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            The Commission presents its second report on employment
   Employment and Unemployment Trends
   In the 4 year period 1985 to 1989, employment in the Community  increased
   by 7 million -a sustained rate of employment growth unsurpassed since the
   1950s.  Employment  is forecast to increase still further -by over 1  1/2
   million this year and by over 1 million in 1991.
   As  employment has increased, unemployment has fallen.  It now stands  at
   12.5 million -some 8.5 % of the working population.  The forecast is  for
   a  continued small decline over the next two years.  It is  notable  that
   the fall in unemployment has been much less than the additional number of
   jobs created.
   Employment creation 1985 to 1988 - An In-Depth Analysis
   A detailed analysis is presented for the 3 year period 1985 to 1988,  for
   which detailed statistics are available.
   Of the 5 million extra jobs created in the 3 years 1985 to 1988, nearly 3
   million  were filled by women i.e. 60 % of the additional jobs.  40 %  of
   the additional 5 million jobs were part-time rather than full time.
   The  additional jobs created between 1985 and 1988 were predominantly  in
   service  sector  activities.  Employment in services increased  in  every
   Community country over this period by an average of 5 %.  Few extra  jobs
   were  created in inudstry apart from in Spain and  Portugal.  Within  the
   service sector, employment increased most in health, education and  other
   services, which accounted for over 2 million extra jobs.
   In all Member States female employment increased significantly more  than
   male  employment between 1985 and 1988.  The only exception was  the  FRG
   where employment fo men and women rose at a similar rate.  In most Member
   States,  the percentage increase in female employment was at least  twice
   the increase for men.
   In  a  majority  of  countries,  part-time  employment  increased  at   a
   significantly  higher  rate than full-time employment  between  1985  and
   1988.  In  some  countries,  however, the share  of  part-time  work  has
   fallen.  In   Spain   (1987  data)  the  number  of   part-time   workers
   -particularly men- declined.
                                     - 2 -
   Unemployment Only Falling Slowly
   As employment increased, unemployment has fallen.  It now stands at  12.5
   million  -some 8.5 % of the working population.  However, in  all  Member
   States,  the  fall  in the number unemployed between 1985  and  1988  was
   substantially  less  than  the additional  number  of  jobs  created.  In
   effect,  only  1  in  8  of the new  jobs  created  were  filled  by  the
   While the number of unemployed men fell by almost a million between  1985
   and  1988,  the  number  of women out of work  actually  rose  by  almost
   The  reason  unemployment did not fall significantly was that  the  extra
   jobs  were filled either by young people coming on to the  labour  market
   for  the  first  time -who accounted for over half  of  the  increase  in
   employment-  or  by  people who, up until finding a  job,  had  not  been
   counted  as unemployed at all.  These were predominantly women, who  were
   not  previously in the labour force, but who took up employment  once  it
   became available.
   The pattern varied between countries.  In several countries, particularly
   Spain, France and Italy, a large proportion of the new jobs were taken by
   new  entrants  to  the  labour  market  as  the  working  age  population
   increased.  In   others,   the   increased   employment   resulted   from
   proportionately  more people going into employment -this  was  noticeably
   the   case   in  the  Federal  Republic  of  Germany,   where   increased
   participation accounted for 90 % of employment growth.
   In  Italy,  although  employment rose during  this  period,  unemployment
   actually  increased.  Only  in  Portugal and the UK  were  a  significant
   proportion of the extra jobs created filled by people who had  previously
   been counted as unemployed.
   The   major  exception  to  this  general  tendency  was  Belgium   where
   unemployment  fell, despite the fall in employment, as both  the  working
   age population and the rate of participation declined.
   Persistent Long-term Unemployed
   The  problem  of  long-term  unemployment  seems  to  have  become   more
   entrenched   during  the  1980s.  While  unemployment  has  fallen,   the
   proportion  of  long-term unemployed (those unemployed for  more  than  1
   year)  has  increased from 37 % in 1979 to 47 % in 1983 and to  53  %  in
   1988.  Moreover,  the  proportion of very long-term  unemployed  (over  2
   years) has increased from 23 % in 1983 to 35 % in 1988.
                                     - 3 -
   7  million  people,  5  % of the  Community's  labour  force,  have  been
   unemployed  for over 1 year.  the problem is particularly acute in  Spain
   and  Ireland where, in 1988, the number of long-term unemployed  amounted
   to 11 % of the labour force.  The problem is also serious in the southern
   part of Italy and in parts of Belgium, where long-term unemployment  also
   exceeded 10 %.
   In  the  southern  Member  States,  long-term  unemployment  particularly
   affects the young.  In Italy, young people under 25 made up over half  of
   the  long-term  unemployed in 1988 and the proportion was  only  slightly
   less  in Portugal, Spain and Greece.  In the more developed countries  in
   the  north,  only around 10-15 % of the long-term unemployed  were  young
   Employment Issues
   The  1990s  promises  to be a decade of  immense  opportunities  for  the
   Community.  The  completion of the Internal Market, in  conjunction  with
   prospective moves towards monetary union and closer coordination of other
   aspects of policy, offer the potential for stronger economic performance,
   more   balanced  development  and  closer  social  cohesion  within   the
   The 1992 programme is having a significant effect on business.  Companies
   are  adopting a more European perspective and, in a number of  cases  are
   beginning  to  rationalise their operations on a European rather  than  a
   national basis.  Perhaps the clearest quantitative evidence of the change
   in the business environment is the quadrupled increase in merger activity
   over the past 5 years.
   The  Commission has identified the industrial sectors which stand  to  be
   most  affected by the 1992 measures.  In the Northern Member States,  the
   sectors tend to be both high-tech and more traditional heavy  industries,
   in  many  cases  protected  at present  by  national  public  procurement
   policies.  In  Southern Member States, they tend to be  labour  intensive
   industries such as clothing, footwear or textiles.
   In  the  North of the Community further rationalisation seems  likely  as
   national protection is removed.  In the South, countries face a choice of
   continuing  to specialise in current manufactures, or of  exploiting  the
   opportunities  offered  by  the 1992  programme  and  diversifying  their
   industrial structures to be more like those in more developed  economies.
   There   are   clear  signs  in  Spain  and   Portugal   that   industrial
   transformation in this direction is underway.
                                     - 4 -
   Wages and Labour Costs
   In all Member States, the rate of increase in real wages was much less in
   the 1980s than in the 1970s.  Since 1983 real wage growth has slowed down
   and as a result unit labour costs have fallen steadily and are now  lower
   as a proportion of value-added than in the 1960s.
   Wage levels vary markedly across the Community when measured in terms  of
   ECU.  Differences in real income, however, are much less pronounced  once
   differences  in  the pattern of consumption and in  relative  prices  are
   taken into account.  Differences in real wages between Member States have
   tended to narrow in the last 20 years, but more so in the 1970s than  the
   Differences  in  wages  and labour costs  across  the  Community  largely
   reflect  differences  in labour productivity.  Labour costs per  unit  of
   output  do not vary much from one part of the Community to  another.  The
   incentive  for  producers  to relocate from high to low  wage  areas  may
   therefore  not  be great.  As a result, policy focused primarily  on  low
   rates of pay will not necessarily secure a shift in market share  towards
   the  weaker  countries  in the Community.  That will  depend  on  raising
   productivity through increased investment in industry and infrastructure,
   and in a better educated and more skilled and enterprising workforce.
   The  gap  between the wages paid to men and those paid to  women  remains
   significant  in  most parts of the Community with  men  in  manufacturing
   employed in manual jobs earning on average around 25 % more per hour than
   women.  There are differences between Member States -in Denmark and Italy
   women were paid an average of 85 % of the hourly rate for men whereas  in
   the UK and Ireland they received less than 70 %.
   Environment and Employment
   Problems  of the environment -notably of the threat from global  warming,
   of  the  increasing  destruction  of natural  resources  and  of  growing
   pollution- impose new constrains on economic development.  This does  not
   mean  that the Community should accept or even welcome slower  growth  of
   the  European  economy, still less of the world economy.  It  does  mean,
   however,  that the need to protect and improve the environment must  play
   an   increasingly  important  role  in  determining  the   direction   of
   development,  the pattern of growth, the kinds of goods produced and  the
   methods used to produce them.  Changes will be far reaching but they  are
                                     - 5 -
   Around  1  %  of the Community's labour force  is  employed  directly  in
   environmental  industries  with a much larger number  of  jobs  concerned
   indirectly.  The future growth of employment in these industries  depends
   very  much  on  Government  policy  and  on  the  commitment  of   public
   expenditure.  The environmental market is largest in the Federal Republic
   and  the  smallest in the Southern States.  The Community  will  need  to
   ensure  that  its products are environmentally friendly  and  incorporate
   sophisticated  pollution controls if it is to exploit the  potential  for
   job  creation in this area and if it is to maintain  its  competitiveness
   relative to producers in the US and Japan.
   Women's Access to Employment
   The  participation  of  women  in the labour force  remains  low  in  the
   Community.  The participation rate for women with children is around 50%,
   with substantial differences between Member States.
   Although  women  account for 38 % of total employment in  the  Community,
   many  women  have non-stnadard terms of employment and  inferior  working
   conditions.  28  % of women's employment is part-time and  a  significant
   proportion of women filling such jobs would prefer full-time work.  Large
   numbers  are also employed in temporary jobs, half of them  because  they
   could not find permanent ones.
   The  obstacles  to employment are much greater for women  than  for  men.
   Adequate  childcare arrangements are a key requirement for many women  to
   participate  at all in the labour market.  Other areas where  improvement
   is   needed   include:   pre-vocational   training   courses;   transport
   arrangements  for  travelling  to and from  work;  co-ordination  between
   working  hours  and school hours; systems of parental  and  family  leave
   during pregnancy and early infancy.
   Managing Human Resources
   Large  firms  -those employing more than 500 people- employ more  than  a
   quarter of the Community's labour force, and a much higher proportion  in
   the  manufacturing sectors.  The way such large firms recruit and  manage
   their  labour forces has an important impact on standards  and  practices
   within the labour market generally.
   Large   companies  are  paying  greater  attention  to   human   resource
   management.  A  particular emphasis is given to raising  the  educational
   and skill level of their labour force and developing flexible  production
   systems adapted to meeting global market conditions.
                                     - 6 -
   The  globalisation  of markets is being matched by the  globalisation  of
   different  management ideas.  The Japanese ways of doing things,  or  the
   strategies  of  US multi-nationals, are becoming as much a  part  of  the
   European  labour market management scene as the practices  of  indigenous
   European companies.
   Vocational Training
   The  1990s will be a period of intense pressure on systems  of  education
   and  training.  The  inadequacy of existing training provisions  in  many
   areas  is being perceived, although the poor quality of statistics  makes
   it  difficult  to  document the current situation and  hence  to  develop
   better strategies and practices.
   There  are significant differences in education and  training  provisions
   between Member States as regards the amount and duration of schooling and
   normal  training  which  young  people  receive,  both  compulsorily  and
   voluntarily.  In  some Member States education and training  are  closely
   linked, in others, vocational training has a lower status.
   Economic and Social Cohesion
   Disparities  in  income  per head and in  employment  remain  substantial
   across  the Community.  From the beginning, the Community  has  committed
   resources  to  structural  readjustment and  the  alleviation  of  social
   problems.  These  have  increased and been given  more  coherent  purpose
   under  the Single European Act and the Reform of the Structural Funds  as
   the Community has expanded to include poorer, less developed countries.
   The main policy emphasis is on strengthening regional and local economies
   through  investment  and  through  the  training  and  education  of  the
   workforce.  Structural  Fund  expenditures  will  double  in  real  terms
   between  1988 and 1993 when they will account for 25 % of  the  Community
   budget.  Over  60  % of expenditure from the Funds will go  to  assisting
   less developed regions in the less developed Member States.
   Reducing  long-term  unemployment  is  one of  the  major  objectives  of
   Community policy within the new Structural Funds.
   Employment in Central and Eastern Europe
   In  order to assess the potential economic and employment effects of  the
   policy  changes  taking place in Central and Eastern Europe,  the  report
   presents the basic facts about employment activity.  The total  populaion
   of  Central  and  Eastern Europe -Albania,  Bulgaria,  German  Democratic
   Republic, Poland and Hungary, Czechoslovakia, Romania and Yugoslavia-  is
   around 140 million.  Of these, some 93 million are of working age.
                                     - 7 -
   This compares with a total Community population of around 320 million, of
   whom some 220 million are of working age.  The Soviet Union's  population
   totals 285 million, some 185 million of whom are of working age.
   A higher proportion of the working age population is employed in  Central
   and  Eastern  Europe  than  in the Community.  In  total,  66  %  of  the
   population  aged  between  15 and 64 were in employment  in  Central  and
   Eastern  Europe in 1988 as compared with 59 % in the  Community.  Figures
   for  the United States, Japan and several other industrialised  countries
   are higher again -at over 70 %.
   The  difference between the Community and Central and Eastern  Europe  is
   due  entirely  to  differences in the rate of employment  of  women  -the
   employment  rate  of  women being 60 % in  Central  and  Eastern  Europe,
   compared with 45 % in the Community.
   In  contrast  to the Community, the labour force in Central  and  Eastern
   Europe is much more extensively employed in agriculture and industry than
   services.  In Central and Eastern Europe employment in services  accounts
   for  around  37  %  of total employment,  a  figure  slightly  below  the
   proportion  employed in services in Portugal and Greece, and  well  below
   the Community average of over 60 %.
   The  political changes now underway in Central and Eastern  Europe  raise
   various  issues  for  the Community.  In the short run,  the  process  of
   systematic reform and the abolition of administered full employment  will
   lead  to  a significant increase in unemployment.  This gives  cause  for
   concern since social security provision is totally lacking.
   Up to now trade between the two parts of Europe has been small.  In  1988
   only  around 3% of total Community export of goods to  countries  outside
   went  to Central and Eastern Europe.  In the longer run,  however,  there
   are  consideraly  possibilities of achieving a significant  expansion  of
   trade  which could provide business opportunities and employment for  the

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