EU: REPLY TO REQUEST FOR INFORMATION REGARDING VIEWS OF

UNCLAS SECTION 01 OF 02 BRUSSELS 000385 SIPDIS DEPARTMENT FOR DRL/IL, EUR/ERA, EEB/OMA PASS TO DEPARTMENT OF LABOR E.O. 12958: N/A TAGS: ECON ELAB EFIN EUN SUBJECT: EU: REPLY TO REQUEST FOR INFORMATION REGARDING VIEWS OF LABOR MARKET ISSUES REF: SECSTATE 15533; USEU BRUSSELS 286 (and previous) ¶1. Current Labor Market Situation. In response to the impact of the financial crisis on the labor market in Europe, Vladimir Spidla, Commissioner for Employment, Social Affairs and Equal Opportunities, has begun publishing a monthly report on the current EU employment and social situation. The first report released in early February 2009 showed that the automotive, metal, financial and transportation industries have been hit hardest, resulting in large job losses in those sectors. ¶2. According to Eurostat (EU statistical agency) data for January 2009, the current unemployment rate is 7.6% across the EU. Within the Euro zone (those countries using the Euro currency),the rate is 8.2%. For the most part, the EU labor market has weathered the financial crisis better than the U.S. market, but forecasts predict that the situation will become worse in 2009. Unemployment, for example, is expected to rise 2.5% over the next two, translating to a further loss of 3.5 million jobs. For more extensive reporting on labor market statistics and trends, including unemployment figures for individual Member States and for specific demographic categories, see Reftel B and earlier cables. ¶3. Numerous labor-related protests have taken place across the EU, in Member States such as Latvia, France, and Ireland. The European Trade Union Confederation (ETUC) has launched a campaign to pressure the EU to provide a large-scale response to the labor crisis, instead of handling crises on a case-by-case basis. It is calling for a "New Social Deal" that will protect social and employment rights. ¶4. Recent Labor-Related Government Initiatives. The EU has already taken action to address the current financial crisis and labor market downturn through the 200 billion Euro European Economic Recovery plan, which was adopted by the European Council in December ¶2008. To maintain current employment and spur employment growth, the EU seeks to invest in numerous infrastructure projects using unspent money from the EU budget. These projects include transportation, energy, internet broadband, business, and research and development upgrades across the EU. ¶5. The Economic Recovery plan also makes full use of the Cohesion Policy, by accelerating regional fund investment into small and medium businesses. To this end, the EU hopes to open lines of credit to smaller businesses to ease the effects of the crisis. The plan also reforms the European Social Fund to assist the unemployed and prevent further unemployment by targeting those who are most vulnerable during financial crisis. Further, the European Social Fund will work to match skilled workers with appropriate jobs and train workers for anticipated labor needs. Moreover, the EU plans to use the European Globalization Adjustment Fund (an initiative launched in 2007 to help workers made redundant as a result of changing global trade patterns to find another job as quickly as possible, mostly through retaining) to reduce the broader social impact of the crisis and support vulnerable populations across the EU. The Fund provides up to 500 million Euro a year. ¶6. EU officials also believe that strengthening industrial employer-employee relations can improve labor conditions during the financial crisis. Commissioner Spidla has emphasized the importance of "social partners" (industry federations and labor unions) in improving working conditions and implementing policies, such as those in the Recovery plan. The Commission has also reached out to social partners for monitoring the functioning of the Single Market. On February 25 the Commission met with social partners to start preparing proposals for an extraordinary summit on employment to be held in Prague in May. ¶7. Web sites of Interest, including press releases: -- Monthly monitoring report on EU employment and social situation: http://ec.europa.eu/commission_barroso/spidla / index.cfm?pid=whats_new&sub=news&langId BRUSSELS 00000385 002 OF 002 =en&id=457 -- Press Release-High quality industrial relations can help EU face crisis: http://europa.eu/rapid/pressReleasesAction.do ? reference=IP/09/203&format=HTML&aged =0&language=EN&guiLanguage=en -- Press Release-Investing in the real economy: Cohesion Policy at centre of Recovery Plan: http://europa.eu/rapid/pressReleasesAction.do ? reference=IP/08/1983&format=HTML&aged= 0&language=EN&guiLanguage=en -- Press Release-Employment and Social Affairs Council, 17 December 2008, Brussels: http://europa.eu/rapid/pressReleasesAction.do ? reference=MEMO/08/794&format=HTML&aged= 0&language=EN&guiLanguage=en -- Press Release-Commission meets employers and trades unions to tackle the economic crisis and take action on jobs: -- http://europa.eu/rapid/pressReleasesAction.do ? reference=IP/09/317&format=HTML&aged= 0&language=EN&guiLanguage=en -- Eurostat-Population and Social Conditions: http://epp.eurostat.ec.europa.eu/portal/ page?_pageid=0,1136184,0_45572592&_dad= portal&_schema=PORTAL MURRAY