Margarida Vasconcelos: Brussels continues to pursue its failed policies to tackle youth unemployment

Despite the countless European Councils, Ecofin and Eurogroup meetings the EU leaders have failed to come up with a successful response to the crisis. There are some signs of recovery but the Eurozone crisis is far from over. The EU, particularly the eurozone, continues to face low growth, massive unemployment and excessive debt. The European Commission has acknowledged that growth is very slow to restore the unemployment situation across the EU. Greece, Portugal, Spain, Ireland as well as Italy can only retrieve from their current situation with growth but that won’t happen unless there is a repeal of the EU employment and social laws.

In the meantime, the unemployment rate continues to rise, particularly in the Euroarea. According to Eurostat the euro area unemployment rate was 12.2 % in September 2013 and 11.0% in the EU28, they have risen compared with last September, when they were 11.6 % and 10.6% respectively. Eurostat estimated that “compared with August 2013, the number of persons unemployed went up by 61 000 in the EU-28 and by 60 000 in the euro area” and “Compared with September 2012, unemployment rose by 978 000 in the EU-28 and by 996 000 in the euro area.” Whereas the lowest unemployment rates were recorded in Austria (4.9%), Germany (5.2%) and Luxembourg (5.9%), the highest were recorded in Spain (26.6%) and Greece (27.6% ). The youth unemployment is getting even worse, it has risen to utterly unacceptable levels in some Member States. In September 2013, the youth unemployment rate was 24.1% in the euro area and 23.5% in the EU28, compared with 23.6% and 23.1% respectively in September 2012. Eurostat estimated that “In September 2013, 5.584 million young persons (under 25) were unemployed in the EU-28, of whom 3.548 million were in the euro area.” Compared to September 2012 figures “youth unemployment decreased by 57 000 in the EU-28 and increased by 8 000 in the euro area.” Whereas the lowest rates were recorded in Germany (7.7%), Austria (8.7%) , the highest were recorded in Greece (57.3% ), Spain (56.5%) and Croatia (52.8 %). There are therefore considerable differences in employment levels, particularly between north and south member states.

The EU leaders met in June and again in November to assess the EU’s youth unemployment and discuss how to tackle it. The European Council noted, “youth unemployment has reached unprecedented levels in several Member States” and stressed that the high number of young people in Europe who are unemployed is unacceptable. In June the EU leaders agreed “on a comprehensive approach to combat youth unemployment”. Despite stressing that “Urgent action must be taken”, the measures agreed by the EU leaders to tackle youth employment are unlikely to have an impact on the problem, as they are not only too costly but also ineffective. According to the European Council conclusions “all the necessary preparations will be made for the Youth Employment Initiative (YEI) to be fully operational by January 2014”. Under this scheme EUR 6 billion will be disburse during the first two years of the next Multiannual Financial Framework to beneficiaries in EU regions having youth unemployment rates above 25%. Moreover, the Structural Funds will be particularly focus on youth employment and “The Commission and the Member States will exploit all possibilities offered by the European Social Fund (ESF), which is one of the main financial tools at EU level for this purpose, including through supporting the creation of new jobs for young workers.”

The EU leaders met again in November but no further solutions were discussed. They just reiterated their commitment to fight youth unemployment and implement the Youth Guarantee. Nevertheless, only six member states have so far presented to the European Commission their first draft plan to implement the scheme. According to Mr Barroso “We all agree that the Youth Guarantee is the best way for Member States to help young people to get a job and to reduce the unacceptable levels of youth unemployment" and called on the member states “to put in place the structural reforms and infrastructure to make the Youth Guarantee a reality as soon as possible.” However, Brussels plan to fight against unemployment just involves programmes with limited impact, which require more money.

The policies that are being pursued won’t bring unemployment down and are far from creating jobs. Indeed, as Wolfgang Münchau pointed out in the Financial Times, the programmes to deal with youth unemployment “are a waste of time and money if not supported by macroeconomic policy”. In fact, as Martin Callanan said, “A good place for us to start would be to scrap some of the EU's job-killing legislation like the Working Time Directive that actually prevents people from working, or the Agency Workers Directive which makes it harder for young people to get a foot on the employment ladder.”

Due to overregulation there is a huge percentage of unemployment in Europe. The EU regulations and directives undermine the ability of any government to promote growth. In fact, the EU overregulation and employment laws have been preventing growth and employment in all member states. Hence, the EU leaders should tackle first the causes of no growth in Europe, namely repealing the EU employment and social laws, which have been strangled the small and medium-sized business in Europe. The costs of implementing all the EU directives and regulations is massive.

Brussels has been regularly paying lip-service to the need to create friendly conditions to small and medium-sized businesses as the engine of future growth in Europe, but there has been, so far, an absence of political will to tackle overregulation. The European Commission has already adopted several Communications, but any serious action on deregulation is yet to be seen. David Cameron believes several other EU countries share his views on deregulation. In fact, according to the European Council Conclusions from last October, the EU leaders call on the EU institutions to “rapidly implement the REFIT programme” namely “through simplification of existing EU law, by withdrawing proposals that are no longer needed and by repealing legislation that is out of date.”  The Commission launched last year the so-called Regulatory Fitness and Performance Programme (REFIT) to identify unnecessary regulatory costs, burdens, and ineffective measures. However, the Commission is in charge of such tasks hence it is likely to find that EU Directives are relevant, fit for purpose and that the benefits they generate are likely to outweigh the costs. The Commission claims that “has put SMEs at the heart of its smart regulation agenda to help growth and job creation in Europe”. It says that it has exempted micro-enterprises from regulation when justified and introduced lighter regulatory regimes for SMEs. However, there are only few examples where the Commission has proposed SME exemptions. In fact, the Commission stresses that it is not possible to exempt microenterprises “when there is clear evidence that excluding them would mean that the regulation would not be able to achieve its goals as e.g. to protect workers or consumers” and “They cannot be exempted from EU Treaty requirements protecting for example fundamental rights”. In these cases, when exemptions are not possible, the Commission says that it has been introducing “a lighter set of requirements for smaller businesses, reduced fees” however, again, there are only few examples of this. The few examples where the Commission has proposed ways to make EU law lighter, simpler and cheaper, are just a drop in an ocean of burdensome regulations.

The Commission is also planning to withdraw a proposal on access to justice in the area of environment and a proposal for a Soil Framework Directive, but it “remains committed” to it. The Commission is only planning to withdraw these proposals because they have been stalled in the Council not because it is concerned with the burdens. If there were a qualify majority voting at the Council the proposals will go through.

The Commission is only proposing to repeal the so-called outdated laws and obsolete provisions. It has not proposed to repeal even one of the most burdensome regulations for businesses, such as the Working Time Directive and the Agency Workers Directive, which are harming the UK’s deregulated labour market, which is becoming less flexible and less competitive. The Temporary Agency Workers Directive imposes administrative burdens and costs on companies that, consequently, take on fewer of temporary workers. The task-force business report, commissioned by David Cameron, stressed that EU employment law places unnecessary burdens on businesses, particular SMEs and micro-enterprises that are struggling to cope with it and prefer not to employ people. According to business leaders “the complexity and quantity of employment legislation coming from Europe is preventing job creation.” One can therefore said that the EU prevents instead of creating jobs. The business task force also noted “EU regulation should create the best possible conditions for businesses to grow” however “too often the burden of EU regulation acts as a disincentive to growth.” They particularly noted, that SMEs “need to be allowed to grow in order to stimulate economic recovery.” In fact, they warned that “European industry will relocate to more dynamic markets unless we adopt a much more innovation-friendly approach to regulation”. They pointed out that UK and European companies will not succeed in competing in the world, “if they are subject to additional costs and burdens which their competitors in other developed markets do not face.” In fact they stressed, “The future of European business depends on the removal of unnecessary, burdensome regulation, which stifles growth and competitiveness.”

It is important to note that Barroso said that such exercise would not “call into question established policy goals at European level.” In fact, he stressed, "It is not about weakening the EU. It is not about giving up on integration or on ever closer union." He said that "useless laws weaken the necessary ones" but it is Commission who decides which are the useless laws. The Commission is mainly proposing to accelerate the “simplification” of EU regulations through consolidation and codification, processes that entail further European integration. No serious repeal of regulations is suggested.

There is no doubt that EU leaders want to cut Brussels’ red tape but they have not made any serious commitment to deregulation although this would be only possible way to achieve growth in Europe, namely, as above mentioned, repealing the EU employment and social laws, which would enable our own small and medium-sized businesses to grow. It would be a Hercules’s task to persuade the European Union to abstain from creating burdensome regulations. As James Clappinson MP pointed out, it is in the European Commission and the European Parliament DNA to produce, on daily basis, regulations that impose burdens on our business. The European Commission has no democratic mandate but it has almost the exclusive right of initiative over all EU legislation. It defines in its proposals the interest of the Union. Even if the European Commission puts forward proposals repealing burdensome regulations, this will be subject to the Ordinary legislative procedure and QMV. A blocking minority of at least four Council members could prevent the adoption of such proposals. Moreover, the ordinary legislative procedure enables the European Parliament to override a decision taken by the Council, and it is well known that the European Parliament always try to introduce amendments, which are even more burdensome that the Commission’s proposal. A serious reform of any aspect of the acquis communautaire is unacceptable to the EU.

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