Croissance et emploi : l'ambition d'une initiative européenne
[eng] Growth and employment the scope of an European initiative Jacques Drèze, Edmond Malinvaud et Alii Executive Summary 1. Since almost twenty years now, European unemployment is a major social problem and the sign of significant underutilisation of resources at a time of substantial unfilled needs. Whereas employment increased by nearly 6 % between 1987 and 1990 in EC12, the rate of employment is now again exceeding 10 % and rising. Even under reasonably optimistic forecasts (a growth rate of 2.5 to 3 %), the unemployment rate will remain above 10 % for at least four or five years. This position paper reviews the short-, medium- and long-run policies best susceptible of promoting growth and employment in Europe. 2. We argue that fiscal policy is not, at this time, a suitable instrument of short-run stabilisation. Attention should rather be focussed on medium-term structural budget consolidation, which was neglected during the expansion of the late eighties. On the other hand, we argue for monetary stimulation through a strong decrease of short-term interest rates, and propose the reference level of zero short-term real interest rates. 3. Turning to medium-run policies, we advocate two sets of measures, concerning respectively labour costs and investment. 3. a We note that high unemployment is heavily concentrated among unskilled workers. Moreover, we find evidence of a trend in the skilll composition of labour demand, which contains a declining proportion of unskilled jobs. These considerations justify investment in training and education. We believe that they also justify immediate measures aimed at reducing the cost of unskilled labour relative to the cost of skilled labour and of capital. An important element of labour costs consists in taxes and social insurance contributions, which drive a substantial wedge — 30 to 50 % in the EC member countries — between the cost of labour to employers on the one hand, take-home pay or the social opportunity cost of unskil
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