European Leaders Huddle on Youth Unemployment

PARIS — President François Hollande of France called Tuesday for “urgent action” to tackle alarmingly high rates of youth unemployment across the European Union, saying that mounting disillusionment among the “post-crisis generation” threatened the very future of the European project.

“We need to act quickly,” Mr. Hollande told a gathering of government officials, business leaders and students in Paris. “In this battle, time is the decisive factor.”

Mr. Hollande spoke ahead of a series of meetings between French and German officials this week in preparation for a summit meeting of European leaders at the end of June, where youth unemployment is expected to top the agenda. The subject is also expected to figure prominently at a meeting here Thursday between Mr. Hollande and the German chancellor, Angela Merkel.

Nearly six million people under the age of 25 are unemployed across the European Union — nearly one quarter of the total, according to Eurostat, the Union’s statistical office. Youth jobless rates are now roughly twice the national average in many of the Union’s 27 member states, with the figures reaching as high as 60 percent in countries like Greece and Spain, which have been hard hit by austerity-driven cuts to social services and other benefits.

Economists say the extraordinarily high rates are in part a result of the general economic slump across the region, but are also a consequence of inflexible labor market rules that make entry into the work force particularly difficult for young people.

In recent weeks, German officials have spearheaded a series of bilateral agreements with countries like Spain and Portugal aimed at helping more young people from those countries enter the work force or to receive vocational training. Discussions about a similar agreement with France are continuing, people with knowledge of the talks said.

Those agreements, while still short on details, are being seen as part of a broader blueprint for a pan-European plan to create jobs and apprenticeships for young people across the Union.

Mr. Hollande said Tuesday that the plan would rest on three pillars: easing the access to credit for small and midsize companies; developing new job-training and apprenticeship programs; and increasing the geographic mobility of young people by offering money for language training and moving costs.

Initial financing for the plan would come from a pool of roughly €6 billion, or $7.7 billion, that has already been earmarked for this purpose from the European Investment Bank.

The European youth jobs initiative is expected to be ready in time for a gathering of the Union’s ministers July 3 in Berlin.

Mr. Hollande’s call to action was echoed by other European officials in attendance at the conference, which was held before a packed hall of university students from France’s prestigious Institut d’Études Politiques de Paris, or Sciences Po.

“We have to rescue an entire generation of young people who are scared,” said Enrico Giovannini, Italy’s new labor minister. “We have the best-educated generation and we are putting them on hold. This is not acceptable.”

Joblessness among those aged 15 to 24 in Italy is above 38 percent, according to Eurostat, on par with the rate in Portugal, which has also adopted wrenching changes. Youth unemployment is much lower in Germany and Austria, below 8 percent in both cases, a reflection both of their stronger economies as well as their centuries-old apprenticeship systems, which offer paid vocational training to students while they are still in high school.

Ursula von der Leyen, Germany’s labor minister, emphasized the need to bring to bear the resources of the European Investment Bank, based in Luxembourg, to encourage companies to invest and create jobs.

“Many small and mid-sized companies, which are the backbone of our economies, are ready to deliver, but they need capital,” Ms. von der Leyen said, noting that small firms still faced “exorbitant” interest rates from private-sector banks that remain reluctant to lend. “We want to break this vicious circle,” she said.

Werner Heyer, head of the European Investment Bank, said the deepening youth unemployment crisis, alongside obstacles to cross-border lending within the euro zone, represented the region’s two “megaproblems.” But he cautioned that politicians would be mistaken if they believed that the European bank’s resources alone would be enough to solve the unemployment problem.

“Such expectations of the bank are beyond the horizon,” Mr. Heyer said. “There is no quick fix; there is no grand plan.”

Article source: http://www.nytimes.com/2013/05/29/business/global/european-leaders-huddle-on-youth-unemployment.html?partner=rss&emc=rss