Cash concern for EU's under-25s job scheme

21st March 2014 at 00:00
Funding for the Youth Guarantee will be billions short, experts say

After five years of financial turmoil, many European countries are now seeing signs of economic recovery. But although overall unemployment figures have fallen, joblessness among 15- to 24-year-olds across the European Union remains stubbornly high.

The latest figures put the EU's youth unemployment rate at 23.5 per cent with few indications of improvement. The European Commission is pinning its hopes on its ?6 billion (pound;5 billion) Youth Guarantee programme as the solution. Based on similar schemes in Austria and Finland, this aims to give unemployed under-25s an offer of employment or training within four months of leaving education or losing work.

The EC has described it as "one of the most crucial and urgent structural reforms" that member states must introduce to tackle youth unemployment. But nine out of 28 states are yet to submit plans setting out how they will implement the guarantee, despite these being due at the end of 2013. This includes the UK, which has indicated it will not be submitting plans.

And with the EC admitting that member states will be expected to commit "substantial" amounts of their own cash to co-fund the scheme, concerns are growing that the reforms could prove too costly.

The International Labour Organisation has estimated the cost of setting up effective Youth Guarantees in the Eurozone at ?21 billion per year.

Last month, a group of left-wing MEPs failed in their bid to amend the legislation to boost funding for the scheme and attacked the current level as "completely inadequate".

Experts from global management consultants McKinsey International have also warned that the funding has to achieve some significant goals.

In a recent report on youth employment on the continent, McKinsey's researchers praise the EU's desire to improve the situation, but add that Youth Guarantee funding must be spent on measures that will help young people to develop their skills and strategies as well as find a job if it is to be effective.

The report states: "It will be wasted if this funding, and further investment by employers and local and national governments, simply `fills in the potholes' on the education to employment road, rather than making it straighter and smoother."

Damian Walne, director of the Socio-Economic Centre at UK-based thinktank The Work Foundation, told TES that the current funding did not feel substantial enough. "If you work out how many unemployed youth there are across Europe and divide it out it doesn't come to very much," he said.

Mr Walne added that simply guaranteeing young people a job would not get to the root of Europe's unemployment problems. "The school-to-work transition is where problems happen and where those barriers to employment are," he said. "We need to understand what is going wrong there."

He added: "Employers might come out in favour of these subsidised job guarantee schemes but actually you could just be displacing unemployment from one labour market to another, from the young to the old for example."

But Lszl Andor, European commissioner for employment, described the guarantee as a "temporary measure" that should lead to longer-term improvements. "It needs to be a short-term relief and long-term investment in the skills and employability of young people," he said.

Addressing MEPs recently, Mr Andor praised several youth job schemes already in place, such as Portugal's Youth Momentum, Italy's Giovanis and the UK's pound;1 billion Youth Contract, but warned that they alone were not enough. "Nothing that is functioning now is sufficient to deliver the guarantee," he said.

Mr Andor urged member states to finalise their plans as quickly as possible. "Leaving young people without help damages their lifetime prospects as well as Europe's economic potential and social cohesion," he said.

"It is in each member state's interest to act swiftly and put in place practical measures to help young people get a job or acquire the skills to get a job in the future."

The EC is meeting next month to review progress.

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