Youth employability has recently gained greater importance for policy makers. Youth unemployment in both higher education (HE) graduates and non-graduates has soared in some EU countries and this led to the realization that public policies were needed to foster their employability. Therefore, the number of youth-oriented active labour market policies (ALMP) 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 youth unemployment behaved differently. A striking example of these differences in ALMP design and implementation are Portugal and Spain in which the former gave a much higher priority to ALMPs targeting the youth and particularly HE graduates. Given that Portugal and Spain share some similarities in youth unemployment levels and were amongst the most affected by the recent crisis one possible explanation for these differences may be found in the different political strategies followed in each country. The social investment welfare state, and flexicurity are two broad policy and academic agendas that have gained ground in the EU since the early 2000s. Both emphasize the importance of education, ALMPs, and life-long learning to address unemployment in contemporary labour markets. Also, both highlight the need for conducting reforms to the labour market institutions, namely labour market policies and employment protection legislation. The flexicurity concept in particular was rooted in three main building blocks: (i) employment protection legislation (EPL) deregulation (namely for regular contracts); (ii) investment in ALMPs and education; policies that increase security must be focused on protecting outsiders. This agenda was highly influential in Mediterranean countries. This was so because, on average, these countries had one of the most restrictive labour laws in the OECD countries (for permanent contracts), and also the need to invest in education was seen as a top priority by policy makers as these countries were lagging behind in educational indicators. Thus, rechannelling public expenditure from passive to active labour market policies and simultaneously reducing job protection seemed an attractive strategy for addressing unemployment and boosting growth. This does not explain, however, why the Portuguese government seemed to be more committed to this agenda than their Spanish counterparts. Our research question is thus: why did Spain and Portugal differ so much in youth-oriented ALMP design and implementation in recent years? 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. Also, Portugal has a much higher number of policies executed both before the crisis and after it and expenditure in ALMP has also been higher in Portugal in most years. Another difference may be found in relation to the nature of the training measures that were implemented. While in Spain the focus was much more on dual-training programmes and VET, in Portugal the predominant dimension was clearly the promotion of internships and more temporary programmes to promote the transition of young people into the labour market. Yet perhaps the most striking difference is the role attributed to HE graduates in ALMPs in both countries. While in Portugal HE graduates were in fact the object of a very significant portion of the new measures being implemented, in Spain they are conspicuously absent in policy design. This is consistent with our argument of two distinct political agendas having been broadly followed in each country. In Portugal the focus was on providing outsiders (namely young people and specifically HE graduates) with a better chance of integrating the labour market through upskilling and incentives to employers in exchange for previous reforms promoting increased flexibility. We argue that countries followed different strategies because the social investment paradigm and flexicurity were 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. 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. 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 youth employability.

This work was financed by Portuguese funds through FCT – Foundation for Science and Technology in the framework of the project no. 030016, “BRIGHET – Bringing together Higher Education, Training, and Job Quality”. Reference: PTDC/SOC-SOC/30016/2017.

• Economics and Business - Social Sciences
• Political Science - Social Sciences