Germany scales back jobs plan

Date: 11/02/1999

By Tim Jones

GERMANY'S Socialist-Green coalition has scaled back its ambitious plans for a European employment pact to focus instead on getting under-25s back to work.

The 'quantified targets' for job creation demanded only two months ago by EU leaders at their summit in Vienna have been discarded as unrealistic in the wake of the near-collapse of Chancellor Gerhard Schröder's home-grown Bündnes für Arbeid (Alliance for Jobs).

Instead, Labour Minister Walter Riester is promising an action plan to cut the youth unemployment rate of more than 19% across the EU.

Riester and Finance Minister Oskar Lafontaine are preparing a memo on youth employment which will be handed to fellow Union ministers next month for negotiation, and eventually annexed to the conclusions of the June summit in Cologne.

In concentrating on one key area of policy, Bonn has shunned last year's radical Franco-German job creation plans and revived the employment policy coordination tools created by the October 1997 Luxembourg summit and reinforced by the Amsterdam Treaty.

The German memorandum will outline the scale of the problem facing the EU, where youth unemployment ranges from 7% in Denmark to 34% in Spain. Poorly qualified youngsters are particularly badly affected.

It will point out that even though most member states operate programmes to boost vocational training, develop entrepreneurial skills and improve job-matching systems, the rate of long-term youth joblessness continues to rise.

The standard response is the provision of subsidies to employers to hire and train young workers. The International Labour Office's 1998-99 report found that such 'youth contracts' now account for 25% of all jobs among under-25s in Italy and 12% in France and Spain.

Riester is keen for fellow ministers to study the recent ambitious youth employment schemes carried out in Denmark, Sweden and the UK. The latest such scheme, Britain's 'new deal' programme, obliges under-25s to accept a 90-euro-per-week subsidised job, join an environmental or educational task force or do volunteer work.

The German finance ministry is analysing how far the general macroeconomic environment can be improved to make it 'friendly' towards the creation of new jobs for young people, while the labour ministry is examining changes to welfare systems.

According to officials, both are convinced that most EU welfare systems are geared towards meeting the needs of those who lose their jobs temporarily rather than bringing the long-term 'excluded' young worker back into the labour market.

"They are also well aware that there are very big differences between member states," said one. "Coming up with one prescription for everyone would be impossible and a waste of time."

For example, a recent study from the Council of Europe pointed out that the youth-unemployment rate was very high in southern Europe because the "poor functioning of vocational training systems discourages employers from hiring young people without previous work experience and trade union policy is focused on the protection of employed workers".

This was an argument cited by the German employers' federation as it faced a strike this week by more than 2 million engineering workers demanding a 6.5% wage hike.