Youth unemployment has become one of the most popular educational research areas, at global, national and local levels. In the international development agenda, lifelong learning (LLL) and vocational education and training (VET) have been linked to youth employment and labour market policies, making education a potential universal solution to socioeconomic challenges. The European Youth Guarantee (YG) scheme, a labour market policy aimed at tackling youth unemployment, is an example of this trend in policy discourse. It offers insights into the European LLL agenda and heated debates over youth employment policies. This article critically analyses the role of liberal capitalist and human capital theories in shaping the YG scheme, formally launched in 2014, and to what extent it addresses issues of youth unemployment, by conducting a systematic review of academic literature, policy documents and official reports in the field. The article also focuses on ideology and power asymmetries between development agendas and various actors in YG policy formation, followed by an analysis of youth unemployment solutions which stem from them. An alternative values-based human capabilities approach is highlighted which could support the YG in achieving social well-being and comprehensive human development to tackle youth unemployment across Europe.