This brief description of how macro policies will work in EMU might leave the impression that there will be no machinery to bring the different players together. This is not the case. Member States are required to coordinate their economic policies in the Council of Ministers, and there are provisions for surveillance and peer pressure. There will also be a dialogue between the Council and the European Central Bank.
Finally let us look a structural policy. Again, this is primarily for Member States to decide, though the new Treaty, agreed at Amsterdam, obliges them to regard promoting employment as a matter of common concern and to coordinate their actions within the Council. There is also provision for the Council to establish annual employment guidelines which the Member States will have to take into account. We are likely to see the first set of these guidelines later this year. Amsterdam also launched an EU employment iniative, with which the British Government and the Chancellor of the Exchequer in particular was closely associated. The challenge facing the EU and the Member States, in or out of EMU, is already fairly clear.
Unemployment in the Member States since 1970 has been on a clear upward trend since 1970 though in some Member States (including Ireland and the UK) unemployment has peaked at a lower level in this cycle than in the 1980s.
Structural unemployment also remains high. The forecast structural unemployment for 1998 varies from 20% in Spain to 5% in Austria. The average is about 10%.
The reasons for this have been much discussed. The famous Jobs Study by the OECD, published in 1994, reached the basic conclusion that it was the inability of economies and societies to adapt rapidly and innovatively to a world of rapid structural change that was the principle cause of high and persistent unemployment. Equally, the report was clear that there is no single recipe for full employment, but a menu of measures that could help move countries towards higher unemployment.
What sort of things are on this menu? The Amsterdam Summit set out some broad principles in its Resolution on Growth and Employment:
- Develop a skilled, trained and adaptable workforce
- Make labour markets more responsive to change
- Modernise social protection systems
The European leaders were clear that this is a balanced agenda: "Economic efficiency and social inclusion are complementary aspects of the more cohesive
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