EU crisis response not job-friendly: Think tanks

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Leading European think tanks have expressed doubt that the EU leaders' pledge to create jobs and growth will be successful, adding to a growing wave of criticism over the outcome of this week's EU summit.

Meeting in Brussels on Monday, EU leaders issued a seven-page statement detailing measures to promote "growth-friendly consolidation and job-friendly growth".

Their plans included mobilising unspent parts of the EU budget towards growth and employment, including €82 billion from the 2007-2013 regional funds.

An EU official had downplayed the latter as being "like paracetamol to mend a broken arm" while socialist leaders criticised the summit's growth statement as "empty talk".

'Gesticulation' of EU leaders

These criticisms were echoed at an annual 'Think Tank Dialogue' of EU and national research institutes, held in Brussels on Tuesday (31 January).

Giles Merritt, secretary-general of Friends of Europe, a prominent Brussels think tank, was among the most sceptical of the EU's growth plans, saying: "You might create a few jobs with a public works programme, but with the euro crisis forget it, there's not going to be any money."

Merritt, a former Financial Times correspondent who has written extensively on unemployment as far back as the economic crisis of the early 1980s, said the EU's economic strategy amounted to "fine-tuning". "There's a strong smell of business as usual," he added.

Daniel Gros, an economist and the head of the Centre for European Policy Studies, expressed similar criticism, arguing that insofar as the economic crisis was caused by a lack of liquidity – the inability of banks and governments to secure loans – the main institution capable of action was the European Central Bank.

"All this gesticulation at the Council level is becoming less and less relevant," he said.

Youth unemployment is 'nitroglycerin'

European thinks tanks have been increasingly concerned about the deteriorating state of 'social Europe'. Gordon Bajnai, a former Hungarian prime minister who now heads a research institute, said there was likely to be reduced growth and an increased generational conflict due to the rise of both youth unemployment and pension costs.

He argued there was a risk of serious unrest as social mobility was being "reversed", with many people falling out of the middle class, and youth unemployment in some countries reaching levels comparable North Africa. "Revolutions are not made by those who are poor, but by those who become disappointed," he said.

Merritt echoed this sentiment saying of youth unemployment, "It's nitroglycerin. We've got a highly-explosive, volatile mix of people in society who feel quite rightly hard-done by."

EU figures indicate the number of unemployed youth increased by 241,000 over the course of 2011, reaching 21%. The highest figures are in Spain and Greece where around half of young people are unable to find work.

Several present suggested EU leaders were unlikely to take the necessary action to remedy the situation in the short-term. "Many phobias have been overcome. Unfortunately we may be in another crisis before it's over," Gros said.

Recently-published Eurostat figures show that unemployment in the eurozone rose in December 2011, reaching an average of 10.4%, a new record.

Unemployment has been steadily declining in many other industrialised economies, falling the same month to 8.5% in the United States.

EU leaders meeting on Monday (30 January) agreed a new fiscal compact treaty to reinforce budgetary discipline. They in parallel presented new proposals for growth and jobs, but those were strongly criticised for lacking substance.

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