Over 5 million people between 15 and 25 years of age are unemployed in the European Union, and youth unemployment trends are worsening in many parts of the eurozone. That joblessness amounts to around $150 billion annually in lost wages and spending as young Europeans remain unable to purchase basic services and goods such as food, housing, and health care.
A quarter of young Europeans cannot find a job, according to a European Commission study on youth unemployment. That number is twice as high in Greece and Spain, where youth unemployment has surpassed 60% in some areas.
Other marginal EU countries had lower youth unemployment rates, with Italy at 42.9%, Croatia at 41.5%, Portugal at 35.5%, and Cyprus at 35.1%.
Cyprus made headlines in 2013 when, amidst a banking crisis, the euro member state announced over the weekend that the government would take 47.5% of Cypriots’ savings in a so-called “bail-in” in which the government confiscated a portion of savers’ assets.
To prevent a bank run, Cyprus banks remained closed as the government confiscated citizens’ assets, but branches in London, where many wealthy billionaires who hold Cypriot accounts, have part-time residences.
More recently, Italy has drawn greater attention amidst a triple-dip recession that some economists are calling a full depression. While Greek and Spanish economies are showing anemic recovery, many economists are dismissing the improvement as a “weak comp” phenomenon, in which the economies have shrank so much that growth becomes virtually inevitable.
EU Recommends Youth Guarantee
To combat persistent high youth unemployment, the European Union has suggested a new program in which member states would guarantee to college graduates a “good-quality job suited to their education, skills and experience”. The program would ensure not only that young people are guaranteed employment if they want it, but also that economies would recover from their low or negative growth by offering young people the opportunity to leverage their incomes to buy goods and services.
However, the program has yet to have any meaningful affect since it has not been acted upon, although the EU has approved it. While the program was first formally adopted by the EU’s Council of Ministers in April 2013, few governments have incorporated the proposal into their legislature. In Spain, the law was interpreted to offer free post-college training courses to young people, which has cost the government 42 million euros, according to the European Commission.
Other nations adopted “small scale pilot projects” between August and December 2013. In Ireland, a thousand people were given a local apprenticeship as part of the program.
Job Vacancies Stagnate
Despite the European Commission’s efforts, unemployment rates for young people have remained high. Equally distressing, job vacancies have remained roughly stable throughout the European Union, at 1.6% for the 28 member states in the first half of 2014, equal to the beginning of 2011 and only slightly higher than the bottom in late 2009, when vacancies fell to 1.2%. Analysts expect demand for labor to remain low in the European Union for as long as aggregate demand is suppressed by high youth unemployment.
The only European nations to buck the high unemployment trend are so-called tax haven states such as Monaco, Liechtenstein, and Luxembourg, where unemployment rates have remained far below the high levels seen elsewhere in the eurozone.