Can the EU help solve youth unemployment in the Eurozone?

David Kingman asks whether the EU’s “Youth Opportunities Initiative” can do much to combat the very high levels of youth unemployment amongst member statesYoung Man Empty Pockets

Across the Eurozone, young people are bearing the brunt of the financial crisis that led to the Great Recession. New figures released on 31 May showed that total unemployment across the region as a whole had reached record levels, with 16–24 year olds faring the worst of all.

The scale of the problem

Total unemployment across the Eurozone was estimated at 12.2% at the end of last month, or 19.38 million, which means an additional 95,000 people joined the ranks of the unemployed during the 30 days of April (that’s an average of over 3,000 people losing their job every day).

Around 3.6 million of those unemployed were aged under 25, meaning youth unemployment in the Eurozone is now nearly a quarter (24.4%). Certain individual countries have levels of youth unemployment which are much higher than average, such as 62.5% in Greece, 56.4% in Spain, 42.4% in Portugal and 40.5% in Italy.

Even in Germany and Austria – two of the Eurozone members with the lowest unemployment rates – youth unemployment is several percentage points higher than the average for the population as a whole.

It’s also worth bearing in mind that these figures are national averages; this means that specific areas, such as rural backwaters or rundown districts in cities, must have much higher figures, possibly approaching 100% youth unemployment, in order to produce national averages which are this high.

Italian President Giorgio Napolitano probably spoke for many Eurozone politicians when he referred to youth unemployment as a “social crisis” which needs to be placed “at the centre of political action”.

What is the EU doing about youth unemployment?

Belatedly, there appear to be some signs that the governments of Eurozone member states are starting to recognise youth unemployment as a very serious challenge which threatens the entire social order in Europe.

So what are they going to do about it? Well, the European Commission (the EU’s executive body) has established a scheme called the Youth Opportunities Initiative, which, in the words of its website, is a set of measures, planned for 2012 and 2013, to drive down youth unemployment”.

They suggest actions to combat youth unemployment which sound eminently reasonable, such as assisting people who left school without completing secondary education to go back and finish it or get vocational training. They also talk of assisting graduates with finding work experience.

The scheme has apparently been allocated a budget of €6 billion by the European Commission, although finding the money to fund it has not been without difficulty (see below). EU diplomacy is also being mobilised to help provide solutions, by using bilateral deals between Germany and member states which have high youth unemployment to make it easier for their unemployed young citizens to find placements in Germany (the Germans have even offered to help with training and translation costs), while Germany is also trying to organise more funding for small businesses in other countries, which are seen as vital engines of employment growth.

Germany has also leant on other Eurozone states to try and get them to move faster at implementing structural reforms which should make it easier for young people to get jobs, such as relaxing the penalties for firing highly-protected labour market “insiders”, who often tend to be older and enjoy special privileges, especially in Spain and Italy.

Will any of this work? It is certainly a sign of progress that Eurozone governments are now doing more to address this crisis in their midst, but there is only so much that they can do on their own.

Unfortunately, there are already signs that even the relatively modest ambitions of this scheme may exceed the level of political will which exists towards achieving them among Eurozone governments. The Commission’s original plan was apparently more along the lines of the youth guarantee schemes which exist in Austria and the Nordic countries, in which all young people are offered a job, traineeship or apprenticeship within four months of leaving school or becoming unemployed, but this had to be scaled-back when national governments refused to provide an adequate level of funding.

Obviously, what would really help would be a return to economic growth, so that these countries can start producing opportunities for young people on their own – but unless the Eurozone can achieve this, far too many of its younger residents will appear to have bleak futures ahead of them.

Posted on: 4 June, 2013