Employment in Europe 2001 report highlights improved labour market performance

The European Commission's Employment in Europe 2001 report was published in July 2001. The report praises the EU for increasing its overall employment rate, stating that the target of a participation rate of 70% by 2010 is within reach. However, it also notes that some challenges remain, particularly in the area of skills, labour market mobility, gender gaps, youth unemployment and the participation of older workers.

The European Commission published its latest annual employment report on 20 July 2001. Entitled Employment in Europe 2001, recent trends and prospects, it finds that Europe's labour markets have performed well over the past year. In a foreword to the 143-page document, the Employment and Social Policy Commissioner, Anna Diamantopoulou, states that "the European Union can be pleased with its employment performance in recent years" and that the EU is "well on the way towards a knowledge-based economy and society, creating jobs, reducing unemployment, strengthening the skills base and improving quality". However, she notes that important challenges remain, including the gender gap in participation and employment, making full use of the EU's potential by encouraging more labour market participation among older workers, and reducing unemployment, particularly among young people.

Employment performance

The report states that the overall employment performance of the EU improved "significantly" during 2000. In total, employment grew by 1.8%, compared with growth of 1.6% during 1999. This means that over 3 million jobs were created in 2000, bringing the overall employment rate to 63.3% (compared with 62.3% in 1999). The employment rate has increased in all EU countries since the beginning of the 1990s, with the exception of Sweden, Germany and Finland.

Full-time jobs accounted for almost 70% of net jobs created in 2000 – this is the third consecutive year that more full-time than part-time jobs have been created (full-time jobs accounted for 60% of net job creation in 1999 and 54% in 1998). In 2000, 18% of employees in the EU worked part time, the majority of them women.

Temporary contracts now account for an average of 13.2% of total employment in the EU, with almost a third of those in temporary work moving into permanent employment within a year. However, transition rates out of temporary work vary considerably according to age and gender, with the highest rates of movement into permanent employment found among "prime-age" men.

The report states that there is a real chance of reaching the "feasible challenge" of the target set at the March 2000 Lisbon European Council (EU0004241F), of an EU employment rate of 70% by 2010. This would entail an overall annual employment growth of 1.1% or the creation of some 17 million new jobs.

The main drivers of employment creation are cited as women and high-technology and "knowledge-intensive" sectors. Women took over 1.6 million of the 3 million jobs created in 2000, resulting in an increase in the female employment rate from 52.8% in 1999 to 54% in 2000. High-technology and knowledge-intensive sectors accounted for more than 60% of total job creation between 1995 and 2000 for all types of workers, not just high-skilled workers.

Declining unemployment

Unemployment fell to an average of 8.2% across the EU in 2000, the lowest rate since 1991. The report notes that inroads are now being made into youth unemployment, although, at 16.1%, it is still almost twice as high as average unemployment. Long-term unemployment (unemployed for over 12 months) also fell, to an average of 3.7% in the EU.

Older workers

The report notes that activity rates among older workers vary considerably across the EU, ranging from 69.4% in Sweden to 27% in Belgium. It states that reforms are still needed to keep older people in the labour market – the Stockholm European Council, held in March 2001 (EU0104208F), set a target of increasing the employment rate of older workers to 50% by 2010.

Skills and quality of work

The average skill level of the workforce continues to rise, particularly among women – in 2000, some 25% of the EU labour force had tertiary education and 70% at least secondary education, although over 40% of unemployed people have less than secondary-level education. The report stresses that upgrading of skills is essential.

In terms of quality of work, more than 80% of EU workers state that they are satisfied with their job, with the percentage rising with tenure, skills, age, work specialisation and employer-provided training. The report states that fears that increasing employment in the service sector would lead to a proliferation of low-quality jobs have not materialised. However, job quality differs greatly between Member States.

Future prospects for Europe's labour markets

The report is optimistic about the future, stating that there is a real possibility that the average employment rate may reach 65% by 2002, although this depends on future economic growth and whether the European employment strategy is "vigorously pursued".

Nevertheless, the report highlights a number of important remaining challenges, noting that the unemployment rate in the EU is still twice that of the USA. There remain considerable variations in levels of employment across individual EU Member States and real possibilities of skills mismatches, potentially resulting in labour shortages in some regions or occupations. It highlights skills promotion and labour market mobility as key issues in the fight to reduce unemployment and avoid skills mismatches.

Commentary

This latest annual employment report shows that real progress is being made in the fight against unemployment in the European Union. It is clear that much of this is dependent on favourable economic circumstances, and therefore the future is relatively uncertain as the EU economy begins to slow down. However, much of the credit must also be given to the EU employment strategy, which is now about to enter its fifth annual cycle. Within the framework of this strategy, EU Member States have worked hard to reduce overall unemployment rates, concentrating on active labour market policies, improving skills levels and integrating particular groups of people into the labour market, such as those with low skill levels, young workers, women and older workers. The European Commission's assessment of Member States' 2001 employment performance, along with recommendations for improving performance and guidelines for 2002, is due in September 2001.

Such is the progress of the EU employment strategy that the goals set at the 2000 Lisbon summit of an overall 70% employment rate now look within reach. Indeed, the intermediate goal of a rate of 65% by 2005 looks set to be reached in 2002 if circumstances remain favourable. (Andrea Broughton, IRS)

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