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Crisis Intensifies Debate on EU Employment Strategy

by Andre Willis

EUOBSERVER / BRUSSELS - European Commission president Jose Manuel Barroso admitted on Thursday (12 March) that unemployment is soaring in the European Union, but insisted that the necessary safety-nets are in place to protect citizens.

"The European social model is working …working much better than the financial system or the economy as a whole," he said, referring to the stymied banking sector and the fall in EU growth that have dominated the political agenda for the last six months.

"When people lose work in Europe we don't consider it to be their fault – we don't just put them on food stamps," he said, adding that the European model had a lot to offer other countries around the world, particularly in the area of "automatic stabilisers" (social security payments).

"We would like others to work on these matters," he said, in an apparent reference to the United States, where unemployment benefits are considerably lower than in Europe.

The debate over stimulus spending has intensified in recent days following calls by Larry Summers, chief economic advisor to US president Barack Obama, for governments around the world to increase their spending to fight the economic downturn.

His call has not found favour with many eurozone governments, which are extremely reluctant to add to already high levels of public debt and who argue that the EU stimulus package will reach 3.3 percent of GDP, if the stabilisers are included.

Mr Barroso's comments came after a meeting with the secretary general of the European Trade Union Confederation, John Monks, and President of Business Europe, Ernest-Antoine Seilliere, to discuss measures to deal with rising unemployment, predicted to reach 10 percent in the EU by the end of this year.

The three agreed on the importance of worker retraining and the use of flexi-time to reduce unemployment. A number of consultative meetings have been scheduled for the coming weeks before an EU leaders summit in May that will concentrate on jobs.

Figures released by Eurostat in January show EU27 unemployment on 7.6 percent (representing 18.4 million people), ranging from 2.8 percent in the Netherlands to 14.8 per cent in Spain.

Mr Seilliere predicted the crisis will cost 4.5 million more European jobs this year.

Lisbon Agenda

The precarious situation has added to the discussion on the merits on the bloc's longterm growth strategy – known as the Lisbon Agenda - and what should follow in its footsteps after 2010, when it is due to expire.

"The Lisbon Agenda is not the cause of the current crisis. On the contrary, it is the answer to it," said Jakub Durr, deputy education minister of the Czech Republic, currently holding the EU's six-month rotating presidency.

The Lisbon Agenda, agreed by EU leaders is 2000, set out to make Europe "the most competitive and dynamic knowledge-based economy, capable of sustainable economic growth, with more and better jobs and greater social cohesion" by 2010.

Mr Durr was speaking on Thursday at the launch of a new survey that monitors how the largest 14 EU economies are performing in reaching the goals set out under the Lisbon Agenda.

Despite the frequent criticism of government inactivity in recent years, the survey suggests that six of these states would have met the Lisbon targets had it not been for the financial crisis. Target areas include human capital, growth, jobs and sustainability of public finances.

The six states on target were Finland, Greece, the Netherlands, Poland, Spain and Sweden. Prof Michael Heise, chief economist with Allianz SE who presented the survey, said that despite news reports to the contrary, the economies of Poland and Spain were on a solid footing.

Finland topped the survey's scoreboard whereas Italy came in last place. Ireland dropped the greatest number of places since last year's report, due to growth of a "superficial" nature Mr Heise said, boosted by a credit and a housing bubble.

Source: www.euobserver.com