Milan, 08/10/2014 (Agence Europe) - The European summit on employment and growth, which met in Milan on Wednesday 8 October, took stock of the implementation of the youth guarantee and discussed extending this instrument to fight youth unemployment, which has an envelope of €6 billion for 2014 and 2015, until 2020 (see EUROPE 11171).
France and Italy, which are very much in favour, themselves mobilising €1.5 billion for this initiative, called for the youth guarantee to have a budget of €20 billion, or €3 billion a year between 2016 and 2020. “€6 billion is not enough”, said French President François Hollande, upon his arrival in Milan. We hope that this proposal will be supported by the vast majority of member states, with the possible exception of the United Kingdom, said one diplomatic source, who added that some of this €20 billion could come from the investment plan to be created by the Juncker Commission in the three months following the start of his term in office.
“We have to use all the funds we have before asking for more”, said the outgoing president of the European Commission, José Manuel Barroso. In a similar vein, German Chancellor Angela Merkel stressed the importance of making use of the existing mechanisms and funds.
Apart from the definitive validation by the Commission of the operational programmes of the 20 beneficiary states (those whose regions have a youth unemployment rate of more than 25%), most of the work will be done at national level, with a view to offering all young people between the ages of 25 and 30 a job, training or a work placement within four months of their arrival on the employment market (see EUROPE 11057).
Against a backdrop of budgetary restrictions, the setting in place of the youth guarantee, which calls for structural reforms of the training, education and job-seeking systems, will be expensive. On top of this, as with the functioning of the structural funds, the pre-financing rate of the youth employment initiative has been set at 1%, a rule which does not go down well with some of the capitals, which are obliged to advance the money.
Structural reforms. In Milan, the Italian and French Social Democrat leaders tried to convince their partners that they have committed their countries to genuine structural reforms, in the hope of influencing the economic policy carried out at European level.
“We are changing the country”, said Italian Prime Minister Matteo Renzi. The Italian government is deeply involved in a reform of the employment market, which aims to make redundancies more flexible, amongst other things. This Jobs Act is not going down particularly well with the unions, who are prepared to take to the streets, and right up through the ranks even of the party in government. On Wednesday, the Italian Senate was called upon to take position on the reform, as the Italian government had attached a motion of confidence to this vote. “We have plenty to be getting on with” as regards reforms, said Hollande, who gave the examples of the relaunch of social dialogue, the revision of the social thresholds, cutting red tape and the future law on growth.
These reforms, together with budgetary cuts, first of all had a negative impact on public finances, coming at an unfavourable point in time from an economic point of view, marked by flat-rate growth. On Tuesday, the IMF reduced GDP growth in the eurozone from 1.1% to 0.8%. “We have to change the pace of budgetary consolidation, otherwise growth is under threat. We are all concerned”, said Hollande. “Even Merkel has an interest in ensuring that the eurozone does well so that the German economy does well”, stressed a source in his entourage. According to the French president, the budgetary debate will be in full swing at the EU and eurozone summits of 23-24 October, just as the Commission will be preparing its opinion on the national draft budgets for 2015 (see EUROPE 11170). (MB and JK)