German Presidency presents draft employment pact

The German Presidency of the EU launched its proposals for a "European employment pact" at an informal meeting of Labour and Social Affairs Ministers on 26 April 1999. The proposed pact emphasises the importance of a strong "synergy" between labour market policies at EU and Member State levels, as well as between wage, fiscal and monetary policies. The draft paper went forward to the June European Council meeting in Cologne.

In April 1999, the German EU Presidency issued Member States with a draft version of a European employment pact entitled European employment pact - Closer cooperation to boost employment and economic reforms in Europe. The idea of such a pact (EU9902156N) to reinforce the European employment strategy (EU9905171F) had been endorsed by the December 1998 Vienna European Council (EU9812141N).

The German Presidency argues that the pact should be based on three mutually supportive objectives:

  • strong interaction and "synergy" between wage developments, fiscal policy and monetary policy;
  • further development and better implementation of the coordinated EU employment strategy within the framework of the process launched at the Luxembourg"employment summit" of November 1997 (EU9711168F); and
  • strengthening structural reforms in accordance with the process launched at the June 1998 Cardiff summit (EU9806109F) in order to improve competitiveness and the functioning of markets for goods, services and capital.

Great emphasis is placed on improving the interaction between national and European employment policies. In particular, the EU Structural Funds and Cohesion Fund should focus on job-creating activities.

Other measures recommended by the Presidency include: boosting the level of investment and the rate of female participation in the labour market; the application of suitable training and labour market policies with the help of the social partners; and the development of an economic environment conducive to innovative companies.

As part of the implementation of the current EU Employment Guidelines (EU9810130F), the pact calls for more attention to be paid to examples of best practice developed by National Action Plans (NAP s) and the setting and monitoring of the objectives and targets set out in the NAPs. The social partners are called upon to improve the organisation of work via framework agreements in this area. Additional attention should also be paid to labour market initiatives for older workers, young workers and the reform of the tax and social security system.

The draft pact was discussed at an informal meeting of EU Labour and Social Affairs Ministers in Brussels on 26 April 1999. At this meeting, ministers were apparently unable to narrow their differences over the kind of policies which need to be pursued to improve the employment situation in the EU. On one side there are countries in favour of setting an EU-wide 3% economic growth target over the next few years in order to achieve a significant cut in the number of unemployed people. On the other are those which emphasise the importance of a more flexible labour market. In addition, the Netherlands has made a proposal to apply a new employment guideline based on keeping track of wages and wage costs in the Member States.

These proposals were to be discussed further at a joint meeting of the Economic and Financial Affairs Council and Labour and Social Affairs Council on 25 May 1999, and the member of the European Commission responsible for employment and social affairs, Pádraig Flynn, called upon Member States to end the months of unproductive debate on this issue. The pact was to be discussed at the Cologne European Council on 3-4 June.

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