Rising joblessness requires local action

What European programs are being used to try to tackle the increasing unemployment throughout Europe, with a special focus on Central and Eastern Europe? 
Europe initiated last year a re-launch plan which includes many conjunctural measures and, based on estimations, the volume of this plan made by all the EU member states represents 5 percent of the GDP. It was the first time in the history of the EU that there has been such a rapid action, and if we see certain signs of improvement in the situation, we can say that the plan has worked. The other thing we have done has been to come up with certain strategies for the EU member states, which means trying to keep people employed, helping them if they lose their jobs, making sure welfare systems are used properly while keeping active response systems. The member states have accepted this. The third line of action was changing certain rules for the European social fund, the globalization fund, because this fund was originally dedicated to changes caused by commercial policies, more or less. Our initial idea was always to accompany the brutal changes, which is why it was possible to change the objectives a bit and say that the brutal changes caused by the crisis are also eligible. You have asked about Eastern Europe, but the countries there don’t make a uniform group, they are different. There are the Baltic States, which are in a complicated situation. There are the Czech Republic and Slovakia, which are more or less solid in the mainstream; the situation is hard but not extreme. There is also Hungary, which has problems in terms of budgetary stability, and Romania, with the same problem. So there’s no unity in the region. When I talk about Latvia, Hungary, Romania – Europe is part of the budgetary stability of these countries. It sustains the labor market in a decisive way, for these three countries, for example.

 What could local governments do to keep unemployment at low or at least stable levels? 
It depends on the country, but there are certain parts of our strategy about which we could generalize. For example, it is good to use the system of labor courts that Germany has used, which means shortening the period of work and paying people through public financing, provided that these people are taking active measures on the labor market, for example: searching for new jobs, re-training and so on. This works quite well. Each country has its own traditions, but in the end, it is a usable measure. The other thing is that the state should put great effort into helping those who have lost their jobs, though counseling, for example. If someone loses their job, they go through the same shock as those who lose their life partners. This kind of post-traumatic shock can limit their chances of finding a new job, so counseling would help. The third measure is targeting the youth, those who have never been employed, as they are in a risky situation, so internships should be created. The fourth measure is to always try to limit long-term unemployment. If the country doesn’t have the capacity to get the long-term jobless into work, you have to take certain measures to get them moving and stop them being passive. For example, EU funds could be used for labor courts, which is our recommendation.

What was the impact of rising unemployment in Western European countries on the flow of migrant workers from CEE countries? Because, for example, many Romanians who used to send remittances home from Italy and Spain have returned because of this.
 It is more or less true. The flow of migrant workers has diminished. This was the case in the UK and Ireland too. There is also the problem of remittances, and not only in Romania. For example in Egypt, where I have been recently, it’s more or less the same situation. It is true this money helps a country a lot. It has always been like this. If you look at the history of crises, they are linked to the flow of workers. 

To what extent have you seen a decrease in the difference between the average pay of Western and CEE workers? From the point of view of companies willing to relocate production to CEE, is remuneration still an issue? 
You have asked this question only taking into account the salary angle, but this is not the most important one for foreign investors. For example, Japanese companies have brought a lot of work to Europe, and it was not because of salaries, but because they wanted access to the EU market. Salaries are not the decisive issue. It is true that salaries in CEE are rising, but salaries in other countries 25 or 30 years after EU entry are not the same either. Also, the productivity criterion is not used very often. If one compares the productivity of the workforce in Romania with that in Germany, one finds a huge difference. So salaries are paid within a certain context; one can’t just compare salaries. Moreover, although I can’t give precise numbers, look at how much salaries make up in the general expenses of a company. Salaries, energy, capital, loans, all these are combined. It was a surprise to me too that salaries, in a modern factory, let’s say, represent a small part of the costs, compared to other things. The decision is never made based on salaries alone. 
corina.saceanu@business-review.ro

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