Opinion on the Social Aspects of the White Paper on Growth, Competitiveness, Employment (94/C 295/11)

On 20 December 1993 the Economic and Social Committee, acting under the fourth paragraph of Article 20 of its Rules of Procedure, decided to draw up an Opinion on the Social Aspects of the White Paper on Growth, Competitiveness, Employment.

The Section for Social, Family, Educational and Cultural Affairs, which was responsible for preparing the Committee`s work on the subject, adopted its Opinion on 19 May 1994. The Rapporteur was Mr Burnel.

At its 316th Plenary Session (meeting of 1 June 1994), the Economic and Social Committee adopted the following Opinion by a majority of votes, with six abstentions.

1. Background and general comments on the current state of unemployment according to the White Paper

1.1. Seventeen million people are officially recorded as being out of work in the European Union, i.e. 11 % of the working population. The figure has now reached 19 million. Unemployment is one of the principal causes of social exclusion - a phenomenon currently affecting more than 50 million persons (single persons and families), i.e. approximately 13 % of the population. These figures highlight the scale of the problem.

1.1.1. Apart from being a serious social and economic problem, structural unemployment (long-term or recurring unemployment) now poses a real problem for society at large. If the victims of these forms of unemployment fail to benefit from family support or social back-up and do not receive appropriate aid, then there is a very real risk of their - and their family`s - psychological balance, health and dignity being severely affected. Long-term unemployment destroys the personality of the person it affects and takes away all hope.

The ESC report on poverty in Europe (1) highlighted the fact that unemployment and exclusion feed on each other and may well play a part in undermining the structures of our societies and cultures.

1.2. Unemployment manifests itself in different ways from one state, region or town to another, according to the local economic activities and trades. In some places, situations and production systems, the results are catastrophic.

1.3. There are also differences:

1.3.1. Between the sexes: 12.6 % of the female working population is out of work as opposed to 9.8 % of the male working population.

1.3.2. Between different age groups: more than 20 % of young people between the ages of 18 and 25 are out of work, the exact figure varying from state to state. There are also many men and women who are excluded from working long before retirement age even though they are still perfectly capable of holding down a job.

1.3.3. Between different nationalities: there is evidence in some places of a bias against employing non-nationals.

1.3.4. Although no one can now rely on training to protect him from the risk of unemployment, training is an essential passport to finding work.

1.4. It is not enough to make a straight comparison of European Union unemployment figures with those of other regions or states. Account must also be taken of factors such as the nature, interest and security of jobs, as well as the type and level of health and social protection. Clandestine working should also be taken into consideration in any meaningful analysis of unemployment, even though it is hard to put a figure on the actual economic and social impact of the black economy.

2. General comments on the White Paper

2.1. The White Paper advocates abandoning some of the approaches used in the past. It is innovative in the form and substance of its discourse on jobs and unemployment:

'We are convinced that the European economies have a future.`

'We are faced with the immense responsibility, while remaining faithful to the ideals which have come to characterize and represent Europe, of finding a new synthesis of the aims pursued by society (work as a factor of social integration, equality of opportunity) and the requirements of the economy (competitiveness and job creation).`

'This major challenge confronts us all.`

2.2. The Economic and Social Committee endorses these statements, and consequently hopes that the political will, and the means of meeting this challenge, will be found rapidly and with determination.

2.3. The Committee regrets that no reference is made in the White Paper to the Treaty of Rome, and particularly its Title III which is crucially important on the matter of employment and social rights.

2.4. The ESC also regrets the Commission`s failure to give a round-up of its action to date in the first part of the White Paper, or indicate the political reception given to previous proposals on jobs, unemployment, social protection and training and the results achieved.

2.5. Such is the profusion of measures advocated by the Commission that, as an aid to comprehension, it would be preferable to establish a link between some of these and previous or current policies, either to affirm the continuity of the action, or to demonstrate the need for a change in direction. This would enhance the credibility of the proposals in the eyes of public opinion. Objective information is a very important ingredient of credibility, especially at a time when everyone should be working towards the same objective with equal determination.

3. Specific comments on the White Paper:

Growth: one of the key factors in the fight against unemployment

3.1. The economic and industrial aspects of growth are dealt with in Opinions drawn up by the Section for Economic, Financial and Monetary Questions and the Section for Industry, respectively.

3.1.1. The Social Affairs Section is looking at the problem from the particular standpoint it is required to adopt by virtue of its role within the Committee. The Section is well aware that the close and reciprocal links between economic and social factors cannot be disregarded.

3.1.2. The Committee endorses the Commission`s view that growth has a central role to play in rectifying the employment situation. It supports the proposals for specific Community actions based on growth-promoting investment.

3.2. However necessary growth may be, it is not sufficient on its own. We cannot sit back and rely on growth alone to deal with the current unemployment situation. We would draw attention, for example, to the crucial importance of social dialogue and negotiations as an early-warning system, a means of preventing unemployment and a way of implementing the solutions required by the situation on the ground. The Council has itself seized the right moment to encourage, and emphasize the need for, social dialogue and negotiations (1).

3.3. At present a number of factors would seem to indicate a slight recovery in growth, and the initial stirrings and signs of an upturn are becoming apparent here and there (USA, Canada and some EU Member States). While this is certainly a positive development, the indicators point to a level of growth which is far too low to effectively combat unemployment.

3.4. Growth and consumption

3.4.1. Growth cannot be produced to order. It occurs under the combined effect of a number of different resources, conditions and factors, including human and social factors.

3.4.2. Since growth and consumption are interrelated, the latter stagnates or even falls under the effects of unemployment, which lowers individual and family incomes. At the same time the fear of losing one`s job encourages saving for a rainy day. In times of unemployment, consumers tend to go for the cheap end of the market, which often means purchasing products of non-Community origin.

In addition to the sometimes drastic reduction of certain types of consumption, the changing pattern of consumption also has an impact.

3.4.3. It would therefore be a mistake to underestimate the role of demand and solely try to influence the supply side of the economy.

3.5. Growth, technology and employment

3.5.1. Too often the search for competitiveness, however necessary, has been based on the axing of a large number of jobs (concentration of resources, relocation of production, restructuring etc.).

3.5.1.1. The Commission states that 'industrial society has continually changed - albeit not always smoothly - by incorporating technical progress`. The Commission thus realistically states that progress has not been solely beneficial.

3.5.1.2. The axing of jobs is always a harsh reality even if, as the Commission points out, 'the employment situation is on average more favourable in those firms that have introduced microelectronics than in those that have not done so`. We need to be wary of judgements based on averages. It would have been better to make clear that the firms in question are often highly efficient or protected concerns able to spend heavily on technology and training, and concerns which have been successful in redeploying their human resources.

3.5.2. The Commission states:

'It would be suicidal and unrealistic to call for a temporary halt to technological progress. In the long run technological progress should be beneficial to employment providing there is a trained workforce, a market, and proper work organizations etc.`

3.5.2.1. This is true enough, but what really hurts is that unemployment is an immediate and pressing reality and cannot wait too long to be solved. Those out of work, just like firms struggling on the edge, are hardly comforted to learn that the situation may be much better some time in the future. It is wretched consolation for the dying to learn that one day it will no doubt be possible to cure their illnesses.

3.5.2.2. Hence the need for quick-acting, tangible measures to prevent the destruction of jobs.

3.5.2.3. The Commission explains that 'technical progress is presenting opportunities for growth and development, on condition that we alter our development model, meet the needs stemming from the upheavals in social life and urban civilization, preserve our rural areas and improve the environment and the quality of our natural assets. In doing so, we will pave the way for our entry into the 21st century`. This is a challenge which the ESC has already endorsed. Reforms of this kind will require changes in both personal and cultural attitudes.

3.6. Technical innovation and social dialogue

3.6.1. The beneficial effects of innovation and technological development will be far greater if these are preceded by active social dialogue. This is crucial.

3.6.2. For a long time now the Committee has been advocating that new technologies, products or services should not be introduced before the social partners in the firm concerned have received objective information and, if necessary, held joint consultations. This preliminary phase would involve looking into and tackling the impact which these innovations would have on working methods and conditions, training needs and, if necessary, worker retraining.

3.6.3. The Committee has also suggested that the impact of new services or goods on use or consumption should be the subject of advance consultations with consumer organizations, so as to avoid subsequent conflicts arising out of products being misused or turning out to be inappropriate to their purpose, with possible consequences for the firm, its development, and hence employment.

3.7. Growth, SMEs, craft enterprises and

liberal professions

3.7.1. There is a job-creation potential in the small-firm and professions sectors. A number of people are prepared to set up such firms but want certain measures to be taken: less red tape; tax concessions; grants towards social-security contributions; training grants; support for new businesses committed to take on workers.

3.8. Growth, trade and external suppliers

3.8.1. Quite rightly, the White Paper warns the Member States against all forms of protectionism aimed at defending jobs. The ESC agrees with the Commission that such a policy would be suicidal and calls for efforts to be made to inform and communicate with the citizens of the EU who understand and have to live with competition from more economically aggressive countries.

3.8.2. We would recall here the Opinion (1) on the Third Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the application of the Community Charter of the Fundamental Social Rights of Workers (point 5.1):

'The Committee would again urge the promotion of a `social clause` within the World Trade Organization procedures, with references to established ILO standards, especially as regards:

- the prohibition of forced labour (Conventions 29 and 105);

- freedom of association and the right to free collective bargaining (Conventions 87 and 98);

- minimum working age and the abolition of child labour (Convention 138);

- equality of opportunity and treatment (Conventions 100 and 111).`

3.9. The White Paper`s goal: Creating 15 million

jobs by the end of the century

3.9.1. The Commission justifies this aim by saying that 'in order to reverse the disastrous course which our societies, bedeviled by unemployment, are taking, the European Union should set itself the target of creating 15 million jobs by the end of the century`. The use of the conditional tense is a sign of caution. Although the Commission`s task is to promote and facilitate job-creation, it does not actually have the ability to take decisions or create jobs itself. Help and support for the creation of new jobs is necessary, but a businessman will only take on workers if he can guarantee them a wage and social security cover. There has to be work to do and customers to purchase what is produced.

3.9.2. The ESC has two remarks to make on the Commission`s proposed aim:

- the first concerns the need to explain the calculations so that their reliability is accepted;

- the second concerns the need to first put a stop to the destruction of jobs, so that we are really talking about the net creation of 15 million new jobs.

4. The cost of labour

The White Paper rightly points out that one of the obstacles to job creation is the level of wage-related costs.

4.1. The debate about the 'cost of labour` leads to fundamental discussions about:

- the cost of social protection and, more generally, of all charges levied on wages and salaries; and

- the methods of financing social protection.

4.2. The ESC reaffirms the obligation to maintain the principles on which the social and health protection of workers and their families, as well as retired people, are based, in order that the values of equity and solidarity which underpin societies in Europe can be preserved.

4.2.1. Current growth rates and the demographical structure of most EU countries sometimes risk creating very serious disparities between those who have a steady job, and will accordingly receive a pension in keeping with that job, and those who are shut out of the labour market, and will have to face up to the immediate and long-term consequences stemming from this exclusion (health and social protection, pensions). There is a whole complex of situations here which, ethically speaking, concern us all.

4.3. The Section for Social Affairs is currently preparing an Own-initiative Opinion on the financing of social security schemes, (1) the conclusions of which cannot be anticipated. The Committee is nevertheless able to point out at the present time that, depending on the various risks to be covered and the requirements and costs to be met, there is a logical form of benefit and a logical way to finance it.

4.4. The Committee would warn against the dangers to social protection of reducing salary- and wage-based social contributions, notably for those on low wages. There is no justification at all for claiming that such measures would lead to job-creation.

5. Generalized reduction of working hours

5.1. The Commission considers a generalized reduction of working hours to be unrealistic and justifies its stance by saying that 'this would result in a slowing-down of production due to the difficulty of striking the right balances between the demand for skilled workers, the optimum utilization of plant and the supply of labour`. Without ignoring the mismatch that sometimes exists between labour supply and demand, the ESC notes that many skilled people capable of doing the jobs available effectively are unemployed.

5.1.1. The Committee generally considers that a reduction of working hours cannot be ruled out quite so categorically. Shorter working hours are just one of several measures that can be used to tackle unemployment provided they do not jeopardize the competitiveness of firms; undermining competitiveness would be prejudicial to employment in the long run.

5.2. Many facts lead the ESC to believe that a search must be made for measures to save jobs in specific firms or even specific industries.

5.2.1. Examples of firms (e.g. the recent case of Volkswagen) in Germany and elsewhere show how industrial negotiations aimed at saving jobs can achieve success by winning support on all sides.

5.2.2. If positive results are to be achieved, it is vital that all possible solutions be examined and negotiated in advance by management and labour. Negotiations on social matters are an essential need, emphasized by the White Paper and confirmed by the European Council meeting held in Brussels on 10 and 11 December 1993:

'The success of the action plan presupposes the commitment of all those involved to preserving social cohesion; this will be easier to achieve if a dialogue is established at all appropriate levels on the objectives to be pursued and the means to be employed. In this connection the European Council invites the Commission to continue its efforts to lead the social dialogue and to make full use of the new possibilities available under the Treaty on European Union, and calls upon both sides of industry to respond constructively.`

The ESC supports these viewpoints.

5.3. The ESC therefore believes wholeheartedly that management and labour should continue to look at different ways of re-arranging working hours, creating wherever possible new possibilities for either protecting existing jobs or creating new ones. Thus, for example, management and labour should look at possibilities of various forms of 'personalized` work, thereby enabling workers to reconcile their occupational activities with family duties, training, cultural activities, etc., whilst also protecting jobs or creating new ones.

5.3.1. Based on voluntary initiatives, and hence responsible and realistic decisions, such arrangements would not only be likely to protect and bolster employment, they would also help to improve the quality of life for workers whilst maintaining the overall volume of production under mutually acceptable conditions.

5.3.2. The ESC is firmly in favour of implementing a 'social compact` as advocated by the Commission, which would try and find the most economically efficient way of developing a genuine trade-off between earned income, work organization and job preservation.

6. Flexibility of the labour market

6.1. The Commission argues in favour of labour market flexibility. It suggests, among other things:

- making the conditions under which workers on unlimited contracts may be laid off more flexible so as to help limit 'precarious forms of employment`; and

- 'reducing certain unemployment benefits and cutting direct taxation on low incomes, in order to fight against undeclared work`.

6.2. The ESC endorses the Commission`s cautious approach, such as when it notes that there are limits on how much unemployment benefits can be cut 'beyond which poverty creeps in`.

6.3. It urges that basic social principles be preserved, as the continued ignoring of such principles would move us away from a European model for society and harm the social dialogue.

7. The development of community services and protection of the quality of life and the environment

7.1. Jobs will also be created in future in response to needs which are not being satisfied today even though they are socially important. Such jobs generally require little capital input and have a low exposure to international competition. The ESC agrees with this analysis of the Commission.

7.1.1. Certain activities in effect have a real economic, social and cultural usefulness but are being performed less and less. These include the assistance provided for customers and users in certain commercial sectors, public administration and services, child minding, daily educational back-up for pupils after school, health and social care for disabled and older people, aid for those seeking a job, help for immigrants, protection of the environment and nature conservation and, more generally, improvement in the quality of life, be it in the form of information, the arts, health, safety, sports, or leisure, etc.

7.2. The ESC considers that such needs should not be assessed in a theoretical way but identified in a real life context, in particular by asking people and specialist organizations and associations what they think.

7.3. These services will have to have all the features of real jobs. For this to happen, they must be seen as such by those performing them; the latter must feel that they are carrying out a useful, effective and respected function.

7.4. Obviously, there is the problem of how to finance such jobs. Depending on the nature and beneficiaries of the jobs in question, users and the public sector (local authorities, social institutions ...) should be asked to bear some of the cost of their financing.

8. An active employment policy

8.1. The Commission notes that 'roughly two-thirds of public expenditure on the unemployed goes on assistance and the remainder on active measures`.

8.1.1. The cost of assistance measures is linked to the number of unemployed and length of unemployment. It is very often difficult to reduce the level of aid or go any further than the adjustments that have already been made in specific areas. However, the unemployed should receive some sort of social support and money should be invested in their training and reintegration in the world of work. As well as their necessary and beneficial human and social impact, such measures will reduce the total sum spent on welfare assistance and will constitute an active use of public and social funds.

8.1.2. The ESC supports the Commission`s sugges-tion that the unemployed should be directly involved in the social dialogue which concerns them, because this will help towards their integration into society and help give them a feeling of personal responsibility for the lives they lead. Trade-union organizations have a role to play in this respect.

8.2. The ESC also agrees that employment services must be helped to go beyond their task of administering unemployment and take on important duties with regard to 'provision of information, advice, job placement and support`.

8.3. The Commission calls for particular attention to be paid to the long-term unemployed, 'a difficult but not impossible task`. It encourages the copying of the examples of several Member States which have taken the initiative of offering such people 'a real route back into employment`, in cooperation with local authorities, trade organizations and various associations. Information about such developments should be stepped up.

8.3.1. The ESC supports this recommendation. It also emphasizes the seriousness of recurrent unemployment, which particularly affects young, unskilled people. Specific programmes will have to be implemented for them, with proper educational and social accompaniment.

9. Training

9.1. General education, basic training and continuing training are three necessities. It is important that any training should have a twofold objective: making people capable of doing a job immediately or at least rapidly, and equipping them to cope at a later date with technological change.

9.2. The Commission recommends that "anyone who leaves the school system before the age of 18 without acquiring a meaningful vocational certificate should be guaranteed a 'Youthstart`". This is a proposal which the ESC has already made. To be effective the 'chance` offered should be preceded by an intellectual and psychological assessment. All of these measures require the input of duly prepared personnel.

9.3. The Committee would reaffirm that sandwich courses and apprenticeship schemes which have a definite pedagogical slant and are focused on the acquisition of relevant qualifications, help people to find and hold a job.

9.3.1. Apprenticeships must no longer be seen by young people and their parents as the ultimate solution to failure at school. The results obtained in certain states demonstrate the value of this type of training if it is well organized and properly targeted on a person`s immediate needs and occupational future.

9.4. The ESC has already called for the rehabilitation of manual work. This will happen if some thought is given to the question of general access to culture and our cultural heritage. Manual workers must not have the feeling that they belong to a culturally inferior social group with a low standing.

9.5. Greater value must be attached to educational and vocational guidance. Success at school depends heavily on this.

9.5.1. The 'right to make mistakes` is a fact of life and should not be presented systematically as a sign of failure due above all to its victims, i.e. young people and their parents.

9.6. The White Paper insists that the education system and hence teachers must keep in close contact with 'the real world`. To bring this about, special attention should be paid to the interface between school, parents and working life. Thus the time put in by teachers talking with families and contacting employers should be part of their professional obligations and rewarded as such.

10. The specific problem of female unemployment

10.1. Special attention must be paid to this problem. Men and women must have equal employment opportunities in reality. This is far from always being the case, (as is illustrated by the unemployment statistics).

10.1.1. Men and women must receive the same pay if they are required to perform the same work, bear the same responsibilities and use the same skills.

10.1.2. Even though we are reluctant to admit it, we still live in a world which is run by men for men, despite the improvements which women have succeeded in obtaining over the years.

10.2. Arrangements to help parents carry out their responsibilities for maintaining and educating their children must be based on the children`s interests and on the parents having a genuine free choice. Whatever happens, the right for people - for instance mothers - to have some form of gainful employment must be respected. A parent who stops working temporarily to bring up children must receive the benefit of measures which will make it possible to return to work later on and maintain professional skills through training during periods when she or he is not working.

10.3. In searching for measures to combat female unemployment, we must be careful not to take steps which might run counter to the interests of women by focusing on specifically female factors, whether real or imagined. We can only establish a balanced and complementary relationship between the sexes by implementing real equality of rights.

11. Distortions between EU and non-EU nationals

11.1. We cannot either overlook or keep quiet about the differences between EU and non-EU nationals as regards jobs.

11.2. The rights of individuals must be respected and measures taken to prevent the development or aggravation of situations of social exclusion, xenophobia or ghettoization. There is the law but there are also personal attitudes and public opinion .... The recent debate on European citizenship has highlighted these realities.

11.3. Immigrants must have training opportunities, be it in the form of language classes or vocational courses, and given every possibility of preserving their original culture.

12. Conclusion

12.1. The right to work, education, training, culture, social protection, health care, etc. are among the basic rights of all human beings and are recognized as such because they concern the individual`s right to personal dignity.

12.2. The unemployment levels we have experienced now for several years throw into sharp focus the many very serious cases of inequality and injustice affecting both individuals and families, and leading to marginalization and exclusion. As a result, more than 50 million persons, i.e. more than one person out of seven, are now suffering from severe poverty in the European Union.

12.3. Bearing in mind its duration and the number of persons (particularly young people) it affects, unemployment in all its forms has become society`s most intractable problem in the immediate and longer-term future. It affects not only the unemployed and their families, but also our societies and cultures as well.

12.4. In addition to taking new measures and amending existing legislation (both regulatory and technical) that has proved to be limited and ineffectual, it is vital to combine all our efforts and the efforts of each one of us to fight unemployment, and to do so without unnecessary procrastination and without any desire to plug personal interests.

12.5. The action of the social partners is therefore of paramount importance: close consultations and negotiations are they key to equitable, realistic and effective solutions.

12.6. It is essential for political decision-makers to display courage, this being often a direct reflection of the political courage which ordinary citizens are capable of showing.

Done at Brussels, 1 June 1994.

The Chairman

of the Economic and Social Committee

Susanne TIEMANN

(1) CES 421/88 fin of 15. 3. 1989.

(2) Meeting in Brussels in December 1993.

(3) COM(93) 668 final - Opinion of the Section for Social Affairs, CES 429/94 fin, 19. 5. 1994.

(4) CES 466/94 fin.