View from Brussels: Europe faces up to 23 million out of work

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The Independent Online
France's five-year job creation plan, announced on Wednesday, has refocused attention away from the money markets and Europe's ailing monetary system back to the fundamental problem confronting all European Community economies: unemployment.

The EC unemployment average, which has been rising for 18 months, is now 10.6 per cent against 9.4 per cent in June 1992. According to European Commission forecasts, it is set to peak at more than 12 per cent by the middle of next year.

For the Community, reducing the jobless total is seen both as a key to greater productivity and economic regeneration and as a mark of a government's political effectiveness.

The conservative government of Edouard Balladur in France aims to lower taxes on employers and increase labour market flexibility. But far from inspiring a radical new approach to combatting the dole queue, the plan has been criticised as little more than a short-term economic fix, despite the protestations of the Labour Minister, Michel Giraud, that it will address the structural problems of France's labour market.

'We have had our fair share of five-year plans: it is a short enough period to suggest proper change is feasible but long enough to ensure that no one will remember what the goals were when the five-year period is up,' the economist Gerard Dupuy said.

Under the plan, the state will gradually take over responsibility from employers for paying the social security for lowest-paid workers.

The 39-hour working week is also to be calculated over 12 months to improve production flexibility and cut overtime payments. Part-time work is to be extended and medical insurance payments frozen. There will be incentives for the creation of small businesses and efforts to improve training.

The country's main unions are highly critical of the plan. 'It amounts to more freedom for employers and greater constraints on workers,' the Force Ouvriere said in a statement. The unions' co-operation is vital to the plan's ultimate success.

Industrialists, meanwhile, are annoyed that the proposals do nothing to reform the minimum wage, which they regard as one of the biggest stumbling blocks to higher employment levels.

In a European context, few of the French measures are new. They have, in various forms, been taken up by most of France's EC partners in their efforts to stimulate job-creation.

The OECD forecasts that by June 1994 there will be a global total of 36 million people out of work. By the end of that year, the jobless total will have risen to 8.25 million in the US, 1.7 million in Japan and a staggering 23 million in the EC.

It argues that, to bring that figure down, governments must cut budget deficits, reduce long-term real interest rates and encourage private investment.

While governments struggle to bring their economies under tighter control, the European Commission is trying to encourage entrepreneurship, labour market flexibility and further training activities.

The white paper due for publication later this year will try to flesh out the blueprint laid down by Jacques Delors at the Copenhagen summit in June.

But it is not clear whether the gloom that has descended over the Commission as a result of the protracted struggle over Maastricht and the near-collapse of the European Monetary System is the right atmosphere to engender creative thought.

Politically, the 12 EC member- states are perhaps now farther apart than ever as their governments become increasingly introspective. The EMS crisis only served to underline the limits of EC solidarity in times of stress.

In these dog-days of summer, France, Spain and Belgium have announced social pacts designed to get people working again. All aim to reduce social security benefits and pass the saving on the employers to stimulate job creation.

All promise new training opportunities, yet the problem of long-term unemployment persists. Europe has a higher percentage of long-term unemployed than either the US or Japan, and more than a third of all claimants have been without a job for more than 12 months.

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