There are 20 million Europeans out of work. Ken Coates MEP examines the ways the European Union can combat the problem through a united effort.
If you ask anyone in the : street about unemployment in Europe, they may be able • to tell you that it is far too high, running at something around the 20 million mark. They will probably be able to tell you that President Delors produced a white paper seeking to show how 15 million new jobs could be created with a view to halving the number of unemployed before the end of the century.
Unfortunately, the promises in this White Paper are in deep trouble.
As the Rapporteur of the Temporary Employment Committee of the European Parliament, I was responsible for drafting a report on the need to implement the Debts White Paper in full. I was very impressed by the strong consensus we obtained. My report was adopted by 268 votes to 10, with 30 abstentions. It sent a very clear . message to the Essen summit. 2 Overwhelmingly, Parlias frient agreed that it was neces
' sary to accept the priority of creating 15 million new jobs by the end of the century, and to adopt the necessary instruments to do this. Quite
: specifically, we insisted that the White Paper should be in large measure funded through the European Investment Fund, of through similar instruments, designed to lever a combination or public and private investment outside the restrictions of the Maastricht criteria.
The Fund clearly is needed. It also has to be a major financial instrument if it is to help achieve the dual targets of national stabilisation and job creation. If it is to offset the deflationary effect of fulfilling the Maastricht convergence criteria, it will need to be a means by which member states can transfer a major share of their current borrowing and gross debt to Union borrowing.
Such a fund would be a joint instrument for macroeconomic policy as well as targeted areas of expenditure. President Mitterand clearly grasped this when he called for a fund of 100 billion ecu in October last year. It could make a major contribution to fulfilling the commitment to a high level of employment of article 2 of Maastricht.
The instrument does not need to be invented. Member governments already have amended the Rome Treaty in the 12 national parliaments in order to enable the Union to borrow and lend on its own account through the EIF.
So why the loss of momentum? Three main arguments have played a role.
The first is economic, on the lines that the Fund was adopted in 1992, when the Union faced recession, and that a counter-recessionary instrument is no longer needed. But this totally ignores the recession which could occur if the budget and borrowing criteria of Maastricht are subsequently implemented, and the depression which would ensue if they were met.
The second argument is financial: that major borrowing by the Union would mean upward pressure on interest rates. But there would be a counterpart downwards pressure on rates to the degree that member states reduced their current and gross borrowing to meet the Maastricht criteria.
Also, to the extent that Germany funded the reconstruction of the new Laender through the new Fund (as it already has done through the Edinburgh facility) pressure on the federal budget would be relieved, making possible a lowering of German and European interest rates.
The third argument against the EIF and Union Bonds is political, and comes from those who claim that the Fund is a federal instrument denying subsidiarity. This is at best misconceived, and at worst misrepresentation.
The scale of the Fund and its areas of expenditure are decided by member states themselves through the European Council. The applications (as already evident from the borrowings from the Edinburgh Facility) are made by regional governments, local governments, public or private enterprises and banks. This reinforces rather than reduces subsidiarity.
What some governments are failing to address is arguably the main political issue of the decade: that unless member states agree to a major increase in the Fund and Union Bonds, they will not be able to meet the Maastricht convergence criteria without causing major unemployment.
This would not be stabilisation with spontaneous recovery. It would be unemployment without parallel since the 1930s, destabilising both national governments and the European project itself.
It seems evident that the European Parliament should give this issue real priority in the coming months leading to Cannes.
Members of the European Parliament need to seek support from members of all the national Parliaments, if a serious job creation plan is to be adopted. Too few levers remain in national hands to implement comprehensive programmes for full employment. But full employment could be a possibility at the European level, if joint action were undertaken. That prospect, provides the most compelling argument for European Union.