Spanish MEP: the Youth Guarantee is not a "magic potion"

There is no magic solution to the problem of tackling youth unemployment. The EU should employ a combination of strategies, including stronger support for SMEs, says Spanish MEP Pablo Zalba, Vice-president of the Committe of Economic and Monetary Affairs in the European Parliament.

Brussels (dpa Insight) - In Zalba's view, the "Youth Guarantee" alone can not solve the problem of youth unemployment in Europe. The answer should be a global one - a combination of strategies, including a stronger ECB role and smoother financing for SMEs in the EU, to help boost growth.

In a June 2013 interview with dpa Insight EU, Zalba, who is a MEP from Spain's conservative ruling People's Party, spoke about the need for a coordinated strategy when tackling youth unemployment.

According to the latest (June 2013) statistics, almost a quarter of 15 to 24-year-olds in the Eurozone are currently unemployed or no longer at school. The situation is particularly serious in southern Europe, with rates exceeding 50 per cent.

To help solve the problem of youth unemployment, the European Commission has recommended that EU member states adopt a Youth Guarantee, with a funding of 6 billion euros (partially financed by the European Social Fund), for the period 2014-2020.

This will ensure that all young people up to the age of 25 years receive a quality offer of a job, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed.

dpa: Is the Youth Guarantee the answer to the problem?

Zalba: "The Youth Guarantee cannot be the entire solution to youth unemployment. The problem should be tackled with a package of measures because 6 billion euros can not perform a miracle. On the other hand, it is necessary that the European Investment Bank (EIB) plays a stronger role in this process, acting as facilitator for the financing of Small and Medium Enterprises (SMEs) in Europe, and also to boost trade and help in particular all EU companies that look for opportunities to invest abroad".

"But, in any case, we should not forget that the true priority is to defragmentise the financial markets and get a quicker and more flexible financing for SMEs, in equal conditions in all EU countries...this was one of the founding principles of the single market. Of course, the Youth Guarantee is a key element in the overall strategy to combat youth unemployment and it will help a lot, but it would be naive to think that this can be like a magic potion".

dpa: Is there a definitive solution?

Zalba: "There is no single solution to youth unemployment, which has already reached dramatic proportions in countries like Greece or Spain. The answer should be a multiple one. Focusing only on the Youth Guarantee (that must be implemented by EU member states) would not solve this drama. We need other actors to also get involved in the process, like the EIB...We, in the EPP Group, strive for a global solution. In some cases, measures can have a short term impact, but EU leaders also consider medium and long term solutions. I insist, again, on the fact that European SMEs should have better ways to get fresh money. In countries like Spain, SMEs are the basis of the economy (with nearly 70 per cent of jobs created annually). SMEs in countries like Spain, but also in other EU member states, need urgent credit lines according to their size and particular needs, not in function of their geographical position. It is simply not logic that a Spanish SME pays more for its financing, almost 70 per cent more, than a German SME, for example".

dpa: Should the ECB have a greater role in the overall strategy of fighting unemployment?

Zalba: "We must respect the independence of the ECB. But in my view, the ECB can also - and should - interact in the whole process of boosting jobs and reducing unemployment. Today, I'm afraid, monetary policy decisions are not properly translated into facts, even Mario Draghi (the ECB president) acknowledges this. Yes, the ECB has recently lowered interest rates, but as long as markets are fragmented, there will be no repercussion of this measures on the real economy. How can the ECB act? Just like other central banks: through a bigger support to SMEs, through a more direct action in this field. It is clear to me that the solution to unemployment can only come through a global strategy, from governments and EU member states, from the Commission, from the ECB, the EIB ..."

dpa: German chancellor Angela Merkel and Spanish Prime Minister, Mariano Rajoy, among other conservative leaders in the EU (members of the EPP Group), have accepted that austerity alone cannot be the answer to the Eurozone crisis. Do you agree?

Zalba: "This is not new to us. Members of the Spanish People's Party have said many times that austerity alone will not help us get out of the crisis. In this case, the Spanish government has not changed its view. We all, in the framework of the Spanish PP and in the EPP Group in the European Parliament, agree that in order to boost growth, we need to have sound domestic finances. We have also accepted that some deadlines (to meet the deficit targets) can be extended ... but the debate between austerity and growth is a false one, these are two sides of the same coin".


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