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Eu youth unemployment: are politicians failing young people?

Youth unemployment is a serious problem for Europe. Angela Merkel, speaking at a summit with EU leaders held in Berlin this year, defined it as  “perhaps the most pressing problem facing Europe at the present time”.

Europe has seen a steady increase in youth unemployment rates since the end of 2008 when the economic crisis began. In September 2013, youth unemployment in the EU-28 was above 23.5%, up by 0.4 percentage points when compared to the previous year.

Ireland’s current rate is 28%, which means that more than 65,000 young people are out of work. Some European countries perform better (such as the UK, 21%, or France, 26%), but others have to deal with an even worse situation (such as Italy, 40%, or Spain, 56% and Greece, 57%).

Europe has reacted to the problem in many ways. Last month, EU negotiators agreed on a budget which includes €3.9 billion in extra funds to try to help the 7.5 million young European citizens currently unemployed. However, many believe that the extra cash is just a ‘drop in the ocean’, consisting of only €200 for each unemployed person, and that the EU is not adopting the right strategy when dealing with unemployment.

“My opinion is that this EU spending on youth unemployment is largely irrelevant to the real issue, ” says Bill Emmott, former editor of The Economist, now working on a film about Europe and its crisis with the Italian journalist Annalisa Piras. “Most likely, it is just a political gesture, designed to allow politicians to claim they are doing something, and to make the EU look better by claiming that something is also being done by the (now often hated) EU. The real issue is growth and economic activity: all the training in the world (and €200 isn't much) will make no difference at all if jobs are not being created that require the skills young people are being trained with.”

The EU has moved in this direction by introducing the Youth Guarantee scheme, whose aim is to ensure that all people under 25 are offered a good-quality job, an apprenticeship, a traineeship, or continued education within four months after leaving formal education or becoming unemployed.

The scheme is going to have a cost for EU member states, estimated at around €21billion per year overall. However, having 7.5 million young people out of work leads to a much higher cost: €150billion are lost every year in terms of benefits paid out and lost output.

The European Social Fund (ESF) is the main source of money for the implementation of the scheme: “We know that in the next period 2014—2020 the whole budget is about €10billion per year for all the member states, for all the actions under the European Social Fund. We don’t know yet the allocations per country, but it will be for each country to decide where they will spend the money,” a spokesperson for László Andor, EU Commisioner for Employment, clarifies.

Ireland and Europe

The numbers

  • 7.5 million young people unemployed in Europe
  • 23.5% the EU-28 youth unemployment rate
  • 28% Ireland’s youth unemployment rate
  • €3.9 billion EU extra funds to fight youth unemployment
  • €21 billion per year: the cost of implementing the Youth Guarantee scheme
  • €10 billion per year: the contribution of the European Social Fund (ESF)

How is the Irish government going to use such money? When asked, the Department of Social Protection declined to answer.  In any case, the government will have to submit a Youth Guarantee implementation plan to the EU Commission by the end of 2013.

According to James Doorley, spokesperson for the National Youth Council of Ireland, “funding should be used to enhance career guidance and job counselling, important to assist young jobseekers to make the right choices about their future. […]Also some of the funding should be used to assist young entrepreneurs especially with regard to start up capital which is difficult to access from the banks at the moment.”

But whatever the Government does, “it should be in the context of a very careful strategically coherent approach. And it seems to me that what the Irish government has done in general is not strategically coherent at all,” David Jacobson, Emeritus Professor of Economics at Dublin City University, says.

From the same university, Professor Gary Murphy, head of the Law and Government department, holds that EU decisions made at a Council of Ministers or European Commission level have no great clarity, and that there seems to be a certain ‘ad-hoc’ nature in relation to the granting of the money: “I would much rather see a scenario where budget are targeted, whereby states have to actually bid into a larger fund and have a specific plan.”