Merkel shows caring side with European youth jobs push

German Chancellor Angela Merkel, stung by criticism she is cracking the whip of fiscal discipline in Europe, has shown a more caring approach by pledging to fight record youth unemployment on the crisis-hit continent. The declared new enemy in Berlin, aside from sloppy budgets and bloated bureaucracies, is the threat of a "lost generation" of young people without jobs, skills or hope, especially in hard-hit Greece and Spain. Merkel's concern has helped soothe discord with French President Francois Hollande and plays well at home, where she faces an election in four months while her austerity drive has given the centre-left opposition room for attack. But many observers are sceptical that a bundle of initiatives -- including an EU plan which will harness six billion euros ($7.75 billion) -- will have more than a cosmetic effect amid the economic turmoil hitting Europe. The fight against youth unemployment, both EU-wide and bilaterally, has dominated German government meetings in recent weeks. Merkel has called a Berlin gathering on youth unemployment on July 3 with labour ministers from all EU member states, following a new Franco-German plan to combat joblessness among Europe's young people. She was due in Paris on Thursday to work on the plan with Hollande. The EU executive had first announced in February its seven-year plan to ensure that young people are guaranteed either training, further education or employment within four months of leaving school. Last week Germany and Spain signed an agreement for employment and vocational training in Germany for young people from Spain, where almost two out of three under 25-year-olds are out of work. Merkel again mentioned the topic in talks Wednesday with Lithuanian Prime Minister Algirdas Butkevicius. Last week Finance Minister Wolfgang Schaeuble spoke about it at length with his Portuguese counterpart Vitor Gaspar. Berlin is also working on an aid programme for Spanish companies through its public investment bank KfW, for an amount German media reports have put at between 750 million and one billion euros. Even German car giant BMW has come on-message, announcing a pilot project last week to train 25 Spaniards aged 18 to 25, who may even stay with families of employees of the Bavaria-based company. Germany, the EU's biggest economy and main paymaster, has argued that ageing Europe needs deep structural reform to stay globally competitive and has insisted fiscal discipline and growth go hand in hand. But growing discord across the eurozone -- including from France, its traditional main partner at the heart of Europe -- has pushed Berlin to show a more conciliatory side. Some observers say it is all too little, too late. "These issues have been discussed for a long time, this is not new," said Ansgar Rannenberg, researcher at the IMK Duesseldorf Institute of macroeconomic studies. "It's mainly a public relations excercise." Schaeuble has acknowledged about the new jobs push that "if in the end it helps nourish fewer misunderstandings, then that's a desirable outcome". "I am very glad to see Mr. Schaeuble finally wake up to the social reality of the European Union," said European Commissioner for Employment Laszlo Andor in an interview with AFP. "For years, we have seen no sign of him showing that he was interested in this issue," Andor said, adding that, with different economic policies, "of course many jobs could have been saved". Berenberg Bank economist Holger Schmieding said that, in terms of economic reforms, "the countries of southern Europe have made a lot of progress, which is why the German position has become more flexible". Boosting youth training and jobs programmes also make economic sense for Germany, which has one of Europe's lowest youth jobless rates and, given its fast-ageing population, is struggling to fill many skilled jobs. More generally, there is danger ahead for Germany's export-driven economy if its neighbours and main trading partners don't quickly recover. Despite the softer tone from Berlin, its economic policy has not fundamentally changed, said Marcel Fratzscher of Berlin's DIW economic institute. "The support of the Germans for Merkel's European policy is huge," he said. Berlin "continues to assert the importance of the consolidation of national budgets," he said. "At the moment I do not see any change on the horizon."