At Friday morning’s working sessions of the informal Ecofin meeting in Göteborg, EU finance ministers discussed climate change and employment.

Climate - the EU is willing to contribute its fair share of financing
The session on climate change was devoted to two separate themes: cost-effective economic instruments and the financing of climate change. Ministers underlined the key role of economic instruments in achieving necessary reductions in greenhouse gas emissions. A number of ministers also welcomed the idea of introducing a CO2 tax to reduce emissions from sectors outside the EU Emission Trading Scheme. Swedish Minister for Finance Anders Borg noted that there had been a constructive exchange of views and that the Commission was encouraged to propose a necessary revision of the current Energy Taxation Directive.

On the topic of financing action on climate change, ministers had an active and construcive discussion. They reiterated the EU’s commitment to reaching a global, ambitious and comprehensive agreement in Copenhagen in December. They also recognised that financial resources for climate action will need to be scaled up urgently and substantially, and that work will proceed both within the EU and in cooperation with our international partners.

“The ECOFIN Council will discuss this topic further at the next meeting, which is to take place on 20 October, in preparation for the 29-30 October European Council. Our discussions showed a strong EU, which will  drive this issue and play an important role in preparing for the G20 meeting in St.Andrew’s on 7-8 November. But we need the help of others, especially the United States,” concluded Anders Borg.

Employment – the importance of maintaining labour market attachment
Ministers expressed concern regarding the dramatic increase in unemployment across Europe, and the associated risk of unemployment becoming entrenched at a high level. Ministers therefore underlined that expansionary fiscal policies must be maintained in order to check the increase in unemployment. They also agreed on the importance of sound macroeconomic frameworks as a crucial element of well-functioning labour markets.

To mitigate the risk of unemployment persistence and to avoid repeating mistakes of the past, ministers emphasised the importance of maintaining labour market attachment for those hit by unemployment. The best way to achieve this is to use active labour market policies such as matching, education and training, and intensified job searching.

“Unemployment will be a difficult political, social and economic challenge over the coming years, and labour market policies will hence be crucial, as we seek to reduce the risk of persistence,” stated Anders Borg.

Ministers agreed that structural reforms must be accelerated, with longer-term measures needed to increase labour supply. In this context, tax and benefit systems should be designed to make work pay. Continued structural reforms will play a significant role in the future strategy on growth and jobs.

“Increasing labour supply is also crucial in achieving sustainable public finances, ” Anders Borg added.