Europe’s €8bn youth jobless fund meets scepticism

Schulz June 2013.jpg

European leaders agreed on Thursday (27 June) to set aside around 8 billion euros to combat youth unemployment, even as they admitted that the labour market would only sustainably improve once the crisis-hit region returns to growth.


More than three years of financial turmoil and belt tightening has sent joblessness soaring across southern, central and eastern Europe, with young people the hardest hit.

Youth unemployment in Greece and Spain is hovering near 60%, while in Italy and Portugal it stands above 40%. Overall, close to six million people between the ages of 15 and 24 are without a job, sparking talk of a "lost generation" and fears of destabilising social unrest.

At a summit, leaders agreed to disburse about €8 billion– more than the 6 billion originally earmarked in February – to fight youth joblessness, with the bulk available over a two-year period starting in 2014 and the remainder becoming available over the full seven years of the next EU budget.

The funds will form the basis of a "Youth Guarantee" that aims to provide a job, training or apprenticeship to young people within four months of their leaving school, full-time education or becoming unemployed.

Scheme derided as PR exercise

Economists have derided the scheme as a public relations exercise, and even the leaders conceded the plan would have little impact unless member states took action themselves.

"It's a lot of money, but of course everybody must understand that the main responsibility lies in the hands of governments, and the tools must be used or taken at the national level," said Finnish Prime Minister Jyrki Katainen. "European solutions can partially help, but it is not the main story."

Germany, which as the bloc's biggest economy has led the response to the crisis, has been particularly aggressive in pushing the jobs plan, concerned that it might get blamed for any jobless-related social unrest.

Chancellor Angela Merkel and her allies in Europe have insisted on deep spending cuts in struggling southern countries in return for aid. This has brought down deficits but also aggravated recessions and sent unemployment soaring.

Next week Merkel, who faces an election in September, will be hosting a youth unemployment conference in Berlin, at which labour ministers and leaders from across the bloc will exchange information on "best practices" for fighting joblessness.

Merkel accused of hypocrisy

In a speech in the German parliament hours before the summit began, Peer Steinbrueck, her centre-left challenger in the looming vote accused Merkel of hypocrisy for preaching austerity across Europe for years, only to change tack before the election and portray herself as a friend of the bloc's jobless.

Brussels-based think tank Bruegel said the EU was wrong to focus specifically on youth unemployment instead of measures to boost growth. "Unfortunately simply targeting measures at young people is unlikely to make much difference to the problem," said Bruegel economist André Sapir.

"If Europe is serious about preventing a lost decade for its citizens and a lost generation of jobless youth, it must act soon with far more potent measures than simply a youth guarantee scheme."

Under the EU scheme, funds would be channeled to regions where youth unemployment is above 25%. It also foresees new efforts to promote the mobility of young job-seekers and the introduction of apprenticeships and work-based learning of the kind seen in Germany and Austria.

Greek Prime Minister Antonis Samaras said youth unemployment in his country was causing "incredible problems" for social cohesion. "What we need to do here, is to think out of the box, inventively, find solutions, those solutions should be drastic measures, they should be drastic measures that will take place immediately," he said.

Juhani Risku, a former innovation director at Finnish telecoms giant Nokia, said traditional measures to tackle unemployment such as tax relief for companies, “are obviously not working” as firms use the extra money for other purposes, like R&D or marketing but not to recruit unqualified or unmotivated young people.

"Encouraging SMEs to take loans to hire young people they don’t need. Are they actually serious with this? We can’t keep on spending productive taxpayers’ money into random, inefficient and temporary measures hoping the problem will go away," Risku told EURACTIV in an interview.

EU heads of states agreed in February to launch a €6 billion Youth Employment Initiative, with the aim of making it fully operational by 1 January 2014.

A Youth Guarantee scheme, introduced by each EU country according to its individual need, will apply to young people who are out of work for more than four months. It aims to give them a real chance to further their education, or get a job, apprenticeship or traineeship.

The EU has a 2020 target of 75% employment for the working-age population (20-64 years).

  • 3 July: German Chancellor Merkel receives EU labour ministers in Berlin
  • 1 Jan. 2014: Target date for €6 billion Youth Employment Initiative to become fully operational

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