Europe needs to focus on encouraging innovation and embedding a moresupportive base for entrepreneurship, writes the Taoiseach, Mr Ahern.
The twin priorities of Ireland's EU presidency are sustainable growth and more and better jobs across Europe. These will form the focus for the discussions at the council of European leaders this month.
Part of our agenda will be the report of the European Employment Task Force, which was chaired by the former Dutch prime minister, Mr Wim Kok. When the European heads of state and government established the task force, they did so out of a concern that Europe was failing to tackle effectively the major employment challenges it faces. Mr Kok's report confirms that the concern was justified but that the challenge can be met.
As the report points out, Europe needs to be more agile and imaginative in responding to the new demands of the global economy and in building our competitiveness. This is the way to bring about real and sustainable improvements in the employment situation.
On reading the report, I was particularly struck by the parallels between the recommendations in it and Ireland's economic experience in the recent past. Especially striking is the emphasis placed on structural reform as a driver of economic growth and employment creation.
A key ingredient in this country's economic performance since the late-1980s has been the sustained priority given to structural reform, especially with regard to labour market policy. A pro-employment bias in taxation and social welfare policies played a crucial part in transforming the Irish economy into a dynamic creator of jobs.
Successive social partnership agreements have focused on bringing about real gains for all the parties. For much of the recent past, that involved moderate wage increases being combined with incremental and significant reductions in the personal tax burden to secure improved living standards for all, especially those on lower incomes.
In Ireland, the incentivisation of work has also involved a focus on social inclusion. The introduction of the national minimum wage in April 2000 is a case in point. It is augmented by a tax system that exempts some 35 per cent of all income earners from tax. Clearly therefore, competitiveness and social goals can be pursued in a complementary and mutually reinforcing manner. At the heart of the matter is that work must pay in real terms, especially for low-paid workers.
Ireland's experience shows that the approach being recommended by the Kok report can deliver real long-term gains for Europe - in terms of improved competitiveness, greater economic growth and more sustainable employment. Striking the appropriate balance between different aspects of fiscal, labour and competition policies on the one hand and incomes policy on the other has yielded significant benefits.
The annual rise in employment in Ireland during the decade to 2001 was nearly 4 per cent and further increases are forecast - from the current level of 1.65 million at work to 1.9 million in 2010. Female participation has shown remarkable growth too - at an average annual rate of 5.2 per cent in respect of total employment between 1991 and 2001.
And perhaps most pronounced of all has been the dramatic performance on the unemployment side - a drop in the unemployment rate from 14.7 per cent in 1991 to today's level of 4.7 per cent. For an economy that was characterised throughout most of the 20th century by emigration and high unemployment, it is clear that a range of complementary socio-economic policies played a crucial role in bringing about the incredible turnaround.
The combination of sensible budgetary policies and a low tax burden on average-to-low-income earners was key. It promoted employment and stimulated investment - and to levels well in excess of anybody's expectations. Other factors - including a well-developed social partnership process and investment in our infrastructure, our people and our technological base - played important roles as well.
This has enabled the Irish economy to consolidate our recent gains and move towards higher value-added activities that will sustain more and better jobs.
I believe that what worked for Ireland can work similarly well for other EU member-states. Europe is challenged now as never before to be agile and imaginative in adapting to change. The Lisbon agenda for economic reform to 2010 gave shape to the nature and scale of the challenge. It also provided a vision, recognising that with growing globalisation, deepening economic integration and a rapidly ageing population, Europe needs to focus more intently on the goals of improving labour market flexibility, encouraging innovation and embedding a more supportive base for entrepreneurship.
The Kok report contains many important recommendations and, certainly, Ireland's recent economic history supports strongly his analyses and conclusions.
As Mr Kok noted: "The Lisbon objectives are ambitious, but Europe cannot afford to miss them. Member-states must step up their efforts." We need to move on from words to action.
Bertie Ahern is Taoiseach and president of the European Council.