Employment Summit agrees limited package of measures to combat unemployment

European political leaders, meeting in Luxembourg on 20-21 November 1997 for a special Employment Summit, agreed a limited package of measures aimed at improving employability, supporting entrepreneurship, increasing adaptability and strengthening equal opportunities. However, the European Council failed to agree on many of the ambitious targets placed on the negotiating table prior to the summit.

On 20 and 21 November 1997, European heads of state and government met in Luxembourg for the much anticipated Employment Summit- the first ever such European Council meeting dedicated to the issue of how to address the problem of persistent unemployment in the European Union. The main decisions reached by the summit were as follows:

  1. The employment provisions of the draft Amsterdam Treaty are to be put into effect immediately and guidelines for Member States' employment policies for 1998 adopted by the end of 1997.
  2. A twice-yearly meeting between the social partners, the Council "troika" (the political leaders of the past, present and future Council Presidencies) and the European Commission is to be instituted to review employment policy and the implementation of the 1989 "Social Charter".
  3. High-level expert working groups are to be set up to analyse industrial change and anticipate and guard against detrimental economic and social consequences.
  4. An additional ECU 10 billion of European Investment Bank (EIB) funding is to be made available to support small and medium-sized enterprises (SMEs), new technology and trans-European networks.
  5. An ECU 450 million "European Employment Initiative" to aid innovatory and job-creating SMEs is called for.
  6. Member States are called on to strengthen their economic policy coordination.
  7. Specific targets are recommended for the 1998 employment policy guidelines in terms of youth and long-term unemployment and of training.
  8. The social partners are invited to negotiate agreements on modernising work organisation, covering flexibility and working time.

The coordination of employment policy

The Member State political leaders at the Employment Summit decided to immediately put into effect the special provisions contained in draft Article 128 of the Amsterdam Treaty on a coordinated employment strategy (EU9707135F). This is essentially a formalisation of a process which was developed to follow up the implementation of the conclusions of the 1994 Essen summit. It is also similar to the procedure which already exists for the coordination of economic policies. Essentially, the new process will follow a number of stages:

  • each year, the European Council will examine the employment situation in the EU and adopt conclusions, based on a joint report from the Council of Ministers and Commission;
  • on the basis of the European Council's conclusions, the Council of Ministers, acting on a proposal from the Commission, will each year draw up guidelines which the Member States will take into account in their employment policies;
  • each Member State will submit to the Council of Ministers and the Commission an annual report on the measures it has taken to implement its employment policy in the light of the EU guidelines;
  • at the end of each year, the Council of Ministers will examine how the guidelines are being implemented and, if it considers it appropriate, make recommendations to Member States (on a recommendation from the Commission); and
  • the Council of Ministers and the Commission will then draw up a joint annual report to the European Council on the employment situation in the EU, and on the implementation of the guidelines, thus triggering the cycle for the following year.

The 1998 employment guidelines

The Employment Summit examined the Commission's Proposal for guidelines for Member States' employment policies 1998 and, on the basis of this, adopted the following recommendations:

  • Member States should ensure that every unemployed young person is offered a new start before reaching six months of unemployment, in the form of training, retraining, work practice, a job or other "employability measure". Unemployed adults should also be offered a "fresh start" before reaching 12 months of unemployment through one of the above measures or by accompanying individual vocational guidance.
  • Member States should endeavour to increase significantly the number of persons benefiting from active employment policy measures. In order to increase the proportion of unemployed people receiving training, a target should be set, in light of the starting situation, of gradually achieving the average of the three most successful Member States and at least 20%.
  • In order to ease the transition from school to work, Member States should aim to reduce substantially the number of young people who drop out of the school system early, and to make sure that they are adequately equipped to meet the needs of the labour market in the emerging "information society".
  • In order to encourage the start-up and success of small businesses, Member States should reduce the financial costs and administrative burdens for businesses, especially when hiring additional workers, as well as reducing any existing barriers to self-employment.
  • Opportunities for job creation, particularly at the local level in the service economy and in new activities linked to needs not yet satisfied by the market, need to be exploited better. This should be achieved by reducing any obstacles in the way of such measures. Targets should be set to reduce the overall tax burden on businesses to create a more employment-friendly environment. The possibility of the introduction of a tax on energy or pollutants is to be examined, as well as the advisability of reducing the rate of VAT on labour-intensive services not exposed to cross-border competition.
  • In order to modernise work organisation, Member States should examine the possibility of incorporating in their law more "adaptable" types of contract. Such forms of employment should enjoy adequate security and higher occupational status, compatible with the needs of business.
  • To support the adaptability of enterprises, Member States should re-examine the obstacles, in particular tax obstacles, to investment in human resources and the possibility of granting tax incentives for in-house training.
  • In order to reduce the persistent gender gap in the labour market, Member States should take measures to reverse the under-representation of women in certain sectors and occupations and their over-representation in others. To encourage an improved reconciliation of work and family life, Member States should seek to improve care provision where needs are currently unmet and ease the return to working life. Special attention should also be given to the problems facing people with difficulties in the labour market.

The Council invited the Commission to submit its draft employment guidelines for 1998 as soon as possible, so that they can be considered by the December 1997 European Council meeting, and called for the national employment action plans based on these guidelines to be submitted to the Council for examination before the European Council in Cardiff in June 1998, so that guidelines for 1999 can be set in December 1998.

The role of the social partners

The European Council also examined ways of involving the social partners more closely in the future determination of a coordinated employment strategy. The Presidency Conclusions stated that, as part of the necessary strengthening of the social dialogue, the social partners at all levels will be involved in all stages of this approach and will have their contribution to make to the implementation of the employment guidelines. It was decided that there should be regular twice-yearly meetings between the social partners, the Council "troika" and the Commission before each European Council meeting: "In the course of such contacts between the Council and the social partners, a detailed exchange of views will in particular be held on the implementation of the 1989 Community Charter of Fundamental Social Rights of Workers".

The European Council called on the social partners to:

  • conclude as soon as possible agreements with a view to increasing the possibilities for training, work experience, traineeships or other measures likely to promote employability; and
  • negotiate, at the appropriate levels, agreements to modernise the organisation of work, including flexible working arrangements, "with the aim of making undertakings productive and competitive and achieving the required balance between flexibility and security". Such agreements may, for example, cover "the expression of working time as an annual figure, the reduction of working hours, the reduction of overtime, the development of part-time working, lifelong training and career breaks".

The wider policy context

The Luxembourg Employment Summit recognised that employment policy could not be considered in isolation and in particular emphasised the importance of maintaining macroeconomic stability and of greater coordination of economic policies. The importance of the further implementation of structural reforms in the run up to Economic and Monetary Union (EMU) was highlighted.

The summit also dealt with the need for a more "proactive" industrial policy. It felt that particular attention should be given to sectors undergoing major industrial change, and called for a high-level expert working party to be set up to analyse likely industrial changes in the Community and to look into ways of anticipating them better. After consultation of the social partners, a first report should be submitted to the Cardiff European Council.

Funding employment growth

The summit approved two new financial initiatives designed to help stimulate employment growth.

The EIB's Amsterdam Special Action Programme

This European Investment Bank initiative, which will run until the end of 2000, involves three sets of complementary measures:

  1. the creation of a ECU 1 billion special fund to help fund high-technology and high-growth SMEs;
  2. the development and reinforcement of the EIB's financing in the areas of education, health, urban environment and environmental protection; and
  3. giving a new impetus to financing trans-European networks and other large infrastructure networks.

These measures will provide an additional ECU 10 billion of funding above the Bank's current activity.

The European Employment Initiative

The European Council welcomed the European Parliament's initiative aimed at providing for the strengthening of budgetary resources earmarked for employment. It called on Parliament and the Council to formalise their agreement and the Commission to make proposals, as soon as possible, for new financial instruments to support innovatory and job-creating SMEs, so that the Council can adopt them speedily.

Initial reactions to the outcome of the summit

The European Trade Union Confederation (ETUC) and the Union of Industrial and Employers' Confederations of Europe (UNICE) have both welcomed the outcomes of the Luxembourg Employment Summit. In a declaration following the summit, Emilio Gabaglio, the general secretary of ETUC, called the outcomes of the summit "a new base on which to build". He argued that they could mark a new European approach to fighting unemployment and welcomed the fact that the summit's conclusions were "more concrete and less wordy than we have sometimes seen". While the first set of measures agreed may be limited, Mr Gabaglio argued that the procedures which have been put in place should make more far-reaching steps possible in future. In particular, he welcomed the provisions for the increased involvement of the social partners in these processes and stated that ETUC was keen to take an active role in ensuring the dynamics of this process of greater coordination of policies.

European employers, represented by UNICE, welcomed in particular the emphasis placed by heads of state on the importance of sound macroeconomic policies and the completion of the internal market. UNICE also favours the flexibilisation of employment relationships and working conditions, the improvement of training systems and the simplification of administrative and legislative provisions, as well as the reduction of taxes on SMEs in particular.

Commentary

Despite the fact that the Employment Summit failed to agree many of the specific targets placed on the negotiating table beforehand, such as the reduction of EU unemployment from nearly 11% to 7% and creating 12 million jobs within five years, there seems to have been something to please everyone in the accord reached.

Prior to the summit, Jean-Claude Juncker, the Luxembourg premier, had urged his 14 fellow heads of state and government to agree "realistic" guidelines and a method to follow them up. The measures agreed strike a balance between the French government's call for an activist approach to job creation and German reservations about EU-wide action which could infringe national governments' powers and dilute the commitment to fiscal discipline in the run-up to EMU.

Not only was the political and economic climate more favourable to reaching common initiatives than it had been 1993, when Jacques Delors sought to generate a debate about the relationship between growth, employment and competitiveness, but ambitions had also been substantially scaled down to more achievable targets. Member States were clearly concerned about raising exceptions which could not be fulfilled in the run-up to EMU, and thus potentially causing a backlash against the single currency project and the financial stringency necessary to achieve this goal.

Although the measures agreed are of a rather limited nature, the UK Government, which takes over the Presidency of the Council in January 1998, appears determined to place at the top of the agenda of its Presidency the notions of employability and adaptability, lower non-wage labour costs, increased skills and a particular emphasis on new opportunities for young people and the jobless. These concepts are at the centre of national policies and are mirrored in the package adopted in Luxembourg .

What precisely these measures will mean for the 20,000 workers, mainly from Germany, France and Belgium who took part in a demonstration in Luxembourg on 20 November to protest against mass unemployment on the eve of the summit and the approximately 18 million unemployed in the European Union, remains to be seen as the outcomes of this summit will have to be judged in the light of any achievements made over the next few years. (Tina Weber, ECOTEC Research and Consulting Ltd, and Alan Burnett, infoBASE EUROPE)

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