THE European Union needs to create two million jobs every year until well into the next
century and cut regulations on industry if it is to head off an unemployment crisis, an Institute of Directors study says today.
The report reveals that the EU has not created a single additional private sector job in the past two decades, while the USA has created 31 million. The only extra jobs in Europe, five million of them, are in the public sector and therefore paid for by tax-payers.
While unemployment has stayed at around six per cent in the USA, in the EU it has risen from 2.5 per cent to 11.5 per cent.
British efforts to deregulate are being overwhelmed by EU directives and European
Court of Justice rulings, the study says, citing a 24 per cent decline in industrial tribunal cases between 1985 and 1989, followed by a 145 per cent surge in the 1990s.
The report says that at least three-quarters of new jobs will have to be created by smalls
firms and that that can be achieved only if the EU follows America's example and exempts
businesses with fewer than 50 employees from employment and social regulation.
Although Americans are four times as likely as Europeans to become unemployed, the deregulated US markets means they are far more likely to get another job. Only one in 10 of the US jobless stays out of work for a year or more, whereas the EU figure is 42.2 per cent.
Calling for "a bonfire of unnecessary and costly regulation", the report says: "What is required in the EU is not a slight change of course but a reversal of policies which have helped to produce an unemployment crisis."
Employment Policy in the EC: Lessons from the USA is written by Dr Charles Hanson, an economist at the University of Newcastle upon Tyne. Tim Melville-Ross, IoD director general, says the institute endorses many of Dr Hanson's prescriptions.
"Much of the regulatory regime is inappropriate for small firms and there is a strong case for exemptions," said Mr Melville-Ross.
"Excessive regulation and red tape stifle enterprise and social and employment policies increase employment costs and price people out of the market."
