Belfast Telegraph

Friday 11 July 2014

Jobless youth a 'huge loss of human capital' to EU

Youth unemployment in Greece is around 60% after the country's austerity measures which have led to mass protests
Youth unemployment in Greece is around 60% after the country's austerity measures which have led to mass protests

Youth unemployment across the European Union risks creating a "huge loss of human capital", a major economist has said.

Fabien Zuleeg, chief economist at think tank the European Policy Centre, said countries faced being "overwhelmed" by the scale of youth unemployment, now at 23.6% across the EU.

Mr Zuleeg was speaking at a two-day event for journalists in Brussels on covering the European Council, where discussions were dominated by the state of the EU economy and the prospect of banking union.

The event coincided with a summit of the leaders of its 27 member states ahead of a controversial €10bn (£8.7bn) bailout of eurozone member Cyprus, including a proposed levy on its citizens' bank accounts.

Speaking to journalists, Mr Zuleeg said it was less unemployment itself than the length of a period of joblessness which posed a threat.

"It's relatively normal for young people to have a transition time between education and a job. The problem is the length of that period.

"There are people who don't get back into the job market at all, leading to a huge loss of human capital.

"If you are unemployed for a year it's not a big problem, but if you're two or three years out you are becoming further and further removed from the job market."

It was a matter of keeping people "close to the job market" through training so that if demand picked up, people are not too far removed from it.

And while it was politically sensitive, he said labour mobility between member states was "a critical part" of the response to the crisis.

Last month, the European Council unveiled a youth employment initiative for 2014 to 2020, which would support young people not in education, employment or training (Neets) in EU regions.

It will focus particularly on regions with youth unemployment rates of over 25%, such as Greece, where it approaches 60%, Spain, almost 55% and close to 39% in Italy.

Northern Ireland's level of joblessness among 18-24-year-olds is 20.4%.

Mr Zuleeg also discussed the likelihood of the UK leaving the EU, and said the chances of it doing so were "50:50". Author and economist Professor Torsten Oltmanns later said cutting corporation tax would not be a silver bullet for Northern Ireland's economy.

Other factors were required to re-ignite a sluggish economy such as Northern Ireland's high-skilled labour and effective links with universities.

Journalists were also briefed off-the-record by officials from the European Union.

One official said that meetings had been "terribly boring" in the good times before the financial crisis.

He described the initially indifferent attitude to the risks posed to the EU by the seismic events of 2008. Lehman Brothers' collapse was an American problem and the run on Northern Rock viewed as a consequence of "Anglo Saxon lousy regulation and supervision".

That was before the freefalling economies of its own member states brought financial crisis to the very doorstep of the EU.

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