The International Monetary Fund (IMF) is suggesting a reduction in the minimum wage or in social security contributions paid by companies to encourage the recruitment of young workers, suffering from an unemployment rate of around 50% in Spain.

This is one of the conclusions of the report titled, ‘Youth Unemployment in Advanced Economies in Europe: Searching for Solutions’, presented on Wednesday by Angana Banerji, senior economist at the IMF, and Angel de la Fuente, director of Fedea.

The study stresses that youth employment is especially linked to economic growth, to the point that each percentage point of Spanish GDP growth translates into a two percentage point drop in youth unemployment.

The reasoning behind this assertion is based on the grounds that these Spanish workers are mainly employed in temporary jobs, which are the first to be destroyed during the crisis, mostly in SMEs (75 %), which are more vulnerable as they work in sectors that are very sensitive to economic cycles.

In this regard, the IMF considers the need to stimulate demand to generate growth, and specifies that youth employment is even more sensitive to domestic demand than to a surge in exports because it is concentrated in sectors with a more domestic vocation.

The IMF adds that reducing youth unemployment implies an increase in spending on active employment policies and placing more emphasis on vocational training.