4-5 February Informal meeting of EU social affairs ministers

Date: 11/02/1999

EU SOCIAL affairs ministers devoted most of their two-day informal meeting in Bonn to a discussion on the implications of economic and monetary union for EU employment policy, and to a further round of talks on German Chancellor Gerhard Schröder's proposed Union employment pact. The meeting was also attended by representatives of EU trade unions and employers' associations, members of the European Parliament and Otmar Issing, chief economist at the European Central Bank.

THE ministers and the social partners agreed that a “responsible” approach to pay increases, together with a jobs-orientated interest rate strategy, could be an important element in a formal EU employment pact. They acknowledged that the wage bargaining process had yielded pay increases only in line with inflation in recent years, thereby contributing greatly towards economic and monetary stability.

EU EMPLOYERS' federation UNICE and its trade union counterpart the European Trade Union Confederation (ETUC) agreed that it was too early to introduce collective wage bargaining on a pan-European basis. ETUC representatives, however, reiterated their view that minimal harmonisation of wages on a sectoral basis within the euro zone was necessary to prevent employers from shifting production to low-wage countries.

GERMAN Social Affairs and Employment Minister Walter Riester, who chaired the talks, said that while EU countries should eventually incorporate job-creation targets into their annual employment action plans, the time was not yet right for governments to commit themselves to such strict objectives. He added that for now, Union governments should concentrate on reducing youth unemployment, paying tribute to the innovative training schemes that had been introduced last year in the UK and Denmark.

THERE was agreement that the EU employment pact must include firm commitments to pay particular attention to the problems of the long-term unemployed, and to improve equality of opportunity between men and women. There should also be renewed emphasis on creating jobs for disabled people.

UK EMPLOYMENT Minister David Blunkett said EU governments should also set up schemes to increase the workforce participation rate: the proportion of the working age population with a job. He pointed out that the average Union workforce participation rate currently stood at 60&percent;, as compared with 70&percent; in the US.

SEVERAL ministers raised the issue of how EU monetary policy affected employment, with some calling for regular coordination meetings with the European Central Bank. Others mentioned the impact of fiscal policy on jobs, pointing out that high wage costs acted as a powerful disincentive to would-be employers.