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EU ministers' tug of war over 'Europe 2020' strategy

Published 19 March 2010 - Updated 24 March 2010
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Ahead of a summit of European leaders next week on the long-term 'Europe 2020' plan, EU labour and finance ministers appear to disagree over the exit strategies to be put in place to lifting the bloc out of recession and reduce massive unemployment.

In a meeting with the president of the European Council, Herman Van Rompuy, the Spanish, Belgian and Hungarian labour ministers, representing the current and upcoming rotating presidencies of the EU, discussed the fundamental differences between EU social and finance ministers, as spelled out in the conclusions of the respective councils.

The 'Europe 2020' strategy should include both short and long-term measures and tackling unemployment should be an overriding objective, stressed the three labour ministers.

Wary of lifting anti-crisis measures too soon

"The economic crisis cannot be deemed to be over. We have the same number of jobs created as those destroyed by the crisis," said Spanish Labour Minister Celestino Corbacho, noting that "we are not seeing net growth of new jobs yet".

It would be wrong for Europe to let its guard down and reduce stimuli and supportive measures by the end of the year, as the Economics and Finance (ECOFIN) Council agreed to do earlier this week, said the Spanish labour minister.

EU finance ministers indeed emphasised the importance of combining cooperation on financial market regulation with "principles to underpin the coordinated withdrawal of short-term measures in labour and product markets" and called for their withdrawal by the end of 2010.

The communication gap between the finance and labour ministers seems to relate to their different approaches to economic growth.

"We need an economic growth strategy, but one that creates jobs," stressed Belgian Labour Minister Joelle Milquet.

Employment strategy not just a flagship

A weakness of the current version of Europe 2020, they said, is that it sets an ambitious employment target of putting 75% of the active population into work, but it fails to come with the economic development instruments, such as direct job creation tools.

Milquet points out that employment is just one of several flagship aspects of the Europe 2020 strategy, arguing that "it should be more than that".

Hungarian Labour Minister László Herczog explained that the European Employment Strategy, developed to encourage and coordinate joint action to create more and better jobs, cannot be reduced to the labour market issues referred to only in the 'Youth on the Move' flagship initiative of the Europe 2020 plan.

The EU employment strategy covers a broad range of labour market, employment, training and economic policies and must address them in a consistent manner, insisted the minister.

"I can't see clearly whether the European Employment Strategy will be developed beyond the approach of Europe 2020, which is essentially limited to the labour market and flexicurity. Or will the employment strategy basically include only the actions currently covered by Europe 2020?" Herczog asked.

New governance models

Labour ministers are clearly trying to secure for themselves a bigger role in the European governance architecture. They called for more coordination with their finance and economic counterparts, and proposed to hold a European employment summit by the end of the year or in early 2011.

"We have 23 million unemployed. We need a summit to deal with the problem," said Milquet.

Last year, a downgraded employment summit in Prague agreed on a 10-point plan which urged the EU 27 to swiftly step up action to increase access to employment, particularly for young people, as well as to upgrade skills, match labour-market needs and promote mobility (EurActiv 08/05/09). 

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Positions: 

 “Ensuring Europe’s youth can obtain genuinely worthwhile jobs, in the midst of this economic crisis, is one of our greatest challenges” said Party of European Socialists (PES) President Poul Nyrup Rasmussen. He contrasted the progressive work of the Committee with Tuesday’s conclusions from the ECOFIN (EU Economic and Finance Ministers) Council. “The PES understands that the best way to make sure we don’t lose a generation to youth unemployment is to ensure strong supportive measures. However, conservative Finance Ministers and Prime Ministers, continue to cut public investments in the labour market. With the ECOFIN decision to phase out supportive measures for the labour market we risk losing an entire generation of young people to unemployment.”

PES leader of the Social Europe Network, Alejandro Cercas, MEP - stated that; “the shortsightedness of conservative governments in Europe exposes our young people to the ravages of long term unemployment just when they have a right to expect support”.

Janna Besamusca, Secretary General of ECOSY – Young European Socialists said: “the unemployment rate of young people is twice that of the average population. We know that unemployment at a young age is likely to cause professional and personal problems to people their whole lives – and still the message from conservative Economic and Finance Ministers is - stop measures which support the labour market.”  

PES and ECOSY are asking for a job guarantee for young people to be subsidized from the European Social Fund, a fiscal incentive for SMEs to offer paid internships and traineeships, a directive to establish minimum criteria for internships, more investment in education and a special project for young people under the EU microfinance facility.

Background: 

To tackle the unprecedented economic storm, governments across the world have been spending trillions of dollars on economic stimulus packages to combat the recession, prompting a debate about how eventually to unwind this support. 

Removing the stimulus measures too soon could see economies slump again, while leaving them in place too long could risk stoking inflationary pressures. This is why the need for coordinated 'exit strategies' has featured high on the agenda of EU leaders and finance ministers since late 2009.

The European Commission indicated that if forecasts showed the recovery was strengthening and self-sustaining, deficit cuts in all EU countries should start in 2011 at the latest (EurActiv 04/11/09).

At a meeting in late 2009, the EU's finance ministers agreed on a plan for a coordinated exit strategy from expansionary stimulus packages but did not agree a date for its implementation (EurActiv 02/10/09)

According to the EU's 'Europe 2020' strategy for economic growth, "for most countries, the onset of fiscal consolidation should normally occur in 2011".

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