Youth unemployment and economic growth. Portugal

Authors Avatar by gabrielleanne020mailcom (student)

Student ID: w17005765

Topic. Youth unemployment and economic growth

Country: Portugal

Committee: International Labour Organisation Conference

Youth unemployment represents the part of the population between the ages of 15-24, who are at present unemployed or looking for work, and whom can predict the future of labour force participatory to the economy (OECD, 2016). In the third quarter of 2017, Portugal’s youth unemployment rate was down to 25.7% from an all-time high of 40.7% in 2013; women were affected 4% more than men (Trading Economics, 2017). Labour force participation rate towards the economy is situated at 59.3% of the population while overall unemployment is at 8.5% out of the 10.32 million population in Portugal in the third quarter of 2017 (Trading Economics, 2017). Portugal’s GDP was at $204.5 billion in 2016 [Chart] (World Bank, 2017) showing a slow improvement of 0.2% in GDP in the second quarter of 2017 (Khan, M and Wise, P. 2017) mainly assisted by exports which account for 40% of GDP (OECD, 2017).

The public deficit, escalating unemployment, austerity measures aimed to curb recession and excessive debt levels of a fragile banking sector has caused slow economic growth in Portugal (Pritchard, A, E. 2014). Bail-out deals with the EU, and IMF worth £70 billion has caused an increase in tax revenue, sales tax, the rise in interest rates, and cut in unemployment benefit from 3 years to 18 months, (BBC, 2011). Causes of the high number of youth unemployment rely on the fact of budget cuts towards education by the government aimed to curb its recession (Bugge, A. and Khalip, A. 2014). The government has chosen to set out norms that support business and lower or freeze the minimum wage level, reducing overtime payments and the demand for low skilled immigrant labour force used for productivity (Cabral, S. and Duarte, C. 2010). These caused social exclusion, inequality and lack of motivation to employment among youth, making them more reliant on the benefits system. One more cause within the youth unemployment area is that those youths who achieved higher education were not given job opportunities fit for their skills. This triggering skill mismatches, youths being less motivated with their jobs which resulted in a growing unemployment rate and a lower standard of living (ILO, 2004).

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Student ID: w17005765

Consequently, budget cuts proposed by Government into the education sector has witnessed schools closing and universities relying on a smaller budget. These actions were affecting the youth, their education, skills and social stability (Caldas, C, J. 2012). Consequences of contracted wage levels and the predominance of insecure or flexible norms of work has strapped young individuals with higher education to take on lower paid jobs or to emigrate elsewhere for better pay (UN. 2015). These consequences influenced Portugal's weak economy and social unrest between young individuals, eroding their skills, affecting their mental health and wellbeing ...

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