Literature review: How can youth unemployment be explained comparatively?

10The abundant literature on youth employment proposes several factors that might result in different youth unemployment levels in different countries,  [18] but none of them can explain the differences between France and Germany specifically. First, several authors have shown that young people constitute the category of the workforce that is most vulnerable to changes in the macroeconomic cycle because of their particular position in the labor market (less seniority):  [19] youth unemployment is hypersensitive to growth rate changes, since young workers are the first to lose their jobs if the economy takes a downward turn. In southern European countries, such as Greece, Italy, and Spain, youth unemployment was directly impacted by the 2007 crisis and its aftershocks. As can be seen in Figure 3, France and Germany were impacted by the crisis in similar ways, making it an unlikely cause of the disparity in their youth unemployment levels.

Figure 3. Growth rate changes in France and Germany (%), 2006­2012

Figure 3. Growth rate changes in France and Germany (%), 2006­2012

11The state of the economy may also impact the labor market: if the unemployment rate goes up among the general population, this may lead to higher youth unemployment, as it would for all other age brackets. In other words, the youth unemployment rate generally follows the overall trend of unemployment: any spike in youth unemployment represents a drop in employment overall. Figure 4 indicates the limits of this argument: while the difference between changes in youth unemployment and overall unemployment is almost zero in Germany (-0.7 points), demonstrating the connection between youth unemployment and overall unemployment, the gap is wider in France (+3.1 points), providing a counterexample of a youth unemployment rate that is relatively independent of the overall unemployment rate.

Figure 4. Changes in the unemployment rate by age bracket between 2007 and 2012 in France and Germany

Figure 4. Changes in the unemployment rate by age bracket between 2007 and 2012 in France and Germany

Explanation: In France, the youth unemployment rate rose by 4.9 points (from 19.5 percent to 24.4 percent) between 2007 and 2012, while the unemployment rate for the entire active workforce only rose by 1.8 points (from 8 percent to 9.8 percent). These two increases therefore differ by 3.1 points.

12Beyond any fluctuations in the economy as a whole, some works have also suggested that demographic changes might have an impact on youth unemployment: if there are fewer young people entering the labor market than in previous years, fewer of them will find themselves unemployed. However, high youth unemployment rates can still be observed in countries with aging populations, such as Italy, for example. Even in Germany, where unemployment is low and the age cohorts entering the labor market are smaller than their predecessors (see Figure 5), it has been shown that the “demographic push” plays a marginal role compared to other factors.  [20] Figure 5 also shows that, although the starting levels were not the same, the decrease in the number of young people as a proportion of the total population was just as large as in France, further weakening this hypothesis.

Figure 5. Proportion of the general population that is under 25 in France and Germany (%), 1991­2015

Figure 5. Proportion of the general population that is under 25 in France and Germany (%), 1991­2015

13Some authors have claimed that the labor cost of employing young people, which may be elevated due to relatively high minimum wage standards, could also play a role: if the labor cost of employing young people outpaces their productivity, companies will not want to hire them. The literature is not, however, unified on this matter, showing some contradictory results that may be linked to the wider context surrounding labor cost levels.  [21]

14It has also been shown that labor market regulations may have an impact,  [22] although this assertion is still widely debated.  [23] Given that young people are looking to enter the labor market, cumbersome regulations would make companies less likely to hire them, since it would be difficult to get rid of them if the economy took a downturn. The “insider/outsider” model produces the same result: labor market rigidity helps insiders (who benefit from labor market rigidity because it protects their jobs) at the expense of outsiders, in this case, young first-time jobseekers.  [24] Be that as it may, French and German labor markets show similar levels of rigidity (i.e., it is equally difficult in both countries for a company to dismiss an employee with a permanent contract): the synthetic indicator created by the Organisation for Economic Co-operation and Development (OECD) to measure labor market rigidity in terms of individual and collective dismissals (for employees with permanent contracts) is roughly the same for both countries, standing at 2.38 in France and 2.68 in Germany for 2013. The literature also highlights similar dualization trends for insiders and outsiders in both countries.  [25]

15Following this logic, union membership rates should also help to determine youth unemployment rates, since unions not only represent mostly older insiders, but they may also push for higher wages or more rigid labor market regulations:  [26] it follows that the stronger unions are, the higher youth unemployment is likely to be. However, here again, this variable does not serve to differentiate France and Germany, since union membership stood at 8.1 percent in France and 18.3 percent in Germany in 2012.  [27]

16Analyses in the literature have gradually widened their scope to consider not only the labor market but also employment and social policies. Such policies may act as incentives, altering the behavior of young jobseekers. If too much support is provided, for example, they might stop looking for a job. While the literature on social policies in the two countries generally considers them to have similar welfare state regimes,  [28] it has also begun to highlight their differences.  [29] However, the impact of these differences on youth unemployment remains unclear,  [30] underlining the need for more research on this topic.  [31]

17Finally, it has been shown that vocational training provided through the education system can help young people access employment, as long as this training takes the needs of companies into account in the teaching of skills and/or makes these skills as clear as possible to recruiters through a well-structured system for helping students enter the labor market.  [32] But vocational training alone is not enough to differentiate France and Germany, since the share of students enrolled in such training programs is similar for both countries: according to Eurostat (online database), in 2015, the share of students in vocational education programs within upper secondary education in France stood at 41.5 percent, compared to 46.8 percent in Germany.

18Unlike other works, which have often looked to statistical studies to evaluate the effects of single variables, the “societal analysis” approach focuses more on the wider situation at the national level, considering the “educational connections,” “organizational connections,” and “industrial connections” that specifically shape the training-employment relationship.  [33] This viewpoint has led some authors to describe three different “youth insertion models” in Europe:  [34] “competitive regulation” in the United Kingdom, “regulated integration” in Germany, and “selective exclusion” in France.

19The fundamental difference between France and Germany arises from the way these two countries structure their labor markets in relation to how they train workers. Germany has “occupational markets” (i.e., training at the level of the occupation: worker mobility occurs between companies in the same occupational sector) built around “occupations” that rely heavily on apprenticeships to teach the “specific”  [35] skills required for a given occupation. In France, on the other hand, there are more “internal markets” structured around companies (here, worker mobility allows them to move within the same company), which remain the primary source of training for the skills needed for a particular position, after workers have received “general” training within the education system. Germany’s system of regulated integration therefore provides rapid access to occupations, while France’s selective exclusion means that some workers first need to acquire professional experience in the secondary labor market before being able to access more skilled jobs in internal labor markets.

20This approach allows us to conceptualize the two different national logics at work concerning employment access for young people.  [36] However, it is unable to explain the countries’ different youth unemployment levels specifically. Both models—regulated integration and selective exclusion—can provide different levels of access to stable employment on the primary market (faster access in Germany thanks to apprenticeships, slower in France because the secondary market is involved), but in both cases employment is accessible (even if the jobs are non-standard and/or of a low quality, as is the case in France). This theory focuses on the industrial sector, retaining a “Fordist” economic paradigm that does not always address the issues of transitioning to a “post-industrial” economy.  [37] In such a context, where youth unemployment is rising sharply, it is no longer enough to consider skill content alone (specific vs. general skills). The level of skills and their diffusion must also be taken into account: skills of all kinds, while a necessary condition for gaining access to employment, are not by themselves sufficient. Because of this, this article proposes a theoretical framework that looks at “socioeconomic citizenship policies,” one that is built from the ground up around the issue of skill-training  [38] for young people and that uses an approach based on comparative political economy and public policies.

Hypotheses about the impact of economic and social citizenship policies on young people

21After reviewing the literature, there appear to be two major obstacles that prevent us from fully understanding the effects that public actions have on youth unemployment or explaining the disparities between France and Germany. On the one hand, the effects of social and public welfare policies remain undetermined. On the other, our models for youth insertion need to be updated through a better understanding of young people’s skill levels. This paper presents two hypotheses based on the concept of “citizenship.” This concept will also help us to think more generally about the relationships between the family, the market, and the state.  [39] In fact, we largely draw inspiration from feminist work on the welfare state  [40] to support our analysis of how these relationships impact young people specifically.  [41] One of the advantages of such an approach that starts with the concept of “citizenship” is that it considers all public policies that might be relevant to the topic of analysis: it makes it possible to take into account not only the public policies that would not necessarily be included in analyses that focus on the sector of public action, but also to understand the interactions between different public policies.  [42] It also opens up a cross-sectoral perspective, unlike most public action analysis studies, which often focus on a single sector of public action.

22To analyze the connections and interactions between public policies, the “varieties of capitalism”  [43] approach uses the concept of “institutional complementarities.” This refers to public policies that only produce certain effects when combined with certain other public policies. This concept has been criticized in particular for its functionalism: it gives too much weight to the consistency of public action, without accounting for all the conflicts and contradictions at play. Hence Richard Deeg  [44] gave the concept more nuance by focusing on policy dynamics and the diversity of possible complementarities. For example, he makes a distinction between “synergistic” complementarities (the simultaneous presence of two kinds of public policy amplifies their individual effects) and “compensatory” ones (when a policy corrects or refines the effects of another policy). “Institutional complementarity” here does not therefore mean a functionalist acceptance of varieties of capitalism, but the total effect of all the kinds of interaction at play between public policies.

23First, “social citizenship” policies refer to young people’s improved access to some kind of income thanks to assistance provided by the state. These policies have a direct impact on the relationship between the state and family: they are here defined as policies that provide some kind of (direct or indirect) financial transfer to young people, as well as those that provide access to these transfers. Based on how the role of young people within the family is conceptualized, “social citizenship” policies may focus on either the family or the individual. When social citizenship is “familialized,” childhood is more heavily institutionalized (the family remains in charge of young people, making family policy very important, with higher age limits for accessing social services and student aid dependent on family income). Meanwhile, when it is “individualized”  [45] it is adulthood that is institutionalized (the family is no longer responsible for young people, so there is no need for family policy, meaning lower age limits for accessing social services, and universal student aid that is not dependent on family income). Based on the notion that the familialization of social citizenship arises from the principle of subsidiarity in Catholic social doctrine, it becomes apparent that social citizenship is familialized in both countries, since they share the same “Bismarckian” or “Christian democratic” European welfare state regime,  [46] once again leaving the differences in youth unemployment unexplained (Hypothesis 1).

24Next, to understand the effect that both countries’ education and professional training systems have on access to employment, it is necessary to study more closely the relationship between the state and the economy. This will lead us to refer here to “economic citizenship” policies. This expression comes from feminist analyses of the welfare state that highlight the importance of access to employment for women’s liberation and empowerment.  [47] These analyses also make it clear that examining public action through the lens of citizenship makes it possible to expand the number of public policies and sectors of public action that are taken into account, while also analyzing the interactions between them. It is important to examine the complementarities at play between the various policies that aim to deliver skills and help young people access employment. We thus define economic citizenship policies as those public policies that generally shape the transition from training to employment or that influence access to employment. These economic citizenship policies include education policies and employment policies, and they can be divided into two strategies: an inclusive learn-first strategy and a selective work-first strategy.

25This means that some countries adopt a strategy whose goal is to invest in the human capital of young people inclusively, so that they can more easily join the labor market. In terms of the school-to-work transition, this strategy gives priority to the investment in skills, in what the OECD sometimes calls a learn-first approach:  [48] the goal is to promote youth training as a priority, whether that training is offered within the education system or through employment policies. Since “post-industrial” labor markets require ever-higher skill levels to access employment,  [49] this public action strategy leads to lower youth unemployment levels.

26The second strategy, on the other hand, aims to deliver skills selectively to the educational “elite.” The education system is highly elitist, in that it focuses on the “best” students and does not offer others any second chances. The result is a lower average skill level and greater skill inequality. In terms of employment policies, the goal is not to make up for the shortcomings of the education system by providing a second chance at training, but rather to help individuals find a job at any cost, with no regard for the quality of that job: in other words, with this strategy, the complementarity between employment policies and education policies leads more to “synergy” than to the “compensation” present in the inclusive first strategy. When it comes to the school-to-work transition, work is given priority (in a work-first approach) and policies based on the demand for labor are implemented: the goal is less to improve the employability of young people (the supply of labor) than it is to modify the labor market by influencing employer demand (the demand for labor). This strategy ultimately leads to higher youth unemployment levels, since there is less investment in their skills.

27However, no causal relationship can be separated from its specific context: Tulia G. Falleti and Julia F. Lynch have shown that the effect of a given variable always depends on a series of initial conditions that make it possible.  [50] To fully account for the effects of these various economic citizenship policies, it is also crucial to identify the contextual conditions that surround them. We round out this second hypothesis on economic citizenship policies by making explicit the context that leads these policies to have such an effect on youth employment.

28First, these opposing economic citizenships need to be considered in the context of the different economic strategies that produce them:  [51] When growth is driven by exports, in the manufacturing industry for example, it requires skilled workers to ensure quality, and thus an inclusive learn-first economic citizenship. However, when the strategy aims to develop growth that is driven by household demand, investing in the human capital of workers does not seem as necessary, since the goal is not to focus on the quality of production (unlike with strategies aiming to produce competitive exports), so a selective work-first approach is favored: this leads to economic polarization due to an unequal distribution of skills.

29These economic strategies are also based on specific “institutional foundations.”  [52] In order for economic agents to invest in skills and exports, they need to be able to coordinate their actions, which depends on the democratic institutions in place: both corporatist institutions (i.e., the participation of social partners in the regulation of the economy and the creation of public policy) and democratic institutions (those that allow political actors to coordinate their efforts within the legislative and executive powers). The literature on political economy has shown that economic strategies that focus on quality and exports rely on both highly developed “macrocorporatism”  [53] (i.e., social partners working together in a way that is centralized, representative, and committed to creating public policy) and “consensual” democracy (i.e., a “democratic regime that emphasizes consensus instead of opposition, that includes rather than excludes, and that tries to maximize the size of the ruling majority instead of being satisfied with a bare majority”  [54]), to the extent that these two kinds of institutions co-evolve and strengthen each other.  [55] It is these differences in economic citizenship policies, as well as their possible contextual conditions, that make it possible to explain the different youth unemployment levels in France and Germany. This second hypothesis is summarized in Table 1.

30In light of the work that has already been done to highlight the importance of education policies in explaining youth unemployment (see above), there are three benefits to this hypothesis. First, it considers both the level of skills and their content (specific or general), in the context of the transition to a post-industrial knowledge economy. Next, it allows us to consider the connections between several different public policies and policy tools: unlike studies that focus mostly on secondary education and vocational education and training (VET), our hypothesis allows us to examine different levels and types of education policy (lower and upper secondary education and higher education), as well as different employment policies and tools (actions on labor costs, direct job creation, VET, and so on), by studying their interactions. Finally, it allows us to reposition these public policies in the wider economic and institutional context that shapes them, making it a “historical neo-institutionalist” approach,  [56] since we are looking at long-term national institutional trajectories.

Similar familialized approaches to social citizenship policies for young people

36First of all, the welfare state regimes in both countries are relatively similar, leading to similar familialized approaches to social citizenship for young people. This means that parents remain responsible for children even after the age of eighteen. The result is that family policy plays a central role, especially in terms of family benefits and financial assistance, since young people continue to be counted as (dependent) children.

37In France, family benefits have been available since 1999 for any family with children under the age of twenty. Outside of any family benefits (allocations familiales), parents with children who are still in education or training may receive other financial assistance: an income tax reduction (for children up to twenty-one, or up to twenty-five when the child is pursuing higher education), a deduction of their adult child’s maintenance allowance (pension alimentaire) from their taxable income, and a reduction of the flat tax on school fees. In Germany, parents may also receive family benefits (Kindergeld) for all children under eighteen, for children under twenty-one without a professional activity, and for children under twenty-five who are still in education or training. Instead of family benefits, they may also receive a child tax credit (Kinderfreibetrag), if that is a better option for them. Furthermore, parents may deduct maintenance allowance (Unterhaltsleistungen) payments to their children from their taxes.

38In terms of social support, the family-based approach involves higher age limits for receiving this support. In France, the minimum income scheme (revenu de solidarité active, or RSA) is only available to adults over 25. This has been the case since the creation of the minimum income allowance (revenu minimum d’insertion, or RMI) in 1988.  [62] While a “Youth RSA” was created in 2010 for those under twenty-five, its impact has been marginal (with only around 9,000 beneficiaries), due to fairly restrictive access criteria. In Germany, they also have Arbeitslosengeld II (ALG II) social benefits, which are a similar kind of subsidiarity, though the age limit for this benefit is officially much lower: the recipient needs to demonstrate that their family is unable to help them meet their needs in order to be eligible.  [63] All of this means that young people under twenty-five are automatically included in their parents’ “community of need” (which they benefit from as dependents), unless there are specific social reasons to prevent this or if such inclusion prevents them joining the labor market.

39Student aid programs also reflect this familialization. In France, student grants based on social criteria aim to supplement, and not replace, the financial assistance that parents provide for their children to pursue higher education. That is why these students are dependent on their parents’ incomes. As a result, only a minority of students receive such scholarships (36.1 percent in 2011­2012).  [64] In Germany, financial assistance for young people in training (BAFöG) also depends on parental income, the location of training, and their accommodation (living with parents or not): as a result, only a minority of students receive such assistance, roughly 25 percent in 2011­2012.  [65] Thus, social citizenship for young people is familialized in both countries, which prevents us from using this factor to explain differing youth unemployment levels. Hypothesis 1 is thus confirmed.

Opposite economic citizenship policies

40This section will show that the policies that shape economic citizenship in these two countries are quite different, thereby explaining their differing youth unemployment levels (Hypothesis 2). It will also show that these policies arise from specific contexts based on each country’s economic strategy and democratic institutions.

Germany: Inclusive, learn-first economic citizenship

41In comparative political economy, and especially in its “varieties of capitalism” sub-branch, Germany is the leading example of a “coordinated market economy” or CME, unlike the United States, which is the model of a “liberal market economy” or LME.  [66] Scholars from the “École de la régulation” also use the term “Rhenish capitalism” to describe this specifically German method of regulating the economy.  [67] This model has led to an export-driven growth strategy  [68] in the industrial manufacturing sector. German export performance levels depend mostly on the “non-cost” competitiveness of its products, i.e., on their quality, or on what Wolfgang Streeck has called “diversified quality production”  [69] This strategy is made possible by the presence of strong trade unions and employers’ organizations, which are centralized and involved in public policymaking, turning Germany’s “macrocorporatism” into close cooperation between different economic agents. This macrocorporatism also explains the country’s moderate salaries, which have allowed its exports to remain competitive despite the economic crisis, which has diminished household demand. This coordination contributes to the creation of a “consensual” democratic system  [70] that stands out in its use of proportional voting, and therefore in its reliance on coalition governments, making it possible to seek consensus within the realm of politics itself, especially in sectors that are heavily impacted by youth unemployment (education and employment).

42Such is the context that creates the conditions for “inclusive” economic citizenship for young people. Essentially, the German education system provides a large proportion of the population with skills, ensuring the country’s access to a qualified work force. This system allows the country to establish a “high skill equilibrium,” ensuring that its economy remains competitive, driven by a high value-added manufacturing industry.  [71] This provides structure not only for the school-to-work transition, but also for young people entering the labor market, creating a “high-skill route for employment transition”  [72] and leading to low youth unemployment levels.

43In order to provide the specific skills needed in the German economy, the education system  [73] offers different tracks for students and places an emphasis on VET. The German education system is, in fact, divided into three sub-systems, with students as young as ten or twelve streamed into different tracks. After a standard primary education (Grundschule), which ends at the age of ten, students go on to their secondary education: over 30 percent go to a Gymnasium (the general academic track for the best students, preparing them for higher education after they pass their Abitur examination after six or seven years of training); around 25 percent go to a Realschule (a kind of general education institution where students study for four years until the age of sixteen); and 20 percent go to a Hauptschule (general education secondary schools for struggling students, where they study for three years until the age of fifteen).  [74] Most students who attend either a Hauptschule or a Realschule continue their training as apprentices within Germany’s “dual education system.” These students will pursue both practical training within a company for around three years, under the technical and educational supervision of a Meister, as well as general and technical classes at a vocational school (Berufsschule).

44These different professional pathways and apprenticeship opportunities make the German education system unique: in 2007, only 43 percent of students were enrolled in a Gymnasium, while 57 percent were pursuing vocational training. Of the latter group, 75 percent were doing an apprenticeship through the dual system. At the end of their apprenticeships, students graduate with the equivalent of a high school diploma and enter the workforce as skilled workers (Facharbeiter). In Germany, the skills delivered by the education and training system are therefore more “specific,” not only to the company the student apprenticed with, but also to a particular industrial sector.  [75] Because both the state and companies need to come together to create this very specific education system for young people, the system can be classified as “collective.”  [76] Germany is therefore an example of a high-skill economy with a learn-first approach: of course, this system is highly stratified, but once a student has completed their general education, all of the tracks are supposed to provide young people with the minimum level of skill needed to access a profession (Beruf  [77]) and a professional community, even if the skills provided differ from one pathway to another.

45Figure 6, for example, presents school enrollment rates for young people aged twenty to twenty-nine between 1995 and 2011 in Germany and France, compared to the EU21 country average: while the rates were quite similar in 1995, they have gradually diverged, with Germany’s rising quickly and crossing the 30 percent mark in 2011, always staying above the EU average, and France’s rate remaining relatively stable, though still above the EU average. Figure 7, however, demonstrates that higher school enrollment rates in Germany are due to the decisive impact of “work-study” programs, otherwise known as apprenticeships.

Figure 6. School enrollment rates for young people (20-29) in France and Germany (%), 1995-2011

Figure 6. School enrollment rates for young people (20-29) in France and Germany (%), 1995-2011

46German employment policies that target unemployed young people also follow an inclusive learn-first strategy, in that they mostly aim to develop the human capital of young people by promoting VET programs. These policies can be divided into two main categories.  [78] The first includes the kind of active labor market policies that might be found in the Social Security Code, and which target the unemployed. As well as these tools, specific programs for young adults are also offered. These serve as preparatory programs for professional training, offering continuous training and support for young people to help them join the labor market, including wage subsidies. The second category includes time-limited labor market programs that are implemented at the federal, local, and Länder levels, and that aim to bring young people into the labor market by providing support for the apprenticeship system.

47The government’s first response to fighting youth unemployment is often to increase the number of apprenticeship placements available. However, because the number of apprenticeship spots has not been able to keep up with growing demand, despite all efforts, the state has had to put other systems into place. A “transition system” (Übergangssystem) has gradually been developed, spanning the gap between these two pillars of youth employment policy. This system offers full-time, publicly financed (pre-)professional training. Its role is to prepare those who missed out on an apprenticeship spot to enter the dual system later.

48Young people are given guidance and advice about their career options, as well as basic professional skills that are supposed to help them find a placement in the regular apprenticeship system, or even to find a job directly. This system has expanded considerably over time, growing by 86 percent between 1992 and 2006. It now accounts for roughly one third of all entries into the training system.  [79] That is why, since 2006, the system officially has three components, and not two: the dual apprenticeship system, the vocational school system, and the transition system. Because these programs are intended to train young people to help them find apprenticeships afterward, the participants are often young people who are unqualified, or who come from a Realschule or, more often, a Hauptschule. In 2008, for example, over three quarters of all non-graduates and half of those who had graduated from a Hauptschule participated in a transition system program.

Figure 7. Percentage of young people (15­29) enrolled in school, broken down by employment status, 2011

Figure 7. Percentage of young people (15­29) enrolled in school, broken down by employment status, 2011

49Several policies for the promotion of training were also put into place in Germany after the economic crisis. For example, in 2008, the government launched a skill-improvement initiative (Aufstieg durch Bildung), which included efforts to promote apprenticeships, among other measures. In 2009, other programs were put into place to expand both apprenticeships and professional training in general, especially within the transition system.

50Figure 8 shows the distribution of participants under twenty-five in active labor market policy programs between 2008 and 2012. It is apparent that young people under twenty-five are mostly concentrated in professional training programs, with more than 80 percent participating in this kind of employment policy. The employment policy goal of investing in human capital is very obvious here: in terms of “institutional complementarities,” the employment policy is “compensating” for education policy, trying to raise the education level of those who leave the basic training system without the skills they need to find a job.

Figure 8. Breakdown of young people under 25 participating in German employment policy programs (stocks), 2008­2012

Figure 8. Breakdown of young people under 25 participating in German employment policy programs (stocks), 2008­2012

51State intervention  [80] to reduce youth unemployment therefore follows an inclusive learn-first strategy, focusing on the labor supply and using VET as a tool. The low youth unemployment rates in Germany seem to be related to the country’s economic citizenship policies, in the context of an economic strategy that counts on exports and is made possible by the democratic institutions in place.

France: Selective work-first economic citizenship

52In comparative political economy, France is a unique case when it comes to distinguishing between LMEs and CMEs. Some think that it has more in common with Germany’s economic coordination than with the liberalized American economy.  [81] Still, many studies classify France using another political economy model, more commonly found in southern Europe: a political economy defined by the state’s predominant role in regulating the economy.  [82]

53The dominance of the state comes at the expense of reduced coordination between different players: in terms of corporatism, social partners are divided, their groups are not very representative, and they are seldom involved in public policymaking (unlike in Germany, where macrocorporatism prevails).  [83] These countries also have “majoritarian” democracies,  [84] where rather than seeking a consensus among different political entities, policy is imposed by the political party in government. This lack of coordination between different actors makes it impossible to pursue an economic strategy that is driven by high value-added exports.  [85] Rather, the economic strategy relies less on exports than on domestic household demand, which is supported by relatively high salaries (with an established minimum wage, the salaire minimum de croissance, or the SMIC) and high levels of social spending, which are signs of the “statism” discussed in the literature.

54On the supply side, the French economy is characterized by the influence of very large companies, which include both “national champions” (Renault, Airbus) and large publicly owned companies (EDF, SNCF). There is, however, no overall focused specialization in high-end, high-value-added sectors, which has created a dilemma for the public authorities:  [86] Should they expand training to move the economy toward higher-end sectors over the long term? Or reduce labor costs to make companies more competitive in their short-term costs? The risk, of course, is jeopardizing household demand, which is the foundation of French growth. This focus on reducing labor costs is what sets the French growth strategy apart.  [87]

55This type of strategy also arises from a particular kind of education system. While CMEs like Germany have systems that put an emphasis on “specific” skills, giving VET and apprenticeships a central role, Mediterranean capitalism focuses on skills that are more “general” but less developed.  [88] France stands out not only for the weakness of its training system, but also for how late it was to develop a mass education system, due to both its highly elitist logic and an economy that had long been dominated by the primary sector, with a low need for a generally skilled workforce. This is why France has been stuck in a “low skill equilibrium,”  [89] typical of Mediterranean countries. Due to this logic, education is focused above all on an elite that primarily works in the upper ranks of the civil service and/or in large French companies, the “national champions”: the elitism of the education system reflects the polarization of the economy. With no large-scale high-quality training programs, the manufacturing sector in France cannot export as competitively as its German counterpart.

56This equilibrium has been maintained despite drives to democratize the education system, which continues to harbor a fundamental contradiction: education cannot be democratized unless the system adapts to the heterogeneity of students.  [90] This illustrates the “meritocratic pact”  [91] of the French education system, whose sense of justice remains based on academic merit. In practice, this means focusing on the elite and letting most other young people slip through the net of the education system. They leave without any qualifications, since the “pedagogical model is designed for a minority of students, which has probably expanded, but which is absolutely not meant for entire age cohorts.”  [92] This current of “Republican elitism,”  [93] reflecting an obsession with excellence and ultimately creating an “academic nobility,”  [94] has prevented the egalitarian treatment of heterogeneous student cohorts. Nathalie Mons believes that this model of “uniform integration” (particularly present in Mediterranean countries) is “a way of managing heterogeneity with academic failure,”  [95] leading to high levels of academic inequality  [96] and high dropout rates.

57The French higher education system also reflects the elitism of the education system overall, with its historic distinction between universities and “grandes écoles,” despite its significant expansion over the last two decades. Higher education has progressively become more diverse, with the creation of advanced technical courses (sections de technicien supérieur, or STS) in 1959, and university institutes of technology (instituts universitaires de technologie, or IUT) in 1966, leading both to a considerable segmentation of higher education (based on institutional duality) and to its massification.  [97] This segmentation is merely an effect of a larger education system that has allowed the gaps between different tracks to grow wider and wider in pursuit of massification: it is what Pierre Merle  [98] calls “segregative democratization.” Such democratization is not qualitative but only quantitative in nature:  [99] inequalities are displaced, meaning that the massification of higher education in France has not led to a learn-first approach that would help to reduce youth unemployment.

58Furthermore, Figure 6 shows that France is characterized by relatively low school enrollment rates compared to Germany. This weaker investment in the human capital of young people demonstrates that, unlike its neighbor, France has a selective economic citizenship model and not an inclusive learn-first approach, which may explain its higher youth unemployment levels.

59Employment policy in France confirms this dynamic, focusing more on creating non-standard low-skill jobs (also called “precarious employment”) for young people than on investing in their human capital: most measures to reduce youth unemployment focus on reducing the cost of their labor, taking a more selective work-first approach, since “historically, employment policy has continued to rely on social security contribution exemptions based on programs with no training content.”  [100] Such French policies are characterized by both their profusion and their ambiguity, since they actually reflect three separate but simultaneous goals: reducing the labor costs of employing young people, training them, and offering them employment assistance.

60The first goal arises from the desire to lower the labor cost associated with employing young people and to create “subsidized jobs” (exempt from common law, with state support for target populations). For example, companies have been exempt from making social security contributions when they employ a young person since the national pacts for youth employment were signed in 1977. Other examples include the employment initiative contract (contrat initiative emploi, or CIE) and the youth in business contract (contrat jeunes en entreprises, or CJE), which were merged into the single inclusion contract (contrat unique d’insertion, or CUI) in 2010, referred to as CIE in the commercial sector. In addition to these measures that specifically target young people, it is also important to mention the general tax relief and social security contribution exemptions for employers with low-wage employees that have been available since 1993, which primarily benefit young people.  [101]

61Alongside these efforts to influence the demand for labor by reducing labor costs and promoting youth employment in the private sector, youth employment policies have also promoted subsidized employment in the public sector: after several previous versions, the employment support contract (contrat d’accompagnement dans l’emploi, or CAE) became the only subsidized employment option for the sector in 2005. The CAE was not only available to young people, although the state subsidies for these contracts were higher (90 percent of the SMIC) than for other contracts (83 percent of the SMIC on average). In 2010, for non-private CUI contracts, 29 percent of CUI-CAE contractees were under the age of twenty-six.

62The second goal of French youth employment policy is to promote the training of young people, especially through apprenticeships and work-study programs, in a more inclusive learn-first approach. Since 2004, the apprenticeship contract has been called a professionalization contract. The number of work-study and apprenticeship spots available has grown significantly, especially during the 1990s. However, this sharp increase is mostly due to it being made possible in 1987 to pursue training at Level IV  [102] and above as an apprenticeship: young people who already had qualifications (higher education) benefited the most from the growth of professional training as a part of employment policy.  [103] In fact, apprenticeship programs are not geared toward the least qualified candidates:  [104] the idea is not to give them a second chance, but to continue the training of those who are already qualified. In short, employment policy here is not compensating for education policy, but rather contributing to its centrifugal dynamic.

63Several decisions were made in 2009 to tackle youth unemployment, with a special focus on training and developing apprenticeship programs.  [105] However, since the effectiveness of German apprenticeships relies on their being part of a larger economic strategy that requires both greater coordination and investment from all sides (government, employers, unions, public employment services), these new measures had mixed results in France: often, employers did not invest in these systems to provide high-quality training, rather they used them as a way to access cheap labor and receive state subsidies.

64Figure 9 shows that training remains significant, with a little less than half of those under twenty-five participating in employment policy measures pursuing a training course. Nevertheless, the proportion of people in training is much smaller than in Germany (around 50 percent in France compared to 80 percent in Germany, see Figure 8), while employment incentives remain higher. We can thus observe that the effectiveness of measures to expand apprenticeships remains “conditional,” depending on certain economic conditions and institutional possibilities.

65Youth employment policies have reflected a third goal, that of “assistance,”  [106] ever since Bertrand Schwartz published his report entitled “L’insertion sociale et professionnelle des jeunes” (The integration of young people into society and working life) in 1981.  [107] This led to the creation of local missions (missions locales, or ML) and of reception, information, and orientation centers (permanences d’accueil, d’information et d’orientation, or PAIO) in 1982. These centers aimed to be a one-stop shop for young people aged sixteen to twenty-five, helping them to overcome any difficulties associated with economic or social integration thanks to comprehensive support tailored to their career path.

Figure 9. Breakdown of young people under 25 who participate in French employment policy programs, 2007­2012

Figure 9. Breakdown of young people under 25 who participate in French employment policy programs, 2007­2012

66In this context, it is worth noting the individualized training contract (contrat formation individualisé, or CFI) for young people launched in 1989, the personalized professional integration plan (itinéraire personnalisé d’insertion professionnelle, or IPIP), created in 1997 and replaced in 1998 by the TRACE program (trajet d’accès à l’emploi, or gateway to the labor market), which offered individualized support for people under twenty-six with no qualifications facing social, familial, and personal obstacles. That program was supplanted by the contract for integration into social life (contrat d’insertion dans la vie sociale, or CIVIS) in 2005. Made available in 2008 after a testing period, the autonomy contract (contrat d’autonomie) pursued this goal by focusing on young people living in certain disadvantaged areas.

67Behind all of these youth integration policy initiatives, which have come one after the other since the 1970s, the same tools are always at work: a focus on the cost of labor and the use of non-standard work contracts.  [108] This means that action is being taken to influence the demand for labor, in line with a selective approach to economic citizenship. Unlike in Germany, employment policies in France are “synergistic” because they tend to reinforce the effects of the education system, rather than compensating for them. It is in fact this approach to economic citizenship, arising from the context of an economic strategy driven by household demand and democratic institutions that do not allow for wider coordination of actors, that explains France’s high levels of youth unemployment.