Ministers set to place a value on cutting unemployment

Date: 17/07/1997

By Rory Watson

HOW far the Union is prepared to back its political commitment to tackle unemployment with hard cash will become clear next week when EU governments examine draft spending plans for 1998.

With the challenge of the single currency looming, the European Commission has proposed unprecedentedly tough limits on next year's EU expenditure, keeping growth in agricultural spending and on internal and external policies to just 0.5&percent;.

But with the new political impetus given at last month's Amsterdam summit to job creation, governments are now investigating how to put their pledges into practice. “There has been a lot of discussion on employment measures and whether there should be money to back up words. People are considering whether to reallocate money to pilot projects,” explained one EU official.

While supporting greater exchange of information between member states on successful employment-generating programmes and on good practice, EU leaders last month stessed the need to gear existing Union policies - in particular the Trans-European Networks and research and development projects - towards greater job creation.

With governments determined to keep a tight rein on Union expenditure, which the Commission has proposed should reach 84.7 billion ecu next year, any extra funding would have to be at the expense of other joint policies.

EU ambassadors will have their final opportunity tomorrow (18 July) to try and reconcile the conflicting demands before Union budget ministers conduct their first detailed assessment of 1998 expenditure a week later.

In a bid to place a tighter political straitjacket on budget ministers and prevent them from deviating substantially from its original proposals, the Commission this year presented its spending plans to traditionally more stringent-minded finance ministers first.

Its tight forecasts have received strong support from the German, Dutch, Swedish, Austrian and UK governments in particular. “Very few member states are opposed to the idea of a virtual zero growth budget, but the question is how to get there,” said one official.

Divisions have also emerged over the Commission's plans to keep farm spending almost constant at 40.9 billion ecu, while continuing to put in place the increases in regional and social spending agreed at the 1992 Edinburgh European summit.

If implemented, the proposal would see a 6.3&percent; increase in structural spending to 33.7 billion ecu next year.