The latest figures published by the Statistical Office of the European Communities Eurostat are speaking volumes: almost 26 million people were unemployed in December 2012. In particular the situation for young people is devastating in many countries – in Greece, youth unemployment has now reached 57.6 percent. Since yesterday, 7 February 2013, the EU heads of government have restarted their negotiations on the future EU budget for the period 2014 to 2020. There has not been a result yet, but one thing is already clear: funds for measures against the army of unemployed are few and far between.
Having said that: at a payment volume of about 133 billion Euros (in 2013) or 0.99 percent of the gross domestic product (GDP) respectively, the EU budget is very small. On Friday morning the heads of government reached an agreement that the volume of payments should be 908 billion Euros between 2014-2020. This is on average less than 130 billion Euros a year, and means a cut of the volume in real terms. In comparison: the national budgets of the EU Member States combined have a volume of 6,300 billion Euros (per 2011) or about 50 percent of GDP respectively. Further basic points to the EU-budget, especially concerning the volume for the different policy areas is still being negotiated.

Most funds are still allocated to the agricultural sector

Whether one calls the EU budget too big as some of the heads of government criticised or too small greatly depends on the way of looking at things: in 2011, for example, 56.2 billion Euros, almost 44 percent of the entire EU budget fund, were spent on “Natural Resources” – i.e. on the Common Agricultural Policy, to be more precise. Even though agricultural policy is the only mutualized sector in the EU budget, the question needs to be asked whether it is still in keeping with the times and future-oriented if a single economic sector is financed by almost half of the entire EU budget. In order to give economies new growth impulses, it would be more helpful to focus on forward-looking investment plans and to initialise programmes for jobseekers at the same time.

In spite of record unemployment less than 0.9 promille of EU GDPs for the European Social Fund

In 2011, 9.5 billion Euros, about 7.4 percent of the EU budget volume were spent within the scope of the European Social Fund (ESF). This equals not even a fifth of what the 7 million farmers in the European Union received in subsidies. Looking at the current EU budget negotiations, there does not seem any change of strategy on the horizon: The negotiations to the multiannual financial framework beginning in 2014 are still going on, but it seems to be sure that still a major part of the funds will be allocated to the agricultural sector. The EU Budget does almost not reflect the fact that the number of people out of work since the crisis began, has risen from 17.7 million in 2008 (January 2008) to 25.9 million (December 2012). Even though the funds of the ESF have been slightly increased in the Commission proposal, the new ESF, however, shall also include food aid, which so far has been part of agriculture. Apart from that, the ESF too will be affected by cuts, which are currently being discussed in the European Council. How small the funding allocated to the European Social Fund really is becomes clear if one views the in the Commissions’ proposal mentioned amount of 84 billion Euro for seven years in relation to the EU gross domestic product (about 13,000 billion Euros): this shows that less than 0.9 promille of the EU GDP remain for the European Social Fund. Even if the heads of state and government would react to the appeal to show more commitment in respect of the young unemployed, the now mentioned six billion Euros extra for improving youth employment would be at best a drop in the ocean. Even though a large part of employment policy is directly financed by national budgets, such low allocation of funds at EU level is definitely a move in the wrong direction and demonstrates that social and employment policy at EU level has been and still is almost completely ignored and that the competent EU decision-makers consider it to be no more than a footnote.

The decision of the EU heads of government is however not the last hurdle. The European Parliament also has to give its approval. Influential MEPs already criticised the negotiations in the Council. Should the European Parliament reject the decision by the Council, the heads of government will be back to square one.