Obama warns of lost generation due to high youth unemployment in Europe

BERLIN — President Barack Obama raised the prospect Wednesday that Europe might need to adjust its economic policies to tackle high youth unemployment and make sure that some countries don't "lose a generation."

Obama warned during his visit to Berlin that, while he was confident the euro area's leaders will resolve their debt crisis, austerity and structural reforms must not cause policymakers to lose sight of the main goal: Improving people's lives.

Unemployment in the group of 17 European Union countries that use the euro, which is stuck in recession, has shot up to a record 12.2 percent. Youth unemployment in southern Europe's crisis-hit economies, such as Spain and Greece, is now well above 50 percent.

Obama spoke at a news conference alongside German Chancellor Angela Merkel, who has championed Europe's focus on budget cuts and structural reforms to tackle the crisis. Some analysts say, however, that the insistence on belt-tightening has worsened the eurozone's recession and that stimulating growth is now needed to overcome the crisis and create new jobs.

"We have to make sure that in pursuit of our longer-term policies, whether it's fiscal consolidation or reforms of our overly rigid labor markets or pension reforms, that we don't lose sight of our main goal, which is to make lives of people better," Obama said.

"And if for example we start seeing youth unemployment go too high, then at some point we've got to modulate our approach to ensure that we don't just lose a generation who may never recover in terms of their careers," he added.

The unemployment rate among those aged 15-24 in the eurozone is 24.4 percent. That compares to 16.1 percent in the U.S, where the age range is 16-24.

Merkel insisted that her government is committed to help its European partners in the crisis-hit nations.

"Germany on the long run can only do well when Europe does well too," Merkel said. "If we were conducting policies that would harm other countries, we would harm ourselves."

Obama acknowledged that there is no patent solution to fix economic problems, saying the U.S. also has to press ahead with reforms such as improving workers' training, upgrading infrastructure and fostering more investment in research and development.

"I don't think there's a perfect recipe. All of us have to make sure that our budgets aren't out of control, all of us have to undergo structural reforms to adapt to a new and highly competitive economy," he said.

The high unemployment rate is among the most visible fallout of Europe's economic woes, increasingly threatening to undermine young people's faith in their governments and the European Union.

"We have to have economies that are working for all people, not just those at the very top," he added.

The president also had a half-hour private meeting with Peer Steinbrueck, Merkel's center-left challenger in September national elections.

Steinbrueck told German television after the talks that he and Obama agreed austerity alone cannot solve Europe's problems.

"Of course we must consolidate public budgets, but we need growth initiatives and we have to take care that the other countries again get wind under their wings," Steinbrueck said.

The president of the EU Commission, the bloc's executive arm, acknowledged in Brussels "we have a social emergency in parts of Europe."

The EU, which also includes 10 nations that don't use the euro, has already earmarked some funds for programs tackling youth unemployment.