Position statement
The Imperative: short term measures for immediate relief – medium term strategy for better functioning labour markets
Alongside changes resulting from technology advances, shifting demographics, and the impact of the new entering economies, Europe is now facing the next phase of the world’s economic downturn: a jobs crisis. The situation calls for political leadership and some tough but well-informed action.
The unemployment rates in many European countries are still below America’s, but that may be because the more rigid European labour markets adjust more slowly to falling demand. Further deteriorations are likely as by the end of 2010, unemployment in much of the rich world is forecasted to rise above 10 per cent.
These developments call for both short and longer term responses. As immediate relief governments are launching or considering various measures to maintain employment levels, promote mobility, upgrade skills and increase access to employment.
But also short term measures to minimise the social impact of the crisis need to be consistent with a longer term effort to make labour markets more responsive to change. Experience tells us that badly designed policies can be self-defeating. After the recessions of the 1970s and early 1980s, Europe’s rigid labour-markets kept unemployment high for decades.
Amid concerns over the short term impact of the crises, the structural challenge of putting Europe on a path of higher growth rates remains. Over the medium to longer term it is of critical importance that Europe reverses the trend of sluggish productivity growth and increase employment if it is to sustain living standards. In addition, there is a need for an increased focus on innovation which fosters the new ideas, technologies, and processes that lead to more and better jobs. For advanced industrial nations no longer able to compete on cost, the capacity to innovate is the most critical element in sustaining competitiveness. This is true in good times as well as in bad.
The European Commission has undertaken efforts to address these challenges. The 10-year programme launched in 2000 to make Europe the most competitive region in the world by 2010 – known as the Lisbon Strategy – contained a set of ambitious reforms designed to promote economic growth. Although important gains have been achieved much remains to be done at member state level to increase productivity and employment.
Demonstrating political leadership by setting the right course for a second generation of growth and jobs guidelines beyond 2010 will therefore be an important task for the new EU Commission that is due to take office later this year.
IBM is working with EU institutions and key member states (UK, France, Germany, Italy, Slovakia, Czech Republic, Romania and Poland) to ensure that policies promote innovation, increase productivity, and encourage workforce adaptability in order to enable Europe to grow its economies, attract investment and make the European model of society sustainable for generations to come.
