Euro jobs summit is more talk than work

For all the talk of historic turning points in Luxembourg last week, says Rupert Cornwell, 18m stay unemployed
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The Independent Online
At least give Europe's leaders credit for focusing on what really matters to ordinary people. Newspaper headlines may suggest otherwise, but the biggest worry for Europe's citizens is not EU enlargement or the intricacies of the single currency, but their job: either the security of the one they have, or, in the case of 18 million unfortunate people, the one they don't have.

Not that Friday's special jobs summit in Luxembourg achieved very much, whatever the talk by Padraig Flynn, the EU Social Affairs Commissioner, of an "historic turning point" in the continent's affairs. A more common view was that the occasion was aria fritta, as the Italians say - fried air, by the bucketful. What common measures, critics asked, could possibly be agreed by 15 countries with very different specific problems. And the summit's conclusions seem to bear them out.

The meatiest part is a pounds 7bn "action plan" by the European Investment Bank to help small and medium-sized businesses, and develop new sectors. There are guidelines for boosting job training schemes and "employability", tackling youth unemployment and cutting tax and red tape. In the background was the Brussels Commission's goal of creating 12 million new jobs, and lowering EU unemployment from 11 to 7 per cent in the next five years.

The summit shied away from such numerical goals - they could be deeply embarrassing to politicians seeking re-election. The hope is that peer pressure will do the trick, just as peer pressure helped prod all EU countries bar Greece into meeting the Maastricht criteria for the single currency. In concrete terms it adds up to precious little. Maybe, of course, the leaders will get lucky. Europe is finally pulling out of recession: even if the jobs crisis will not disappear, it might at least recede in time for the launch of the single currency, allowing everyone to claim progress when they compare notes on unemployment next year. But it could all go dreadfully wrong, especially if the Asian financial crisis spreads to Japan, and then feeds into the European economy. Throw in an overdue slowdown in the US, and the recovery might shudder to a standstill.

At that point, unemployment could turn into a time bomb under the single currency itself. Not only will individual EMU countries surrender to the new European central bank the power to manipulate interest and exchange rates. On the fiscal side, too, the discipline imposed by the Euro will virtually rule out the inflation-boosting, deficit-expanding pump priming that once used to create jobs. Which leaves a grim truth, scarcely murmured in Luxembourg.

With devaluation and tax cuts off limits, most of the burden of adjustment in individual countries will fall on labour markets. Governments can offer incentives, in other words, but if things go wrong, the unemployed have three basic choices. They can accept lower wages and benefits. They can learn marketable new skills. Or they can move to where the jobs are. That is what "flexibility" means in practice. It works in the US, but America is an extraordinarily homogenous country, with a single language. Europe has its single market - but will someone unemployed really be "flexible" enough to brave the culture shock of a move from Manchester to Marseilles.

All of which renders Luxembourg's great ideological debate somewhat academic. Much was made beforehand of a great clash of labour market cultures; between the highly protective, highly regulatory job policies championed by France, and Britain's rough-and-tumble US-style capitalism.

Helmut Kohl knows full well that high labour costs and excess regulation are prime reasons for Germany's 4.5 million unemployed, while Gordon Brown acknowledged last week that in terms of education and job training, Britain is way off the pace. Reality, though, will surely press towards the British model. At 5.3 per cent, Britain's headline unemployment rate is less than half that of France, Germany and Italy, and barely a quarter of Spain's 20 per cent.

Thus the summit offered the rare spectacle of the UK on the side of the angels in a European intellectual argument, and Mr Blair will keep up the pressure during Britain's six-month EU presidency which starts in January. But whether that pressure will make any practical difference for Europe's 18 million unemployed is quite another matter.

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