Brussels, 07/09/2012 (Agence Europe) - The “Jobs for Europe” conference held in Brussels on Thursday 6 and Friday 7 September provided an opportunity for the main European policymakers to discuss the most appropriate employment policies for addressing the situation of constantly increasing unemployment. In order to have the opinion of someone who is not only outside the European institutions but also at the forefront of the social challenges facing many EU member states, Agence Europe interviewed Guy Ryder, the new director general of the International Labour Office (ILO) on Thursday 6 September. Ryder is to take up his duties at the ILO in October. As during the conference, in which Ryder participated, the following questions are based on the two currently most discussed subjects in relation to employment policy. These are: the European Commission's proposals known as the “employment package”, and the case of Greece, not only in relation to the structural reforms of the labour market that are taking place there but also regarding the possibility that Greece might exit the eurozone. (JK/transl.jl)
Agence Europe: A primary objective of this conference is to find out how today's employment policy in the EU can find a new paradigm. Do you think that this paradigm, founded on the catchwords “Growth & Jobs”, could be found in times of deep structural reforms, including in labour markets, and of tough reductions in sovereign debts?
Guy Ryder: The conference is certainly focused on the need to create jobs and to stimulate growth in Europe. (…) The political statements made at the beginning of the conference certainly give evidence of the need, recognised by EU leaders, to put jobs right at the top of the agenda. There are obvious reasons why that needs to be done. I think no political leaders can ignore the realities in which the euro area finds itself, with between 11% and 12% of unemployment, heading upwards. The global context is becoming less helpful, because we are seeing a slowdown in growth in other parts of the world. We've got dramatic situations, both in terms of the concentrations of unemployment amongst some populations (here, I'm thinking of youth in particular where unemployment is twice the average rate), and in some countries where concentrations are very clearly threatening social stability. (…) The financial situation is not going to disappear. The sovereign debt crisis will not disappear or be put on hold while we are dealing with the employment crisis. We have to deal with the two things at the same time. The question now is about how we deal with those two priorities together. I believe that experience over the last two years has shown that the policy course taken so far, the manner in which deficits have been tackled, the pace at which policy makers have sought to reduce them, have produced negative results in two respects. They have not significantly reduced the deficits as they intended to do in the first place and they have created simply unacceptable employment consequences. So the need for a new approach is quiet evident.
Agence Europe: What is your opinion on the Commission's employment package presented in April 2012 ? Can it set the EU on the right track to bring back economic growth and create new jobs, preserving at the same time the social gains of the past?
G.R.: The employment package is welcome in itself. It has several elements which, if they are going to be implemented seriously, can certainly make a difference. But there are two questions. Are we going to go from the intentions of last April to rapid implementation? And that's really the question on the table at the conference, to be honest. Secondly, are the measures to be taken going to be anything like the scale required and are we going to be able, in the financial circumstances prevailing, not to blow the whole process? There is sometimes an uneasy feeling that, with the employment package, we're trying to blow as hard as we can in one direction but we have a financial hurricane blowing in the opposite direction. That means we are not going forward. We have to make sure that financial hurricane isn't throwing it off course. There are a number of elements in the package that we need to pick up and I think there are a number of elements where I hope that the ILO itself can assist and contribute. I will be making the point very strongly tomorrow at the conference that the ILO is absolutely ready to move with the European policy makers in some of those areas.
Agence Europe: One of the most controversial points in the employment package was to propose introducing more flexibility in labour negotiations and in the systems of minimum wage or to reduce wages to boost competitiveness, something that is being done in Greece for example. What is your opinion on those measures?
G.R.: The labour market reforms that have taken place in Greece need to be looked at again. From a number of perspectives, it is not only the minimum wage that has been pushed down a very long way. The minimum wage used to be established through a process of collective bargaining in Greece. That process is changing. We have a situation in which the whole process of collective bargaining is basically being dismantled. You could argue with some justification that the Greek collective bargaining system needed to be revised and its outcome in terms of unique labour costs needed to be addressed. Many people would agree with that. I fear, and I hope that this is unintentional, that the consequences of the changes that have been introduced will simply marginalise collective bargaining in Greece as a whole. It would be extremely damaging if we reached that conclusion. Concomitant of that very painful and difficult situation is that we have a breakdown of social dialogue. Government is not talking to unions or to employers and nobody is talking to anybody. Now, some counter examples of what we need to have. There's a need - a need that is recognised and I think this is part of the package - to have wages conform much more closely to productivity. Collective bargaining is traditionally the right way to do that, backed up by other forms of social dialogue. There are different ways of doing that, each country has its national traditions and institutions in that respect. But I think having a new look at the wage policy, so it does reflect productivity gains with a social dialogue that is enforced and the role of social partners increased, is the right way to go. I fear that what's happening in some of the countries most severely affected by crisis is a move in the opposite direction.
Agence Europe: Although the idea of Greece leaving the eurozone is dismissed in Brussels, one of the senior ILO economists recently warned about the consequences on labour markets if that were to happen, even if no one wants it. Can we fear a contagion effect with Greece returning to its ancient currency on the labour markets of other member states? Should even the German workers fear such a train of events?
G.R.: With the projections made up by the ILO's secretariat, it's clear that, should Greece exit from the eurozone, this would have a substantial negative employment effect, not only in the country directly concerned, but across the eurozone. Projections have shown that unemployment would jump up from the current levels to over 17% across the whole eurozone area. But what is perhaps more telling than anything is precisely that countries like Germany would find themselves affected as well. You would have as a consequence a jump in the German unemployment level, which would rise by 26% from now into 2014. That is the strongest possible illustration of the common interest across the EU. In trying to find ways forward to solve the eurozone crisis nobody should think that the exit of Greece or any other country would come cost free. Those who see only costs in helping Greece need to take into account what the real costs would be of Greece's failure in respect of the euro. It's a very worrying situation and I think policy makers need to take account of those perhaps hidden or unnoticed costs.
Agence Europe: Finally, do you think that the EU is still able to achieve the objectives that it has set for itself, called the “EUROPE 2020 targets”? Particularly its first and last target: that 75% of the 20-64 year-olds be employed by the year 2020 and that they will be at least 20 million fewer people in or at risk of poverty and social exclusion.
G.R.: Those targets when they were set were to an extent ambitious and at the same time laudable. Of course, the more time that goes by without improvement in labour markets, and the deeper we go into recession in labour markets, the more difficult it becomes to maintain those already ambitious targets. Every day that goes by without a change of line makes it more difficult, but maybe not impossible. It's certainly one more argument for an immediate and urgent change of course.