Jobs Summit: Talking shop offers little hope for jobless

One in five Europeans live in the shadow of unemployment. Diane Coyle, Economics Editor, asks whether a gathering of Europe's leaders in Luxembourg this week will deliver more than a photo opportunity.

There are nearly 20 million people in the European Union who are looking for work and cannot find it. As many again have given up the unequal struggle and withdrawn from the jobs market.

Solving Europe's unemployment problem is a challenge the British Government has set itself for its presidency of the EU in the first half of next year, and for the G8 summit of world leaders in Birmingham in June.

Meanwhile, sceptics expect little concrete action to emerge from the Luxembourg summit which ends today. Politicians from the high unemployment countries such as Germany and France are hesitant even to agree to targets for reducing joblessness, so unsure are they that these could be achieved.

The UK and US have both cut their jobless rates to almost acceptable levels over the past five years, although seemingly at the price of increased inequality. On the internationally accepted definition, Britain's jobless rate is below 7 per cent and America's below 5 per cent, compared with rates in double figures in France, Germany, Italy and Spain.

But there is little willingness on the part of the Continental leaders to admit that they can draw lessons from the Anglo-Saxon successes.

Launching his Employment Action Plan, the UK's contribution to this week's debate, Gordon Brown, the Chancellor, acknowledged this difficulty. He said: "We need to find a third way between rampant free-market economics and stifling over-regulation, combining economic efficiency and social inclusion."

For many economists, however, talk of a third way is window dressing. Charles Bean, an expert on unemployment at the London School of Economics, said: "There is no magic bullet - it is a fight on many fronts. But we do know which policies will help get people into work."

So, for example, there is agreement that a high minimum wage for young people and a high ratio of benefits to earnings are unhelpful; that "active labour market policies", such as jobs advice, support with application forms and travel to interviews, are helpful.

John Philpott, director of the London-based Employment Policy Institute was no fan of the Conservatives' boasts about the benefits of flexibility. But he agrees with most experts that mainland Europeans need more deregulation, more entrepreneurship, a lower minimum wage for young people.

"Suggesting that a 35-hour week will create jobs is just crazy," he said, voicing the widespread view amongst the profession that this French plan has everything to do with domestic politics and nothing to do with sensible economics.

Whatever comes of this plan, the European Commission is proposing at the summit "four pillars" for creating employment that are built on this consensus.

The leaders will sign up to these motherhood and apple pie sentiments in Luxembourg. Whether they will then go home and get down to the nitty gritty of policies that might help people into work is more doubtful.