Germans kick off talks on EU jobs pact

Date: 28/01/1999

By Myles Neligan

GERMAN Social Affairs Minister Walter Riester will use an informal meeting with his EU counterparts next week to gauge the extent of support for his government's proposed employment pact.

But he will tread carefully in the face of strong resistance from some member states to greater fiscal harmonisation and pan-European bargaining over pay and conditions between workers and bosses.

Bonn is thought likely to include elements of both in its final proposals for a new EU job-creation pact, although Chancellor Gerhard Schröder's government has moderated its language in the run-up to next Thursday's (4 February) meeting to avoid clashes with the UK, which strongly opposes the notion of tax harmonisation.

Briefing documents issued by Riester to fellow social affairs ministers ahead of the meeting speak instead of greater "fiscal coordination".

British diplomats say that Germany has moved to narrow the gulf which opened up between Bonn and London last month when German Finance Minister Oskar Lafontaine called for greater tax harmonisation within the EU to eliminate 'predatory' competition from low-tax regimes.

They add that Germany has also taken on board last month's joint declaration on job creation from Spanish Prime Minister José María Aznar and his UK counterpart Tony Blair, which called for greater labour market deregulation as the best way to boost employment. This contrasted with Schröder's preferred approach, which emphasised macroeconomic measures designed to stimulate growth.

"They are aware that there are various possible strands to a policy for increased economic growth," said one British official.

Riester is also hoping that next week's ministerial discussions will yield support for the notion of EU-wide collective wage bargaining.

The Schröder government believes that this will be necessary to prevent employers from taking advantage of wage disparities within the euro zone by relocating their business to countries where labour is cheaper.

European trade unions enthusiastically support the idea of pan-European wage negotiations, arguing that the single currency will make it easier for employers to compare the relative cost of labour across the Union, and that this could encourage them to switch locations. But most EU countries have yet to decide what stance to take on the issue.

Next week's meeting will be the first at which the idea will be discussed at ministerial level. "These are uncharted waters. The Germans are looking for a general orientation debate," said one EU diplomat.

While few governments are expected to oppose the move in principle, fears that such an arrangement could result in wages being 'bid up' to the relatively high levels enjoyed by German workers are likely to strengthen resistance from low-cost labour countries such as the UK.

German diplomats say that the conclusions of the meeting will contribute towards their final proposals for an employment pact, which is due to be discussed by EU heads of government at their June summit in Cologne.