Italy has, on the books at least, some of the tightest labor rules in Europe, even after scrapping a few years ago the scala mobile linking wages to inflation automatically. Unions, then represented by Wim Kok, now Prime Minister, offered wage moderation in return for a shorter work week, and urged the government to redistribute work through part-time employment and ever more flexible contracts. The most important change was an end to the high pay settlements that led to the soaring unemployment of the early 1980s. But few governments have followed the Dutch example. Other efforts at flexibility have been piecemeal or half-hearted, according to a chiding report issued last week by the Organization for Economic Cooperation and Development.
Some solutions create new problems.
Only a long-term commitment will solve the jobs crisis, as the Netherlands can attest. Although it's not popular to say so, governments must realize that too much emphasis on protecting existing jobs conflicts with the more pressing need to create new ones.