May 28, 2013
Germany Sees 'Revolution' if Welfare Model Scrapped
German Finance Minister Wolfgang Schaeuble warned on Tuesday that failure to win the battle against youth unemployment could tear Europe apart, while abandoning the continent's welfare model in favor of tougher U.S. standards would cause "revolution."
Germany, along with France and Italy, backed urgent action to rescue a generation of young Europeans who fear they will not find jobs, with youth unemployment in the EU standing at nearly one in four, more than twice the adult rate.
“We need to be more successful in our fight against youth unemployment, otherwise we will lose the battle for Europe's unity,” Schaeuble said.
While Germany insists on the importance of budget consolidation, Schaeuble spoke of the need to preserve Europe's welfare model.
If U.S. welfare standards were introduced in Europe, “we would have revolution, not tomorrow, but on the very same day,” Schaeuble told a conference in Paris.
“We have to rescue an entire generation of young people who are scared. We have the best-educated generation and we are putting them on hold. This is not acceptable,” Italian Labor Minister Enrico Giovannini said.
Germany in particular, weary of a backlash as many in crisis-hit European countries blame it for austerity, has over the past weeks taken steps to tackle unemployment, striking bilateral deals with Spain and Portugal.
German ministers told the conference that, to help young people find jobs, Europe must continue on the path of structural reforms to boost its competitiveness as well as make good use of available EU funds, including 6 billion euros that leaders have set aside for youth employment for 2014-20.
While all agreed on the urgency needed to tackle youth unemployment, ministers offered no concrete plans, insisting Europe must be pragmatic and work on various strands.
Schaeuble said this was why Germany had also decided to strike deals with countries such as Spain and Greece.
“Let's be honest, there is no quick fix, there is no grand plan,” said Werner Hoyer, head the European Investment Bank.
Together with ministers, he said policies aimed at boosting youth employment must focus on small and medium-sized enterprises as they are the main entry point to the labor market for most.
More than half of Spain's under 25-year-olds are jobless, as are nearly 40 percent in Portugal. In Greece, youth unemployment shot to a record 64 percent in February.
In March 2013, the lowest youth unemployment rates were in Germany and Austria, both below 8 percent, highlighting the wide disparities within the EU.
The youth employment crisis will be a central theme of a June EU leaders' summit, and German Chancellor Angela Merkel has invited EU labor ministers to a youth unemployment conference in Berlin on July 3.
Following up on an idea aired earlier this month, French President Francois Hollande urged the euro zone to work towards a joint economic government with its own budget which could take on specific projects including tackling youth unemployment.