Policy differences will underlie jobs summit

VIEW FROM CANNES

The European Union's summit, which starts today in rather pleasant surroundings, is not just an opportunity to refresh the tan. This is a summit about jobs, the hosts have underlined.

The French have made it clear that they want progress on tackling unemployment in the next two days. Jobs are "the beginning and end of policy", Jacques Chirac, the President of France, has said.

It is pretty easy to make wisecracks about this. Employment is so important that heads of state and government will talk about it for, oh, about three hours.

Every summit for the past four years has been a summit about jobs, because unemployment is high and world leaders want to show that they are doing something. What they have mainly done, so far, is organise more summits, including the next G7 jobs summit in France.

But the more important point about Cannes is that it will, once more, reveal the underlying policy differences about unemployment and its root causes. They are still there, even though the election of a right-wing French President has reduced the number of Socialists who will be taking the waters at Cannes still further.

Indeed, the real divide is not between left and right, it is between those who believe the state has a role and those who think the market works best.

There is no shortage of ideas. The Confederation of British Industry, Unice, the EU employers' federation, and the European Round Table, which groups the largest corporations in Europe, have all drawn up plans in the past weeks. Broadly speaking, they call for a more conservative approach to regulation, fiscal orthodoxy and a focus on training.

This is all good news for the British government, which believes that the business of Europe is business, and will say so. John Major, though teetering on the edge of a political precipice, will restate the case for reducing regulations and cutting back on legislation. But though the UK is nurturing a new political alliance with France, on economic affairs this is unlikely to flourish.

A study group that will report to the summit will make the same arguments as Britain on deregulation, but couple with those demands for a more active stance on education and training. The general principle will be agreed, but there is unlikely to be much firm action. The report will be filed under "good ideas".

There has already been a lively debate on deregulation, and another study group under a German official was sent off to examine the case. The Molitor Group will bring its report to the summit, and the story it has to tell is not an especially happy one.

The Danish environment minister has called the report mad because it seems to suggest reducing environmental standards. Several representatives distanced themselves from the idea that there be a basic code of workers' rights enshrined in the EU treaty, an idea supported by EU commissioner Padraig Flynn. The British representative on the Molitor Group, Sir Michael Angus, former head of the CBI, had a particularly difficult time. He had to make a separate announcement distancing himself from the ideas on workers' rights. Better to look at the harmful consequences of regulation, he said.

These underlying problems occur in other areas, too. Traditionally, when called to act on jobs, EU ministers underline the importance of the single currency. The European Commission's paper on monetary union will be on the table at Cannes, and is likely to receive a luke-warmish welcome. The prospect of a single currency has drifted off towards 1999, but one of the basic issues - how to make economies converge before then - is still a fundamental problem.

In particular, is this the right time to reduce budget deficits? Alain Juppe, the French Prime Minister, managed to hold the fiscal line in the package he announced last week, but that meant the results for France's jobless - 12 per cent of the workforce - may be meagre.

Mr Chirac is likely to propose further study of Europe's plans for a single currency, and in particular what happens to the relationship between those countries that join and those that stand outside. Linked with this topic, of course, is the question of the stability of the international monetary system, and here Mr Chirac is arguing against the grain of the liberal consensus in the EU.

At the Halifax G7 meeting, he called speculation the equivalent of Aids in the world economy, and proposed action against it.

Theo Waigel, Germany's finance minister, said there was not talk about a tax on transactions, however. "And if there had been we would reject it," he added. The idea is unlikely to command much support from the EU, and EU commissioner Mario Monti has already looked at proposals to combat speculation and deemed them unworkable, or against the principle of liberalising capital flows.

Mr Chirac has one idea that will make progress: to speed implementation of the EU's Trans-European Networks projects. There is already a list of 14 high-priority transport schemes ready to go, and the summit will pledge more cash and more attention to this idea.

One of the projects is France's new TGV-Est, a high-speed rail link between Paris and Strasbourg, and that is likely to be trumpeted as one of the main achievements of the summit. It is the type of grand project that appeals to France, and which will make headlines.

A new fast train will not, of course, resolve the fundamental problems of high long-term unemployment in Europe. Competitiveness is the general title for this debate: how can the EU compete more effectively in world markets, creating more jobs as it does?

The trouble is that as in the US, where the question came to prominence in the mid-1980s as the trade deficit soared, there is no consensus on whether that means letting markets rip or trying to mould and shape them.

The EU drew up a huge document on the subject two years ago, as one of the last legacies of Jacques Delors. Most of it is still unimplemented, indeed probably unread in some quarters. It seems increasingly likely it will join the huge and growing stack of documents and papers piling up in offices around Europe, full of good intentions but with little practical effect.