Impact of Crisis on Youth's Unemployment Rate

Impact of crisis on the youth unemployment rate
The 2008 global financial crisis created economic shockwaves that resulted in unemployment. Notably, it is the recession that causes unemployment. Whenever there is a fall in output and demand, firms tend to stop acquiring new labor. As a result, there is a rise in unemployment because of fewer job opportunities. In one study conducted by Misbah Tanveer Choudhry, Enrico Marelli, and Marcello Signorelli, two vital results were relevant on the impact of financial crises on unemployment rates among the youth (Choudhry, Tanveer, and Enrico 77). As per the researchers’ empirical estimates, the impact of financial crises on youth unemployment extends for five years beginning its onset, however, the impact is significantly felt in the second and third year following the crisis.
The integration of youth into the labor market is a crucial objective for many governments across the world and many nations, especially in the West (Europe and America) have made it a key policy. In Europe, for example, the European Employment Guidelines insist on creating employment opportunities for the younger generation to reduce instances of unemployment. Compared to the adult unemployment rates, youth unemployment rates are twice higher in Europe. And youth unemployment dramatically rose after the global financial crisis. The crisis that began between 2007 and 2008 as a financial crisis morphed into one of the biggest recessions since the Great Depression of the 1930s (Choudhry, Tanveer, and Enrico 78). It came along with widespread repercussions on economic performance, employment, and labor output in every nation. And its impacts were heavily felt in the weakest segments of the labor market, more so among the young people.
The underlying issue is that the financial and economic crisis posed serious threats to young people in many nations. Often, school-leavers highly compete with many other job seekers for few employment opportunities, and this stiff competition is sometimes met with highly selective hiring processes. Even for the youth already in the labor markets on a temporary basis, the future looked grim and was among the first lot to lose their jobs. In addition, the low-skilled youth who faced several barriers in accessing work was at risk of total exclusion from the market. Again, the 2008 financial crisis exacerbated several structural problems that affect youth transition from school to work. As such, there was a need for governments to implement crucial structural reforms that would be of benefit to the youths. This required both short and long-term strategies (Scarpetta, Anne, and Thomas, 12). For instance, one short-term strategy would be to target the youth who are most vulnerable, those who risked getting knocked out of the labor market completely and solving the labor market issues that affected the transition from school to work. The long-term agenda would be to improve access to jobs, including career progression because there is a strong need for an integrated long-term agenda of increasing job opportunities. Before the infamous financial crisis, the labor market of the youth had shown tremendous improvements in many Organization for Economic Co-operation and Development (OECD) countries. There occurred a generalized improvement in the labor market conditions seen in OECD nations over the decade until 2005-2007 when youth unemployment slowly began to decline.
The youth unemployment problem
As previously mentioned, unemployment among the youth is higher than that of adults globally. In 2010, data showed that unemployment rates among the youth stood at 13.1 compared to 4.8 among adults. Often, unemployment and joblessness, if extended, are associated with increased long-term negative impacts of unemployment as well as wage prospects of the young population (Scarpetta, Anne, and Thomas, 14). Also, youth unemployment and joblessness increase instances of crime rates, including burglaries, drug offenses, and theft. Unhappiness is also an extension of unemployment, especially for the unemployed and those who feel their jobs are risked because of uncertainties. In one study conducted in 2009, researchers analyzed in detail the impacts of unemployment, especially youth unemployment in five core financial crises in Spain, Finland, Norway, Sweden, and Japan. The major findings from these studies are that youth unemployment often peaks either faster or at the same rate as the prime-age adults. However, the difference occurs when the economy starts to recover in that rates among the youth are more durable. The Japanese recession of 1992 provides a glimpse of this phenomenon. It was long-lasting because experts took long to recognize the “bad-loan” problem (Scarpetta, Anne, and Thomas, 16). In as much as the recession was not severe, it lasted long and consequently led to the emergence of the lost generation of the Japanese youth. This group was highly disaffected commonly referred to as the Freeters. They were defined by their lack of attachment to the labor market.
While youth unemployment rates furnish individuals with critical information on the situation of labor markets, especially among the young people, it remains essential to check whatever is happening to similar indicators to have a wider understanding of the likely repercussions and the appropriate responses to these problems (Scarpetta, Anne, and Thomas, 20). Notably, youth unemployment, including joblessness are important issues of concern because it are heavily associated with social exclusion and long-term labor market withdrawal.
In general, the immediate impact of financial and economic problems throughout the nations is the substantial decline in labor demand because of unusual and widespread shock that affects the aggregate demand. In the figure below, there is an absolute change in employment rates by age and sex, especially between the third quarter of 2007 and 2009. Notably, this period corresponds with the start and end of the recession. Again,...