A “lost generation”?

Almost a fourth of the EU’s young people cannot find a job, and every second young citizen of Spain and Greece is unemployed. According to Eurostat, youth unemployment in the EU reached 23.1 percent in May this year. The lowest level of youth unemployment is traditionally in Germany (7.5 percent) and the highest is in the crisis-stricken Greece (62.5 percent).

This situation makes Europe raise the alarm. “Europe has spent hundreds of billions of euros rescuing its banks, but we are running the risk of losing a generation of young people,” Martin Schulz, President of the European Parliament told Reuters. Meanwhile, the President of the European Central Bank, Mario Draghi, has urged European governments to solve this problem before it has led to social disturbances.

So it is not a mere coincidence that the problem of youth unemployment was high on the agenda of the summit held on June 27-28 in Brussels. In those two days, 20 heads of EU states and 28 labor ministries’ officials were working out measures to tackle youth unemployment. As the European Commission (EC) told The Day, “to achieve this priority goal, we have launched the Youth Employment Package.” This document advises EU member states to provide guarantees that every young person aged up to 25 be offered a job, a study, or a four-month retraining program to ward off unemployment. It is planned to earmark six billion euros for this purpose. Besides, the European Investment Bank will be recapitalized with an infusion of 10 billion euros to encourage commercial banks to issue more loans to small and medium enterprises (SMEs), especially in the most crisis-hit countries of southern Europe. The point is that SMEs create up to 70 percent of jobs in the EU. The EC noted that special attention would be paid to the creation of jobs in the most promising sectors, such as the “green economy,” health care, information, and communication technologies.

In addition, the European Council has also resolved to launch the European Semester, a cycle of economic and fiscal policy coordination within the EU, as part of the efforts to reform the EU provisions on coordination of the member states’ economic policy aimed at promoting a long-term sustainable growth.

It is good that the European Union is taking general measures to fight youth unemployment. But it is important how this will be done in each member state. The role model here is undoubtedly Germany which can boast the lowest level of youth unemployment. Germany has tried out a dual system of schooling and work experience. German Chancellor Angela Merkel said in an interview with The Guardian: “We in Germany have learned a lot from successfully reducing unemployment by means of structural reform since reunification and we can now bring that experience to bear.” She believes that the jobless young people of Eurozone countries should be mobile and prepared to relocate for the sake of a job. The German politician recalled that when youth unemployment hit her native East Germany, many young people found a job only because they moved to southern Germany, where there was a demand for work.

By contrast with the Germans, the Portuguese would rather live on the unemployment relief than work. The BBC radio reported on the following paradox: even in some resort areas of Portugal with an above-the-average level of unemployment, bars and restaurants cannot find the staff. Even after the introduction of strict austerity measures, unemployment benefits still remain quite generous: “At 65 percent of the pre-unemployment wage, jobseekers get between 419 and 1,048 euros a month for the first half-year” after they had lost the job. Moreover, restaurateurs complain that young people live too long in their parents’ homes and have no need to seek a job.

Rojo Cornejo, a student at the Barcelona School of Business, told The Day that the EU financial policy turned out to be less effective than it was expected, so the professional model which links businesses with universities and students, as is the case in Germany, is indispensable for the rest of Europe.

In the first quarter of this year unemployment in France reached an officially estimated 10.8 percent of the able-bodied population, a 15-year high. So, quite logically, French President Francois Hollande has declared 2013 as Employment Year. Since March 18 this year, France has been under the so-called Generation Contract which calls for an annual 4,000-euro aid package for three years. Te aid is granted to small businesses that employ fewer than 300 people. Enterprises of this kind, which account for 99.5 percent of the total number of French businesses, employ 56 percent of French men and women. This funding will promote recruiting young people aged 15 to 25 (the handicapped aged up to 30) years, while elderly people (aged over 57) will keep their jobs intact. The government expects to sign 500,000 generation contracts by 2017.

In Italy, over 40 percent of young people are officially jobless. According to the National Statistical Directorate (Istat), the overall level of unemployment in Italy reached 12 percent in April, which is record number in the past 36 years. The Mario Monti government carried out the Fornero reform in April 2012, the essence of which lies in reducing the value of full-time jobs by means of a simplified procedure of dismissal and, at the same time, in increasing the value of part-time jobs by means of granting part-time staff the right to social security. Experts believe that, by doing so, the government only speeded up the growth of unemployment and further encouraged part-time employment to enter the gray sector.

The new Prime Minister of Italy, Enrico Letta, has said that high on the list of his Cabinet’s priorities are reduction of taxes on wages, youth employment, and renewed trust in university education. The entrepreneurs who hire young people are promised tax exemptions and subsidies. It is planned to create new jobs in the fields of ICT, nanotechnologies, biomedicine, energy conservation, environmental protection, and aerospace research.

Christopher Lawton, Senior Research Fellow at the UK Economic Strategy Research Bureau, told The Day that, to fight youth unemployment, the British government had launched a contract program for young specialists, aimed at providing opportunities for people aged 18 to 24. About 1.5 billion dollars has been earmarked for this project.

The problem of youth unemployment also exists in Ukraine. Officially, the level of youth unemployment in this country is more than 17 percent. Natalia Korolevska, Minister for Social Policies, has assured the employers who will provide the first job that the state will guarantee them privileges in paying the single social fee. Meanwhile, Dmytro Firtash, chairman of the Federation of Ukrainian Employers, said at a meeting with entrepreneurs that youth unemployment would be reduced if demand for specialists were formed by employers.

Aliona Hetmanchuk, director of the Institute of World Economics, believes that Ukrainian and European young people are alike in that they seek easy ways to grow rich. “It is in vogue now to get a good employment through personal connections and show oneself exclusively by means of some creative ideas,” the expert says. “These things are, of course, necessary, but if you are not prepared to work hard, gain experience, and improve yourself every day, this will end sooner or later. The ideology of money and wealth, so deeply inherent in youth, is a road to nowhere.”