EU youth job funds languish

When EU Commission President Jean-Claude Juncker announced a new effort to try to encourage around 315 billion euros of new private-sector investment in Europe on Wednesday in Strasbourg, he didn't emphasize youth unemployment. But EU policy-makers know that historically, the youth unemployment rate has been around double the rate of general unemployment.

"In many European countries, the general unemployment level is very high. It's important to stimulate the economy in these countries - then jobs will be created for young people as well. It's not possible to create lasting jobs only for young people in a country whose economy is in the doldrums," said Heike Solga, an economist at the Berlin Center for Social Research (WZB).

According to Eurostat, there were about 24.4 million young Europeans in the labor market in 2014 - which is to say, either employed or actively looking for work. Nearly a quarter of them, or 23.4 percent, were unemployed. In some countries, the rate is lower - in Germany, it was 7.5 percent. In some, however, it was much higher. In Spain, for example, 55.5 percent of young people looking for work cannot find any.

The toughest cases to deal with are the NEETS. As of May 2014, according to Eurostat, 7.5 million young Europeans were NEETS -- people who were not employed, not in education and not in training. That's out of a total of 57.5 million young people between 15 and 24 years of age.

"A lot of young people have given up, and are so far removed from the job market or from training that the first order of business is to establish communications with them," said a spokeswoman for France's labor ministry. "The NEETS are not easy to engage."

European Union policy-makers have expressed worries about a "lost generation," and have responded with a slew of programs meant to improve the employment prospects of the young. But progress in their implementation has been slow.

Is the EU's Youth Guarantee achievable?

In April 2013 at a summit meeting in Brussels, European national leaders agreed on a so-called Youth Guarantee. That was a promise that in future, once member countries had had time to set up appropriate programs, every European Union citizen under the age of 25 years would be offered a good-quality job, or an individually suited traineeship or placement in continuing education within four months of leaving school or becoming unemployed.

The machinery of program design began churning in Brussels. Not long afterward, in June 2013, the European Commission (EC) allocated six billion euros under a new Youth Employment Initiative (YEI) in support of the Youth Guarantee.

A year and a half later, in November 2014, little of the money had been taken up by EU member states. Why not?

Max Uebe is head of the youth employment section at the European Commission's Directorate General for Employment, Social Affairs and Inclusion (DG Employment). In an interview with DW, Uebe explained that it is easy enough to spend a lot of money quickly by means of quick fixes like wage subsidies, but these do little or nothing to increase employment long-term.

"It's much harder to spend money usefully in ways that achieve sustained increases in employment," Uebe said. "That's why member countries have been working with DG Employment to develop well-thought-out YEI programs."

Uebe, too, said that realistically, the youth unemployment problem cannot be solved without first solving the general unemployment problem.

Karl Brenke, an economist at the German Institute for Economic Research in Berlin (DIW), agrees that fostering youth employment is a difficult challenge. He told DW that the education and training of young people in many European countries must become more practical and employment-relevant.

"That usually requires deep reforms of the country's career training systems. Institutions have to be set up for the design of training courses, and for monitoring and evaluating the quality of training programs. Because workplace training is often best, companies have to create trainee workplaces," he said.

"All that costs quite a lot of money, especially in the start-up phase," he added. "Money from the Youth Employment Initiative would be well spent on getting those sorts of programs going."

Uebe said anyone familiar with the normal pace of development and implementation of national plans under new European Commission spending programs knows that achieving design and approval of such plans within a year and a half of an EC program's launch "is really very fast".

About a quarter of the six billion euros had already been committed under EC-approved national YEI plans as of November 2014, and about 85 percent would be committed under approved plans by the end of 2014, Uebe said.

But in reality, some countries may have already spent some of their YEI funding. The eligibility window for spending YEI funds opened in September 2013. Under the rules, money spent on youth employment measures anytime from then onward can be reclaimed from the member country's share of the EC's YEI fund - even if the youth employment measures were only formally approved by the EC's DG Employment a year or more later.

That's interesting, given that member countries' supposed failure to spend YEI funds has lately been used by Germany's finance minister as an argument against any and all increases in European Union public spending.

Wolfgang Schäuble, Europe's Mr. No

During a debate on the federal budget in the Bundestag on 9 September 2014, Schäuble singled out the YEI and said that before new spending proposals were considered, already approved spending plans must be successfully implemented.

A chorus of calls for major new EU spending initiatives has been heard in recent months, emanating from other European capitals - notably Paris, Warsaw and Rome, and now also from Brussels, the headquarters of the European Commission.

They have been consistently opposed by Mr. Schäuble and hence by the German government, who insist that "structural reform" and "budgetary discipline" - i.e. decreases in public spending - were the right way to revive the European economy. German officials agree that more infrastructure spending is needed, but they say it must come from private spending.

Perhaps for that reason, recent proposals from capitals less enamored with budget austerity have focused on measures that would leverage a lot of private infrastructure investment money with a relatively small dose of public money. Hence Mr. Juncker's plan, announced Wednesday, to leverage up to 315 billion euros of investment - most of it private money - with 21 billion euros of public money. Little or none of that is new money.