European Commission President Jacques Santer and Social Affairs Commissioner Padraig Flynn this month challenged member states to get to grips with Europe's unemployment problem. They proposed targets, such as the creation of 12 million jobs over the next five years, and a reduction of the employment rate across the EU from an average of 10.6 per cent to 7 per cent.
The Commission also called for an increase from 10 per cent to 25 per cent in the percentage of offers of a job or training to the unemployed, over the same period. All those out of work for over a year should be offered a job or training, said President Santer, responding to the worrying statistic that 48 per cent of Europe's unemployed have been without work for over a year.
It is also intended that employers should not be deterred from hiring staff on account of high ancillary social charges. These new initiatives, Mr Flynn told MEPs, were not to cost more money but would come from "a restructuring of expenditure". These proposals are to be presented to the jobs summit which will take place this month in Luxembourg. However, some member states have already expressed reservations about the setting of targets.
The European Parliament's approach to the jobs summit has been similar in tone. Among proposals in its resolution of October 21st concerning the forthcoming jobs summit, Wim Van Velzen highlighted that:
unemployment should be cut to 7 per cent of the active population, and youth unemployment reduced by 50 per cent, within five years
unemployment should equal the average in the three best countries within five years
there should be a guarantee that the retrained unemployed be given paid employment for at least a year, and that special attention should be given to groups particularly affected by unemployment
member states' national budgets should be geared to the mean of the three best-performing member states as regards training, while resources now devoted to "passive" employment policies should be transferred to more active measures, such as education and training
promotion of labour market flexibility with a regard to working hours, working time and working patterns, such as career breaks, was needed
it was desirable to move towards reducing the overall tax burden for individuals and companies.
A European approach to the job creation process has to be promoted in the context where employers believe that expansion will lead to increased profits or market share. Employers are reluctant to take on extra labour in the face of restrictive conditions. They get even more reticent however, if by law they are "restricted" in how they employ staff.
Employment protection, such as a statutory minimum wage, is often considered costly and unrealistic, all the more so given that countries are forced to compete within a globalised economy. Companies dare not raise their prices for fear of losing business as a result of tougher competition.
On the other hand, it is argued that by paying employees a decent wage, adopting consultation practices, providing training and a measure of stability, a company is, in the long term, far more efficient and more profitable. This approach also attracts a loyal labour force. Hiring and firing only causes friction and does nothing for efficiency.
In the changing employment market, the need for on-going training is critical both for employer and employee. Shortages of qualified staff, due to lack of training, can push up wages to the detriment of the employer.
A minimum wage, the counter argument continues, is costly only if it is set too high. Its function is to prevent the excesses of an all-powerful market. Furthermore, it is said, a minimum wage cannot destroy jobs, since non-skilled, low-paid jobs are in decline anyway due to market demands. The new jobs, in the short to medium term at least, tend to be of a higher-paid nature and therefore would not necessarily be affected. A minimum wage is not necessarily anticompetitive if it is applied across the board. It can also put more spending power in the pocket of the lower paid who tend to spend their money on goods generated by the domestic economy.
Thus, a society is created that is more at ease with itself and more willing to spend its money, the so called "feel-good factor", creating more wealth and jobs. Moreover, it should be illegal to employ people with low wages and poor conditions.
Employment has shifted in recent years as a result of changes in the jobs market, new technology and the expansion of certain areas of the economy and the decline of others. One example is the decline in manufacturing industry and the rise of the services sector, which now represents some 60 per cent of the EU economy. Part-time staff, of whom many are women, are also increasing as employers seek to recruit more flexible staff, particularly in the service sector. Hence the need to give these workers the same rights as traditional full-time workers has become more pressing.
There are significant differences in approach to the problem. Lionel Jospin's administration in France has so far concentrated on the need to protect workers from the excesses of the free market, public sector job creation and a reduction in the working week. Tony Blair in Britain has gone for flexibility in the workplace, training for the young unemployed and a courting of the private sector. Jean-Claude Juncker, Luxembourg's premier and host to the jobs summit, stressed in September that he believed that there was a third way between US-style market flexibility and the more protective welfare state, insisting that Europe "has not lost its ability to compete, and the European social model, though in need of reform, is not under threat".
The realistic way forward is therefore likely to require a measure of both approaches. The summit will help us see just how far this is possible.