Earlier recessions already made aware of the fact that young people are the first and the most severely affected by unemployment and economic uncertainty. The Coronavirus economic crisis sadly confirms this. However, this time the European Commission is early in its response to these developments. Still, it will require a significantly larger budget to ensure that the Youth Employment Support initiative will have an impact.
Dramatic situation expected
According to the latest forecast of the Chamber of Labour and the Johannes-Kepler University Linz, the labour market situation for young people in the entire EU will continue to deteriorate. According to the intermediate scenario of this forecast, the number of young people out of work in the EU-27 will increase from 2,8 million to 4,8 million within a year. The youth unemployment rate will increase from 15,1 percent in 2019 to 26,2 percent in 2020; the pessimistic scenario even assumes 30,2 percent. The number of NEETs (young people who are Not in Education, Employment or Training) will increase from 4,7 million to 6,7 million.
EU Youth Guarantee must become more effective
An EU Youth Guarantee was established in 2013, which was to ensure that all young people under the age of 25 receive a good-quality offer of employment, continued education, an apprenticeship or a traineeship within a period of four months of becoming unemployed or leaving formal education. The EU Youth Guarantee was mainly funded by the Youth Employment Initiative and had been furnished with a budget of 6,4 billion euro for the period 2014 - 2020. The intention was to support in particular those regions, where the youth unemployment rate was above 25 percent. In 2015, the budget for the EU Youth Guarantee was increased by 30 percent with additional funding by the European Social Fund (ESF). During the period 2014 – 2020, the Youth Guarantee received funds of 12,7 billion euro from the EU Budget. Even if the objective of the EU Youth Guarantee is a good idea, its implementation and effectiveness has been criticised, in particular because of the insufficient budget. As early as five years back, the actual cost of an EU Youth Guarantee were estimated at 45,4 to 50,4 billion euro per year.
Greater budget necessary
Hence, a new European Youth Guarantee should – in view of the to be expected in rise in youth unemployment – be in a position to make an overall budget of ca. 50 billion euro per year available for implementing measures to support young people in the Member States. In view of the economic and budgetary situation of the Member States, it is vital that the majority will be funded from the EU Budget and that the EU Member States make their contributions in accordance with the impact it has on them and their financial capacities. The proposals of the Commission for the Recovery Plan, integrated in the new MFF, include the idea of a distribution mechanism. The overall budget of 750 billion euro should enable a focus on young people. Based on the REACT-EU Programme (“Recovery Assistance for Cohesion and the Territories of Europe”), an additional budget of 55 billion euro for the period 2021 - 2022 has been planned. Part of this shall also be used for measures to support young unemployed people.
On 1 July 2020, the European Commission presented the “Youth Employment Support a bridge to jobs for the next generation“ initiative, which includes for main points:
- Reactivation and expansion of the European Youth Guarantee: expanding to all persons between 15 and 29 with even greater consideration given to disadvantaged young people
- Support of vocational training and training courses taking diversity and inclusion into account
- Creation of incentives for dual apprenticeships, integrating the social partners
- Additional measures on youth employment support and start-ups
An amount of at least 22 billion euro has been mentioned, which shall come from the European Social Fond Plus and other crisis measures (“Next Generation EU”, REACT-EU Programme). However, taking the experiences of the early Youth Guarantee into consideration, an annual budget of 50 billion euro for the age group 15 – 24 seems to be necessary. Increasing the age limit to 29, as proposed by the European Commission, would mean an appropriate increase.
After the financial crisis 2008, governments took far too long to look at the situation of young people, which created economic uncertainty and poverty risks. This had far-reaching negative consequences for the people affected, the economies, but also for the social cohesion in the Member States. This mistake must not be repeated. What is needed are quick counter measures, both at European and national level. A European Youth Guarantee, which would still be implemented in 2020, could be a successful solution.