EU to introduce Unemployment Quotas


Like Economist, but heavier

EU to introduce Unemployment Quotas

Governments must hit minimum unemployment targets or face fines

Objective to reduce imbalances between member states

Article originally published in GTG April 2011

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Brussels, Mon Mar 28th:
EU Finance Ministers have announced agreement on a new Commission scheme of quotas to unify unemployment levels across the European Union

Modeled on the well-proven Common Agricultural Policy, Fishing Quotas and Eurozone Sovereign Debt Bail-Out schemes the objective is to create a ‘level playing-field’ across the Union to ensure that the southern European countries, including France, don’t have to face unfair competition from countries with more efficient labour markets

Henceforth each member state will be allocated a quota which they are legally required to meet. The traditionally more efficient northern economies – Germany, the Netherlands, UK, Sweden – will have to increase their unemployment levels by around 2-4 percentage points. Though this is likely to prove unpopular in those countries it is seen as essential for the common good of the Union

Countries face hefty fines if they fail to meet their minimum unemployment quota. Exceeding the quota is not a problem. The Commission’s logic is that making people redundant is easy – so there are no excuses for not doing so – but creating employment is much harder and so it is inappropriate to punish governments that fail in that respect. In fact, the Commission has indicated that the quotas might be revised upwards if the northern economies continue to outperform those in the south

Britain’s EU-sanctioned unemployment quota for 2011-2012 is 11.5% (current level 7.8%) rising to 13.5% by 2012 and 20% in 2013 to come into line with the benchmark Spanish rate

To hit these targets the UK will have to increase unemployment by at least 1 million this year and a further 3 million by 2013, but the UK government has said it is committed to the plan and will enact an emergency budget introducing special measures to force through job losses