The main policy-making body of the International Monetary Fund (IMF) urged the European Union yesterday to tackle the "root causes" of high unemployment in order to make monetary union as solid and stable as possible.
"The best way to ensure a solid and stable EMU will be for its participants to demonstrate not only their commitment to the financial requirements of the Stability and Growth Pact, but also their resolve to attack the root causes of Europe's high unemployment," an IMF interim committee communique said.
The communique was issued after the policy-making interim committee met yesterday under the chairmanship of Mr Philippe Maystadt, who is also Belgium's finance minister.
"The committee welcomed progress made towards a successful European Economic and Monetary Union (EMU) that contributes to stability in the international monetary system," it said.
"The economic convergence achieved in Europe and the strong commitment to start EMU on schedule constitute a strong basis for securing a smooth transition to the euro on January 1st, 1999," it said.
A string of politicians and officials have declared at the annual IMF meetings here in the past few days that they see no doubt over the launch of EMU in 1999.
The IMF is now starting to campaign for Europe to introduce more "flexibility" in labour markets to tackle structural unemployment.
IMF head, Mr Michel Camdessus, made the point even more bluntly in a news conference on Thursday when he said EMU countries should now focus on cutting high-cost unemployment benefits and social security schemes.
The interim committee communique added: "High levels of structural unemployment in several European countries point to the pressing need for more determined efforts to increase efficiency and adaptability in labour and product markets and to reform tax, social benefits and other entitlement systems".
Around 18 million people are unemployed in the European Union and a special unemployment summit has been scheduled for November in Luxembourg in response to a French request.
Unemployment runs at 12.5 per cent in France, with more than 3.1 million people out of work and the four-month-old Socialist-led government has declared fighting unemployment its top priority.
France's strategy, including plans to create 350,000 youth jobs with the help of state funds, differs markedly from the prescriptions of the IMF and other international financial organisations, notably the Organisation for Economic Co-operation and Development.
They are pushing for deregulation of the labour market and point to the decreasing jobless in Britain as evidence that it works.
