Youth Unemployment

Jobs for the Kids

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  • Why it matters

    Why it matters

    European Union members pledged in April 2013 to get 5 million jobless young people into work or training within 4 months. Progress has been slow, and labor groups warn that the E.U. has woefully underfunded the scheme.

  • Facts

    Facts

    • Youth unemployment in the European Union is 21.6 percent.
    • The bloc has allocated €6 billion ($7.6 billion) to pay for its Youth Guarantee.
    • The United Nations estimates the scheme will cost €21 billion ($26.8 billion) a year.
  • Audio

    Audio

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With youth unemployment in the European Union having fallen by about 2 points since the launch of the bloc’s Youth Guarantee deal last April, leaders gathering in Milan this week for a conference on job creation can point to some initial successes.

Host Matteo Renzi, the Italian Prime Minister, will have bragging rights. Financial incentives for employers who hire jobless youths were expanded across his particularly hard-hit country this week.

But Italy still has a long way to go. In regions such as Emilia-Romagna, where the program has been running for some time, the demand for jobs or apprenticeships is three times higher than the number of available positions.

The situation underscores how difficult it has been to make the Youth Guarantee a reality. When it was launched, governments promised that all of the E.U.’s five million-plus unemployed youths would be offered a job, or at least a chance to learn a skill, within four months. But success has been slow coming, with the unemployment rate still at a troubling 21.6 percent.

It took almost 18 months before the European Commission approved the first applications.

Member states set aside €6 billion ($7.58 billion) to fund the youth employment initiative in 2014 and 2015, but it took almost 18 months before the European Commission approved the first applications, from France and Italy. The French are expected to receive €432 million while the Italians are expected to get €1.1 billion. Meanwhile, Lithuania’s program has also been approved.

E.U. officials in Brussels maintain that they’re making good progress with the program, but the slow pace of implementation is being criticized in Berlin. “The federal government took a beating over six billion euros being much too little to combat youth unemployment,” said a German government official, who then wondered aloud why it has taken an eternity for the money to be requested and distributed.

There are many who think that much more cash is needed to deal with the problem. The International Labour Organization (ILO), a United Nations agency, estimates €21 billion ($26.8 billion) per year is needed to successfully implement the Youth Guarantee, points out Terry Reintke, a member of the Group of the Greens/European Free Alliance in the European Parliament and co-spokesperson of the Federation of Young European Greens. “The E.U. and its members must finally take more money in hand to effectively address the mass unemployment among youths,” she said.

“The E.U. and its members must finally take more money in hand to effectively address the mass unemployment among youths.”

Terry Reintke, Green Party European Parliamentarian

The European Investment Bank (EIB) has already given €9.7 billion in loans to companies who want to hire or train unemployed youths. The original budget was just €6 billion ($7.6 billion). Meanwhile, the €120 billion ($153 billion) for the Compact for Growth and Jobs adopted by the E.U. in the summer of 2012 has not yet been exhausted.

The German government believes that the Italians want to prioritize investments and use the Milan summit to push for a relaxation of austerity measures. But German Chancellor Angela Merkel, a center-right Christian Democrat, and Labor Minister Andrea Nahles, a center-left Social Democrat, are committed to remaining firm on austerity issues. “The question of an increase does not arise,” said a government source.

Whatever progress has been made, national and European Commission leaders still have much work to do. Marianna Thyssen, the incoming European Commissioner for Employment, Social Affairs, Skills and Labour, seems to be up for the challenge. In her confirmation hearing in the European Parliament, she promised to urge member states to do everything possible to fight against the high rate of youth unemployment.

“Only when the situation for young people in the labor market has permanently changed in five years can I judge my time in office as a success,” Ms. Thyssen said.

 

The authors are all Handelsblatt reporters. To contact the authors: Hildebrand@handelsblatt.com, Kort@handelsblatt.com, Ludwig@handelsblatt.com, Specht @handelsblatt.com

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