EC: Why unemployment strategy has to rise on the EC's agenda.

EC: Why unemployment strategy has to rise on the EC's agenda. - Politicians are beginning to worry about the long-term jobless.

by Peter Wilsher, freelance consultant and writer.
Last Updated: 31 Aug 2010

Politicians are beginning to worry about the long-term jobless.

Not long ago I was talking to a schoolboy in Middlesbrough about jobs. He told me that not only had neither his father, his elder brothers and sisters nor his mother ever had a regular pay-packet during his 16-year lifetime, but the same applied to every one of his male relations, uncles, cousins and both grandfathers. It is an experience which is becoming increasingly common throughout Europe.

Unemployment, and the absence of any effective strategy to counter it, has emerged as the Common Market's greatest single failure. With only a temporary dip in the middle 1980s, the total of those without work has been rising inexorably for a decade, and will reach just under 17 million this year, according to the latest OECD estimates. That would represent 9.7% of the Community's potential adult workforce - slightly higher, even, than Britain's current 9.4%. But the much more worrying figures are for those who have been without work for 12 months or more. The latest comprehensive figures, gathered before the present recession touched bottom, showed more than half those registered (53.7%) already classified as "long-term unemployed". Various individual country statistics suggest that the position is now considerably worse, and at long last it is starting to generate some serious political and social concern. When immigrant workers come under physical attack, as they have from Calabria or Schleswig-Holstein, and right-wing, anti-foreigner extremists start winning unexpected election victories, even the blandest of ministerial apologists start to sit up.

It is about time. In the last half-century, the employment issue seems to have dropped everywhere to the bottom of the policy agenda. Such targets as the defeat of inflation, and the preservation of the exchange rate have taken a far higher priority, and any resulting effect on employment opportunities has been largely left to take care of itself. The effects of such not-so-benign neglect have been unevenly spread. As France's Banque Paribas found in a recent study, "while the likelihood of being unemployed is high in the United States, the chances of finding another job are also good. That is by no means the case in the EC". Often those unlucky enough to slip off the 9-to-5 travelator (and certainly the millions of young people who find it almost impossible to scramble on) find themselves facing a barrage of well-meant "job-protection" measures which seem perversely designed to prevent them clawing the way back.

Strict rules on such things as sick pay and holiday entitlement, and even more so, redundancy compensation, make companies increasingly reluctant to rehire permanent staff. Despite the widespread decline in trade union membership, minimum wage agreements and collective bargaining arrangements frequently discourage the creation of new jobs. Restrictive attitudes to working "unsocial" hours hold back the spread of a US-style service sector. And on the other side of the coin, supposedly "generous" unemployment benefits often work in such a way as to actively discourage people from rejoining the labour market.

At this troubled moment in Europe's affairs, anyone attempting to tackle such problems is caught in a three-way rip tide. Belgium, Italy, France, Spain and even the pathologically conscience-ridden Netherlands are all trying to put through legislation intended to make idleness less financially attractive and set limits to their present budget-bursting levels of public largesse. But if the Maastricht Treaty goes through in anything like its present form, it will work in almost the opposite direction, while at the same time exacerbating the underlying problem. Its "social chapter" will force governments, in many areas, to be even more protective than they are at present, while its insistence on budgetary rectitude and economic convergence is likely to cause a sharp acceleration in the shedding of public sector jobs.

Meanwhile, Europe's private sector industries are responding to a decade-long rise in labour costs by intensifying their struggle to raise productivity and profits, which almost always starts with slashing the pay-roll. This trend is now being strongly reinforced by the wholesale export of jobs overseas. How soon before my Teesside schoolboy's experience becomes equally commonplace in Stuttgart and Clermont-Ferrand?

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