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Europe: Addressing the employment challenge

Position statement

The Imperative: Implementing a 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 employment challenges associated with a slow and fragile recovery.

Today over 23 million people are unemployed in the EU. One quarter are young people. More than one third of those unemployed for more than four years are over 50 years old. These figures are sobering. No society should feel comfortable with them. With many unemployed experiencing long spells of joblessness, there is now a risk that the sharp increase in cyclical unemployment will become structural.

As the recovery gathers pace, it is therefore essential to create the right incentives for firms to hire. A comprehensive strategy to promote job creation and sustained economic growth should also involve reconsidering some labour regulations. Hence, beyond temporary hiring subsidies and efforts to foster employability, this could involve rebalancing employment protection between temporary and permanent contracts by introducing more flexibility where employment protection is overly rigid.

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.

Therefore IBM strongly supports the European Commission's call for action, as expressed by EC President Barroso, ”to overcome Europe’s two key weaknesses in the face of a fast-changing business environment: firstly, the difficulty of ensuring a quick and smooth reallocation of resources, including human capital, from declining activities to emerging ones; and secondly, ensuring the long-term employability of workers even in sectors at risk of job cuts, by improving their capacity to adapt to change”.

Demonstrating political leadership by executing such action in 2011 and beyond will be an important task for the EU institutions and member states in particular.

IBM is working with EU institutions and key member states (UK, France, Germany, Italy, Spain, Slovakia, Czech Republic, Hungary, 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.

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