Europe faces uphill battle over youth unemployment

European Union leaders will hold a summit later this month to tackle the growing scourge of youth unemployment. But there’s a problem: the 6 billion euros they want to use to get to grips with the issue aren’t yet available.

Leaders agreed in February that they would set aside the money from the EU’s next long-term budget, which runs from 2014-2020, with the funds going towards a “youth guarantee” of training or a job within months of education ending.

But the European Parliament, which must approve the budget, has not yet done so, and there’s a good chance it won’t by the time EU leaders meet in Brussels on June 27-28.

“I’m not overwhelmingly optimistic,” was how one EU official responded when asked about the prospect of parliamentary approval during discussions on Tuesday and Wednesday.

While six billion euros is no small amount, diplomats acknowledge it’s largely a symbolic figure that won’t go far in tackling a vast and deepening problem. Yet it’s not the only niggle surrounding the youth scheme, which targets EU regions where youth unemployment exceeds 25 percent.

When the plans were being drawn up, most policymakers were focused on tackling youth unemployment in the southern European countries that have been hit hardest by the debt and economic crisis: Greece, Spain, Italy and Portugal.

Figures show that joblessness among people under the age of 25 exceeds 50 percent in parts of Greece and Spain, a blight that has given rise to fears of a “lost generation” of youth.

But a closer examination of the figures from Eurostat, the EU’s statistics agency, shows that youth unemployment as a proportion of total unemployment is a bigger problem in many northern European countries than it is in the south.

While overall unemployment may be lower in Scandinavia – for example Sweden’s jobless rate is 8.7 percent, well below the EU average of 11 percent – the bulk of those who are without jobs in Sweden (38 percent) are people aged under 25.

The situation is similar in Finland (30 percent), Denmark (29 percent) and Britain (38 percent). By contrast, youth make up only 14 percent of all those who are out of work in Greece, 16 percent in Spain and 19 percent in Portugal. Across the EU as a whole, the average is 22 percent.

“If you have a decent education, you are likely to find a good job,” Ola Pettersson, the chief economist of the Swedish Trade Union Confederation, said of the situation in Sweden.

“But the young with weak educational backgrounds simply aren’t up for grabs in the Swedish job market.”

A report published by the Friedrich Ebert Foundation in November 2012 showed that 15-20 percent of young Scandinavians fail to finish secondary school on time.

That creates “major problem in the transition from school to working life” the report said, highlighting the very issue that the EU’s youth guarantee scheme is designed to address.

What’s more, psychological studies show that stubborn unemployment among young people leads to frustration, a sense of isolation and resentment. For that reason, it hasn’t surprised some that Sweden has experienced riots in recent weeks.

“The problem in Sweden is that the youths have born the burden, and when they see that, social unrest happens,” said David Blanchflower, an economics professor at Dartmouth College and a former member of Britain’s monetary policy committee.

Economists have latched on to the youth unemployment discrepancy, suggesting that EU policymakers may be tilting at the wrong windmill if they look to resolve problems in Spain and Greece when the situation is just as bad in the Nordic states.

“In those countries where the problem makes the biggest headlines (Greece and Spain), youth unemployment accounts for less than a quarter of overall unemployment,” Daniel Gros, the director of the Center for European Policy Studies in Brussels, wrote in a commentary for Project Syndicate.

“By contrast, youth unemployment contributes relatively much more (about 40 percent) to overall unemployment in countries like Sweden and the UK. One could argue that the latter two should worry about their youth unemployment more than Spain or Greece should.” [Reuters]