EUROPE
European employment
Fiddling
B R U S S E L S
IT IS easy to agree that unemployment is the European Union’s biggest economic problem. Some 18m of its people are jobless, an average unemployment rate of 10.6%. In France and Spain, the latest rates are 12.6% and 19.9% respectively. More women are out of work than men. Youth unemployment is twice as high as the average. Nearly 6m people have been out of work for more than two years.
It is much harder to agree on what to do about it. One European tradition is to produce papers and hold meetings. On October 1st, the European Commission unveiled the papers it will put before a special jobs summit of heads of government in late November. It wants governments to adopt lots of targets for the next five years, under the guise of “employment guidelines”—increasing the employment rate from 60% to 65% (and later to 70%), creating 12m new jobs, cutting the unemployment rate to 7%, raising the proportion of the unemployed who are offered training from 10% to 25%.
Several countries, including Britain and Germany, will be sceptical. Adopting grand targets does not create jobs, except among bureaucrats. True, the commission has some better ideas, such as switching some of the 200 billion ecus ($221 billion) spent every year on unemployment benefits to active labour-market policies; cutting the overhead and tax costs of employing workers; and encouraging more adaptable forms of contract. But its papers are corporatist in tone, with much talk of negotiating with “social partners” (government, employers, unions); they pay only lip-service to such essential things as flexible labour markets; and there is little about the need for more deregulation, lower taxes or lower minimum wages. Instead, the commission suggests that slow economic growth is the main cause of Europe’s unemployment.
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This analysis is feeble. The recession and stuttering growth have clearly made things worse. But European unemployment has been high for so long that most of it must be structural: that is, it reflects excessive regulation of labour and product markets, an ill-adapted workforce and over-generous welfare benefits. For policies that might reduce it, continental Europeans need simply follow America and Britain, where unemployment has tumbled, thanks to deregulation and cuts in taxes, public spending and welfare benefits.
Such a message remains mostly unwelcome on a continent determined to maintain its distinctive “European social model”. In one commission paper for the summit, which discusses 11 examples of “best practice” in the employment field, not one of the examples is British. Jean-Claude Juncker, Luxembourg’s prime minister, who will chair the jobs summit, says he is determined not to let it become a deregulation summit. And both the commission and Mr Juncker suggest that changes in work practices to make them more flexible should be negotiated with “social partners”, not imposed.
All this may turn the jobs summit into a missed opportunity. But it could do worse than that. Consider the growth of part-time work, which has been responsible for all of Europe’s net job gains in the past six years and now accounts for 16% of the EU’s total employment. In the Netherlands, much praised for combining low unemployment with the European social model, part-time jobs now account for 38% of all jobs. The commission says it is not against this, indeed it wishes to encourage it. But at the same time it wants part-time workers to have the same security and benefits as full-time ones—a sure recipe for reducing the number of part-time jobs created.
