EU plans “lost generation” fund to fight youth unemployment

(Reuters) – European Union leaders are expected to set aside more than 5 billion euros from the EU budget to tackle the bloc’s soaring and costly youth unemployment when they meet for a summit in Brussels on Thursday.

The aim is to get to grips with the debilitating unemployment caused by the region’s debt and economic crisis. There are estimates that youth joblessness is costing the EU up to 150 billion euros a year, or around 1.2 percent of GDP.

If leaders can agree – and that depends on them reaching a deal on the next long-term budget, which earmarks nearly 1 trillion euros of spending from 2014-2020 – more than 5 billion euros would be directed towards youth employment programmes.

The money – probably a mixture of old and new money – would be used to provide training, apprenticeships and other forms of education to people in parts of the EU where youth unemployment exceeds 25 percent.

As well as several regions of Spain and Greece, that is expected to include parts of Italy, Portugal,Ireland, Bulgaria, Cyprus, Latvia, Hungary and Slovakia, officials say.

Youth unemployment has become one of the biggest scourges of the sovereign debt crisis that has dragged the euro zone and the wider EU down for the past three years, with heavy social, political and economic implications.

While there are hopes that the euro zone has overcome the worst of the crisis and growth may return in the middle of this year, unemployment is a lagging indicator, with the rate only likely to drop once a recovery is fully underway.

In countries such as Spain and Greece, officials are concerned that stubborn, long-term unemployment among the young will fuel social unrest and lead to other problems such as an increase in crime and drug use.

The Commission, which first proposed the youth employment package in December, has calculated that the cost of youth employment and training programmes is far exceeded by the cost of inactivity and lost productivity, especially when unemployment benefits are taken into account.

In July last year, the International Labour Organization estimated the total cost of putting in place youth training programmes across the euro zone at 21 billion euros, meaning the 5 billion euro fund is likely to be less than what is needed.

(Writing by Luke Baker. Editing by Jeremy Gaunt)

http://uk.reuters.com/article/2013/02/06/uk-eu-unemployment-fund-idUKBRE9150TU20130206

Ireland’s welfare system should be a springboard as well as a safety net for our unemployed, writes Joan Burton

Let’s start with the figures, because they’re simply horrendous. Across Europe right now, 5.5 million young people – one in five of those aged between 15 and 24 who are on the labour market – are without a job. In some individual member states, the situation is even worse.

In Spain and Greece, it’s one in every two young people on the labour market, with youth unemployment rates above 50 per cent. In Ireland, the rate is 32 per cent, which corresponds to about 61,000 young people.

This is not just a problem. It’s an existential crisis for the European Union. The economic cost has been estimated at more than €150bn a year, or 1.2 per cent of EU GDP. But how do we measure the social cost, the terrible and potentially lasting effects of unemployment on the young people themselves?

The internationally respected economists David Bell and David Blanchflower found that even a short spell of unemployment when young can have devastating effects throughout a person’s life.

Youth unemployment increases the likelihood of being unemployed later in life. And there are a host of knock-on consequences on pay, health and status. In short, youth unemployment leaves permanent scars. That is why I say this is no mere problem for the EU; it’s a potential personal and societal tragedy. So what can be done about it?

This week in Dublin Castle, as part of Ireland’s presidency of the Council of the EU, social protection and employment ministers from the member states will gather to discuss this and other issues.

My colleague, Jobs Minister Richard Bruton, will chair discussions on skills development and training for growth sectors of the economy.

I will chair discussions on the youth unemployment crisis, and a key proposal to tackle it, namely the Youth Guarantee. Like all good ideas, it is a simple one – that member states would guarantee every young person under 25 a job, training or educational placement within a set number of months of becoming unemployed. But agreement will not be simple. During the negotiations so far, several member states have expressed understandable concerns, including how such a scheme would be funded.

But while I am cognisant of those concerns, we simply have to overcome them. Yes, the Youth Guarantee is ambitious. But we have to be ambitious – the sheer scale of the crisis demands it.

On the funding side, the European Commission envisages member states prioritising some of the money they receive from the European Social Fund to implement the guarantee. As part of our Presidency, Ireland is chairing separate negotiations on the wider EU budget for 2014 to 2020, including the ESF.

As chair, Ireland will act as honest broker in those negotiations, seeking to move them forward in a fair and impartial way. On the wider EU approach, I will say this, though: it is now clear that austerity policies cannot go on forever.

The IMF itself has acknowledged it underestimated the effects of austerity. Aside from the policy, the EU’s response to the economic crisis has been far too slow, even if the pieces are gradually coming together now, five years later.

We cannot wait five years to tackle the youth unemployment crisis. To do so would be to fail our young people, and stack up problems for the Union down the line. Here in Ireland, we are already dealing with the consequences of previous failures. This Government inherited a policy response to unemployment that was largely passive, allowing people to receive benefits indefinitely.

That is Ireland’s tragedy, which this Government is now doing its utmost to address.

While I firmly believe in the social welfare system as a safety net, it must also be a springboard, and that is why we are transforming the system and spending more than €1bn this year on activation schemes.

Europe has to respond in similar fashion, and the Youth Guarantee would be a major step. I am confident that during the Irish presidency, we can deliver a successful outcome to these negotiations and get agreement on a deal. It won’t mean that everybody will find employment overnight. But it will create opportunities and give hope to Europe’s youth, and lay a sustainable foundation for the EU’s future.

Joan Burton TD is Minister for Social Protection.

In the EU Article attached Irish MEPs have defined their different hopes for the Irish Presidency, two of the MEPs listed the youth unemployment issue as their top priority and another focused on austerity measures:

http://ec.europa.eu/avservices/video/player.cfm?ref=I075514