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European Commission

Press release

Brussels, 2 October 2013

EU Employment and Social Situation: Quarterly Review highlights fragility of economic recovery; persistent divergence within EMU

A fragile economic recovery may be beginning to take hold in the European Union, but there are persistent divergences between countries, particularly within the euro area, according to the European Commission's latest Employment and Social Situation Quarterly Review. The Review also underlines that labour market and social conditions remain critical, and inclusive growth will require further strategic investments and structural reforms.

The Commission has addressed these divergences with the April 2012 Employment Package, Country Specific Recommendations to tackle segmented labour markets, urge employment friendly tax reforms, ensure more effective public employment services and adapt education and training to reflect employers' needs, the Youth Guarantee, Action Teams to help Member States to refocus EU structural fund spending on youth unemployment and measures to facilitate the free movement of workers such as reform of the EURES job-search network. These measures will be complemented by developing the social dimension of Economic and Monetary Union (EMU) by better monitoring and assessment of potential employment and social imbalances, the subject of a Communication to be adopted by the Commission on 2 October.

European Commissioner of Employment, Social Affairs and Inclusion László Andor commented "There is no room for complacency: too many people are suffering the dire social consequences of the crisis, and we need to step up social investment and support to job creation. A sustainable recovery requires further progress in reforming the Economic and Monetary Union, including paying greater attention to employment and social problems and coordinating employment and social policies more closely. We need to be able to detect and address major employment and social challenges early on, instead of allowing disparities within Europe to deepen. "

Although there are signs of a timid recovery, the Quarterly Review highlights that labour market and social conditions remain very challenging:

  1. Youth unemployment rates have reached unprecedented levels – averaging 23% for the EU as a whole, and reaching 63% in Greece.

  2. Long-term unemployment has risen in most Member States, and reached an all-time high in the EU as a whole. Structural unemployment and mismatches between the supply and demand of both the quality and quantity of labour have been growing.

  3. Net job destruction has coincided with more precarious jobs - part time jobs, especially involuntary, have been increasing even if the share of temporary contracts has fallen in the EU as they bore the brunt of the contraction.

  4. Poverty has increased in the EU since 2007. Household incomes are declining and 24.2% of the EU population is now at risk of poverty or exclusion. Children are particularly affected as unemployment and jobless households have increased, together with in-work poverty.

Further social investment and reforms necessary

Active labour market policies such as hiring subsidies, reduced taxation of low-paid labour, personalised job-search support and training are crucial at this stage of an emerging recovery to help move people into jobs and prevent the long-term unemployed or those finishing education from giving up on seeking work. The more people are in work, the more they contribute to balanced budgets and the more households are able to spend, enabling continued recovery in economic production.

Particular efforts must be made to implement the Youth Guarantee, which was adopted by the EU's Council of Ministers in April 2013 and endorsed by the 27/28 June European Council. For many countries, this will require structural reforms such as reinforcement of public employment services, establishing strong partnerships between public authorities in charge of employment and education, and greater investment in training and apprenticeship schemes. Member States are due to present their national Youth Guarantee implementation plan in the coming months.

In addition, Member States should continue to modernise their national welfare systems to increase the efficiency of the available resources and achieve maximum impact in terms of social and economic inclusion. Social protection systems should respond to people's needs at critical moments throughout their lives. The Commission provided guidance for better social investment in its Social Investment Package of February 2013, which included specific recommendations to tackle child poverty and homelessness (IP/13/125, MEMO/13/117, MEMO/13/118).

Divergence in Eurozone undermines EMU

The latest Quarterly Report underlines persistent divergences between countries, especially within the euro area:

  1. Unemployment rates in the South and periphery of the euro area reached an average of 17.3% in 2012, against 7.1% in the North and core of the euro area.

  2. The average rate of young people neither in employment, education or training (NEETs) reached 22.4% in the South and periphery, against 11.4% in the North and core.

  3. Poverty has increased in two thirds of Member States, but not in the remaining third.

Social and economic divergences represent major challenges for EMU. Poor labour market and social performance not only hits the Member States directly affected, but also spills over to the better performing countries through reduced aggregate demand, lower productivity and higher interest rates linked to political instability and eroded confidence in the euro and the EU.

A robust EMU with a social dimension needs better monitoring and assessment of key potential imbalances in employment and social situations of the Member States. This could be coupled with stronger coordination of employment and social policies to ensure timely and effective response to such challenges, in the interest of the EMU as a whole. The Youth Guarantee Recommendation and the agreement to launch a Youth Employment Initiative with a budget of €6 billion are examples of such collective action focusing on overcoming a major employment and social challenge that disproportionately affects some parts of the EMU.

These issues are addressed in the Communication on the social dimension of EMU adopted by the Commission on 2 October – see IP/13/893).

Further information

Employment and Social Situation Quarterly Review

Social Investment Package

Youth Employment Package

Employment Package

Employment and social analysis

László Andor's website

Follow @László AndorEU on Twitter

Subscribe to the European Commission's free e-mail newsletter on employment, social affairs and inclusion

Suggested hashtags: #EconomicRecovery #eurozone #emu

Contacts :

Jonathan Todd (+32 2 299 41 07)

Cécile Dubois (+32 2 295 18 83)

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