Commission issues new employment package

The European Commission issued a new package of proposals aimed at encouraging employment growth in the European Union in September 2000. The package comprises three draft documents – a review of Member States' employment and labour market initiatives in 2000, recommendations for improvements in the implementation of their policies, and Employment Guidelines to Member States for their 2001 National Action Plans on employment.

On 6 September 2000, the European Commission issued an employment package within the framework of the "Luxembourg employment strategy" (EU9711168F), enshrined in Article 128 the EC Treaty. This requires Member States to formulate annual National Action Plans (NAP s) on employment, based on Employment Guidelines issued by the Council of Ministers, on a proposal from the Commission. The Council, on a proposal from the Commission, then evaluates the implementation of these NAPs each year and may, if it considers it necessary, issue non-binding recommendations to Member States on how they might improve their performance. The Council and Commission make an annual joint employment report to the European Council on the employment situation and the implementation of the Employment Guidelines.

Overall assessment

The first document in the new employment package is the draft joint employment report, reviewing Member States' employment policies in 2000 in the light of the Employment Guidelines. In this document, the Commission maintains that substantial progress has been made in terms of structural reforms which are designed to increase "the dynamism and adaptability of Europe's labour markets", but concludes that governments "can and must do more". It concedes that long-term unemployment appears to be on the decrease, but notes that it still accounts for almost half of unemployment in the EU. Further, it maintains that gender differences in terms of employment, unemployment and pay still persist, as do major regional inequalities. Further, participation in lifelong learning is still relatively low, Member States' policies for "active ageing" are limited and bottlenecks in labour supply and skills are building in some areas.

Recommendations to Member States

In 1999, the Commission caused a significant amount of controversy by proposing that the Council issue a number of recommendations on employment policies to individual Member States (EU9909187F). Many countries felt that this should be a "last resort" rather than a regular occurrence.

However, maintaining that recommendations have "played a useful role in focusing Member States' efforts on those aspects of the labour market where performance is acknowledged as being below the level achieved elsewhere in the Union", the Commission has in 2000 once more issued a number of draft recommendations to countries in key areas of labour market policy, as follows:

  • youth and long-term unemployment. Member States should aim by 2002 to offer a new start to young people within six months of becoming unemployed and to all adults within 12 months. The Commission notes that progress in this area is uneven across Member States, and in particular in Greece and Italy. It has proposed recommendations to Belgium, France, Germany, Greece, Italy, Spain and the UK;
  • tax and benefit reforms. The Commission notes that the only countries which have comprehensively reviewed their tax and benefit systems are Denmark, the Netherlands and the UK. It has proposed recommendations on this point to Belgium, Finland, Greece, Spain, and Sweden. In the area of taxes on labour, it notes that the reduction process is slow and that the average tax on employment is 39%, 15 percentage points above that in the USA. It has proposed recommendations on this point to Austria, Belgium, Denmark, Finland, France, Germany and Sweden;
  • skills and lifelong learning. Although it acknowledges that progress has been made, the Commission believes that there is still more to be achieved and it has therefore proposed recommendations to 10 Member States (the exceptions are Austria, Denmark, Finland, the Netherlands and Sweden);
  • older workers. The Commission highlights the differences in the labour market participation rates of older workers in individual countries. It praises Austria, Denmark, Finland, Germany and the Netherlands for their current or envisaged policies in this area, but has nevertheless issued recommendations to Austria, Denmark, France, Germany and Italy;
  • gender mainstreaming and equal opportunities. Noting the difference in employment rates of men and women, the Commission highlights the situation in countries such as Greece, Ireland, Italy and Spain, where the gender gaps in the labour market are greater than 20 percentage points. It also draws attention to the continuing differential between male and female earnings and singles out Spain and Greece as having taken only limited action to improve both the participation rate and the pay of women. It has proposed recommendations to 11 Member States (the exceptions are Belgium, France, Greece and the Netherlands);
  • service sector. Stating that the services sector is a key net jobs creator in the EU, the Commission has proposed recommendations on this point to Greece and Portugal; and
  • modernisation of work. The Commission notes that there is relatively little evidence of comprehensive efforts to modernise work organisation and has issued recommendations to Greece, Luxembourg, the Netherlands, Portugal, Spain and the UK

Employment Guidelines for 2001

The third element of the Commission's employment package is the draft Employment Guidelines to Member States for 2001. The Commission notes that the proposed 2001 Guidelines make some substantial changes and additions to the 2000 Employment Guidelines, reflecting policy developments, the continuing need for structural reforms of labour markets and the goals set at the Lisbon European Council meeting in March 2000 (EU0004241F). In general terms, the draft 2001 Guidelines call on all Member States to set targets of an overall employment rate of 70% and a female employment rate of over 60% by 2010.

More specifically, the Guidelines urge Member States to take action in the following areas:

  • tackling labour shortages, bottlenecks and skills gaps;
  • abolishing the so-called poverty trap and avoiding the creation of the "working poor" and marginalised people;
  • eradicating illiteracy;
  • boosting education policy targets;
  • establishing comprehensive strategies to promote "active ageing" and to help older workers;
  • increasing investment in human resources;
  • investing in education and training in order to build a knowledge-based society;
  • identifying and combating discrimination on the grounds of sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation;
  • developing equal opportunities policies by means of consultation with equal opportunities bodies; and
  • considering the establishment of targets for childcare.

The employment package was discussed at the 16–17 October 2000 meeting of the Employment and Social Policy Council of Ministers (EU0010274F), with ministers broadly welcoming its content. The package will be discussed further at the next Employment and Social Policy Council, scheduled for 28–29 November 2000.


This latest package of employment measures represents the beginning of the third annual round of the European employment strategy. All involved in the strategy tend to agree that this is a welcome process in terms of monitoring the performance of individual Member States' employment strategies. The Commission, which is leading the process, now has a detailed overview, updated each year, of the specific issues concerning individual Member States and what needs to be done to address particular problems. For 2000, its proposed Employment Guidelines addressed the issue of equal opportunities, as it felt that this was the most neglected pillar of the employment strategy. For 2001, although the proposed new Guidelines include substantial references to equal opportunities and ways to combat discrimination, they also include topical issues of concern such as addressing the skills shortages which are now appearing in certain sectors as the labour market tightens. Further, they recognise the continuing problems faced by older workers and, for the first time, make explicit reference to the setting of targets for childcare.

In terms of the effect of the employment strategy, it is clear that unemployment in Europe is falling – the latest figures from Eurostat (relating to August 2000) show that average unemployment across the 15 Member States was 8.3%, down significantly from 9.1% in August 1999. It could be argued that this downward trend in unemployment is largely due to robust economic growth in Europe, but it is likely that the employment strategy has at least made a contribution to rising employment levels. (Andrea Broughton, IRS)

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