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Last week, I attended the PES Social Europe Network – a group of prominent PES policy-makers chaired by my colleague and good friend Alejandro Cercas – for a discussion of what I think is one of the most serious and yet most sidelined issues of the day: unemployment (read the report of the meeting pdf).

I decided to dedicate a blog post to this because the current European discussion about an exit strategy is extremely worrying. The unemployment crisis has just begun. Over 5 million young people are already unemployed. Economists warn that we risk losing an entire generation of people to poverty and unemployment, and they are not exaggerating. Overall, it is likely that by 2010 more than 30 million people will be unemployed.

The surge in unemployment that we expect will not only increase social exclusion. It will jeopardise future growth prospects; it will endanger the sustainability of public finances through increased welfare payments; it will reduce the total level of demand, sending our economies into a negative spiral.

You might ask: why then isn’t everyone demanding co-ordinated policies for job creation? Because the agenda is currently dominated by other issues. The conservatives are now asking for an exit strategy from the recovery programs. But make no mistake: with the unemployment and social crises flaring up, it is not the time for an exit strategy. What we need is an entry strategy into the labour market.

Such an entry strategy must include carefully thought-out policies, based on a European strategy for smart green growth. Such a strategy could create 10 million new jobs by 2020 – with two million in the renewable sector alone. Meanwhile, investment in green jobs could serve to reduce raw material and energy costs, thus making European products more competitive, to transform European transport, to expand energy and broadband infrastructure, and to raise the EU’s global research and innovation profile.

Practically speaking this could be achieved by reforming the Lisbon Strategy into a ten-year economic, social, employment and environmental long term recovery and development programme for the EU.

At the same time, the strategy should be embedded in a policy-mix that would include active labour market policies. What is more, all European programmes should be examined – in the context of a European Pact for the Future of Employment – to see how jobs can be safeguarded and created.

Our political family has a unique burden of responsibility: we are the only political family in Europe that has recognised the grave danger of increasing unemployment with all its human, social, economic consequences, and has at the same time put forward a realistic framework for a solution. I invite you to read our discussion paper pdf on the entry strategy into the labour market and share your views with us.

Posted by Poul Nyrup Rasmussen