COVID-19 could leave another generation of young people on the scrapheap

It is time that the highest political level focuses on the risk of a lost generation.

By: Date: November 12, 2020 Topic: European Macroeconomics & Governance

This opinion post was originally published in Domani, The Guardian, Le Monde, El País and Die Zeit.

Le Monde logo

El País logo

A decade ago, the global financial crisis left deep scars in terms of destroyed opportunities and unemployment for young people. In Europe in particular youth unemployment persisted. Now COVID-19 threatens to do the same thing to the under-25s. Yet, neither the leaders of France, Italy or Spain, nor the president of the European Commission, have prioritised youth unemployment in recent policy speeches. It is time that the highest political level focused on the risk of a lost generation. Bold policies will be needed.

During the global financial crisis, the United States youth unemployment rate increased from around 10% to 19%, while in the European Union it increased from 16% to 26%. The rate in the EU only returned to its 2008 level in 2018, while the spike in US youth unemployment was overcome more rapidly. In the recovery, some EU countries fared much worse than the EU average. In Greece, Spain and Italy, youth unemployment in 2019 was still higher than it was before the global financial crisis.

Another major surge in youth unemployment brought about by the COVID-19 pandemic could also take a decade or more to heal. The first signs are already visible: US youth unemployment was more than twice as high in July compared to July 2019. In Europe, youth unemployment has increased less, but still increased from 15 to 17% between February and September 2020 – while unemployment among the over-55s actually fell in the first half of the year. More worryingly, measures of labour market slack for the young are up by some 5 percentage points, as are the percentages of young people who have even given up searching for a job. Some countries such as Spain or Croatia are more severely hit. In fact, Spanish youth unemployment increased from an already high 32% in February to 40% in September while the Croatian rate increased from 17% to almost 24%. In the UK, youth unemployment rose from 11 to almost 14% in July. As Europe enters its second significant lockdown, the risk is that these numbers will rapidly deteriorate further.

Youth unemployment does long-term damage. Workers who were unemployed when young tend to earn significantly less over their lifetimes. The young unemployed look at the future less optimistically. They also tend to leave the parental home later and start families later. On average, Italians leave their parents’ homes only at the age of around 30 years, and it is no surprise that the Italian and Spanish fertility rates are among the lowest in Europe.

In short, Europe cannot afford to again forget its youth. The European institutions must contribute to the effort to avoid another lost generation and national policymakers in particular need to do their bit.

The first big priority is to get the European macroeconomic policy stance right. One of the reasons for the slow recovery in youth employment in the EU after the financial crisis was the second recession that Europe fell into in 2011-13. At the time, fiscal and monetary tightening prematurely choked off the recovery. So far in the response to COVID-19, European policymakers have not repeated that mistake and have provided impressive fiscal and monetary support. Fiscal policies will need to continue to support the EU economy in 2022 and 2023.

Second, policymakers need to set up targeted support programmes for the hiring and retention of young workers. The European Commission has pledged that €22bn from the EU recovery fund will be used to support youth employment. But such funding for the EU’s three million young unemployed is insufficient. National policymakers will need to increase their budget lines to support the hiring of young people and the creation of opportunities.

Third, ten years ago, and despite pledges to the contrary, education and investment funding and spending on families was cut in many parts of Europe at the expense of the young. This time needs to be different. School closures have meant pupils missing out on teaching, affecting negatively their lifetime earnings expectations. In particular, children from families with weak educational backgrounds have not been able to make up the loss of teaching. In that way, inequalities in opportunity have been further exacerbated. Many European countries are now paying a heavy price for their slowness in the digitalisation of schools and even universities. For example, many German schools, after more than half a year of COVID-19, have not yet been able to put in place proper online teaching systems.

Massive increases in public debt are happening to shield business from bankruptcy and to preserve economic structures. But if Europe wants to stay competitive, it needs to invest more in the economy of the future. There is no better investment than investment in Europe’s young people, who continue to suffer disproportionately from this pandemic.


This Opinion was produced within the project “Future of Work and Inclusive Growth in Europe“, with the financial support of the Mastercard Center for Inclusive Growth. 

Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to [email protected].

Read article More on this topic

Blog Post

The scarring effect of COVID-19: youth unemployment in Europe

Even before the pandemic, youth unemployment in the European Union was three times higher than among the over-55s. COVID-19 threatens to undo the last decade of progress: policymakers must act to avoid Europe’s youth suffering the scarring effect.

By: Monika Grzegorczyk and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: November 28, 2020
Read article Download PDF More on this topic More by this author

Policy Contribution

European Union recovery funds: strings attached, but not tied up in knots

Ensuring effective recovery spending is a high-stakes challenge for the European Union, with the potential for derailment because of fuzzy objectives and overloaded procedures. The EU should work with member countries to identify limited policies that will maximise the impact of EU investment, while accounting for spillovers.

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: October 27, 2020
Read article More on this topic More by this author



Without good governance EU recovery could fail

Guntram Wolff and Luis Garicano discuss how to ensure that the EU borrowing mechanism would successfully boost economic recovery.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: October 7, 2020
Read article More on this topic More by this author

Blog Post

Common eurobonds should become Europe’s safe asset – but they don’t need to be green

The plan to fund the European Union’s recovery programme via debt issuance has raised hopes that a new type of euro-denominated safe asset could emerge. As a priority, the European Commission needs a strategy to create a liquid and transparent market in EU bonds. For now, funding through EU green bonds would complicate that effort.

By: Alexander Lehmann Topic: Finance & Financial Regulation Date: September 28, 2020
Read article More on this topic More by this author


Europe’s recovery gamble

Next Generation EU, was rightly hailed as a major breakthrough: never before had the EU borrowed to finance expenditures, let alone transfers to member states. But the programme and its Recovery and Resilience Facility amount to a high-risk gamble.

By: Jean Pisani-Ferry Topic: Finance & Financial Regulation Date: September 25, 2020
Read article Download PDF More on this topic More by this author

Policy Contribution

Why has COVID-19 hit different European Union economies so differently?

All European Union countries are undergoing severe output losses as a consequence of COVID-19, but some have been hurt more than others. Factors potentially influencing the degree of economic contraction include the severity of lockdown measures, the structure of national economies, public indebtedness, and the quality of governance in different countries. With the exception of public indebtedness, we find all these factors are significant to varying degrees.

By: André Sapir Topic: European Macroeconomics & Governance Date: September 22, 2020
Read article More on this topic More by this author

Blog Post

Redefining European Union green bonds: from greening projects to greening policies

European Union green bonds, as promised by European Commission president Ursula von der Leyen, might be better linked to the bloc's achievement of its climate goals, rather than project-by-project green criteria.

By: Georg Zachmann Topic: Energy & Climate Date: September 21, 2020
Read article More on this topic More by this author


Without good governance, the EU borrowing mechanism to boost the recovery could fail

The European Union recovery fund could greatly increase the stability of the bloc and its monetary union. But the fund needs clearer objectives, sustainable growth criteria and close monitoring so that spending achieves its goals and is free of corruption. In finalising the fund, the EU should take the time to design a strong governance mechanism.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: September 15, 2020
Read article More by this author

Parliamentary Testimony

House of Lords

Employment and COVID-19

Testimony before the Economic Affairs Committee at the House of Lords, British Parliament on Employment and COVID-19.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance, Finance & Financial Regulation, House of Lords, Testimonies Date: September 9, 2020
Read article More on this topic

Blog Post

EU recovery plans should fund the COVID-19 battles to come; not be used to nurse old wounds

In its proposed Recovery Fund, the European Commission uses allocation criteria mainly linked to infection rates and past economic performance. To foster an efficient economic rebound post COVID-19 crisis, we propose instead to allocate funds through a forward-looking approach based on specific industrial and economic structure of EU regions.

By: Carlo Altomonte, Andrea Coali and Gianmarco Ottaviano Topic: European Macroeconomics & Governance Date: July 6, 2020
Read article More on this topic

Blog Post

Artificial intelligence’s great impact on low and middle-skilled jobs

Artificial intelligence and machine learning will significantly transform low-skilled jobs that have not yet been negatively affected by past technological change.

By: Sybrand Brekelmans and Georgios Petropoulos Topic: Innovation & Competition Policy Date: June 29, 2020
Read article More on this topic More by this author


Reading tea leaves from China’s two sessions: Large monetary and fiscal stimulus and still no growth guarantee

The announcement of a large stimulus without a growth target indicates that China’s recovery is far from complete.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: May 25, 2020
Load more posts