WHEN Angela Merkel declares something to be a priority in the euro zone, the region’s policy machinery steps up a gear. Over the past couple of months Germany’s chancellor has woken up to the risks of sky-high youth joblessness in southern Europe.

The champion of fiscal austerity has started to echo her counterparts in Spain, Greece and Italy, declaring youth unemployment to be Europe’s “most pressing problem”, one that risks a “lost generation” if left unattended. The result has been a flurry of summitry and schemes to help the continent’s jobless Young.
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Europe’s leaders have promised a “youth guarantee”, under which every young European has a job, apprenticeship or place in higher education within four months of becoming unemployed or leaving formal education. They have pledged €8 billion ($10.5 billion) for the worst-hit countries over the next two years. The European Investment Bank (EIB) is to help small businesses employ and train youngsters, and some European “structural funds” are to be redeployed towards helping the young. A souped-up version of the EU’s Erasmus scheme, which encourages study abroad, will help more people cross borders for education and apprenticeships.

These proposals make for good sound-bites—no small concern for southern Europe’s embattled leaders, or indeed for Mrs Merkel two months before an election. But, in practice, they are likely to disappoint. They suffer from the same flaws that have plagued the European Union’s response to the crisis over the past three years: a lack of boldness, an incomplete analysis of the problem and an excessive faith in copying German policies.


Weakness in numbers
 
 
The lack of boldness is obvious as soon as you look carefully at the numbers. Almost 8m young Europeans are not in work, education or training; one young person in seven. In Italy and Spain the ratio is one in five; and in Greece it is more than one in four.

Compared with the scale of the problem, the funds on offer are puny. The pledge of €8 billion over two years is the equivalent of less than 0.1% of GDP a year for the eligible countries, or €850 a year for every young European in those countries who is neither in work, nor training nor education. Add the structural funds and potential lending from the EIB and the pot is bigger, but it is still small relative to most countries’ budget squeezes, and certainly won’t pay for huge expansions of training or apprenticeship schemes.

Training and apprenticeships are a good idea, but they will do little to help Europe’s young jobless unless governments also succeed in boosting growth. The main reason youth unemployment has soared in southern Europe is the depth of the recessions in those countries.

Over time, cyclical joblessness can become entrenched. As the OECD makes clear in its new Employment Outlook, the young have been hit harder than older people. The scars will linger as a generation fails to acquire skills.

Apprenticeship schemes may help at the margins by making youngsters more employable, but they will not substitute for economic recovery. Prospects for this potentially “lost” generation will not improve until the European economy gets better.

A third problem is naivety about interpreting Germany’s success. Germany has a long-standing system of apprenticeships and vocational training. It also has the lowest youth-unemployment rate in Europe.

But it would be a mistake to conclude that the former caused the latter. Germany had apprentices and vocational training when it was the “sick man of Europe”, with a youth-jobless rate of over 15% in 2005. Nor is a system so closely tied to Germany’s peculiar business structure, with its emphasis on manufacturing, easy to export.

More focus on vocational training should be part of every country’s arsenal against youth unemployment, but in southern Europe other policies will yield results more quickly. Top of the list is more liberalisation of labour rules for permanent workers, so that the gap between them and (younger) temporary ones narrows. Spain and Greece have made some progress, but more is needed: a more flexible and less segmented labour market would encourage firms to hire more workers, and to give young people better opportunities. Another way to encourage the employment of the young is to cut payroll taxes on them, as Italy has just done.

Europe’s strategy for tackling youth unemployment amounts to a series of useful but small initiatives. Thanks to Mrs Merkel, more is happening. But it is not nearly enough. Solving Europe’s “most pressing” problem demands a bolder approach to boost growth in southern Europe as well as more money to help the southerners revamp their labour markets. The euro zone’s to-do list, from milder austerity to faster progress towards banking union, is as familiar as Mrs Merkel’s wariness of it. But it must be done. Otherwise the “youth guarantee” will be a hollow promise.