OECD warns of long-term pain for jobless youth

High levels of youth unemployment that have persisted in the wake of the financial crisis threaten to scar young people, affecting their career paths and future income.

Elevated jobless rates, coupled with the fact that a growing number of young people have been out of work for at least a year, could lead to what is known as the "scarring effect," the Organization for Economic Co-operation and Development warned Tuesday.

In Canada, youth unemployment remains more than double the overall national rate, at 14.8 per cent. Across OECD countries, the percentage of employed youth relative to older groups has continued to deteriorate since 2008, as more of the available jobs went to workers 55 or older, the group said in an employment outlook.

"The collapse in employment opportunities experienced by youth during the crisis is of particular concern because unemployment and other labour market difficulties encountered early in their working lives can jeopardize their long-term career paths and future earnings prospects (the so-called 'scarring effect')," the OECD said. "Youth not in employment, education or training (the so-called 'NEETs') are most at risk of these scarring effects."

Employers appear more interested in hiring older workers even for entry-level jobs, said Florence Watson, executive director of Youth Employment Services in Winnipeg. She sees jobs that might once have gone to younger workers now filled by more "mature" candidates deemed to have more experience.

Young people are among the demographic groups most at risk of long-term unemployment, the OECD report warned.

The percentage of young people out of work for a year or more, as a portion of the overall work force, doubled across OECD countries between 2008 and 2011, reaching 4 per cent. In Canada, roughly one in 10 unemployed youth are in this situation, according to Statistics Canada.

At YES, a youth employment centre in Toronto, president Nancy Schaefer said that since 2009-2010 about one-third of her clients have been without a job for more than 12 months.

"It's particularly demoralizing," Ms. Schaefer said. "After young people have been unemployed for a period of months ... they start getting absolutely desperate."

Countries with high levels of long-term unemployment risk a situation where the unemployed become so discouraged and lose labour market skills to the point that they choose not to, or are unable to enter the workforce even after the economic recovery is complete and demand is restored, the OECD report said. This could lead to higher structural unemployment, it warned.

Trevor Hunter, a 21-year-old from Winnipeg, has been looking for a job for three years. He said he hopes to eventually land one at a day camp, but so far has only been able to find one-to-three-month-long stints cooking at restaurants.

A "spotty résumé" that shows jumps from one temporary job to another can raise a red flag with employers, Ms. Schaefer said, and these long periods of underemployment or joblessness can also push workers to give up looking.

"Young people come here and they're hungry, they have no place to live, and their friends say, 'well, get on welfare, it's better than nothing,'" she added.

Of particular concern is the growing number of youth who are not employed, nor in education or training. Across the OECD countries, the NEET rate rose 1 percentage point between 2008 and 2011 to 16.4 per cent. In Canada, it stands at 13 per cent, representing nearly a million young people.