Employment is the foundation of the welfare state. At present, however, employment rates vary considerably between Member States. While in Germany and other Central European countries unemployment rates have been falling for years, Southern and Western European countries such as Spain and Italy continue to face major problems. This is particularly true of youth unemployment. In Greece and Spain, one in three young people is unemployed. The EU must therefore make every effort to improve employment conditions in the problem countries. Qualification and support programmes must be expanded and working conditions made more flexible. Deregulation must be promoted and new markets opened up.