Will EU rhetoric be a match for the reality of youth unemployment?

Blog posts

12 Aug 2015

Kari Hadjivassiliou

International Youth Day 2015 finds lots of young people still struggling to get a foothold in the labour market, not least in many parts of Europe. Despite plenty of brave statements about the need to tackle youth unemployment, questions remain as to whether the EU’s policy initiatives will be sufficient to match the severity of the problem.

Against the backdrop of very high youth unemployment rates (and its well-documented long-term ‘scarring’ effects) and precariousness in employment, the EU has made the need to improve the labour market prospects and employment chances of young people one of its key priorities.  Indeed, in the face of a dramatic rise in youth unemployment, and the risk of a ‘lost generation’ of young Europeans, EU institutions (notably the European Parliament, the European Commission and, more recently, the European Council) have put the promotion of youth employment at the top of the political agenda. 

As a result, consideration has been given at EU level to the increasing problem of youth unemployment and its human capital and economic implications for both Europe as a whole and its 28 Member States. There is strong recognition of the need to support young people through strategies relating to both education and employment, in order to facilitate their school-to-work (STW) transitions, which have become increasingly unstable, uncertain, protracted and difficult.

Although promoting smooth, stable and speedy STW transitions has been the focus of EU policies following the launch of the EU2020’s flagship initiatives Youth on the Move and, to some extent, the European Platform Against Poverty, persistent high levels of youth unemployment have given the importance of STW transitions a renewed impetus. Given the proven success of the Youth Guarantee concept, notably in Nordic countries such as Denmark, Finland, Norway, Sweden, which have been pioneers in this as part of a wider activation approach to labour market policies, Youth Guarantees are increasingly seen as a major instrument in effectively addressing youth unemployment across the EU. They are seen as, inter alia, being instrumental in forcing immediate action to address youth unemployment, before disengagement sets in and, as a result, avoid the long-term consequences or ‘scarring’ effects.

In December 2012, the Commission launched its Youth Employment Package (YEP), which is the follow-up to the actions on youth laid out in the wider Employment Package (published in April 2012).  One key element of the YEP was a Commission proposal for a Council Recommendation on establishing a Youth Guarantee, according to which within four months of leaving formal education or becoming unemployed, all young people up to 25 receive a quality offer of (i) a job; (ii) continued education; or (iii) an apprenticeship or a traineeship.

The following year, the European Commission launched its Youth Employment Initiative (YEI) which aimed to reinforce and accelerate measures outlined in the YEP, especially the Youth Guarantee, and to support particularly young people not in education, employment or training (NEET) in regions with a youth unemployment rate above 25 per cent.  Indeed, in order to help Member States start the implementation of the Youth Guarantee, the YEI reinforced financial resources available under existing EU funds, such as the European Social Fund (ESF) and other cohesion policy funding instruments. To this end, it made €6 billion available for the period 2014-2020 with the aim of helping hard-hit regions . Half of that amount comes from the ESF and the other half from a new dedicated youth employment budget line.  Moreover, in order to maximise the YEI’s reach and effectiveness, its implementation, including youth guarantees, was frontloaded, so that this funding was available immediately.

However, although the European Commission has been making the right noises about the need to address the issue of youth unemployment, and has even sought to introduce a number of relevant policies, there is scepticism about the likelihood of its success. For example, the EU funds earmarked for the Youth Guarantee (e.g.  the ESF itself and the YEI’s €6 billion for the period 2014-2020) are seen as inadequate for the effective implementation of EU youth employment reforms such as the Youth Guarantee (targeted especially at NEETs). Indeed, the International Labour Organization estimates that the EU requires an injection of €21 billion which represents around 0.45 per cent of Eurozone government spending. It is clear that the money allocated by the European Commission, although welcome, is a fraction of what is required for the proper and effective implementation of the Youth Guarantee. Yet, as the 2012 Eurofound ground-breaking study has shown, the cost of inaction is very high indeed: the estimated cost of NEETs in 26 Member States is about €156 billion a year (representing 1.51 per cent of the EU’s Gross Domestic Product).

Cost considerations aside, the Youth Guarantee is not a panacea for all youth unemployment problems, nor is it as effective for all groups of young people. For example, it has proved more effective for relatively job-ready young people and less effective for ‘hard to reach’ youth who require a more integrated and holistic approach. Likewise, it requires public employment services (PES) that have the necessary (high) capacity and service quality to provide the highly professional and individualised help and support to eligible young people. In many Member States the implementation of the Youth Guarantee will require structural reforms, such as the restructuring and revamping of PES, to give it the necessary capacity and professional staffing levels to ensure individual young people receive personalised (?) appropriate advice on job, education and training opportunities most relevant to their own needs. Within a context of fiscal consolidation, austerity and reduced public spending as well as variable PES capacity and quality across the EU, it remains to be seen whether a proper PES revamping can really occur.