Angela Merkel has described mass youth unemployment as the greatest crisis facing European policymakers today. Recent figures suggest that there were 5.6 million unemployed young people (15–24 year-olds looking for work but unable to find it) in the European Union (EU) as of January 2014.

Even more worryingly, there were more than 7.7 million young people not engaged in employment, education or training – over 13% of the EU’s youth population.

In response, the Youth Employment Package was created to help curtail youth unemployment and social exclusion. The package recommends launching a Youth Guarantee in every country, with member states moving to ensure that all young people up to the age of 25 receive a good offer of employment, continued education, an apprenticeship or traineeship within four months of leaving formal education or becoming unemployed.

Whilst the youth employment measures are welcome, waste in the structural funds system must be put to better use. EU structural funds — currently used to promote growth and investment in the EU — must be reformed if they are to deliver the vital support and foundations for growth. 

These structural funds account for approximately 35% of annual EU expenditure and appear to be distributed according to confused and, at times, competing objectives agreed decades ago. Open Europe, an independent think tank, commented that “there are still a number of problems with the funds, including an unsatisfactory correlation between funding and results.” Cash continues to be funnelled into infrastructure construction that does not align with economic circumstances or need. Aside from the infamous “irregularities” surrounding the Salerno-Reggio motorway case in Italy, well-intentioned investments have resulted in many unsuccessful white elephant projects in Portugal, Greece and Spain as well.

In an era of scarcer resources, this money must be spent on promoting growth and jobs in the poorest and most deprived areas. Structural funds must be used to address the contrasting education, vocational training and labour market structures and institutions of different countries, and the different problems facing different groups of young adults.

However, we need greater collaboration with industry to ensure that structural funds are not glorified subsidies to colleges in the absence of meaningful work opportunities following graduation. Mixing both classroom and workplace training appears to be effective in Germany, Denmark, Switzerland and Austria. Sustainable job creation requires the integration of technical and vocational training alongside entrepreneurship. The forces of globalisation and mechanisation mean that productivity gains tend not to translate to greater employment and have forced wages down across Europe.

The Youth Employment Package is a good start, but much more must be done. Recent events in the Middle East have shown that high levels of youth unemployment, lacklustre private investment and feelings of a “lost generation” are a dangerous mix.