REPLIES OF THE COMMISSION TO THE SPECIAL REPORT OF THE EUROPEAN COURT OF AUDITORS

"EU YOUTH GUARANTEE: FIRST STEPS TAKEN BUT IMPLEMENTATION RISKS AHEAD"

EXECUTIVE SUMMARY

V.

First bullet: The Commission notes the recommendation addressed to Member States and would indeed welcome in some cases a better overview of the estimated cost of all planned measures to combat youth unemployment.

The template produced by the Commission requested Member States to provide information on EU, national, regional/local, employer and other funding sources thus encouraging the Member States to give the complete information on the overall costs and funding of a YG (including funding gaps).

19 out of 28 Member States have provided this information (with different degrees of detail).

Second bullet: The Commission accepts the recommendation and considers it as partially implemented, in particular through the Council Recommendation on a Quality Framework for Traineeships, the European Alliance for Apprenticeships and the related Council Declaration and the monitoring of the quality of employment in the European Semester.

Regarding the promotion of qualitative attributes, the Commission will further stimulate the reflection around "good-quality" offers, taking into account the qualitative attributes mentioned in the Guidance for evaluation of the YEI. The Commission will in particular: animate a debate on the concept of "good-quality" offers in the next meeting of national YG coordinators, invite Member States to discuss the concept of "good-quality" offer in the context of the EMCO work, explore the possibility of addressing "good-quality" YG offers under the Mutual Learning Programme (MLP), and provide further guidance on "good-quality" in the YG FAQ document.

The Commission notes that ex post evaluations will provide evidence on the quality of job offers, as recommended in the guidance for the evaluation of YEI.

Third bullet: The Commission accepts the recommendation and considers it as partially implemented. through the indicators framework as endorsed by the EPSCO Council, through the relevant arrangements that are set out in article 19 and Annex I and II of the ESF Regulation and relevant CPR provisions related to monitoring and evaluation in the case of measures financed from the YEI and through its commitment to report on the implementation of the Youth Guarantee to the European Parliament and the Council in 2016.

Monitoring activities will feed into the Commission's assessment of the Youth Guarantee implementation under future European Semesters. They will also inform the Commission's 2016 report on the implementation of the Youth Guarantee, which will be formally submitted to the European Parliament and the Council through the appropriate channels.

INTRODUCTION

15. The Commission notes that a further 11 billion aim at measures such as modernisation of employment services and self- employment measures which will also indirectly support youth employment.

Over 26 billion euros will be spent on education measures including life-long learning where young people are likely to be among the main beneficiaries.

OBSERVATIONS

37. The Commission would like to remind that it operates in a soft law environment, based on a Council recommendation and that while many sub-elements of a Youth Guarantee are desirable where appropriate, not all of them need to be part of a particular national scheme.

Moreover, the evaluation of the submitted YGIP was just a first step in a process of continued monitoring of the implementation of the Youth Guarantee in Member States. The Commission monitors the implementation of Youth Guarantee schemes within the European Semester. The European Semester process covers a broad spectrum of national policies which are linked to the delivery of a Youth Guarantee.

First indent: In the context of the European Semester, the need for enhancing ICT/digital skills is highlighted where appropriate.

Second indent: The Commission is of the opinion that failure to consider a link between the non-acceptance of a reasonable offer and unemployment or social assistance benefits does not necessarily limit the effectiveness of a Youth Guarantee scheme.

The Commission’s Staff Working Document sets out that principles of mutual obligation such as participation in active labour market policies could be considered when designing a Youth Guarantee scheme[1].

In the Council Recommendation the principle of mutual obligation is called upon in the context of early intervention and activation (recommendation 10).

While "mutual obligation" may carry important benefits, it does not figure in the assessment grid, as it would be too prescriptive to judge a scheme against its inclusion in case a Member State chooses to not base their scheme on it or in case their national provisions and practices do not allow it.

Priority was therefore given to assess the main building blocks of the Youth Guarantee and the intended existence and coverage of offers.

41. In the context of an adoption of an operational programme containing YEI-related measures, "a strategic policy framework for promoting youth employment" must be in place before any disbursement of Funds from the Commission. The Commission's assessment of this pre-condition (so called YEI ex-ante conditionality) is based on the Member State's self-assessment and the information provided therein. Whenever the Member State has referred to additional national strategies on youth employment other than the YGIP, the Commission had to base its assessment regarding the YEI ex-ante conditionality fulfilment on all the strategic documents for youth employment referred to by the Member States. Nevertheless, when assessing the YEI ex-ante conditionality, the Commission's looks at the consistency with the YGIP so that the ESF investments will match the policy objectives of the Member State concerned.

42. The Commission notes that the assessment framework for YGIP is not the same as for the YEI ex-ante conditionality, as the two processes are driven by different objectives – respectively policy objective (YG) and legal compliance (YEI).

The criteria for fulfilment of the ex-ante conditionality do require "the existence of a strategic policy framework for promoting youth employment including through the implementation of the Youth Guarantee". The sub-criteria against which this "strategic policy framework" should be assessed by the Commission services were also laid down in the Regulation. The latter do not make any reference to the existence of a YGIP and a fortiori to its positive assessment by the Commission.

Therefore, there is no automatic link between the assessment of the YGIP which is done from a policy perspective and against the Youth Guarantee recommendation and the assessment of the YEI-related EAC which is done through a fixed set of criteria detailed in the CPR.

The Commission notes that such a link which would have made the existence of a YGIP a legal requirement for fulfilling the YEI ex-ante conditionality was proposed by the Commission but rejected by the Council during the legislative process.

43. The Commission refers to its reply to paragraph 42. The sometimes nuanced or slightly different outcomes of the two processes are explained by their different although to some extent interlinked nature.

The sub-criteria against which the "strategy policy framework for promoting youth employment" should be assessed contain also qualitative elements such as the identification of key stakeholders, including the public authorities involved and the coordinating arrangements with the partners, the set-up of early intervention and activation systems as well as the monitoring arrangements. The assessment of these qualitative elements is going beyond a pure formality check.

Moreover, to the extent feasible, the context of the Commission's assessment of the YEI ex-ante conditionality fulfilment did serve as a channel for requesting certain modifications to the YGIP (for example in the case of France).

Common Commission reply to paragraphs 45 and 46.

The Commission agrees and would like to point out that investing in a Youth Guarantee is crucial for the EU to preserve its future growth potential. Significant EU financial support can help - most notably from the European Social Fund and in the context of the Youth Employment Initiative. But to make the Youth Guarantee a reality, Member States also need to prioritise youth employment measures in their national budgets.

47. 19 out of 28 Member States have provided information on the envisaged sources of funding of their Youth Guarantee scheme (with different degrees of detail). In some cases, the Commission would however welcome a better overview of the estimated cost of all planned measures even if it is aware that any estimates of the costs of a Youth Guarantee are subject to caveats.

49. The Youth Guarantee recommendation does not prescribe any precise way in which the Member States will implement the Youth Guarantee since it will very much depend on the national situation (i.e. number of the NEETs they have and their specific characteristics).

The impacts will therefore depend on the choice of Member States as regards the targeting and the design of the support.

As explained in the Explanatory Memorandum of the Commission's proposal, it is accompanied by a Staff Working Document (SWD), which goes into more details about what constitutes a Youth Guarantee, addresses questions about costs and benefits of such schemes, and describes one by one the ingredients necessary to make the Youth Guarantee a success. Furthermore, in an annex, the SWD presents policies supporting youth employment already in place in the 27 Member States and Croatia, reflecting the various starting points of these countries towards setting up fully-fledged Youth Guarantee schemes.

The real cost of a Youth Guarantee will also depend on the national circumstances and the way in which it is set up and implemented in each Member State. As such, any estimates of the costs of a Youth Guarantee are subject to a number of caveats.

In that respect, country examples of Austria, Finland, Sweden and the UK could be considered as an indication of potential costs for the Member States intentions about implementing the Youth Guarantee.

50. The Commission refers to its reply to paragraph 15.

53. The Commission refers to its reply to paragraph 47.

54. The Commission indeed informed France that the quantitative overall targets of the plan are not sufficiently clear and indicated that doubts remain on the qualitative aspects of the offers that Pôle Emploi will propose to the NEETs in order to comply with the YG. Further follow up is taking place in the context of the European semester.

In its YGIP, Ireland provided a table which sets out information on average participation, inflow of new participants, the expected inflow of young people and the indicative cost of youth provision. Irish authorities are reticent to project future participation numbers until national budget allocations are decided and therefore did not provide any figures beyond 2014. It was therefore not deemed necessary or appropriate to request further information from the Irish authorities.

Common Commission reply to paragraphs 55 and 56.

The Commission considered that it was primarily important to be able to see if (sufficient) national resources were allocated in addition to the EU funds. It therefore provided the Members State with a template where they were asked to provide information on the available funding sources, i.e. whether it would originate from EU, national, regional/local, employer and/or other funding sources.

The breakdown between the different EU funds was secondary at that stage, since the Operational Programmes were to follow shortly. The Commission considered that a detailed breakdown of EU funding sources by ESF/YEI funds would be provided within the relevant OPs, especially as the informal negotiations on the OP financial plans were still ongoing between the Member States and the Commission.

57. The Commission notes that regularity of YEI expenditure will be subject to verifications as part of the normal assurance building process which duly takes specific risks into account.

Common Commission reply to paragraphs 61 and 62.

The Commission agrees that "good-quality" is a crucial element for implementing the Youth Guarantee.

The Commission promotes a set of qualitative attributes for traineeships (through the Council Recommendation on a Quality Framework for Traineeships) and for apprenticeships (through the European Alliance for Apprenticeships and the related Council Declaration). For jobs, the Commission monitors the quality of employment in the European Semester, with particular attention being paid to school-to-work transitions and issues related to labour market segmentation.

Regarding the quality of employment in the open market, the Commission is of the view that any quality assessment will be dependent on the situation of the relevant labour market, including aspects such as labour laws or the current economic climate.

The Commission will further stimulate the reflection around "good-quality" offers, taking into account the qualitative attributes mentioned in the Guidance for evaluation of the YEI. The Commission will in particular animate a debate on the concept of "good-quality" offers in the next meeting of national YG coordinators, invite Member States to discuss the concept of "good-quality" offer in the context of the EMCO work, explore the possibility of addressing "good-quality" YG offers under the Mutual Learning Programme (MLP), and provide further guidance on "good-quality" in the YG FAQ document.

63. The Commission refers to its common reply to paragraphs 61 and 62.

In addition, the Commission considers that a consistent implementation of the YG and a “one size fits all” approach is neither possible nor in line with the Council recommendation, which clearly indicates that YG schemes should be in accordance with local, regional and national circumstances.

However, the Commission agrees that an effective implementation of Youth Guarantee schemes is crucial. The outcome based approach followed by the Commission has precisely many advantages in assessing the effectiveness of the measures within the YG schemes, as it takes into account the diverse labour market situations and the suitability of an offer to the individual.

In this regard, the Commission is of the view that, in general, an offer is of good quality if the person who benefits from it achieves sustainable labour market attachment. That is to say, not return to unemployment or inactivity thereafter; a "good-quality" offer can thus be measured by its outcome. As said (cf. common reply to paragraphs 61 and 62) the Commission will further stimulate the reflection around "good-quality" offers.

The Commission notes that offers of apprenticeships, traineeships and continued education, be them subsidised offers – such as those financed under YEI/ESF programmes or under national programmes – or not, are already covered by quality standards.

65. The Commission would like to point out that a lengthy consensus building exercise was necessary to define a common monitoring framework. This might have delayed the adoption of the Youth Guarantee Council Recommendation at a critical moment and thus hindered swift delivery.

68. The Commission would like to point out that the results from the monitoring feed into the key documents adopted by the European Commission in the context of the European Semester (Commission Staff Working Documents, In- Depth Reviews, proposals for Country Specific Recommendations).

The Commission has regular exchanges with the European Parliament on the European Semester developments.

Moreover, further to the 27-28 June 2013 European Council conclusions, the Commission will report to the European Parliament and the Council in 2016 on the implementation of the Youth Guarantee and on the operation of the YEI.

Common Commission reply to paragraphs 69 and 70.

The Commission notes that a second review of progress on the implementation of Youth Guarantee schemes in 21 Member States took place in EMCO on 3 December 2014 with conclusions for each reviewed Member State. These will be followed up in May 2015. All December 2014 EMCO reviews focused extensively on the Youth Guarantee schemes in a consistent manner, according to Working Methods applied to all Member States. Both the May and December 2014 reviews were echoed in the following EPSCO meetings on Youth unemployment and the Youth Guarantee.

71. The Indicator Framework for Monitoring the Youth Guarantee was endorsed by EMCO on 22 September 2014. The EPSCO Council endorsed in December 2014 the EMCO Key messages on the Indicator Framework for Monitoring the Youth Guarantee which ask for a strong political commitment to overcome the existing obstacles in data collection and ensure a sound monitoring system of the Youth Guarantee at EU and Member State level, based on the proposed framework.

See also Commission reply to paragraph 65.

72. The Commission agrees that the continued commitment of Member States is needed. The YG pilot data collection was launched by the EMCO indicators' group in October 2014. The aim was to test the methodology proposed for the regular administrative data collection for monitoring the implementation of the Youth Guarantee and assess the obstacles faced by Member States and how they can be overcome in view of launching regular data collection in June 2015. By 18 February all Member States but three have sent their contributions. The remaining contributions are expected soon.

73. The reading of the scoreboard of key employment and social indicators is supplemented by the additional information derived from –inter alia- the Employment Performance Monitor (EPM), and the assessment of policy measures undertaken by the Member States.

Common Commission reply to paragraphs 74 to 76.

The Commission emphasizes that the formulation and adoption of CSR is foremost a political process, where on the basis of country specific analysis in the Staff working documents, the Commission makes a proposal which is then reviewed through a multilateral surveillance process in Committees, Council Groups and subsequently endorsed by the European Council.

The Commission's proposals for Country Specific Recommendations take into account the specificities of each country's situation.

Box 7 - Country-Specific Recommendations in 2013 - Examples of Lithuania and Italy

The Commission considers that recommendations for both Lithuania and Italy took duly into account the specificities of each country's situation.

77. The Commission notes that on a whole, the Semester process is leading, over a medium term perspective, to considerable reform efforts in Member States.

80. The Commission considers that the YGIP submitted by Member States provide already in most cases a useful general overview of all Youth Guarantee measures.

Moreover, the Commission has set up a monitoring system for the Youth Guarantee. Structural reforms are monitored through the European Semester, including EMCO. Measures targeting individuals will be monitored both through the Indicator Framework for Monitoring the Youth Guarantee, and in the case of measures financed from the YEI, through the relevant arrangements that are set out in article 19 and Annex I and II of the ESF Regulation and relevant CPR provisions related to monitoring and evaluation.

84. The Annex II ESF indicators for YEI have been designed to follow as closely as possible the ESF Annex I common indicators. At the same time, they reflect the specific nature of YEI.

First indent: For the purpose of ensuring the quality result in relation to the (YEI) funding provided, the Commission is interested in measuring the overall outcomes in relation to the change in the person's status – namely that from being a NEET at the stage of entering the operation to a potential change after the YEI support.

The Youth Guarantee has its own monitoring requirements which will allow tracking the type of offers provided under the Youth Guarantee from 2016 onwards.

Second indent: The YEI indicators follow the logic and pattern of the ESF common indicators.

Subsequent monitoring for former participants in YEI measures places additional burden on the participants and administrative resources. For some of the measures such extensive obligatory monitoring might be seen as costly and excessive. Effects observed after prolonged time also decrease causality linking observations to the interventions, decreasing the value-added of these observations.

However, Member States can in addition to compulsory monitoring decide to have additional longer term indicators, for example to repeat a survey after 6 months. Also, Member States have an obligation to carry out impact evaluations, which will provide insights on long term effects of interventions such as income differentials for subsequent year and similar indicators in addition to the indicators presented in Annex II.

Third indent: Whenever a Member State has stated in its OP that it plans to extend the target group to below 30 years, the Commission has requested that the Member State includes additional programme-specific indicators to cover the 25-29 group.

Result indicators are not age specific as such and do not cover any age group such as 15-18 etc. However, Member States are asked by the Commission to include Programme specific Output indicators for YEI age group 25-29, if they decide to target them. Such indicators will allow assessing effectiveness of interventions when crossed with YEI Annex II Result indicators.

CONCLUSIONS AND RECOMMENDATIONS

87. See Commission reply to paragraph 37.

89. The Commission refers to its reply to paragraph 47.

The Commission notes that the Council recommendation does not prescribe any precise way in which the Member States will implement the YG (i.e. employment, continued education, apprenticeship or a traineeship) since it will depend on the national situation (i.e. how many NEETs they have, the structure of NEETs). The targeting and the design of the precise support influences the costs and benefits and makes it difficult to estimate in advance the costs and benefits of all potential options.

The Commission however agrees that there might be a risk that total funding may not be adequate to implement the Youth Guarantee schemes and has encouraged Member States to prioritise youth employment measures in their national budgets.

It should also be recalled that EU funds support to the YG goes beyond direct YEI and ESF measures for young persons' training and employment measures. The ESF also supports labour market services modernisation, self-employment, education and social inclusion measures – which partly also support youth employment from a structural reform point of view.

Recommendation 1

The Commission notes the recommendation addressed to Member States and would indeed welcome in some cases a better overview of the estimated cost of all planned measures to combat youth unemployment

The template produced by the Commission requested Member States to provide information on EU, national, regional/local, employer and other funding sources thus encouraging the Member States to give the complete information on the overall costs and funding of a YG (including funding gaps).

19 out of 28 Member States have provided this information (with different degrees of detail).

90. The Commission considers that a consistent implementation of the Youth Guarantee and a “one size fits all” approach is neither possible nor in line with the Council recommendation, which clearly indicates that YG schemes should be in accordance with local, regional and national circumstances.

The Commission agrees that an effective implementation of Youth Guarantee schemes is crucial. The outcome based approach followed by the Commission has precisely many advantages in assessing the effectiveness of the measures within the YG schemes, as it takes into account the diverse labour market situations and the suitability of an offer to the individual.

In this regard, the Commission is of the view that, in general, an offer is of good quality if the person who benefits from it achieves sustainable labour market attachment. That is to say, not return to unemployment or inactivity thereafter; a "good-quality" offer can thus be measured by its outcome.

The Commission notes that offers of apprenticeships, traineeships and continued education, be them subsidised offers – such as those financed under YEI/ESF programmes or under national programmes – or not, are already covered by quality standards.

In this regard, the Commission promotes a set of qualitative attributes for traineeships (through the Council Recommendation on a Quality Framework for Traineeships) and for apprenticeships (through the European Alliance for Apprenticeships and the related Council Declaration). For jobs, the Commission monitors the quality of employment in the European Semester, with particular attention being paid to school-to-work transitions and issues related to labour market segmentation.

Regarding the quality of employment in the open market, the Commission notes that any quality assessment will be dependent on the situation of the relevant labour market, including aspects such as labour laws or the current economic climate.

Recommendation 2

The Commission accepts the recommendation and considers it as partially implemented, in particular through the Council Recommendation on a Quality Framework for Traineeships, the European Alliance for Apprenticeships and the related Council Declaration and the monitoring of the quality of employment in the European Semester.

Regarding the promotion of qualitative attributes, the Commission will further stimulate the reflection around "good-quality" offers, taking into account the qualitative attributes mentioned in the Guidance for evaluation of the YEI. The Commission will in particular: animate a debate on the concept of "good-quality" offers in the next meeting of national YG coordinators, invite Member States to discuss the concept of "good-quality" offer in the context of the EMCO work, explore the possibility of addressing "good-quality" YG offers under the Mutual Learning Programme (MLP), and provide further guidance on "good-quality" in the YG FAQ document.

The Commission notes that ex post evaluations will provide evidence on the quality of job offers, as recommended in the guidance for the evaluation of YEI.

91. The Commission monitors the implementation of the Youth Guarantee within the European Semester, including through bilateral meetings with member states, and through fact finding missions.

Through its membership in the Employment Committee (EMCO) – in its preparation of Council deliberations – the Commission also contributes to the multilateral surveillance on Youth Guarantee implementation. Dedicated multilateral surveillance reviews were held by EMCO in this regard once in 2013 and twice in 2014. Both the May and December 2014 reviews were echoed in the following EPSCO meetings on Youth unemployment and the Youth Guarantee.

The Commission, where appropriate, proposes country-specific recommendations to Member States, The conclusions of the EMCO multilateral reviews feed into the final CSR negotiations.

EMCO endorsed an Indicator Framework for Monitoring the Youth Guarantee on 22 September 2014, based on macroeconomic, implementation and follow-up levels indicators which, taken together, will aim to provide a holistic view of Youth Guarantee schemes’ impact on the labour market situation of young people across Europe. The administrative data necessary for the 'implementation level' is currently tested through a pilot data collection exercise in all 28 Member States, with regular data collection due to start in 2015. Key messages on the Indicator Framework were endorsed by the EPSCO Council on 11 December 2014, highlighting Member States’ political commitment to providing the necessary data.

Measures targeting individuals will be monitored both through the Indicator Framework for Monitoring the Youth Guarantee, and in the case of measures financed from the YEI, through the relevant arrangements that are set out in article 19 and Annex I and II of the ESF Regulation and relevant CPR provisions related to monitoring and evaluation. Regarding specifically the YEI, the Commission has set up a framework for monitoring the YEI actions implemented within YG framework, by setting common indicators in its ESF regulation.

Recommendation 3

The Commission accepts the recommendation and considers it as partially implemented. through the indicators framework as endorsed by the EPSCO Council, through the relevant arrangements that are set out in article 19 and Annex I and II of the ESF Regulation and relevant CPR provisions related to monitoring and evaluation in the case of measures financed from the YEI and through its commitment to report on the implementation of the Youth Guarantee to the European Parliament and the Council in 2016.

Monitoring activities will feed into the Commission's assessment of the Youth Guarantee implementation under future European Semesters. They will also inform the Commission's 2016 report on the implementation of the Youth Guarantee, which will be formally submitted to the European Parliament and the Council through the appropriate channels.

[1] European Commission Staff Working Document, SWD(2012) 409 final, p. 4.