Report optimistic about fall in unemployment

Date: 12/10/1995

By Michael Mann

UNEMPLOYMENT in the European Union could be halved between now and the year 2000, according to the European Commission.

In a report prepared jointly by Economics Commissioner Yves-Thibault de Silguy and Social Affairs Commissioner Pádraig Flynn, they present an upbeat message on job prospects.

The report forecasts that if the EU can achieve its aim of investment-led growth of 3-3.5&percent; every year, just 7.5&percent; of the EU population will be out of work by the year 2000. If this is accompanied by structural measures, unemployment could fall by a further 2.5&percent;, the Commission believes. Unemployment stood at 10.6&percent; at the end of August.

Although generally optimistic about developments in economic and structural policy, the report,published yesterday (11 October) cautions that further progress will be stymied unless member states and the social partners are prepared to commit themselves to a determined two-track approach.

The Commission found that the improved economic climate, low inflation, and the positive trade balance meant that “the basic conditions for growth and new jobs are better than they have been for twenty or thirty years”.

“This really does show that there is light at the end of the tunnel,” said one Commission official.

The report points to progress in structural reforms, reflected in member states' multi-annual programmes, adjustments in social security systems and developments in collective bargaining which have allowed greater labour market flexibility. However, it suggests that in the future, member states should look at “more systematic research into alternative financing of social security”.

The Commission also warns against complacency as the EU climbs out of the slump of the early 1990s. Member states must continue their efforts to reduce public deficits and continue wage moderation. Any relaxation of efforts to meet the criteria for economic and monetary union would severely damage the fight against unemployment, the report concludes. The document represents the Commission's contribution to preparations for a single report based on consultations with both finance and social affairs ministers to be discussed at the Madrid summit in December.

Following a two-day meeting this week with French President Jacques Chirac, Spanish Prime Minister Felipe Gonzalez pledged that the Madrid Summit would endorse common guidelines on employment policy. “For the first time, there is a commitment that labour, social affairs, economy and finance ministers, as well as the Commission, will submit an employment plan that can serve as a guideline for the entire European Union,” Gonzalez stated after the meeting.