Cardiff summit debates next steps in employment strategy

The European Council meeting which took place under the UK Presidency in Cardiff on 15-16 June 1998 predictably focused on the issues of Economic and Monetary Union and employment, drawing on the Member States' recently submitted National Action Plans for employment. This feature presents the Presidency conclusions and the expectations of the social partners of the summit, as well as some initial reactions.

Meeting in Cardiff on 15 and 16 June 1998, European Union heads of state underlined their commitment to work towards a successful finalisation of the Single Market and the introduction of the euro single currency in 1999. They stated that these developments, in conjunction with the European employment strategy, which is currently taking shape through the implementation of the Member States' National Action Plans (NAP s) on employment in response to the 1998 Employment Guidelines, would contribute towards reducing unemployment across the European Union.

In statements issued prior to the Cardiff European Council, European employer and trade union organisations outlined their priorities for the summit.

Social partner expectations of the Cardiff summit

The presidents of the 33 member federations of the Union of Industrial and Employers' Confederations of Europe (UNICE), meeting in council in London on 5 June 1998, called upon the Cardiff European Council to continue the process of budgetary convergence and to implement the structural and economic reforms necessary for improving the employment situation in Europe. In particular, they called for reductions in the burden of taxation, the streamlining of non-wage labour costs, the implementation of administrative simplification and the improvement of the cost-benefit equation in the public sector.

Echoing the views expressed by UNICE at the social dialogue "mini-summit" on 2 June 1998 (EU9806110F), the presidents of UNICE underlined the importance of the Cardiff summit re-emphasising the principle of subsidiarity, recognising that employment policies in particular should remain primarily a matter of national competence. UNICE argued that the NAPs for employment drawn up by the Member States could serve to create jobs only if they followed the guidelines drawn up at the November 1997 Luxembourg Employment Summit (EU9711168F). They should therefore, in particular, emphasise the importance of entrepreneurship, employability and the promotion of labour flexibility.

The council of presidents welcomed the creation of Economic and Monetary Union (EMU) as a decisive step towards strengthening European competitiveness and, as a result, growth and employment. However, a warning was issued that the current favourable economic climate should not be used to institute short-sighted initiatives, notable in the areas of tax and social policy, which would endanger the progress already made.

With regard to the widening of the EU, UNICE's council of presidents emphasised that this could be successfully achieved only if Member States were committed to strengthening the competitive position of European companies. Particular emphasis should therefore be given to:

• injecting dynamism into economic and structural reform, alongside industrial change in Europe;

• fully implementing the single market Action Plan before the target date of 1 January 1999;

• eliminating obstacles to business activity and improving the regulatory environment;

• implementing a more transparent and effective state aid policy;

• using "benchmarking" to strengthen competitiveness; and

• improving market access for European companies in third countries;

Finally, UNICE called upon heads of government to give the utmost attention to the resolution of the year 2000 computer problem (the "millennium bug").

In a statement to the Cardiff Council, which was adopted by its executive committee on 11-12 June 1998, the European Trade Union Confederation (ETUC) argued that, while the new procedures introduced under the Amsterdam Treaty's new employment chapter (EU9707135F) had the potential for improving the employment situation for all in Europe, the NAPs drawn up by the Member States did not go far enough in realising this potential. ETUC attributed these perceived shortcomings to three main factors:

• the lack of economic policy reorientation;

• the lack of social partner involvement; and

• the lack of "mainstreaming" of equal opportunities for men and women

ETUC argued that, while an emphasis on training and active labour market policies was valuable, training alone could not create jobs and there was therefore a need to end budgetary stringency and to invest in growth. ETUC therefore called for a revision of the Council's "broad economic policy guidelines" to enable the implementation of active budgetary and employment-friendly policies. It also called upon the European Central Bank to recognise that inflation was currently not a threat, and accordingly to lower interest rates to help employment, purchasing power and real investment.

ETUC stated that in many instances, social partner organisations at national level were either only minimally involved in the drawing up of national action plans or insufficient time was granted for them to comment. In addition, it criticised what it saw as the unwillingness of a number of national employers' organisations to participate fully in the NAPs' development. More particularly, ETUC bemoaned what it calls UNICE's refusal to accept that the Employment Guidelines are "in any way addressed to them as a European social partner". As became evident at the June social dialogue mini-summit, ETUC is keen to negotiate and conclude agreements with regard to training, work organisation and working time. UNICE regards these areas as falling under the principle of subsidiarity, but ETUC sees this an another indication that the employers' organisation "will only work effectively in social partnership when the clear alternative is legislative action".

ETUC would like to see equal opportunities run through all "pillars" of the Employment Guidelines as well as forming a separate pillar - in other words, this issue should be mainstreamed.

It is argued that the National Action Plans could be improved by:

• making their financial implications clear, and making new resources available for redistribution and more effective action on tax coordination and harmonisation;

• quantifying objectives to a greater extent, with deadlines set for achieving results;

• consolidating the preventive approach without forgetting the needs of those who are already unemployed; and

• strengthening the articulation of employment actions at local, regional, cross-border, national and European levels.

The Presidency conclusions

The Presidency conclusions drawn from the Cardiff summit underline the important juncture at which the Union now finds itself, with historic decisions having been taken on EMU and enlargement. At the same time, the economic outlook for the Union has improved and steps are being taken towards economic reform and the promotion of employment. The conclusions argue that the Cardiff European Council has taken further steps in this process by:

• setting out the essential elements of the EU's strategy for further economic reform to promote growth, prosperity, jobs and social inclusion;

• identifying practical ways of bringing the Union closer to people through greater transparency, environmental integration and stepping up the fight against drugs and organised crime;

• establishing guidelines and a timeframe for further negotiations on the Agenda 2000 programme for expansion of the Union (EU9708143F);

• reviewing other progress in developing the Union at its external relations; and

• launching a longer-term debate on the Union's future development.

Economic and Monetary Union

The European Council welcomed the decision taken on 3 May 1998 which confirmed that 11 Member States met the conditions for joining the single currency. They urged the Council of Ministers, the Member States and the private sector to complete the remaining legislative and practical steps needed to ensure the successful introduction of the euro on 1 January 1999. The Presidency conclusions further emphasise that the full benefits of EMU to the citizens of Europe can be achieved only by a strategy to promote employment through increased competitiveness and economic and social cohesion. The conclusions commend the Member States for the significant steps which have been taken towards economic stability. Sustained fiscal consolidation in line with the broad economic guidelines is seen to be the key to maintaining the momentum of growth.

Action for employment

The Presidency conclusions underline the findings of the Commission's assessment of the NAPs (EU9805107N), finding that they:

• make a serious effort to enhance the employability of the active population, in particular of young and long-term unemployed people and of women;

• actively promote the development of skills and lifelong learning;

• seek to improve conditions for SMEs and the self-employed; and

• take measures to promote work as opposed to dependence.

A speedy implementation is called for and peer-group evaluation of Member States' Plans is envisaged. In addition, the 1999 Employment Guidelines will be considered in preparation for the Vienna European Council in October 1998. Emphasis is given to the need to develop and define comparable indicators to measure progress in the implementation and outcomes of these NAPs - a process which should involve the social partners.

Future work on employment is to include:

• reinforcing the development of a skilled and adaptable workforce, including through lifelong learning with particular attention being paid to older workers;

• strengthening action on equal opportunities by ensuring that equality between men and women is mainstreamed in all employment policies; promoting family-friendly working practices, including suitable childcare and parental leave schemes;

• tackling discrimination against disabled people, ethnic minorities and other disadvantaged groups in the labour market;

• promoting new ways of organising work, where necessary by reviewing the existing regulatory framework at all levels to combine flexibility and security;

• reviewing tax and benefit systems to make it easier for employers to create new jobs; and

• developing a culture of entrepreneurship and encouraging the growth of smaller businesses.

The single market project also needs to be finalised in order to increase competitiveness and therefore the opportunities for employment creation.

Other issues discussed at the Council included the openness of EU institutions, the environment, justice and home affairs, measures to prepare for the so-called "millennium bug", preparations for the implementation of the Amsterdam Treaty and the implementation of Agenda 2000, as well as pressing external relations issues.

Initial reactions

In a press release, Emilio Gabaglio, general secretary of ETUC, welcomed the emphasis placed on the European employment strategy at the Cardiff Council. However, he added that the practical effects of the NAPs would not become visible before the end of the year. He criticised the broad economic policy guidelines for addressing "yesterday's issues" and called for a greater coordination of Member State economic policies.

ETUC expressed agreement that institutional reform must be tackled as a priority, as the Union moves towards enlargement, "but we must not forget that subsidiarity and solidarity go hand in hand. It would be intolerable if the Union were to find itself after completing the Internal Market and Economic and Monetary Union with no powers to take effective action articulated with that of other Member States in areas like taxation, social policy, workers and citizen's rights."