Why we need Action teams?

Levels of youth unemployment are reaching very high levels in some Member States (see the table below) and this can have long term consequences with young Europeans becoming alienated from the world of work. This is why European leaders meeting in Brussels on 30 January 2012 (informal European Council) agreed to a strong drive to combat youth unemployment delivering quickly on two concrete objectives.

First, we must do everything to help young people get in to work, education or training. Second, to help small and medium enterprises (SMEs) – creators of 80% of jobs in Europe – get affordable access to financing. Restrictions on usual sources of financing and the cost of borrowing are inhibiting SMEs from filling orders or taking on new contracts and this has a dampening effect on the economy and on employment.

The European Commission’s experts are ready to go on the ground and work with the specific situation and needs of each country. Available EU funding and expertise will be used as a catalyst to boost national efforts to tackle youth unemployment and SME funding problems.

Youth unemployment situation (end of 2011)

Who are the Action teams?

The Action teams are representatives of the national authorities and officials of the Directorates General for Regional Policy, Employment, Social Policy and Inclusion, Education and Culture, as well as for Economic and Financial Matters. The coordinators are representatives of the Prime Minister’s office in the Member States, and of the Secretariat General under the authority of the President Barroso. The teams will have meetings in 8 Member States (Italy, Ireland, Greece, Portugal, Latvia, Spain, Lithuania and Slovakia – these are the Member States with the highest levels of youth unemployment) between 13 and 24 February 2012.

What is the job description of these teams?

President Barroso has launched this initiative with the aim of targeting EU funding and expertise to deliver faster and more effective results. Each team will work with the national authorities and national social partners on targeted actions to combat youth unemployment and help the SMEs to get access to loan and grant financing.

The experts will have a fresh look at the use of Structural Funds and discuss the how to help national authorities to reallocate them to projects that will make the biggest difference in short time. They will also be ready to advise on mid- and longer term solutions that enhance employment such as adjusting tax policy or social contributions to favour employment.

So how much European money is there exactly?

President Barroso mentioned at the Informal European Council an overall figure of EUR 82bn as being still unallocated for concrete projects in all 27 Member States. This concerns EU Structural Funds (Cohesion Fund, Regional Development Fund and Social Fund) during the financial period 2007-2013. The figures vary for each Member State depending on how quickly each of them has already spent or planned to spend the overall amount. The following table gives an approximate estimation of unallocated sums as they stand in January 2012 in the 8 Member States with the highest levels of youth unemployment

Which are the most common causes of high unemployment in these 8 Member States and which kind of European support can help the most?

It is impossible to generalise. In Greece and Ireland or Portugal (under the EU/IMF programmes) the causes are linked to the consequences of the economic and financial crisis, often exacerbated by existing structural difficulties. In other Member States like Slovakia, Lithuania and Latvia the skills mismatch between the labour market demand and supply is one of the main causes. In Italy several factors played together, such as labour market segmentation and an unbalanced unemployment support system which created inter-generational inequalities. Spain suffers from very high level of early school leavers which impacts on the ability of the labour force to match the demand for certain skills.

Hence, short term solutions will need to reflect those different situations. In some cases quick support for training to match skills labour market demand will make the difference. Elsewhere, like in Ireland or Northern Italy, it is about focusing more on funding for SMEs which need access to financing to maintain or expend their activities. Italy, Portugal and Spain have recently decided on far reaching reforms and the Action teams will focus on complementing and speeding what has been agreed. In most situations education and training policy has a key role to play. One way of supporting young people in the short and mid-term term is to offer more apprenticeships and traineeships for example via EU programmes like Erasmus and Leonardo da Vinci.

How would the redeployment work and what is the role of the Members States?

Structural Funds are allocated to national and regional Operational Programmes at the beginning of the EU’s 7 year financial cycle. This funding is programmed or allocated for specific projects that match the objectives of the Operational Programmes during the budgetary cycle. This is why Member States still have amounts that are not allocated or committed so they can be moved or re-programmed as circumstances change. Right now, in the 8 countries where this intensive effort is being made, they can be concentrated on youth unemployment and SMEs.

The re-programming must be done in agreement between the European Commission and each of the 8 Member States and this will be the core work of the action teams.

How the Action teams relate to the existing Commission assistance in the countries receiving EU/IMF financial support like Greece or Portugal?

The work of the action teams is complementary to the programmes which are designed to help each programme country get its economy back on its feet. The Task Force for Greece helps the Greek government with structural reforms, privatisations, tax reforms and on re-focussing of the Cohesion Funds to better match growth oriented reforms. The Action teams will specifically focus on youth employment or SMEs to help provide concrete results as part of the longer term growth agenda.

What is the calendar?

The initial results of the Action teams’ missions and discussions will be presented by President Barroso at the European Council on 1-2 March 2012. The outcome will then be integrated by each of the 8 countries in its National Reform Programme to be submitted to the Commission by mid-April as a part of the European Semester.

This is a pilot project proposed by President Barroso for the 8 Member States with the highest level of unemployment but if successful it can be applied by other interested Member States.