The youth unemployment in Europe: causes and European Union’s policies

The current situation

The unemployment rate for those under age 25 was at 19.4 percent in February. While that is an improvement compared with a year ago, and is the lowest since 2009, huge imbalances between the different European countries still persist. European Central Bank President Mario Draghi highlighted the improving jobs figures as proof that the central bank’s quantitative easing and asset purchase program are not just boosting asset prices and widening inequality, but benefiting ordinary citizens. Nonetheless, the differences between the EU countries are still quite large. In Germany, the youth unemployment is at 6.6% percent. That is lower than the overall rate in Spain has ever been since the euro’s introduction. In Greece, still struggling seven years after its first bailout, the figure in December was almost seven times greater than Germany’s, at 45.2 percent. Draghi has said that monetary policy cannot take the whole weight of the economic recovery, and repeatedly urged governments to implement reforms to reduce structural unemployment. (Source: Bloomberg).

Source: Eurostat

The causes

There are multiple causes of this high unemployment rate. The first one is obviously the 2008 great financial crisis. Young people were the most exposed to this situation due to the lack of experience and protection. Second, the globalization together with the asymmetries existing in UE are causing a strong imbalance between the demand and supply in the labour market. This is fertile ground for well-known situations where there is a growing mismatch between the skills that young people have and the positions that are offered in the job markets. For example, many people are now undertaking jobs for which they are often overqualified or employers report that applicants for vacancies lack required skills for the job. Regarding the unemployment level in the different Member States, differences in employment and labour market policies, welfare system and GDP growth are underpinning the huge imbalances currently visible in the European Union.

The role of the European Union

The European Union sought to implement measures designed to counteract the high unemployment rate. During a Council Recommendation of April 2013, all EU countries have committed to the implementation of the Youth Guarantee (YG). The YG is a commitment by all Member States to ensure that all young people under the age of 25 years receive a good quality offer in terms of employment, continued education, apprenticeship and traineeship within a period of four months of becoming unemployed or leaving formal education. Together with the Youth Guarantee, the EU also implemented the Youth Employment Initiative (YEI). The YEI was launched to provide support to young people living in the regions where youth unemployment was higher than 25%. It exclusively supports young people who are not in education, employment or training (NEETs), including long-term unemployed youngsters or those not registered as job-seekers. This ensures that in parts of Europe where the challenges are most acute, young persons can receive targeted help. The Youth Employment Initiative provides support in terms of financing of the different proposals and could be considered complementary to both the Youth Guarantee and other actions undertaken at national level, in particular with European Social Fund (ESF) support, with a view to setting up or implementing the youth guarantee schemes. The total budget (for all eligible EU Member States) of the YEI is €6.4 billion for the period 2014-20. Given that the unemployment is still very high, the Commission proposed on 14 September 2016 to increase the YEI budget from € 6.4 to € 8.4 billion. Thus, the YEI overall resources will be increased by € 2 billion for 2017-2020 if the Council and the European Parliament adopt the Commission's proposal. (Source: European Commission)

If we analyze the results achieved, we can see how 14 million young people have entered Youth Guarantee schemes since January 2014 and how almost two thirds of young people who left the Youth Guarantee in 2015 took up an offer of employment, education, traineeship or apprenticeship. Overall, there are almost 1.5 million fewer young unemployed in the EU and 900,000 less young people not in employment, education or training (NEETs). (Source: European Commission)

If we look at the national implementation, significant reforms and innovative measures have been introduced within the framework of national Youth Guarantee schemes. For instance, in Bulgaria, a network of youth mediators was put in place in 2015 to reach out to non-registered NEETs in their direct environment and activate them. Youth mediators act as intermediaries with public institutions that provide social, health, educational and other services. The apprenticeship system in Spain has undergone significant structural reforms, leading to an increase in the number of apprentices from 4 000 to 15 000 in just three years (between 2013 and 2016). During the same period, the number of enterprises participating in apprenticeship training grew from barely 500 to 660. The EU has supported Member States in establishing their national Youth Guarantee schemes through substantial financial as well as policy support and mutual learning activities. In particular, the European Commission has helped each Member State to develop and deliver its own national Youth Guarantee Implementation Plan. Further, the Commission also facilitates the sharing of best practices between governments. If we analyze the costs and benefits of these policies, we can see how the total estimated cost of establishing Youth Guarantee schemes in all Member States of the European Union is around €50 bn per year, or around 0.7% of European GDP (Source: Eurofound). However, inaction would be much more costly. Young people not in employment, education or training are estimated to cost the EU €162bn (1.21% of European GDP) a year (Source: Eurofound). (Source: European Commission)

A look to the future

Indeed, a considerable degree of strong coordination could facilitate the solution of the problems mentioned. Promoting something more than Erasmus program could favour student mobility and a centralization of the actual labour market and occupational policies should allow overcoming many of the current asymmetries. One of the Vox aims is to unify and optimize the different national European policies. Being able to unify different educational and employment systems could simplify the implementation of European programs and determine the adoption of a uniform model for all the EU Members.

The role of Vox

Vox is the voice of a new generation which has decided to take its future into its own hands to overcome the divisions starting to come back in Europe. This climate of tension and disillusion feeds on the feeling of uncertainty affecting our generation. Fighting against the youth unemployment and early school leaving

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Gianluca Vanni
Federico Finocchietti

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