Britain sets out controversial ideas for pepping up the EC

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The Independent Online
FREE trade, free enterprise and flexible labour markets are the key to making the European Community more competitive, Britain argues in a paper released yesterday.

The document is Britain's contribution to an EC initiative intended to boost growth and pull the community out of its malaise. It sets out the way Britain believes Europe should work after the Maastricht treaty is ratified, but is sharply at odds with that advocated by the commission.

The document, Growth, Competitiveness and Employment in the European Community, focuses on four issues. It says Labour markets are too inflexible and over-regulated and 'these factors deter employers from taking on new employees and damage job creation'.

The community is losing competitiveness, it argues. Social security and health care costs are rising. And the community must pursue free international trade.

From an analysis of these factors, the report draws three conclusions. It argues for completing the Uruguay Round of negotiations on the General Agreement on Tariffs and Trade and for reductions in budget deficits and low inflation in the EC.

Secondly, it urges measures to encourage enterprise, including the enforcement and implementation of the single market. More controversially, the British paper argues for jettisoning some EC rules.

But the part of the paper that is likely to spark the strongest debate concentrates on labour markets and social protection. Britain calls for member states to achieve more flexible labour markets, for scrapping existing and planned EC legislation, examining their costs and benefits and switching to active labour market policies such as requiring the jobless to be available for work. This should be matched with training initiatives and education.

The British paper also advocates reducing the costs of social protection. 'There is no question of abandoning social protection,' it says. 'However, all member states will have to contain the level of social expenditure while protecting those in genuine need.'

This means reforming social security systems, targeting assistance and providing incentives to work and save, the paper says.