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Labour force participation

Labour force participation measures the proportion of a specific population (such as women and older workers) considered to be either working or actively searching for a job. The declining number of persons active in the labour market makes labour force participation an issue of growing significance in the EU and has been a primary concern of the European Employment Strategy.

The Essen European Council of 10 December 1994 first identified priorities for job creation which have become increasingly elaborate in the annual employment guidelines beginning in 1997 (COM (97) 497). In 1997, the labour force participation rate in the EU was 60.5% compared to rates well over 70% in the USA and Japan. The labour force participation rate varied significantly among Member States: Denmark, the Netherlands, Sweden and the UK have achieved labour force participation rates of 70% or more, whereas Italy has the lowest participation rate at 53.5%.

The 1997 Amsterdam Presidency Conclusions referred, without further definition, to ‘full employment’ as an objective. The Council was reluctant to commit itself to quantitative targets, but the Commission’s draft 1998 employment guidelines specified a long-term target of a 70% labour force participation rate. In the shorter term, a target of 65% would require an additional 12 million jobs over five years.

At the Lisbon European Summit of 24 March 2000, the Council was prepared to commit itself to precise targets to increase the average employment rate from 61% to 70% by 2010 and increase women’s labour force participation rate from 51% to 60% over the same period. The ageing population and the declining birth rate were also identified as problems which required urgent action by the Member States, although no specified targets were set out to address these problems.

The Stockholm European Council of 23-24 March 2001 set interim targets for labour force participation in general of 67% (57% for women) by 2005 and a new long-term target of 50% for older persons aged 55-64 by 2010. The Commission’s report on the progress of its five-year Social Policy Agenda 2000-2005, issued on 13 February 2003, estimated that the 2010 targets would necessitate the creation of some 15 million additional jobs.

See also: Employment rate; European Employment Strategy.