EU wants the rules loosened to save some jobs

With many of the 27 European Union countries racked by a recession that has put millions of workers on the streets, the European Commission has offered to help mitigate the impact  on the dwindling labour market by speeding up the expenditure of 19 billion Euro (USD 27 billion) in community funds until 2010. Under a proposal unveiled by Commission President Jose Manuel Barroso and Employment Commissioner Vladimir Spidla, EU governments will temporarily be freed from the obligation to put money into projects co-funded by the European Social Fund (ESF), the commission’s main financial instrument for supporting employment. 
The move is deemed necessary because many member states are unable to provide part of the money due to the strains that the economic crisis is placing on their national budgets. “Most of our member states are under heavy pressure on their national budgets. We are telling them that we will put 100 percent of the money if you do (projects) for employment and training,” Barroso said. “We are doing this because there is a social urgency,” he said, noting that unemployment is the main concern of European citizens. 
The ESF is one slice of the Commission’s structural funds, which are designed to improve economic development and which have a total budget of 347 billion Euro over the 2007-13 period. And Commission officials say their next move will be to propose temporarily relaxing the co-financing rule for the EU’s regional and cohesion funds. The biggest recipients of the ESF – which Brussels says helps more than nine million people find a job each year, mainly through training – are Poland, Germany and Spain. Money is allocated according to a country’s population and relative wealth. 
The proposal comes in the wake of worrying new unemployment figures, which showed the EU jobless rate climbing to 8.6 percent in April. In May, the commission predicted that some 8.5 million Europeans would lose their jobs over the next two years, with unemployment exceeding 10 percent in 2010. The commission’s plans could, however, face resistance from some member states, notably Germany, when they are discussed by EU leaders at their regular summer summit on June 18-19. 
In the meantime, Barroso and Spidla also want member states to prevent layoffs by encouraging the use of short-time work, cutting workers’ hours and using the rest of the time for training. They are also proposing the creation, with the help of the European Investment Bank, of a micro-credit facility worth 100 million Euro to help Europeans set up small businesses. The proposals were criticised by the Socialist grouping of the European Parliament, which compared them to trying to extinguish a fire in a house by using a glass of water. 
In Spain, the hardest hit in terms of joblessness, the official level of unemployment fell to 3.6 million people in May, experiencing its first decline in 14 months, the Labour Ministry said.
Unemployment went down by about 24,700 people, after rising for 14 consecutive months. The figure did not yet mean that Spain had overcome its economic difficulties, senior official Maravillas Rojo conceded. Spain went into a recession late last year after being hit by the collapse of its construction sector and the international crisis.  In April, the National Statistics Institute put the jobless rate at 17.4 per cent, the highest in the European Union. 
The French labour market was seriously affected by the economic crisis in the first quarter of 2009 as unemployment soared to 8.7 per cent for the period, the government’s statistics office INSEE said. That represents some 2.46 million jobless people in the workforce and is up from 7.6 percent in the fourth quarter of last year. 
Including France’s overseas territories, the unemployment rate for the first quarter of this year was 9.1 percent, INSEE said. “This is a bad result … a very substantial deterioration,” Finance Minister Christine Lagarde told Europe 1 radio. Lagarde said the depressed labour market “will continue,” and noted that French GDP is expected to shrink by “about three percent” this year.


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