MEAE´s analysis: Young people entering the labour market can expect more than 32 years of employment and four years of unemployment
According to a recent analysis by the Ministry of Economic Affairs and Employment, a young person aged 18 entering the labour market can expect to have 32.5 years of employment and 4.1 years of unemployment during their working career. The result reflects the average expectation for each 18-year-old based on the situation in 2017. The analysis is based on a breakdown of an individual’s life cycle activities.
Working life expectancy has grown. Especially for the elderly, the expected number of working years has risen by several years since the 1990s recession. In the 2010s alone, the working life expectancy for a 50-year-old has grown by about one year.
Calculations based on population and labour force data clearly indicate the long duration and significant economic impact of unemployment. The results of the analysis highlight the need to extend working careers, i.e. actions to increase employment and reduce unemployment. The life cycle approach provides a new, essential element for understanding labour force participation, employment and unemployment.
In 2017, the life expectancy outside employment exceeded the working life expectancy already at the age of 29. At the same time, every young person entering the labour market could expect on average more than four years of unemployment during their working careers.
The analysis of the Ministry of Economic Affairs and Employment examines participation in the labour force, employment and unemployment using the life cycle approach. The analysis is based on life expectancy data provided by Statistics Finland. The analysis also draws on two different sets of data: the sample-based Labour Force Survey by 1-year age group, and Statistics Finland’s register-based employment statistics, also by 1-year age group.
The working life expectancy for an 18-year-old was 32.5 years, for a 25-year-old 29 years, and for a 50-year-old 10 years. The unemployment expectancy for an 18-year-old was 4.1 years, for a 25-year-old 3.5 years, and for a 50-year-old 1.4 years. These figures indicate the number of years a person of a certain age can expect to be employed or unemployed if their labour force participation remained at the 2017 level and their life expectancy remained unchanged. However, in real life changes do occur; unemployment expectancy in particular can change quickly as the labour market situation changes.
The life expectancy outside employment will exceed the working life expectancy at the age of 29 or 36, depending on the data set used. Based on calculations made with register-based data, the life expectancy outside employment will exceed the working life expectancy at the age of 29.
The 4.1-year unemployment expectancy of a young person means that for each person entering the labour market, more than EUR 34,000 on average would be spent by the central government on their unemployment security alone at the current benefit and price level.
Heikki Räisänen, Research Director, Ministry of Economic Affairs and Employment, tel. +358 295 047 118