European leaders yesterday warned that youth unemployment – which stands at up to 59% in some countries – could lead to a continent-wide "catastrophe" and widespread social unrest aimed at member state governments.
The French, German and Italian governments yesterday joined together to launch initiatives to "rescue an entire generation" who fear they will never find jobs.
More than 7.5m young Europeans aged between 15-24 are not employed or in education or training, according to European Union data. The rate of youth unemployment is more than double that of adults, and more than half of young people in Greece (59%) and Spain (55%) are unemployed. François Hollande, the French president, dubbed them the "post-crisis generation", who will "for ever after, be holding today's governments responsible for their plight".
"Remember the postwar generation, my generation. Europe showed us and gave us the support we needed, the hope we cherished. The hopes that we could get a job after finishing school, and succeed in life," he said at conference in Paris. "Can we be responsible for depriving today's young generation of this kind of hope?
"Imagine all of the hatred, the anger. We're talking about a complete breakdown of identifying with Europe.
"What's really at stake here is, not just 'Let's punish those in power'. No. Citizens are turning their backs on Europe and the construction of the European project. Germany's finance minister Wolfgang Schäeuble warned that unless Europe tackles youth employment, which stands at 23.5% across all European Union countries, the continent "will lose the battle for Europe's unity". Italy's labour minister Enrico Giovanni said European leaders needed to work together to "rescue an entire generation of people who are scared [they will never find work]. "We have the best ever educated generation in this continent, and we are putting them on hold," he said. The UK department for work and pensions and the Treasury were unable to say why Britain, which has a 20.7% rate of youth unemployment, was not represented at the conference in Paris on Tuesday. Stephen Timms, shadow employment minister, attacked the coalition for remaining "utterly silent on youth unemployment".
"This government has totally failed to tackle Britain's youth jobs crisis. This government must stop sitting on the sidelines and take the urgent action we need to get young people back to work."
Hollande outlined a series of measures to tackle the problem, including a "youth guarantee" to promise everyone under 25 a job or further education or training.
The plan, which has already been discussed by the European Commission, will be supported by €6bn of EU cash over the next five years. Another €16bn in European structural funds is also being made available for youth employment projects.
Herman Van Rompuy, European Council president, pledged to put the "fight against unemployment high on our agenda" at the next EU summit in June. "We must rise to the expectations of the millions of young people who expect political action," he said.
The commission estimates youth joblessness costs the EU €153bn in unemployment benefit, lost productivity and lost tax revenue.
"In addition, for young people themselves, being unemployed at a young age can have a long-lasting negative 'scarring effect'," the commission said. "These young people face not only higher risks of future unemployment, but also higher risks of exclusion, of poverty and of health problems." The European ministers, who will meet with German chancellor Angela Merkel to discuss the youth unemployment crisis in July, said small and medium-sized businesses (SMEs) will form a central plank of the plans. SMEs traditionally employ the vast majority of young people, but have complained they haven't been able to borrow enough money to grow since the financial crisis struck in 2008. Ursula von der Leyen, Germany's labour minister, said: "Many SMEs, which are the backbone of our economies, are ready to produce but need capital, or they have to pay exorbitant borrowing rates." The minsters are working on establishing a special credit line for small and medium-sized businesses from the European Investment Bank (EIB), which will have a €70bn lending capacity this year. However, Werner Hoyer, head of the EIB, warned minister not have "expectations completely over the horizon".
"Let's be honest, there is no quick fix, there is no grand plan," he admitted. Schäeuble warned that European welfare standards should not be jeopardised in order to cut the youth unemployment figures. "We would have revolution, not tomorrow, but on the very same day," he warned. Germany and Austria have the lowest rate of youth unemployment, with just 8% not in work, education or training.
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The subway workers were on strike in Lisbon on Thursday. Next month it will be the turn of the teachers. Portugal's blue-collar trade unions are gearing up to bring almost a million workers out later in the summer as the country's protest against austerity intensifies.
It is a similar story across large parts of the eurozone. There have been mass protests in Madrid, Dublin and Athens against policies designed to reduce budget deficits and bring about economic reform. Now, after six successive quarters of recession, it seems the protesters have something to cheer about. Austerity in the eurozone is in retreat.
The European commission has told six countries – France, Spain, Portugal, Poland, the Netherlands and Slovenia – that they will have up to two extra years to put their public finances in order. In truth Brussels had little choice, because weak growth had reduced tax revenues and made it impossible for exacting budget targets to be met.
What's more, the commission found that it was one thing to dictate terms to the small countries on the periphery of the eurozone, but quite another to lay down the law to France, where François Hollande's loss of popularity in his first year in office surpasses that of any previous president.
An exasperated Draghi perceives Weidmann's constant admonitions simply as a "Nein zu allem" strategy. German for "no to everything," it's one of the few German expressions the ECB president has mastered since moving to Frankfurt, where the ECB is headquartered.
Draghi feels misunderstood in his new home, both by Weidmann and by a majority of Germans. For Draghi, Germany's staunch insistence on principles means putting the euro zone on the line. For example, his fellow monetary watchdogs in the ECB tower fear that if the Federal Constitutional Court in Karlsruhe declares the bond program to be unlawful, the relative calm in the financial markets could end very quickly.
This is why Draghi has often said "yes" since assuming the ECB presidency in November 2011: yes to enormous amounts of liquidity for euro-zone banks, yes to the purchase of government debt and yes to the idea that going forward, the ECB should supervise the 6,000 banks in the euro zone.
For Draghi, the ECB is not just a central bank, but apparently also a massive think tank focused generally on euro rescue policy. The organization must sometimes act as an "intellectual catalyst," Draghi said in an opaque statement to a confidant.
Thousands of Blockupy protesters continue to circle the European Centrla Bank's headquarters in Frankfurt,
Reueters estimates that there are 2,500 people -- while the organisation itself said there are 3,000. People are carrying signs with slogans such as "humanity before profit".
They have been met by armed police wearing helmets and riot gear, accompanied by Alsatians.
Here's more from Reuters:
Trucks with water cannons stood by and a helicopter hovered overheard.
At least 20 protesters held up inflatable mattresses with the slogan "War Starts Here" written on them. Police said some protesters had thrown stones and there were some clashes at the barricades, but the protest was generally peaceful so far.
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