The new coordinated strategy for employment

The EC Treaty's new Title on employment aims to put in place a comprehensive strategy to achieve the objective of a high level of employment, with the participation of all those concerned.

EC Treaty - Title VIII on employment policy (Articles 125-130).

Article 125 of the EC Treaty states that the Member States and the Community will work towards developing a coordinated strategy for employment. Article 126 deals with the contribution of the Member States and coordination of their action.

According to Article 127 the Community will contribute to this action by incorporating employment issues into its policies and activities. Article 128 details further the process of coordination mentioned in Article 126 and highlights the work to be done at Community level on a yearly basis, particularly by the Council and the Commission, entailing a joint report, guidelines on employment and recommendations to the Member States where appropriate.

Under Article 129, the Council may adopt incentive measures to encourage cooperation between Member States and support their action in the field of employment.

Finally, Article 130 provides for the creation of an employment committee with advisory status, to promote coordination between Member States' policies in the area of employment and the labour market.

The Community strategy for employment has to tie in with the provisions on economic and monetary policy of Title VII of the Treaty. Article 126(1) stipulates that the Member States' contribution to the achievement of a high level of employment must be consistent with the broad guidelines of the economic policies adopted in accordance with Article 99(2), while Article 128(2) states that there must be similar consistency in the guidelines on employment.

This aspect was emphasised by the Vienna European Council (11 - 12 December 1998) during which representatives of the Member States called for greater synergy between the employment guidelines and the broad economic policy guidelines. According to the European Council, employment policy should fit in with a comprehensive approach embracing macroeconomic policies geared to growth and stability, economic reforms designed to increase competitiveness and employment guidelines to increase employability, adaptability, equality of opportunity and entrepreneurship.

The European Council also requested that a European Pact for Employment be developed in keeping with the Luxembourg process. A report on the development of this Pact was drawn up by the Cologne European Council, which endorsed the Pact.

The main innovation of the European Employment Pact is the setting up of a dialogue between those responsible for budgetary, monetary, wage and structural policies. The Pact should help each key player to understand better the approach of the others, and to anticipate their reactions to economic and political developments with greater accuracy. At the same time, it should reduce factors of uncertainty and thus stimulate growth and job creation. More specifically, the Pact should help to bring about and maintain moderate wage developments.

The essential elements of the Pact are:

• coordination of economic policy and improvement of mutually supportive interaction between wage developments and monetary, budget and fiscal policy through macro-economic dialogue aimed at preserving a non-inflationary growth dynamic (Cologne process);
• further development and better implementation of the coordinated employment strategy to improve the efficiency of the labour markets by improving employability, entrepreneurship, adaptability of businesses and their employees, and equal opportunities for men and women in finding gainful employment (Luxembourg process);
• comprehensive structural reform and modernisation to improve the innovative capacity and efficiency of the labour market and the markets in goods, services and capital (Cardiff process).