Germany, France to Unveil ‘New Deal’ for EU’s Jobless Youth

Germany and France will announce joint proposals this month to address Europe’s soaring youth unemployment, the Labor Ministry in Berlin said, confirming a newspaper report of a planned “New Deal for Europe.”

The blueprint will be unveiled in Paris on May 28 and will enroll the European Investment Bank to unlock billions of euros in loans to companies that create jobs for young people, the Rheinische Post reported today. The proposals are part of a joint initiative termed a “New Deal for Europe” that echoes former President Franklin D. Roosevelt’s drive to cut U.S. unemployment in the 1930s, the newspaper said.

The EIB may “leverage” the 6 billion euros ($7.8 billion) to be made available through 2020 by the European Union to offer loans worth a total of as much as 60 billion euros, the newspaper said, citing unnamed officials. The plan will be aired by the German and French finance ministers, Wolfgang Schaeuble and Pierre Moscovici, and by the respective labor ministers, Ursula von der Leyen and Michel Sapin, it said.

Chancellor Angela Merkel sees youth unemployment as possibly the most serious challenge facing Europe at this time, Steffen Seibert, the chief government spokesman, said today at a press conference in Berlin. Germany is “obliged” to impart its “expertise” in curbing youth employment, including promoting the country’s “dual apprenticeship” system of training that brings together job experience with college-based training, he said. “At the end of the day, the initiatives have to be based on a common EU approach.”

Rising Rates

The economy of the 17-nation euro area will probably shrink for a second year while unemployment will rise to a record 12.2 percent, the EU Commission said May 3 as it presented new forecasts. Youth unemployment -- defined as people aged below 25 without work -- rose to 24 percent in the single currency area in March, according to Eurostat.

The average masked rates of 56 percent in Spain and 38 percent in Portugal and Italy. Youth unemployment in the EU will remain above 17 percent until 2015, the International Labor Organization said May 8 in a report called “Generation at Risk.” The rate in Germany in March was 7 percent.

“Conceivable is establishing a link between credit conditions” on offer and the creation of jobs and training places by companies, EIB President Werner Hoyer was cited as telling the Rheinische Post. The Paris meeting will be organized by the Berggruen Institute of Governance, the newspaper said.

The Luxembourg-based EIB says on its website that it is “the only bank owned and representing the interestes of Europe Union member states.”

Before it's here, it's on the Bloomberg Terminal.