UNICE and ETUC draw up position papers for Lisbon summit

As preparations intensified in the run-up to the special European Council on employment, held on 23-24 March 2000 in Lisbon, ETUC and UNICE issued policy papers, listing their objectives in the area of social and business policy, and making detailed suggestions for action in order to achieve these goals. ETUC's focus is on high employment, increased social protection and the involvement of the social partners in future action, while UNICE concentrates on issues such as the encouragement of entrepreneurship and the reduction of regulatory and tax burdens on business.

The Portuguese Presidency of the EU organised an extraordinary European Council summit meeting, aimed at considering the European strategy for growth, competitiveness and employment in the light of globalisation, technological change and social exclusion, in Lisbon on 23-24 March 2000 (EU0001220N). In the run-up to the summit, the central social partner organisations issued policy papers on the issues concerned.

ETUC memorandum

The European Trade Union Confederation (ETUC) memorandum to the Lisbon European Council sets out the confederation's thinking under a range of headings, in response to a document prepared by the Portuguese Presidency for the summit. It notes that the Lisbon summit is being held at an "opportune time", as the European economy is showing signs of recovery, and concentrates on four key points:

  • full employment;
  • the "policy mix", under which it groups monetary policy, budgetary policy, wage policy, structural policies and "coherence and synergy";
  • social cohesion and social protection; and
  • social partner involvement.

Full employment

ETUC maintains that the EU's new strategic goal should be full employment. It agrees with the Portuguese Presidency's calls for a greater quantification and monitoring of objectives and suggests that the target for EU employment growth should be 3.5% per year, rather than the 3% suggested by the Presidency. It believes that this is possible, owing to: the "vast army" of unemployed and excluded people, which can help to sustain a stronger recovery; investment growth of some 6%-7%; the continuation of the Luxembourg process (ie the system of EU Employment Guidelines and National Action Plans - EU9711168F) and the Cardiff process (ie a comprehensive programme of structural reform and modernisation - EU9806109F); and improved coordination which will ensure that policy-mix conflicts do not hinder recovery.

The EU, says ETUC, should aim to reduce the Union's average unemployment rate to at least 5% by 2005, on the basis that the European Commission is forecasting a rate of 8% in 2002 and given likely falls in the unemployment rate of one percentage point per year.

The policy mix

Maintaining that previous recoveries have failed in employment terms due to either conflicts in policy mix or inappropriate policy-mix responses to external shocks, ETUC believes, in line with the Presidency, that better coordination of macroeconomic and structural policies is needed.

With regard to monetary policy, ETUC believes that achieving a successful policy mix under Economic and Monetary Union (EMU) should be a shared undertaking rather than the sole responsibility of the European Central Bank (ECB). It therefore welcomes the new "Cologne process" of macroeconomic dialogue (EU9906180N). However, ETUC also believes that the ECB is becoming too cautious, as illustrated by actions such as raising interest rates in February 2000.

In respect of budgetary policy, ETUC notes that the debate now revolves around how to use the extra revenues that are beginning to flow into national treasuries following higher growth and lower unemployment. It states that there is merit in all of the European Commission's suggestions (contained in its papers for the Lisbon summit), relating to: speeding up the budgetary consolidation process; saving in order to meet the pension and health costs of an ageing population; and improving incentives for employment creation. ETUC believes that the latter proposal is particularly valid and notes further that it strongly disputes the validity of cutting overall taxation - and implicitly thus also social security benefits.

In terms of wage policy, ETUC states its concerns about the growth of the phenomenon of the "working poor". However, it accepts that there is a macroeconomic dimension to wage policy and notes that "active discussion" is underway within trade unions at European level concerning framework formulas for collective bargaining, which focus on compensation for productivity and inflation (TN9907201S). It goes on to say that wages cannot be seen as an abstract cost and that, given that company profits and salaries for senior executives have soared in recent years, there is growing trade union concern that past acceptance of wage moderation has "tilted the balance too far in the wrong direction" and that this has not resulted in increased employment, but has served to dampen consumer demand.

In terms of structural policies, ETUC agrees with the Presidency that, in view of the fact that the EU already has two structural policy processes (the Luxembourg process and the Cardiff process), no further processes are needed and that any further initiatives should be linked to these two processes.

ETUC can accept "virtually all" of the current 21 Employment Guidelines (EU9909187F), although it would like greater emphasis on some, such as equality "mainstreaming". It also believes that consideration should be given to the possibility of regrouping existing provisions relating to social protection, taxation and employment into a fifth "pillar" in the Guidelines.

Social cohesion and social protection

ETUC states that it is prepared to debate the social protection aspect of the "European social model" - "provided that it is clear from the start that the debate is a constructive and not a destructive one" - and endorses the Commission's key objectives for modernisation:

  • to make work pay and to provide a secure income;
  • to make pensions safe and pension systems sustainable;
  • to promote social inclusion; and
  • to guarantee a high and sustainable level of healthcare.

The memorandum adds that sustainable funding of social protection also needs to be guaranteed. Further, it notes that the "Luxembourg method" should be applied to social convergence, rather than the simple exchange of information and best practice.

Social partner involvement

Although the social partners are currently involved in a variety of procedures, such as the Luxembourg and Cologne processes, their own social dialogue, and responsibilities for framing legislation under both national and European law, ETUC regrets that, so far, relatively few European intersectoral framework agreements have been reached - those on parental leave, part-time work (EU9706131F) and fixed-term work (EU9903162N). ETUC has been pressing for new negotiations with the European employers' organisations on the subjects of vocational training and the rights of temporary agency workers and teleworkers (in addition to a reinforcement of sectoral dialogue) (EU0001224F). It regrets that "on much of this a positive response from UNICE has not been forthcoming."

UNICE's policy position

On 29 February 2000, the Union of Industrial and Employers' Confederations of Europe (UNICE) issued an action plan for economic and structural reform in which it details business priorities and draws together themes from its recent work in the areas of competitiveness, entrepreneurship, innovation, employment and social policy, education and training and the information society.

Maximising entrepreneurial spirit and innovation

UNICE states that enterprise is the key to economic development, higher living standards and sustainable social progress and lists the following goals:

  • improving attitudes to enterprise, risk-taking, new technologies and new products;
  • releasing market potential by removing restrictions on competition and the development of new markets;
  • improving access to finance at all stages of business development; and
  • ensuring employability, appropriate skills and rewards for work.

Exploiting the potential of the internal market

UNICE describes the single market as the cornerstone of the European economy, but notes that it functions imperfectly or is incomplete in some areas, notably the service sector. It suggests a new target date of 2002 for completion of the single market and makes a variety of suggestions for action, including: liberalising financial services; facilitating cross-border activities and mobility of companies; and defining a common VAT system adapted to business needs.

Maximising the benefits of EMU

UNICE believes that the single currency and good macroeconomic policies must be accompanied by economic and structural reforms, noting that the monetary policy framework of EMU requires that markets be flexible enough to adjust to economic change without losing jobs and competitiveness. It identifies the key issues as:

  • reducing the size and increasing the efficiency of the public sector;
  • continuing to reduce public deficits and debts; and
  • reforming social security systems.

Putting more people to work

The employers' organisation feels that Europe urgently needs to bring down its "excessive" levels of unemployment and that two long-term trends in particular need to be reversed: the fall in the activity rates of the workforce; and the growth in the overall tax burden. In addition, reforms need to tackle "skills gaps" such as the one which exists in the information technology sector. UNICE lists the key issues in this regard as:

  • reforming labour market regulations that restrict entrepreneurship, slow down innovation and discourage employment creation;
  • providing individuals with security by means of employability rather than excessive regulation;
  • lowering the overall costs of employment and reducing indirect labour costs in particular; and
  • reducing high marginal tax rates in order to establish an environment in which it "pays to work".

Expanding the information society

Aware that the development of the information society will radically transform the business and trade environment, UNICE makes a number of suggestions for action, including: reducing costs of access to and use of new technology, particularly in the case of small and medium-sized enterprises (SME s); and fully liberalising the telecommunications sector.

Reducing taxation and regulation

UNICE believes that SMEs in particular suffer from excessive administrative, regulatory and tax burdens on EU business and makes the following suggestions: simplify national and Community legislation; justify all new action at EU level and test its effects in areas such as its potential to create or destroy jobs; and arrest or reverse the long-term trend towards an increase in the overall tax burden.

Balance between policy cooperation and competition

UNICE makes two final points in the area of the balance between common EU approaches and competition between Member States: first, although there is greater scope for joint actions, it emphasises its belief that "there are many areas where doing things together is neither effective nor desirable"; second, it believes that it is important for the EU to promote best practice on the basis of worldwide "benchmarking" and that more effective mechanisms to monitor implementation of agreed policies should be put in place.

Commentary

As EU leaders prepare to gather in Lisbon for the special employment summit, many social partner organisations and EU institutions have drawn up position papers detailing the topics which they believe are central to the summit's debates (EU0003235F). While the goal of all concerned is higher levels of employment, there will doubtless be differences of opinion regarding exactly how this is to be achieved. From the employer and business community's point of view, increased entrepreneurial freedom is paramount, as only then will business have the room to manoeuvre which in turn will lead to job creation. UNICE believes strongly that the current climate of economic growth in Europe must be used to put into place the structural reforms which it regards as necessary.

From the trade union point of view, it is essential that workers' interests remain protected, which essentially means that the European social model must be upheld rather than dismantled in any way. ETUC is also a firm believer in a negotiated response to changing environments and is keen to embark on social partner negotiations at European level on issues such as temporary agency work and teleworking – the latter in response to the changing environment as a result of the increasing use of new technology.

More broadly, it is true to say that average unemployment rates across the EU have declined since the introduction of the Luxembourg employment strategy following the European Council held in November 1997. However, it is difficult to say with any degree of certainty whether this is due to the efforts of the EU's actions or to the fact that the EU economy has performed well over the past two years. (Andrea Broughton, IRS)

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