Europe’s young and jobless

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European youth unemployment has hit 23.6%. Photo: AFP/Getty Images

Cyprus’s bailout has European policy makers worried, once again, about the future of the euro zone after months of quasi-calmness. But that tranquility was always an illusion. The E.U.’s GDP shrank by 0.5 % during the fourth quarter of 2012, the largest contraction since early 2009, a result of decreased exports and domestic demand.

At the same time, unemployment kept rising, and unemployment rates in member states diverged further. Social conditions, bad since the start of the euro crisis, worsened. Public budget cuts, tax increases and other austerity measures lowered Europe’s living standards to their lowest point since the beginning of the economic crisis. Poor households were worst affected.

The European Commission’s latest Employment and Social Situation Quarterly Review, published this week in Brussels, calls the situation critical. Its latest data paint a dark picture:

Source: E.U. Employment and Social Situation

In the fourth quarter of 2012, overall employment in the E.U. fell by 0.2% compared to the previous quarter, and by 0.4% compared to the fourth quarter of the previous year. The unemployment rate hit 10.8% in January, 2013 — 26.2 million Europeans. In the euro area, the unemployment rate was 11.9% — 19 million people. The gap between the unemployment rates in the countries in the north of the euro zone, and those of the south and on the periphery reached an unprecedented 10 percentage points in 2012, reinforcing the idea that there is a two-speed Europe.

More alarming for Europe is its exaggerated level of youth unemployment. That also reached a new high. Almost one in four of active young people was jobless in January, 2013, ranging from 15% or less in Austria, Denmark, Germany and the Netherlands to more than 55 % in Greece and Spain.

E.U. member states can’t seem to wrap their politics around the problem. Little has been done in a practical way. E.U. leaders approved at the end of February a Youth Guarantee scheme, through which young people without a job for more than four months would be offered further education, or a job, apprenticeship or traineeship. The plan is intended to be implemented by each member country according to its individual needs.

A €6 billion pot in the E.U. budget for 2014-2020 had been set aside to tackle youth employment through the Union’s structural funds, but the budget was rejected in March by the European Parliament. It is now at an impasse.

As Ian Bremmer, president of Eurasia group, a political risk company, tweeted on March 25, the day after the agreement on Cyprus’s bailout, “in Italy, youth unemployment now stands at 34%. In Germany, it’s 8%. That, not Cyprus, is the real crisis in Europe.”