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Students shout slogans during a protest against public education spending cuts in Barcelona on Feb. 6, 2013. European Union leaders are expected to set aside more than €5-billion from the EU budget to tackle the bloc’s soaring and costly youth unemployment when they meet for a summit in Brussels on Thursday.ALBERT GEA/Reuters

European Union leaders are expected to set aside more than €5-billion ($6.8-billion U.S.) from the EU budget to tackle the bloc's soaring and costly youth unemployment when they meet for a summit in Brussels on Thursday.

The aim is to get to grips with the debilitating unemployment caused by the region's debt and economic crisis. There are estimates that youth joblessness is costing the EU up to €150-billion a year, or around 1.2 per cent of GDP.

Youth unemployment now exceeds 25 per cent in 13 of the EU's 27 member states, while more than half of those aged 15-24 in Spain and Greece are out of work. Economists warn of a lost generation unless a way is found to resolve the problem.

"High youth unemployment has dramatic consequences for our economies, our societies and above all for young people," Laszlo Andor, the European commissioner for employment, said when he presented plans for a fund late last year.

If leaders can agree – and that depends on them reaching a deal on the next long-term budget, which earmarks nearly €1-trillion of spending from 2014-2020 – more than €5-billion would be directed towards youth employment programmes.

The money – probably a mixture of old and new money – would be used to provide training, apprenticeships and other forms of education to people in parts of the EU where youth unemployment exceeds 25 per cent.

As well as several regions of Spain and Greece, that is expected to include parts of Italy, Portugal, Ireland, Bulgaria, Cyprus, Latvia, Hungary and Slovakia, officials say.

Youth unemployment has become one of the biggest scourges of the sovereign debt crisis that has dragged the euro zone and the wider EU down for the past three years, with heavy social, political and economic implications.

While there are hopes that the euro zone has overcome the worst of the crisis and growth may return in the middle of this year, unemployment is a lagging indicator, with the rate only likely to drop once a recovery is fully under way.

In countries such as Spain and Greece, officials are concerned that stubborn, long-term unemployment among the young will fuel social unrest and lead to other problems such as an increase in crime and drug use.

The Commission, which first proposed the youth employment package in December, has calculated that the cost of youth employment and training programs is far exceeded by the cost of inactivity and lost productivity, especially when unemployment benefits are taken into account.

In July last year, the International Labour Organization estimated the total cost of putting in place youth training programs across the euro zone at €21-billion, meaning the €5-billion fund is likely to be less than what is needed.