EU leaders meet on youth jobs but solutions elusive

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Published November 12, 2013

| Reuters

Soaring youth unemployment will top the agenda when France hosts a European jobs summit on Tuesday, but leaders will eschew radical proposals to tackle a problem that risks fuelling social unrest and political extremism.

Nearly six million people under the age of 25 are without work in the European Union, with jobless rates among the young at close to 60 percent in Spain and Greece.

A July jobs summit in Berlin set out plans to devote at least 6 billion euros over the next two years to addressing the problem - a big headline figure that looks less impressive when spread among the many unemployment blackspots in the region.

French President Francois Hollande hosts a follow-up gathering of more than 20 EU leaders on Tuesday.

But with the leader of the euro zone's number two economy more unpopular than ever and bigger neighbor Germany still in political limbo following elections, conditions for advancing a potentially divisive debate could hardly be less favorable.

"The idea is to stay within what was set out in Berlin," an adviser to Hollande said.

"The aim is not to add further programs but to fine-tune implementation of what has been decided," the adviser said of measures that include a guarantee to provide a job or training opportunity for every youth unemployed for over four months.

That means the meeting is likely to skirt more controversial areas such as growing question marks over whether, given Germany's record trade surplus, Chancellor Angela Merkel is doing enough to nurture domestic demand and so help stimulate growth - and jobs - in the wider euro single currency zone.

Leaders are due to meet in the afternoon before a final news conference scheduled for 5:30 pm Paris time (1630 GMT).

Hollande has seen his popularity ratings plummet to a record low during France's 55-year-old Fifth Republic, with his failure to bring overall unemployment down from around 11 percent - and joblessness among youths from over double that - a major factor.

The French president has hitched his credibility on engineering a turnaround in the jobless trend by the end of the year, and increased state-funded jobs may help him create a short-term bounce.

But economists are skeptical on whether the underlying economy will allow any improvement to endure - a concern that applies equally to the spate of major infrastructure projects being overseen by many of Hollande's EU counterparts.

Worries over the ability of the French economy, weighed down by the need to finance high public spending, to generate sufficient growth was a factor behind ratings agency's move to downgrade France's sovereign debt for a second time last week.

The economy is forecast to have grown just 0.1 percent in the three months to September, though the Bank of France said on Tuesday it expected an improvement to 0.4 percent in the final quarter of 2013.

GERMANY IN THE SPOTLIGHT?

In a rare move to shine a critical spotlight on the policies of the larger German economy, the European Commission will decide this week whether to scrutinize Berlin's record surplus for economic imbalances.

International pressure has risen for Germany to do more to spur domestic demand, with criticism that its reliance on exports is hurting Europe's economic stability and the global economy.

Germany has so far brushed off the criticism, arguing it has more than halved its current account surplus with the euro zone as a share of gross domestic product since 2007.

Whether to introduce a minimum wage is one of the key sticking points in Merkel's talks to form a grand coalition with left-of-centre Social Democrats who say the measure is a precondition for them entering government.

Concerns in France that some employees are being undercut on costs by countries with no minimum wage rules have been highlighted in recent weeks by a series of often violent protests in Brittany by food sector workers threatened by plant closures.

($1 = 0.7459 euros)

(Editing by Mark John, John Stonestreet)

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