March 29, 2024

Germany Works to Curb E.U. Youth Unemployment

Wolfgang Schäuble, the German finance minister, and Vítor Gaspar, his counterpart in Portugal, announced a plan on Wednesday to use the German state development bank to help set up a financial institution to assist Portuguese under age 25 in getting jobs or training.

Earlier this week, Ursula von der Leyen, the German labor minister, signed an agreement with her Spanish counterpart, Fátima Báñez García, that foresees bringing thousands of young Spaniards to Germany for apprenticeships. At the same time, Germany will seek to help Spain build a dual-track vocational system in which young people earn qualifications through a combination of work and study.

The initiatives are part of a recent multipronged effort by Berlin to quickly get more young people into the work force, a move that experts say is crucial if a unified Europe is to survive into the next generation. “What is decisive is that we must be faster and more definitive in fighting youth unemployment,” Mr. Schäuble said.

More than 5.6 million people under 25 are without work across the Union, according to figures released by Eurostat. Among the countries with the largest number of young people out of work are the weaker members of the euro zone that are undergoing deep cuts to social services and other structural reforms, part of efforts to recover from the ongoing debt crisis.

Germany grappled with its own youth unemployment problem early last decade. While its numbers then were nowhere near the 60 percent of young people now out of work in Greece, or the nearly 56 percent in Spain, German leaders say their experience can be of value to their E.U. partners.

A crucial element of Germany’s success has been its dual vocational training system, in which young people work three to four days per week in their chosen sector and spend an additional 8 to 12 hours per week in the classroom. At the end of their training, the students must pass a test to receive a certification of their skills.

Ms. von der Leyen said that several of the recent bilateral agreements foresaw programs to help develop a similar system in other European countries.

Next week, German and French officials plan to draw up a bilateral agreement on employment when they meet alongside European business leaders at a conference in Paris. On July 3, Chancellor Angela Merkel of Germany will gather labor ministers and the heads of 27 E.U. labor agencies in Berlin for a meeting to further discuss the problem.

Details of what the proposed German-French initiative would entail remain vague, but Mr. Schäuble insisted that financing would not be an issue.

He cited the €6 billion, or $7.8 billion, that the Union has earmarked in its new budget for addressing the problem, as well as additional funds that were given to the European Investment Bank in Luxembourg intended for loans to small and midsize businesses, which would help create more jobs.

“We are working to use the existing funds more efficiently,” Mr. Schäuble said in Berlin.

Some experts say the recent bilateral efforts fall far short, given the size of the problem in Europe. Others highlight the need to act quickly, citing studies showing the damaging effects that long-term unemployment can have on youths.

Unemployment in the early stages of a person’s career has a negative impact on the ability to integrate into society, or, in the case of the Union, to later support the idea of more integration on the Continent, said Joachim Möller, director of the Institute for Employment Research in Nuremberg. “The long-term effects reach far beyond the working world,” he said. “It could be catastrophic for their idea of Europe.”

Article source: http://www.nytimes.com/2013/05/23/business/global/germany-works-to-curb-eu-youth-unemployment.html?partner=rss&emc=rss

Economix Blog: Sarkozy and Merkel’s Delicate Dance

President Nicolas Sarkozy of France greeting Chancellor Angela Merkel of Germany in Paris on Monday.Ian Langsdon/European Pressphoto AgencyPresident Nicolas Sarkozy of France greeting Chancellor Angela Merkel of Germany on Monday.

For weeks, attitudes toward Europe’s debt crisis have gone through a recurring cycle: markets flail, spurring leaders to gather and confer; grim-faced, they issue statements of guarded optimism and determination. Rinse. Repeat.

Below is a look back at statements from President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany over the last two months:

Oct. 7: As Germany and France try to forge a comprehensive response to Europe’s debt crisis, the two nations clash on a fundamental question. France wants to draw on the European bailout fund, the European Financial Stability Facility, to rebuild bank capital. German leaders think national governments should take the lead.

Merkel

“Only if a country can’t do it on its own should the E.F.S.F. be used,” Mrs. Merkel said.

Oct. 9: Mrs. Merkel and Mr. Sarkozy met in Berlin, and said they reached a general agreement on a plan.

Sarkozy

“It’s not the moment to go into details of all questions,” said Mr. Sarkozy.

Merkel

“We are determined to do everything necessary to ensure the recapitalization of Europe’s banks,” Mrs. Merkel said.

Oct. 19: Mr. Sarkozy and Mrs. Merkel met in Frankfurt, ahead of a European summit meeting, but emphasized that a comprehensive deal was not imminent.

Merkel

In a speech, Mrs. Merkel noted that the meeting would be just “one point” in “a long journey.”

Sarkozy

“In Germany, the coalition is divided on this issue. It is not just Angela Merkel who we need to convince,” Mr. Sarkozy told French lawmakers.

Oct. 23: As concerns over high debt spread to Italy, Mr. Sarkozy and Mrs. Merkel met with the leaders of the European Union in Brussels. Tensions ran high, but little new progress was made.

Sarkozy

Mr. Sarkozy reacted sharply to criticism from Prime Minister David Cameron of Britain, which does not use the euro. “You say you hate the euro, and now you want to interfere in our meetings,” Mr. Sarkozy said.

Merkel

Mrs. Merkel reiterated her call for a comprehensive solution. “Trust will not be achieved alone through a high firewall,” she said. “Trust will not happen from a new package for Greece. Trust will only happen when everyone does their homework.”

Oct. 27: In negotiations lasting into the early morning hours, Mrs. Merkel and Mr. Sarkozy secured an agreement from banks holding Greek debt to accept a 50 percent loss on its face value.

Sarkozy

“If there was no accord yesterday, it’s not just Europe that would face catastrophe, but the whole world,” Mr. Sarkozy said.

Merkel

Mrs. Merkel said, “I believe we were able to live up to expectations, that we did the right thing for the euro zone, and this brings us one step farther along the road to a good and sensible solution.”

Nov. 10: Fears of contagion continued to grow, as Italy’s cost of borrowing continues to rise rapidly.

Sarkozy

Mr. Sarkozy suggested that a two-tiered model for Europe was likely in the future. “There are 27 of us,” Mr. Sarkozy told French students in Strasbourg. “Clearly, down the line, we will have to include the Balkans. There will be 32, 33, 34 of us. No one thinks that federalism, total integration, will be possible with 33, 34 or 35 states,” he said.

Merkel

Mrs. Merkel renewed her call for fiscal discipline and central oversight of euro member states. “It is time for a breakthrough to a new Europe,” she said. “A community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules, that community simply can’t survive.”

Nov. 18: Bond yields spiked in France and Spain, raising fears that the debt crisis could freeze credit markets throughout Europe.

Merkel

Mrs. Merkel’s government again said it would oppose the creation of euro zone bonds or an expanded role for the European Central Bank. “I’m convinced that none of these approaches, if applied right now, would bring about a solution of this crisis,” Bloomberg News quoted Mrs. Merkel as saying in a speech.

Nov. 24: Meeting in Strasbourg, France, with Mr. Sarkozy and Prime Minister Mario Monti of Italy, Mrs. Merkel once again rejected calls for joint euro zone bonds or more activity by the E.C.B.

Sarkozy

“I am trying to understand Germany’s red lines,” Mr. Sarkozy said.

Merkel

“Nothing has changed in my position,” said Mrs. Merkel.

Dec. 1: In an address to French citizens, Mr. Sarkozy warned that Europe could be “swept away” by the euro crisis if it does not change.

Sarkozy

“If Europe does not change quickly enough, global history will be written without Europe,” he said. “Europe needs more solidarity and that means more discipline.”

Dec. 2: In a speech to Germany’s Parliament, Mrs. Merkel called for changing European treaties to address the underlying causes of the debt crisis.

Merkel

“The future of the euro is inseparable from European unity,” she said. “The journey before us is long and will be anything but easy. But I am convinced that we are on the right path. It is the right path to take to reach our common goal: a strong Germany in a strong European Union that will benefit the people in Germany, in Europe.”

Dec. 5: Meeting in Paris, the two leaders issued a joint call for Europe’s governing treaties to be amended to bring the 17 countries of the euro zone into greater fiscal harmony.

Sarkozy

““We want to make sure that the imbalances that led to the situation in the euro zone today cannot happen again,” Mr. Sarkozy said.

Merkel

“We are absolutely determined to keep the euro as a stable currency and as an important contributor to European stability,” Ms. Merkel said.

Article source: http://feeds.nytimes.com/click.phdo?i=546949a156f652560bfc84297bc0aa72

Stocks and Bonds: Wall Street Ends Mixed on Uncertainty Over Europe

Leading indicators sagged but then moved into positive territory after comments by French and German leaders eased market concerns. The leaders said the euro zone needed a new operating method for the rescue fund, the European Financial Stability Facility, and scheduled a series of meetings over the next few days to try to reach a consensus.

Investors are hoping European Union leaders will move toward a solution as early as this weekend, a crucial factor for stocks to break out of their trading range.

“It’s a Ping-Pong game — people have been burned by reacting to individual news stories only to have them refuted, withdrawn or contradicted,” said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.

“Next week we will get something more definitive but at this point, to react to these individual whispers and news stories has been a fool’s game,” Mr. Massocca said.

The Dow Jones industrial average gained 37.16 points, or 0.32 percent, to 11,541.78. The Standard Poor’s 500-stock index gained 5.51 points, or 0.46 percent, to 1,215.39. The Nasdaq composite slipped 5.42 points, or 0.21 percent, to 2,598.62.

The Treasury’s 10-year note fell 8/32, to 99 15/32. The yield rose to 2.19 percent, from 2.16 percent late Wednesday.

The S. P. 500 has struggled after reaching the top end of a two-month trading range at the 1,230-1,250 level, and progress on Europe’s debt woes is critical to breaking out of that range.

Investors are also closely watching the developing earnings season. According to Thomson Reuters data, of the 109 companies in the S. P. 500 that have reported earnings, 70 percent have topped analyst expectations.

“The focus is starting to be more domestic. Here and there are some questions about the directions of earnings,” said Mr. Massocca.

Ingersoll Rand posted lower quarterly earnings, and its fourth-quarter profit forecast fell short of some Wall Street estimates, because of depressed housing and consumer markets.

Polycom, the videoconferencing company, plunged 25 percent to $16.33 and weighed on the Nasdaq after quarterly revenue fell well below market expectations. The company said its sales to large companies slowed, and it forecast weak fourth-quarter revenue.

On the economic data front, factory activity in the mid-Atlantic region rebounded in October and the number of Americans claiming new jobless benefits fell last week, but other data showed a drop in sales of previously owned homes last month and only a small rise in a gauge of future growth.

“The numbers we have seen today provide some hints that the domestic economy is doing a little bit better, even with the challenges that are unfolding in Europe,” said Michael Strauss, chief economist at Commonfund in Wilton, Conn.

Initial claims for state unemployment benefits slipped 6,000, to 403,000, last week, the Labor Department said. A four-week average, which smoothes out weekly volatility to give a better view of trends, hit its lowest level since April.

Initial claims dropped 25,000 between the September and October survey periods, suggesting a step-up in nonfarm employment after payrolls increased 103,000 last month.

After spiking in mid-September, jobless claims appear to have settled near the 400,000 mark that is usually associated with some improvement in the jobs market.

Separately, the Philadelphia Federal Reserve Bank’s business activity index rebounded to 8.7 in October, the highest reading in six months, from minus 17.5 in September.

A reading above zero indicates factory activity is expanding in the region, which covers eastern Pennsylvania, southern New Jersey and Delaware.

Sales of existing homes dropped 3 percent to an annual rate of 4.91 million units in September, the National Association of Realtors said.

In another report, the Conference Board said its index of leading economic indicators edged up 0.2 percent in September, pointing to continued sluggish growth. Still, it warned that the economy faced a 50 percent chance of recession whereas a month ago it said recession risks were lower than that.

The recent stream of data, including figures on retail sales and trade, suggests that output sped up in the third quarter.

Analysts estimate that gross domestic product grew at an annual pace of 2.3 percent to 2.7 percent, a sharp step up from the second quarter’s tepid 1.3 percent rate.

Article source: http://feeds.nytimes.com/click.phdo?i=bda148201bfcacf1085e120daa47e25d