Lisbon Council agrees employment targets

An extraordinary European Council was held in Lisbon on 23–24 March 2000 in order to discuss how to harness the power of the emerging "knowledge economy" in order to create employment growth. The conclusions of this Council focus on a 10-year strategy for the European economy, including a framework for concrete targets in employment and training. It was also agreed that from now on, special European Councils will held each spring in order to debate economic and social issues.

An extraordinary European Council meeting of EU heads of state and government was held in Lisbon on 23–24 March 2000 with the aim of strengthening employment, economic reform and social cohesion in the new "knowledge-based economy (EU0001220N)". The Council hoped to find a strategy for the next 10 years which will take advantage of the opportunities and challenges presented by increasing economic "globalisation" and the new knowledge-driven economy.

In its conclusions, the European Council noted that the EU is experiencing its best macroeconomic outlook for a generation, due partly to developments such as continuing wage moderation and low inflation and interest rates. In addition, the Council forecasts that, in the medium term, the forthcoming enlargement of the EU will create growth and employment.

However, the Council also notes that the EU economy continues to suffer a number of weaknesses, such as continuing high levels of unemployment, affecting more than 15 million people. In addition, labour market participation rates are particularly low in the case of women and older workers and structural long-term unemployment persists, in addition to the continued existence of regions where unemployment remains high. Other weaknesses of the EU economy include an underdeveloped services sector and an increasing skills gap in high-technology sectors.

In order to try to rectify these weaknesses, the Council has declared a strategic goal for the European economy of becoming "the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion". In order to achieve this, it proposes a three-point approach:

• preparing the transition to a knowledge-based economy and society by the development of improved policies in terms of the "information society" and research and development, in addition to completing the internal market and accelerating structural reform;

• modernising the "European social model", investing in people and combating social exclusion; and

• sustaining a healthy economic outlook and favourable growth prospects by applying an appropriate macroeconomic policy mix.

The knowledge-based economy

Movement towards a "knowledge-based economy" will, the European Council believes, be a significant boost for European growth, competitiveness and employment. To aid this, the Council of Ministers and the European Commission will jointly prepare, by June 2000, an "eEurope Action Plan", which will be based on the "benchmarking" of national initiatives. The Council also wishes to see more widespread use of the internet, both within companies and by individuals, and states that the rules governing electronic commerce must be predictable and inspire business and consumer confidence. It calls on the Council of Ministers and the European Parliament to adopt legislation on the legal framework governing issues such as electronic commerce and the telecommunications regulatory framework. Member States are called upon to ensure that by the end of 2001 all schools have access to the internet and that all relevant teachers are skilled in the use of the internet by the end of 2002.

Special attention is devoted to the problems of new and innovative businesses, and particularly small and medium-sized enterprises (SME s), looking in particular at ways in of lowering the costs of business and removing unnecessary "red tape". The Council of Ministers and the Commission will set up by June 2000 a benchmarking exercise concerning the length of time and costs involved in setting up a company, with the results presented by December 2000. Further, a "European charter for small companies" will be drawn up by the Council of Ministers and the Commission, committing Member States to focusing on small companies and responding to their needs, recognising that these companies are the main engine of job creation.

The European social model

Education and training

The Lisbon Council stated that the EU's systems need to adapt to the demands of the "knowledge society" and to the need for an improved level and quality of employment. Member States, the Council of Ministers and the Commission are therefore asked to meet a number of targets, including:

• the achievement of a substantial annual increase in human resources investment;

• the number of 18- to 24-year-olds with lower-secondary level education only who are not in further education and training should be halved by 2010;

• the development of schools and training centres into multi-purpose local learning centres;

• the drawing up of a definition of appropriate basic new skills to be acquired through lifelong learning, including information technology skills, foreign languages, entrepreneurship and social skills. A European diploma for basic information technology (IT) skills should be established in order to promote increased mobility of IT specialists in Europe;

• improvements in the mobility of students, teachers and training and research staff, by making the best use of existing Community programmes; and

• the development of a voluntary common European format for curricula vitae in order to aid general mobility within the EU.

Employment policy

Employment policy is an area where the European Council is keen to set concrete targets, believing that it should be possible to raise the employment rate in the EU from an average of 61% to 70% by 2010 and to increase the proportion of women in employment from an average of 51% to 60%, also by 2010. However, acknowledging that Member States operate in different contexts, the Council suggests that national targets for increasing employment rates should be set. Whilst praising the "Luxembourg process" of annual Employment Guidelines and National Action Plans (EU9711168F) for helping to reduce unemployment substantially, the Council notes that the social partners need to be more actively involved in the drawing up, implementation and follow-up of the Employment Guidelines.

At European level, the Council of Ministers and the Commission will look at four main areas:

• improving employability and reducing skills gaps, by means such as creating a Europe-wide database on employment and learning opportunities and by promoting special skills attainment programmes;

• giving higher priority to lifelong learning, including the encouragement of agreements between the social partners on issues such as innovation and lifelong learning;

• increasing employment levels in service industries; and

• furthering all aspects of equal opportunities, including the reduction of occupational segregation.

Modernising social protection

The European Council states that the European social model must underpin the transformation in the EU to the knowledge economy. However, the systems of social protection which make up the European social model need to be adapted in order to ensure that work pays and to secure the future of these systems in the face of an ageing population. It suggests that Member States should exchange experiences and best practice. At European level, a high-level working party on social protection should be established in order to prepare a study on the long-term future development of social protection. Particular emphasis should be placed on the sustainability of pensions systems up to 2020 and beyond. A report on the working party's progress will be available by December 2000.

Promoting social inclusion

The new knowledge-based society offers great potential for reducing social exclusion, but also brings a risk of an ever-widening gap between those who have access to the new knowledge and those who do not. In order to ensure maximum social inclusion, the Commission will, by June 2000, draw up an initiative for cooperation in this area. Further, the Council of Ministers and the Commission are called upon to:

• promote a better understanding of social exclusion through continued dialogue and exchanges of information and best practice;

• "mainstream" the promotion of inclusion in Member States' employment, education and training, health and housing policies; and

• develop actions targeted at specific groups such as minority groups, children, elderly people and people with disabilities.

The Commission will issue a communication on the future direction of social policy, with the aim of reaching agreement on a European social agenda at the Nice European Council, which will be held under the French Presidency in December 2000.

Implementing the action points

It was concluded that no new process is needed in order to achieve the above goals, as the existing processes agreed at Luxembourg in 1997, Cardiff in 1998 (EU9806109F) and Cologne in 1999 (EU9906180N) "offer the necessary instruments, provided they are simplified and better coordinated".

However, the European Council will guide and coordinate the process in order to ensure overall coherence and monitoring of progress towards the new strategic goal. From now on, the European Council will hold a meeting each spring which will be devoted to economic and social questions, with work organised "both upstream and downstream" from that Council meeting.

The European Council advocates a "fully decentralised approach" to implementing these targets, actively involving the EU, the Member States, regional and local bodies, the social partners and civil society. The Council also encourages companies to act from a "corporate sense of social responsibility" in the areas of lifelong learning, work organisation, equal opportunities and social inclusion.

Reactions to the Council

The conclusions of the Lisbon European Council have brought a broadly positive response from all the main parties involved. The Commissioner for Employment and Social Affairs, Anna Diamantopoulou, stated that the summit "has brought about a radical change in the political context of our discussions ... the conclusions have set Europe's economic and social agenda for the next decade."

Antonio Guterres, who as Portuguese Prime Minister is currently President of the European Council, stated that the EU now has a "clear strategy, a firm political determination and an effective method of coordination". The President of the European Commission,Romano Prodi, characterised the summit as "a true turning point" and described the introduction of an annual spring summit as "a radical change in our way of working".

The Union of Industrial and Employers' Confederations of Europe (UNICE) has reacted positively to the outcome of the summit. UNICE president Georges Jacobs stated that the business community is "happy with this new momentum in the EU to tackle to high unemployment rates through economic and structural reforms". He noted further that a rapid implementation of the action points agreed at Lisbon is absolutely necessary "to enable Europe to catch up in the new and fast-moving e-economy". UNICE also welcomes the fact that the European Council has set a number of concrete targets and a timetable for achieving these, and urges Member States to go further by imposing shorter and "sufficiently ambitious" deadlines.

The initial reaction of theEuropean Trade Union Confederation (ETUC) to the European Council's conclusions has also been broadly positive. ETUC general secretary Emilio Gabaglio stated that "the Lisbon Council has marked a change of spirit and priority as far as addressing the problems facing the European economy is concerned. Stability is no longer the dominant feature. Growth and employment are also being taken into account." ETUC also welcomes the European Council's recognition of the social partners' role in this whole process and appreciates the encouragement given to the social partners to negotiate agreements in the areas of innovation and lifelong learning, noting that trade union proposals on these issues have already been drawn up and are awaiting a response from European-level employers (EU0001224F).

However, ETUC is disappointed that a trade union proposal establishing a timetable for the reduction of unemployment was not included in the European Council's conclusions. It also notes that the second half of 2000, under the French Presidency, will be crucial for issues such as labour market modernisation and the extension of workers' rights to information and consultation, neither of which were mentioned at the Lisbon Council.

Commentary

This latest European Council devoted to employment differs slightly from its predecessors in a number of ways. First, it is the first of its kind to be explicitly linked to the development of new technology and to involve debates on how this rapid change can be used to raise employment levels. It is clear that the EU feels that it is lagging behind other economies, and in particular that of the USA, in terms of its harnessing of the potential of the new "knowledge economy". Second, this Council has introduced no new process to tackle unemployment, in view of the fact that three such processes, agreed at Luxembourg, Cardiff and Cologne, already exist and that it would be unwise to muddy the waters by introducing a "Lisbon process". Instead, the emphasis is on the better utilisation of those processes and facilities which are already in place.

This project is clearly a long-term strategy designed to overhaul the European economy over the coming 10 years. While the emphasis is on a coordinated approach within a European-level framework and therefore leaves much to be determined at local level, with the involvement of the social partners, a number of clear targets have been set in the areas of training, employment levels and labour market participation rates for some groups of workers, notably women. These targets have been welcomed by all concerned, with some parties, such as UNICE, arguing for the most rapid implementation possible at national level.

In terms of achieving any noticeable and lasting impact upon unemployment levels in the EU, much will depend on the continuation of strong economic growth in the EU. Constant monitoring of progress towards targets will take place at the annual employment Councils which have now been introduced. (Andrea Broughton, IRS)