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Flexibility Key to Full Employment, Says Brown
By Joe Churcher, Chief Parliamentary Reporter PA News
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October 15, 2003
Flexibility in labour markets is the key to making full employment a “realistic goal” in Europe, Chancellor Gordon Brown told MPs today.
He was speaking as the Treasury published its contribution to an EU-wide debate on employment which called for “urgent and decisive action” to meet targets.
It warned that European nations had to leave behind assumptions that flexibility was “the enemy of social justice” and embrace the UK’s approach.
At Treasury questions, Mr Brown said the unemployment in Britain was at its lowest since 1975 and was lower than in Japan, America and the whole of the euro area.
Further measures to improve the situation through the New Deal – including helping people into self employment and to start new businesses – would be included in his Pre-Budget Report, expected in December.
Asked whether Europe could learn from the British experience, he said: “I have regular talks with my European finance minister colleagues. The French and German finance ministers signed a joint letter with me to our European colleagues and we are proposing that the same incentives that are available in welfare to work and our New Deal are available in the rest of Europe.
“Equally, at the same time, we are promoting flexibility in the European labour markets which is the means by which we can return to a position where full employment can be a realistic goal in Europe.”
Vincent Cable, the Liberal Democrats’ new Treasury spokesman, asked if he agreed with the Governor of the Bank of England Mervyn King, that the Government was already “as close to full employment as it is likely to get”.
Mr Brown said full employment remained the goal with supply-side measures such as training people for work and “pay responsibility” the key.
“These are the conditions in which I believe we can create more jobs in the British economy and reduce unemployment further,” he said.
The Treasury’s summer submission to the EU employment debate called for a “new approach to employment” to ensure Europe is equipped to “make the most of globalisation”.
It said: “Europe has too often been unwilling to go beyond old assumptions that the labour, capital and product market flexibility necessary for productivity is the enemy of social justice.”
Supporters of full employment “have not been in the habit of thinking of flexibility as a route to full employment” it added.
It concluded that the EU needed to do “far more” to meet the challenging targets it set itself in Lisbon in 2000.
“Urgent and decisive action by member states is needed to ensure that we reach these targets...The answer lies in a radical reform of our labour markets, their institutions and practices.
“There are lessons to be learned, both from each other and from outside the EU. But the time to act is now.”
The publication of the report came as Mr Brown warned the EU about the consequences of failing to open itself up to globalisation in an article in The Wall Street Journal.