The Malta Independent 20 April 2024, Saturday
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What Should the EU be doing to combat unemployment?

Malta Independent Saturday, 16 July 2011, 00:00 Last update: about 14 years ago

With 23 million citizens out of work and an average youth unemployment rate approaching 20%, unemployment is one of the European Union’s primary challenges – only trumped, perhaps, by the eurozone’s debt crisis.

Overcoming this challenge depends chiefly on the EU’s ability to put together a coherent strategy at the European level to better integrate Europe’s labour market – to facilitate movement from areas of low employment to areas of high employment across national boundaries. With average unemployment at 9.3% in the European Union but at 20% in Spain, for example, there are clearly wide spreads in employment rates among different member states.

The EU can help member states beat down high jobless rates in two ways. First, by setting targets to guide policymaking at the national level and, second, by taking or financing measures itself. The EU‘s 2020 strategy has set several ambitious targets related to employment. It prescribes an overall employment target of 75% across the European Union in the 20-64 age group, which would entail bringing groups with traditionally lower rates of employment, such as women and the elderly, into the labour market. It also sets the target of reducing school drop-out rates to below 10% and seeks to reach at least a 40% rate of tertiary education completion among 30 to 34–year-olds in the EU.

In meeting these targets, the European ‘Agenda for new skills and jobs’ outlines a number of measures to be taken. The key priorities include stepping up reforms to improve flexibility and security in the labour market, equipping people with skills that meet the needs of today’s economy, improving the quality of jobs and ensuring better working conditions to encourage certain demographic groups to go out to work, and improving the conditions for job creation to keep the labour market buoyant. Paired with the 13 key actions outlined in the agenda, these priorities represent the European Commission’s vision for a Europe with full employment.

All of these areas will be important to achieving the EU’s employment targets. But there are three particular areas that should be prioritised.

First, as I have already stated, it is crucial for the European Union to act to enhance the mobility of workers across national borders. While Europe’s economy is largely integrated, its labour market is not. This is due to several factors, including language barriers and different social security systems. The main indicator of this fragmentation is the fact that member states don’t have the same unemployment rate. This would not be the case – at least not to such an extent – if Europe’s economy was truly integrated. Certain initiatives have already been taken to boost mobility, such as a Europe-wide website for jobseekers. And the implementation of the new Single Market Act, by streamlining administrative procedures, should serve to further boost the process of labour market integration.

Second, and somewhat related to the first point, is the need to improve the skill set of Europe’s working and unemployed population. This is related to the first point because higher-skilled workers tend to be more mobile and therefore better placed to take advantage of opportunities across political and linguistic barriers. But, of course, skills are an asset in themselves, distinct from their benign effect on mobility.

The economic crisis has had the worst effect on already declining sectors, throwing into sharp relief the need to retrain workers to move into booming areas of economic activity. Where, for example, a staggering one-third of Europeans have rarely or never used the Internet, estimates indicate that by 2015 there will be a shortage of ICT practitioners of up to 700,000. This not only constitutes a drag on the continued growth of that sector, but also on the larger economy. Not least, it represents wasted opportunity in a context where one in five young Europeans can’t get a job. This brings in an obvious role for the Commission in terms of financing training programmes in digital literacy, for example, through already existing lifelong learning educational funds.

Third, the Commission can and has prioritised the role of small- and medium-sized enterprises in providing employment. SMEs provide two-thirds of all private sector jobs in the European Union. They must therefore be a central part of any employment strategy. Within the framework of the Commission’s ‘Innovation Union’ flagship project, SMEs which show willingness to invest in the training of their staff and in investing in research and innovation should be supported.

The employment crisis facing the European Union – or, at least, several member states – while, short of wiping the slate clean, provides a historically unique opportunity to rethink the structure of our labour markets and lay the foundations for us to be able to sustain high employment once growth returns to Europe’s economies. Of all the areas to prioritise, labour mobility stands out as a win-win solution: Apart from bringing unemployment rates down it would help narrow economic imbalances among member states and lead not only to a more integrated European economy but perhaps also a more integrated policy.

David Casa is a Nationalist MEP

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