EU measures to tackle youth unemployment
European Commission - MEMO/14/466 08/07/2014
Brussels, 8 July 2014
EU measures to tackle youth unemployment
What is the current situation?
The situation is clearly unacceptable: this is why the Commission has been working with Member States to tackle youth unemployment.
What is the EU doing?
Investing in youth: the Youth Guarantee
The Youth Guarantee seeks to ensure that Member States make a good-quality offer to all young people up to age 25 a of a job, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed. The Youth Guarantee is one of the most crucial and urgent structural reforms that Member States must introduce to address youth unemployment and inactivity, and to improve school to work transitions.
The logic of the Youth Guarantee is very simple – to ensure that no young person is left unemployed or inactive for longer than 4 months. The Youth Guarantee should enable young people to find a job suited to their education, skills and experience or to acquire the education, skills and experience that are directly relevant to increasing their chances of finding a job in the future.
The Youth Guarantee is based on experience in Austria and Finland that show that investing in young people pays off. For example, the Finnish youth guarantee resulted in a reduction in unemployment amongst young people, with 83.5% successfully allocated a job, traineeship, apprenticeship or further education within three months of registering. A Youth Guarantee Recommendation was formally adopted by the EU's Council of Ministers on 22 April 2013 (see MEMO/13/152) on the basis of a proposal made by the Commission in December 2012 (see IP/12/1311 and MEMO/12/938) and was endorsed by the June 2013 European Council.
The implementation of national Youth Guarantee schemes is monitored by the Commission within the framework of the European Semester (see below).
How does it work?
For many Member States, the implementation of the Youth Guarantee requires structural reforms. For example, public employment services must be able to ensure individual young people receive appropriate personalised advice on job, education and training opportunities most relevant to their own situation, resulting in a tailor-made, concrete offer within four months. The Decision to help public employment services to maximise their effectiveness through closer cooperation, proposed by the Commission in June 2013 and adopted in May 2014, can play a useful role here (see IP/13/544 and IP/14/545).
Another area requiring structural reforms concerns apprenticeships and vocational education and training systems. Member States must ensure that they give young people the skills that employers are looking for (see below).
The Youth Guarantee does have a fiscal cost for Member States (the International Labour Organisation has estimated the cost of setting up Youth Guarantees in the Eurozone at €21 billion per year). However, the costs of NOT acting are far higher. The European Foundation for Living and Working Conditions (Eurofound) has estimated the economic loss in the EU of having millions of young people out of work or education or training at over €150 billion in 2011 (1.2% of EU GDP), in terms of benefits paid out and lost output.
This is in addition to the long-term costs of unemployment to the economy, to society and to the individuals concerned, such as increased risk of future unemployment and poverty. The cost of doing nothing is therefore very high: the Youth Guarantee scheme is an investment. For the Commission, this is crucial expenditure for the EU to preserve its future growth potential. Significant EU financial support can help - most notably from the European Social Fund and in the context of the Youth Employment Initiative (see below). But to make the Youth Guarantee a reality, Member States also need to prioritise youth employment measures in their national budgets.
How does the European Social Fund support implementation of the Youth Guarantee?
By far the most important source of EU money to support implementation of the Youth Guarantee and other measures to tackle youth unemployment is the European Social Fund (ESF) which provides more than €10 billion every year in the 2014-2020 period. It is important that Member States devote a significant proportion of their European Social Fund allocations for 2014-20 to implementing the Youth Guarantee, and the various reforms and measures needed to support it.
The Youth Guarantee is a new concept and in many Member States it requires the implementation of significant structural reforms to tackle youth unemployment. Public employment services must be strengthened, education and training systems reformed, partnerships for reaching out to inactive young people not registered with an employment service reinforced, and the delivery of quality offers improved. Such measures take time to be implemented.
Examples of Youth Guarantee activities/interventions that can be supported by the ESF:
How does the Youth Employment Initiative support delivery of the Youth Guarantee?
To top-up available EU financial support to the regions where individuals struggle most with youth unemployment and inactivity, the Council and the European Parliament agreed to create a dedicated Youth Employment Initiative (YEI). YEI support concentrates on regions experiencing youth unemployment rates above 25% and on young people not in employment, education or training (NEETs). This ensures that in parts of Europe where the challenges are most acute the level of support per young person is sufficient to make a real difference.
The YEI is available for Member State measures directly aimed at young individuals – especially the NEETs - aged under 25 years, and where the Member States consider relevant, also those aged under 30 years. In this case however Member States should allocate additional ESF resources to these measures in order to ensure equal levels of support per person.
The YEI funding comprises €3 billion from a specific new EU budget line dedicated to youth employment matched by at least €3 billion from the European Social Fund national allocations. This amplifies the support provided by the European Social Fund for the implementation of the Youth Guarantee by funding activities to directly help young people not in employment, education or training (NEETs). The Youth Employment Initiative can be used to support activities including first job experience, provision of traineeships and apprenticeships, or further education and training. It could or example support business start-up support for young entrepreneurs, second-chance programmes for early school leavers and targeted wage and recruitment subsidies. The YEI is programmed as part of the ESF 2014-20.
Member States will have to complement the YEI assistance with substantial additional ESF and national investments in structural reforms to modernise employment, social and education services for young persons, and by improving education access, quality and links to labour market demand.
*Member States have to match these amounts by at least the same amounts from their European Social Fund allocation.
When are these funds available to Member States?
Now. The €6 billion under the Youth Employment Initiative is frontloaded so that all this money is committed in 2014 and 2015 rather than over the seven year period of the Multiannual Financial Framework.
The Commission can reimburse Member States for spending on eligible measures as soon as they have submitted a clear outline of what the funds will be spent on. Such outlines must be submitted by the relevant Member State and agreed by the Commission. This is the condition agreed the EU's Council of Ministers and the European Parliament and it applies to spending on the 6 billion euros Youth Employment Initiative as it does for all other EU funding (including the European Social Fund).
Note that Member States should also be using their own money. In its Annual Growth Survey 2013 and 2014, the Commission stressed that, in the context of growth-friendly fiscal consolidation, Member States should pay particular attention to maintaining or reinforcing the coverage and effectiveness of employment services, active labour market policies and Youth Guarantee schemes.
It is important to underline that Member States (such as Bulgaria, Croatia, Ireland, Poland and Sweden) are already putting in place projects to implement the Youth Guarantee using their own money and, where they are due to receive EU money, without waiting to be reimbursed by the Commission.
The Commission has consistently encouraged Member States to submit their youth employment related programmes as a matter of priority and has reviewed Member States' Youth Guarantee implementation plans as part of the European Semester.
France and Italy decided to dedicate an Operational Programme to using YEI money for youth employment, which allows for fast-track adoption. The French programme was already adopted on 3 June after very shortened procedures (see IP/14/622) and the draft Italian programme is in the final stages of discussions with the Commission. Once both programmes have been approved, more than 25% of YEI money will have been committed.
Poland, Portugal and the UK are other major recipients of YEI. These three Member States have formally submitted their ESF Operational Programmes (that also programme the spending of YEI resources), and the Commission has already provided its feedback to the three Member States.
Once Member States' spending programmes are adopted, financing from the YEI can be backdated to September 2013.
Member States may in the meantime consider making use of bridge financing as proposed by the EIB in its recent youth initiative.
The Commission is continuously working with Member States to speed the process up and has provided extensive support to implement the Youth Guarantee. The seminar organised by the Commission in Brussels on 11th July (see IP/14/784) will be another opportunity to help Member States to accelerate and improve implementation of the measures supported by the Youth Employment Initiative.
Country Specific Recommendations
The Country Specific Recommendations for 2014, proposed by the Commission and endorsed by the 26-27 June European Council, as part of the so-called European Semester, the EU's yearly economic policy-making cycle, urged 18 Member States to take urgent steps to combat youth unemployment by improving transitions from school to work.
The Commission proposed specific recommendations on implementation of the Youth Guarantee to 8 countries (Spain, Italy, Slovakia, Croatia, Portugal, Poland, Bulgaria and Ireland). Full details of the Commission's review of all Member States' implementation of the Youth Guarantee as part of the European Semester are available here.
These steps include active labour market policies, reinforcement of public employment services, support for training and apprenticeship schemes, combating early school leaving and setting up outreach strategies, all of which can contribute to the delivery of the Youth Guarantee. The Recommendations also urged Member States to look at ways to tackle the segmentation of labour markets where young people are much more vulnerable.
How to improve apprenticeships and traineeships
Effective vocational education and training systems, in particular those that include a strong work-based learning component, facilitate the transition of young people from education to work.
To complement the Youth Guarantee, the Commission has launched two specific initiatives to help young people in this transition:
The Commission also helps young people to find a job by facilitating labour mobility, in particular by making young people aware of job opportunities in other EU countries. EURES, the pan European job search network, gives access to nearly 2 million job vacancies. The portal is being modernised to become a genuine EU-wide self-service employment tool, and the Commission has proposed new rules to strengthen EURES services to job-seekers and employers (IP/14/26, MEMO/14/22, MEMO/14/23).
The Commission's Your first EURES job mobility scheme is a pilot project to test the effectiveness of tailor-made services combined with financial support to help young people aged 18-30 to find a job in other Member States (minimum 6 months contract in accordance with national labour law). It provides information, a job search function, recruitment and job placement support. It finances language courses or other training needs and travel expenses for young job applicants (for job interviews and job settlement in other EU countries). It also provides a contribution to an integration programme in the case of recruitment by an SME. Since 2013, the scheme has been extended to traineeship and apprenticeship placements.
The Programme for Employment and Social Innovation (EaSI) provides additional direct funding of between €5 and €9 million a year to support this type of targeted scheme (see IP/13/1212). Small-scale initiatives will be developed to deal with vacancies in certain occupations, sectors or Member States through tailor-made recruitment campaigns, facilitating intra-EU job matching. Youth employment will remain a key priority.
In view of the scale of the challenge the onus will be on Member States – working through their Employment Services with the possibility of using ESF funding – and employers to step up their financial support for employment through intra-EU mobility, drawing on the experience of Your First EURES Job.