Print Friendly, PDF & Email

di VITTORIO EMANUELE AGOSTINELLI Consulta giovanile del Pontificio Consiglio della Cultura

Abstract - INTERVISTA AL COMMISSARIO NICOLAS SCHMIT IL PROGRAMMA GARANZIA GIOVANI RINFORZATO: UN PONTE PER LE NUOVI GENERAZIONI Chi a 18 anni ha vissuto l’apice della curva di disoccupazione giovanile in Europa oggi ne ha 25 e sta vivendo l’ennesima crisi economica ed occupazionale scaturita da una emergenza sanitaria senza precedenti nella storia. All’indomani della crisi finanziaria del 2008, la disoccupazione giovanile è passata dal 16% nel 2008 al 24,4% nel 2013. Da allora le cifre sono diminuite, con minimi record del 14,9%, poco prima della pandemia. Tuttavia, la disoccupazione giovanile è sempre rimasta più del doppio della disoccupazione generale. L’UE è determinata a evitare un’altra cosiddetta “generazione perduta”. Il pacchetto di sostegno all’occupazione giovanile adottato nel Luglio 2020 mira a sostenere i giovani che stanno entrando nel mercato del lavoro. Gli Stati membri devono spendere almeno 22 miliardi di euro per il “Youth Employment Support”. Il pacchetto fornisce un ponte verso il mondo del lavoro per le prossime generazioni con il programma Garanzia Giovani rafforzato; un’istruzione e una formazione professionale a prova di futuro; e un rinnovato impulso all’apprendistato. Ulteriori misure includono incentivi all’occupazione e all’avviamento a breve termine e rafforzamento delle skills, reti di giovani imprenditori e centri di formazione interaziendali a medio termine. Opportunità e prospettive per i giovani nell’intervista resa dall’attuale Commissario Europeo per il lavoro e i diritti social Nicolas Schmit. 6 interventi e opinioni tHe reinforceD YoutH guarantee: a briDge for tHe neXt generation intervieW WitH commissioner nicolas scHmit VITTORIO EMANUELE AGOSTINELLI Consulta giovanile del Pontificio Consiglio della Cultura Young people, business, labor marKet, economic crisis, training, entrepreneursHip, YoutH emploYment anD eDucation.

Summary: 1 Interview with European Commissioner for Jobs and Social Rights Nicolas Schmit. 2 The transition from education to work: youth unemployment in Europe. 3 The Youth Employment Support and the reinforced Youth Guarantee. 4 Microcredit scope in Europe. 5 Microenterprises and vulnerable populations.

1. interview with european commissioner for Jobs and social rights nicolas schmit Which role will the fight against youth unemployment have in the national plans for recovery and resilience? Job creation must be at the heart of our recovery efforts. I recently spoke to a group of young Portuguese people and their main concern was finding a good job with fair pay. It is our collective responsibility to ensure that the younger generations have all the opportunities they deserve to build a secure future for themselves. The Recovery and Resilience Facility was designed to help Member States build back stronger, more resilient economies after the pandemic, ones fit for the digital and green transitions. The investments that the Member States propose in their national recovery plans must pay particular attention to employment support for young people, whether it’s through investments into public employment services, dedicated up- or reskilling, hiring subsidies for SMEs and companies, or incentivising businesses to offer more apprenticeships. These are the core elements of the Commission’s EASE Recommendation - Effective Active Support to Employment. Only by making these investments in human capital, in people, will we see an inclusive and fair recovery and build a Europe fit for the green and digital age. Today, compared to the context of the first implementation of the Youth Guarantee, how needed is to reinforce the programme? During the aftermath of the 2008 financial crisis, youth unemployment went up from 16% in 2008 to a 24.4% in 2013. The figures went down since, with record lows of 14.9%, just before the pandemic hit. Nevertheless, youth unemployment has always remained more than twice as high as general unemployment. The EU is determined to avoid another so-called “lost generation”. The Youth Employment Support package adopted in July 2020 aims to support young people who are entering the labour market. Member States should spend at least €22 billion on youth employment support. The Youth Employment Support provides a bridge to jobs for the next generation with a reinforced Youth Guarantee; a future-proof vocational education and training; and a renewed impetus for apprenticeships. Additional measures include employment and start-up incentives in the short term, and capacity building, young entrepreneur networks and inter-company training centres in the medium term. It is paramount to give opportunities and prospects for young people as we exit this crisis. The reinforced Youth Guarantee - which has been adopted by the Council - makes a number of improvements to the previous Guarantee. Its scope is larger: it covers young people aged 15 - 29 (up from 15 - 25). It is more inclusive: it avoids any forms of discrimination, with a wider outreach to more vulnerable groups, such as youth of racial and ethnic minorities, young people with disabilities, or young people living in some rural, remote or disadvantaged urban areas. It also aims to break gender stereotypes. It links in with the needs of companies, providing the skills required - in particular those for the green and digital transitions - and short preparatory courses. And it provides tailored counselling, guidance and mentoring. With the Recommendation now adopted it is really the time for Member States to put the wheels into motion and implement the Youth Guarantee. I am heartened to see the Italian government is well advanced in their plans to offer the reinforced Youth Guarantee to their young people.What will be the effort of the European Commission in helping the transition from education to work and reducing the NEETs rates across EU? The Commission is committed to helping national governments reduce the number of NEETs in the EU. In general, the lower the education level, the higher the risk for young people to become NEETs and fall into poverty and social exclusion as a result. Then we see the vicious cycle of disadvantage which is so hard to break. We also see young people turning to precarious forms of work on temporary contracts without the proper level of social protection that we expect in the EU. The Youth Guarantee is certainly an important tool in tackling the high NEETs levels in some countries. Vocational education and training (VET) is also a practical avenue to take for many young people, and we are working with Member States to make VET more agile, attractive and user-centric. It is critical that we focus our efforts on skilling people for jobs, and for this we need to use skills intelligence to map where the gaps in demand and supply are, and train our young people in those areas. Investing in digital skills is a sure way to improve your employability in the new digital age. The European Social Fund Plus and the Recovery and Resilience Facility provide Member States with the funding opportunities they need to build training and job-matching systems to get young people into work. Member States which are above the EU average rate of NEETs should devote at least 12.5% of their ESF+ resources to help these young people find a qualification, or a good quality job. The European employment strategy provides a framework for EU countries to share information, discuss and coordinate their employment policies. The guidelines for the employment policies of the Member States are intrinsically linked with the guidelines for the economic policies of the Member States and of the EU. Together, they form the integrated guidelines that underpin from 2010 the Europe 2020 strategy for smart, sustainable and inclusive growth. One of them is fostering social inclusion, combatting poverty and promoting equal opportunities. “SELFIEmployment” is a programme of the Italian Agency for microcredit for helping NEETs enrolled in the Youth Guarantee programme, between 18 and 29, in developing their business ideas and starting business initiatives, which will allow them to access subsidized loans through support for access to credit. The Fund finances the launch of entrepreneurial initiatives promoted by young NEETs, through the granting of zero-interest loans. What is your perspective on tools as Microcredit in fostering social inclusion, promoting equal opportunities and pursuing the European Employment strategy? It is absolutely right that the EU and Member States lend a helping hand to start-ups and entrepreneurs who wish to launch, grow or scale up their business venture. The Employment and Social Innovation (EaSI) programme - and soon InvestEU - increases the availability and accessibility of microfinance for vulnerable groups and micro-enterprises and increases access to finance for social enterprises. In our upcoming Social Economy Action Plan we will aim to make accessing finance for social enterprises even easier and simpler. During the last year, millions of people in EU lost their jobs, closed their activities and cut the wings of their dreams in the name of the global emergency COVID-19. What can you say to all those people? Can they start to plan ideas and think about their employment dreams? Will be EU ready to shape their future jobs or business ideas? Since the start of the global pandemic, we have seen so much upheaval, loss, and distress. In the EU we have cushioned the blow of job and income loss to a certain degree by putting in place short-time work schemes, many financed by the EU’s SURE instrument or the European Social Fund. However, we know that many people will not return to the same jobs as before the crisis, and the world of work as we knew it will be forever changed. Now that the vaccination campaign is accelerating throughout Europe, I feel somewhat optimistic that things will soon be back on track. It will not be an immediate shift from one day to the next, and many workers will need to retrain, upskill, and be open to new ideas. But we can begin to make plans again. The EU and the Member States have shown solidarity since the start of the crisis, and rest assured this solidarity will be just as present during the recovery.2. the transition from education to work: youth unemployment in europe In March 2021, 2.951 million young persons (under 25) were unemployed in the EU, of whom 2.373 million were in the euro area. In March 2021, the youth unemployment rate was 17.1 % in the EU and 17.2 % in the euro area. Compared with March 2020, youth unemployment increased by 319 000 in the EU and by 208 000 in the euro area.1 One of the most important decisions in life concerns the choice of when to make the move from education to the world of work. Given that the vast majority (90.7 %) of young people in the EU between the ages of 15 and 19 continued to participate in some form of education and training (either formal or non-formal), the following analysis mainly focuses on the population aged 20 to 34. The analysis shown in Figure 1 is complicated somewhat by the emergence of new patterns of transition from education to work. Traditionally, most young people only started work once they had completed their highest level of education or training, and they rarely combined education with a job. The transition has, in recent years, become more prolonged and increasingly unpredictable, with young people switching jobs more frequently and taking longer to become established in the labour market, either by choice or necessity. It has also become increasingly common to find tertiary education students taking part-time or seasonal work to supplement their income, or for young people already in employment to seek a return to education and training in order to improve their qualifications (for example, through evening classes or distance learning). As a result, the transition between education and work has become less clear, with a growing share of students also working and a rising proportion of people in employment also studying (for example, apprentices are generally considered to be employed and in formal education). In 2019, some 11.1 % of young people aged 15-19 in the EU made use of this more flexible transition from education to work, a share that rose to 18.7 % among those aged 20-24, before falling somewhat for older age groups - 14.3 % among those aged 25-29 and 10.6 % for those aged 30-34. The NEET rate for young people is closely linked to economic performance and the business cycle. Figure 2 provides an analysis over time for young people aged 20-34 and shows that the share of NEETs in the EU jumped from 16.6 % in 2008 to 18.7 % the following year, after the onset of the global financial and economic crisis. The rate then rose at a more modest pace through to 2013, when it reached its peak at 20.5 %. After that the rate decreased continuously and was below its 2008 level in 2019, at 16.4 %. With a record number of NEETs following the financial and economic crisis in the late 2000s, there have been concerns among policymakers that a whole generation of young people in the EU could remain out of the labour market for years to come. The implications of this are two-fold: on a personal level, these individuals are more likely to become disenfranchised and to suffer from poverty and social exclusion, while at a macro-economic level they represent a considerable loss in terms of unused productive capacity and a considerable cost in terms of welfare payments. Across the EU Member States there was a wide variation in NEET rates in 2019. For people aged 20-34, the lowest rates in 2019 were below 10.0 % in Malta, the Netherlands, Luxembourg and Sweden; this was also the case in Iceland, Switzerland and Norway. There were 9 Member States that recorded NEET rates above the EU average of 16.4 %. Among these, by far thehighest rates were recorded in Italy and Greece, where a quarter or more of all young people aged 20-34 were neither in employment nor in education and training (27.8 % and 25.1 % respectively); there were also very high NEET rates in Turkey (35.3 %), North Macedonia (31.2 %), Montenegro (28.8 %) and Serbia (22.7 %). A comparison between Italy and Sweden — the EU Member States with the highest and lowest NEET rates in 2019 — reveals that the proportion of young people who were NEETs was 3.8 times as high among young Italians as among young Swedes2 . Beyond the immediate negative effects of unemployment on individuals and public finances, youth unemployment has been shown to have longer-term effects. The literature on the ‘scarring effect’, the effect of being young and unemployed, shows there are irreversible consequences (see for example Arulampalam, 2001; Darvas and Wolff 2016). For instance, Gianni De Fraja and Sara Lemos found that “an additional month of unemployment between ages 18 and 20 permanently lowers earnings by around 1.2% per year”. Burgess (2003) found that unemployment early in an individual’s career increases the probability of subsequent unemployment. There is some controversy about the long-term effects of youth unemployment on the employment rate. Barslund and Gros (2017) and Mroz and Savage (2006) suggested limited effects, while Eurofound (2018) data showed higher long-term unemployment numbers. Eurofound (2017) data and Scarpetta et al (2010) highlighted longer-lasting scarring effects from long-term unemployment, including decreasing optimism about the future. Schwandt (2019) showed that people who enter the labour market during a recession earn less and work more but receive less welfare support. Moreover, they are more likely to divorce, and they experience higher rates of childlessness. Furthermore, Strandh et al (2014) found that youth unemployment is significantly connected with poorer mental health. It is important to underline that periods of unemployment later in life do not appear to have the same long-term negative effects. In summary, the labour market is much more difficult for younger people than older people. Like the last big recession, the economic fallout from the pandemic will leave many young people in Europe unemployed, with long-lasting social and economic consequences.3 3. the Youth employment support and the reinforced Youth guarantee4 Guided by the European Pillar of Social Rights, the Commission laid out its programme for a Social Europe right at the beginning of its mandate, with people at its heart. Since then, the Commission has prioritised work to help young people. It is strengthening education and training, fostering youth employment, ensuring fair working conditions and improving access to social protection for all, because young people are the next generation and deserve all the opportunities to develop their full potential to shape the future of our continent. The COVID-19 pandemic emphasised the need to stay on this road and accelerate with speed. Though a health crisis first and foremost, the pandemic’s impact has spiralled the EU into a deep recession. Rising claims for unemployment benefits foreshadow new challenges. Unemployment will rise among all age groups, but youth have already been struck disproportionally. Over one in six young people have stopped working since the onset of the crisis. Many were working in hard-hit sectors such as accommodation, food, arts, entertainment, wholesale and retail. Others are now trying to enter the labour market when such sectors are no longer hiring. For youth in many Member States, this is the second economic recession in their young lives. Someone who turned 18 at the peak of the previous youth employment crisis is now barely 25. Challenges are likely to be worse for discriminated or vulnerable groups, as economic downturns tend to widen inequalities. Over the last years, the Commission has supported Member States in offering young people steppingstones to enter the labour market. Launched at the peak of the previous youth employment crisis, the 2013 Youth Guarantee has had a significant transformative effect across many Member States. It has created opportunities for young people, driven structural reforms and innovation, and strengthened public employment services. It has helped over 24 million young people across the EU in entering the labour market since its first implementation. The package made 1st July 2020 for a Council Recommendation for “a Bridge to Jobs - reinforcing the Youth Guarantee” builds on this important work. As schoolto-work transitions and a sustainable market integration are taking longer because of a changing nature of workand the skills in demand, it broadens the target group from all unemployed or inactive young people under 25 to all under 30. It supports job creation measures, as well as various activation measures such as counselling, career advice and advocacy. The proposal steps up prevention of unemployment and inactivity of young people through better tracking and early warning systems and improves the quality of offers by linking them to recently created quality frameworks. The proposal actively tackles gender, racial and ethnic stereotypes, while supporting diversity and inclusiveness, including for young people with disabilities. Fortunately, many young people are only out of employment, education and training for a short time. Without underlying disadvantages holding them back individually, they may overcome setbacks due to lockdowns or economic cycles relatively quickly. But the crisis should not make us lose sight of those hardest-to-reach, who will need intensive, often one-to-one support. Indeed, some young people risk being out of employment, education or training for a longer term, especially those belonging to the more vulnerable groups of our societies with major barriers to labour market integration even in the best of times. 4. microcredit scope in europe5 Microcredit has emerged at the European level as a crucial policy tool to fight against social and financial exclusion, promote self-employment and support microenterprises. The EU is supporting microcredit providers mainly through the Employment and Social Innovation (EaSI) programme as well as the European Social Fund (ESF). For the next multiannual framework (2021-2027), the commitment of the EU towards the microfinance sector is expected to continue through the InvestEU and ESF+ programmes. The EU traditionally defined microcredit as loans up to € 25.000 granted to existing and potential micro-entrepreneurs at risk of social and financial exclusion. This broad interpretation of microcredit has been adopted in the two waves of EU support to the sector (2007-2013: Jasmine and Progress Microfinance; 2014- 2020: EaSI programme) with the aim of embracing the diversity of microcredit practices across Europe. A new definition, which will influence the implementation of the new EU tools to support the sector (e.g. InvestEU), can be found in the ESF+ regulation: “microfinance includes guarantees, microcredit, equity and quasi-equity, coupled with accompanying business development services such as in the form of individual counselling, training and mentoring, extended to persons and micro-enterprises that experience difficulties accessing credit for the purpose of professional and/or revenuegenerating activities”. This interpretation establishes the scope of EU support for microcredit. By contrast, there is no harmonised regulation on microcredit at the Member State level as this is left to the national legislator initiative or current market practice. According to the definition above, microcredit-part of the microfinance toolbox-is intended to be a combination of credit and accompanying non-financial services that are provided to individuals and enterprises that are financially excluded. Interestingly, no thresholds for microcredit are currently set in the ESF+ regulation. A key element of the ESF+ definition is the central role played by non-financial support, which is now considered as an inherent part of the microcredit disbursement. This designation echoes the current practice in the sector whereby the vast majority of the MFIs have adopted an integrated approach. An element of continuity with the previous definition is that microcredit is explicitly intended to support income generating activities. This indicates that the provision of personal (social inclusion) microloans is not yet part of the EU agenda and differs from the approach adopted in some Member States (e.g. France, Italy) where personal microcredit was considered as important as business microcredit. Advocates of personal microcredit envision a product designed for disadvantaged individuals and low-income households who want to finance personal and family development projects or necessities arising from daily needs, potential risks and temporary or unforeseen circumstances (e.g. home expenses, health, education, disability requirements, and family reunification). Today, half of the MFIs in Europe offer personal microloans, which differs from business microcredit since it is not immediately directed to the creation of income generating activities but is designed to cover personal or family needs that can have indirect positive effects on integration into the labour market (e.g. investment in education and training) and, more generally, on social inclusion. Personal microcredit differs from traditional consumer credit since it doesn’t merely target consumption needs. Rather, the objective is to enhance the financial and social inclusion of beneficiaries. However, as practices are different across countries (and MFIs) and there is no common agreement on what can be considered a “legitimate” need to be financed with personal microcredit, it is difficult to track the provision of this product in a homogeneous way. Further research is needed to highlight the specific breadth of coverage of personal microloans in the European market and establish a common understanding of its scope. 5. microenterprises and vulnerable populations All over Europe, there are social groups that face an increased risk of financial exclusion. In 2017, 138 million Europeans were financially cut off from society, without having a formal bank account or mode of payment. This figure includes long-term unemployed, youth, disabled persons, women, rural populations and seniors. In addition, migrants and refugees arriving in Europe who need financial instruments to facilitate their social and economic integration often have difficulties in accessing formal financial services. These social groups encounter difficulties in accessing financial services and advice for both business and personal purposes. This may arise, for example, because persons in these groups have little personal capital and skills, lack collateral and guarantees, or have little or no credit history. Furthermore, they tend to ask for relatively small loan amounts, perceived both as too expensive in terms of administrative costs and too risky by banks. A lack of access to finance can have severe consequences for individuals and businesses, restricting their ability to make necessary investment in their business, stabilize their income patterns or find employment. Microfinance in Europe has gained traction as a tool to counter financial and social exclusion. European MFIs provide financial and non-financial products predominantly targeted at groups excluded from mainstream finance, such as: 1.women clients (targeted by 64% of surveyed MFIs/microfinance providers) 2.rural populations (46%) 3.unemployed or welfare recipients (30%) 4.youth (26%) 5.ethnic minorities (12%) 6.immigrants or refugees (10%) 7.disabled people (4%) Moreover, European microfinance not only directly provides finance to vulnerable groups but also provides financial and non-financial products to enterprises who employ or serve those vulnerable groups. In order to reach the target client groups, non-bank providers focus on providing services, particularly microloans, to very small enterprises, including: i) self-employed; ii) micro-enterprises; iii) individual farms; iv) start-up entrepreneurs. These very small enterprises are an important element in the European economic fabric, accounting for 93% of all European businesses and 30% of total employment in Europe. They are often found in sectors such as construction, hospitality, retailing or wholesaling. While being considered as the job engine of the economy, these enterprises often face more challenging conditions than those faced by their larger counterparts, especially when it comes to access to finance. The financial situation of micro-enterprises is often opaque, as their annual statements or contracts are not publicly available. This contributes to information asymmetry and potential morally hazardous conditions that often prevent micro-enterprises from accessing formal financial instruments. Microfinance in Europe can be a relevant instrument to address the needs of vulnerable populations and micro-enterprises.6

NOTE 1 Eurostat, March 2021, Youth unemployment, 2 Eurostat, April 2020, The transition from education to work, 3 Bruegel, November 2020, The scarring effect of COVID-19, 4 European Commission, July 2020, Youth Employment Support, 5 European Microfinance Network, January 2021, Microcredit regulation in Europe, 6 European Commission, May 2020, Microfinance in the European Union Report,

Print Friendly, PDF & Email
© 2019 Rivista Microfinanza. All Rights Reserved.