European social partners issue joint declaration on Confidence Pact for Employment

After a long period of negotiation, the European-level social partners issued a joint declaration late in 1996 on the priorities and actions proposed by Jacques Santer in his Confidence Pact for Action on Employment in Europe. However, disagreements remain over a number of issues in the debate on how to address the problem of unemployment in Europe.

At a special Social Dialogue Committee meeting held on 29 November 1996, the European Trade Union Confederation (ETUC), the Union of Industrial and Employers' Confederations of Europe (UNICE), and the European Centre of Enterprises with Public Participation (CEEP) adopted a joint contribution to the Confidence Pact for Action on Employment in Europe, in preparation for the Dublin European Council summit held in December. In their statement, the social partners express their deepest concern at the high level of unemployment which continues to prevail across the EU, and criticise what they perceive as a lack of coordination and implementation of a Europe-wide strategy to combat the problem effectively. They pronounce themselves in favour of Commission President Santer's proposal for a Confidence Pact, and see their declaration as "a committed response to his proposals on the themes of youth unemployment, lifelong learning, and better use of Structural Funds for job creation, in a macroeconomic environment conducive to growth and employment".

In the document, the social partners reaffirm their commitment to the current negotiations aimed at reaching an accord on a European framework agreement on part-time work. The European social partners equally reiterate their support for the "Essen process" with regard to employment policies, and argue that monitoring should be reinforced, providing an extended platform for the involvement of the social partners.

The involvement of the social partners in the European employment debate

What has become known as the "Essen process" was instituted by the European Council held in Brussels in December 1993, with the aim of monitoring the implementation of the Action Plan on Employment adopted by the heads of state in Brussels. The main product of the Essen process is the annual publication of a review of employment and labour market policy developments at EU level as well as in the member states. The first such review took place at the European Council held in Essen in December 1994. The recommendations on priority areas for policy intervention, stipulated in the conclusions of the Essen summit, have shaped the structure of the subsequent monitoring process and reports. These priority areas are:

  • vocational training (the improvement of education and training systems, the promotion of life-long learning and assistance with adaptation to structural change);
  • increasing the employment intensiveness of growth (more flexible work organisation, responsible wage setting and the promotion of employment creation initiatives);
  • reducing non-wage labour costs;
  • improving the effectiveness of labour market policy;
  • improving measures to help groups which are particularly hard hit by unemployment (young people, long-term unemployed people, older workers, unemployed women); and
  • the promotion of equal opportunities

As part of the post-Essen process, a series of member state seminars were held, which focused on the themes of some or all the priority areas outlined above and how these are being addressed at the national level. In most, but not all, member states, national social partner organisations were invited to contribute.

EMU must have employment element

In their November declaration - - Action for Employment in Europe: A Confidence Pact, Contribution from ETUC, UNICE, CEEP- the social partners acknowledge that sound and sustainable growth is an essential condition for job creation. They also argue that the negotiation and introduction of necessary reforms in the area of flexibility and the functioning of the labour market could produce a significant impetus for job creation. Measures to stimulate small and medium-sized companies (SMEs) are considered to be particularly important. The social partners continue to support the objective of Economic and Monetary Union (EMU), but warn that steps must be taken to ensure that EMU does not become associated with high unemployment in the mind of the public. They voice agreement with the European Commission's assessment that the completion of the Single Market will have a positive effect on employment creation, as demonstrated in its recent report on The impact and effectiveness of the Single Market.

ETUC, UNICE and CEEP express their disappointment at the delay in launching the Trans-European Networks - a major plank of Santer's Confidence Pact - which resulted from the Council's refusal to an additional ECU 1,000 million funding, and call upon the Council to reconsider its decision. They also stress the need to give new impetus to concrete developments of the European dimension in taxation, particularly with regard to supporting SME formation and job creation. The social partners conclude by appealing to the Dublin Summit to support the actions for employment defined in the Confidence Pact.

The end of a long process of negotiation

This joint contribution is the most recent step in a long process which has been beset with difficulties. The idea for a Confidence Pact on Employment was first raised by President Santer on 31 January 1996 in a speech to the European Parliament. He urged all political, social and economic actors to join together to help fight unemployment, which, he argued could endanger the "European social model" and undermine confidence in EMU. The Pact was to have the following three main elements:

  • to continue the move towards EMU and the single currency and the associated macroeconomic strategy of reducing public debt and budgetary deficits at the member state level;
  • to reinforce Community initiatives to encourage investment growth and employment, for example through Trans-European Network projects, support for SMEs and policies linking environmental protection and employment creation; and
  • to strengthen the coordination between member states and stimulate social partner involvement to achieve a "multiplier effect in employment".

In order to explore the social partners' views on labour market flexibility and organisation, labour costs and social security, education and training, and job creation, President Santer initiated a "Round Table on Employment", in the hope that this would lead to a joint declaration in the run-up to June's tripartite conference in Rome and European Council in Florence. The Round Table took place on 28-29 April 1996 with the participation of the Commission, ETUC, UNICE, CEEP, UEAPME (the European Association of Craft, Small and Medium-Sized Enterprises), EuroCommerce (the European employers' organisation representing the retail, wholesale and international trades), CEC (Confédération Européenne des Cadres, representing managerial staff ) and two French unions not affiliated to ETUC. The Round Table debate was influenced from the beginning by the very different perceptions with which employers and trade unions entered into the discussions. While ETUC welcomed Santer's initiative as a "jobs pact" and an acknowledgement on the part of the Commission that EMU required a job-creation dimension, UNICE approached the debate in the belief that the Round Table should address the problems of excessively high labour and social costs and rigidities in the labour market.

The Round Table failed to reach a joint declaration and its outcomes highlighted these divergent views. In the area of flexibility the trade unions were particularly concerned to safeguard employees' terms and conditions while employers sought to ease existing legislation. Nevertheless, both sides expressed themselves in favour of positive forms of flexibility such as teamworking, multiskilling and new patterns of work and working time, as well as career breaks and retraining. On labour costs, employers called for further reductions to encourage recruitment. The trade unions, on the other hand, expressed caution on introducing further wage restraints, as they felt that these had so far proven ineffective in delivering jobs. The Commission seeks to concentrate its actions on lowering the cost of employing the least skilled workers. Although they agreed that there was a mismatch between supply and demand in training and employment, employers and trade unions failed to agree on the causes of this mismatch: unions insisted that the problem was rooted in the overall lack of jobs, while employers blamed deficient education and training systems. During the discussions, UNICE remained very cautious about the aims and potential success of a social pact at European level and expressed itself in favour of voluntary bilateral agreements between workers and employers.

As a result, when the Pact - Action for Employment in Europe: A Confidence Pact (CSE (96) 1 final) - was finally adopted by the Commission on 5 June 1996, it restricted itself to outlining a number of priority areas for action while stressing that there were no intention that it should lead to any binding legislative texts. The Confidence Pact encourages member states:

  • to engender a propitious macroeconomic climate based on monetary stability, sound financial policies and EMU through the reduction of public sector borrowing, wage restraint and the lowering of indirect labour costs;
  • to harness the full potential of the internal market by completing it and helping SMEs. The Commission placed particular emphasis on the need to adopt the long stalled European Company Statute, and the simplification of the regulatory framework and financial environment for SMEs;
  • to speed up the reform of employment systems (eg, the improvement and better targeting of services provided by national employment administration system, the mobilisation of local actors, measures to improve the employability of young people, encouraging greater coherence between income replacement and direct taxation, new forms of work organisation, and improving access to education and training); and
  • to ensure that European structural policies serve the aim of job creation.

The prospects for the Pact were diminished in October 1996, when the member states' economic and finance ministers refused to authorise the additional ECU 1,000 million for Trans-European Networks.

Commission assesses the progress of the Confidence Pact

In his interim report on the Confidence Pact, published for the European Council in Dublin in December 1996, Jacques Santer claimed that the Pact was already a success in a number of areas. In this document, he points to what are perceived to be encouraging economic trends and the transformation of the "climate of distrust" towards EMU. However, he argues that much work remains to be done in 1997 in order to devise a more robust multilateral monitoring procedure to ensure that the requirements for EMU are being met. Member states are called on to improve their budget situation and transfer funds from passive to active expenditure. The report urges governments to work towards removing the remaining barriers to the internal market. In the area of labour market policy, it is argued that much progress has been made, particularly in the presentation of multiannual programmes by the member states. The European Commission argues that it is now important to evaluate further the success or failure of different policies and to make political recommendations on the basis of good-practice assessments. The negotiations entered into by the European social partners on flexibility and working time, and a number of agreements at the sectoral level, (such as the agreement on employment creation concluded by the social partners in the cleaning industry), are judged positively. There is, however, a hint of caution because the Commission perceives the social dialogue to be poorly integrated at the national level and is calling for a major awareness raising campaign. The social dialogue section of DGV is currently piloting a newsletter which seeks to disseminate the outcomes of the European social dialogue process more widely.

Commentary

The joint declaration by ETUC, UNICE and CEEP is as significant for the issues it does not mention as for what it contains, thus highlighting the remaining differences in approach to the question of how to solve Europe's unemployment problem. Differences remain in the approaches to labour market flexibility, with the employers favouring deregulation, and a lowering of labour and social costs in order to improve competitiveness. Trade unions are wary of the introduction of further wage restraint, and of a lowering of social and employment protection. They argue that such measures have failed to deliver sustainable employment. These differences are currently reflected in the negotiations on part-time work, which are nearing deadlock at the time of writing (February 1997).

The European Commission's work programme for 1997 mirrors the priorities of the Confidence Pact, and the proposed legislative instruments in the field of social affairs and employment are restricted to the area of health and safety. The Irish Government's draft outline for the revision of the Treaties, issued in December 1996, specifies the promotion of a high level of employment as an objective and introduces a new title on employment into the Treaty. This seeks to establish a basis in the Treaty for the coordination on employment policy at Community level which has been developed in the post-Essen process. The draft includes the establishment of common guidelines on employment and the annual assessment of national measures with a view to ensuring a consistency of approach. The draft also mentions the establishment of an Employment Committee with an advisory role which would include two members from each member state and from the Commission. In this area, events have overtaken the drafting process as the European Council has already passed a decision to establish an Employment and Labour Market Committee. The Committee held its first meeting on 29 January 1997.

The draft Treaty received a mixed reaction from the social partners. ETUC applauded the inclusion of employment into the Treaty, but criticised what it sees as the absence of the social dimension, and of social rights for workers in particular, enshrining the key elements of the 1989 Community Charter of Fundamental Social Rights of Workers. ETUC supports the inclusion of the "social chapter" (the social policy Agreement annexed to the Treaty on European Union) into the Treaty. UNICE remains sceptical of any extensions of Community powers in the area of labour market and social policy, preferring voluntary actions initiated by employers and employees. (Tina Weber, ECOTEC)

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