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[1] On a proposal  by Mr Flynn, Commissioner responsible for Employment and
Social  Affairs,  the Commission  has  today  adopted  a  set of  proposals
designed to  develop further the  action plan against unemployment  adopted
by the European Council in December 1993.The Commission is now  asking that
the European Council at Essen on 9 and  10 December endorse specific policy
guidelines (see annex) which build upon the 1993 Action Plan.

These  guidelines, although  not binding,  would be  implemented by  Member
States in  accordance  with their  own economic  characteristics and  would
provide a benchmark  for the reform  of national employment systems  in the
context  of a  mutually  supportive process  of  assessment between  Member
States.

Introducing the guidelines to the  Commission, Mr Flynn said that "we  need
to intensify our actions in five main areas" :

. Improvement   of  the   employability   of  people,   with   the  active
  participation  of  industry   and  the  social  partners,  by  promoting
  investment in  vocational  education  and training  policies,  combining
  practical  training and  work  experience  and  offering  qualifications
  closer to market needs.  Access to  life-long learning and training  and
  to training in new technologies should be generalised.

. Increase  of  the  employment  intensity of  growth,  in  particular  by
  arrangements providing  more flexible patterns  of work organisation and
  working  time suitable  to  employees' preferences  and  compatible with
  competitiveness requirements, by wage developments  enabling greater job
  creating investment, and by facilitating the development of  regional or
  local initiatives  maximising the  job creation  potential of particular
  areas and activities.

. With due recognition of the differing starting position in Member States
  and  within  the objective  of reducing  public deficits,  reductions of
  non-wage  labour costs should  be more  far-reaching in order to  have a
  significant impact on the decisions to hire people, especially the lower

  qualified.   Alternative sources of  taxation, especially those destined
  to preserve the  environment or on capital revenues, will  be necessary,
  unless  revenue losses  can  be  compensated by  increased  revenue from
  growth or by a parallel reduction in public expenditure.

. More effective  labour  market policies  based on   the  combination  of
  income  support  schemes and  active  policies,  offering individualised
  support  and training  and retraining  possibilities, and  assisting and
  encouraging the unemployed in their search for jobs.  Priority should be
  given to  action to  prevent long-term unemployment and  to promote  the
  integration into the labour market of the long-term unemployed.

. Specific action in favour  of young people and especially those with low
  qualifications, offering them support to find a job, the possibility  to
  acquire   new   qualifications   or   experience,   and   by   promoting
  apprenticeship systems.  National action could be supported by Community
  action in the context of Youthstart.

Commissioner Flynn  said that  the  Social Affairs  Council should  examine
measures taken  in the context  of these guidelines  at least once a  year,
and  that progress would  be reviewed  annually by the  European Council on
the basis of  a coordinated examination   by the EcoFin and  Social Affairs
Councils.

Annex

The  Commission proposes  that  the European  Council  adopt the  following
objectives to be monitored between now and the year 2000.

1.   Improving the employability of people via education and training

a)   Life-long learning and access to continuing training for all should be
     more widely promoted. The competitiveness  of the workforce should  be
     enhanced, by giving greater priority to investment in human capital in
     the  context of  the  general policy  to  support investment,  and  by
     encouraging  firms  to  build  training into  their  company  business
     planning with the active involvement of the social partners, including
     through  collective   bargaining.  Priority  should  be   accorded  to
     increasing  participation  in  training  for those  working  in  SMEs,
     including their managers, unskilled workers and  those whose job is at
     risk. Access  to training should  be actively promoted  in combination
     with part-time work. Investment in people should receive tax treatment
     no  less favourable than that given to physical capital investment and
     consideration should be given  to the provision of tax  incentives for
     individuals and firms to invest in their own training.

b)   Vocational education and training policies should be adapted to market
     needs through:

  .  the promotion of partnerships between government, the social partners,
     regional and local  authorities and  the private sector  to draw  upon
     their respective expertise to  improve competitiveness through the use
     of new technology and local labour market knowledge

  .  the more generalised introduction of periods of practical training and
     work  experience combined with formal education  both for young people
     and adults;

  .  improved measures designed to  anticipate new skills and qualification
     needs by allocating  an increasing share of training resources to such
     medium-term objectives (with a medium term objective of up to 5 %) and
     by  increasing  the  involvement  of, and  coordination  between,  the
     private sector, public employment  services and education and training
     systems; special attention should be given to training requirements in
     the context  of the emergence  of the  information society and  of the
     development of new areas of job growth.

c)   Training methods  and provision  should be diversified,  in particular
     through:

  .  the use of new technology, and the dissemination and use of innovative
     approaches and good practice developed through  transnational training
     partnerships and networks; 
  .  the development of quality  standards for training supply and  for the
     training of trainers;
  .  the  development of  varied  routes to  acquiring qualifications,  for
     example through the recognition of  prior learning and work experience
     or credit accumulation;
  .  more  effective  linking of  R&D  programmes  with training  provision
     including  distance   learning,  with  particular  reference   to  the
     potential exploitation in SMEs.

d)   The  on-going reforms  in  education and  training  systems should  be
     linked  to  the   setting  of  national  strategic  targets   for  the

     qualification level of the  workforce as a whole, to  be progressively
     achieved and monitored  by the year 2000. These  targets should aim to
     ensure that a  large proportion  of the present  and future  workforce
     effectively participate  in retraining,  improve their  skill  levels,
     motivation  and  performance,  and  have practical  knowledge  of  new
     technologies.

2.   Improving the employment intensity of growth

2.1  Flexibility and work organization

a)   Part-time  work  should be  facilitated  and promoted  on  a voluntary
     basis, where necessary, through measures such as:
  .  the  provision  of  equal  treatment  of  part-timers,  with  benefits
     proportional to the time worked
  .  incentives to work-reorganization  schemes which combine  reduction of
     working time with new hirings
  .  introduction of progressive retirement arrangements
  .  introduction of  part-time work possibilities by the public sector and
     administrations
  .  offering people accepting  to reduce working  time the possibility  to
     acquire new qualifications.

b)   The introduction of flexible working  organization arrangements should
     be promoted, in a decentralized way, in particular in the framework of
     agreements between employers and  employees. They could facilitate the
     redistribution  of work throughout the  year or even  over the working
     life  of  employees, and  be combined  with  a better  exploitation of
     capital equipment. Measures could include the annualization of working
     time,  the possibility to take leaves for training, childcare or other
     purposes, job-rotation schemes, or the provision of incentives for the
     unemployed to fill temporary vacancies. Social partners should also be
     encouraged to view the proper diffusion of information technologies as
     a vehicle  for enhancing communication  and participation at  work and
     also for enlarging the  scope for flexible working time  through tele-
     work.  Governments could  contribute by creating  the right  legal and
     administrative   framework,  and   by  introducing   flexible  working
     arrangements in the public sector. 

c)   Recourse  to  redundancies  at  times  of  slowing  demand  should  be
     diminished  through   the  introduction  of  new   forms  of  downward
     flexibility, enabling adjustments  in the total amount of hours worked
     as an  alternative to  reducing  the number  of people  employed in  a
     company. These could include:
  .  collective  agreements  at company  or  sector level  providing  for a
     temporary reduction of working time
  .  introduction of partial unemployment
  .  granting  of incentives  to  facilitate the  conclusion of  job-saving
     agreements.

d)   Mobility  between and  within firms, including  geographical mobility,
     should  be improved,  through measures  such as  the promotion  of the
     mutual  recognition  of  qualifications, the  encouragement  of credit
     systems,  the  provision of  incentives  to move,  the  elimination of
     strict  barriers  between  professional categories,  and  through  the
     development of job vacancy information networks.

e)   National legislation on working conditions generally and especially on
     employment  protection should be reviewed, to ensure that it is simple

     and effective, up-to-date and encourages employers to create more jobs
     while meeting  objectives of adequate social protection with the least
     possible  costs,  serves  to  encourage stability  in  human  resource
     management,  is conducive to job  search, and is targeted  to those in
     need. This review  would include a range  of policies which impact  on
     employment,  such as  taxation,  social security,  labour law  and the
     collective  bargaining process. Such a  review could take into account
     the conclusions,  due for June 1995,  of the Group  on Legislative and
     Administrative Simplification  set up recently by  the Commission, and
     of  the on-going work of  the Committee for  improving and simplifying
     the  business environment.  It  should put  especial  emphasis on  the
     simplification of the regulatory environment for SMEs.

2.2 Wages

Wage negotiations  need  to be  adapted  both to  the evolution  of  labour
productivity and  of the overall  macro-economic situation. In  particular,
average real wages  per employee should continue the present trend observed
in  a majority  of Member  States and  grow below  productivity growth  (by
around 1%)  to facilitate  that a  larger share  of productivity gains  are
devoted to employment  creating investment and to additional  job creation.
With  this objective,  and to meet  competitiveness concerns, methods could
be developed  to better  adapt wages  to different  productivity levels  at
regional, sectoral or company level.

2.3  Exploiting  new job  opportunities  to meet  new  needs through  local
     development

The exploitation of  this potential for  substantial creation  of new  jobs
through  greater diversification  of activities  meeting  the new  needs of
European people, which  is mostly conditioned by  the particular  national,
regional or local  characteristics, could be best achieved  through setting
a more  coherent framework  for action  conducive to  local employment  and
development initiatives, which would be based on the following elements:

a)   The establishment of procedures  at local and regional level  with the
     support  of  the  relevant  authorities,  such as  local  or  regional
     development  agencies, to identify local needs  and local resources to
     meet  them, to  identify  key areas  of  job growth  in  the different
     sectors  or  areas,   and  to  facilitate  the  development  of  these
     activities and the exploitation of job opportunities. 

b)   National  authorities  should  establish  or/and  regularly  review  a
     framework at national level for the promotion of local initiatives and
     for  the removal  of obstacles  to the  development of  new employment
     opportunities. These frameworks should include different aspects  such
     as:

  .  diversification   of  financial  instruments  (for  example,  service-
     vouchers, tax  deductibility of expenditure in  certain services, risk
     capital funding for small and micro-business, or use of local savings)
  .  obstacles to the equal opportunities for women to be actively involved
     (including opening hours of shops and availability of services such as
     child care and transports)
  .  new ways to check the quality of services in these sectors
  .  reinforcement of  the fight  against unfair competitive  practices and
     illegal work
  .  reduction of non-wage costs as incentive to additional recruitment, or
     topping-up  of  income  by  social   security  payments  in  order  to
     facilitate  access  to a  job  in  certain areas  of  activity  by the
     unemployed
  .  support for  community enterprises and other  organisations seeking to
     assist the transition from unemployment into the market economy.

c)   Within those  national  frameworks, cooperation  between  regional  or
     local  authorities and governments  could take the  form of integrated
     schemes,  combining in the most  efficient way the different available
     levers of  policy action. The decentralization  of employment services
     and  of training  should  also  be  encouraged  in  order  to  provide
     integrated and adequate partnerships  between local services and local
     development  and employment  initiatives.  Regions  and  local  areas,
     particularly those facing large  scale structural change and potential
     redundancies,  could be  supported  by local  or regional  development
     agencies  in  developing appropriate  responses, such  as conventional
     labour  market  assistance,  support   for  new  job  generation,  the
     provision  of  adequate training  possibilities,  the introduction  of
     flexible patterns  of work organization, or  special opportunities for
     young  people. Public  action should  take place  normally only  where
     private initiative is insufficient to meet social needs.

d)   An  interface  between  the  national  framework,  local   development
     activities  and private  initiatives, including  micro-enterprises and
     the  community  and  voluntary  sectors,  should  be  secured  by  the
     promotion  of  public-private partnership  projects  to  encourage job
     growth  in  new   sectors,  and   to  help  the   building  of   local
     resourcefulness  of  small  enterprises  and  other  local  actors.  A
     reorganization and  diversification of public  intervention, including
     the  use  of  "delegated   management"  of  certain  public  services,
     particularly utilities, would contribute to this end.

e)   The constitution of  locally based  knowledge data banks  in urban  or
     rural   areas,  efficient  decentralization  of  public  services  and
     interactive networking among  "islands of development" should  benefit
     from an extensive use of new information technologies. The building up
     of  information  highways should  be  linked with  local  and regional
     communication networks.

3.   Reduction of indirect labour costs

Action  by Member States  in this  area should  give a clear  indication to
economic agents that  a significant change  is taking  place regarding  tax
and social  contributions,  with the  aim  of  restructuring them  to  give
labour, and especially low-skilled workers,  a comparative fiscal advantage
or at least treatment no less favourable as  compared with other factors of
production. Objectives regarding non-wage cost reduction include:

a)   Within the objective  of reducing public deficit  the increased fiscal
     margin  of manoeuvre resulting by  the return to  growth should enable
     the reduction (1-2 % of GDP) of non-wage costs to be accelerated. This
     reduction  is  particularly important  for  those  Member States  with
     higher than average non-wage labour costs.

b)   Taking  into account that the main obstacle  for the reduction of non-
     wage  labour costs  is  the difficulty  to compensate  revenue losses,
     alternative  sources of  taxation should  be identified,  particularly
     those destined  to integrate  into the  market mechanism  the external
     costs to the environment  and the use of scarce  natural resources. To
     this  end,  a coordinated  action of  the Member  States, such  as the
     revenue  safety  net  already  proposed by  the  Commission  (CO2 tax,
     minimum  taxation  of  capital   revenues),  would  reduce  the  risks
     associated  to the instability of  the tax base,  thus reinforcing the
     margin of manoeuvre of each Member States in its fiscal policy.

c)   The  targeting of the reduction  in non-wage costs  towards the bottom
     end of the labour  market being increasingly applied by  Member States
     should now be  intensified. The targeting towards job  creation should
     be  emphasized  through  the link  of  fiscal  advantages  to the  net
     creation of jobs, which may be combined with other employment actions,
     such  as the promotion  of new employment  possibilities, training and
     working time reorganization.

d)   Especially  as  the upturn  in the  economic  growth takes  place, due
     attention should be given to encouraging new recruitments, rather than
     extending the  working hours of  existing employees, by  reductions in
     social contributions.

4.   Improving employment policies and employment services

a)   The balance of labour market expenditure should be shifted towards the
     development of active labour market policies, and within them to those
     active  measures  most effective  in  helping people  into  work, with
     priority attention  to the long-term  unemployed and young  people. In
     particular to fight long-term  unemployment, measures should include a
     combination of:

  .  professional  counselling,  support,  information  and  job placement,
     improving  the  chances  of the  unemployed  to  compete  for jobs  by
     providing them with individualized assistance
  .  active  involvement to  promote  the development  of new  job-creating
     activities, to support those  who want to start  a business or  become
     self-employed, or to offer fixed-term jobs with public support
  .  the  offer  of  training   and  retraining  possibilities  with  clear
     employment prospects and recognized qualifications in credit
  .  automatic intensification of efforts in favour of the unemployed after
     six  months  of  unemployment  to prevent  leaning  towards  long-term
     unemployment
  .  intermediate labour  market initiatives to provide  stepping stones to
     the formal economy.

b)   Public  employment   services  should  be  made   more  efficient  and
     responsive  to the needs of people and business, through improving the
     delivery  of  their  services,  greater  decentralisation  and  better
     adaptation to  the local environment,  and more active  involvement of
     the  social partners.  More  effective coordination  with services  in
     charge of unemployment benefits should be required, including whenever
     appropriate the establishment of  "one stop-offices" or other formulae
     providing integrated services closer  to the unemployed. More rigorous
     monitoring of these  services and their  staffing resources should  be
     established.

c)   The  operation of social security should be examined, in particular to
     find  ways to achieve a  more efficient combination  of income support
     schemes and active policies providing more scope for the unemployed to
     find work or become self-employed, through measures such as:

  .  restructuring  of   national  income  support   schemes  enabling  the
     transformation of  unemployment  allowances into wage subsidies and/or
     topping-up  income from  work  with income  from  social security,  by
     developing integrated  taxation and  income support  schemes  ensuring
     greater efficiency of measures in ways which avoid possible adverse or
     distortive effects. Such schemes could be combined with initiatives to
     promote  job creation in activities  of general public  interest or to
     help the development of local employment initiatives;

  .  incentives  to accept  part-time  jobs or  temporary  contracts or  to
     initiate  an   economic  activity   as  self-employed,  such   as  the
     introduction  of temporary  part-time unemployment allowances,  or the
     guarantee of  return to full-time  unemployment allowances in  case of
     loss of a part-time job, after expiry of a temporary contract or after
     cessation of independent activity.

5. A better future for young people

Member States  should give  high priority  to improving  the transition  of
young people from school to work, with  greater efforts and specific action
to diminish the numbers of unqualified school leavers:

a)   In order  to  ensure  that no  young  person goes  from  education  to
     unemployment  and to  affirm  the right  of young  people  to a  basic
     qualification,  a guarantee  should be introduced  progressively, with
     the cooperation of industry  and the social partners, that  each young
     person under 20 will be either  in full time education or training, in
     employment,  or in a  linked work-training programme.  A commitment to
     the effective implementation of Youth-Start in the Member States would
     underpin this objective. In the context of Youth-Start, a programme of
     voluntary  civil or  community  service could  be developed,  combined
     whenever possible with training leading to a vocational qualification.

b)   By  the year 2000  Member States should  seek to halve  the members of
     unqualified school-leavers who leave  school with no qualification and
     lacking  basic skills. All young people who leave the education system
     without a  basic  qualification should  be  provided a  second  chance
     through  the provision  of an entitlement  to obtain  basic vocational
     qualification, within five years of their leaving compulsory full-time
     education.  This  'second  chance' vocational  qualification  should 
     be founded  on an  individual  work  experience and  training plan,  
     to  be implemented  with the full  collaboration of all local services
     and the social  partners  in  providing  recognised  linked  work  and
     training opportunities.

c)   The  promotion of  the vital  importance of  vocational and  technical
     education for young people, by giving priority to cooperation  between
     schools  and industry,  by  widening  access  to  further  and  higher
     education for  people with  vocational qualifications, by  modernizing
     and  making more  attractive  apprenticeship systems  with the  active
     involvement of the social  partners, as a key option  within the range
     of linked work  and training  opportunities for young  people, and  by
     improving  the guidance  systems and  strengthening  their cooperation
     with  public employment services. Access to a work experience could be
     facilitated  through  apprenticeship,  traineeship  and  other special
     contracts  providing  for  training  and  work  experience,  with  the
     necessary safeguards.

[1]     COM(94) 529

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