European Commission
MEMO
Brussels, 5 December 2012
Youth employment: Commission proposes package of measures – frequently asked questions
(see also IP/12/1311)
Why has the Commission proposed a Youth Employment Package?
The Package has been proposed because the youth unemployment rate (under 25 years old) in the EU is more than twice as high as the rate for adults in most Member States (22.7 % as against 9.2 % in the third quarter of 2012) and has dramatically increased over the last four years.
The percentage of young people under 25 who are neither in employment nor in education or training (so-called NEETs) is rising. In 2011, 12.9 % of youth were NEETs, 2 percentage points more than four years earlier and corresponding to 7.5 million young people.
The dramatic situation of youth unemployment results from the economic crisis, but also shows structural problems, and has an immediate economic cost, in terms of benefits paid out, tax revenue and earnings foregone , has been estimated by Eurofound at over €150 billion per year, or 1.2% of EU GDP. The cost for some countries, such as Bulgaria, Cyprus, Greece, Hungary, Ireland, Italy, Latvia and Poland, is 2% or more of their GDP.
Young people not in employment, education or training (NEET) - EU Member States, 2008, 2010 and 2011(Source: Eurostat,Labour Force Survey)
Long-term youth unemployment is on the rise: on average, 30.1% of the young unemployed have been jobless for more than 12 months. The long-term unemployment rate increased by 3.7 percentage points (to 7.3 % of the young labour force) between 2008 and 2012, compared with a 1.8 point increase for adults (to 4.3 %). At the same time, overall employment rates for young people (15-24) fell by almost five percentage points over the last four years (from 37.3 % to 32.8 %) — three times as much as for adults (25-64).
Additionally there are significant differences between Member States in terms of their youth unemployment rates and their measures to tackle them.
What is in the Youth Employment Package?
The Youth Employment Package addresses a number of problems affecting youth employment and proposes remedies and EU-level actions:
Problem / Possible Remedy / EU-level Tools/Actions.
Young people, particularly from disadvantaged groups, dropping out of education or work; rising long-term unemployment and inactivity / Set up Youth Guarantee schemes; use ESF funding effectively in their implementation / The Commission is proposing a Council Recommendation on Establishing a Youth Guarantee
Difficult school-to-work transitions / Increase the supply of quality traineeships and apprenticeships / The Commission is launching a second stage social partner consultation on a Quality Framework for Traineeships
The Commission will set up a European Alliance for Apprenticeships
Substantial number of vacancies coexists with high unemployment rates, growing skills and geographical mismatches / Reduce obstacles to mobility to allow companies to recruit workers, apprentices and trainees from other EU countries / The Commission will develop an integrated mobility set for young people(EURES)
1. Youth Guarantee
What is a Youth Guarantee?
The Youth Guarantee is a fully efficient tool developed in Finland and Austriathat ensures that young people receive a good quality offer of employment, continued education, an apprenticeship or a traineeship within a certain time after having left school or become unemployed.
The Commission has developed a comprehensive Youth Guarantee to be financially supported by the European Social Fund and to be integrated in employment policies of Member States. As outlined by the Commission, the Youth Guarantee should be activated for young people within four months of leaving formal education or becoming unemployed.
Why does the Commission think a Youth Guarantee is effective?
The Youth Guarantee’s main objective is to ensure smoother transitions from school to work and requires that all concerned stakeholders are engaging in strong partnerships to deliver such schemes. The Youth Guarantee will help to reduce the current number of NEETs and prevent more young people from falling into this category. The comprehensive Youth Guarantee designed by Finland is a good example of this. A first evaluation recently published by Eurofound shows that 83.5% of young job seekers received a successful intervention within three months of registering as unemployed in 2011. The Finnish youth guarantee notably accelerated the pace at which personalised plans were drawn up, and had resulted in a reduction in unemployment (leading either to employment or further training). Eurofound also comments on the Swedish "job guarantee scheme": 68% of all participants below the age of 25 had some sort of employment 90 days after they completed a New-Start-Job, indicating that the reform is an effective door-opener into the labour market.
Besides the Finnish and the Swedish cases, a variety of initiatives exist in other Member Statesthat would support the success of a fully implemented Youth Guarantee. An overview of these measures is compiled in the Staff Working Document accompanying the proposal for a Council recommendation.
What will be the cost of putting in place a Youth Guarantee?
A Youth Guarantee has a fiscal cost for Member States, but this cost is much lower than the cost of inaction.
First, the cost depends on national circumstances: it will be lower in Member States where supporting measures are well developed (e.g. well-trained Public Employment Service (PES) staff to address young people’s needs). Second, it depends on the way in which the scheme is set up and implemented. Third, it will be greater in countries with high rates of NEETs or of youth unemployment. .
In July 2012, the ILO estimated that the total cost for establishing Youth Guarantee schemes in the eurozone would stand at 0.45% of the eurozone's GDP, or €21 bn. The ILO analysis is based on the Swedish model of "special job-search support", estimated to have an annual cost of €6,000 per unemployed young person plus administrative costs (in terms of resources needed for Public Employment Services to serve the programme) at €600 per participant.
However, these costs should be compared with the costs of unemployment, inactivity and lost productivity. The costs of benefits paid out to unemployed young people, foregone earnings and taxes , are estimated by Eurofound to be the equivalent of 1.21 % of GDP, i.e. an annual loss of €153 billion for the EU. In addition, for young people themselves, being unemployed at a young age can have a long-lasting negative ‘scarring effect’.
These young people face not only higher risks of future unemployment, but also higher risks of exclusion, of poverty and of health problems.
Further information on the cost-benefits of the Youth Guarantee can be found in the Staff Working Document accompanying the Proposal for a Council Recommendation.
Why is the European Commission proposing a Council Recommendation?
So as to give Member States a clear benchmark and precise guidelines for establishing their own Youth Guarantee scheme, that will be effective in helping young people to make a successful transition from school to work and that will also enable Member States to make best use of Cohesion Funds, and in particular of the European Social Fund, to support the scheme.
The proposal recognises that different situations in individual Member States (or at regional or local level) could lead to differences in how the scheme would be set up and implemented.
The implementation of the recommendation will be monitored by the Commission, as well as the results on the ground.
Moreover, the implementation of Youth Guarantee schemes in individual Member States has been integrated in the Commission policy guidance to Member States in the AGS 2013. Implementation will therefore also be monitored thgh the European Semester and possibly addressed through Country Specific Recommendations.
How would Member States be able to put in place the Youth Guarantee given their different situations and limited fiscal room for manoeuvre?
First, the proposal for a Council Recommendation recognises that Youth Guarantee schemes need to take into account the diversity and different starting points of the Member States as regards their levels of youth unemployment, institutional set-up and capacity of the various labour market players. It also recognises that supportive measures should be geared to national, regional and local circumstances.
Second, the Commission considers that a Youth Guarantee would generate positive returns on Member States' economic situation in the long run and therefore constitute an investment, in the same way as education. In the 2013 Annual Growth Survey (see IP/12/1274) the Commission considers that investments in education should be prioritised and strengthened, while ensuring the efficiency of such expenditure. The 2013 Annual Growth Survey also explicitly indicates that particular attention should also be paid by Member States to maintaining or reinforcing the coverage and effectiveness of employment services and active labour market policies, such as Youth Guarantee schemes.
Third, not all measures are expensive in terms of public expenditure. Building up partnership-based approaches for example does not require large budgets, but would significantly contribute towards the success of the Youth Guarantee.
How would EU funding support Youth Guarantees?
The Youth Guarantee can be supported by EU Structural Funds and in particular the European Social Fund.
Examples of Youth Guarantee activities/interventions that can be supported by the ESF
Measures / Specific examples of activities/interventions that can be supported by the ESFOutreach strategies and focal points
[YG rec 8-9] / School visits by PES
Training sessions for teachers by PES
Development of specialised youth services as part of PES or contracted private providers
Distribution of printed material at youth centres or youth events
Use of internet and social media
Data gathering systems
Road-shows
Provide individual action planning
[YG rec 10] / PES staff training
Contract with specialised partners
Offer early school leavers and low-skilled young people routes to re-enter education and training or second-chance education programmes, address skills mismatches and improve digital skills
[YG rec 11-13] / Training and second chance programmes
Language training provision
Counselling and extra teaching support to keep or bring youth back into education or training
Support to at-risk youth in acquisition of relevant qualifications and the completion of upper secondary qualification
Work-based learning and apprenticeships
Provide digital skills training
Training vouchers
Encourage schools and employment services to promote and provide continued guidance on entrepreneurship and self-employment for young people.
[YG rec 14] / Training sessions of employment services’ staff and teachers
Development and implementation of entrepreneurship courses in secondary education
Training sessions for unemployed young people
Use targeted and well-designed wage and recruitment subsidies to encourage employers to provide young people with an apprenticeship or a job placement, and particularly for those furthest from the labour market.[YG rec 17] / Hiring credits targeted at net new hiring of young people via jobs as well as apprenticeships (ESF support for the subsidies credits should be accompanied by activation measures – such as practical training, etc.)
Promote employment/labour mobility by making young people aware of job offers, traineeships and apprenticeships and available support in different areas and provide adequate support for those who have moved
[YG rec 18] / Operation of EURES points (ESF support to EURES focuses on recruitment and related information, advice and guidance services at national and cross border level)
Awareness-raising campaigns
Support to voluntary organisations providing mentors
Support to youth organisations reaching out to migrant young workers
Ensure greater availability of start-up support services
[YG rec 19] / Cooperation between employment services, business support and finance providers (e.g. regional employment fairs and networking events)
SME start-up support
Self-employment support
Training in business skills for e.g. for unemployed persons, accompanied by entrepreneurship grants
Enhance mechanisms for supporting young people who drop out from activation schemes and no longer access benefits
[YG rec 20] / Support to youth organisations and youth services
Cooperate with other organisations that are in contact with the young persons
Establish tracking systems
Support to employment and school career support services
Monitor and evaluate all actions and programmes contributing towards a Youth Guarantee, so that more evidence-based policies and interventions can be developed on the basis of what works, where and why[YG rec 23] / Identify cost-effective initiatives
Use controlled trials
Set up centres for analysis
Developing policy models, pilot actions, testing and mainstreaming of policies (social innovation and experimentation)
Promote mutual learning activities at national, regional and local level between all parties fighting youth unemployment in order to improve design and delivery of future Youth Guarantee schemes.
[YG rec 24] / Use of the European Network on Youth Employment (ESF supports transnational cooperation activities on exchange of good practice among organisations at EU level through ESF Technical Assistance funding at Commission level)
Strengthen the capacities of all stakeholders, including the relevant employment services, involved in designing, implementing and evaluating Youth Guarantee schemes, in order to eliminate any internal and external obstacles related to policy and to the way these schemes are developed.
[YG rec 25] / Provide training and workshops
Establish exchange programmes and secondments between organisations through transnational cooperation activities.
How much money will be available from the European Social Fund after 2014?
The proposed ESF Regulation for the next programming period 2014-2020 includes a dedicated ESF investment priority targeting the sustainable labour market integration of young NEETs. Member States facing high youth unemployment rates are thus expected to identify young unemployed persons as a specific target group for ESF funding. MemberStates' Partnership Agreements and Operational Programmes for the period 2014-2020 are expected to focus on school-to-work transitions and the possibility to introduce Youth Guarantee schemes, as well as on labour market integration of young people.
During the negotiations between the Commission and Member States about the future Operational Programmes will define specific amounts allocated to these priorities. The Commission expects adequate funding to be allocated to youth guarantees. However, the exact amounts will be determined in the negotiations with Member States.
What happens with the Recommendation now and when does the EC expect it to be implemented?
The Commissioner is due to present the proposed Recommendation to the EU's Council of Employment and Social Affairs Ministers on 6 December 2012. Negotiations in the Council working group will start immediately with a view to adoption of the proposal at the Council on 28February 2013. The Commission will urge Members States to implement the Youth Guarantee as soon as possible, preferably as from the start of the 2014-2020 Multiannual Financial Framework.
2. Traineeships
What exactly is the Commission proposing?
The Youth Employment Package includes a Commission Communication launching a second stage consultation of European social partners on a quality framework for traineeships. The Communication[1] outlines the main results of the first-stage social partner consultation, as well as recent evidence about quality problems related to traineeships. It goes on to set out three options for EU-level action:
- the quality framework, for example in the form of a Recommendation; this could include quality requirements like a compulsory traineeship contract specifying social security coverage and remuneration/compensation (if applicable), the definition of professional and learning objectives, transparency of information, proper guidance through the traineeship, limited duration, the limitation of successive traineeships and the building of partnerships among stakeholders
- a voluntary quality label with similar quality requirements
- the creation of an information website.
To help the social partners prepare their replies to this consultation, this Communication is accompanied by an analytical document giving background information and analysis (e.g. a definition of traineeships' types, their benefits and costs, reporting stakeholders views, problem definition and policy objectives)[2].
Why is this necessary?
Traineeships can be very useful to ensure a smooth transition from education and training to the world of work, but do not always live up to their role: they sometimes fail to help young people to gain the skills and knowledge necessary on the labour market, they lack a proper learning content; trainees are sometimes exploited and used as cheap or free workforce.
The recent study on a 'Comprehensive overview of traineeship arrangements in Member States(see IP/12/731) confirmed that young trainees face different problems during their traineeship(s) in most EU Member States. These problems mostly relate to the lack of a high quality learning content, low or no remuneration, poor working conditions other than remuneration/compensation (e.g. lack of proper social protection coverage, long working hours, no equal treatment etc.) and – as a consequence of the previous problems combined with the differences in national traineeship legislations – a relatively low level of intra-EU mobility of trainees.
A quality framework for traineeships could contribute to ensuring that traineeships really help smooth school to work transitions and do not replace regular jobs.
What would happen if social partners did not agree to negotiate?
Social partners have six weeks to decide whether to enter into negotiations on a quality framework for traineeships. The possible outcomes of this procedure are the following: social partners can enter into negotiations, and may reach an autonomous agreement or they may ask the Commission to make a legislative proposal based on their agreement. If social partners fail to agree or decide not to negotiate, the Commission has to assess the situation and decide whether to present its own proposal on a quality framework on traineeships.
3. Apprenticeships
Why is the Commission advocating apprenticeship schemes?
Company-based apprenticeship schemes (also known as 'dual' or 'twin-track' apprenticeships) enable a young person to gain work experience and practical skills through a work-contract in a company as well as acquire theoretical knowledge, often through an educational institution. There are good examples in the EU of how to use apprenticeship schemes optimally to smooth the transition from education to work.