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