Attempt at a “Youth Guarantee”

Improving youth unemployment has always been a priority for German Chancellor Angela Merkel’s administration. On July 3, 2013, the Chancellor called a summit with 18 fellow European leaders and 28 labor ministers to discuss the issue, and the result was a promise of a “youth guarantee” that would pump €8 billion toward programs and funds to assist with the training and employment of youth. A new Erasmus-like study-abroad program will encourage students to get overseas experience, and vocational training, apprenticeships, and traineeships will be encouraged.

Germany’s youth unemployment rate in 2012 was 7.9 percent while in Greece and Spain it was at 57.9 percent and 55.2 percent, respectively. Chancellor Merkel’s push to reduce the European rate is a touching gesture given these circumstances, but criticism is pouring in domestically and internationally. Right across from the summit was an “alternative” youth summit organized by Germany’s trade union federation (DGB) and its French counterpart, hosting trade unionists who came to protest from across the continent. Merkel’s German Social Democrat challenger, Peer Steinbrück, claimed that almost three times the proposed budget would be necessary for this project to be effective.

What The Economist suggests is not only being more generous with EU funds and a strong focus on vocational training, but to allow for a “more flexible and less segmented labor market” to encourage firms to hire youth, especially in the southern European countries. It also cited the positive effect of Italy’s cut in payroll taxes on the youth. European companies must be willing to offer vocational training and encourage the younger generation to join their teams. No doubt Chancellor Merkel’s initiative was a great start, but it pointed out that there is still a very long way to go.