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CHAPTER I

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(b) although sonie specific labour policies appear to have had positive effects, the whole of public policies, together with the associated consistent strategies adopted in the domain of industrial relations (increased labour flexibility and wagę moderation), do not appear to have substantially alleviated unenp1oyaent problems, despite the    fact that such policies

and strategies have been actively    and widely practiced all

throughout Europę. Several hypotheses can be madę for explaining such a failure:

(b.l) the theories upon which labour policies are based

are plainly wrong;

(b.2) such policies (and the theories. behind them) are correct only in so far as they . succeed in affecting relative competitiveness; this could not happen because all of the competing countries adopted the same policies, reciprocally eroding the galns in competitiveness produced by the adopted policies;

(b.3) restrictive macroeconomlc policies have conpensated the hypothetical positive effects of labour policies.

In previous Reports -and in the second one in particular-we have argued that both explanations b.l and b.2 apply (they are not inconsistent). As to b.3, it is certainly true that macroeconomic policies are among the causes of the unemployment sltuatlon, but not slmply because they are -in the *ain- restrictive. The problem is that they have become substantially ineffective, so long as it cannot be, established any longer a strict and mechanical correlation between a given budgetary or monetary expansive policy, a definite positive change of real GNP, and a definite increase of enployment (this is nothing else than the 'other face' of what has been said under point b.l above);

(c) the fact that labour policies and strategies have had sonę positiye effects in lowering the specific unemployment of the directly affected population, while their overall effects have been poor or nuli, makes it elear their substantia 1ly re-distributive naturę. In other words, either such actions are ineffective or, when they are effective, this is due to the fact that those who are hired because of the policies are actually squeezing out sonę other worker. Since this overlaps with other forms of ongoing labour substitution processes, and the substitution effects which are produced by labour policies aay be very indirect, it cannot be ascertained who is sub8tltuting whom (direct enąuires have established, however, that youth policies are affecting eraployers* reeruitment policies, while careful statistlcal estimates have shown evldence of substitution effects). Labour policies are thus not neutral from a distributive point of view; despite this, however, nowhere such policies appear to have been evaluated,