Inflexible labour laws put EU third in productivity league

Europe’s productivity is lagging behind the US and Asia because inflexible labour laws are preventing companies restructuring and investing in new technologies, a report shows.

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

EU heads of state agreed a 10-year programme in 2000 to increase investment and make the EU “the most dynamic and competitive knowledge-based economy in the world”.

However, the DTI report said little progress has been made in achieving this goal. Companies in Europe have to pursue a policy of “creative destruction” to change the way they do business and learn from the “hire and fire” culture of the US to compete globally, the report said.

At a conference this week key European players from business and government discussed the challenge of the future of information and communication technologies (ICT) policy.

Viviane Reding, EU commissioner for information society and media, said many workers were concerned about their jobs and the EU would only strengthen economic growth by investing in ICT and abolishing “superfluous regulation”.

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