Abstract:

The issue of employability has recently gained greater importance for policy makers. Graduates’ unemployment has soared in some EU countries and this led to the realization that public policies were needed to foster their employability. Also, the share of graduates working in low-skilled sectors has been rising, leading to growing over-education and poor employment conditions.

Therefore, the number of active labour market policies (ALMP) targeting graduates increased recently in the EU, especially after the 2008 global economic crisis. However, there are great differences between countries and even those with similar levels of graduates’ unemployment and over-education behaved differently. A striking example are Portugal and Spain in which Portugal gave a much greater focus to graduates’ employability in policy design. Our research question is thus: why did Spain and Portugal differ so much in the priority they gave to ALMP targeting graduates?

To address this question the paper analyses all ALMP targeting young people in both countries between 2000-2017. The data were drawn from the LABREF database which collects all ALMP in each EU member-state.

The results show that during this period Portugal has been much more active in ALMP design with 46 new policies implemented while Spain has only 20. More importantly, Portugal implemented nine policies targeting graduates, while Spain has not implemented any specific policy for this group. Also, Portugal has a much higher number of policies executed both before the crisis and after it. Expenditure in ALMP has also been higher in Portugal in most years. Overall, the measures in both countries relate to wage subsidies, labour market training and internships and workplace-based training. This suggests that Governments are concerned with employability skills of youngsters and try to increase them with general and specific skills but acknowledge that this is an incomplete intervention. Wage subsidies appear as an additional measure to encourage employers to hire youngsters, including graduates.

We argue that countries followed different strategies because the social investment paradigm was much more attractive in Portugal than in Spain. In the early 2000s the Portuguese labour market was still very much regulated and reforms were made to increase flexibility (2003 and 2009). Yet the socialist party never strongly adhered to the labour market liberalization agenda (unlike their Spanish counterparts). The social investment agenda seemed a good way to compensate young workers for increasing flexibility and match social cohesion with greater competitiveness. This was at the heart of the Lisbon Strategy (2000) where graduates are a top priority in the transition to the knowledge economy, particularly in a country in which the investment in higher education and in the scientific system soared in this period. The situation in Spain differed as the labour market was already more liberalised, and there was not such a need to combine further liberalization with ALMP or greater investment in the scientific system. The priority in Spain has thus been further investment in the vocational system and apprenticeships and not in higher education. We argue that faced with similar problems, governments adopted different strategies showing that political ideas and historical trajectories play a key role in policy-making. These strategies and paths influence labour market outcomes, including graduates’ employability.

Keywords:

Higher education, employability, public policies, active labour market policies.