Labour reforms needed to stimulate growth in EU

EU MEMBERS should reform their labour markets and introduce minimum wages and indirect levies, including property taxes, to stimulate their economies and generate jobs, according to the European Commission.

The suggestions from the EU’s executive arm, made in a paper to be presented tomorrow entitled Towards a Job-Rich Recovery, come as the jobless rate in the EU hits a record 10 per cent, with 24.5 million people out of work.

The commission proposes a shift away from taxes on labour towards consumption, property and pollution taxes. Other suggestions include subsidising newly hired staff, particularly younger people, or reducing employers’ social security contributions to reduce the cost of creating jobs.

“Creating the right kinds of incentives and hiring subsidies should motivate employers to engage in net new recruitment, thus creating jobs that would otherwise not be created,” the paper says. “In many member states, there is scope for reducing employers’ social security contributions which account for a lion’s share of the tax wedge.”

The commission urges renewing the pan-EU fight against black-market jobs and proposes allowing wage increases in exchange for greater worker productivity.

EU commissioner for employment, social affairs and inclusion László Andor proposes a complete opening of labour markets, particularly the public sector, to qualified candidates from across the EU. It calls for the lifting of labour restrictions on Romanians and Bulgarians in nine EU member states .

It favours limited “appropriate minimum wages” across individual labour sectors, to allow workers live from their earnings.

“Mobility of workers in the EU continues to face important obstacles,” it says, listing the main barriers as language, housing issues and discrimination.