Inflexible labour laws hold EU back

Europe’s productivity lags behind the US and Asia because inflexible labour laws prevent companies restructuring, a UK government-backed report has warned.

The DTI-sponsored study, published to coincide with the UK’s presidency of the EU, criticises member states, particularly Ger-many, France, Spain and Italy, for not having the courage to reform labour laws.

EU leaders agreed a 10-year plan in 2000 to increase investment and make the EU “the most dyn-amic and competitive knowledge-based economy in the world”.

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But progress in achieving this goal has been poor, said the report i2010, Responding to the Challenge. The report suggests that companies in Europe pursue a policy of ‘creative destruction’ to change the way they do business and learn from the US ‘hire and fire’ culture to compete globally.

At the report’s launch in London last week, Viviane Reding, EU commissioner for information, society and media, said the region would only strengthen its economic growth by investing in IT and abolishing “superfluous regulation”.