By Gregory Viscusi
Seventeen years after their first jobs summit European Union leaders are divided on how to create employment and a fifth of young people are still out of work.
At a meeting in Milan Wednesday Italian Prime Minister Matteo Renzi plans to tout the new labor laws he’s pushing through. French President Francois Hollande will argue for more spending, a proposal German Chancellor Angela Merkel intends to reject. Britain’s prime minister David Cameron isn’t coming.
Their lack of progress may increase the frustration of European Central Bank President Mario Draghi who has faced down internal dissent to deploy unprecedented monetary easing. He’s calling on the politicians to do their bit now and loosen the continent’s rigid labor markets even if that means facing the ire of protected workers.
“An entire generation is being sacrificed in countries such as Spain,” Ludovic Subran, chief economist at credit insurer Euler Hermes said in an interview. “That has a real impact on productivity in the long run.”
The 18-nation euro area is still struggling to heal its debt-crisis scars, five years after Greece revealed that its deficit was more than twice its forecast, forcing it into two bailouts. Across the bloc, growth has ground to a halt and inflation is at its lowest for five years.
When EU leaders met in Luxembourg in November 1997, the soon-to-be-born euro zone’s unemployment rate was about 11 percent. Jean-Claude Juncker, then prime minister of the host country, now president designate of the European Commission, promised a mix of free-market solutions and government plans would mean a “new start” for young people. Today the jobless rate is 11.5 percent.
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