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Looking for work

Bernd Riegert / cmkOctober 8, 2014

After Berlin and Paris in 2013, the EU has called for a third summit to discuss ways of boosting growth and jobs across Europe. Politicians meeting in Milan face a challenge, and so far have had only limited success.

Deutschland Spanien Spanische Klempner-Praktikanten
Image: picture-alliance/dpa

After some back and forth, Italian Prime Minister Matteo Renzi has finally invited EU leaders to Milan for a third summit to discuss youth unemployment in Europe.

Some member states doubt whether yet another summit can bring any progress; Brussels insiders say that EU leaders don't like to attend summits, if they're unable to announce any positive news after the meeting. Although the final guest list wasn't available the day before Wednesday's summit, Italian organizers believe that the vast majority of the EU's heads of state and government will attend.

Renzi has made the fight against unemployment the priority of Italy's EU presidency. At home, he could also use a political boost from Europe. Renzi is in the process of pushing through contested labor reform plans in Italy, and is facing resistance from trade unions and members of his own Socialist Party. Among the reforms is a relaxation of job protection rules in order to make it easier to hire young workers.

Renzi is implementing long-delayed reforms that top economists and European leaders, including German Chancellor Angela Merkel, have been pushing for.

EU-Gipfel in Paris zur Jugendarbeitslosigkeit
EU leaders met last year in Paris in an attempt to tackle the youth unemployment problemImage: picture-alliance/dpa

Italy's high youth unemployment level (42.9 percent) can be traced not only to economic problems but also to structural issues, according to the German-Italian Chamber of Commerce in Milan.

Leaders are only expected to take stock of the current situation at Wednesday's summit; new initiatives will not be put in place, nor will any new funds be made available. Major decisions are also not expected, high-level German officials said on Tuesday.

Youth Guarantee scheme lagging behind

One of the three initiatives with which the EU wants to help the more than 5 million unemployed youth is the Youth Guarantee. The initiative, which originated in Austria and Finland, aims to find jobs, internships, or further training for people under the age of 25,within four months of having lost a job or having completed prior training.

A total of 10 billion euros ($12.6 billion) has been made available to all 28 EU member states over the next seven years to implement the scheme.

In many crisis-stricken countries, including Greece, Spain and Italy, the challenge is to establish a proper job and apprenticeship program or training system. "The key challenge is to ensure that every young person is reached and helped, even those most disengaged from the labor market," said Laszlo Andor, the outgoing EU commissioner responsible for employment. "Everybody needs and deserves a decent chance to find either a good job or training to find a good job later."

Andor rejects the criticism that the implementation of the Youth Guarantee, which was decided more than a year ago, is taking too long. "The implementation of the Youth Guarantee is well on track and is already bringing results. Compared to other structural reforms in Europe, the Youth Guarantee is probably the most rapidly implemented," said Andor.

Infografik Jugendarbeitslosigkeit in der EU Juni 2014 Englisch

To date, member states have submitted plans to the European Commission, which are to be approved by the end of the year. Pilot projects are under way in seven countries. But for Paul Murphy, a former member of the European Parliament from Ireland, it's not enough:

"Unfortunately, this guarantee has a status equivalent to the verbal guarantee of a dodgy used car salesman," he said in one of the many debates on the EU's youth unemployment problem before the summer break. "Its real purpose is not to provide real jobs for the 5.5 million unemployed young people across Europe. Instead, it's to try and save the jobs of some MEPs."

Funding delays

The Youth Employment Initiative, set up more than a year ago, has also had some teething problems. It took many months for the member states to even begin submitting applications to receive funding from EU coffers. "In Milan, we will have to speak about the reasons for this delay, and how to speed up the process," a senior German government official told journalists.

Only three countries - France, Italy and Lithuania - have received funds for approved projects from the 6-billion-euro initiative. France, with its 432 million euros, wants to reduce school dropout rates, promote the mobility of job seekers and improve labor administration. Italy wants to use its 1.1 billion to strengthen employment agencies and promote mobility and job creation. Neither Spain, with its youth unemployment rate of 53.8 percent, or Greece, at 53.1 percent, have had their requests for EU funds approved. "It would be nice if that were to change soon," said a German government representative, who wished to remain anonymous.

The third pillar in the fight against youth unemployment is the European Investment Bank in Luxembourg, which has already dispensed 9.7 billion euros in loans for employment measures. Some 80,000 small and medium-sized enterprises were on the receiving end of 7 billion euros, helping them to create jobs or provide training.

Laszlo Andor EU Kommissar für Arbeit
Impossible to solve job crisis without overall economic growth, says outgoing EU Employment Commissioner Laszlo AndorImage: Georges Gobet/AFP/Getty Images

Money isn't everything

The International Labor Organization (ILO), based in Geneva, thinks the EU isn't doing enough to get young people back to work. And even the EU Commission admitted, in a report from mid-September, that the measures taken so far have only had a minimal effect on unemployment levels.

"We believe that the [available funds] are not enough to tackle the size of the problem," Ekkehard Ernst, an ILO employment expert, told DW earlier this year. "The youth unemployment rate has come down mainly because we have seen some recovery, but it is not enough. We need much more, both public and private investment, to create jobs and bring young people back to work."

But a high-ranking official in the German government, who will take part in the Milan summit, believes the call for more money is the wrong approach. "As long as it's not clear how we should spend the available funds, the call for more funds doesn't even come into question," he said.

There is no target of how many jobs should be created by the EU funds. In any case, the projections of the European Commission assume that the low economic growth forecast for the next two years will not significantly reduce unemployment figures. Like many economists, Commissioner Andor points out that more growth is needed.

"The Youth Guarantee will mean a systemic improvement for school-to-work transitions," he said, "however, we should not forget that in the absence of overall economic growth, it will be impossible for any employment reform to solve a job crisis of such a magnitude as we are experiencing in Europe."

Andre Sapir, an economist with the Brussels think tank Bruegel, sums up the problem in his writing: "It's growth, stupid!" Sapir says youth unemployment in the southern EU countries has always been twice as high as that of older workers, even before the economic crisis. When the economy improves and the general unemployment rate begins to decline, only then will there be more jobs for young people in any significant number, he points out.