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Brussels, 1st October 1997

Employment in Europe: Countdown to the Jobs Summit, 20-21 November 1997

In the run-up to the extraordinary European Council on Employment (Jobs Summit) which will take place in Luxembourg on 20-21 November 1997, the European Commission has today adopted a package of three documents - Guidelines for Member States Employment Policies 1998; Joint Employment Report 1997, and Employment in Europe Report 1997. The objective of this package is to provide sound analysis and policy guidance to the Heads of State for discussion at the Summit. The Guidelines for Member States Employment Policies 1998 proposes key policy measures and targets (in many cases quantified) which the Commission considers essential that Member States pursue if serious progress is to be made regarding the employment situation in Europe. The Joint Employment Report - which is based on the multi-annual programmes submitted by the Member States - provides material on national employment policies and examples of "best practice" or successful employment measures undertaken by Member States mainly at the macro level, with a view to sharing this information across the EU. The third document : The Employment in Europe Report 1997 provides analysis and data on labour market. It addresses two sets of issues: the policy challenges for employment which face the European Union (EU) at the turn of the century and those which are created by the move to Economic and Monetary Union The Executive summaries of the Joint Employment Report, the Employment Report 1997 and the full text of the Guidelines are available separately..

1. Guidelines for Member States Employment Policies 1998

The Amsterdam Treaty foresees the establishment of common guidelines in the area of employment which can in due course lead to recommendations to Member States. The Commission's proposed Guidelines will provide a framework for discussion at the extraordinary European Council on 20/21 November. The Commission will, on the basis of the Presidency's Conclusions from the Jobs Summit, present a final proposal for adoption by the Council. The new Treaty has thus launched a recurrent process which enables the Member States to consider the employment situation each year and adopt guidelines for their national employment policies.

The Guidelines are developed under the four main lines of action outlined in the Joint Employment Report 1997: entrepreneurship, employability, adaptability and equal opportunities.

The main challenge addressed in the Guidelines is: to move progressively towards an employment rate of over 70% in the EU in line with those of its main trading partners. In order to achieve this, Member States must in the medium term commit themselves to ambitious employment targets and policies while seizing the opportunities afforded by growth and macroeconomic stability. Considering the current favourable outlook for economic growth, the combined efforts of the Member States based on these guidelines, with EU support where appropriate, could result in an increase of the current employment rate of 60.4% to 65% within 5 years and a reduction of the unemployment rate to 7%. This will imply the creation of at least 12 million new jobs.

  The Commission has decided to set out some ambitious targets in these guidelines in order to focus the attention of policy-makers at all levels. These include the following:

To promote a new culture of Entrepreneurship in the EU

· Make it easier to start-up and run businesses by providing a clear, stable and predictable set of rules. Member States should review and simplify the administrative burdens on SMEs, taking into account the new proposals to be developed by the Business Environment Simplification Task Force.

  particular attention should be given to reducing significantly the overhead costs for enterprises of hiring an additional worker.

  the obstacles, especially those within existing social security regimes, to people moving from employment to self-employment and setting up micro-enterprises need to be tackled and existing regulations must be adapted to facilitate easier transition to self-employment.

 Develop the markets for venture capital, thereby mobilising Europe's wealth behind entrepreneurs and innovators. Member States should examine the specific needs of SMEs as regards financing, principally in the form of equity or guarantee capital, building on EIB initiatives in this area.

 

  a pan-European secondary capital market should be established by the year 2000.

 

· Make the taxation system more employment friendly. In order to encourage enterprises to create new jobs, Member States must exploit the current favourable macroeconomic climate to finally reverse the consistent long-term trend towards higher taxes and charges on labour (which have increased from 35% in 1980 to over 42% in 1995).

  set a target for reducing the tax burden on labour, while maintaining budget neutrality, with a view to achieving substantial progress by the year 2000.

- To create a new culture of Employability

· Tackle long-term and youth unemployment. Member States should adopt preventive and employability-oriented strategies built on early identification of individual needs and early action and ensure that

  every unemployed adult is offered a new start - in the form of a job, training, retraining, work practice or other employability measure - before reaching twelve months of unemployment.

  every unemployed young person is given such a new start before reaching six months of unemployment. 

  The combined effect of preventive and reintegration measures can be expected to reduce the rates of long-term and youth unemployment in the Member States by half within 5 years. This will also improve the employment situation of the disabled, many of whom are long-term unemployed. 

· Ease the transition from school to work. Employment prospects are poor for the 10% of young people who drop out of the school system early and many of the 45% who do not complete upper secondary education. Member States must seek to

  reduce the numbers dropping out of the education system early by half within five years and reduce progressively the share who do not complete upper secondary level.

  apprenticeship provides a particularly effective way of equipping young people with relevant skills and Member States should, where necessary, significantly increase participation in apprenticeship systems in line with the best performing Member States and improve their systems accordingly.

· Move from passive to active measures Benefit and training systems should be reviewed and adapted to ensure that they actively support employability and provide clear incentives for the unemployed to seek and take up work or training opportunities. Each Member State should

  set a target for the number of people to be transferred from passive income support to active employability-related measures.

  seek to increase the numbers of unemployed who are offered training from the current EU average of 10% towards the average of the three best performing Member States i.e. above 25%, within 5 years.

  consider how reducing the cost of hiring less skilled workers through measures such as targeted reductions in non-wage labour costs, can be better linked to measures designed to boost skill levels.

· Develop a partnership approach. Both enterprises and the social partners should be involved in joint efforts to invest Europe's wealth in its future by offering the necessary work experience/training positions. The Social Partners are urged to

  conclude as soon as possible a framework agreement to open workplaces across Europe for training, work practice, traineeships and other forms of employability measures and to agree on the terms and conditions.

  continue the impressive contribution which they have made over the past five years to the wage moderation which has contributed so much to the improved economic outlook and the improved prospects for new job creation.

- To promote and encourage Adaptability

· Modernise work organisation In order to promote the modernisation of work organisation and working patterns:

  Social Partners should

  negotiate, at the appropriate levels, particularly in economic sectors undergoing major structural change, agreements on work organisation and flexible working arrangements, including where appropriate, reductions in working time, with the aim of making enterprises productive and competitive, and achieving the required balance between flexibility and security.

 Member States should

  put in place a framework for more adaptable forms of contract, taking into account that forms of employment are increasingly diverse. Those in non-standard work should be given greater security and occupational status and those who opt to work reduced hours should not be penalised in terms of career progression or in terms of maintaining social security protection

· Support adaptability in enterprises. In order to renew skill levels within enterprises, Member States should

  remove fiscal and other obstacles to the promotion of investment in human resources and offer tax incentives for the development of in-house training. Incentives to workers to avail of training opportunities should also be encouraged.

  re-focus their State Aid policies on upgrading the labour force, the creation of sustainable jobs and efficiently functioning labour markets, while respecting Community state aid provisions.

- To strengthen the policies for Equal Opportunities

· Tackle gender gaps: Member States should translate their commitment to equality of opportunity into increased employment rates for women and breaking down gender segregation, and

  make consistent efforts to reduce the gap in unemployment rates between women and men by actively supporting the increased employment of women.

· Reconcile work and family life: Policies on career breaks, parental leave and part-time work are of particular importance to women. Implementation of the various Directives and social partner agreements in this area should be accelerated and monitored. There must be an adequate provision of good quality care for children and other dependents in order to support women's entry and continued participation in the labour market. Member States should

  seek to raise levels of care provision, using the standards of the best performing Member States as a benchmark.

· Facilitate return to work: Specific attention should be given to women considering a return to the paid workforce after an absence. They may face problems of poor employability due to outmoded skills and may have difficulty in accessing training opportunities if they have not been registered as "jobseekers". Moreover, taxation and benefit systems may interact to reduce financial incentives to seek work. Member States should address these and other obstacles.

Commenting on the Guidelines, Employment and Social Affairs Commissioner, Padraig Flynn, said, "The time has come to set targets and quantify our employment goals. We have the analysis. We know what the problems are. We believe that if Member States sign up to and act upon these Guidelines, we can make serious inroads into Europe's employment problems. The ground is laid. Now we have to get on and complete the job."

2. Joint Employment Report 1997

In its draft for the third Joint Employment Report 1997, the Commission calls on Member States to develop a culture of entrepreneurship, to increase the employability of job-seekers, to promote adaptability for growth and employment and to strengthen equal opportunities, as a stepping stone to concerted and sustainable action for employment in the Member States and the union as a whole.

The report contains several innovations compared to the previous two editions: more information is given on Member States' employment policies, the information is arranged by subjects and a first assessment of Member States performance is presented in accordance with the recommendations of the Amsterdam European Council.

The report is mainly built on Member States submissions concerning the implementation of their multiannual employment programmes, and on an examination of the various actions undertaken at Community level. It includes an identification of best practice in the field of employment and labour market policies.

Noting the need for a more comprehensive strategy, the report urges Member States to speed up progress in three main areas, singled out as a possible cause for concern: shifting resources from passive to active labour market measures, actions to help the long-term unemployed and the promotion of equal opportunities as a means of improving the employment and participation rate in the Union.

The report stresses the need for harmonised, comparable information on these and other policies as a crucial element in the development of a co-ordinated employment policy.

It then identifies four main challenges for employment policy:

- developing a culture of entrepreneurship - in order to stimulate the creation of more jobs and better jobs;

- increasing the employability of job-seekers - so that they can seize the new employment opportunities;

- addressing the issue of equal opportunities at work - to ensure fair prospects for women and men and the long-term growth capacity of our economy;

promoting the adaptability of enterprises and the workforce - to respond to changing market conditions while ensuring no group is left behind. 

- 3. Employment in Europe Report 1997

The Employment in Europe Report 1997 addresses two sets of connected and overlapping issues: the policy challenges for employment which face the Union at the turn of the century, and those which are created by the move to Economic and Monetary Union. It identifies the main problem as job creation, and then goes on to analyse the main structural problems which also need to be addressed: the skills gap, the problems of specific groups, promoting flexibility, improving mobility and migration, as well as adjusting to the capacities of individuals, for which disabled people represent a special case. It concludes with a series of policy messages, based on the analysis presented in the report, which should also complement and contribute to the conclusions drawn in the joint report and the first employment policy guidelines for the special jobs summit.

In analysing the latest employment trends, within the general framework of economic recovery, low inflation (2.5%) and moderate wage developments which characterised 1996, the Report highlights a modest increase in employment, confirming the long-term trend towards part-time working (though full-time jobs increased for the first time since 1990 almost half the jobs created in 1996 were part-time, and 17% of all employees now work part-time), and the persistence of stubbornly high unemployment rates (10,8% in mid-1997), particularly as regards women (12.7% against 9.4% for men), young people (over 20%) and people with disabilities, whose employment rate, at just 44%, is 17% below the overall employment rate.

According to the report, what clearly emerges from the analysis of these trends is the need to create more jobs through policies which - besides fighting unemployment - actively promote employment creation. This requires a profound modernisation of the structure and functioning of our labour market and institutions, which must be made more employment-friendly, more conducive to entrepreneurship and job creation and more responsive to the economic situation.

The main policy challenge, according to the report, lies in recognising that dealing with unemployment is two-fold: bringing about a sufficient, but sustainable rate of growth, and tackling the employability of the unemployed by ensuring that they have access to the means to continually update their skills in line with labour market needs.

Particularly important in this respect is the need to bridge the widening skills gap undermining the employability of the unemployed and the adaptability of those who have a job. To achieve this, the report sets out a three-pronged strategy based on improving the initial education and training of young people to help them into the labour force (and to enable them to adapt to new challenges later in life); on a positive approach to upgrading the skills of the existing work force throughout their working life, and on an active programme of training for the unemployed and particularly the long-term unemployed.


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