This paper focuses on three major themes in the policy debate on European u
nemployment. A first issue concerns the causes of unemployment. We point to
the diversity of the unemployment performance in Europe and plead for a po
licy approach which takes into account the interdependence between employme
nt, labour costs and social protection. As a second major theme, we evaluat
e existing EU policies. While a EU social dimension is gradually developing
, the European level is far from providing a comprehensive policy framework
at this stage. A third issue relates to the national policy dimension and
is linked to Europe's quest for a third way. We compare the corporatist and
competitive labour market approach.