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Brussels, 22 February 2008

EU jobs outlook upbeat, but progress uneven

Employment growth has been impressive during the last year according to the Joint Employment Report, to be adopted by Employment Ministers on 29 February. Almost 6.5 million new jobs were created during the last two years and another 5 million jobs are forecast by 2009. Unemployment in the EU is expected to fall to under 7% in 2008, the lowest level since the mid-1980s. The Report – which assesses Member States’ implementation of their national reform programmes in the area of employment – is strongly upbeat. However, it also points to a number of ongoing areas for concern, notably youth unemployment and under-investment in education and training.

"Recent labour market reforms are beginning to show an impact," said Vladimír Špidla, EU Employment Commissioner. "Structural unemployment has fallen by one third since 2004 and the EU employment rate, currently at 66%, has moved much closer to our overall target of 70%. All Member States have implemented substantive reforms since 2005, but some have responded more robustly than others. We need to redouble our efforts to effectively respond to the challenges of globalisation and ageing, in particular by investing more, and in a more targeted way, in lifelong learning."

Employment rates for older workers: 43.5% (target is 50%) and for women: 57.2% (target is 60%) are continuing to rise strongly across the EU as a whole. But despite the positive performance in 2006, Europe remains short of the 2010 employment targets. The current employment rate implies that another 20 million jobs will have to be created by 2010 if the target is to be reached.

Unemployment dropped significantly from 8.9% in 2005 to 8.2% in 2006 and almost all Member States contributed to this trend. Both women and men benefited as the unemployment rate fell to respectively 9% and 7.6%. A notable indicator of the robustness of the current labour market performance is that the long-term unemployment rate fell for the second year in a row, from 4% to 3.6%.

Some regions and groups have however benefited less. The low skilled, disabled and migrants are still facing problems. Youth unemployment remains a severe problem in many Member States at 17.4% on average. The overall youth unemployment rate did fall over the last year, but this was mainly attributable to significant reductions in a small number of EU countries (Poland, Bulgaria, Lithuania, the Netherlands and Spain). In several others, the rate has actually increased since 2004 and overall, young people remain more than twice as likely to be unemployed than the workforce as a whole.

About half of EU Member States have now developed or are developing comprehensive approaches to balance more flexibility in the labour market with employment security. So far their performance on the specific components of flexicurity is less positive.

  • Labour market segmentation remains a significant problem in many Member States and many are still focusing on specific aspects of labour market regulation rather than on reforming existing mainstream labour legislation.
  • Reforms of social security systems have tended to be limited to pension reforms.
  • Active labour market policies, although becoming more personalised, have been subject to a decline in expenditures since 2000 both as a share of GDP and per worker.
  • Finally, participation in lifelong learning in the EU barely increased between 2005 and 2006, while it actually decreased in half of the Member States, and adult training provision remains uneven.

A substantial rise in the investment in human capital, better targeted towards labour market needs, is essential to close the productivity gap with our key global competitors, says the Report. Learning needs to start at a very early age and continue throughout life, and qualifications learnt on the job need to be recognised across Europe.

Bottlenecks are appearing and with pressing labour and skills shortages in an increasing number of sectors (e.g. health care and elderly care; education; many artisan or crafts sectors; engineering), there is a need for more and better forecasting and monitoring of future skills needs. Europe needs to improve regional and national labour mobility as well as to define a regulated immigration policy. Such a policy must be accompanied by measures to improve the economic and social integration of immigrants.

Joint Employment Report (Commission proposal)

Country-specific recommendations can be found under this link:

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