4th Mar 2024

More Europeans need to work, IMF says

A lack of participation in the workforce is Europe’s biggest obstacle to economic growth, an International Monetary Fund official said Thursday (21 April).

Europe needs to focus on bringing young people, people over 50 years old and women into the workforce, the IMF’s deputy director of research, David Robinson, said at the Brussels Economic Forum.

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  • High investment in childcare ensures high employment participation (Photo: European Commission)

"The key to progress is at the national level," Mr Robinson said.

With fewer working hours due to shorter workweeks combined with more holiday time in comparison with US workers, some of the reasons why Europeans have only 70 per cent GDP per capita versus the US are clear.

Economists and policy makers representing countries and organisations from all over the world are participating in the two-day forum in an effort to find ways of boosting economic growth in the EU.

The consensus Thursday was more investment in education and research and development are needed to help bridge the economic gap and prepare the economy for a future of ever-ageing citizens supported by fewer workers.

The road to Lisbon

The so-called "Lisbon Agenda" development goals form the basis for the policy ideas that EU leaders believe can strengthen the economy. The policy goals set in 2000 are meant to make the EU the most competitive economy in the world by 2010.

Former Danish prime minister Poul Nyrup Rasmussen said that if each Member State invests an additional one per cent in each area covered by the Lisbon Agenda over the next four years, the EU will find itself much better off economically.

He pointed to Denmark and Scandinavia where childcare costs are subsidised by the governments.

"High investment in childcare ensures high employment participation and helps the age problem" by allowing people to have children and balance it with work life," said Mr Rasmussen.

European companies are far behind their US counterparts in terms of research, development and innovation, something which the Commission is pushing hard for Member States to improve as part of the Lisbon Agenda.

The more research and innovation, the more competitive European companies will become in the global marketplace, said Commission vice president Gunter Verheugen.

"We can not compete with China on lower wages…so we must be better, not necessarily cheaper …we can not have the best product if we don’t invest in research and development", said Mr Verheugen.

As more unskilled labour jobs are outsourced to countries outside the EU where labour is cheaper, the market for skilled jobs will increase, many of the speakers said, so it is time for Europeans to prepare now to take the skilled jobs of the future.

Every step of education past primary level is one more step away from future unemployment, figures presented by John Fitz Gerald of the Economic and Social Research Institute in Dublin showed.

"It’s not just about increasing unskilled jobs but it is better to increase education so to lower the supply of unskilled labour," said Mr Fitz Gerald.

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