THE BLOG
06/25/2013 05:55 pm ET Updated Aug 25, 2013

Europe's Dangerous Unemployment Cocktail: Why Europe's New Deal on Youth Employment Won't Work and How the Social Sector Can Help

Co-written by Simon Rowell

Like a party starting to get out of control as people up the strength of their drinks, the increasingly high level of youth unemployment across countries in Europe is becoming very risky. Whilst Germany is still sipping on its premium lager (7.9%) contentedly in the corner, Britain has upped the ante from its cider to sample the Pimms (25%), and Italy has long ago ditched its Chianti to move to the hard liquor (38%), meanwhile Greece is downing the extra-strong Ouzo (59%) with abandon. But as is often the case, such parties often can descend into craziness and downright chaos when excess reaches a certain level. But in this party, a whole generation of European youth is at risk and urgent action is required.

The good news is that after summit after summit, Europe's political leaders have started to grasp the gravity of the situation and have come up with a noble plan "to rescue an entire generation" in the words of President Hollande. Europe's "New Deal" announced in May 2013 focuses on replicating what has worked in keeping unemployment so relatively low in Germany. In particular, the New Deal will aim to replicate Germany's notoriously successful training and apprenticeship program that links students with employers and will be supported by £5bn of European cash for the purpose. Other national governments, such as David Cameron's government's recent initiatives to boost apprenticeships in both the trades and professional settings, have been taking similar policy approaches and have therefore shown the German model to be the pro forma solution to a youth unemployment crisis.

Whilst it is laudable that European leaders are finally thinking about solutions to this epic challenge, this politically trendy solution is unfortunately doomed to fail due to three reasons.

It won't be fast enough. Vast structural differences exist between the German economic model and those of Southern European countries -- making change this deep change to labor markets mechanics and education program culture will realistically take a decade.

It doesn't target the current unemployed cohort. The German model relies upon training students to meet the needs of willing employers from early high-school age, which effectively rules out all the 7.5 million idle young Europeans waiting for a job right now.

There are still no jobs. Even if there was a facility to train these students, there still is nowhere for them to work. And with economic growth still struggling across Europe now and in the foreseeable future -- OECD even recently forecast a 0.6% contraction among Eurozone economies -- it is unlikely that training is going to lead to any new permanent roles, but rather a succession of short-term and part-time employment opportunities that are becoming the norm for young workers.

In addition, it is important to note that the characteristics of this current "lost generation" cohort of youth unemployed are not the same as when they were first lost their jobs.

Economically, many have been unemployed for more than two years, which drastically increases the difficulty of getting a job as youth become "unemployable" in the eyes of potential employers.

Socially, they have become more socially disconnected as they lose one of their main links to the real world -- the workplace -- and end up in a cycle of despair and isolation amongst the other youth unemployed.

And politically, they are starting to favor extremist groups offering radical and often anarchic solutions to their predicament, such as Syriza in Greece and Indignados in Spain. In Italy, the 46% youth electoral following of Beppe Grillo which the proceeded to destabilize a country's political system showed us some real potential political consequences of youth unemployment.

The solution therefore needs to be not only fast, target the current unemployed cohort and deal with the lack of jobs, but also address the multiple economic, social and political implications of youth unemployment to have any chance of success. A tall order, but the solution might prove to be a naively simple, yet economically and politically viable one - shepherding the large pool of unemployed youth into the social sector that needs to boost its volunteer workforce.

The social sector, meaning charities, social enterprises, community organizations and public service spin-offs, desperately needs more people in their organizations right now to help them address important social needs, from reoffending prisoners to housing. Austerity-induced budget cuts flowing on from Europe's sovereign debt crisis have blown away traditional grant funding elements from these organizations, and as traditionally labor-intensive operations, they need volunteers in large numbers. Further, such social sector organizations can provide the sense of public purpose and broader community engagement that results in reduced feelings of political disenfranchisement or extremism as well as reduce the cycle of social stigmatization of unemployed youth. This is not to mention the positive impact the organizations themselves are having on society. For government, this prospect is enhanced given they may already be paying for unemployment benefits in any event -- clearly a better deal.

However this initiative will not happen by itself and government will need to be proactive with both key groups to make it work. For social sector organizations, government needs to connect them intimately with job networks and benefits agencies to help identify the right volunteers with skills and motivation suitable to their operations. For youth, government needs to ensure this program is credible and respected by employers and the public to ensure interest in youth and future flexibility of employment. Lessons can be learned from the UK's TeachFirst program (based on US Teach for America) that made teaching one of the most sought after careers on university graduation.

The social sector solution could provide some much needed fast-acting dilution to the dangerous cocktails of youth unemployment across Europe bringing them back to a responsible level. Government clearly needs to think outside of current policy trends for this to happen and be willing to be the enlightened publican that tells us what will be best for us in the long-term.

Luka Oreskovic is an IQSS associate at Harvard University. Simon Rowell works in strategy and market development for a social investment fund in the UK.

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