Timid measures

The government measures to boost employment and curb joblessness, figures that were included in the bill presented by Labor Minister Dimitris Reppas yesterday, were originally part of the so-called Social Charter launched by the prime minister. The government’s purpose back then was to hammer out a medium-term plan – encompassing specified intermediate goals – for achieving real convergence with the European Union without neglecting the government’s social face. Contrary to previous pledges, the measures in the proposed bill appear to fall short of the grandiose goals envisaged at the time. They are, instead, a mix of moderate social measures and slightly more daring business incentives. This, of course, is not negative in itself, but the chances that the measures can be any real tonic for unemployment are minimal. The draft bill includes incentives to reduce hardcore unemployment (the long-term unemployed over 55, people under 25 and mothers of two children or more). It trims unemployment benefits for those who refuse to take an offered job, and includes several favorable regulations for the jobless. The core of the recruitment incentives is to alleviate employers of social security contributions – a big burden on businesses. Given that the so-called non-wage costs of employment are widely held to be partly responsible for the low job recruitment level, the bill appears to be in the right direction, provided that this subsidy does not result in businesses recruiting some workers while sacking others as, under the proposed system, layoff monitoring becomes relatively looser than in the past. But this is not the essence of the problem. In fact, we are not worried about the nature of the measures but about their limited effect. Commendable as the subsidy of social security contributions may be, it fails to solve the problem of high contributions which put a big strain on employers and squeeze workers’ income. Without drastic changes in the social security system, subsidies will yield little fruit. If we really wish to bolster employment we must enhance production – and both aspects demand far more daring and comprehensive measures than those foreseen in the proposed legislation. We hope, of course, that the latest initiatives will also have a positive effect, though we cannot expect them to fully solve the problem.