Brussels, 13 November 2013
Draft Joint Employment Report – frequently asked questions
The latest draft Joint Employment Report, published by the European Commission as an annex to the Annual Growth Survey 2014, analyses employment and social trends and challenges as well as the policy responses deployed by Member States. It serves as a basis for further analysis, surveillance and coordination throughout the so-called European Semester, the EU's yearly economic policy-making cycle.
This year, for the first time, the Report includes a scoreboard of key employment and social indicators, as announced in the Commission's Communication on strengthening the social dimension of the Economic and Monetary Union (EMU) – see IP/13/893 and SPEECH/13/774. The results of the scoreboard, together with other instruments such as the Employment Performance Monitor and the Social Protection Performance Monitor, will be further analysed by the Commission in the preparation of Country-Specific Recommendations and through multilateral surveillance with the Member States.
The draft Joint Employment Report will be endorsed by the EU's Council of Employment and Social Affairs Ministers and will be then presented to the European Council in order to feed into the European Semester process and surveillance.
What are the recent labour market and social trends and challenges?
Unemployment remains at unacceptably high levels in the 28 EU Member States even if it has stopped growing. Youth unemployment remains at particularly high levels, long-term unemployment is still rising and poverty and inequality have increased in several Member States. In addition major divergences between countries built up throughout the crisis still persist, in particular between the "core" and the "periphery" of the euro area. All this may hamper a quick return to strong GDP growth.
Employment rates have continued to fall, due in particular to the decrease in the number of unemployed finding jobs. Although the number of job vacancies has not changed much unemployment has been on the rise, indicating that the lack of labour market opportunities cannot be met without investments in human capital and better support to the unemployed. Job losses have not been evenly distributed and the low skilled, non-EU nationals and people on temporary job contracts have been more affected. Improving the resilience of labour markets by reinforcing public employment services' capacities and boosting job creation in fast growing sectors such as the green economy, the health sector and information and communications technologies are key employment priorities for the year to come.
Persistent low transition rates from less to more protected or permanent forms of work and gender pay and employment gaps show that segmentation in the labour market continues to be considerable.
The risk of poverty and social exclusion as well as inequalities have grown significantly in a number of Member States driving an overall increase in the EU. Better performing social protection and targeted social investment are essential to reduce inequalities and poverty over time.
What employment and social policy reforms have been implemented by the Member States?
Following the Employment Guidelines and the policy guidelines set out by the Commission in the 2013 Annual Growth Survey, Member States have been introducing reforms to address employment and social challenges. The Country Specific Recommendations for 2013 adopted by the Council show that still more effort needs to be undertaken
To boost labour market participation, Member States continued to reinforce their active labour market policy (ALMP) measures while several countries took measures to improve the effectiveness of their public employment services (PESs). Specific policies were introduced to bring closer to the labour market the unemployed from disadvantaged groups, in particular persons with disabilities, the long-term unemployed and workers with a migrant background. Member States addressed also the situation of young people on the labour market with the early introduction of some elements of the Youth Guarantee. They promoted measures to boost female employment rates and to reconcile work and private life by introducing changes to early childhood education and care services and revising parental leave regulations. Employment-promoting initiatives also addressed barriers to longer working lives.
Several Member States have made changes to the level of minimum or public wages and addressed wage-setting mechanisms, including wage indexation, and collective bargaining processes. Many countries took tax measures to promote job creation and have continued to support initiatives exploring job-rich sectors. Some Member States used employer subsidies and promoted entrepreneurship while some additional measures have been taken to address the issue of undeclared work. Finally many Member States continued to introduce changes to their employment protection legislation to address the balance between flexibility and security and address the segmentation of the labour market .
Improving skills supply and promoting adult learning became a priority in several Member States Some countries introduced measures that facilitate school to work transitions and focused on improving vocational education and training systems. Member States have implemented qualification frameworks, to better link general education, vocational education and training, and higher education, and to improve the transparency of qualifications across borders. Relevant changes were introduced to tertiary as well as primary and secondary education systems.
While some Member States have improved benefits addressing child poverty, others have restricted access to or reduced benefits. Similarly mixed signs are found in access to early childhood education and care.
Rebalancing time in work and retirement is a key theme in pension initiatives as almost everywhere the pensionable age is being raised and gender equalised. More countries are also taking the crucial step of linking pension age to growth in age expectancy. In order to curb early labour market exit, most Member States have taken steps to restrict access to early retirement. Many Member States are opening routes for people to prolong their working lives and improve pension entitlements by deferring retirement.
Member States are reviewing healthcare expenditure and seeking ways to improve value for money while better instruments for cost containment are introduced. It remains necessary to find new ways of tackling staff shortages and securing access to healthcare for all calls for further measures. States are also taking steps to secure a better organisation of long-term care services.
Increased efforts to contain or reduce adult poverty include major overhauls of social assistance systems. Member States introduced also special inclusion programmes for people in situations of particular disadvantages and for people affected by homelessness and housing exclusion.
Reforms have been undertaken or are being prepared in all the above areas. However, the degree of progress varies across policy areas and between Member States. Further efforts are thus needed, even though in many cases the full effects of the reforms are not yet visible as they typically take time to materialise. Also the 'value' of reforms cannot typically be judged in isolation as several reforms may be undertaken at the same time. Member States should therefore take relevant trade-offs into account when designing policies and reforms.
Does the draft Joint Employment Report assess the reforms implemented by Member States?
The draft Joint Employment Report presents an overview of reforms and measures introduced by Member States in the past 12 months. The assessment will be conducted country-by-country in the context of the 2014 European Semester and presented in the proposals for Country Specific Recommendations next year.
How does the new scoreboard of indicators work?
The Commission announced in its October 2013 Communication on strengthening the social dimension of the Economic and Monetary Union (EMU) that it was creating a new scoreboard to follow key employment and social developments relevant for the well-functioning of the EMU. This serves as an analytical tool, allowing for the better and earlier identification of major employment and social problems and therefore allowing for prompt action.
The scoreboard consists of a limited number of key indicators of employment and social trends that can severely undermine employment, social cohesion and human capital. It contains five headline indicators:
The scoreboard covers all EU Member States and comparisons are thus made with the EU average. At the same time, statistical deviations from the euro area average merit particular attention as convergence in socio-economic outcomes is crucial for the good functioning of a currency union using a single monetary policy. This is why there are two annexed tables showing the Member States' situation vis-à-vis the EU and the Eurozone averages respectively.
Scoreboard of key employment and social indicators with EU and Eurozone averages as reference points
* The latest data for RO for real growth in GHDI available for 2010-11
* The latest data for RO for real growth in GHDI available for 2010-11
What are the key findings from the scoreboard for the EU and the Eurozone in general? Why should they be a matter of concern for all Member States?
Analysis of the five indicators of the scoreboard shows that prior to the current financial and economic crisis, the European Union saw convergence of most social and employment performance indicators. However, since 2008, most employment and social indicators point to a growing divergence between the southern and peripheral EU countries, and the countries of Northern and Central Europe. Also even more resilient Member States become affected by spill-overs through reduced aggregate demand, eroded confidence, and contagion via the financial markets.
The divergence is clearly visible in the rates of unemployment, of youth unemployment and of young NEETs. Greater divergence within the euro area than outside of it is also apparent in the cases of household income and inequalities. Poverty rates have also grown in the euro zone 'periphery' while remaining steady in the 'core'.
In the event of an economic shock, employment and social problems risk developing within the monetary union partly because of the limited range of adjustment tools available. At the same time, lack of implementation of effective policy responses to major employment and social challenges may indirectly result in negative effects in other Member States and the European Union as a whole. It is hence in the interest of all Member States to ensure that employment and social challenges are addressed in a timely and effective manner.
For further information
IP/13/1064 European Semester 2014: strengthening the recovery
MEMO/13/970 Third Alert Mechanism Report on macroeconomic imbalances in EU Member States
MEMO/13/979 The EU's economic governance explained