12 Tackling youth unemployment
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| Committee's assessment | Politically important
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| Committee's decision | Cleared from scrutiny
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| Document details | Draft Regulation amending Regulation (EU) No. 1304/2013 on the European Social Fund, as regards an increase of the initial pre-financing amount paid to operational programmes supported by the Youth Employment Initiative
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| Legal base | Article 164 TFEU; co-decision; QMV
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Summary and Committee's conclusions
12.1 At the end of 2014, nearly five million young
people under the age of 25 were unemployed across the European
Union. The aggregate youth unemployment rate was 21.4% in the
EU and 23% in the euro area, compared with 23.1% and 23.9% at
the end of 2013.[52]
These figures conceal significant variations in youth unemployment
between Member States. Those with the lowest rates are Germany
(7.2%), Austria (9%) and the Netherlands (9.6%). At the other
end of the scale, the youth unemployment rate exceeds 50% in Spain
(51.4%) and Greece (50.6%) and 40% in Croatia (44.8%) and Italy
(42%). The UK is towards the lower end of the scale, with a youth
unemployment rate of 16.7% in October 2014.[53]
12.2 The EU has taken steps to tackle youth unemployment.
In April 2013, the Council agreed a Recommendation establishing
a Youth Guarantee. Its purpose is to encourage Member States to
develop schemes ensuring that all young people under the age of
25 receive a good-quality offer of employment, continued education,
an apprenticeship or traineeship within four months of leaving
formal education or becoming unemployed.[54]
The UK is one of seven Member States that have recently taken
part in a pilot project to develop local partnerships and practical
experience to implement national Youth Guarantee schemes. The
areas covered in the UK pilot were Croydon, Hartlepool and Pembrokeshire.[55]
12.3 The Youth Employment Initiative is intended
to support implementation of the Youth Guarantee and other job
creation measures in regions within the EU where the youth unemployment
rate exceeds 25%. The Initiative has high-level support —
it was agreed by the European Council in February 2013 —
and forms a core part of the European Social Fund. It has a budget
of €6 billion (half drawn from the European Social Fund and
the remaining €3 billion from a dedicated Youth Employment
budget line) to support the sustainable integration of young people
into the labour market, with a particular focus on those not in
employment, education or training, or at risk of social exclusion,
or from marginalised communities. Whilst Member States are required
to make a national contribution to their national programmes implementing
the European Social Fund, the additional funding provided by the
Youth Employment Initiative is not subject to the principle of
co-financing.
12.4 The Youth Employment Initiative was debated
in European Committee B on 10 June 2013. At that stage, the Government
anticipated that five UK regions would be eligible for funding
from the Youth Employment Initiative: Inner London, Merseyside,
Tees Valley and Durham, West Midlands, and South West Scotland.
12.5 The existing regulatory framework governing
the Youth Employment Initiative makes provision for funding to
be frontloaded in the first two years of the 2014-20 programming
period. However, a number of Member States have experienced difficulties
in mobilising sufficient resources to provide immediate support
for the integration of young people into the labour market. The
draft Regulation seeks to overcome these difficulties by increasing
the amount of "pre-financing" available in 2015 to 30%
— or ?1 billion — of the ?3 billion allocated to the
dedicated budget line for the Youth Employment Initiative.
12.6 The Commission anticipates that its proposal
will enable Member States qualifying for funding from the Youth
Employment Initiative to step up their efforts in 2015 to support
young people into employment. As the Government raises no objection
to the increase in pre-financing proposed in the draft Regulation,
and as it will not impose any additional burden on the EU budget,
we agree to clear it from scrutiny.
Full details of the documents:
Draft Regulation of the European Parliament and of the Council
amending Regulation (EU) No. 1304/2013 of the European Parliament
and the Council on the European Social Fund, as regards an increase
of the initial pre-financing amount paid to operational programmes
supported by the Youth Employment Initiative: (36658), 6107/15,
COM(15) 46.
Background
12.7 Our earlier Reports, listed at the end of this
chapter, provide more detailed information on the Youth Guarantee
and the Youth Employment Initiative.
The draft Regulation
12.8 The draft Regulation would amend a 2013 Regulation
establishing the European Social Fund for the period 2014-20.
The proposed amendment would allow the Commission to advance up
to 30% of the total allocation of funding from the Youth Employment
Initiative budget line to eligible Member States in 2015. The
Commission notes that those Member States with the highest levels
of youth unemployment also face the greatest budgetary constraints,
resulting in a funding gap. It anticipates that a higher level
of pre-financing will enable Member States to make more rapid
headway in setting up their national programmes to implement the
Youth Employment Initiative by providing immediate budgetary support
for the integration of young people into the labour market. The
Commission emphasises that this frontloading of payments, whilst
being budget-neutral, would give Member States greater flexibility
by allowing them to access and mobilise funding for youth employment
initiatives more rapidly. In particular, the proposed increase
in pre-financing payments to Member States:
"does not alter the already agreed overall
financial profile of national allocations: it merely proposes
to advance in time the allocations that already have been secured
in the EU budget for the Youth Employment Initiative". [56]
12.9 In an accompanying press release, the Commission
estimates that accelerated funding would "reach out to between
350,000 and 650,000 young people this year; at the current pre-financing
rate, in contrast, this figure would be between just 14,000 and
22,000 young people".[57]
The Government's Explanatory Memorandum of 25
February 2015
12.10 The Minister for Universities and Science (Greg
Clark) explains that the UK receives an allocation of £170
million (€226.3 million) for the Youth Employment Initiative
which can be implemented either through a stand-alone programme
or (as in England and Scotland) as part of an ESF programme. He
notes that the frontloading of commitments during the first two
years of the 2014-20 financial period has not led to the intended
rapid mobilisation of resources, adding:
"The main reasons identified are the processes
of negotiation of the relevant operational programmes and the
roll-out of respective implementation arrangements in the Member
States; the limited capacity of the authorities to launch calls
for projects and to process applications speedily and the lack
of sufficient pre-financing."[58]
12.11 The Minister notes that the proposed increase
in the level of pre-financing in 2015 is "a one-off measure"
which would allow funds to be paid up-front to a Member State
(rather than in arrears) to help address cash flow problems. It
would increase pre-financing from around 1 or 1.5% to 30% of the
EU contribution to Member States' operational programmes implementing
the Youth Employment Initiative ("YEI"). He continues:
"The Commission says there is sufficient
headroom in the annual budget for 2015 to cover this under the
payments line for the YEI.
"This does not alter the initial pre-financing
paid from the ESF to operational programmes implementing the YEI,
or the initial pre-financing to be paid in 2016 from the specific
allocation for the YEI. It does not affect the initial pre-financing
paid to other programmes co-financed by other ESI [European Structural
and Investment] Funds.
"The initial pre-financing should be used
by Member States only for payments to beneficiaries in the implementation
of the programme supported by YEI and has to be made immediately
available. To ensure that the additional pre-financing results
in immediate implementation of the YEI it is proposed that if
12 months after the entry into force of this Regulation the Commission
has not received interim payment applications in which the Union
contribution from the YEI amounts to at least 50% of the additional
pre-financing, the additional pre-financing will need to be reimbursed
to the Commission."[59]
12.12 Turning to the implementation of the Youth
Employment Initiative in the UK, the Minister notes that, in addition
to the five regions in England and Scotland qualifying for funding,
the UK has "taken advantage of a flexibility in the regulations
that allows for a limited part of the allocation in England to
be made available to other NUTS3 areas with high youth unemployment
of over 30% (Kingston upon Hull, Nottingham, Leicester and Thurrock)".[60]
12.13 Although the level of pre-financing is not
a factor in implementation in the United Kingdom, as it has not
experienced the same cash flow problems as some other Member States,
the Minister "recognises the seriousness of youth unemployment
as an issue across the EU and the need for urgent action".[61]
He continues:
"The United Kingdom agrees that an increase
in pre-financing would help speed up implementation in Member
States where there are liquidity problems that are preventing
payments to beneficiaries ahead of reimbursement from the Commission.
The United Kingdom notes that interim payments cannot be claimed
from the Commission until a formal designation process has been
completed. Compliance with the rules and regulations governing
EU budget expenditure remains a necessary means of ensuring that
Member States manage EU funds effectively."[62]
12.14 The Minister makes clear that the draft Regulation
will not result in any additional burden on the EU budget or alter
the overall financial allocations to qualifying Member States
— rather, it "merely proposes to advance in time the
allocations that already have been secured in the EU budget for
the YEI".[63] He
notes that the Latvian Presidency intends to seek agreement to
a general approach within the Council by April.
Previous Committee Reports
None, but the following Reports concerning the Youth
Guarantee and the Youth Employment Initiative are relevant: Thirty-first
Report HC 86-xxxi (2012-13), chapter 4 (6 February 2013); Thirty-sixth
Report HC 86-xxxvi (2012-13), chapter 9 (20 March 2013); Thirty-ninth
Report HC 86-xxxviii (2012-13), chapter 1 (17 April 2013) and
Fourth Report HC 83-iv (2013-14), chapter 10 (5 June 2013).
52 The youth unemployment rate is the number of people
aged 15 to 24 who are unemployed as a percentage of the labour
force of the same age. Young people in full-time education are
not part of the labour force. Back
53
See Eurostat unemployment statistics. Back
54
See Council Recommendation of 22 April 2013, OJ No. C 120, 26.04.2013. Back
55
The European Commission has published a First Findings Report
on the pilot projects. Back
56
See p.4 of the Commission's explanatory memorandum accompanying
the draft Regulation. Back
57
See Press Release. Back
58
Para 4 of the Minister's Explanatory Memorandum. Back
59
Paras 6-8 of the Minister's Explanatory Memorandum. Back
60
Para 17 of the Minister's Explanatory Memorandum. Back
61
Para 16 of the Minister's Explanatory Memorandum. Back
62
Ibid. Back
63
Para 20 of the Minister's Explanatory Memorandum. Back
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