Experts differ on jobless

MULHOUSE (Reuter) - A Franco-German split emerged yesterday as a panel of experts from the two countries recommended far-reaching labour market deregulation, productivity-linked pay, more flexible working hours and free trade as the solution to chronic unemployment.

The panel advocated radical steps broadly supported by Bonn but some of which are considered social heresy by Paris. The German Economics Ministry issued what it said was the final report of the panel, but French Economy Minister, Edmond Alphandery, told reporters at a Franco-German summit in Mulhouse that the text was provisional.

In a rebuttal of a widely-held French view, the panel said it did not consider that 'developing and threshold countries use basically unfair trade practices'. Imports from Central and Eastern Europe should be seen as an opportunity for Western European industrialists and consumers to cut costs and not as an economic threat.

The report said German competitiveness suffered from high labour costs, a strong mark, high taxes on corporate profits and short working hours. France suffered from high social security costs, an unbalanced corporate structure, regional imbalances and the weakness of its small and medium-sized business.

'An economic policy strategy for more employment should reduce regulations above all in the services sector and support new firms and technologies instead of subsidies to outdated structures,' the panel said. 'Beyond that, a wage policy based on productivity, flexible working hours, active labour market measures and a review of the rules for dismissing workers are important.'