The true causes of youth unemployment in Curaçao
Youth unemployment is an issue that is frequently discussed in formal and informal circles in Curaçao. I often observe frustrated young people exclaim: “How can I get any experience if nobody will hire me because of lack of experience?”
Awkward attempts by politicians and policymakers to address this issue only exposes the utter lack of economic logic to which we have let our political discussions degenerate.
The most common proposed solutions are all based on forms of labour protectionism and creating subsidized jobs. This unsensible approach is nothing more than a hidden form of wealth redistribution, as no actual value is created by protecting jobs from effective competition or by subsidizing them directly. Obviously this populist approach does not offer any long term sustainability. Most credible reports on the Curaçao economy tend to agree about one thing: to promote economic growth, the Curaçao labour market is in dire need of flexibilization. Yet we find that in practice the government aims towards the complete opposite and blatantly disregards economic logic in favour of utopian delirium. I therefore find it appropriate to briefly highlight the true causes of youth unemployment in Curaçao, as unsettling as they might be for some.
Reason #1: To many of our youngster have created the habit of focusing only on extracting value out of their employers instead of adding value to the employer.
It shocks me when I hear all the things young people assume an employer should do for them in terms of pay and fringe benefits. In short, most young people are so focused on what they want from their (prospective) employer that they do not for a second think how they can add value to their (prospective) employer. The derogatory joke about Curaçaoan being always very well aware of their rights, but without any conception of their duties has I believe a lot more truth in it than many of us would be ready to admit. It seems to me highly appropriate that people that only think in terms of what THEY want from their employer should not even bother seeking employment in the first place, but instead should first read Dale Carnegie’s classic ‘How to win friends and influence people’. The Curaçao youth should focus on the continuous development of value adding skills that the market is willing to pay for instead of passively laying back and listing the things they want from their (prospective) employer whilst ignoring the fact that employment contracts are reciprocal.
Reason #2: An inflexible labour market.
A culture of encouraging post-colonial victimization from a very early age on, glorifying labour rights and blaming all individual adversities on differences in sex or skin colour has essentially created a large group of highly egoistic and dysfunctional people that are simply not desirable to hire as employees. The employers unfortunate enough to have hired people from this group soon find themselves in a quagmire of undisciplined and ill-mannered workers that feel offended and discriminated against one way or another whenever their superiors give them orders or even suggestions on the job. This dysfunctional group can not easily be fired because of the fact that the bureaucratic ‘dismissal committee’ takes months to review a single case (during which the employer is still obligated to pay wages and socials premiums). But the employers learn their lesson fast; for the next job opening they will be a lot more picky with whom they choose. An inflexible labour market thus significantly increases the risk and cost of ‘experimentation’ with different employees as there is barely room for a ‘hire-and-fire’ approach until the optimal ‘workforce input mix’ is discovered. The absence thereof induces employers to be a whole lot more careful and picky in their decisions as they are now always wary of the notorious ‘dismissal committee’. Consequently, the total amount of job mobility and opportunities in the marketplace shrinks significantly. Thusly, much of our youth, which by default are inexperienced, have a limited track record of previous work & positive referrals are often deemed ‘risky’ and will not easily get a job. All thanks to the government's noble labour market laws.
Reason #3: Supporting trade unions means supporting youth unemployment.
In Curaçao we have a long history of admiring and respecting trade unions. Few people realise that trade unions function primarily as an instrument of labour supply control. By being able to control the labour supply and by limiting competition from non-labour union members, the labour unions essentially attempt to monopolize labour in order to demand higher wages for their affiliated members. The effect is very simple: EXISTING jobs are protected at the expense of NEW jobs (filled mainly by young people). Thusly, supporting labour unions is equivalent to supporting youth unemployment.
Reason #4: Supporting the existence of the minimum wage means supporting youth unemployment.
The primary way by which trade unions obstruct competition from new entrants is by pricing lowly skilled labourers (mainly young inexperienced people) out of the market. This is achieved by the minimum wage. The higher the minimum wage, the more expensive the hiring of lowly skilled labour becomes. Consequently, employers no longer hire lowly skilled labour as they become too expensive, but instead will only hire more experienced workers whose productivity is more in line with the minimum wage. Cynical as it may sound, the existence of the minimum wage is one of the primary causes of youth unemployment and serves no other purpose than to protect the established workers from competition with the lowly skilled workers. If young people could work for a lower wage, they would at least get a job and gain experience and discipline, which eventually increases their market value. Instead, the government and members of parliament opt to habitually and with a great deal of flamboyancy combined with misleading propaganda take pride in raising the minimum wage. Every time the minimum wage is raised, more lowly skilled people end up being priced out of the job market and are forced to make a living in the shadow economy. Thusly, supporting the existence of a minimum wage is equivalent to supporting youth unemployment.
In conclusion, much of the popular debate on the causes of youth unemployment centers around accusing employers for ‘not giving young people a chance to gain experience’. But who are the real culprits of youth unemployment? It is the government and mediocre politicians that believe that through regulating the labour market it can better protect workers. This is partly true, as existing jobs and trade unionist enjoy more job security. Unfortunately we are never told that this security is at the expense of job opportunities for the young, the inexperienced and the lowly skilled.
In essence, as a society we can choose between two alternatives; protect existing jobs from the realities of a dynamic marketplace by means of protectionism and subsidizing jobs or equip people with the right skills and attitude to be able to confront the varying demands of a dynamic marketplace head on. Let us choose the latter instead of the former.
By Dennis E.A. Arrindell