Wanted: Big Ideas to Tackle Youth Unemployment

You may not have heard about it because it didn’t receive much media attention, but the Parliamentary Finance Committee has been researching Youth Unemployment.

Canada has a youth unemployment problem. The youth unemployment rate at 13.9% in 2013 is more than twice the rate of those above 25, youth employment has barely improved since the worst of the recession and youth labour force participation has declined substantially. Youth who do have a job are more likely to be working in a precarious, temporary position or to be working part-time involuntarily.

At the same time, the economic costs of youth unemployment are immense. Youth who experience periods of unemployment earn less than their peers over their career; even without personally experiencing unemployment, individuals who graduate during periods of high youth unemployment make smaller starting salaries and earn less. A 2013 TD Economics report estimated that the cost of youth unemployment (PDF) is about 1.3% of Canada’s GDP, or over $10 billion annually with an additional residual effect of $12 billion spread over the next two decades.

Clearly, this is a problem in need of a solution so it’s good that Parliament was studying the issues and looking for “possible solutions”. The committee’s report has now been released and parts of it are a fascinating read (if you’re into reading 75 page policy studies) but its recommendations are inadequate compared to the scale of the problem.

Of 23 recommendations, five are that the Federal government should continue doing what it’s doing – even in areas where the federal government’s activities have been woefully inadequate, like it’s sponsored internship programs. Two more call for the federal government to “expand” or “renew” current initiatives.

Four recommendations call for better labour market information (including tracking internships, as suggested in CCPA’s Alternative Federal Budget) or suggest requiring universities to track student labour market outcomes, so youth can make better career decisions. Obviously, these are good ideas and better labour market information is needed in Canada partially because of cuts from this government, but that alone won’t solve youth unemployment problems.

A couple other recommendations suggest tweaks to the Canadian Student Loans Program, supporting youth entrepreneurship, or encouraging interprovincial consistency on apprenticeship. And the report suggests seven areas of further study.

What’s missing is any big ideas to actually tackle the problem of youth unemployment – which you might think is odd for a report titled “Youth employment in Canada: Challenges and Potential Solutions.”

Only one of 23 recommendations actually deals directly with creating job opportunities for youth and it’s only a suggestion for additional study: “Recommendation 16: That the federal government explore ways to promote youth hiring in Canada, such as tax credits for businesses that hire Canadians aged 18 to 30.”

There was at least one big idea to tackle youth unemployment presented to the committee, although it only earned a passing mention in the final report. A Youth Guarantee program, like those in parts of Europe, was discussed by CUPE in testimony to the committee and will be explored further in a forthcoming CCPA discussion paper written by CUPE senior economist Toby Sanger and myself.

A youth guarantee is an umbrella of programs with a very basic idea: within a short period of unemployment – say four or six months – a young person should be offered of a subsidized job placement, more education, an apprenticeship or a skills training placement. Several European countries have adopted this approach with good results and the EU has recently committed €6 billion in multi-year funding for a Europe-wide youth guarantee.

A comprehensive made-in-Canada youth guarantee would be one good way to tackle our youth unemployment problem.

Other ideas to actually tackle youth unemployment that the committee heard in testimony: CCPA suggested, among other things, to expand federally funded summer youth employment programs, to set aside a portion of jobs in federally funded infrastructure programs for youth and hiring subsidies in certain areas. Several commentators, including CCPA’s Armine Yalnizyan and the Canadian Labour Congress, suggested mobility funding for youth who were moving to look for work.

It seems that the Finance committee, however, wasn’t looking for big ideas and possible solutions to address youth unemployment if it meant labour market interventions or actually spending money on the issue.

That’s a shame because the status quo isn’t working.

Kayle Hatt is a Research Associate with the Canadian Centre for Policy Alternatives’ National Office and was the CCPA’s 2013 Andrew Jackson Progressive Economics Intern. Follow Kayle on Twitter at @KayleHatt.