Economy and employment

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Economy and employment – EU emerges stronger from the economic crisis

The global financial crisis has struck Europe with full force. In its wake it leaves declining growth, bankruptcies and unemployment. The financial and economic crisis has had a prominent place on the EU agenda ever since its effects first became noticeable.

The EU has helped to avoid a financial collapse thanks to joint action. The EU has agreed on a recovery plan to offset the recession, reduce its impact on employment and improve competitiveness. The Presidency will continue the work begun under the leadership of France and the Czech Republic. The ambition is to work to restore confidence in the financial markets, combat the negative impact of the crisis on growth and employment and create long-term solutions for sustainable growth, employment and open markets.

Times of crisis entail major challenges for public finances. Good budgetary discipline promotes sound economic development. A key issue is therefore to discuss how Member States can regain order in public finances.

The economic crisis is global and requires a global response. The G20 (the world’s 19 largest economies plus the EU) is an important forum. During the autumn, the G20 will address issues concerning resources to international financial institutions, regulation and supervision of the financial markets, work against harmful tax competition and increased resources to the world economy. The Presidency will work for a joint EU position ahead of the G20 meetings.

More jobs and more people in work

Further redundancy notices and job cuts are expected along with the slowdown in the economy. This will have a major negative impact on individuals and society as a whole. The economic crisis calls for effective action to limit and mitigate its effects. We must avoid repeating the mistakes of previous decades, which lead to long-term exclusion or to people leaving the labour market prematurely. The Presidency will therefore give priority to action regarding measures on the labour market that limit unemployment, reduce exclusion and return people to work at the same time as the foundation is laid for a high level of long-term, sustainable employment.

Responsibility for labour market policy lies with the Member States. The added value of the EU is in the exchange of experience and commitments to take measures at national level that increase employment for women and men throughout the EU. There is a great need to deal with unemployment, both together and in each Member State. In the short term a quick return to work must be facilitated, but also in the long term the individual’s employability and position on the labour market must be strengthened. An active labour market policy for better adjustment and mobility in the EU’s labour market, more effective matching, increased skills development and more entrepreneurs are important factors in dealing with the job crisis in the short and long term. With regard to the business sector, important factors include work with better regulation and better conditions for smaller enterprises, as well as financial stability and better access to capital.

Efficient financial markets through better supervision and regulation

The current crisis would not have been as serious if the supervisory bodies had been able to foresee the risks on the financial markets. New rules and strengthened supervisory bodies are therefore necessary. The Presidency’s objective is to reach an agreement on the form of a new supervisory structure, which includes the establishment of a European body to supervise stability in the financial system as a whole. The new structure also contains a proposal for a European system for financial supervision at micro level that will ensure more efficient supervision of cross-border banks and reinforced cooperation among national supervisory authorities.

Long-term growth and employment in the coming decade

At the same time as the EU is dealing with the serious economic crisis, the long-term challenges must not be forgotten. The only way that we can safeguard our welfare systems in Europe is through high employment levels and sound public finances. The economic crisis has shown the importance of long-term reforms to facilitate adjustment, the development of new companies and employment opportunities. The crisis also provides an opportunity to create an economy that combines growth with environmental sustainability. Recovery of the economy is based on open, inclusive and efficient markets, within and outside the EU. It must be easier for consumers and entrepreneurs to make use of the advantages of the internal market. A good business climate with simple rules encourages new and growing companies. Research and innovation create new development areas. Efficient labour markets in cooperation with modern social insurance systems will make the adjustment easier for both companies and individuals.

The EU faces a number of major challenges ahead of the next decade: to meet increased global competition, restore the balance of public finances and meet the challenge posed by an ageing population. A new strategic and focused strategy for long-term growth and welfare is necessary. The Presidency intends to lay the foundation for the next strategy for sustainable growth and jobs, i.e. a successor to the Lisbon Strategy. Work is continuing with the objective of reaching agreement on overall challenges and areas during the Swedish Presidency. The decision on the next strategy will be taken during the Spanish Presidency in spring 2010.