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BW Businessworld

Two-Way Flow Of Youth

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The German economy is booming. Its export performance, based on its traditional prowess in engineering, is excellent; it rescued Greece, and its fisc is strong enough to rescue another one or two fellow-members of the European Union that may fail. But it is an exception; most of Europe is not in too good a shape. In the third quarter of 2010, Japan had the lowest unemployment rate amongst the young — close to 8 per cent. The rate in the US was over twice as high. For the European Union, it exceeded 20 per cent: over a fifth of those aged 15-24 were out of job.

That is only the average; it was brought down by low levels in Germany, Holland, Switzerland and Austria, all below 10 per cent. Ireland, Italy and Sweden had more than a quarter of their youth out of job. In Greece, which has already been in trouble, the rate was over 30 per cent. In Spain, which may be the next country to collapse, over 40 per cent were unemployed.

Unemployment is not the only malady that plagues the young; when they do get employment, it is in industries and occupations which pay least and offer least job security. The sturdier amongst them find work in construction, an industry given to extreme cyclical swings. The better looking get hired in hotels, restaurants and retail shops, which are sensitive to both cyclical and seasonal variations. And even when the young find jobs in industries with a stable labour force, it is the older and more experienced workers who are kept in bad times, and the youth that are dismissed first.

That applies to those who do get a job, however short-lived. But many European countries impose minimum wages on employers which reduce the chances of young people getting jobs even further. What was once regarded as a part of workers' protection works as discrimination against those who would like to work but cannot. European policies are virtually designed to maximise unemployment amongst the youth.

India has draconian policies against foreigners coming to work. The theory is that India is a labour-surplus country and does not need to import workers. We are perfectly happy, and often proud, that millions of Indians have found jobs, in the US, the UAE or elsewhere; but our government does not extend to foreigners the courtesy it would like other governments to extend to its own citizens.

There may, however, be an option that suits its prejudice and serves national interest: the government should introduce a special, limited-term visa whereby young Europeans may come to India and work in corporate apprenticeships. A contract with a company in India would be a precondition of the visa. The government should reach an agreement with the European Union under which the EU would give a subsidy to such apprentices from the money it would save on unemployment subsidies. Indian companies that are investing in the EU will thereby get young European employees trained in India. Their costs would be reduced both by the official subsidy and by the fact that the cost of living in India is lower. The training can only improve their employability — not just with the companies that train them. Many Indian companies have bought companies or set up subsidiaries in Europe. They will find a new source of European workers with Indian training. And both they and the government will earn goodwill in Europe.

This is one way of addressing a more general problem Indian companies investing in Europe face. European government regulations are more restrictive and obstructive; and workers are better organised and conscious of their rights. It is easy for Indian companies to get into intractable difficulties with European governments; the problems they get into intensify the prejudices they often face. The European environment is a strange one, often bordering on hostile, for Indian companies. In the circumstances, it is necessary for them to make friends, and for the Indian government to help them do so. The training programme for young Europeans that has been suggested above will therefore advance corporate as well as national interests.

Once the government gets this far, it might as well get some reciprocity built into the programme. If Indian companies can send young employees to Europe for short periods, they will pick up European languages other than English. India needs now to grow beyond the Anglophone world; both business and government need to find ways of doing it. Youth exchange is a part of the solution.

(This story was published in Businessworld Issue Dated 06-06-2011)