French appeased by employment pledges

Date: 19/06/1997

By Michael Mann

THE new French government came away from the EU summit well-satisfied with two decisions committing member states to step up the fight against unemployment.

Differences between Paris and Bonn over the shape of monetary union were patched up with two non-binding resolutions pledging the Union to a balanced approach towards stability, growth and employment.

The formula gave the new French Socialist administration something to offer its disgruntled public while respecting Germany's insistence that no additional EU money be earmarked for job creation.

This led Dutch Prime Minister Wim Kok to claim that Europe was “not just creating a monetary union with monetary and budgetary discipline”, but also “a Europe of employment with social content”.

The dispute had threatened to overshadow the treaty review process, but the deal stitched together after a week of frenzied diplomacy by Dutch Finance Minister Gerrit Zalm allowed the 'stability pact' to ensure budgetary discipline in the euro-zone to be adopted unchanged.

The resolution on the stability pact provided some succour to French demands for a political counterweight to the future European Central Bank.

Those fighting for a beefed-up treaty commitment to jobs, in the form of a specific employment chapter, were confident of victory before the summit even began. But EU governments have now also pledged to look at new ways of using loans from the European Investment Bank to help small businesses (SMEs) and the hi-tech sectors, promised to use spare money from the European Coal and Steel Community from 2002 onwards for research and agreed to hold a special jobs summit in Luxembourg this autumn.

In addition, EU leaders put renewed emphasis on efficient and flexible labour markets, the role of SMEs, lifelong learning and efforts to reduce non-wage labour costs.

The new employment chapter in the Amsterdam Treaty includes a commitment to create “a high level of employment”.

But while emphasising the need for closer coordination on employment, the chapter stresses that the overall mix of policies in each country is a matter for member states.

In reality, this goes little further than enshrining the joint action which has developed on a piecemeal basis since the Union's employment objectives were defined at the 1994 Essen summit.

Principally, it involves regular situation reports, although the Council of Ministers may make specific recommendations

to particular countries and even adopt incentive measures designed to improve cooperation between member states.

German Finance Minister Theo Waigel stressed that it would be inappropriate to use additional money from the EU budget to deal with the problem.

“Structural unemployment in Europe cannot be solved simply with money. The resolutions ensure closer cooperation between member states, but the final responsibility remains in national hands,” he said.

EU leaders also heralded a significant step forward for social policy by welcoming the UK's decision to end its opt-out from the Maastricht Treaty social chapter.

An arrangement will now be reached which will allow the UK government to take a full part in negotiations before it accedes to the protocol, which will be integrated into the new treaty.