Growing consensus over jobs initiative

Date: 14/09/00

Publication of the European Commission's employment guidelines last week attracted none of the controversy which surrounded last year's report. John Shelley explains why

PEER pressure, adults often tell children, is something to be resisted. But the grown-ups at the European Commission appear to disagree.

The EU executive's employment recommendations, published last week as part of social affairs chief Anna Diamantopoulou's annual jobs package, are attempt to embarrass member states into action to tackle issues such as high taxes on labour and inequality in the work place by exposing them to the condemnation of their peers. The are the Union equivalent of a name and shame campaign, with Greece earning the biggest glares of disapproval after being criticised on six counts for its job-creation efforts this year, and Germany, France, Spain, Italy and Belgium all presumably hanging their heads at the humiliation of attracting five. Of course, the implication of this approach is that the punishment is the humiliation and that no other action need be taken; and so it is with the Commission and employment policy. Diamantopoulou can shout and moan as much as she likes, but she has no actual powers to make anyone do anything.

This may sound like a recipe for inaction, with Eurocrats collecting their pay cheques for work which everyone ignores. But Commission officials insist this is not the case and say that, with political brownie points on offer, there are signs that national leaders are beginning to sit up and take notice. "If the vehemence with which people react to criticisms they get in these reports is anything to go by, then I think this process is being taken very seriously indeed," said one.

Ardent champions of a pro-active role for the EU in formulating employment policy argue that there is no logical reason why the Union should have such limited powers in an area so crucial to the economy.It is certainly not, they say, because everything is going just fine in the European jobs market and member states are doing perfectly well on their own - the failings of the employment market are seen as one of the key weaknesses of Europe's economy, with 14.9-million people still out of work in March this year despite the EU's job-creation efforts.This year's joint employment report shows how despite a period of strong economic growth, many member states have failed to use their prosperity to liberalise their job markets and that, overall, Europe still lags far behind the US in terms both of the proportion of people at work and the flexibility and equality of its job markets.

Few member states have undertaken meaningful reviews of their tax and benefits systems - even though this is seen as vital for making work more cost effective - and countries such as Greece and Spain have done next to nothing to tackle the under-representation of women in the workplace.

The Union has, however, come a long away since the mid-Nineties, when the fight against unemployment was seen as an exclusively national preserve. It was not until nearly four years ago, with 18-million people out of work across the EU as a whole, that the right to review member states' progress and make recommendations - dubbed the Luxembourg process - was introduced at a summit in the Grand Duchy in 1997.

At that meeting, member state leaders - while remaining determined to retain control over their employment, benefit and tax policies - agreed that the Commission could play a monitoring role; a right which was later enshrined in the Amsterdam Treaty.The first set of general employment guidelines, issued in 1997, were based on a four-pillar approach. Union governments were asked to introduce measures to improve the employability of their workforce, develop entrepreneurship and job creation, increase flexibility for businesses and employees, and strengthen equal opportunities. This was followed the next year by an updated set of guidelines and the first joint employment report, which evaluates progress country by country.

Last year, outgoing Social Affairs Commissioner Pádraig Flynn took the process a step further when, possibly inspired by the devil-may-care attitude of someone about to leave his job, he suddenly announced the introduction of recommendations - widely taken to mean criticisms - targeted at each member state.

Although EU leaders were aware they had written this possibility into the Amsterdam Treaty, the speed with which the new procedure was introduced and the apparent lack of consultation before the initiative was announced left many shocked and angry. "A lot of member states were very annoyed last year. The first time they knew anything about them was when they read about it in the media," admitted one Commission official.

This year's package - again consisting of general guidelines, an employment report and specific recommendations - follows the same formula.

It is, however, significant that Diamantopoulou's consultational rather than confrontational approach to wrist-slapping means that it has been received with a lot less fuss and a growing acceptance that such things are a legitimate part of the Commission's work.

With each passing year since its inception, the Luxembourg process has become more significant. It now plays a critical role in influencing member states' employment policy and has a genuine ability to get up governments' noses.

This gradual creep of power has prompted concern among Eurosceptics about unnecessary 'meddling' by 'Brussels' in matters which they believe should be left to member states. But Commission officials insist fears that the institution will play an ever greater role in setting employment policy are unfounded, pointing out that the Luxembourg process has now gone as far as it can under the terms of the current EU treaty.A review of the initiative is due next year and although this could lead to big changes in content - with some already calling, for example, a more focused approach to specific problem areas such as benefit reform - officials say the Commission will not emerge with more power to impose decisions on national governments because there is no legal basis in the Union treaty for doing so. The treaty could, of course, be changed if all 15 member states agreed, but there appears to be no political will to do so at the moment and the issue has not even been raised at the current Intergovernmental Conference.

Most EU governments are as determined as ever to guard their sovereignty in this area and some are feeling increasingly touchy.

Pre-referendum paranoia in Denmark in the run-up to this month's vote on euro-zone membership has already led to pressure for the long-standing guideline calling for cuts in labour taxes to be deleted or amended, amid fears that it could threaten the Danes' generous welfare system.

The debate over Union powers is not, however, just about protecting national sovereignty. Many experts also insist that it would be inappropriate for the EU's institutions to become more closely involved in tackling a problem which, they say, differs hugely from region to region and country to country.

Supporters of the Luxembourg process say this is precisely why the current level of Union involvement is right. They admit that only limited progress has been made so far in boosting job-creation efforts, and acknowledge that changes in the global market and domestic policy have had a far greater impact. But they say it is still early days and insist that those who saw the launch of the Luxembourg process as a stepping stone to greater integration were misguided.

They argue that enabling member states to compare their efforts to tackle unemployment and giving them some impetus to boost job creation allows the less advanced to copy the more successful, creating a kind of free market for employment policy providers.

If the economic situation remains as bright as it has been for the last year, this argument is likely to continue to hold sway. But if there is a downturn, and the still-lagging jobs market begins to be seen as a serious drag on success, the voices of those who believe the Luxembourg process is too weak are likely to become louder. "If after two or three years if growth has stalled and unemployment is hampering it and shooting up at the same time, then we might have to have a rethink," said one Commission insider.

Major feature. Publication of the European Commission's employment guidelines on 6.9.00 attracted none of the controversy which surrounded the previous year's report.