Statement on the results of the European employment summit (Milan, 8 October)

Source: European Commission (EC) i, published on Tuesday, October 21 2014.

European Commission

[Check Against Delivery]

László Andor i

European Commissioner for Employment, Social Affairs and Inclusion

Statement on the results of the European employment summit (Milan, 8 October)

European Parliament plenary session

Strasbourg, 21 October 2014


Honourable Members,

The meeting of Heads of State or Government last week in Milan reconfirmed their determination to make the Youth Guarantee a reality.

As you know the European Commission under the leadership of President Barroso has taken a number of initiatives to improve the employment situation and the life prospects of young people.

The Youth Guarantee is a key structural reform of our time. Its implementation is at the core of the EU coordination of employment policies and it is therefore central to the European Semester and the country-specific recommendations.

The Youth Guarantee is a comprehensive policy which includes modernisation of vocational training, strengthening of public employment services, greater support for apprenticeships and traineeships as well as financial incentives for job creation and business start-ups.

All these measures need to be combined in order to ensure that every young person under the age of 25 receives a good-quality offer of a job, continued education, apprenticeship or traineeship within four months after leaving school or becoming unemployed.

The Youth Guarantee focuses both on improving the quality of labour supply (for instance through trainings) and on stimulating the demand for young people's labour (for instance targeted wage or recruitment subsidies and apprenticeship grants).

The Youth Guarantee is being implemented across Europe.

Some Member States have amended their legislation; others have introduced new policy instruments to scale up labour-market-related measures for young people.

For example, in Spain the number of vocational education and training (VET) centres, of companies involved in dual VET projects, and of VET students has doubled since 2013.

In Slovakia, hiring subsidies are proving effective in supporting long-term unemployed young people. The Youth Guarantee has already resulted in 12,000 jobs in Slovakia, mainly in SMEs and most of them sustainable. In parallel, vocational education is also being modernised.

And just last week I visited a second-chance school in Turin, Italy, where young people are learning various crafts, such as baking or brewing, and cooperative enterprises play an important role in offering them first employment.

The EU budget provides important financial support for the roll-out of the Youth Guarantee. The first instrument to be used was obviously the European Social Fund for 2007-13, from which Member States have planned to finance human capital investments up till 2015.

On top of that, we of course have the €6.4 billion Youth Employment Initiative, whose implementation has been frontloaded to 2014-15 in terms of budgetary commitments. As I informed you already in September, we expect that Operational Programmes covering 85% of the Youth Employment Initiative will be adopted by the end of this year.

Importantly, expenditure on Youth Employment Initiative projects is eligible already from 1 September 2013. This means that many Member States have been spending the YEI money since more than one year ago and the expenditure will be reimbursed after the operational programmes are adopted.

In addition, Member States have proposed to allocate another over €4 billion from the European Social Fund 2014-20 to the investment priority specifically supporting young people's labour market integration.

Considerable further resources from the ESF are also being programmed for general job-search support measures, entrepreneurship support or vocational training investments from which young people will also benefit.

Honourable Members,

The Youth Guarantee has a cost, but it should be considered as an investment. Investing in the Youth Guarantee's implementation here and now is crucial for preserving the EU’s future growth potential.

As you know, the economic value of the Youth Guarantee has been highlighted by the OECD, ILO and Eurofound. More recently the G20 strongly supported it and invited countries to step up implementation.

The economic value of the Youth Guarantee is related both to building up the human capital stock and to improving the flow of this human capital into and within the labour market.

In other words, it pays off to ensure that young people quickly find relevant jobs, where their productive potential can be realised. For this, we need not only education and training but also active labour market policies, high performing Public Employment Services as well as measures stimulating demand for labour, such as targeted hiring subsidies, all embedded in Youth Guarantee schemes.

These investments and their returns are harder to measure than for instance infrastructure investments. But they are very important - both to strengthen the human capital stock and to improve labour market flows and transitions. That's why Youth Guarantee expenditure should be considered as an investment.

Heads of State and Government and Ministers meeting last week in Milan have reconfirmed that the Youth Guarantee is and should remain the framework for our efforts to improve youth employment across Europe. I am therefore confident that the value of these investments will be recognised also in the EU's future plans for investment.

Some Member States still seem to be facing constraints when it comes to their ability to pre-finance the implementation of Youth Guarantee measures from their national budgets.

As you know very well, the EU Structural and Investment Funds provide only very limited pre-financing in the 2014-20 period, namely 1% in the year 2014, which can be increased to 1.5% in case of the Youth Employment Initiative for countries that had recently been subject to a macroeconomic adjustment programme.

We may all agree that this level of pre-financing is low, but unfortunately it is closely linked to the overall design of the Multi-annual Financial Framework and in particular to the very low payment ceiling for the first couple of years.

The EU budget is suffering from a severe shortage of payment appropriations, which also means that there was no room to envisage higher pre-financing rates for the Youth Employment Initiative - at least not in the absence of a change of attitude from some Member States.

However, the European Investment Bank has been offering to Member States the possibility of bridge-financing their investments to be later reimbursed from the Youth Employment Initiative. In this way the EIB could help to resolve the liquidity problem. A couple of Member States have already discussed with the EIB the possibilities and I am sure that the Bank's doors remain open to all Member States.

I reiterated these same messages last Thursday during the formal EPSCO meeting attended by the employment and social affairs ministers.

Honourable Members,

The Milan summit delivered one important message: if we want to have more employment in Europe, we need to combine structural reforms with support to aggregate demand. The Youth Guarantee is a structural reform and it also helps boosting demand for young workers. Successful delivery of the Youth Guarantee supported in a timely way by the relevant EU funds remains a priority for the Commission.

I am sure that it will continue to be treated as an urgent and important issue also by the incoming Commission.

Thank you.