Hollande and Merkel agree to mobilise €6bn to spend on unemployed youth

French president François Hollande pleaded for a Europe of solidarity and German chancellor Angela Merkel called for a competitive Europe of mutual responsibility when the two leaders met in Paris yesterday to draw up a joint proposal for the June 27th/28th European summit.

“Europe has stalled on an economic level,” Mr Hollande said. “Growth is weak for some, nonexistent for others. What is at stake is for us to give more confidence to Europe . . . First of all to the young.”

Mr Hollande said he and Mrs Merkel had agreed to “mobilise” the €6 billion which the council agreed to spend on unemployed youths “as quickly as possible”. The labour ministers of all 27 EU member states will meet in Berlin on July 3rd to “evaluate all the systems” for fighting joblessness, he added.

France advocates “economic governance” of the euro zone. Mr Hollande said he and Mrs Merkel agreed on the need for convergence of fiscal systems and a “social dimension” including minimum wages.

Sick man of Europe
Mrs Merkel later explained that, in Germany, wages are decided by the social partners, not the government. "Ten years ago, Germany was the sick man of Europe," she said. "We reformed our labour markets . . . We put flexibility into labour law. Is it better for a youth to have a job with a certain flexibility? Or no job at all?"

Mrs Merkel said the two leaders were “keeping the promise we made about Franco-German friendship, that is to say a contract to develop monetary union, principles to make Europe more competitive and create lasting growth”.

She said Europe “must not let up” in its efforts to reform. “Budgetary discipline and growth are two sides of the same coin. There is no contradiction.” Conditions must be improved for private investment across Europe, bureaucracy must be reduced and the law must favour competitiveness.

When Mrs Merkel referred to “François Mitterrand” instead of “François Hollande”, there was much laughter in the room, the only moment of levity at the 50-minute press conference.

On Wednesday, Mr Hollande had reacted negatively to EU recommendations on structural reforms in France, saying it was not the role of the commission “to dictate what we should do”. The outburst seemed to contradict Mr Hollande’s calls for greater European integration and “economic governance”.

Mr Hollande said France would fulfil its commitments “but the details of procedure, the manner of doing it, are the government’s responsibility. Otherwise, there would be no sovereignty possible . . . The method I chose for my country is consultation”.

System of solidarity
Germany, Mrs Merkel said, "can accept that the commission gave France two more years to reach the 3 per cent [budget deficit] limit. But that is tied to the fact that reforms will be undertaken. You can reduce deficits while increasing competitiveness . . . I cannot put in place a system of solidarity in Europe and then everyone does their own budgets".

Germany had shown its good will, Mrs Merkel said. But the system “cannot work if some assume the risks while others spend the money. That is not possible”.

Referring to reports of tensions in his relationship with Mrs Merkel, Mr Hollande said, “Everyone says we don’t agree. Most of the time we do agree. There are nuances, but you emphasise those nuances.”