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Joint employment report 2006/2007
The joint employment report states that the labour market reforms in the European Union (EU) are beginning to bear fruit. Unemployment is falling while employment is rising. Achieving Europe's employment objectives, however, still requires a lot of effort. Whilst investment in education and skills is up, policy implementation to improve the adaptability of workers and enterprises is lagging far behind. This report, like previous reports, emphasises the need for more stringent reforms in order to strike a better balance between flexibility and security in the labour market.
The joint employment report reiterates the main priorities of the European Employment Strategy (EES). It reports on the advances and shortcomings of employment policies since the publication of the previous joint employment report.
The EES is built around three priorities:
- to attract and retain more people in employment, increase labour supply and modernise social protection systems;
- to improve the adaptability of workers and enterprises;
- to increase investment in human capital through better education and skills.
Of these priorities, Member States pay the greatest attention to attracting and retaining more people in employment. The implementation of policies to increase investment in human capital through better education and skills is also progressing. Policy implementation to improve the adaptability of workers and enterprises, on the other hand, is lagging behind.
The report emphasises that the poor take-up of policies to improve the adaptability of workers is especially worrying. Reforms of legislation relating to contracts and greater investment in training would allow easier job transitions and provide more opportunities for workers to progress.
Progress in achieving the Community's employment objectives
The report states that the Member States' policies, which are built around the priorities of the EES, should promote the following employment objectives:
- full employment;
- quality and productivity at work;
- social and territorial cohesion.
Unemployment fell from 9.1 % in 2004 to 8,8 % in 2005 and the employment rate rose by 0.8 % in 2005, which is the largest increase since 2001. The employment gender gap narrowed further and there were further increases in employment for older workers, with the employment rate increasing from 41% in 2004 to 42.5% in 2005. 22 million new jobs do, however, still need to be created to achieve the EU's employment objectives by 2010 and youth unemployment still gives cause for concern. Few Member States report on progress in providing the long-term unemployed with active support.
Little improvement has been recorded as regards the quality of work. Youth employment rose in 2005, but other elements of the quality of work showed little progress. The report showed few tangible gains in terms of either the transition from insecure to secure jobs or adult participation in lifelong learning.
To be competitive and ensure sustainable growth, productivity must increase. However, labour productivity growth has been falling in the EU as a whole over the last twenty years, from around 2% a year in the 1980s to 1% in the 1996-2001 period and to below 1% between 2001 and 2003. The situation improved in 2004 (1.9%) but fell back again to 0.9% in 2005.
The Lisbon strategy calls for economic and labour market reforms and for social policies to support economic and employment growth. The report adds that social protection reforms should, where required, improve the sustainability of public finances, particularly by modernising pension systems. The report emphasises that the challenge is to ensure that growth and job creation translate into greater social cohesion.
The report also focuses on territorial cohesion, explaining that regional disparities remain widespread, with very high rates of unemployment in many regions.
A call for delivery
The report stresses that the better functioning of labour markets and quality at work calls for comprehensive measures, which can:
- encourage the inactive to enter the labour market;
- reward work within the framework of modern social security systems;
- facilitate restructuring;
- improve workers' adaptability and skills development.
10. The report points out that "flexicurity" should ease the transitions between different stages of working life. "Flexicurity" can be defined, more precisely, as a policy strategy to simultaneously enhance the flexibility of labour markets, work organisations and labour relations on the one hand, and employment and income security on the other. In June 2007, the Commission will present a communication along with extensive consultation in order to set out a range of options to help Member States find the right policy mix for their labour markets.
A reinforced lifecycle-based approach to work should improve access to the labour market, extend working life and promote professional mobility over the life cycle. This measure should in particular lead to an urgent improvement in the situation of young people on the labour market.
The report indicates that due attention should be given to people at the margins of the labour market. Financial incentives which are more attractive than social benefits would create opportunities for the low-skilled. A balanced approach could consist of individually-tailored measures, appropriate minimum wages, targeted payroll tax cuts and the creation of the right environment for the provision of good quality jobs, for example through the development of the personal services market.
To achieve these objectives, effective investment in human capital is indispensable and a breakthrough in lifelong learning is required. The Spring 2006 European Council stated that it was also essential to raise education levels to improve employment opportunities.
The report specifies that migration is an emerging labour market issue which may be relevant in alleviating labour shortages. Several Member States are implementing measures targeted at immigrants or ethnic minorities, but the unemployment rate gapbetween EU and non-EU nationals is still huge.
For a detailed analysis of recent trends and performances in the EU labour market, please see the European Commission's "Employment in Europe 2004" report. For the latest macro-economic updates, see the European Commission's "Economic Forecasts Spring 2005" [PDF] (EN).