May 29, 2013 in Business

EU warns of youth job rate

Leaders call on business to help reduce unemployment
Sarah Dilorenzo Associated Press
 
The worst

In Greece and Spain, youth unemployment is more than 50 percent.

PARIS – European leaders sounded the alarm on youth unemployment Tuesday and called for businesses to help solve a problem that has left nearly one in four young people in Europe without a job.

At a conference in Paris, French, Italian and German ministers warned that if high youth unemployment is not addressed, young people will lose faith in their governments and the European Union.

“We now have to rescue an entire generation of people who are scared,” said Enrico Giovannini, Italy’s labor minister. “We have the best-ever-educated generation in this continent, and we are putting them on hold.”

European countries have seen their unemployment rates skyrocket, first fueled by the global recession and then by the continent’s debt crisis. The unemployment rate for the EU’s 27 member countries is now 10.9 percent. For young people in Europe, those between ages 15 and 24, the situation is much worse: Their unemployment rate in the EU is 23.5 percent. In Greece and Spain, youth unemployment is more than 50 percent. By comparison, it is 16.1 percent in the U.S, where the age range is 16-24.

EU countries have struggled to tackle the problem. Budget cuts imposed to control outsized deficits – which have cut thousands of public-sector jobs and left little money for economic stimulus or employment programs – have only exacerbated youth unemployment.

Many countries with the worst unemployment problems, such as Greece, Spain and Italy, are implementing labor market reforms that should eventually spur growth and create more jobs by making it easier for companies to hire and fire people, but they will take a long time to yield results.

The EU has already set aside funds, including $7.8 billion for its “Youth Guarantee,” a commitment to getting every young person in the EU into a job, an internship or training within four months of their becoming unemployed. Another $20.7 billion in European structural funds are also available for youth employment projects.

But to tap the funds, countries need to come up with projects – and they have been slow to do so.

The French and German labor and finance ministers met Tuesday to come up with a plan to bring more urgency to the subject. In a joint editorial published in French and German newspapers Tuesday, they warned that “elevated unemployment that (young people) are enduring is a social, economic and political threat.”

Few details have come out of the meeting, however, and much of the plan seems to be repackaging old promises. A statement following it said a full plan should be unveiled and adopted at the European Summit at the end of June.

French President Francois Hollande proposed Tuesday that governments start spending money on youth jobs this autumn and get reimbursed by the EU next year. Hollande spoke after meeting Spanish Prime Minister Mariano Rajoy in Paris.

Taking an extra step, Rajoy called on the EU to change its deficit procedures so that countries would no longer be penalized for spending money on fighting youth unemployment.

“This is an urgent situation,” Rajoy said.

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