As Millennials here in Seattle and throughout the U.S. are feeling themselves boomeranged back into their parents homes after college due to lack of employ, Sweden's Millennials are often finding themselves out of work and living off the system, the social welfare system, of their own country. However, unlike young people in the U.S. whose plight to find gainful employment is not only understood but recognized and validated, the unemployment of Sweden's young people is a problem being somewhat swept under the rug.
An article by Swedish CEO, Nima Sanandaji, explains that many throughout the world are under the general impression that Swedes are fortunate enough to live in a country and economy with a low unemployment rate. In fact, she reports, Sweden has a much higher unemployment rate than they readily claim but those numbers are hidden as citizens without jobs are conveniently filed under the category of "early retirement" - and most affected by this false label is the younger workforce population:
The concept of relying on early retirement among the relatively youthful might sound a bit strange. Swedish politicians have even changed the term “early retirement” into “activity and sickness compensation” to make it sound more acceptable. And it has oddly enough become more or less an accepted fact that many young Swedes who cannot find a job instead rely on early retirement – often on a permanent basis.
Since 2004 close to 70,000 Swedes in the ages 20-39 have been supported by early retirement. This represents close to three percent of the total population among this age group living in the country. In the Stockholm region, where the labor market is strong, two percent of the young population is living on early retirement. In regions where jobs are scarcer, the figure is four percent. Even among the youngest group – those between 20-24 years – more than two percent of Sweden’s population is being supported by early retirement.
One reason for the popularity of early retirement is because of the increasing troubles for young Swedes to find employment. According to Statistics Sweden, the unemployment amongst those between 15-24 years was fully 24 percent in the beginning of 2009. Many young people feel depressed since they cannot find a meaningful purpose and cannot contribute to society.One reason for the popularity of early retirement is because of the increasing troubles for young Swedes to find employment. According to Statistics Sweden, the unemployment amongst those between 15-24 years was fully 24 percent in the beginning of 2009. Although Sweden does not have minimum wages set by the government, the vast majority of the employers have to follow labor union contracts and the contracts in turn include very high effective minimum wages.
Not only is the price of youth labor set too high for demand to meet supply, but employers find it too risky to hire inexperienced youth since rigid labor market regulation make it difficult to fire those who do not perform well on their job.
The OECD [Organisation for Economic Cooperation and Development] measures the percentage of those who are officially declared to be outside of the workforce but view themselves as being unemployed. This group is referred to as “discouraged workers”. In countries such as Denmark, Germany and the United Kingdom only 0.1 percent of the labor force of 15-24 year olds is composed of discouraged workers. In Sweden, the figure is almost a hundred times higher.
The Swedish welfare system is seen as many as a role model. When it comes to creating opportunities for the youth however, Sweden could learn much from free-market systems. Or for that matter it could learn from neighboring welfare state Denmark, which has combined welfare mechanisms with a dynamic labor market.
Who knew that in Sweden, 20-somethings are receiving "early-retirement" benefits from the government? And, that the Swedish government doesn't seem too eager to admit that these Millennials are, in actuality, plagued by unemployment?
Meanwhile, here at home, just over one third of Millennials are currently unemployed with the average job search lasting one million months.
For Nima Sanandaji's full article from newgeography.com click here.
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