Commission issues annual employment package

The European Commission launched its annual 'employment package' in September 2001. The performance of Europe's labour markets is praised, although recommendations on how to improve labour market strategy are made to all Member States. The Employment and Social Policy Commissioner also warned that the current strategy must continue, despite the likelihood of an economic downturn.

The European Commission's latest annual 'employment package'- comprising proposals for a

joint employment report, recommendations to Member States and Employment Guidelines for 2002- was issued on 12 September 2001.

In the draft joint (Commission/Council) employment report - which is separate from the Employment in Europe 2001 report, issued in July 2001 (EU0107230F), but draws many of the same conclusions - the Commission generally praises the labour market performance of the Member States over the past year, noting that 2000 saw the strongest employment growth for a decade. Correspondingly, the overall employment rate increased from 62.3% of the working age population in 1999 to 63.3% in 2000. Unemployment also fell, from 9.1% in 1999 to 8.2% in 2000. The employment rate of women grew particularly strongly, from 52.8% in 1999 to 54% in 2000. The report notes that the EU is therefore well on the way to fulfilling the employment targets set by the Lisbon (EU0004241F) and Stockholm (EU0104208F) European Council meetings of an overall employment rate of 67% by 2005 and 70% by 2010, and a female employment rate of 57% by 2005 and 60% by 2010.

In terms of sectors, the report states that the high-technology sectors accounted for more than 60% of job creation during the period from 1995 to 2000.

Nevertheless, the report maintains that there remain some key areas of weakness which must be addressed in the future, notably the employment rate of older workers, long-term unemployment, youth unemployment and gender gaps. The draft report will be considered at the European Council meeting in Laeken in December 2001.

Recommendations to Member States

The Commission praises all of the Member States for their labour market performance over the past year, although, in its view, all countries still have some problematic labour market areas or structural weaknesses which need addressing. It therefore proposes that the Council of Ministers issue a number of recommendations to each Member State.

Youth and long-term unemployment

Youth and long-term unemployment is a theme running through many of the recommendations to Member States. The Commission advises Belgium, Denmark, Greece, France, Italy, Spain, Sweden and the UK to concentrate on this issue, looking at areas such as the modernisation of public employment services, and increasing the efficiency of active labour market policies and tax and benefit systems in order to ensure that there is sufficient incentive to enter and remain in the labour market.

Increasing labour market participation

Increasing labour market participation is an issue which, according to the Commission, needs to be addressed by most Member States. Many countries are advised to increase labour market participation among older workers, largely by looking at present early retirement incentives and tax and benefit schemes. A number of countries are urged to address labour market problems relating to ethnic minorities and immigrant workers. Recommendations in these areas are proposed for all Member States with the exception of Finland, Ireland, Portugal and the UK.

Lifelong learning

The need to draw up and implement a comprehensive and coherent lifelong learning strategy is seen by the Commission as vital if Member States are to increase productivity (cited particularly in the case of Portugal and the UK) and to ensure an adequate supply of well-trained and employable workers onto the labour market. It notes that many Member States have not yet implemented this approach satisfactorily and has proposed recommendations to all Member States with the exception of Denmark, Finland, the Netherlands and Sweden.

High levels of tax on labour

The continuing high level of tax on labour is an ongoing problem for a number of Member States, according to the Commission, which states that if both employee and employer social charges can be lowered, particularly in the case of low-income jobs, this will provide more of an incentive for people to enter the labour market. It has therefore proposed recommendations to Belgium, Denmark, France, Germany and Sweden.

Equal opportunities

This fourth pillar of the employment strategy has been somewhat neglected in recent years, in the Commission's view. This time, the Commission focuses on the notion of mainstreaming, stating that overall labour market participation rates cannot be raised unless more women enter the labour market. Particularly problematic issues here include the lack of affordable childcare facilities in many countries, an ongoing gender pay gap and the continuation of occupational and sectoral gender segregation. This latter issue is reported to be a problem in Sweden, despite very high rates of female labour market participation. The Commission has proposed recommendations on some aspect of equal opportunities to all Member States with the exception of Belgium, Denmark, France and the Netherlands.

Regional imbalances

Although the labour market performance of all Member States has improved significantly over the past year, the Commission highlights specific regional imbalances in many Member States. In some countries, such as Belgium and Spain, the Commission recommends that the mobility of labour between regions be improved. It has also proposed recommendations to Finland and Ireland on ways in which to overcome poor performance in some regions.

Involvement of the social partners

One of the key elements of the European employment strategy is the involvement of the social partners in the drawing up of Member States' National Action Plans (NAPs) for employment. Assessing the extent to which this is taking place, the Commission notes that social partner involvement is lacking in some countries, notably Finland, France, Greece, Portugal and the UK. The UK is singled out in particular as having no national framework for general social partner consultation.

Guidelines for 2002

The Commission's draft Employment Guidelines to Member States for 2002 contain relatively minor amendments to the 2001 Guidelines (EU0010276F). In part, the changes that have been made reflect the debates and conclusions of the March 2000 Lisbon summit and the March 2001 Stockholm summit:

• following the conclusions of the Stockholm summit, a new horizontal objective is added to the guidelines, obliging Member States to ensure that policies across the four pillars of the employment strategy contribute to raising 'quality in work'. This should include elements such as skills, lifelong learning and career development, as well as wider labour market issues such as gender equality, health and safety, flexibility and security, inclusion, access to the labour market, the organisation of work, work-life balance, social dialogue, worker involvement, diversity, non-discrimination, overall performance and productivity;

• the new employment targets agreed at the Stockholm summit are incorporated into the guidelines. These are the intermediate targets of an overall employment rate of 67% and a female employment rate of 57% by 2005 and a 50% employment rate for older workers (aged 55-64) by 2010. Member States are more strongly encouraged to set national targets within this framework, in view of the fact that the response of Member States to this invitation in the past has been 'limited';

• in response to a perceived need to encourage labour market mobility, the employability pillar contains a more strongly-worded guideline obliging Member States to encourage the promotion of occupational and geographical mobility; and

• the equal opportunities pillar includes a more strongly-worded guideline encouraging the Member States to reinforce their efforts to reduce the gender gap in terms of labour market participation and both occupational and sectoral segregation. Further, it urges Member States to adopt a 'multi-faceted' strategy to achieve pay equality between men and women.

Commentary

Launching this year's annual employment package, the Employment and Social Policy Commissioner, Anna Diamantopoulou, stated that: 'EU labour markets are reforming, results have been positive so far but government, business and unions must persist with the reform policies we have agreed on - regardless of any deterioration in the world business climate. Economic cool-off must not lead to policy cool-off.' It is certainly true that major steps forward have been taken over the past four years in terms of increasing the overall employment rate in the EU and decreasing unemployment. Just how much of this success is due to the robust economic climate of the past few years and how much is specifically due to the efforts of the European employment strategy is a moot point, although a coordinated and well thought-out approach to labour market strategy is doubtless a good idea. It is also true, however, that the coming year may see a slowdown in the world economy which is likely to affect Europe's labour markets. The real test for the employment strategy will therefore be to see if it can carry on improving labour market performance in the context of an economic downturn. (Andrea Broughton, IRS)