The economic and financial crises, as well as the investment gap, are putting the achievement of targets set in the Europe 2020 strategy at risk, in particular, the headline employment target. In the third quarter of 2014 unemployment in the EU28 stood at 9.7 per cent. Still too many young Europeans are on the edge of poverty while many member states fail to make effective use of available funds, such as the youth employment initiative.
The financial crisis has also undermined the positive effects of cohesion policy and led to a rise in unemployment rates, increased poverty, social exclusion and less convergence than expected. However, we should not neglect the fact that without cohesion and structural funds things would have been even worse. Cohesion and structural funds are still one of the EU's main investment instruments, with the potential to alleviate negative trends resulting from the economic crisis and to help create jobs, if used efficiently.
"We are facing a serious risk of losing a whole generation of people who should normally bring optimism and energy into our economy"
What is worrying is the fact that the job creation potential of EU funds is still insufficient, very often due to ineffective way of spending money. These problems, however, have already been addressed in the framework of cohesion policy for the years to come and hopefully we will soon observe the positive effects of results-based policymaking. Positive trends in the labour markets should also be apparent as a result of strengthening the European social fund's role in adapting workers' skills to the demands of the labour market and new more flexible forms of employment.
The situation is particularly worrying for young people, many of whom start falling into the long- term unemployed category. We are facing a serious risk of losing a whole generation of people who should normally bring optimism and energy into our economy.
Therefore we should welcome the recent decision of by the European commission to release €1bn in 2015 in pre-financing for the youth employment initiative (YEI). It should be a priority for member states to make the best use of this money and support the YEI with greater national funding, as well as necessary reforms to areas such as education systems.
Higher education institutions should put much more effort into adapting their programmes to the needs of labour markets and developing guidance and counselling programmes for young people.
Despite the positive impact of cohesion policy, current efforts to foster growth and boost employment have not been sufficiently successful. Europe urgently needs a complementary initiative aimed at growth and job creation and in this context we should welcome the proposal to set up the European fund for strategic investment (EFSI).
"SMEs represent 99 per cent of businesses in the EU, employ more than 90 million people and have been recently responsible for an 85 per cent recent net growth in jobs"
Empirical evidence shows a strong correlation between unemployment and investment levels and we should expect this fund, if well-structured and managed, to boost much-needed medium to long-term employment. The fund is expected to mobilise €315bn over three years and as a result generate 1.3 million additional direct and indirect jobs.
The potential employment impact of the EFSI will depend on many factors, especially the possibility of supporting projects with job creation potential, the extent to which private capital will be leveraged, its compatibility with other existing instruments as well as the timely release of funds and additional measures addressed at labour markets.
If the fund is to generate jobs we need to make sure that money is directed towards small and medium-sized enterprises (SMEs). SMEs represent 99 per cent of businesses in the EU, employ more than 90 million people and have been recently responsible for an 85 per cent recent net growth in jobs. They have great job creation potential; therefore, incentives for the private sector to invest should be strengthened. The success of the EFSI will also depend on how it coexists with and reinforces current financial instruments in Europe.
Results-based policymaking with regards to structural funds, the youth employment initiative, structural reforms of the labour market, and the EFSI are crucial to boosting growth and jobs in the EU but should be further supported by additional measures to provide greater regulatory predictability and remove barriers to investment, making Europe a more attractive investment destination.