EU AND THE POLICY TO COMBAT UNEMPLOYMENT

The President of the European Commission has recently stated (January 1996, before the European Parliament) that ''the continuing high level of unemployment is putting the cohesion of our societies at risk; if is shaking the foundations of our European model''. This paper reviews the official policy to combat unemployment, addresses the fears that moves to monetary union are putting people out of work, and especially the controversial issue whether budget consolidation is deflationary or not. It concludes that the current recommended policy mix is based on a consistent economic analysis, supported by veal life evidence; ma jor deviation from this line will not be helpful for employment; but m ore determined action is needed, especially in apparently sensitive ar eas.