WRITTEN QUESTION E-1445/97 by Nikitas Kaklamanis (UPE) to the Commission (28 April 1997)

Subject: Employment, unemployment and the Maastricht criteria

Unemployment has reached such inconceivable levels in the EU that it is causing social unrest. Unfortunately, however, it has not spurred either conservative or socialist governments in Europe into immediate action to alleviate the situation of the young unemployed.

The Maastricht criteria did not specify an unemployment rate to be attained by each country for participation in the third stage of EMU. In view of this, will the Commission say:

1. what measures it will take to give employment policy the same weight as monetary policy in the EU,

2. what measures it will take, if any, to bring about not only economic but also social cohesion in the EU,

3. whether the new Treaty following from the Intergovernmental Conference will add to the existing economic convergence criteria an unemployment rate as a defining indicator of social cohesion, and

4. whether it has considered a scenario in which there is convergence on the economic indicators but not on unemployment between the Member States, resulting in a population shift of jobless people moving from Member States with high levels of unemployment to those with low levels?

Answer given by Mr de Silguy on behalf of the Commission (12 June 1997)

The Commission agrees with the Honourable Member that unemployment in the Community has reached intolerable levels. For that reason the Commission's economic policy recommendations give equal weight to the objective of achieving a high level of employment and that of completing economic and monetary union (EMU).

1. The objective of a high level of employment is enshrined in the EC Treaty (Article 2). Pursuant to Article 102a of the Treaty, that objective is achieved through the economic policies of the Member States and the Community. Specifically, under Article 103 the Commission and Council recommend the implementation of macroeconomic policy which promotes growth and jobs. This is also the policy required by EMU, since the respective monetary policies of the Member States' central banks, and that of the European central bank, will tend to promote employment in so far as the conflicts between those policies, the Member States' budget policies and wage trends will be resolved as countries meet the convergence criteria. Articles 104 to 104c, in conjunction with the stability and growth pact, will ensure cohesion between budget policy - which remains the preserve of the Member States - and Community monetary policy. The good outlook for stability has also raised economic operators' expectations and, more specifically, tended to promote the conclusion of wage agreements between labour and management which take account of the stability objective and which favour lower interest rates and increased job-creating investment by maintaining sufficient profitability levels. In that context, macroeconomic policy is therefore geared to a gradual return to higher, sustainable growth whereby the necessary jobs can be created. This is in fact taking place, as reflected in the fact that policies have been eased following significant progress towards convergence in budget policies and wage-cost trends.

As macroeconomic policy is placed on a sounder footing, structural policies, particularly those designed for the labour market, can come into play and their full impact can be felt. With a view to highlighting the interconnection between macroeconomic policy and labour market policies, the Commission has proposed reinforcing labour market cooperation between the national authorities. This is exemplified by the recent setting-up, by the Council, of an employment and labour market policy committee. In addition, within the context of the IGC, the Commission has supported proposals to insert a chapter on employment and labour market policy into the EC Treaty.

2. Social cohesion is also one of the Community's objectives. Several instruments and structural funds have been set up to that end, such as the Cohesion Fund provided for in Article 130d of the EC Treaty. In addition, the resources available to the structural funds have been boosted with a view to EMU. It should be noted that the full benefits of these instruments are reaped only where they are used in conjunction with convergence policies in the recipient Member State. This point is illustrated by Ireland, where compliance with the convergence criteria and the use of structural funds have resulted in living standards improving spectacularly to levels around the Community average.

It should also be noted that the social protocol is highly likely to be integrated into the EC Treaty, as the Commission has proposed.

3. Employment is one of the Community's fundamental objectives, and EMU should help it to resume - and maintain - a course of economic growth whereby employment performance can be improved. However, the Commission's view is that it would not be appropriate to add employment to the list of convergence criteria for EMU.

4. Experience has clearly shown that employment performance is contingent on a high degree of economic convergence. The high degree of convergence required and guaranteed by EMU will therefore help to improve the employment situation.