EU Unemployment Falls

The European Union, widely seen as an unemployment blackspot, is finally creating more jobs, with its employment rate rising last year for the first time in three years, a new report showed yesterday.

But the European Commission's annual report bore out strictures from Gordon Brown, the chancellor, about "euro-sclerosis" by noting that the EU's job rate lagged behind that of the US and Japan.

Unemployment in the EU totals 19 million or 9%, while 92 million of the 457 million population are "inactive", either in education, disabled or just discouraged. But of these, 13 million are willing to work - a reserve army of workers in an EU beset by a dwindling labour force and the retirement of the baby-boom generation.

The 25 EU governments aim to reach an employment rate of 70% by 2010, with women at 60% and older people, aged 56-64, at 50% but current levels remain short by 7%, 4% and 9% respectively. The report, launched by Vladimir Spidla, employment commissioner, said the number of people aged 15 to 64 in work had to rise by 23 million to meet the overall target.

The employment rate is now 63.3%, up 0.4%. That compares with 71.2% in the US and 68.7% in Japan. Labour productivity grew 1.9% last year in the EU - twice as fast as in the last three years - but the rate was 3.3% in the US and 2.5% in Japan, and EU growth is expected to fall this year.

Mr Spidla hopes higher demand will raise job growth to 0.7% this year and 0.8% in 2006 but officials admit that prospects for growth, including private consumption, had darkened recently. The report showed that, while more older people and women are in work, people aged 15-24, especially men, are being squeezed out. Their jobless rate is 18.7%.

"We can't just wait for growth as if waiting for Godot," said Mr Spidla. "We need to increase the adaptability of the labour market."