COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

Proposal for a Council Recommendation

on Establishing a Youth Guarantee

1. What constitutes a Youth Guarantee?

1.1. The concept of a Youth Guarantee

Young people struggle to find a foothold on the labour market. These difficulties have been amplified during the current crisis, with young people often being the first fired and last hired in such economic circumstances. Youth-specific responses are needed, now and in the future, and in this context the Commission is proposing a Council Recommendation on establishing a Youth Guarantee.

Member States should ensure that young people receive, within four months of having left school or becoming unemployed, a good quality offer of employment, continued education, an apprenticeship or a traineeship.

This concept of a Youth Guarantee is not new. Already in 1981, the Nordic Council[1] defined it as "a social situation where all young people are guaranteed genuine opportunities for education, training and employment in accordance with, on the one hand, the aspirations, capabilities and interests of the individual, and, on the other, the needs and objectives of society". One could add today “and of the economy”.

Young people should be supported in such a way as to achieve a job outcome, enrolment in continued education, in an apprenticeship or in a traineeship. Depending on the individual situation the support needed will vary. For many young people short and light interventions such as universal vocational orientation, education and labour market information are enough for them to achieve the desired placement on their own within the specified time period. Others will require a labour market entrants assessment, vacancy matching and, if necessary, a short CV training. Yet others, often more disadvantaged young people (such as those with low skills or other barriers), will need deeper, longer and more complex interventions and the use of tangible offers in order to ensure that they too benefit from the Youth Guarantee.

Indeed, the purpose of a Youth Guarantee is to ensure that nobody is left on their own, that all young people, who have not succeeded in securing an offer on their own, are, within a certain period of time, presented with an offer of a job, continued education, apprenticeship or a traineeship.

Taking into account the current high rates of unemployment across Europe, the fact that the most recent estimates[2] made by the International Labour Organization (ILO) show no reversing trend whatsoever in the next coming years, and in particular the unbearable number of more than 7.5 million of young people under 25 currently not in employment, education or training (NEETs), it is of utmost urgency that a Youth Guarantee helps reduce those numbers and in any case put a stop to an increase of this group.

The European Commission is thus calling on Member States to take action and to provide the Youth Guarantee to young people within four months of becoming unemployed or leaving formal education. As the success of the Youth Guarantee is dependent on a number of actors and actions (e.g. addressing issues such as awareness or take-up), the Commission proposes a set of guidelines as part of the recommendation and which are further discussed in section 3 of this Staff Working Document.

1.2. Principles to consider when establishing the schemes

When designing a Youth Guarantee scheme, a number of principle-based questions are likely to arise and different situations in individual Member States (or at regional or local level) could lead to differences in how the scheme will be set up and further implemented.

First, it should be noted that young people, although requiring specific monitoring and intervention through a general Youth Guarantee, are not a homogeneous group and that they face different social environments; furthermore a particular focus will be needed on those young people particularly at risk of becoming or staying as NEET. For example, young women show a greater NEET persistence and lower turnover than young men, especially in Southern and Eastern Europe (Bulgaria, Czech Republic, Greece, Hungary, Italy, Malta and Poland), where young women present a higher share of annual NEET rate and always NEET in the 2006-2009 period and lower exit rates than men[3]. However, once women exit the NEET status, recurrence is less likely in some countries. The higher persistence for young women is probably due to the fact that women NEET are more likely to be inactive rather than unemployed. When designing and implementing a Youth Guarantee scheme Member States should pay attention to the gender dimension of the challenges. Currently the coverage rates of Active Labour Market Policies (i.e. the number of young participants in % of the NEET population 15-24) are lower for young women compared to men in all countries. The average coverage rate for young women is 26.3% relative to 33.9% for young males when considering ALMPs. Gender differences on coverage rates in Training reach 8.5 percentage points (13% for young women relative to 21.5% for men)[4].

Eurofound[5] identified eight different key determinants that increase probability of young to enter NEET category: i) having a disability; ii) immigration background; iii) low education; iv) living in remote areas; v) coming from a low household income; vi) having parents who experienced unemployment; vii) having parents with a low level of education and viii) coming from divorced families. These determinants, especially when combined, can lead to low performance and sometimes also discrimination, both at school and on the labour market, making the next steps particularly hard for these young people.

As a result, the schemes should tackle the situation of those young people currently furthest away from the labour market who may not yet be ready for a real job offer when they become unemployed or leave school and may require specific training offers and intensive coaching. Indeed, Eurofound[6] has argued that experiences from Sweden show that placing young people in a job over a relatively short period of time may not offer long-term solutions. Structural concerns, such as skills and qualifications, need to be taken into account when providing a Youth Guarantee offer to a young person.

Second, principles of mutual obligation, such as those applying to adults and their participation in active labour market policies, could be considered when designing a Youth Guarantee scheme. Indeed, it could be conceivable that the condition to receive an offer under the Youth Guarantee would be to register with an employment service. However, in this case, it would be important to tackle issues such as stigmatisation of registering in the first place and increased awareness of the benefits of registering with the employment service.

Furthermore, in many countries payment of benefits (and sometimes also social assistance benefits) is linked to the participation in an activation programme. Sanctioning benefits if young people do not participate in the Youth Guarantee would be a means by which to ensure that young unemployed people do take up the offers made to them, therefore limiting the impact of unemployment scarring[7].

There are however also caveats to such an approach as particularly vulnerable young people might then take a further step away from employment services and be even more difficult to reach. Thoroughly tailored individual action planning and placements can prevent dropouts from occurring in the first place.

In case dropout from activation (and loss of benefits) has occurred, mechanisms have to be in place to ensure that these young are not left alone, but that there are services to reach out to them and to keep contact with them to find out where the problems are and how to get them back on the pathway to further education, vocational training and any other labour market integration measures (e.g. traineeship, apprenticeship, etc.).

Third, when designing the schemes, the potential of cycles of inactivity should be addressed. How should the scheme tackle early abandoners or those who make use of a guaranteed offer but then end up having to resort to another guaranteed offer? The scheme should include mechanisms or action plans to break and avoid cycles of inactivity for young people, as these can lead to further demotivation and destruction of their human capital.

Fourth, a Youth Guarantee scheme could carry the potential of moral hazard if young people rely on an external organisation, such as an employment service, to deliver an offer to them. Such situations can be avoided in the design of the scheme, for example through introducing active and individualised guidance at the start of the process, helping the young person to find vacancies or study places that appeal to them and supporting their application to enhance their probability of success.

Fifth, Member States will need to decide at which level to implement and manage the Youth Guarantee. For Member States where the implementation of education, training and employment policies is decentralised, the regional or even the local level can be the relevant one in terms of implementation while it would be important to ensure a mechanism of national coordination with a national ministry, body or organisation to take the lead. This can help address the regional disparities or the local circumstances of e.g. suburbs, rural or remote areas existing inside a same country, whilst working as close as possible to the young people targeted.

Finally, in order to avoid the scarring effects of unemployment (see also section 2.2.) it is recommended to include rules on timing as part of a Youth Guarantee scheme[8]. The Commission proposes that Member States should offer the Youth Guarantee to all young people within four months of unemployment or leaving education. Rules on timing of interventions are already foreseen in many PES[9]. Beyond this, in many countries young unemployed people are already a priority group for early PES intervention[10].

1.3. Country-specific examples

A guarantee that comes closest to the one outlined in the Commission proposal for a Council recommendation in the sense of young people being offered a job, an apprenticeship, a traineeship and further studies can be found in Finland. Building on a long experience of youth guarantees the Finnish government aims to make the new guarantee more comprehensive and preventive and to combine employment and education elements. This guarantee[11] will be implemented from early 2013 onwards and in a nutshell reads like this:

"Each young person under 25 and recently graduated under 30 will be offered a job, a traineeship, on-the-job training, a study place, or a period in a workshop or rehabilitation within 3 months of becoming unemployed."

“Every school-leaver will be guaranteed a place in upper secondary school, in vocational education and training, in apprenticeship training, in a youth workshop, in rehabilitation or by other means[12].”

Besides the Finnish case, a variety of initiatives exist in other Member States[13] that would support the success of a fully implemented Youth Guarantee (e.g. Czech Republic, Denmark and France). These are for example programmes for the development of career management skills and for vocational orientation at schools, career guidance, coaching of disadvantaged young people to prevent dropout and to facilitate the transition, assistance for job search, individual guidance, matching, subsidies to employers, schemes for apprenticeships and vocational training. These are offered, to a different extent in different Member States, to students, young unemployed, drop-outs, NEETs and disabled young people. Especially apprenticeships and/or traineeships are frequently used to support young unemployed people.

Typically, schemes are scheduled to start within a certain number of days or months after registration as being unemployed – although generally without a promise that it will result in a job offer, apprenticeship, traineeship or vocational training. All the initiatives are usually carried out through a Public Employment Service (PES) or another body within the public administration.

Some of the measures to activate young people and reduce levels of unemployment are financed by the European Social Fund (such as in Bulgaria, the Czech Republic and Latvia).

In Austria[14], a "Training Guarantee" for young people up to the age of 18 was put in place in 2008, giving young people who cannot find a company-based apprenticeship the opportunity to learn an apprenticeship trade at a supra-company training institution financed by the PES. Within this measure apprentices with special needs can benefit from an integrated training scheme involving partial or prolonged apprenticeships. A “Job and Training Guarantee” for young people aged between 19 to 24 under the action programme “Future for Youth” ensures that unemployed young people are offered employment, targeted training or subsidised employment within the first six months of their registration with the PES. Alongside basic needs-oriented subsidies and pay rates as agreed under collective agreements, quality-related and labour market-related incentives are offered to encourage emplo­yers to establish additional training places and improve the quality of training. Hence, employers will be supported if their apprentices earn excellent or good grades in the final apprenticeship examination.

In Sweden, the approach is to stimulate the young unemployed to be active in job-seeking. This scheme starts with an initial period of three months of intensified support and follow-up of the individual's job seeking efforts. After this initial period, an active matching process begins, combined with enhanced action, which may be an apprenticeship or further education.

1.4. EU level action towards establishing the Youth Guarantee

The political drive at EU-level to support young people in their transition from school into employment has also been very strong over the past years.

Already in 2005, the Council agreed, in the context of the Employment policy guidelines[15] (2005-2008), that “every unemployed person is offered a new start before reaching 6 months of unemployment in the case of young people”. In 2008[16], the Council reduced the time period to “no more than 4 months” for young people having left school.

As by 2010 implementation of such a measure across the EU had not yet taken place, both the European Parliament (EP) and the European Youth Forum were strongly advocating for Youth Guarantees to be set up at EU level.

In the "Youth on the Move" flagship initiative[17] of September 2010, the Commission presented a framework of policy priorities to reduce youth unemployment, with a particular focus on facilitating the transition from education to work and reducing labour market segmentation. The Commission called in particular upon Member States to ensure that all young people are in a job, further education or activation measure within four months of leaving school and to provide this as a ‘Youth Guarantee’.

The years 2011 and 2012 have seen repeated calls for this, in particular from the European Council, the European Parliament and the European Youth Forum, but without much success on the ground. The Commission announced the implementation of the €4 million EP preparatory action on Youth Guarantees in the Youth Opportunities Initiative Communication[18] of December 2011 and reiterated its commitment to Youth Guarantees in the Employment Package[19] of April 2012 by announcing a proposal for a Council recommendation.

The Danish Presidency organised a workshop on ways to fulfil a Youth Guarantee in the framework of the Informal Meeting of Employment and Social Affairs Ministers held in Horsens in April 2012.

On their part, an EP resolution[20] of 24 May 2012 and an opinion[21] of 12 July 2012 from the European Economic and Social Committee (EESC) have commented on the "Youth Opportunities Initiative" communication. Both included specific points on Youth Guarantees.

As part of the yearly questionnaire sent to the PES Network on their adjustment capacity to the crisis, the 2012 edition, launched in January, included a module on actions taken to address youth unemployment. In June 2012, in the context of the meeting of the Heads of PES (HoPES), members of this network were asked to report on developments since January 2012, specifically targeting young people.

As a follow-up to the Employment Package, a discussion took place with social partners on the prospect of an initiative on Youth Guarantees in June 2012, and representatives of the European Youth Forum and of cross-sectoral social partner organisations were met in September 2012. The Youth Guarantee initiative was discussed once more Social Partners at the Social Dialogue Committee on 23 October 2012.

Finally, on 29 June 2012, the European Council urged Member States to step up efforts to increase youth employment, with "the objective that within a few months of leaving school, young people receive a good quality offer of employment, continued education, apprenticeship or a traineeship". It further concluded that these measures can be supported by the European Social Fund (ESF) and that Member States should use the possibilities of financing temporary recruitment subsidies from the Fund.

1.5. Rationale of the proposal

The Commission, along with all Member States, is very concerned about the current labour market situation for young people and its persistent deterioration. The dramatic levels of youth unemployment affect the whole of Europe: their costs are high now and in the future. The savings achieved through the Youth Guarantee go beyond the pure social protection expenditure savings achieved. Avoiding unemployment and the deterioration of skills would lead to longer-term benefits for young people and for the economy through lower unemployment over the course of the lifecycle, higher incomes (and therefore also higher tax incomes and social security contributions) and through fewer social and health problems. Further information can be found in section 2.

Following the lack of implementation of a number of political calls from both the Council and the European Parliament to set up Youth Guarantee schemes, it is now necessary to issue this recommendation to Member States. Indeed, so far only a limited number of Member States have taken measures towards implementing comprehensive Youth Guarantee schemes.

Offering guidelines at EU level on tools that contribute towards effective Youth Guarantee schemes will enable Member States to make best use of Cohesion Funds, and in particular of the European Social Fund, in order to address youth unemployment and inactivity.

The proposal recognises that different situations in individual Member States (or at regional or local level) could lead to differences in how the schemes will be set up and further implemented.

2. An investment approach: costs versus benefits

Youth unemployment and inactivity are expensive. They are expensive now (in terms of benefits being paid out and also in terms of foregone earnings), but they are also expensive in the future (as they lead to a number of scarring effects). Preventing unemployment and inactivity therefore has the potential to outweigh these costs and as such represents an opportunity for smart investment in the future of Europe, its youth.

2.1. The immediate cost of NEETs

The cost of young people's unemployment or inactivity (i.e. the costs of young people being considered to be NEET) had been estimated by Eurofound to be around €100 billion or 1% of the aggregated GDP of EU21 countries in 2008[22].

In October 2012, Eurofound presented updated estimates, now including 26 Member States (all except Malta)[23]. The definition of a NEET was a young (15-29 year old) person who had remained outside employment, education or training for 6 months or more during the previous 12 months. The 6 months did not need to be consecutive.

On that basis, the economic costs of NEETs were deemed to stand at €119.2 billion per year, approximately 1% of the aggregated GDP in 2008. These figures correspond to the sum of "public finance income", i.e. all public finance transfers and benefits from welfare to the individual, as well as "resource income", i.e. the missing contribution of the individual to society (in terms of foregone earnings, unpaid taxes and unpaid social security contributions). Costs were calculated on the basis of a propensity score matching in order to ensure that the different characteristics of NEETs were taken into account[24] and these costs were substantially higher than public finance costs (€8.8 billion public finance costs versus €111.3 billion resource costs)

Eurofound also included an estimate of the costs of NEETs in 2011[25]. The annual loss now stands at €153 billion per year, a staggering €34 billion higher cost than in 2008, representing a relative increase of almost 28 percentage points in 3 years. As a share of GDP, the costs are now 1.21% of GDP.

At country level, the absolute costs are highest in Italy (€32.6 billion), followed by France, UK and Spain (€22 billion, €18 billion and €15.7 billion respectively). The costs proportionate to GDP are highest in Bulgaria and Greece (3.3% and 3.28% respectively), whilst Cyprus, Hungary, Ireland, Italy, Latvia and Poland all report annual losses of more than 2% of GDP.

It should be noted that these findings do not consider the indirect costs of the deterioration of human capital and employability nor any increase in certain crime and health costs.

Some caution should also be used when interpreting these calculations: as some NEETs will undoubtedly be activated through education or training measures (rather than through paid employment), the total cost, as calculated by Eurofound, would not be recovered through a successful Youth Guarantee. Furthermore, some young NEETs may not participate in the programme at all (for example very young mothers): here also this implies that not all of these costs would be recovered.

In terms of inclusion and poverty, the fragile and instable labour market position of young people may intensify current and future social risks. 29.1% young people aged 16-24 in the EU were classified as living in poverty or social exclusion in 2010, an increase of 1.3 percentage points (pps) on 2009, and 0.8 pps on 2008. However, when analysing these figures and undertaking country comparisons it has to be borne in mind that current indicators of poverty and social exclusion do not fully reflect the situation of young people. Indeed, statistically, a young person living with his/her parents for financial reasons will not necessarily be considered as poor, even if he/she is not able to live on his/her own earnings.

2.2. The longer-term effects of having been NEET

For the individual, being unemployed at a young age also carries risks of "scarring". A growing amount of literature is showing that an experience of unemployment at a young age has a long-lasting negative impact on both future income levels and future risk of unemployment. The corresponding positive is also true: the experience of employment also increases the probability of future employment[26]. Beyond this, young people's health status, well-being and job satisfaction are also impacted negatively through spells of unemployment[27].

Following a spell of unemployment, the probability of a future spell of unemployment has been estimated to be increased by 13-16%[28]. There is a higher risk of further unemployment through to age 33[29].

At the same time, young people affected by unemployment are also likely to experience a wage penalty: six months of unemployment at age 22 leads to an 8% lower wage at 23 and a 2-3% lower wage at ages 30 and 31[30]. The wage penalty also applies to young people who graduate from university during a "bad economy": the initial wage loss immediately after graduation is 6-7% for each 1 percentage point increase in the unemployment rate[31]. Even 15 years later, the wage loss stands at 2.5%. Some estimates are gloomier, suggesting a scar of 13-21% at age 42, though reduced to 9-11% if repeated spells of unemployment are avoided[32].

In terms of duration of unemployment, the longer the spell of unemployment at a young age, the larger its negative impact[33]. Other findings show that it is the mere fact of being employed that matters (and conversely the mere fact of being unemployed has a negative impact): "young people who hold jobs can more easily find jobs in the future. This could be interpreted as benefits accruing from networking, or other skills in finding employment. Alternatively, employers could be more willing to hire people who have held previous jobs regardless, of the length of the employment spells"[34]. This would mean that even a short employment spell would be beneficial for future employment probability.

Macroeconomic conditions (through witnessing increased unemployment) also have an effect on the young generation: young people who are aged between 17 and 25 during a recession have less confidence in public institutions and believe that success depends more on luck than on effort[35].

Beyond this, the impact of unemployment or inactivity on young people can also lead to societal consequences: if independent housing is not affordable for this group, they are likely to remain living with their family and delay founding their own family, thereby worsening demographic trends and prospects. Furthermore, if the lack of opportunities to enter the labour market leads to young people leaving the EU to find jobs elsewhere, a phenomenon often affecting the highly qualified and therefore leading to a potential brain drain, this can also be costly to Europe's future competitiveness.

Setting up the Youth Guarantee will cost money, but putting these costs into perspective with the costs of doing nothing means that we can apply a rational investment approach when considering young people's transitions from school to further education and to the labour market. Gregg and Tominey already put forward the underlying rationale for a Youth Guarantee in 2005: "Interventions to reduce the exposure of young adults to substantive periods of unemployment could, if successful, have substantial returns in terms of the individual's lifetime earnings and represent a good investment. In addition there is evidence that raising educational qualifications after substantial youth unemployment can lead to enhanced wage recovery."[36]

2.3. The costs of a Youth Guarantee

Whilst the previous two sub-sections have demonstrated that a successful Youth Guarantee would yield substantial benefits to society and the individuals, this sub-section addresses the potential costs of implementing the guarantee.

It is of course very difficult to estimate the costs of a Youth Guarantee. Nonetheless this has been attempted by a number of stakeholders.

In July 2012, the International Labour Organisation (ILO) estimated the costs of implementing a Youth Guarantee scheme in the Eurozone[37]. Their total cost estimate for the Eurozone stands at 0.45% of the Eurozone's GDP, or 21bn€. Their analysis is based on the Swedish model of "special job-search support", estimated to have an annual cost of €6,000 per unemployed young person plus administrative costs (in terms of resources needed for Public Employment Services to serve the programme) at €600 per participant. As the Commission's proposal for a Youth Guarantee goes beyond the Swedish model, this is only an indication of the potential cost of a Youth Guarantee.

In that context, one should consider the Austrian example. According to preliminary governmental estimates, in 2011 the Austrian Public Employment Service dedicated approximately €382 million to young people under the age of 25 in terms of active labour market policies. More than one third of this expenditure went towards supra-company apprenticeships[38] (approximately €11,000 per year per supra-company apprenticeship place[39] for those under 18[40]). Beyond this, the subvention of new jobs for young people costs around €3,600 per job supported. Considering in addition active labour market policies such as further training or career counselling, the costs of the measures for each young unemployed person (between 19 and 24 years) amount to approximately €5,500.

A further way of measuring the costs of a Youth Guarantee could be a crude and simplistic calculation on the basis of a pure job guarantee (providing all unemployed young people with a job). Here, the calculation could be based on the existing minimum wage (where relevant), multiplied by the number of hours to be worked and the number of participants. Such a calculation was undertaken in the UK, on the basis of a guarantee that would pay for 6 months of work for 25 hours per week (the business would cover 10 hours of training a week). On the basis of the current minimum wage in place in the UK, this would cost £4,000 per job (approx. €5,000)[41].

But when budgeting for a Youth Guarantee, more detailed analysis should be undertaken. The Finnish Government will introduce its renewed Youth Guarantee in 2013 and has estimated the costs necessary as well as broken these down into various components.

The average annual total per-person cost of the entire guarantee, including a "Skill programme for young adults", would amount to €2,240[42]. This cost is substantially lower than that calculated for Sweden and Austria and this could be due to different characteristics of the target groups and also potentially to different existing infrastructures that could be used to implement the Guarantee (e.g. well-established and trained employment service staff).

As illustrated by the Finnish example, when calculating corresponding costs for young people across other countries, it should be borne in mind that not every young person making use of a Youth Guarantee would be placed in such a government-subsidised apprenticeship and not every young unemployed person would need to make use of a Guarantee either (e.g. if they find a suitable offer by themselves within the first 4 months of unemployment or leaving school).

Indeed, there are large differences in the required expenditure on each individual in order to provide all young people with the Youth Guarantee. For example, the Finnish budgetary costings include costly vocational education (at €33,800 per participant), intended only to suit the needs of a small minority (1,200) of all the young people to be covered by the entire guarantee (50,100).

Of course 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:

The costs for a Youth Guarantee will be higher in those countries experiencing higher rates of NEETs or of youth unemployment. In these countries, making the most use of additional means of funding (such as through the European Cohesion Policy funds) will be important and gradual implementation could also be considered.

The average duration (and cyclicality) of young people's unemployment will also have an impact on the estimates for establishing a Youth Guarantee within four months of becoming unemployed or leaving school.

Different starting points in terms of existing supporting measures (e.g. well-trained Public Employment Service staff to address young people’s needs and circumstances) will also have an impact on the potential up-front costs needed.

It should be noted that the longer-term costs of a Youth Guarantee will also be influenced by demographic developments: in the future, as a result of lower fertility rates, youth unemployment will structurally be reduced as a problem (as long as labour supply qualitatively matches labour demand).

2.4. Comparing costs and benefits

Bearing in mind all of these caveats, it is nonetheless clear that investment in young people is paramount to avoid immediate and longer-term costs of their inactivity that were described above.

A cost-benefit study of Swedish measures to help young people (between 18 and 30) onto the labour market[43] concluded that the average socioeconomic potential (i.e. the potential profitability) over one year is over SEK 600,000, or approximately €70,000, per participant. This is based on the assumption that participants forego their dependence on benefits, reduce their reliance on care and nursing services and become productive and pay taxes instead.

In reality the full potential is not reached. However, with an average cost of SEK 66,400 (€7,809.97) per participant, investments are usually recouped within one year and average profitability within the first year stands at SEK 35,800 (approximately €4,200) per participant. The study further says: "The calculations for subsequent years do not include projects costs and forecast average profitability of SEK 441,000 [€51,870] per participant over five years. In the longer term profitability naturally accumulates over time and, considering that the gains refer to younger people, the total potential gains up to retirement age are enormous".

The savings made through investment in a Youth Guarantee go beyond the pure social protection expenditure savings achieved. As described above, avoiding unemployment and the deterioration of skills would lead to longer-term benefits for young people and for the economy through lower unemployment over the course of the lifecycle, higher incomes (and therefore also higher tax incomes and social security contributions) and through fewer social and health problems.

3. How to make the Youth Guarantee a success?

3.1. Partnership based approaches

Partnerships matter

Successfully delivering the Youth Guarantee requires the mobilisation of numerous actors and resources towards a common goal. Evidence[44] from Member States, where initiatives similar to Youth Guarantee schemes are in place, shows that adopting partnership based approaches is often the most suitable way to achieve efficient delivery.

Establishing partnerships to implement the Youth Guarantee requires in a first instance the designation of an organisation to be in charge of establishing and managing the scheme and coordinating partner actions. This role could be assigned to the Public Employment Service (PES), which would then be in charge of developing the necessary links with the relevant partners, namely: schools, youth organisations, training institutions, private employment services, social partners and employers.

Solid partnerships are characterised by a number of pre-requisites such as the need to establish a clear definition and distribution of roles and tasks; the fact that all actors involved should possess complementary skill sets; a high degree of trust in one another; a willingness to learn and regular reviews to assess progress against objectives.

Where service delivery of employment services is commercially subcontracted to private and/or third sector providers, it is important that the terms, conditions and expected outcomes are clearly specified in any tendering process. Monitoring and evaluation of such initiatives is equally important in order to ensure return on investment and learn from what works with a view to designing more tailored and evidence based future policies.

With its cross-cutting approach to youth issues, the EU Youth Strategy[45] is a framework that addresses youth transitions from education into work in a wider context and advocates inter-ministerial cooperation. The EU Youth Strategy comprises tri-annual EU youth reports[46] with data and policy practices which could be useful when designing the Youth Guarantee schemes. The Commission and Member States also developed a multi-disciplinary dashboard of youth indicators, illustrating key aspects around youth in transition[47].

One example of a partnership-based approach to develop a coordinated policy strategy is displayed in Finland. To establish its Youth Guarantee, Finland developed a comprehensive model where various Ministries (employment, education, social and health), municipalities, education institutions and other service providers, enterprises and other employers, social partners, youth organisations, student organisations and the third sector are involved in this common endeavour.

An example of a coordinated approach to develop strategies for implementation and service delivery corresponding to the needs of the local labour market can be found in Germany. Germany has set up a “Young People and Career Work Alliance” where the Employment Agency, Job Center, municipality, and youth welfare bodies sign a cooperation agreement through which they increase transparency, undertake joint analysis, optimise the availability of the relevant social data on young people and their environment in accordance with data protection legislation, avoid duplication of questions and profiling, create common processes and synchronise offers.

Bridging the gap between schools and employment services

Schools and training bodies play a key role in preventing drop-out by providing targeted support to young people at risk of dropping out, but also offering guidance or access to relevant services to all students. They can also signal early exit from the education system to municipalities, PES or other relevant bodies. Reducing school abandonment can be greatly helped by raising awareness about the world of work and familiarising students with services such as those provided by PES. To achieve this, programmes for vocational orientation should be complemented with quality individual career guidance[48]. Career guidance counsellors from PES can visit schools, providing general advice on their services available (labour market information, job/apprenticeship vacancy matching, assistance with job search, etc.).

However, school visits can have a relatively high cost for PES. Other, less resource-intensive options include offering personal or on-line training to teachers and trainers in schools to then deliver the information themselves. In Italy, for example, teachers are trained to provide vocational guidance as well as information about relevant PES services. In Hungary, the PES also provide training for schools to make relevant form teachers aware of PES services, to allow them to pass this knowledge on to pupils before they leave school. In the context of more scarce resources, such activities can achieve an important multiplier effect[49].

Evidence[50] shows that partnerships between different employment services are slowly becoming more wide-spread across the EU as PES seek to deliver more targeted and individualised services, whilst also pursuing more cost efficient service delivery channels. Equally, a growing number of third sector employment services, municipalities and youth organisations are involved in local level cooperation to remedy youth unemployment. Such an array of actors presents many opportunities to ensure greater outreach to young people, but also challenges in terms of ensuring properly coordinated actions to avoid duplication of efforts.

Civil society organisations (CSOs) can also play an important role in bridging the gap with hard-to-reach young people and society. According to the YOUNEX research project [51] CSOs are essential partners for policy change in the field of unemployment and precariousness, as they have extensive knowledge about unemployment and precariousness.

Engaging with social partners

Equally important to the development of a Youth Guarantee scheme is the establishment of stable and trustful relationships with social partners.

Trade unions can play an important role in ensuring that a Youth Guarantee scheme can be offered in Member States. Employers, particularly the SMEs that have been the main job creators over the past decade, are key to open job opportunities[52] for young people who would not necessarily be the first choice in a normal process of recruitment. Developing the cooperation between employment services and employers should be seen as a long term investment and as a relationship that grows and matures over time.

The reinforcement of employer oriented services and staff trained to work with young people, in particular the most disadvantaged ones, as well as clear strategies of cooperation through company specific agreements, frameworks for cooperation, sector level pacts, as well as networking, recruitment and information events and sessions are among the tools that PES most commonly use when engaging with employers. These tools and services are well suited also to the development of Youth Guarantee schemes. Finally, servicing employers' labour needs also requires the strengthening of skills policies and labour market intelligence gathering tools with a view to better profile and match candidates to jobs and/or traineeships and apprenticeship places available. Successful matching is ultimately the best guarantee for establishing win-win situations, positive employer relations and further fruitful partnerships, ultimately resulting in stable and durable employment offers for young people.

Involving youth organisations

Involving youth organisations and associations in the design and conceptual phase of public programmes can ensure that interventions are tailored to the exact needs of young people.

When reaching out to young people facing more complex challenges (such as no or low qualifications, disabilities, addictions, etc.), it is vital to establish well-functioning partnerships between employment services and other youth support services. Youth work organisations can reach out to young people through leisure activities and, due to their often informal approaches, instil the necessary amount of trust in young people that will enable them to get in touch with authorities and to register with employment services. In March 2011, the European Network of Public Employment Services carried out a Peer Review [53] on how to design and implement Youth Guarantee schemes that revealed the importance of reaching out to young people in an environment in which they feel at ease and in their own language. Furthermore, the private and public sector may not be able to fully cater for all young people, especially those harder to place, in terms of providing them with jobs or traineeships. Youth organisations and NGOs with a youth focus could therefore be involved in providing places, through paid or unpaid traineeship or voluntary work experiences.

In Finland the voice of young people was conveyed at an early stage by a working group led by the Finnish Youth Co-operation Association. The working group also organised an online public consultation “Giving young people a voice” with young active forces and entrepreneurs, which prompted responses from 6,366 young people in autumn 2011.

The UK has introduced MYPLACE, a £279 million[54] programme aimed to create youth facilities across England, including in some of the most disadvantaged areas across the country. The programme provides capital grants of between £1 and 5 million[55].

3.2. Early intervention and activation

Reaching out to young people

Evidence from Member States shows that many young people, who experience difficulties to get a foothold on the labour market, only access PES or other responsible public services once they are unemployed, or indeed not at all, particularly if they are not entitled to benefits. While partnerships and cooperation between public employment services and schools can help to pave the way, additional targeted outreach activities are needed to ensure that young people not enrolled in education or without a job register with PES or other responsible services do not get lost / end up in NEET status/inactivity when leaving school. The range of activities includes distributing printed material at places frequented by the target group (e.g. youth centres or youth events) and the use of modern media which "speak" the language of young people (e.g. attractive web-pages, media-campaigns via YouTube, special websites for young people offering tailored information and vocational orientation). Further developing the use of social media such as Facebook, like in Germany, the Netherlands or Sweden, is also a promising way forward given the communication habits of young people.

One step to ensure that young people receive an offer soon after leaving school is to improve data gathering systems and school records, as well as the transfer of at risk young people and/or recent drop-out to PES or other responsible services. A national commitment, such as in Norway where it is implemented at county-level, to stay in contact with school leavers and refer them where necessary to the PES, greatly facilitates rapid contact with early school leavers. However, many countries have to cope with data protection regulations regarding the transfer of individual data between institutions.

In Finland, the Youth Act lays down provisions on the disclosure of information for the purposes of youth outreach work. Primarily, the personal information of a young person can be disclosed with his/her specific consent. If the young person cannot be reached to obtain the consent, his/her contact and personal information is to be disclosed by an education provider if a young person has completed basic education, but has not found placement in post basic-education; or if a young person under 25 drops out of vocational education or general upper secondary school.

Tracking or "catch up" services such as in Denmark, Finland, Luxembourg, the Netherlands and Norway monitor participation in education and training, contact early school leavers after they have dropped out and seek to find a pathway to education, training or employment. For example the Regional Registration and Coordination institutes (RRC) in the Netherlands monitor and keep records of young people who do not have basic qualifications and ensure that those who are inactive are contacted and supported. In Finland, municipalities or groups of municipalities have been obliged since 2011 to recruit youth outreach workers, who contact and follow up young early school leavers at risk of becoming NEET.[56]

Hard to reach young people usually require special outreach activities to make sure that they access the relevant services. This is especially relevant for those who have already dropped out from school and for those facing multiple barriers, often coming from diverse/non mainstream backgrounds that put them at risk of discrimination both to access training and enter the labour market. Such measures include the cooperation with youth centres and other relevant organisations and NGOs working with youth or disadvantaged groups (e.g. migrants, drug addicts, orphans, disabled people). Campaigns with actors of ethnic and religious communities and welfare organisations can be particularly useful as can an age and culturally diverse profile of staff within the PES services themselves. In Austria, for example, visits to mosques and to cultural clubs, cooperation agreements with Turkish and Serbian newspapers and DVDs in foreign languages have helped to get into contact with those hardest to reach.

As the experience from a number of countries shows establishing special "focal points" for young people can not only contribute to lower the threshold, but also to make interventions and activation more effective by facilitating a coordinated service delivery. Structures vary from specialised youth services as part of the PES, independent local or regional institutions up to contracted private providers. In Austria, Denmark and Germany, Job centres for young people are part of the PES. Other institutions help disadvantaged people, such as the "Missions locales" in France which aim to prevent young people from becoming NEET and offer opportunities for those who have dropped out from school. By contrast, the Local Employment Services in Ireland are an example for outsourcing to private providers: “Youth reach centres” provide intensive mediation and guidance services to young school-leavers. Such youth centres are particularly effective as a "focal point" when other relevant services such as career guidance, municipal youth or family services, debt advice services, services for disabled, addicted or ex-convicts are either integrated in the form of a one-stop shop or on the basis of cooperation agreements for referral between the institutions.

In order to cope with the problem that many young people in the NEET group are not known to the PES, a few countries have created ad hoc agencies. These "youth agencies" are designed to support young people specifically in their study and career orientation like the “Youth Employment Centers” in Lithuania or the “Navigator Centers” in Sweden. The latter are a national network of one-stop shop services for young people seeking (re)integration into education, training and employment, rather than being directed to contact several different public agencies.

Tailoring the support

Once young people have registered with the PES or with another responsible service (e.g. municipal employment service, private provider), the key to early intervention and activation are binding regulations to entitle young people to use PES services and obliging PES to offer young registered unemployed an education, training or a job based upon an Individual Action Plan (IAP). Individual support schemes include support for job search, referral to education or training, and active labour market measures for those in need.

In times of budget constraints it is more important than ever to well target resource-intensive interventions such as education, training or more comprehensive support to those in need. Tailor made IAPs are the main precondition to make activation work[57]. Both preparation and follow-up require professionalism and adequately trained staff. Digitalisation means making use of all channels, applying the right mix of online, self-help tools and face-to face services. However, those young people faced with more complex problems need a "whole-person" approach to detect and address the full range of barriers and issues the young person is facing and to identify their skills and competences. Holistic guidance and case management, including a deepened assessment of the personal situation taking into account the whole life situation, comprising also a detailed follow-up if needed. As such services cannot be provided by PES alone, often partners are contracted. According to results from evaluation such an approach has proven successful in Austria, Germany and Slovenia.[58]

Although emphasis in IAPs is on more enabling approaches, it is important that IAPs reflect the principle of mutual obligation (carrots and sticks-approach). This is best achieved by a document signed by both sides. A reasonable balance has to be struck between support and monitoring, while at the same time ensuring the compliance to rules for activation and imposing sanctions with implications for the entitlement for benefits and services if needed. According to qualitative expert judgment sanctions have a higher impact if they are clear, graduated, immediate and fair. There is also a need to couple eligibility with social assistance for youth at high risk of marginalisation with a rigorous mutual obligation approach.[59] In case of drop-out from activation schemes, mechanisms for further supporting young people have to be enhanced, in order to avoid social exclusion.

3.3. Supportive measures enabling labour market integration

Early school leaving

54.2% of early leavers from education and training in the EU are not employed. Reducing early school leaving (ESL) is one important measure against youth unemployment; it is also one of the headline targets of the Europe 2020 strategy. Member States agreed to reduce the average European rate of early school leaving to less than 10% by 2020. The Council Recommendation “on policies to reduce early school leaving”[60] highlights the need to implement comprehensive and cross-sectoral policies against early school leaving, to address both general education and vocational education, to provide guidance to young people and to increase their employability.

Such comprehensive policies against ESL need to include compensation measures to address the consequences of early school leaving and enable renewed access to education and training in order to support young people to acquire relevant qualifications. In this context, second chance programmes, as well as additional language support for those who do not fully master the language spoken in the country of residence are of high relevance. More gender sensitive programmes might also be relevant in a context where young men are more at risk of early-school leaving (15.3 % of 18-24 years old men and 11.6 % of women are early leavers from education and training).

Furthermore, work-based learning, in particular dual vocational training equip young people with relevant skills needed on the labour market. In addition, gaining an understanding of how theory is applied in practice can motivate them more for further theoretical learning. Finally, such approaches create entry points and contacts which can facilitate the transition to a first job. They should provide successful students with recognised accreditation and allowing them to continue education and training within mainstream education and training systems.

Improving the long-term perspectives on the labour market of early school leavers will contribute to the success of the Youth Guarantee.

Skills mismatches

The current economic situation, characterised by high levels of unemployment and in parallel persistent job vacancies in specific occupations, highlights the major skills challenge Europe is facing.

Before the crisis, the European Union as a whole and most of the Member States showed increasingly efficient job matching processes. However, over the last two years unemployment rates and job vacancy rates both increased. These figures are well described by the so-called Beveridge curve, which relates unemployment rates to job vacancies. When the job matching process is functioning well the Beveridge curve shows a negative relationship between unemployment rate and job vacancies. This has been the case for the EU-27 till the first quarter of 2010. Since then the increase in vacancies did not have an effect on unemployment[61].

Figure 1: Beveridge curve, EU-27, 2008Q1-2012Q3

Source: Eurostat

Short description: The data used are: (i) the unemployment rate (UR, %), variable "une_rt_q" and (ii) the labour shortage indicator (LSI, %), variable "ei_bsin_q_r2", derived from EU business survey results (% of manufacturing firms pointing to labour shortage as a factor limiting production).

The problems in the job matching process – as reflected by the Beveridge curve's movement – may be related to mismatches in skills[62] and educational qualifications[63] required for a certain job. In addition, high disparities between regions and between industries may indicate a potential problem of regional and sectoral mismatch since the new jobs might be found in regions other than those where people with the proper skills and educational qualifications required by the market are available.

The European Labour Force Survey shows that the average incidence of skills and qualification mismatch during the period 2001-2011 varied significantly across European Member States[64]. As regards the qualification mismatch, on average, nearly 15% of European employees are over-educated, while 21% are under-educated[65].

The mismatch between labour demand and the skills and location of potential employees is extremely serious since it may imply that unemployment will become increasingly of a structural nature. The comparison between pre-crisis and actual data clearly shows a consistent increase of the structural and long-lasting unemployment. In particular the structural unemployment for the EU-27 raised by more than one percentage point, shifting from 8.2% in 2007 to 9.3% in 2012 and the European Commission's projections[66] for 2013 show an even higher rate of structural unemployment (9.6%).

The number of ICT graduates is insufficient in order to fill all the vacancies in the ICT sector, where, even in times of recent economic turmoil, the demand for ICT practitioners has been growing at a rate of 3% per year. In addition, there will be up to 700,000 unfilled ICT practitioners' vacancies in the EU by 2015[67].

Non-formal and informal learning experiences

In the current situation of rising unemployment and lack of economic growth, validation of non-formal and informal learning can help the young unemployed that are looking for their first job or those with very little professional experience to create a market value for their skills and competences acquired in different contexts. Furthermore, from an individual perspective, validation of non-formal and informal learning enhances the prospects of employability, higher wages and faster career moves, and offers second chances for those who have dropped out of school prematurely, as well as improved access to formal education and training, greater motivation and increased self-confidence.

Non-formal learning occurs in a formal learning environment but does not generally lead to a qualification or diploma. It typically involves courses, workshops, conferences or seminars. Informal learning takes place in a variety of places, such as at home, work, in an association and through daily interaction between people; it includes language learning, cultural norms and manners.

Four Member States currently have comprehensive systems in place for the validation of non-formal and informal learning:

In France all qualifications, except regulated professions such as medical doctors, dentists, veterinarians and architects, can be obtained through validation of non-formal and informal learning. Individuals submit details of their learning experiences and the skills/competences gained. An expert jury appointed by the relevant ministry may then grant a full or partial qualification. A similar system exists in Luxembourg.

In the Netherlands people can submit a description of their experiences to a recognised provider of "experience certificates" for the purpose of job applications or formal recognition by an examination board. In Finland education laws allow for the validation of experiences in many education fields and levels.

On 26 November 2012, the Council reached a political agreement on the Council recommendation on the validation of non-formal and informal learning according to which Member States should have in place, no later than 2012 – in accordance with national circumstances and specificities, and as they deem appropriate - arrangements for the validation of non-formal and informal learning.

Youth entrepreneurship: creating jobs and competences

Entrepreneurship is not always seen as a conventional route to promote employment. However, entrepreneurship clearly represents an opportunity to foster employment and lower youth unemployment[68]. But more than that, having ideas and turning them into actions is one of the key competencies in lifelong learning in the 2006 Commission’s recommendation on key competences[69], representing a transversal skill and fostering (self-)employability.

Young people need to be familiarised with the meaning of entrepreneurship and becoming an entrepreneur should be an attractive option for a young person. Successful entrepreneurs, role models, are important in fostering entrepreneurial spirit in young people.

In early 2012, OECD published a Policy brief on youth entrepreneurship[70] highlighting that although young people may not seem like a likely group for entrepreneurship (due to their inexperience and lack of finances), they do have an interest in entrepreneurship and many of them believe that self-employment is feasible. The results of the 2009 Eurobarometer[71] suggest that the two youngest age cohorts (ages 15 to 24 and 25 to 39) have the highest level of interest in self-employment with 40% and 42% of people, respectively, responding that self-employment in the next five years was either “very feasible” or “quite feasible”, much higher than the figures for the 40 to 54 and more-than-55 cohorts (29% and 13%, respectively).

Young people can face specific barriers, preventing some from turning ideas into projects. These barriers include lack of entrepreneurial skills, lack of prior work experience and easy access to finance. The European Commission already supports youth entrepreneurship through promoting education for entrepreneurship at school and university, through the European exchange programme "Erasmus for Entrepreneurs"[72], allowing new entrepreneurs to be hosted by more experienced ones.

Through the European Progress Microfinance Facility[73], the Commission is aiming to increase the availability of microcredit for those willing to become self-employed or to start a micro-enterprise and experiencing (as is the case for young people) difficulty in getting conventional credits, including those entering the labour market. The future European Programme for Social Change and Innovation[74] (2014-2020) will continue to promote access to finance for micro- and social entrepreneurs.

Wage subsidies and non-wage labour costs[75]

Too high non-wage labour costs – such as employer social security contribution – can have detrimental effects on labour demand, especially for relatively lower productivity groups such as young people who are starting their career, as they face very elastic (sensitive) labour demand. Therefore, reducing the tax wedge (especially non-wage labour costs) on labour in a budgetary neutral way by shifting towards environmental, consumption or property taxes can have positive effects on labour demand and therefore also be a tool to ensure the success of a Youth Guarantee scheme. Targeting reduction at those groups who have sensitive labour demand is expected to have positive impacts on their employment. Nevertheless, design and implementation needs to be carefully prepared so as not to have an adverse effect on the employment prospects of groups that are (narrowly) ineligible.

Wage subsidies (hiring credits) offer payments to employers for hiring from particular groups of workers by subsidising their wages. They can also be used to secure the success of a Youth Guarantee scheme as they have the potential to boost employment. A hiring credit reduces the labour costs incurred by employers, raising their willingness to hire other workers and ultimately creating new jobs.

Employers should target hiring subsidies to new hiring. This way they can motivate employers to engage in net new recruitment, thus creating jobs that would otherwise not be created. Targeting vulnerable groups such as young people can have positive effects particularly where hiring subsidies are combined with additional efforts to help the target population. Subsidies are more effective when there is a good match, thorough preparation of the placement by the employment service and also the possibility for young people and employers for follow-up advice where required.

State aid rules should be taken into account as regards the above mentioned measures. In that respect it should be noted that general measures to facilitate the recruitment of young people, open to all companies in all sectors of the economy, would not qualify as State aid. By contrast, selective measures, e.g. limited to certain types of companies or certain sectors, or involving discretion of the authorities, may constitute State aid if the other conditions of Article 107(1) TFEU are met.

Labour mobility

Recent estimates (1st quarter 2012) based on the EU-Labour force survey[76] point to a share in the (working-age, 15-64) EU citizens residing in another Member state around 3.0%. This represents around 9.5 million persons. Compared to 2005 it is a strong increase (+50% as it was exactly 2.0% at that time or 6.2 million persons).

Whilst unemployment in the EU remains high, paradoxically, there are also over 2 million unfilled vacancies in the EU, according to the European Vacancy Monitor. These are mostly due to mismatches between labour supply and demand, and to insufficient labour mobility at regional, national and European level.

Young people are one of the groups with the highest propensity for being mobile. Work experience abroad can add value to their life-long learning and career path[77] and provide them with more job opportunities.

Labour mobility could therefore be promoted to address the issue of youth unemployment, to help employers find the skills they are looking for, but cannot find in their local labour market, and to enable Member States to offer every young person a good quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed or leaving formal education.

The Employment Package calls for more performing, dynamic and frictionless labour markets and the Commission’s 2013 Annual Growth Survey[78] stressed that with certain region and sectors lacking employees who fit their needs, these skills bottlenecks and mismatches need to be addressed through increased labour market participation, improved skill levels and facilitated mobility. In order to improve the situation, employment policies need to facilitate employment transitions that enhance productivity and job quality; workers must possess the right skills, and people have to be mobile enough to respond to job vacancies in other Member States and regions.

Investment in skills and reskilling will play a crucial role in supporting future mobility and productivity gains. Indeed, much of the loss of competitiveness in many Member States can be explained by poor productivity growth due to insufficient investment in skills policies and tools. Reinforcing skills policies is also crucial for tackling existing supply-side shortages and mismatches on the labour market and subsequently enabling mobility.

Furthermore, a genuine EU-wide labour market with sufficient fluidity levels will only be created once the remaining legal and practical obstacles to mobility for firms and workers are removed.

To this end, the European Commission is currently in the process of repositioning EURES, the European Network of Employment Services[79]. The reform will turn EURES into an EU-wide matching, placement and recruitment tool and include the roll out of targeted mobility schemes for certain occupations, sectors and cohorts (such as youth). This approach will follow the logic of the pilot action[80] “Your first EURES job" conceived to help young Europeans aged 18-30 find work in other EU countries. The scheme is based on support from national employment services – information, job search, recruitment and funding – for both young jobseekers and businesses confronted with bottleneck vacancies and interested in recruiting from outside their home country.

3.4. The European perspective

Use of EU structural funds

As evidenced by the Member States' replies received by the Commission to a questionnaire on youth policies and reporting results of the Youth Opportunities Initiative, this initiative has played an important role as a driving factor behind further reallocation of vast EU funding resources, in particular from the ESF and European Regional Development Fund (ERDF), towards youth unemployment measures. A notable example is Italy, which under its Cohesion Action Plan has so far reallocated EUR 6 billion in two phases, of which a significant share is dedicated to employment and education actions.

The European Social Fund in the current 2007-2013 programming period supports a range of actions aimed to enhance access to employment and the sustainable inclusion into the labour market of job seekers with a particular focus on preventing long-term and youth unemployment. Member States have dedicated significant resources towards improving school-to-work transitions for young people, and additional labour market integration measures such as targeted activation policies, wage subsidies, measures to encourage youth entrepreneurship and business start-up. Temporary recruitment subsidies are an instrument already implemented by Member States in the context of the economic crisis and can be supported by the ESF. ESF support to temporary recruitment subsidies should also respect certain requirements related to state aid rules and national co-financing. For examples of Youth Guarantee activities/interventions that can be supported by the ESF see Annex II.

The Proposal for ESF Regulation for the next programming period 2014-2020 includes a dedicated ESF investment priority targeting the sustainable labour market integration of young people not in employment, education or training. Member States facing high youth unemployment rates are thus expected to identify young unemployed persons as a specific target group for ESF funding. The latter represent the results achieved though EU Funds support. EU Funds can also be used to support job creation for youth through SME start-ups and self-employment measures.

Relevant measures under the European Regional Development Fund (ERDF) to support youth employment and labour mobility include notably support for SMEs, development of business incubators, investing in education and social infrastructure, as well as infrastructure for public employment services. Moreover, under cross-border cooperation programmes, ERDF promotes integrating cross-border labour markets, including cross-border mobility, joint local employment initiatives and joint training courses.

Youth employment will also be stimulated and supported under the European Agricultural Fund for Rural Development (EAFRD) in the field of agriculture and rural business development. Young people in rural areas will have the opportunity to set up their own farms, start a rural business or take part in various co-operation activities that could be supported under the EAFRD. They can also receive relevant training and professional advice on how to manage and run their businesses. They can also be involved in the local development of their area of living through the LEADER initiative[81].

The upcoming Partnership Contracts and Operational Programmes are therefore expected to dedicate significant focus on the issue of school-to-work transitions and labour market integration of young people. Moreover, in the next programming period, Member States are encouraged to identify possibilities for closer cooperation and integrated approaches among the five Common Strategic Framework Funds[82] (CSF) with a view to providing comprehensive solutions. In this context, youth integration cuts across a number of inter-related policy areas such as education, employment, social inclusion and social entrepreneurship, housing and business environment, which would involve investment support from multiple CSF funds. From the EU Funds perspective, a "Youth Guarantee" could in particular provide an effective policy instrument, demonstrating the added value of EU investments in measures with lasting effects.

During the 2007-2013 programming period, the Commission assisted Member States with regard to mutual learning and preparing joint proposals on youth employment policies through the European Network on Youth Employment, co-financed from ESF technical assistance[83]. In the run-up to the adoption of the EU CSF Funds Regulations for the next programming period, the Commission will discuss with Member States their preliminary views on the main country-specific challenges.

In order to speed up Structural Funds absorption in the current programming period, Member States should more actively seek to fully implement the youth activity measures already in place (in particular following reallocation of funds). Managing Authorities, in partnership with the social partners and when elaborating calls for ESF project proposals, could identify the measures for which implementation can most rapidly and effectively provide a guarantee for youth employment or training. For example, training vouchers and entrepreneurship grants could be such instruments. The Commission also encourages the application of simplified costs options, namely fixed flat rates for certain costs items by applying standard scales of unit costs and lump sums, to facilitate project accounting and implementation. Simplification and results-based management are taken further in the Commission's regulatory proposals for the 2014-2020 programming period, through the introduction of Joint Action Plans. These large-scale sets of projects, driven by pre-defined and agreed policy outcomes and results, could provide a flexible and effective instrument to ensure that EU funds support policy objectives. Some Member States, already implement similar measures during the current period.

European semester

The Commission is committing itself to monitoring the implementation of Youth Guarantee schemes as well as their impact in the Member States. It will in particular do so in the framework of the European Semester and the country-specific recommendations.

In order to increase competitiveness and ensure that the targets of the Europe 2020 strategy of smart, sustainable and inclusive growth are achieved, the European Commission has set up a yearly cycle of economic policy coordination, the European Semester.

The European semester starts when the Commission adopts the Annual Growth Survey (AGS) at the end of the year, which sets out the short and medium term EU priorities to boost growth and job creation. In April, Member States submit their Stability or Convergence Programmes and National Reform Programmes. During the course of May and June the Commission analyses these documents with a view to the priorities set out in the AGS and assesses progress on previous recommendations. Finally, the Commission issues country-specific recommendations that are formally adopted by the Council at the end of June.

As one of the groups hardest hit by the crisis, youth unemployment has figured prominently during the first two European Semesters. The 2011 AGS package pointed to the importance of targeting young people with appropriate measures to avoid a 'lost generation' and this message was reinforced in the 2012 AGS. A large number of Member States have received country specific recommendations linked to the improvement of the situation of the youth in the labour market[84]. This framework will be used to monitor the steps taken by Member States (and their impacts) towards implementing Youth Guarantee schemes.

In the 2013 Annual Growth Survey[85], the Commission stressed that Member States should secure school-to-work transitions for young people and develop and implement Youth Guarantee schemes whereby every young person under 25 receives an offer of employment, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed. Such schemes can be co-financed by the European Social Fund.

Learning from one another

Mutual learning will be a vital tool in order for Member States to be able to achieve a successful Youth Guarantee.

Mutual learning programmes and initiatives can help to share knowledge and expertise between actors confronted with similar problems. Learning from one another and drawing lessons, which can be applied to one's own national/regional/local situation, is a cost effective way of acquiring new skills and competences to deal with new labour market challenges.

The outcomes resulting from this kind of exercise can allow for certain elements and aspects to be transferred from one country to another and applied in a local / national context. Replicating this kind of exercise at Member State level can help to disseminate knowledge among relevant partners and empower them to be more efficient in their own work. It is also a means of reducing risk in the implementation of new schemes and ensuring greater return on investment on the basis of previously tried and tested policy options.

At European level, the objective of the Mutual Learning Programme (MLP) in the employment field is to encourage mutual learning at all levels of governance and to enhance the transferability of the most effective policies[86].

In 2013 and the following years, the MLP programme could focus on the transferability of knowledge on Youth Guarantee schemes among Member States having similar patterns of NEETs or meeting specific situations with groups facing multiple barriers. It would thus ensure that the most effective policies and measures are known by all concerned stakeholders across the Member States and would help improving the design and the delivery of future Youth Guarantee schemes.

The European Commission will also continue to monitor the uptake and implementation of Youth Guarantee schemes through the European PES Network and draw lessons from national programmes. Furthermore, in the future, there will be a closer coordination with the Mutual Learning Programme in the social Open Method of Coordination, PES to PES dialogue and, where relevant, other exchanges supported by the Commission, in order to avoid overlaps, both in terms of contents and timing.

The mutual learning process will also take account of experiences from outside the EU which could be useful. Further, the process will seek to enhance and extend the involvement of other stakeholders, especially social partners, but also NGOs, academic institutions, international organisations, etc. in order to ensure a wider dissemination of the outcomes.

On 20 August 2012, the Commission launched a call for proposals in the framework of a European Parliament preparatory action on Youth Guarantee schemes, funded with € 4 million. The purpose of this call is to support partnerships for activation measures targeting young people through projects in the context of Youth Guarantee schemes at national, regional or local level.

The experience gained from the projects selected under this call will provide Member States with various schemes, patterns and practical recommendations for establishing the Youth Guarantee with a view to the future Union funding schemes relevant to young people and labour market integration, paving the way for future ESF action. The Commission will organise a valorisation conference involving all Member States (in particular ESF managing authorities) to present the various schemes, patterns and practical recommendations resulting from this call to all Member States and expects them to make full use of the results of the funded projects.

European socio-economic research has already focused for a long time on youth unemployment and on aspects of their social exclusion (and potential for inclusion). Findings from this range of projects have recently been summarised in policy reviews[87], which include research findings and policy recommendations on employment, education & training, youth and social policies.

For the final year of FP7 the Social Sciences and Humanities programme has called for a large scale integrated research project “Overcoming youth unemployment in Europe”[88]. The objective is to develop a comprehensive understanding of the causes of the very high unemployment rates among young people and to assess the effectiveness of labour market policies designed to mitigate this phenomenon.

Assessment and continuous improvement of the Youth Guarantee schemes

Assessing and evaluating all actions and programmes contributing towards the setting up of Youth Guarantee schemes are necessary both at national and EU-level. They will indeed allow continuous improvement of the existing schemes and further feed the policies to be implemented to reduce youth unemployment in Europe.

So far, few exercises of the kind have been carried out. The PES of the 12 participating Member States[89] stated that a number of country cases (such as Austria or France) demonstrated the possibilities of monitoring beneficiaries before and after entry into a measure, allowing not only an assessment of the outcomes of measures, but also helping to identify the most cost effective initiatives.

However, the collection of data on this scale was considered to be impossible in many countries in light of data protection requirements, thus highlighting the need for more targeted evaluation studies or controlled trials.

In addition, even in countries with existing evaluation systems, a stronger link is still to be made between the evidence base and how to use the findings for organisational learning and (future) policy design.

In the UK, the Centre for the Analysis of Youth Transitions (CAYT) has been set up to provide evidence on transitions made by young people and help inform key government policies such as the raising of the education and training participation age to age 18. The CAYT is a mechanism by which the UK seeks to improve understanding of the bridging period between childhood and adulthood and how it is changing over time, with a particular focus on what this can tell about the likely effectiveness of a range of policy interventions.

Eurofound recently published a short report[90] assessing the Swedish and Finnish experiences as regards Youth Guarantee schemes which highlights how strengths and weaknesses of schemes can be assessed.

The Commission will also work together use with relevant partner organisations such as Eurofound, ILO and OECD to provide further evaluation of actions and programmes contributing towards the setting up of the Youth Guarantee so that more evidence based policies and interventions can be developed on the basis of what works, where, why, and for whom, paying special attention to gender and the diversity of young people, thus ensuring efficient use of resources and positive returns on investment.

Awareness raising

To ensure the rapid take-up of the Youth Guarantee by all young people across Member States, the visibility of the schemes must be ensured. Raising awareness activities will be needed to promote the existence of the schemes, the ways they function and the ways young people can access these schemes.

Youth organisations, youth information services, PES, trade unions and other relevant stakeholders, both at EU and national level, will be the natural multipliers of Youth Guarantee-related information.

Using social media (e.g. Facebook) is obviously a natural avenue to reach out to young people. However, information campaigns using more traditional media (TV and for instance youth specialised channels, radio, written press, youth press, etc.) can be envisaged as they can also target parents who can support their children when it comes for example to registering with an employment service.

In order to make people aware of its renewed Guarantee and to commit the relevant actors (public officials, entrepreneurs, labour market unions, young people, parents, etc.) to its implementation, the Finnish Ministry of Employment and Economy launched a road show visiting 15 cities during September and October. This tour was also meant to be a platform from which local authorities could build a network in order to coordinate the implementation of the Youth Guarantee at local level. Around €100,000 had been earmarked for this activity, which included a handbook of best practices, a website[91] (in Finnish, Swedish and soon in English) and a short video.

The Commission on its side will use the European Youth Portal and will liaise with its existing information campaigns such as “Youth on the Move[92]”, “For Diversity. Against Discrimination[93]” and “We Mean Business[94]” to promote the Youth Guarantee across the EU.

ANNEX 1

Youth-related measures currently in place in Member States and Croatia

C/try || Vocational training, Apprenticeship Traineeship measures || Early intervention and activation measures || Labour market integration measures, including subsidies to employers

AT || “Training Guarantee” for apprentices: young people until the age of 18, who cannot find a company-based apprenticeship, are given the opportunity to learn an apprenticeship trade in a supra-company training institution. “Production Schools”: reintegrating young people having dropped out from school or from an apprenticeship into the education and training system and the world of work. "Apprentice Coaching", pilot project starting in Upper Austria, Styria, Tyrol and Vienna: additional support to apprentices and to companies offering apprenticeship places incl. legal advice services, mediation and crisis intervention; training manuals for some important sectors with best practice examples about ways of designing training within a company; central clearing office for final apprenticeship exams and a certificate for examiners are being developed. PES supports the integration of disadvantaged groups and young women who take up apprenticeships in male-dominated professions. || “Youth Coaching”: early intervention against school drop-out and supporting young people (in their last year of compulsory education, NEETs until 19 and those with special educational needs or disabilities) in their transition from school to work - 2012 pilot project in Vienna and Styria, to be extended to the rest of Austria in 2013. || “Youth Placement Foundations” Companies having trouble to find adequate staff for certain posts cooperate with PES in finding the best suitable participants among unemployed (19-24) in order to subsequently provide them with closely job-related qualification measures (enrolment has only just started). Alongside basic subsidies, quality-related and labour market-related incentives are offered to encourage employers to establish additional apprenticeship places and improve the quality of training for the about 130,000 apprentices per year.

BE || End of July 2012, the Federal government budgeted the means to create 10,000 subsidised traineeships as of 2013 for youngsters exiting the education system without a secondary education degree, to be implemented in close cooperation with the regions. Support for apprenticeships in all regions and communities, notably through various schemes of subsidised “Individual Vocational Traineeships”. Flanders: renewed “Career Agreement” (2012-2014) provides for closer follow-up of low-skilled youth. As of January 1, 2013, young people with no degree, who did not manage to build up any significant work experience, will be guided towards existing vocational training, in-company training and/or apprenticeship schemes. The ambition is to have the entire target group participate in an intensive activation trajectory (work experience or vocational training) by June 2013. || Brussels-Capital region: funded actions targeting young people. Flanders: ESF funded “Work@telier” targeted at long-term unemployed youth, and measures for work placement and traineeships to early school leavers. German-speaking Community: ESF programme includes 15 different initiatives focused on young job seekers. Walloon Region: ESF funded support to young people, in particular through individualised guidance (former Job Tonic initiative). || The Federal government has also committed the resources necessary to increase the existing reductions of social security contributions for low-qualified young job seekers as of 2013. A new social security contribution reduction will be introduced for medium qualified youngsters. Regional governments subsidise the apprentice's wages and social contributions provided certain conditions with regard to training and ulterior employment are met (concrete modalities and support vary by region and target group).

BG || Under the ESF-supported Human Resources Development Operational Programme (HRD OP) there are four on-going operations promoting youth traineeships (targeting secondary school and university students), including for disadvantaged groups. || An Agreement on exchange of information between the Ministry of Education, Youth and Science (MEYS) and the Ministry of Labour and Social Policy (MLSP) was signed in July 2012 to facilitate the implementation of the “European Youth Guarantee”. Within four months of leaving school, young people will be offered employment mediation services, training and subsequent employment. || A recently signed (June 2012) national agreement “First job” has united the efforts of the government and the social partners towards increasing youth employment by promoting opportunities for a first professional experience.

CY || Under the ESF co-financed Operational Programme, post-secondary Institutes of Vocational Education and Training are to be established (Ministry of Education and Culture). A subsidy scheme co-financed by the ESF and implemented by the Cyprus Productivity Centre (CPC) to promote the employment and in-company training of apprenticeship students. “Scheme for the Job Placement and Training of Tertiary Education Graduates”: consolidated programme operated by Human Resource Development Authority (HRDA) for the integration of highly qualified young people into the labour market by providing on-the-job experience in a company for a period of 12 months. Training programmes for the unemployed: - Under accelerated initial training programmes for newcomers and other unemployed people in occupations currently in demand, priority is given to those up to age 25; - Under scheme for improving the employability of the unemployed through training and work experience programmes (with ESF support), at least 30% of participants should be under 30. || || HRDA subsidises wages paid by employers to apprentices who attend classes in technical schools; also funds the practical training of final year students who follow the practical direction of technical schools; and subsidises enterprise-based practical training of students of the Higher Hotel Institute of Cyprus.

CZ || “Traineeships in Companies - education through practice”, a new ESF-funded project (09/2012-10/ 2014) providing internships in companies for several months, in sectors of the future, involving mainly graduates, but also other groups who lack work experience to complete their skills profiles. If successful, the internships might become a 'standard' offer of assistance to the unemployed. || The “Individual Action Plan” defines the procedure and timetable for implementation of measures to increase job opportunities. It is elaborated and signed if a job applicant is registered as unemployed continuously for more than 5 months. ||

DE || The “National Training Pact” aims at increasing the educational attainment of young people. It aims at offering a training or apprenticeship option to every young person who is interested in vocational training and who fulfils necessary requirements. “Entry-level qualifications” offer 6 to 12 months of company-based pre-training courses in order to qualify individuals for apprenticeships and to improve the matching between applicants and companies. || Some 2,000 schools can now profit from the assistance of career start coaches under the “Career Entry Support” programme to help their students successfully complete the transition to career training. Public Employment Services (PES) support young people in preparing and obtaining qualifications needed on the labour market, including those with disabilities. “Initiative to Support Structural Change”: low-skilled to acquire vocational qualifications or learn employable skills via modular courses, if full vocational programme is not completed in one go. The "Abschluss und Anschluss – Bildungsketten bis zum Ausbildungsabschluss" initiative aims to support young people entering the workforce and to prevent long transition periods from school to work. || Companies participating in the “Entry-level qualifications” receive up to EUR 216 per month to cover the social security contributions for trainees.

DK || Since 2009, the Danish Parliament has agreed upon five agreements focusing on increasing training places in companies. The latest agreement from November 2011 ('Increased efforts for more company training places in 2012’) entails the creation of 7,400 internships and 3,000 school-based training positions in 2012 (a 25% increase compared to 2009). The 2013 draft budget agreement, proposed by the Danish Government, provides that an “education and apprenticeship guarantee” should be offered within the vocational youth education system. || Young people under 30 are entitled to a first interview at a jobcentre within one month of unemployment. Everyone has a right – and duty – to receive active labour market measures within three months of unemployment. Young people under 25 receive lower benefits in order to create an incentive to take up education or find a job. The August 2012 proposal for a “Youth Package”, to be implemented in 2013, includes help for more young people (18-30) to be in education, internship or work, including inter alia: - bridging education programmes for uneducated young people; - placing internship consultants in schools to help young people find an internship; - allocating funds for long-term unemployed skilled and un-skilled young people; - developing graduate job partnerships. In order to increase the employability of young people and lower the drop-out rates, the Danish Government proposed to better target vocational youth education towards the needs on the labour market. || Bonus of up to EUR 9,333 to private and public employers who enter into a training agreement with a trainee.

EE || An apprenticeship training scheme offers unemployed people practical work experience and improve their professional skills and knowledge. Nine pilot projects are running for youth (16-29) without any professional education. Career counselling services and work practice schemes provided by the PES for young job-seekers. || Under the EuroPlus Pact 2012, programmes will be developed to offer formal education to young people aged 16-29 who lack specialised education, as well as for outreach to at-risk youth and their inclusion in active labour market measures and education. ESF-funded KUTSE programme invites students who have dropped out from vocational education back to school to finish their studies. ESF-funded TULE programme allows university drop-outs to finish their higher education studies free of charge. || Wage subsidy is the main incentive measure for employers to recruit long-term unemployed people; more favourable conditions for young unemployed (16-24).

EL || Various schemes largely co-financed by ESF: - career guidance services offered by vocational training and tertiary education institutions; - acquisition of first work experience for vocational education and training graduates. On-going ESF co-funded operation offering work-based training opportunities for students in upper secondary, post-secondary and tertiary education. The Ministry of Education, Religious Affairs, Sport and Culture operates work-based training schemes for tertiary education, as well as for vocational training students. An ESF co-financed scheme for post-secondary maritime education students is also running. || Job search assistance to unemployed youth through the Greek Manpower Organisation (OAED). || Preparation of an action plan consisting of targeted interventions to boost employment and entrepreneurship among young people, to be mainly supported with funds under the Greek National Strategic Reference Framework 2007 – 2013. Employment subsidy schemes: OAED provides incentives to employers to accept students for internships (where the employer pays 80% of the wage of an unskilled worker to the trainee and OAED reimburses the employer up to 50% of the total amount/wage paid).

ES || The Spanish system provides for concrete measures regarding apprenticeship and training, such as the "on the job training contract" and a new "training account" for each young unemployed. Since 2011, law introduced traineeships in enterprises without the obligation of subsequent job offer, for 3-9 months, aimed at young unemployed (18-25) with a specific academic degree or a professional accreditation certificate. Participants receive a grant for at least 80% of the current minimum wage (EUR 641/ month). The labour market reform of February 2012 introduced a “training and learning contract” (1-3 years) which foresees a system of alternating remunerated work and vocational training activity, for young workers 6-25) lacking professional qualification and seeking for an internship. Royal Decree implementing a contract for training and learning and providing the basis of dual vocational training. || ESF co-finances specific measures for disadvantaged young people, mainly through the national OP Fight against Discrimination. Envisaged: reallocation of ESF financing towards actions to support the employability of young people; to support public employment services to reinforce the measures to combat early school leaving and promote vocational training; to explore the possibility of pilot projects for dual vocational training. || The labour market reform of February 2012 established a new individual right to professional training (20 hours per year).

FI || More study places in vocational education, regional re-distribution of the study places according to changes in age groups, changes of the acceptance criteria for vocational education & training. The “Education Guarantee” includes an apprenticeship training pilot project's aiming to develop apprenticeship training into a suitable form of training for young basic education graduates. || A revamped “Youth Guarantee” in 2013: each person younger than 25 and each recent graduate under 30 will be offered work, a traineeship, or a study, workshop or labour market rehabilitation place, within 3 months of becoming unemployed. The Guarantee also includes an “Education Guarantee”: each comprehensive school graduate will be guaranteed a place in further education, workshop activity, rehabilitation or similar. A temporary “Skills programme for young adults” (2013-2016): additional places will be targeted to those (20-29) who have only attended comprehensive school. Youth outreach work as early as possible towards those under 29 at risk of exclusion directing them to low-threshold services that promote their growth and independence as well as access to education and work. “Youth workshops” provide young people with the opportunity to work under guidance and support as well as a tailored pathway to education, help towards completing one’s education by working together with the education provider, or support finding employment through the open labour market. More training, language courses and counselling will be provided to reduce the NEET risk among young immigrants. Additional resources and more career counselling for young job seekers in the employment offices, increased municipal responsibility in counselling comprehensive school graduates. || The apprenticeship training pilot project supports both the training organiser and the employer (EUR 800/month) by providing additional resources.

FR || “Contrat d'apprentissage” (apprenticeship contrac