Analysis: Jobless youths could drag on recovery

Wed Apr 3, 2013 2:03am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Mike Dolan

LONDON (Reuters) - The global economy is recovering - although the younger you are and the longer you've been out of work, the less likely it is that you'll have noticed.

A modest upturn in the major developed economies flagged last week by the Organisation for Economic Cooperation and Development should be a considerable relief for Western countries still struggling to run down huge debts.

But with persistent recession across Europe and high levels of youth unemployment and long-term joblessness, signs that growth is picking up may offer little cheer.

"The rise of long-term unemployment, with more of the unemployed moving off unemployment insurance onto less generous social benefits, is worsening poverty and inequality," the OECD said on Thursday, adding the issue was especially bad in Europe.

The consequent drain on demand could hinder recoveries before they reach what some economists call "escape velocity" and policymakers are starting to fret that the longer high joblessness persists, the harder solving the problem becomes.

More than 40 percent of U.S. unemployed have been out of work for more than six months, almost double the previous post-World War Two record.

Even news on Tuesday of falling registered jobless in employment blackspot Spain may reflect more darkness than light, with economists at Citi saying the decline in March resulted from a tightening of the criteria for accessing benefits.

There is particular anxiety among policymakers - and increasingly global investors - that leaving hordes of youths without work even after a turn in the economic cycle could threaten social and political stability in many economies.   Continued...

Jesus Pardal (2nd L), an unemployed 29-year-old father-to-be, waits inside a government-run employment office with wife Yolanda Garcia (L), 24, as he takes out garbage belonging to other people to earn .50 Euro cents (.60 U.S. cents) in Cadiz, southern Spain November 2, 2012. REUTERS/Marcelo del Pozo