Debt crisis stricken EU unemployment rate hits 10%.
April 19, 2012
by The Canadian Press
BRUSSELS, Belgium: The 27 member countries of the European Union (EU) have been slammed for not implementing laws designed to boost growth on the crisis-hit continent.
The criticism, from the president of the European Union’s executive Commission, comes as the EU finds itself increasingly under pressure to do more to get its economy growing again as many of its members slash government spending, pushing some states into recession.
International bodies like the Organization for Economic Cooperation and Development have long pointed out that the EU’s internal market—which in theory should allow people and businesses to move as freely in Europe as they can in the US—often falls short in practice.
“It is incomprehensible that member states are still not fully implementing growth-friendly legislation we have in place,” European Commission President Jose Manuel Barroso told the European Parliament in Strasbourg, France.
The European Commission for years has been pushing states to remove administrative barriers that prevent workers from taking jobs and companies from offering services in other EU countries.
The EU’s internal market “is probably the largest engine for growth within the European Union,” Barroso said. “It gives European business unfettered access to other companies and half a billion consumers and allows them to develop the scale to compete globally.”
Barroso spoke after the Commission approved a series of initiatives to boost jobs and growth in the crisis-hit bloc. Many of the proposals in the 27-page plan have been made before but have failed to overcome resistance by governments.
The push to free up jobs has become increasingly urgent as unemployment in Europe has jumped to more than 10% as the continent struggles with a series of debt crises that have caused Greece, Ireland and Portugal to seek a bailout.
Joblessness varies widely from country to country, however. In Spain and Greece, unemployment stands above 20% and among young people almost one out of two is looking for a job. In rich countries like Germany, Austria or the Netherlands the unemployment rate is below 6%.
But getting a job in Germany or Austria is difficult for a Greek or Spaniard. Not only do most jobs require workers to speak the local language, there are also practical and administrative barriers.
The Commission called Wednesday for an easier way to transfer a worker’s pensions from country to country and the way cross-border workers are taxed to be simplified. Job seekers should be able to receive their unemployment benefits for up to six months while they are looking for work in another country and non-nationals should be hired for jobs in a country’s public sector, it added.
Getting governments to implement such initiatives is not easy. Citizens are often wary of foreign workers—even in countries with relatively low unemployment—and some rich states have seen nationalistic parties rise in the polls.
The EU has also come under fire from unions for its push to make the labour market more flexible—making it, they argue, easier to fire workers. The Commission argues that knowing they can easily get rid of workers during a slump would encourage businesses to hire more in good times. However implementing the reforms in the middle of an economic crisis can create more pain in the short-run. Critics also warn that shifting taxes away from income to consumption on things like energy—as the Commission has long favoured—will effectively leaves workers with less money as their bills rise.
Laszlor Andor, the EU’s commissioner for employment and an outspoken critic of the focus on austerity, said governments needed to do more to ensure people who work full-time make enough money to live.
Even when adjusted for varying price levels, minimum wages range for less than $300 a month in countries like Bulgaria to almost $1,500 in rich states like Luxembourg—leaving many workers below the poverty line. Some countries, such as Germany, don’t have a minimum wage at all.
While low wages can make country’s exports more competitive, they also hurt consumption in rich states.
In addition to strengthening its internal markets, Barroso said the EU should try to improve its trade relations with non-European countries, including the United States.
“The US is our largest economic partner,” Barroso said, adding that trade between the EU and the US was worth almost $450 billion last year and that they had invested more than $1 trillion in each others’ economies.
“Any further gains, including through reducing non-tariff barriers, would be significant for both sides,” Barroso said. “We are exploring ways in which to broaden and deepen these ties.”
©2012 The Canadian Press