Council Recommendation on the implementation of Member States' employment policies (2004)
The recommendation sets out the priorities for the implementation of employment policies by the Member States and the social partners. It calls upon them inter alia to increase the adaptability of workers and enterprises; attract more people to the labour market and make work a real option for all; invest more, and more efficiently, in human capital and lifelong learning; and ensure effective implementation of reforms through better governance. For the first time, the Council recommendations are also addressed to the 10 new Member States of the European Union.
Council Recommendation (EC) No 741/2004 of 14 October 2004 on the implementation of Member States' employment policies [Official Journal L 326 of 29.10.2004]
The 2004 recommendations stem from scrutiny of the national action plans, analysis of the employment guidelines for the period 2003-2005 and the conclusions of the European Employment Taskforce set out in the joint report for 2003-2004. Employment policies are deployed in line with the recommendations for the broad economic policy guidelines (BEPG).
This report concludes that the Member States and the social partners have given limited responses to the Council recommendations of 22 July 2003. The common priorities of the 2004 recommendations are to:
- increase the adaptability of workers and enterprises, inter alia, by promoting flexibility combined with security in the labour market; by creating more and better jobs and raising productivity ;
- attract more people to enter and remain on the labour market and make work a real option for all, inter alia, by building comprehensive active ageing strategies (measures to counter early retirement, more flexible work organisation, using skills to best advantage, providing training),by ensuring personalised services to all those seeking employment, and by enhancing the attractiveness of employment by 'making work pay';
- invest more and more effectively in human capital and lifelong learning, inter alia, by sharing costs between public authorities, companies and individuals; by broadening the supply of training, in particular for the low-skilled and older workers, by stemming early dropping out of school and by improving the relevance of higher education to the labour market;
- ensure effective implementation of reforms through better governance, inter alia, by building broad partnerships including the social partners, civil society and public authorities; where appropriate, by defining targets to reflect the priorities set at European level, and ensuring effective use of public funds by promoting the role and visibility of National Action Plans and through country-specific recommendations for developing mutual learning.
The new Member States need to further develop their efforts to achieve a new balance between flexibility and security, and to improve the health of the workforce. Stepping up the social dialogue and improving the administrative capacity of public authorities are crucial to achieve full implementation and efficient use of European Social Fund support. The country-specific messages in the Employment Taskforce report provide the basis for implementing the employment guidelines in the new Member States.
Belgium | Denmark | Germany | Greece | Spain | France | Ireland | Italy | Luxembourg | Netherlands | Austria | Portugal | Finland | Sweden | United Kingdom | Cyprus | Czech Republic | Estonia | Hungary | Lithuania | Latvia | Malta | Poland | Slovenia | Slovakia
The employment rate in Belgium remains far below the Lisbon targets. The employment rate for older workers is amongst the lowest in EU25. The employment rate of non-nationals is strikingly low. Belgium should give immediate priority to:
- better anticipating restructuring of enterprises, in particular in the case of collective redundancies;
- reducing non-wage labour costs, in particular for the low-paid, while safeguarding budgetary consolidation efforts ;
- improving cooperation between regional employment services to support mobility between regions;
- removing unemployment traps by reviewing the conditionality of benefits;
- increasing the coverage of unemployed adults, disadvantaged young people and immigrants in the measures run by the employment services ;
- monitoring recent inter-professional agreements to raise worker participation in training, with special attention for the low-skilled.
Denmark has employment rates well above the Lisbon employment targets, including for women and older workers. Denmark nevertheless needs to ensure adequate labour supply in the longer term and should as a matter of priority get down to :
- reducing the overall fiscal pressure on labour while at the same time safeguarding budgetary consolidation efforts;
- removing incentives for early retirement or, where appropriate, reducing marginal tax rates and raising incentives for low-income groups to work;
- helping to integrate immigrants into the labour market, in particular by providing training to build up the necessary basic skills;
- monitoring trends in vocational training in the light of recent increases in training fees.
The German employment rate is above the EU average but still below the Lisbon targets. The employment rate for older workers is lagging behind. The employment rate for women exceeds the EU average but is stagnating. Since 2000, employment has been on the decline and unemployment has increased. Long-term unemployment and regional disparities between the eastern and western parts of the country persist. Germany should give immediate priority to:
- reviewing the financing of the social protection systems to reduce non-wage labour costs;
- encouraging the social partners to take responsibility in wage setting, and in achieving further progress in working time flexibility;
- promoting the development of SMEs, through better access to financing, and strengthening entrepreneurial culture, especially in the Eastern part of the country ;
- continuing reform of the tax system and employment services' reforms (Hartz reforms);
- reducing the gender pay gap and reviewing possible tax disincentives to female participation in the labour market; increasing childcare facilities, especially in the Western Länder, and improving the correspondence between school schedules and working hours;
- strengthening efforts to integrate immigrants;
- improving education levels of the workforce, especially for the low-skilled and SME employees;
- continuing to encourage the dual system of school and on-the-job training.
Although job creation has increased recently, Greece still has one of the lowest employment rates in the EU, particularly for women. Undeclared work is widespread. Labour productivity remains at low levels. Adult participation in training also remains low, especially given the low educational attainment of the working-age population. In recent years, increased immigration has contributed to labour supply. Greece should give immediate priority to:
- further raising the attractiveness of part-time work and developing temporary work agencies to increase the diversity of work arrangements;
- reducing non-wage labour costs while at the same time safeguarding budgetary consolidation; doing more to transform undeclared work into regular employment by improving the attractiveness of standard and non-standard contracts to employers and employees and strengthening law enforcement capacity;
- promoting a more employment-friendly business environment;
- taking stronger action to increase the level and effectiveness of active labour market policies and speeding up the development of efficient employment services throughout the country offering preventative and personalised services; upgrading the statistical monitoring systems;
- further raising incentives for women to participate in the labour market, including through part-time employment; increasing the availability and affordability of care facilities for children and other dependants;
- reviewing incentives to promote life-long learning and increase participation in training, in particular for the low-skilled and for immigrants.
Despite substantial progress between 1997 and 2002, unemployment in Spain remains well above the EU average, while the employment rate remains well below. Addressing regional disparities remains a priority. Female participation and the employment rate of older workers remain particularly low. Moreover, about a third of all workers are still employed under fixed-term contracts. Labour productivity remains at low levels. Overall levels of educational attainment and participation of adults in training remain particularly low. In recent years, increased immigration has contributed to labour supply. Spain should give immediate priority to:
- making permanent contracts more attractive for employers and discouraging the use of fixed-term contracts so as to counter the segmentation of the labour market; increasing the attractiveness of temporary agency work for workers; removing obstacles to part-time work;
- using possibilities of wage differentiation according to productivity gains at local, regional and sectoral levels;
- raising incentives for women to participate in the labour market by bringing down the cost of care facilities for children and other dependants;
- improving active labour market measures for disadvantaged people, in particular young people, people with disabilities, immigrants and the long-term unemployed; completing the modernisation of the public employment services; strengthening the coordination between regional employment services; and removing remaining obstacles to geographical mobility.
In France, the overall employment rate is below the EU average. The employment rate for older workers (55-64) is one of the lowest in the EU. Unemployment remains among the highest in the EU and it is particularly high for young people (15-24). The employment rate of non-nationals is strikingly low, notably for women. The share of fixed-term contracts continues to exceed the EU-15 average, whereas participation of adults in education and training remains just below average. France should give immediate priority to
- facilitating the transition of people employed under fixed-term contracts into permanent contracts;
- developing a more effective system of anticipation and management of restructuring;
- promoting a business-friendly environment for the development of SMEs and monitoring progress in order to increase the number of business start-ups;
- monitoring the impact of the pension reform on the exit age;
- strengthening the provision of individualised services; building effective pathways to work and training for unemployed young people and for immigrants, notably women;
- ensuring proper evaluation of the recent reform of the unemployment insurance system and ensuring that it is accompanied by appropriate requirements and effective job search;
- ensuring that the social partners' agreement on vocational training and the law on training throughout working life result in an increased share of the population participating in training, giving particular attention to the low-skilled and workers in SMEs.
The total employment rate in Ireland has increased from 56,1 % to 65,3 % since 1997 while unemployment has fallen by nearly two-thirds and long-term unemployment from 5,6% to 1,3 %. There is still a significant gap between employment rates for women and men, as well as a high gender pay gap. Labour shortages remain a problem although they are eased by increased immigration. A significant element in Ireland's success is its capacity to attract direct foreign investment. Social partnership, its tax system, a good regulatory environment and investment in human capital are also major factors. Ireland should give immediate priority to:
- increasing access to active labour market measures for a larger share of the unemployed and inactive population and ensure their effectiveness;
- increasing the supply and affordability of childcare facilities and taking urgent action to tackle the causes of the gender pay gap.
Despite weak economic conditions employment growth still continues to be positive and confirms the improvements since 1997. However, the employment rate continues to be one of the lowest in the EU. Female participation and the employment rate of older workers also remain among the lowest in EU25. Unemployment has decreased in recent years, but still stands above the EU15 average. With unemployment at about 5 % in the centre-north, compared to 18 % in the south, addressing regional disparities is a priority. Undeclared work still remains particularly significant, even if the employment situation of 700 000 immigrants has been regularised. Overall levels of educational attainment and participation in training remain particularly low. Italy should give immediate priority to:
- reducing the imbalances between permanent and non-permanent contracts and labour market segmentation; improving the level, coverage and effectiveness of unemployment insurance;
- further reducing non-wage labour costs, especially for the low-paid, while at the same time safeguarding budgetary consolidation;
- doing more to transform undeclared work into regular employment by removing tax disincentives and improving law enforcement capacity;
- encouraging the social partners to review wage bargaining systems to take account of regional labour market differences;
- ensuring the development of effective employment services throughout the country, especially in the South, including efficient personalised services and participation in active labour market schemes, focusing in particular on the situation of the young, the disadvantaged and the low-skilled;
- increasing the availability and affordability of care facilities for children, especially under three years of age, and other dependants;
- increasing participation in training, in particular for the low skilled, through, inter alia, the effective development of inter-professional funds.
In Luxembourg, the employment rate is close to the EU average but still below the EU target. Unemployment remains low and the long-term unemployment rate is one of the lowest in the EU. However, the new jobs generated by the economic boom of the 1990s were notably taken up by cross-border workers and women, while employment of older workers remained at a very low level. Participation in education and training remains below the EU15 average. Luxembourg should give immediate priority to:
- supporting the development of start-ups and promoting business training;
- retaining workers longer in employment, particularly in the private sector, by reducing the use of early retirement schemes;
- promoting work-oriented solutions for people covered by the disability scheme who are able to work;
- encouraging women to return to work after long periods outside the labour market; taking action to tackle the causes of the gender pay gap;
- ensuring effective implementation of the framework law on continuing training and increasing participation in training, notably for the low-skilled;
- revising the overall lifelong learning system to achieve better coherence between the education and training systems.
While the employment rates for women and men well exceed the Lisbon targets, the employment rate of immigrants remains low. The labour market is characterised by an exceptionally high level of part-time work (about 44 % of the workforce), and a high number of people on disability benefits. The employment rate of older workers exceeds the EU average but is still far below the EU target. Unemployment has risen significantly since 2001, although it remains among the lowest in the EU. The Netherlands should give immediate priority to:
- implementing and closely monitoring wage developments in line with the 'Autumn Agreement' between the government and the social partners which provides inter alia for a wage freeze in 2004 and 2005;
- screening the work ability of people on disability benefits and assisting those who are able to work to find a suitable job, paying special attention to women under the age of 40;
- increasing the effectiveness of and access to active measures for social benefit recipients and those at the greatest risk of becoming inactive; facilitating the integration of immigrants;
- facilitating the transition from part-time to full-time jobs;
- taking urgent action to tackle the causes of gender pay gaps and increasing the affordability of childcare facilities.
Austria has achieved a high employment rate overall, and a relatively high employment rate for women, in line with the Lisbon targets. Unemployment is amongst the lowest in the EU. Social partnership plays an important role in modernising work organisation, improving labour legislation and ensuring satisfactory wage developments. The employment rate of older workers, however, is particularly low. Employment growth has slowed down and unemployment has started to rise. Participation of adults in education and training is below the EU average. The gender pay gap remains one of the highest in the EU. Austria should give immediate priority to:
- monitoring and if necessary complementing reforms on severance pay legislation and progress on the planned implementation of entitlement to unemployment benefit for the self-employed in order to increase levels of occupational mobility;
- monitoring the impact of the revision of the pension system on the effective exit age and progress towards the national targets;
- taking action to tackle the causes of the gender pay gap; increasing the availability and affordability of childcare facilities and evaluating the impact of the present childcare allowance scheme on the level and quality of female employment;
- reviewing incentives to increase participation in training, especially for the low-skilled and for immigrants.
Portugal is close to achieving the Lisbon target on overall employment and slightly exceeds the employment targets for women and older workers. The recent economic slowdown has caused unemployment to rise, although it remains at a relatively low level by comparison with the EU average. Levels of productivity, overall levels of educational attainment and access to training remain particularly low. Moreover, a significant share of people (more than 20 %) is employed under fixed-term contracts. In recent years, increased immigration has contributed to labour supply. Portugal should give immediate priority to:
- promoting modernisation of work organisation and strengthening productivity and quality at work;
- building on the new Labour Code to make permanent contracts more attractive to employers and employees alike, and to counter the segmentation of the labour market;
- developing a more effective system of anticipation and management of restructuring;
- strengthening active labour market measures for the unemployed and the inactive and ensuring their efficiency; strengthening efforts to integrate immigrants;
- taking action to tackle the causes of the gender pay gap in the private sector and increase the availability and affordability of care facilities for children and other dependants;
- raising the educational attainment of the whole workforce, strengthening the incentives for lifelong learning and increasing participation in training, in particular for the low-skilled.
Finland is close to the overall employment rate target and it exceeds the employment rate target for women. It has achieved a high increase in the participation of older workers over the last decade, coming close to the EU target for older workers. The unemployment rate is above the EU average, and is particularly high for young people. Finland should give immediate priority to:
- reducing non-wage labour costs on the low-paid while maintaining sound public finances;
- monitoring the impact of recent reforms of active labour market policies on structural unemployment and regional disparities; taking special measures to facilitate the activation and integration of disadvantaged young people, people with disabilities and immigrants;;
- further reforming tax and benefit systems to remove unemployment traps.
Sweden exceeds all EU employment targets including those for women and for older workers. The total unemployment rate stands at about 5 %. Efforts should be maintained to avoid labour supply constraints. In view of the ageing population, there will be a need to sustain labour supply by exploiting potential sources of labour among immigrants, the young and the long-term sick, and by improving incentives to work. Sweden should give immediate priority to:
- facilitating the development of SMEs in particular by reducing administrative burdens;
- addressing the rising number of people on long-term sick leave by promoting work-oriented solutions and improving conditions of work;
- eliminating remaining unemployment and inactivity traps;
- closely monitoring the results of actions to integrate immigrants into the labour force;
- addressing the issue of emerging bottlenecks and skills mismatches in low- and medium-skilled sectors.
The UK exceeds all the employment rate targets, including those for women and for older workers. However, concentrations of economic inactivity, and to a lesser extent unemployment, persist in certain communities and amongst particular groups. Productivity levels, especially as expressed per hour worked, remain comparatively low. This is in part due to the prevalence of low skills amongst the workforce, including insufficient basic skills. The gender pay gap remains one of the widest in the EU. The United Kingdom should give immediate priority to:
- ensuring that wage trends do not exceed productivity gains;
- ensuring that active labour market policies and benefit systems prevent de-skilling and promote quality in work, by improving incentives to work and supporting sustainable integration and progress in the labour market of inactive and unemployed people; addressing the rising number of people claiming sickness or disability benefits, and giving particular attention to lone parents and people living in deprived areas;
- improving the access to and affordability of childcare and care for other dependants, increasing access to training for low paid women in part-time work, and taking urgent action to tackle the causes of the gender pay gap;
- implementing national and regional skills strategies, with particular emphasis on improving literacy and numeracy of the workforce, the participation and achievement of 16-19 year olds, and low-skilled workers in poorly paid jobs.
PRIORITIES FOR THE NEW MEMBER STATES
The employment rate in Cyprus is well above the EU15 average and the unemployment rate is low. The share of foreign workers, who are often employed on a temporary basis, has increased significantly over the years in response to labour market needs. Cyprus needs to:
- raise innovation capacity and diversify the service sector;
- further increase female participation (which is already above the EU average), improve care facilities, increase the participation of women in training, and enhance the attractiveness of part-time work;
- review policies on the employment and the rights of foreign workers, including in terms of the opportunities open to them;
- modernise the public employment services and strengthen preventive and active labour market measures in order to cover a greater proportion of unemployed and people with disabilities, ageing job-seekers and women;
- build on the reorganisation of education underway since 2000, improve the links between initial education and continuing training and ensure greater participation in training.
The employment rate in the Czech Republic is slightly above the EU15 average. Unemployment is around the EU15 average but has been slowly increasing since the mid-1990s. The employment rate of older workers is close to the EU average but low, particularly for women, given the early statutory retirement age. There are significant regional imbalances. The Czech Republic needs to:
- ensure that wage trends remain in line with productivity developments;
- further discourage welfare dependency and ensure that regular work pays;
- strengthen incentives to part-time work in order to encourage the participation of women and older workers;
- modernise the public employment services and do more to integrate the most vulnerable groups in the labour market (particularly in regions other than Prague and for the Roma population), applying preventive and active labour market measures, combined with anti-discrimination measures, putting a strong emphasis on education, training, support for entrepreneurship and job creation.
The employment rate in Estonia is a little below the EU15 average. The unemployment rate has decreased over the years but remains higher than the EU average. Moreover, the share of long-term unemployed is high. Estonia is expected to suffer from the decline in the working-age population resulting from demographic change. Estonia needs to:
- reduce the tax wedge on labour, especially on lower wage earners, and promote contractual and working time diversity; improve the tax systems and transform undeclared work into regular jobs. It is also important that wage trends remain in line with productivity developments;
- reduce levels of inactivity and raise further the participation of women, older workers and the low-skilled;
- strengthen active labour market measures, provide greater access to training for the unemployed and ensure that the labour market becomes more inclusive, particularly with regard to disadvantaged people, such as the long-term unemployed, young people, persons with disabilities, older jobseekers those belonging to an ethnic minority.
The employment rate in Hungary is low, particularly for the low-skilled, the disadvantaged, women and for older workers. At the same time, unemployment remains well below the EU15 average. This is explained by a low participation rate, i.e. a large inactive population of working age. There are major labour market imbalances between the central and western regions and the rest of the country. Regional and sectoral mobility is low, while skills bottlenecks reflect both a lack of skilled labour and the insufficient responsiveness of education and training systems to labour market needs. Hungary needs to :
- reduce the high tax wedge on labour and ensure, in conjunction with the social partners, more employment-friendly wage developments;
- improve worker health by promoting better working conditions and preventive and curative healthcare; pursue reforms of the social benefit systems, including sickness benefits, in order to reduce undeclared work;
- encourage part-time work, in particular for women and older workers; strengthen preventive and active labour market measures for the unemployed and the inactive is also necessary, especially in the most disadvantaged regions; modernise public employment services, so as to support occupational and geographic mobility; improve the labour market prospects of the Roma population ;
- promote equal access to university education; improve the efficiency of the education system, and increase its flexibility in order to better adapt to the skills needs of the labour market.
The employment rate in Lithuania has risen slightly recently but remains well below the EU15 average. The unemployment rate has decreased significantly but is still well above the EU average. Lithuania needs to:
- increase the share of employment in services; alleviate the tax burden; anticipate and accompany restructuring in conjunction with the social partners;
- strengthen active labour market policies to help unemployed or inactive people move back into employment; broaden access to training, support for job search, occupational mobility, and the modernisation of the public employment services;
- further raise levels of participation of women and older workers by removing obstacles to part-time work; make more and more effective investment in human capital and lifelong learning.
Employment in Latvia has increased quite strongly over the last two years. However, the overall employment rate stands below the EU15 average. Unemployment remains above the EU15 average with wide regional variations. At the same time, labour and skill shortages exist in Riga. Latvia needs to:
- support the development of services, especially in disadvantaged regions and address the issue of undeclared work;
- encourage people to take up a job in the formal economy and encourage women to stay in the labour market;
- modernise public employment services and develop active and preventive policies for the unemployed, in particular measures supporting job search, entrepreneurship, geographic mobility and greater access to training; ensure a more equitable and inclusive labour market for the young, the low-skilled and those belonging to an ethnic minority;
- address the problem of skills gaps and skills mismatches and increase access to education.
The employment rate in Malta is particularly low compared to EU15 average. The employment rate of older workers is particularly low. The employment rate of women is the lowest in the EU25: only a third of women of working age are in work. Unemployment has increased slightly over the last two years but remains below the EU15 average. Malta needs to:
- roll out its privatisation programme while redeploying employees as necessary and progressively reduce administrative costs and tax burden on labour; build on the provisions of the revised Business Promotion Act and monitor its impact;
- expand its labour supply by raising the employment rate for women in the formal economy, inter alia by increasing childcare facilities;
- reform the tax and benefit systems, and increase the gap between minimum wage and benefit level in order to provide sufficient incentives to take up a job and to help to transform undeclared work into regular employment;
- raise general educational levels and develop a more systematic approach to education and training in conjunction with the social partners.
The employment rate in Poland is among the lowest in the EU25. The situation on the labour market has deteriorated during the last four years. The employment rates of women, of older workers, of young people and of the low-skilled are particularly low. At about 20 %, the unemployment rate is at its highest level since the start of the economic transformation, and is the highest in EU25. Poland needs to:
- foster entrepreneurship and a more employment-friendly environment, especially in the context of restructuring;
- address the high tax wedge on labour, particularly at the lower end of the wage scale, particularly in order to reduce undeclared work;
- in conjunction with the social partners sustain employment-friendly wage developments, actively promote change at enterprise level and facilitate job mobility;
- accelerate the establishment of new public employment services, with sufficient resources in terms of funding, staff numbers, training and equipment;
- pursue the reform of the different benefit systems including disability benefits and social assistance, with a focus on promoting active job search and reintegration, particularly with regard to disadvantaged young people; increase opportunities for women and older workers, particularly through part-time work;
- ensure that the education and training system provides new labour market entrants with the skills needed in a labour market characterised by structural change; ensure equal access to education and improve the efficiency and quality of education; invest in training and facilitate access to training as well as the commitment of the social partners.
The employment rate in Slovenia is slightly below the EU15 average, but is particularly low for older workers. The unemployment rate is well below the EU average. Slovenia needs to:
- increase activity and reduce undeclared work by improving interaction between the minimum wage and the different components of tax burden on labour; promote flexible forms of work while maintaining the appropriate balance between flexibility and security;
- increase the employment of people over 55; reduce the use of early retirement schemes; ensure consistency between tax and benefit reforms; promote access to training for older workers; review the interactions between unemployment, social benefits and the minimum wage in order to reduce undeclared work; ensure access to training for public employment service staff in order to strengthen relations between private and public employment services;
- increase the share of the adult population participating in further education and training; provide incentives for workers and employers to invest in training.
The overall employment rate in Slovakia remains low compared to the EU15 average. Although it is declining, unemployment is still very high, with a large share of long-term unemployed. The employment rate of women is low and the employment rate of young people, of the low-skilled and of older workers (especially women) is particularly low. There are significant regional imbalances. Slovakia needs to:
- further reduce the high tax wedge on labour; promote more contractual and working time diversity;
- remove unemployment and inactivity traps and transform undeclared work into employment by building on the ongoing reforms of the tax and benefit systems;
- make work pay; increase the participation of older workers and women in employment, especially through the implementation of employment legislation and pensions reform, more flexible forms of work and greater use of part-time work;
- foster the integration of the most vulnerable groups (e.g. the Roma, the long-term unemployed, young people, people with disabilities, older workers, people living in disadvantaged areas) and promote modern active labour market measures, greater access to training for the unemployed and the inactive; modernise public employment services;
- coordinate training systems and labour market requirements, and encourage occupational and geographic mobility throughout life, particularly in order to foster the integration of young people.