inflation and consumer debt — “historic ingredients for an economic slowdown.”
Pompeo on Monday described US actions as “economic diplomacy,” which, when done right, strengthens national security and international alliances, he added.
“We use American power, economic might and influence as a tool of economic policy,” he said. “We do our best to call out unfair economic behaviors as well.”