Euro zone's Dijsselbloem says taxes on labor too high

BERLIN Tue May 27, 2014 6:10am EDT

File picture shows European Union member states' flags flying in front of the building of the European Parliament in Strasbourg, April 21, 2004. REUTERS/Vincent Kessler/File

File picture shows European Union member states' flags flying in front of the building of the European Parliament in Strasbourg, April 21, 2004.

Credit: Reuters/Vincent Kessler/File

BERLIN (Reuters) - The chairman of the Eurogroup of euro zone finance ministers Jeroen Dijsselbloem said on Tuesday the euro zone must "jointly reform" and added that high taxes on labor are an obstacle to growth.

Speaking in Berlin, Dijsselbloem said that national tax cuts should be coordinated across Europe.

"The tax wedge on labor in the euro zone is high, probably too high," he said. "In almost all euro zone countries we have a tax wedge that is higher than the OECD average."

Dijsselbloem said that following the European Parliamentary elections he is more convinced that the European Union must focus on job creation. "Europe is no longer taken for granted," he said. "It is no longer undisputed ... the elections have only strengthened my belief that we have to focus on creating jobs." He also said the EU's efforts must be aimed at creating the right conditions for sustainable growth.

"The key issue at the moment is simply the return of jobs. The real thing in life that people still feel, such as in Portugal, is massive unemployment. So people ask, will this be jobless growth?"

Dijsselbloem said he was concerned about a lack of movement for reforms after the parliamentary elections.

"After these elections, my fear is that we are scared to do more, that we will draw back and see what happens. Then we will get stuck at a very low level of growth, unemployment does not go down and you will lose the next elections," he said.

"If you want the next elections to be better – of course it always depends on the perspective – you have to act now."

Dijsselbloem, who is finance minister of the Netherlands, said he wasn't sure if the Eurogroup needs a permanent chairman or not but believes it is possible to continuing to hold two jobs at the same time.

"Whether it needs a permanent president, I don’t know. I like combining both jobs. Of course, there would be more time (for the Eurogroup role) if I didn't have my daytime job, but the combination is practically doable," he said.

(Reporting Annika Breidthardt; Writing by Erik Kirschbaum; Editing by Stephen Brown)

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