ECB President: Europe's job market is fixed against young workers

The squeezing of a new generation of workers during and after Europe's recession is creating real social problems

ECB President: Europe's job market is fixed against young workers

Michael Probst / AP

European Central Bank President (ECB), Mario Draghi says that he has real concerns about the futures of Europe's young workers.

"In many countries, the labour market is set up to protect older 'insiders' – people with permanent, high-paid contracts and shielded by strong labour laws. The side-effect is that young people are stuck with lower-paid, temporary contracts and get fired first in crisis times," he told The Guardian.

"That also means that employers are reluctant to invest in young people, so the incomes of this generation stay lower over their lifetime," the Italian continued.

In Ireland close to 40,000 of the 319,723 people signing on in February were under the age of 25, the latest Live Register figures show. That means youth unemployment accounts for 12.4% of the Live Register for last month.

Mr Draghi added that the impact of economic uncertainty for the current generation of 16 to 24 year-olds could be worse than that of the Great Depression.

"Youth unemployment is a tragedy and prevents people from playing a full and meaningful part in society. If every second young person is out of work – as is still the case in some countries in Europe – it seriously harms the economy, because people willing to work cannot work and skills are not developed.

"It threatens social harmony. Unemployment can lead in the long run to increased social problems and ill health," he continued.

He believes that the solution to this problem is to stimulate fresh economic growth:

"Our standard of living depends on the strength of our economy. We need a more open, flexible, innovative and business-friendly society. Much focus is put on the central bank to raise growth, and it can contribute through price stability and a stable financial system.

"But in the long run real growth is driven by what the economy can produce. That is much more about ideas, technology, flexibility, motivation, skills. It is up to elected governments to set a growth-friendly environment."