Taking stock of five years of the EES: mid-term review (2002)

In this Communication the Commission provides a mid-term review of the European Employment Strategy. Based on national evaluations following a common thematic breakdown, the review notes clear structural improvements, viz. the creation of employment, the decline in unemployment and increase in labour force participation. The review stresses that progress has also been made as regards the modernisation of work organisation, inclusion and equity, and recognises the added value of the new method of coordinating national employment policies. However, the Commission recommends taking into account population ageing, regional disparities and globalisation, and the widening of the European Union.

ACT

Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions of 17 July 2002: taking stock of the five years of the European Employment Strategy [COM (2002) 416 final - not published in the Official Journal].

SUMMARY

Launched by the Luxembourg Jobs Summit in 1997 (the so-called Luxembourg process) and reinforced by the Lisbon strategy, the European Employment Strategy (EES) was initially established with a view to ameliorating the European labour market within five years, in particular in the field of long-term and youth unemployment. The Commission is active in four main areas:

• employability, progressively widened to cover the whole life cycle, covering the prevention of early school leaving, prevention of unemployment, increasing access to an inclusive labour market, and continued updating of skills;
• entrepreneurship, including improvement of the business environment and reductions of the tax burden on labour by lowering, inter alia, social security contributions;
• adaptability, the creation of more flexible employment, introduction of more flexible working time arrangements in concertation with the social partners, and finding a balance between flexibility and security;
• equal opportunities and reduction of gender gaps on the labour market, reconciliation of work and family life, increasing the availability of childcare provision.

Trends in the labour market during the second half of the 1990s show reductions in levels of structural unemployment throughout the European Union, a more employment-intensive pattern of economic growth, a link between productivity and the level of education, and the rising responsiveness of employment with the development of contracts of limited duration.

This Communication reviews the experience of the five years of the EES and draws conclusions as to how it can be reformed. The review notes a clear structural improvement in the labour market between 1997-2001, including:

• the creation of 10 million jobs (+6.5%), of which 6 million were taken up by women;
• a decline in unemployment by more than 4 million (-25%);
• growth of 5 million in terms of labour force participation, driven largely by women;
• reduction in the gender gap from 20% to 18% as regards the employment rate and from 12% to 9% as regards the unemployment rate;
• reduction in the overall tax burden on labour of about 2% and even 3% for the low-paid (provisionally based on the implicit tax rate).

The Communication also notes that the new method of coordinating national policies, the so-called open method of coordination, or OMC, was very effective in creating a European employment area. The political commitment of the Member States translates into the National Action Plans (NAPs), first by reducing unemployment and subsequently by defining long-term employment objectives.

However, considerable structural problems and challenges persist:

• a reduction in the number of unemployed, of which 42% are long-term unemployed (almost 13 million in 2001);
• achievement of a 70% employment rate, chiefly by integrating women and older workers;
• improvement in productivity rates (the gap between the US and the EU rose from 17.3% to 19.5% between 1996 and 2001);
• reduction in major regional disparities, notably in terms of unemployment, in several Member States.

To this end, the Commission has identified four main issues to be explored with a view to reforming the EES:

• responding to medium-term challenges: the context of the EES is changing and requires a response to the ageing workforce, the sustainability of social protection systems, the challenges of the information society and social inequalities. The Commission stresses the need to create more and better jobs which are also more productive. For the Commission, the reduction in disparities between different groups is a matter both of equity and efficiency. Besides, investment in human resources, skills development and lifelong training is necessary with a view to improving the performance of the European labour market. The modernisation of employment services is important with a view to finding jobs for the greatest possible number of unemployed persons and avoiding the emergence of bottlenecks.
• simplifying the guidelines (without undermining their effectiveness): this is a matter of clarifying priorities via a clearer definition of the overall improvements and the results to be achieved, with a focus on implementation of the employment guidelines. This would facilitate communication with all the stakeholders and enable more effective monitoring. However, the Commission insists that the guidelines must keep their wide policy scope, to be developed in close articulation with macro-economic policies and structural policies, which are favourable to growth and competitiveness, as well as policies promoting social inclusion. It is also important to ensure greater stability of the guidelines because the regular addition of new priorities or objectives does not improve effectiveness. The principle of annual reporting by the Member States, which makes it possible to ensure effective multilateral surveillance and which represent 'pressure towards convergence', should be respected.
• improving cooperation between the different EES actors: the social partners have been urged to place their strategies in the various territorial and sectoral spheres at the service of the Lisbon strategy and the Commission will consult them when preparing the next guidelines. It is also a matter of mobilising actors at all relevant territorial levels, since competences for different aspects of employment policies are shared between different territorial levels. Better coordination is also necessary at national level between the employment services, the employment departments and those dealing with financial affairs, training and education, gender opportunities, social security, justice and home affairs and information society affairs. The Commission encourages greater transparency so as to give a full picture of how the European Structural Funds (ESF) support the Employment Strategy, besides alignment of the ESF objectives with the EES priorities.
• improving consistency and complementarity between other European processes, notably the Broad Economic Policy Guidelines (BEPGs ): the Barcelona European Council of 2002 called for a synchronisation of the Employment Package of the BEPGs, which will be the subject of a Communication from the Commission on improving the mutually supportive character of the two sets of instruments.

The social partners were progressively involved in the different pillars of the Luxembourg process before a horizontal objective called on the Member States to develop a comprehensive partnership. They have since become involved in the preparation of the NAPs. Local and regional authorities have also been involved in the EES via regional and local action plans (RAPs and LAPs), whether as social services providers or local employers.

The Communication was intended as an input to the debate in 2003 on the future of the EES, which included all the stakeholders and led to a proposal for Employment Guidelines for 2003.

The annex to the Communication explains the evaluation methodology and contains a review of key policy changes in relation to the EES on a country-by-country basis.

RELATED ACTS

Communication from the Commission to the Council of 13 November 2002 on the joint employment report 2002 [COM(2002) 621 - not published in the Official Journal]. The Commission noted that the European Union's labour market performance, in terms of both employment (+ 0,6%) and unemployment (- 0,6%), continued to improve in 2001, although the prevailing economic slowdown meant that the Member States would have to step up their efforts to reform the labour markets in order to help both workers and firms to adapt to change. The Commission emphasises that much progress is required as regards the three key priorities of raising employment and participation rates, improving quality and productivity at work, and promoting an inclusive labour market.

Communication from the Commission of 3 September 2002 on streamlining of the annual coordination cycles of economic and employment policy [COM(2002) 487 final - not published in the Official Journal.]

Last updated: 03.03.2005