Agreement on the package, which sceptics doubt will radically alter the plight of Europe's 18 million unemployed, was seized on by Tony Blair, the Prime Minister, to bolster his claim that Britain is leading the way to fundamental reform in Europe.
He said the outcome "signals a new direction for Europe". The focus was now on "people's priorities", on the need for skills training, and on reforming the economic environment to allow businesses to hire more workers. "We are moving away from the idea that you can pass laws to create jobs," he said, stressing that for the first time there was agreement that governments should ease the burden of costs and taxation which hinders recruitment.
But the agreement falls well short of any endorsement of British-style labour flexibility. Heads of government committed themselves to new employment action plans which will be assessed collectively on an annual basis under a new "name-and-shame" style procedure. The first results will be vetted when the 15 leaders meet in Cardiff next June under the British presidency of the European Union.
But amid persistent divisions over public policy the strategies for cutting unemployment and meeting targets will remain strictly in national hands. Most Continental leaders, are still sceptical about embracing the American or British employment model which they claim has exacerbated inequalities and created millions of part-time and low-paid jobs.
The compromise worked out at Luxembourg allows governments to "tailor" the remedies to the particular problems they face. This means, for example, that the French and Italians can pursue their plans for a 35- hour working week, but the idea will not necessarily be exported elsewhere.
Mr Blair nevertheless claimed strong backing on the need for reform of the inflexible European social model. He said the way was open to "a middle way" somewhere between old-style state interventionism on one extreme and the laissez-faire "free-for-all" which characterised the Tory years in Britain.
The employment package enshrines a pledge to increase training opportunities to tackle youth and long-term unemployment. Only around 10 per cent of the unemployed are currently in training and the leaders agreed the objective should be to increase this, not to the 25 per cent sought by the French and the European Commission, but to a less ambitious target of 20 per cent.
They agreed that every unemployed young person should be offered a new start within six months of being on the dole in the form of training or work experience. Older people out of work for more than a year will be offered training or individual counselling.
-- Katherine Butler LuxembourgReuse content