Jobs Summit: Talking shop offers little hope for jobless

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The Independent Online
One in five Europeans lives in the shadow of unemployment.

Diane Coyle and Katherine Butler ask whether a gathering of Europe's leaders in Luxembourg will deliver more than a photo-opportunity.

There are nearly 20 million people in the European Union who are looking for work and cannot find it. As many again have given up the unequal struggle and withdrawn from the job market.

Solving Europe's unemployment problem is a challenge the Government has set itself for its presidency of the EU in the first half of next year, and for the G8 summit of world leaders in Birmingham in June.

Sceptics expect little concrete action to emerge from the Luxembourg summit, which starts today.

Politicians from the high-unemployment countries, like Germany and France, are hesitant even to agree to new targets for reductions in joblessness, so unsure are they that these could be achieved.

Last night Britain, Sweden and Italy made an appeal for sweeping reforms to Europe's inflexible labour markets.

In a joint letter targeted at the over-regulated interventionist social models of continental Europe, Tony Blair, his Italian counterpart, Romano Prodi, and the Swedish Prime Minister, Goran Persson, urged the summit to endorse a five- pronged attack on the obstacles to what they called "the scourge" of unemployment.

The United Kingdom and the United States have both cut their jobless rates to almost acceptable levels over the past five years, although seemingly at the price of increased inequality.

On the internationally accepted definition, Britain's jobless rate is below 7 per cent and the US's below 5 per cent, compared to rates in double figures in France, Germany, Italy and Spain.

But there is little willingness on the part of the continental leaders to admit that they can draw lessons from the Anglo-Saxon successes. Launching his Employment Action Plan, the UK's contribution to this week's debate, Gordon Brown acknowledged this difficulty.

The Chancellor said: "We need to find a third way between rampant free- market economics and stifling over-regulation, combining economic efficiency and social inclusion."

For many economists, however, talk of a third way is window dressing. While it would be wrong to say the profession has cracked the unemployment problem, there is a great deal of consensus about what steps governments should be taking.

Charles Bean, an expert on unemployment at the London School of Economics, said: "There is no magic bullet - it is a fight on many fronts. But we do know which policies will help get people into work."

So, for example, there is agreement that a high youth minimum wage and a high ratio of benefits to earnings are unhelpful; that "active labour market policies", such as jobs advice, support with application forms and travel to interviews and information services, are surprisingly helpful.

Most experts would also agree that the continental economies are too highly regulated, not just in their hiring and firing rules but also in the rules applying to providing goods and services.