EU in 'critical' employment phase

(BARCELONA) - The European Union is in a "critical" employment phase, with the jobless rate in the 27-nation bloc expected to hit 10 percent this year, Europe's biggest business organisation said Thursday.

But if governments take the "right measures, European economies can return to creating jobs in a short amount of time," Gerardo Diaz Ferran, vice president of BusinessEurope, said at a meeting of EU employment ministers.

"We find ourselves in a critical phase in terms of employment. Despite the tentative recovery, it is likely that the unemployment rate will reach 10 percent in the EU by the end of the year which would mean 28 million European workers would be out of work," he told the gathering in Barcelona.

"What is most urgent now is to prevent long-term unemployment and encourage labour activity with the necessary structural reforms," he added.

Reducing labour costs, promoting worker mobility to regions with more jobs, greater training and "modernising" labour protection laws were among the measures he recommended to promote job creation in the European Union.

"Europe has the highest level of labour protection in the world. Member states have welfare systems that protect workers during difficult times. We should preserve the substance of those systems but we also need to modernise them. This will be the only way to maintain them," said Diaz Ferran.

He recommended "flexicurity" -- which mixes lifelong learning and job training, flexible labour market policies and high levels of social protection -- as the way to modernise Europe's labour policies.

Half of all EU countries are working to achieve some form of flexicurity, up from just a handful in 2006, according to the European Commission.

But some top economists have argued that the model would not work well during an economic downturn when output is well below potential - an argument Diaz Ferran rejected.

"Contrary to what people say, flexicurity is not a policy for 'boom times'. On the contrary, it has shown all its potential, above all during times of crisis," he said.

Europe must preserve its social safety net at a time of rising unemployment despite pressure for cuts to rein in public debt, an official from Europe's main trade union confederation said Wednesday.

"Today all main European economists say you absolutely must reduce public debt levels, which amounts to reducing social protections," Joel Decaillon, secretary of the European Confederation of Unions, told AFP on the sidelines of an informal meeting of EU employment ministers in Barcelona.

The unemployment rate in the EU was registered at 9.5 percent in November, meaning 22.899 million people across the bloc were out of work, according to EU statistics agency Eurostat.

The European Commission forecasts the EU will breach the 10 percent mark this year, with best-case projections predicting the loss of 7.5 million jobs over 2009-10.

Informal meeting of Employment and Social Security ministers