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Speech : Tackling the EU's social deficit

European Commission - SPEECH/14/471   17/06/2014

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European Commission

[Check Against Delivery]

László Andor

European Commissioner for Employment, Social Affairs and Inclusion

Tackling the EU's social deficit

Plenary meeting of the Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union

Athens, 17 June 2014

Honourable Members,

Ladies and gentlemen,

Three weeks ago, EU citizens expressed their opinions in the European Parliament elections. The outcome of these elections has given new impetus to the debate about what needs to be done to bring the European Union closer to its citizens. This makes the subject of this event — tackling the EU’s social deficit — so topical.

Improving living and working conditions has been a major goal since the start of European integration – not only in the Treaty of Rome, but also in the Schuman Declaration.

Social policies and instruments have been at the core of the European project since its inception; they have played a key role in promoting convergence in the EU. In fact, there is a reference to convergence already in the Schuman Plan.

But this convergence process has slowed down and even gone into reverse in parts of Europe: six years of financial and economic crisis and four years of sovereign debt crisis have greatly increased economic and social disparities in Europe.

In that connection, it is important to talk about the European Employment Strategy – a core convergence instrument for more and better jobs throughout the European Union.

The European Employment Strategy provides a framework for coordinating employment policies, by setting objectives, monitoring developments and performance, and by addressing recommendations to Member States.

The Treaty provides for four tools as part of the European Employment Strategy: the Employment guidelines; the Joint Employment Report; the National Reform Programmes submitted by national governments, and the Country-Specific Recommendations issued by the Commission. These tools are today part of the European growth strategy – the Europe 2020 Strategy – and are integrated into the European Semester for policy coordination.

When the Europe 2020 Strategy was put in place in 2010, its ambition was to address the shortcomings of our growth model and the key longer-term challenges such as natural resource constraints, climate change, demographic and technological change, and globalisation.

To this end, the Strategy established five headline targets at EU level, which Member States then reflected in their national targets. These targets include 75% employment rate among 20-64 year-olds and at least 20 million fewer people in or at risk of poverty or social exclusion.

The Commission has launched the mid-term review of the Europe 2020 strategy. This is the context in which we should discuss the revision of the European Employment Strategy. But let's first have a look at the employment situation before and after the crisis started in the European Union.

Pre-crisis trends and impact of euro-area crisis in 2011-12

Employment in Member States rose constantly between 2002 and 2008, while the unemployment, including youth unemployment, fell.

This contrasts strongly with today's trend.

Compared to April last year, the EU unemployment rate has fallen from 10.9% to 10.4 %. But this is still remains unacceptably high. And young people continue to be hit hardest by the job crisis, with 22.5% unemployed across the EU. The EU also faces growing divergences in the employment and social situations of Member States and in their prospects for recovery, especially the euro area.

Employment Package and follow-up

In April 2012, the Commission put forward the Employment Package - a reform agenda for EU and Member State action setting out actions and reforms requiring particular emphasis in the context of the protracted economic crisis.

With the Employment Package, we have moved away from the traditional supply-side approach to employment policies, which focused on skills and activation of the workforce. We have put greater emphasis on measures stimulating the demand for labour and we have highlighted the importance of supporting job creation in three key sectors: the green economy, health and ICT sectors.

We have insisted on the need for balanced labour market reforms and for securing employment transitions. We have also emphasised the need for a balanced approach in terms of wage developments which should not only be in line with productivity developments but also support internal demand. And for the first time, the Commission addressed the role of a minimum wage to fight in-work poverty and inequalities.

The Employment Package also stresses the need to continue investing in skills and tackling labour-market mismatches. In addition, we have developed practical tools to build a genuine European labour market and reinforce the cooperation of public employment services.

To sum up, the Employment Package aimed at restoring the dynamics of the labour market in the context of the economic recession, by presenting a comprehensive agenda for employment policies that were designed to support a job-rich recovery and tackle unemployment.

The Employment Package and related CSRs

This agenda has subsequently been reflected in the European Semester. The Commission pays particular attention to active labour market policies (ALMPS) and to the functioning of the Public Employment Services, which are key for increasing the resilience of labour markets. The Commission also focuses on shifting taxation away from labour in order to support job creation. And let's note that wage increases have been recommended in surplus countries, notably the setting-up of general minimum wage in Germany. These points have been reiterated in the draft country specific recommendations which were proposed by the Commission on 2 June.

I am aware that you are particularly concerned by the situation of young people. The Commission is very committed to address the extremely difficult situation of young people by complementing the European Employment strategy with additional and innovative tools.

Youth Employment Package

In December 2012, the Commission presented a Youth Employment Package which included the Youth Guarantee, the European Alliance for Apprenticeships, the Quality Framework for Traineeships, and measures to reduce obstacles to mobility among young people.

The Youth Guarantee is the umbrella initiative for youth employment. It is a fundamental reform and also a new standard. The aim is for all young people under 25 to get a good-quality offer of a job, an apprenticeship, a traineeship or the chance to continue their education within four months of leaving formal education or becoming unemployed.

The Youth Guarantee is backed up by the European Alliance for Apprenticeships launched in July last year, which seeks to increase the number and quality of apprenticeships across Europe. And the Quality Framework for Traineeships adopted in March lays down guidelines for traineeships to include high-quality learning content and fair working conditions.

To help finance the Youth Guarantee, the European Council adopted a dedicated financial instrument – the Youth Employment Initiative – targeted at Member States' regions where youth unemployment is over 25%. A total of 6 billion euros is available for the worst-affected regions, for spending in 2014 and 2015.

Member States need to ensure this funding is rolled out smartly and that projects are in place quickly. The emphasis should be on the quality of the jobs, apprenticeships, traineeships or training offered. Mobilising the funds on the ground is vital, but this is taking time. The Commission encourages the Member States to submit their operational programmes relating to the Youth Employment Initiative as a matter of priority. Adopting the operational programmes is indeed a precondition for releasing pre-financing.

The Youth Guarantee is also monitored in the context of the European Semester. The 28 Member States submitted their Youth Guarantee Implementation Plans to the Commission. For 8 Member States, where youth employment is particularly high and where there are serious implementation problems, more decisive action is needed. They have therefore received draft country-specific recommendations on this subject in 2014.

Today, the Youth Guarantee and its financial instrument – the Youth Employment Initiative – are obviously crucial tools in the context of the European Employment Strategy.

Social dimension of EMU

Ladies and gentlemen,

Tackling the growing divergence in the Member States’ economic, employment and social situations — especially those in the euro area — will be a demanding task in the coming years.

But, in my view, this should be a priority for the next five years.

Divergences are clearly visible in the rates of unemployment, youth unemployment and young people neither in employment, nor in education or training.

There are also greater divergences in household income and inequality within the euro area than among the other Member States. The poverty rate has increased in the euro-area periphery, but remained steady in its core.

For me this means that the Economic and Monetary Union needs to be reformed at a faster pace and that its social dimension needs to be bolstered.

This year, for the first time under the European Semester, we have used a new scoreboard of five key employment and social indicators in order to better identify employment and social imbalances which might threaten the stability of the EMU. In the future, we will need to develop policy benchmarking and social standards, as we did with the Youth Guarantee. Such standards should be reflected in the future Employment Guidelines in order to deepen the integration of EU labour markets and foster socio-economic convergence.

Social dialogue

The Communication on the Social dimension of the EMU of last October emphasises the need to strengthen the social dialogue and the existing processes of consultation of social partners both at EU and national levels. In my view, existing EU fora should be used more effectively so as to better involve social partners in reforming the Economic and Monetary Union, the EU economic governance and the European Semester.

I am referring in particular to the Tripartite Social Summit, the Social Dialogue Committee, the Macroeconomic Dialogue as well as dialogue of the social partners with the Employment and Social Protection Committees. We should build on these fora to establish a more consistent and stable consultation of the social partners throughout the European Semester.

Labour mobility

Labour mobility should also be seen as part of the solution to high unemployment in Europe.

Mobility of workers within and across countries can help tackle existing mismatches between people's skills and employers' needs. This, in turn, can lead to higher employment as well as higher productivity.

Free movement of workers and citizens are fundamental rights in the EU. We cannot achieve economic recovery or improve the social situation by dismantling the Single Market and depriving people of rights and opportunities.

In 2013, despite 50 years of freedom of movement for workers, EU citizens living in a Member State other than their home country accounted for only around 3.1% of the EU population. There are several reasons for this, including lack of language skills and difficulty in getting information on opportunities and conditions for working abroad. The Commission has been actively addressing these issues.

In January the Commission presented a proposal for a Regulation on a European network of Employment Services. It aims to make the network more responsive to labour markets and better equipped to provide high-quality to both jobseekers and businesses.

The Commission is currently testing a new initiative called "Your first EURES job". It is a job-mobility scheme which supports young people to find a job, a traineeship or an apprenticeship in another Member State. We hope to achieve a target of around 5 000 work placements by the end of the year.

Improving the EURES network and providing new financial incentives will foster a more demand-driven approach to intra-EU labour mobility, help build a more integrated EU labour market and, contribute to meeting the Europe 2020 employment target.

Enforcement of workers' rights

Another Commission proposal was recently adopted by the EU's Council of Ministers and the European Parliament. It will ensure better application of EU citizens' right to work in another Member State at national level.

People wish to work in another EU country is a matter of personal choice but these new rules will ensure that everyone is more aware of the rights that mobile workers have. In this way, we hope to facilitate mobility within the EU labour market.

Europe 2020 mid-term review and involvement of national parliaments

Ladies and Gentlemen,

As mentioned in my introduction, the Commission is in the process of reviewing the Europe 2020 Strategy. What is clear today is that progress in meeting the Europe 2020 targets has been uneven.

However, the disappointing lack of progress on the Europe 2020 headline targets is not a reason to question their role and relevance as part of the Strategy. Simply put, it is not the Europe 2020 Strategy that is to blame.

The Eurozone crisis has made Europe much more divided than before. Persistent financial fragmentation deepens economic asymmetries which, in turn, leads to polarisation in terms of the employment and social situation; and this potentially divides the EU politically too.

The key point is that we cannot reverse this dynamic with employment or social policy instruments, even if their efficiency can be improved in most cases – as we have tried to achieve with the policy packages I have mentioned.

Reversing the on-going socio-economic divergence in Europe is a question of finance and macroeconomic policy, and the solutions have to be found in the financial and monetary mechanism.

Therefore my conclusion is that lack of progress on Europe 2020 targets should prompt EU leaders not to water down or abandon the Strategy as such, but to step up the policy responses. The review of Europe 2020 should be connected with the reconstruction of the EMU.

More specifically, serious reform of the Economic and Monetary Union is a precondition for ensuring a sustained recovery and the workability of the Europe 2020 Strategy.

The Commission has opened a public consultation until the end of September to gather opinions and ideas for the post-crisis period. It will present a proposal for a revised Strategy in early 2015. This Conference’s contribution will be very important in the review process.

Conclusion

Ladies and gentlemen,

Given the interdependence of the Member States’ economies, especially those in the euro area, the need for firm collective action to improve employment and social conditions hardly needs proving.

While the Member States have competence for policy in these areas, we all stand to lose or gain by their success or failure to tackle the problems effectively.

I look forward to hearing your views.

Thank you.


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