January 1, 2011

Europe’s Young Grow Agitated Over Future Prospects

By RACHEL DONADIO

LECCE, Italy — Francesca Esposito, 29 and exquisitely educated, helped win millions of euros in false disability and other lawsuits for her employer, a major Italian state agency. But one day last fall she quit, fed up with how surreal and ultimately sad it is to be young in Italy today.


It galled her that even with her competence and fluency in five languages, it was nearly impossible to land a paying job. Working as an unpaid trainee lawyer was bad enough, she thought, but doing it at Italy’s social security administration seemed too much. She not only worked for free on behalf of the nation’s elderly, who have generally crowded out the young for jobs, but her efforts there did not even apply to her own pension.


“It was absurd,” said Ms. Esposito, a strong-willed woman with a healthy sense of outrage.


The outrage of the young has erupted, sometimes violently, on the streets of Greece and Italy in recent weeks, as students and more radical anarchists protest not only specific austerity measures in flattened economies but a rising reality in Southern Europe: People like Ms. Esposito feel increasingly shut out of their own futures. Experts warn of volatility in state finances and the broader society as the most highly educated generation in the history of the Mediterranean hits one of its worst job markets.


Politicians are slowly beginning to take notice. Italy’s president, Giorgio Napolitano, devoted his year-end message on Friday to “the pervasive malaise among young people,” weeks after protests against budget cuts to the university system brought the issue to the fore.


Giuliano Amato, an economist and former Italian prime minister, was even more blunt. “By now, only a few people refuse to understand that youth protests aren’t a protest against the university reform, but against a general situation in which the older generations have eaten the future of the younger ones,” he recently told Corriere della Sera, Italy’s largest newspaper.


The daughter of a fireman and a high school teacher, Ms. Esposito was the first in her family to graduate from college and the first to study foreign languages. She has an Italian law degree and a master’s from Germany and was an intern at the European Court of Justice in Luxembourg. It has not helped.


“I have every possible certificate,” Ms. Esposito said dryly. “I have everything except a death certificate.”


Even before the economic crisis hit, Southern Europe was not an easy place to forge a career. Low growth and a corrosive lack of meritocracy have long posed challenges to finding a job in Italy, Greece, Spain and Portugal. Today, with the added sting of austerity, more people are left fighting over fewer opportunities. It is a zero-sum game that inevitably pits younger workers struggling to enter the labor market against older ones already occupying precious slots.


As a result, a deep malaise has set in among young people. Some take to the streets in protest; others emigrate to Northern Europe or beyond in an epic brain drain of college graduates. But many more suffer in silence, living in their childhood bedrooms well into adulthood because they cannot afford to move out.


“They call us the lost generation,” said Coral Herrera Gómez, 33, who has a Ph.D. in humanities but still lives with her parents in Madrid because she cannot find steady work. “I’m not young,” she added over coffee recently, “but I’m not an adult with a job, either.”


There has been a national debate for years in Spain about “mileuristas,” a nickname for college graduates whose best job prospects may well pay just 1,000 euros a month, or $1,300.


Ms. Herrera is at the lower end of the spectrum. Fed up with earning 600 euros a month, or $791, under the table as a children’s drama teacher, Ms. Herrera said she had decided to move to Costa Rica this month to teach at a university.


As she spoke in a cafe in Madrid, a television on the wall featured a report on the birthday of a 106-year-old woman who said that eating blood sausage was the secret to her longevity.


The contrast could not have been stronger. Indeed, experts warn of a looming demographic disaster in Southern Europe, which has among the lowest birth rates in the Western world. With pensioners living longer and young people entering the work force later — and paying less in taxes because their salaries are so low — it is only a matter of time before state coffers run dry.


“What we have is a Ponzi scheme,” said Lawrence Kotlikoff, an economist at Boston University and an expert in fiscal policy.

He said that pay-as-you-go social security and health care were a looming fiscal disaster in Southern Europe and beyond. “If these fertility rates continue through time, you won’t have Italians, Spanish, Greeks, Portuguese or Russians,” he said. “I imagine the Chinese will just move into Southern Europe.”


The problem goes far beyond youth unemployment, which is at 40 percent in Spain and 28 percent in Italy. It is also about underemployment. Today, young people in Southern Europe are effectively exploited by the very mechanisms created a decade ago to help make the labor market more flexible, like temporary contracts.

Because payroll taxes and firing costs are still so high, businesses across Southern Europe are loath to hire new workers on a full-time basis, so young people increasingly are offered unpaid or low-paying internships, traineeships or temporary contracts that do not offer the same benefits or protections.


“This is the best-educated generation in Spanish history, and they are entering a job market in which they are underutilized,” said Ignacio Fernández Toxo, the leader of the Comisiones Obreras, one of Spain’s two largest labor unions. “It is a tragedy for the country.”


Yet many young people in Southern Europe see labor union leaders like Mr. Fernández, and the left-wing parties with which they have been historically close, as part of the problem. They are seen as exacerbating a two-tier labor market by protecting a caste of tenured older workers rather than helping younger workers enter the market.


For Dr. Kotlikoff, the solution is simple: “We have to change the labor laws. Not gradually, but quickly.”


Yet in Greece, Italy, Portugal and Spain, any change in national contracts involves complex negotiations among governments, labor unions and businesses — a delicate dance in which each faction fights furiously for its interests.


Because older workers tend to be voters, labor reform remains a third rail to most politicians. Asked at a news conference last year about changing Italy’s de facto two-tier system, Italy’s center-right finance minister, Giulio Tremonti, said simply, “You can’t make violent changes to the system.”


New austerity measures in Spain, where the unemployment rate is 20 percent, the highest in the European Union, are further narrowing the employment window. Spain has pledged to raise its retirement age to 67 from 65, but incrementally over the next 20 years.


“Now people are being sent into early retirement at age 55,” said Sara Sanfulgencio, 28, who has a master’s degree in marketing but is unemployed and living in Madrid with her mother, who owns a children’s shoe store. “But if I haven’t started working by age 28 and I already have to stop at 55, it’s absurd.”


In Italy, Ms. Esposito is finishing her lawyer traineeship at a private firm in Lecce. It pays little but sits better on her conscience than her unpaid work for the government.


“I’m a repentant college graduate,” she said. “If I had it to do over again, I wouldn’t go to college and would just start working.”


Lucia Magi contributed reporting from Madrid, and Gaia Pianigiani from Rome.