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Restructuring and employment: the role of the European Union in anticipating and accompanying restructuring in order to develop employment

The main goal of this communication is to suggest measures intended to anticipate and accompany the restructuring of enterprises in order to maintain employment. It is a response to a threefold challenge: ensuring that enterprises can adapt quickly, increasing competitiveness and ensuring that workers remain employable.

ACT

Communication from the Commission of 31 March 2005, Restructuring and employment - anticipating and accompanying restructuring in order to develop employment: the role of the European Union.

SUMMARY

This communication is fully in line with the updated Lisbon Strategy which, in addition to higher and more sustainable growth, focuses on job creation. It proposes measures to respond to the social and economic cost of the restructuring of European enterprises.

THE CURRENT CHALLENGES

It is estimated that, every year, 10% of European enterprises are set up and destroyed. In the light of this, the European Union has long been applying policies and instruments to accompany these developments, in particular in the iron and steel, shipbuilding and textiles sectors. These measures do not relate solely to sectors in difficulty. They may also involve the establishment of strategies for many other sectors.

At enterprise level, restructuring is the permanent reshaping of the fabric of production by several factors:

  • the development of the European Single Market and globalisation have allowed competitiveness to be improved and new, high quality jobs to be created;
  • technological innovation generates new applications which, in turn, lead to more creative, higher-quality jobs;
  • developments in the regulatory framework and significant changes in consumer demand (ageing population and environmental issues) lead to changes in products and labour markets.

From the workers' point of view, restructuring often puts a large number of people out of work at the same time; often the least qualified and most vulnerable are affected first. Moreover, restructuring is having a major impact in certain European countries that are still in transition.
It is therefore important to help people who have been made unemployed to quickly find new jobs of an equivalent quality and to provide responses for the entire territory of the European Union by anticipating change through proximity to regions and their populations (identification of potential comparative advantages).

THE ROLE OF THE EUROPEAN UNION

Although most of the social and economic challenges thrown up by restructuring are matters for the national authorities, the European Union can intervene through:

  • policies which contribute to anticipating and accompanying restructuring (employment policy, financial support instruments, industrial and company policy and rural development policy);
  • the identification of sectoral trends and intervention instruments;
  • recognising the role that the social partners can play in the phase preceding anticipation, and which characterises the change.

COMMUNITY POLICIES IN ACTION

Reform of the financial instruments and the role of the structural funds

The draft new European Social Fund (ESF) regulations reaffirm the latter's role in funding measures to anticipate and manage restructuring by improving the adaptability of workers and enterprises, investing in human resources and lifelong learning and establishing employment pacts at national, local and regional level.

The European Regional Development Fund will also play a major role, thanks to investment in research and development, dissemination of innovation and the creation of infrastructures.
8. In the area of rural development, the Agriculture and Rural Development Fund should allow sectoral policies (in agriculture, industry, services) and territorial policies (regional, rural, urban, local) to complement each other in order to optimise the impact on employment.

Moreover, the Commission recommends that a contingency reserve for unforeseen events be created within the structural funds and proposes the creation of a growth adjustment fund of one billion euros per year.

Finally, other programmes can contribute to managing change more effectively, for example the research framework programme, the education and training programmes and the integrated lifelong learning programme.

Industrial policy

As part of the implementation of the revamped industrial policy, as set out in the Communication of April 2004, the Commission proposes improving the regulatory framework applicable to companies and supporting innovation and competitiveness. A new communication on the sectoral dimension of industrial policy is to be drafted in 2005. This communication will set out how the Commission intends to monitor more closely the sectors that are at risk.

The Commission is proposing the launch of joint technological initiatives, such as the action plan for ecotechnologies to fund programmes for the development of social products and services, the aim being to create a competitive advantage that will open up new markets and create new jobs.

Competition policy

The Commission is focusing on the strict application of the competition rules, including in the area of state aid, as well as monitoring mergers. It is proposing:

  • a reform of the state aid monitoring policy, encouraging Member States to award aid in sectors contributing most to growth and jobs;
  • a new regulation on mergers in order to facilitate industrial restructuring.

Other policies and instruments

14 .In order to better anticipate and accompany restructuring, the Commission wishes to:

  • improve protection of intellectual property and step up the fight against forgery, and continue to act to ensure that the Doha Round of negotiations on global free trade is a positive factor for development;
  • revise the European Employment Strategy during 2005, in order to focus on the priorities for anticipating and managing restructuring;
  • step up the role of the European Monitoring Centre on Change which will be called on to develop tools for the quantitative and qualitative analysis and monitoring of restructuring;
  • increase the convergence of and synergy between policies by way of an internal task force involving the relevant Commission departments and involving regular dialogue with the European Parliament and the Council.

CONSULTATION OF THE SOCIAL PARTNERS

This Communication launches the second phase of consultation of the European social partners on company restructuring and European works councils. The Commission will be analysing the results of this consultation before the 2006 Tripartite Social Summit.

Two other initiatives are planned:

  • publication of a new communication on the social responsibility of enterprises, showcasing positive initiatives taken by enterprises in the event of restructuring;
  • the creation of a Restructuring Forum, the mission of which will be to monitor trends and promote link-up between the various initiatives.

CHANGING THE REGULATORY FRAMEWORK

This communication recalls the modernisation and simplification measures already provided for in the Lisbon programme of action and recommends the following initiatives:

  • a new Green Paper on labour law development which will analyse the role of labour law in effective transitions;
  • a new proposal for a directive on improving the portability of supplementary pension rights, so as to facilitate the mobility of workers within the Community.
Key statistics
  • Between 1977 and 2002, Europe created 30 million jobs, with an increase of more than 44 million in services and a loss of at least 7 million in industry and 7.5 million in agriculture.
  • Each year, 10% of European enterprises are created and destroyed.
  • Between 5 000 and 15 000 jobs are created and destroyed every day on average in each of the Member States.
  • Employment in the services sector has risen in the past 20 years, employing two out of three people in 2003.
  • Employment in business services has increased by 25% over the last five years.
Last updated: 15.09.2005
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