"Youth Guarantee" to make only small dent in Croatia jobless problem

By bne IntelliNews March 10, 2014

Joe Orovic in Zadar -

During the usual midday hours of the workweek grind, the cafes dotting this picturesque Dalmatian city are notable not for the expected gaggle of tourists and sightseers, but for teenagers and young adults casually smoking and drinking macchiatos. Most of them say they'd happily go to work instead – if only they could find a job.

Their joblessness is a rapidly growing problem for the EU's newest member, which joined the trading bloc in July 2013. Youth unemployment in Croatia jumped to 49.2% last year from 25.1% in 2009, according to Eurostat. It now ranks third behind Greece and Spain in 15 to 24-year-olds looking for work, with a third of the nation's 385,000 unemployed citizens under the age of 29.

The European Commission hopes to reverse the trend through its "Youth Guarantee," a €6bn programme designed to bolster job prospects for Europe's young adults. Croatia will receive €128m, with half coming in the first two years and the rest being used to support or adjust the scheme as labour market conditions change, says Aleksandra Gavrilović, a senior advisor in the Croatian Ministry of Labour and Pension System.

But is a cash infusion and promises of reform enough to help what some have dubbed Croatia's "Lost Generation"?

Cautious optimism

The "Youth Guarantee" calls for every qualifying nation in the bloc to develop a scheme in conjunction with the European Commission. The goal is to help all citizens under the age of 25, so-called NEETS (Not in Education, Employment or Training), find a job within four months of declaring themselves unemployed. The plans are unique to every nation, but generally call for changes in governmental programmes, academic reforms and participation from stakeholders in the private sector. National and European figureheads hope the programme will ultimately limit the time a young jobseeker spends on the dole and out of the workforce. In Croatia, this initially translates to subsidies for employment, training, apprenticeships, internships, and transportation and renumeration costs, Gavrilović says.

But even proponents of Croatia's participation in the "Youth Guarantee" approach the programme with just cautious optimism, saying good intentions and a bit of cash aren't enough for a country just entering the European Council's Excessive Deficit Procedure amidst a five-year recession and a severe lack of jobs in both the public and private sector.

While such schemes may benefit more-developed EU members, a struggling, small nation like Croatia needs more, says Nikola Buković, programme coordinator for national and local youth policy development at the Croatian Youth Network, an advocacy organization that has helped push and at times guided Croatia's scheme. "The 'Youth Guarantee' will not meet the mark really completely separated from other reforms in the Croatian context," he says, pointing to needed reforms in economic policy, educational priorities and an increased focus on vocational education, on-the-job training and apprenticeships. "Early prevention is important but it needs to be tackled with other key challenges causing high rates of youth unemployment."

Gavrilović concurs, posing the programme as a small step in solving the nation's macroeconomic problem. "It actually needs to lead toward a different kind of approach to youth in the labour market," she says. "So, measures by themselves are not enough, but in the mid- to long-term period, it should lead to establishing a robust support system that should enable youth with a better position in the labour market."

The proliferation of unemployed youths in Europe has become a cause of global concern. Data shows prolonged early joblessness leads to despondency and poor odds of economic success, while also contributing to social unrest. The World Economic Forum's managing director, Robert Greenhill, suggested during a panel in Davos in January that reversing the trend could not only stymie potential calamities, but boost global consumption by $72bn for every percentage point increase in youth employment.

Croatia has already seen miniature versions of the sort of unrest caused by dire economic outlooks. An estimated 400 Croats gathered in the capital Zagreb in February to protest in solidarity with neighboring Bosnians, where poor economic conditions and corruption have driven political upheaval and spurts of rioting.

The Balkans as a whole were labelled by the Economist Intelligence Unit as a region most likely to see social unrest this year. Croatia in particular was given a "high risk" rating. The odds of upheaval may increase in the coming weeks, as parliamentary debate over controversial labour law reforms led to a two-hour nationwide strike among trade unionists with promises of a "general strike" should the regulations pass.

Struggles with such reform, and adapting to the post-Yugoslavian economy in general, are leaving many behind, according to Gavrilović. "Many Croatian workers still have an out-dated picture of a job place that was secure from the day they entered employment until pension and was offered to them without having to playing an active part in searching for it," she says. "All of this is changing and now we are not talking about the security of a specific work place, but rather about the security of workers skills and competences."

Croatian MEP Biljana Borzan puts it more succinctly: "Young people should have the initiative to reinvent themselves for the labour market if their qualifications are not in demand."

Croatia itself is trying to reinvent its own economy in fits and starts, with continuing reforms aimed as the grey and black market, as well as various subsidies encouraging employment. In April, the Economy Ministry will offer investors 29 sections of the Adriatic coastline to search for oil and gas. But such fixes do not suit Buković. "We have to prioritize building a coherent industrial strategy. As long as Croatia is depending on drilling in the Adriatic and becoming another Norway, the problems will continue," he says. "We must put an end to this lottery mentality."

For the young cafe patrons of Zadar, the lottery mentality remains. March and April represent the big hiring months for the booming tourism season. Some say they can only hope to temporarily switch places, from drinking coffee to serving it.

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