the transition becomes. policy makers in europe have launched the youth guarantee scheme, a kind of promise of employment, to combat the youth unemployment problem. measures of this kind may afford short - term relief, but they will not create jobs that are profitable on a long - term basis. the sobering truth is that the high level of youth unemployment in the crisis - hit countries can only be checked by radical reforms. looking into the past we see that ten years ago, for example, youth unemployment in many southern european countries was higher than their overall unemployment level. by contrast, in germany at that time – when the country was caught up in a phase of weak growth and serious structural problems – the exact opposite was true. in 2003, when germany was known as the sick man of europe, german youth unemployment was lower than general level of unemployment in germany. this fact in particular illustrates that youth unemployment has a lot to do with structural causes, but very little to do with cyclical influences. what exactly is meant by structural causes? where do the biggest problems lie? the three most important problem areas for the southern european labour markets may be outlined as follows. 1. the labour markets are strongly segmented, and give established, older employees high job protection. what is undoubtedly an advantage for them, however, proves to be a major obstacle for young people in search of a permanent position. consequently, young job - seekers are often only offered temporary employment contracts which are easy to terminate when economic activity slackens. 2. legal or negotiated minimum or entry - level wages for young workers are often relatively high in those countries. this can be an obstacle to employment. in germany, by contrast, it is customary for apprentices to receive a distinctly lower starting wage. 3. in many of the crisis - hit countries, vocational training is mainly school - based and is often not sufficiently geared to enterprises ’ needs in terms of labour and qualifications. in countries with dual training systems such as austria, switzerland and germany, on the other hand, youth unemployment is very low by international standards. while there is therefore a lot to be said for a dual training system, the countries concerned cannot, of course, change their system overnight. for this reason, measures to introduce a new training system would only improve the job prospects for young people in the longer term. but what about germany? what needs to be done here? i will begin with the most obvious point. we should welcome young, well - trained job - seekers from crisis

##recise to some degree. for example, cecchetti et al ( 2007 ) employ a slightly modified version of the stock - watson procedure in a recent paper and find that inflation persistence has fallen so low that their estimated trend for gross domestic product ( gdp ) price inflation has been almost perfectly flat at about 2. 2 percent over the past few years. in contrast, cogley and sargent ( 2005 ), using a different modification of the procedure, obtain results more in line with the original stock and watson paper. finally, followup work by staff members at the federal reserve board suggests that the degree of persistence found with these techniques varies across different measures of inflation. thus, the empirical evidence on this question can vary. nonetheless, i think it fair to say that inflation has become less persistent over the past two decades but that the underlying trend may not yet be perfectly stable. when cecchetti and his co - authors apply this type of analysis to other countries, the results are remarkably similar. in particular, in canada, italy, and the united kingdom, the importance of the trend shocks began to rise in the late 1960s and early 1970s and then declined only in the mid - 1980s. france followed a similar pattern, although there the rise began a bit earlier, in 1963. in short, all these countries experienced a similar " great inflation, " when trend inflation became unanchored. germany and japan had shorter periods of high persistence of inflation, with persistence beginning to decline around 1969 in germany and around 1979 in japan. cecchetti and his co - authors conclude that the rise and subsequent decline of inflation persistence has thus been a worldwide phenomenon. slope of the phillips curve in traditional phillips - curve equations, inflation depends on past values of inflation, an unemployment gap ( the difference between the unemployment rate and an estimate of its natural rate ), and variables such as the relative price of energy and import prices. when researchers estimate these equations, they typically find that the coefficient on the unemployment gap has declined ( in absolute value ) since the 1980s, often by a marked amount. 4 in other words, the evidence suggests that the phillips curve has flattened. the finding that inflation is less responsive to the unemployment gap, if taken at face value, suggests that fluctuations in resource utilization will have smaller implications for inflation than used to be the case. from the point of view of policymakers, this development is a two - edged sword : on the plus side, it implies that an overheating