(30.11.1999 - Juhani Artto) "Europe's economy has not developed structurally in recent decades and its competitiveness has shown little progress. The productivity of labour in the USA is still about a fifth higher and the rate of economic growth there is more rapid than in Europe", said Finnish Prime Minister Paavo Lipponen recently at a European seminar organised in Helsinki by Finland's leading daily newspaper Helsingin Sanomat.
"The gap between EU and USA employment rates, which dates from the 1970s, is still significant. Mainly, it can be explained by the number of people employed in the service sector. In the EU this corresponds to a lack of about 36 million jobs. This failure to utilise resources undermines the long term prospects of our economy."
According to Lipponen, the central goal of structural reforms is to increase the employment rate. "If the EU employment rate currently averaging 60 per cent could be raised to the level of the Community's best regions, i.e. to more than 70 per cent, then the number of people employed would increase by over 30 million."
Lipponen urged a start to such reforms by strengthening the sustainability of the public sector. "This will increase the confidence of market forces in long term stable development and create a basis for investment and new jobs", he argued.
The Finnish Prime Minister pointed out the need for reforms which engender confidence in the operations of the markets. "However, too much attention has centred on the labour market alone. It is not only a question of labour market flexibility but also one of functional commodity and capital markets."
Referring to Mario Monti, Lipponen supported policies which shift the emphasis away from labour taxes and onto taxation of capital.
Lipponen also spoke in favour of developing the international system so as to give more rights to employees, improve environmental protection and tackle the child labour problem effectively.
"The question is not one of trying to force on others the EU model and norms which correspond to the Union's level of development. Instead, it is important to support an international order that does not encourage neglect of human rights and the environment."
"The basic norms of working life and environmental protection must be promoted through positive incentives. Suitable means for this must be sought in partnership with the developing countries", Lipponen proposed.
In Lipponen's opinion the proper way to introduce working life norms into the debate on international trade is to establish a new permanent forum between the WTO, ILO and other organisations concerned. This forum would deal with the relationship between trade policy, trade liberalisation, the basic rights of employees and development.