High unemployment threatens future of the EU - ministers

BRUSSELS Wed Feb 27, 2013 11:49am EST

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BRUSSELS Feb 27 (Reuters) - European Union leaders must strengthen social policies or run the risk of soaring unemployment undermining support for the EU and its institutions, labour ministers said in a strongly worded document circulated on Wednesday.

The call comes after voters in Italy, the euro zone's third largest economy, resoundingly rejected the austerity policies advocated by outgoing prime minister Mario Monti and supported by the rest of the EU.

"Social Europe is in trouble," said the five-page paper circulated among ministers ahead of a meeting in Brussels, a copy of which was obtained by Reuters. "It is ... dangerous for the very future of the European Union.

"If we do not succeed in showing that Europe brings about training, employment and social progress for citizens, important conditions for the legitimacy of the European project will be jeopardized."

Anti-austerity street protests and strikes have swept through Greece, Spain, Portugal and Belgium as three years of sovereign debt crisis and shrinking economic output have worn down voters' patience with budget consolidation.

The labour ministers, who meet for talks in Brussels on Thursday, said the 17 countries of the euro zone would only emerge from the crisis if governments could find ways to tackle unemployment across the bloc.

"Europe needs the courage to respond to the major financial and economic crisis that it is experiencing with social and employment policies that make a real change to people's working and living conditions," it said.

"The relevant level of response goes more and more beyond the national framework; it is also a European one that must be accompanied by appropriate measures."

Unemployment stood at a record high of 11.7 percent in the euro zone and 10.7 percent in the European Union in December and is seen rising further this year. In Spain and Greece, youth unemployment exceeds 50 percent.

"The rising social costs and high unemployment - particularly youth unemployment - may undermine people's trust in the value of the European community and its institutions," the paper said.

The ministers supported the idea of introducing a guarantee for young people that they would either be offered a job or further training within four months of leaving school -- what the EU calls a Youth Guarantee.

Such schemes already work in Scandinavia and would might give hope to the likes of Spain or Greece, where the economies run the risk of a lost generation of unemployed people.

The ministers also want to help workers move around more easily in the 27-nation bloc, especially it they are to offset the fact that getting a job in another country often entails the loss of acquired pension or social security rights.

They also want to return to a discussion on setting a minimum wage in Europe as a whole. Up to eight EU countries, like Germany, do not have a minimum wage because they set wages in collective bargaining between trade unions and employers.

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