UK pushes for employment growth in Europe

The UK's new Labour Government, elected in May 1997, has made solving the problem of unemployment one of its top priorities. At home, it has committed itself to getting 250,000 young and long-term unemployed people back to work through the "welfare to work" deal, which has largely received a positive reception from social partners. Within the European Union, Labour is also keen to make employment a priority when the UK takes over the Presidency in the first half of 1998, though within the tight limits of promoting labour market flexibility. Will the Government's policy of promoting labour market flexibility and employment growth conflict with the views of the social partners?

The politicians

At the end of May 1997, the Foreign Secretary, Robin Cook, signalled the Government's intention of supporting new employment provisions in the revision of the EU Treaty. He argued that initiatives to increase levels of employment within the EU should have equal weight with the financial criteria to be decided for Economic and Monetary Union. Believing that tackling unemployment is a number one priority, Mr Cook also said "that is why we will support an employment chapter within the treaty of the EU."

Other social partners, while supporting employment growth in the EU, have differing opinions of how it should be achieved and whether in fact an employment chapter in the Treaty should be part of the process.

On 5 June, the Chancellor, Gordon Brown, announced Labour's programme to stimulate jobs throughout the EU - Getting Europe to work. He said that the programme, which would become a key priority when the UK takes over the Presidency of the EU in the first half of 1998, would highlight measures to promote labour market flexibility and minimal regulation. He said that new social or employment initiatives should be adopted only if they meet the criteria of boosting productivity, creating job opportunities and promoting labour market flexibility. When, a few days later, the Chancellor presented his proposals at a meeting of EU finance ministers in Luxembourg, they largely met with support. The other ministers are also said to have agreed to the UK's attempts to amend certain aspects of the proposed employment chapter, underlining the need for flexibility.

In an interview with the Financial Times published on 11 June, the EU commissioner responsible for social affairs, Padraig Flynn, joined the call for tackling unemployment in the EU, stating that the European Commission should join forces with national governments in coordinating employment policies for the whole of the Union. Mr Flynn hoped that the employment chapter which was likely to be decided at the June Intergovernmental Conference in Amsterdam (EU9706133N) would help to give social affairs a much stronger role and, although he noted that it is the job of national governments to create jobs, he argued that it would help if all policies were underpinned from the centre. Mr Flynn said that he too was a great believer in flexible labour markets and stated that it was he who invented the idea of a third way between neo-liberalism and over-regulated social Europe and not UK Prime Minister, Tony Blair. He said that there has to be flexibility, but also security through employability.

Employers' representatives

While the politicians seem to be reaching a degree of agreement on the subject of tackling employment in Europe, representatives of employers and employees seem to view the subject from opposite ends of the spectrum. According to The Times, the Confederation of British Industry (CBI) has privately warned the Government that a new EU Treaty could hit the UK with what it sees as the European jobs problem. The CBI was reportedly urging the Government not to agree to any measures which might damage British competitiveness and employment.

According to a report in The Times (9 June 1997), the CBI now generally seems to agree that the social chapter will have few harmful effects, despite the fact that it opposed it until recently. However, it still feels that any new measures introduced could harm the UK by "transferring national inefficiencies across Europe". It says that labour market reform at home must not be damaged by EU action which might add to rigidities and costs, arguing that other EU countries risk structural unemployment because they have much higher non-wage labour costs, limits on flexible working and high minimum wages. The Institute of Directors (IOD) is also warning that social legislation can only discourage firms from taking on more employees and creating jobs.

Employees' representatives

The Trades Union Congress (TUC), keen to forge a partnership with the Government and employers, has said that it supports the Government's active labour market policies at home, but is likely to be less happy with the general philosophy of labour market flexibility. In its Budget submission, presented to the Chancellor in May, the TUC said that it welcomed the government approach to the responsibilities of unemployed people. It feels that Labour is offering a choice of options for the unemployed which breaks from the "coercive" policies of the old Government. But the TUC has put forward a plan which it hopes that ministers will put into action when finalising their plans for "welfare to work":

• people taking part in a programme which involves productive work should be paid the equivalent rate for the job;

• childcare is the key to enabling people with children to take part in the programme;

• programmes are more likely to avoid deadweight and substitution if they are monitored by social partners;

• quality is an important issue in training;

• the Government should distinguish the strategic role of Whitehall (central ministries) from the operational role of local economic actors; and

• the national minimum wage is a key factor in helping people back into work.

These policies are asking for more active involvement in the labour market, rather than flexibility. UNISON, the public sector union, takes a similar approach and has warned the Government that if it intends to stick to the tight spending policies of the previous Government, this will pose a great threat to its plans to create more jobs at home. General secretary Rodney Bickerstaff argued that the public sector could only meet such spending targets by laying people off.

Commentary

While the UK Government and ministers of the other EU countries seem to have reached some agreement on the subject of employment and labour market flexibility, the balancing act at home between the social partners may be more problematic as time progresses. On the one hand, employers' representatives are pushing for complete labour market flexibility, while at the same time attempting to minimise the effects of social legislation. On the other, the unions are attempting to put in place minimum rights and social legislation, while minimising the impact of flexible labour markets. Only time will tell whether these objectives conflict. (MW Gilman, IRRU)