László Andor, the European commissioner for employment, has rightly pointed to the growth in the unemployment gap between the north and south of Europe (“Record unemployment in eurozone”, EuropeanVoice.com, 8 January).
This can be largely explained by steps taken by most northern European countries to reform their labour markets along the principles of flexicurity, including offering more diverse contractual arrangements as a means of promoting job creation.
By contrast, southern European countries such as Spain, Portugal and Greece continue to lag behind in adapting their labour markets to the new economic reality. There is solid data to demonstrate that well-functioning labour markets create jobs. The European Commission acknowledged this in its 2012 employment package and the Organisation for Economic Co-operation and Development (OECD) has demonstrated a link between employment protection levels and unemployment.
Recent studies have shown how jobs can be created even when growth in gross domestic product is fairly low if flexible forms of work are developed. A July 2012 study by the French Economic Observatory estimated that the level of growth needed to create employment has declined from 1.5% to just 1% in markets with flexible, well-balanced labour structures.
It is crucial that governments across Europe put conditions in place to create jobs in a low- or no-growth economic environment. As the Commission highlighted in its 2012 “Employment and social development in Europe” report, we also need to ensure that labour markets are operating efficiently in matching supply with demand in order to reduce frictional unemployment. While 26 million people in the EU are unemployed, over two million vacancies remain unfilled.
That also highlights the rationale and value of the Commission's PARES initiative, which is intended to strengthen co-operation between public employment services and those in the private sector (many of whom are members of the association that I head).