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European Commission

László Andor

European Commissioner responsible for Employment, Social Affairs and Inclusion

Speech: Employment and Social Situation Yearly Review 2012

Press conference / Brussels, 8 January 2013

You do not need me to tell you that 2012 was another very bad year for Europe. After five years of economic crisis, recession has returned, unemployment has reached levels not experienced in nearly two decades and the social situation is also deteriorating. This is confirmed by the latest review of Employment and Social Developments in Europe, which the Commission is publishing today.

The review also shows why the European social situation is so worrying. Household incomes have declined and the risk of poverty or exclusion is constantly growing.

Some population groups are affected more than others: young adults, unemployed women and single mothers are among those facing the highest risks of persistent poverty.

But the value of this review is not that it simply confirms to us how bad the current employment and social situation is. This review also shows us what works in terms of taking measures to remedy these problems so that Member States know better how to adjust their policies and build solutions that measure up to the problem we face.

First, the review shows that, after a few years of persistent crisis, most national welfare systems have lost much of their ability to protect household incomes against the effects of the crisis. The cushion of lower tax receipts and higher spending on social benefits, so-called 'automatic stabilisers', has gone flat as national fiscal policies have lost room for manoeuvre.

This points to the need to find better macroeconomic stabilisation mechanisms as we try to improve the functioning of the EU's Economic and Monetary Union. And more generally, we need to develop a much more integrated Economic and Monetary Union, including in the field of employment and social policies, as highlighted by the December European Council.

Second, the review confirms that the incidence of long-term unemployment varies widely between Member States, and that long term unemployment reflects the importance of skill levels. People need the right skills for the right jobs. The review's analysis shows in particular that in some countries, notably in the Southern part of Europe, the match between skills and jobs is bad and/or has worsened.

To reduce the skills mismatch, countries need to invest more efficiently in education and training, spend better on active labour market policies and support the creation of high skilled jobs in growth sectors such as the green economy, information and communications technologies and the healthcare sector.

The skills mismatch problem is particularly acute for the 7.5 million young Europeans between 15 and 24 who are unemployed or not in any form of education or training (so-called NEETs).

The proposals outlined in our December 2012 Youth Employment Package aim to address this problem by ensuring that jobless young people can boost their chances of finding a job. The Member States are called to establish a Youth Guarantee scheme ensuring that all young people up to the age of 25 receive a quality job offer, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed. I therefore urge Member States to adopt and implement such schemes urgently.

Another Commission measure adopted recently, to modernise and improve the pan-EU job search network EURES, will help people with relevant skills to find jobs in other countries that need those specific skills. The aim is to make it easier for jobseekers to contact employers looking for particular skills, and for companies to find suitable workforce. There will be particular focus on sectors and occupations with skills shortages and targeted mobility schemes for young people.

Third, the risks of entering and escaping poverty vary greatly across Member States. The divergence is especially striking between the north and the south of the Eurozone. A widening gap is emerging between the countries confronted with fast rising unemployment and those that have better-functioning labour markets.

On the positive side, the review shows that improvements in the design of welfare systems can increase Member States' resilience to economic shocks and facilitate faster exit from the crisis. It means that Member States need to continue to reform their labour markets and social protection systems.

We set out an agenda for job creation and balanced labour market reform in the April 2012 Employment Package, and I will shortly present a Social Investment Package for Growth and Cohesion to address the growing risks of poverty and social exclusion.

As the crisis drags on, governments find it more difficult to invest in people and prevent economic and social exclusion. But we need social investment now, otherwise we will see a decline in economic potential and much larger social costs in the future.

The Social Investment Package will show ways to modernise the European Social Model so that it mobilises a larger share of Europe's human capital, ensuring social inclusion of disadvantaged people and an adequate level of social protection.

It is by working together, by learning from each other, by identifying where the real problems lay that we can make 2013 and the years ahead better than 2012. This review helps us to do just that.

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