DUBLIN (Reuters) - Europe needs to tackle high youth unemployment to safeguard democracy, public trust and growth, European Central Bank President Mario Draghi said in Dublin on Friday.
With almost a fifth of young people out of work, Europe’s ability to innovate may suffer, its cohesion is put at risk and the trust in public institutions could be undermined, Draghi said before a town hall-style meeting with university students.
The EU must foster competition and focus on protecting people rather than jobs if they become obsolete. It must also take a bigger role in education that prepares workers for the economic shifts that can displace entire industries, he said.
“We have seen how in several countries the weight of the crisis has fallen disproportionately on the young people, leaving a legacy of failed hopes, anger and ultimately mistrust in the values of our society and in the identity of our democracy,” Draghi.
“With a large proportion of young people not having any defined role in society, there is a high risk of social cohesion and of trust in public institutions being undermined, with harm for medium-term growth prospects,” he said in a speech that did not discuss current monetary policy.
While youth unemployment has fallen steadily for years, it is more than twice as high as the euro zone’s overall rate, taking the biggest toll on countries on the bloc’s periphery.
Indeed, over 40 percent of people under 24 in Greece and Spain are unemployed while the rate in Italy is well over 30 percent, Eurostat data shows.
“Youth employment and productivity growth create a virtuous circle,” Draghi said. “When firms become more productive they are more likely to employ young people. And when young people have such opportunities, they can capitalize on their skills, adding to productivity growth, which among other benefits for society will lead to higher wages.”
“Protracted periods of unemployment can result in ‘scarring’ effects, leading to a greater likelihood of future unemployment, human capital losses and lower earnings,” Draghi said.
Reporting by Conor Humphries; Writing by Balazs Koranyi; Editing by Matthew Mpoke Bigg