"The Target of Full Employment and the Institutional Reform of the European Labour Markets"
Date: 4-3-2003
by Anna Diamantopoulou, European Commissioner
for Employment and Social Affair
Over the last decade, the employment issue has steadily moved up on the European agenda, increasingly embedded in a holistic understanding of the interplay of economic, employment and social policies. The Lisbon European Summit in March 2000 set for the EU "a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion." And it was that Summit which explicitly stated that "this strategy is designed to enable the Union to regain the conditions for full employment". The European Council adopted subsequently targets on employment rates to quantify the "full employment".
Employment rates targets
Total
2001: 64 percent
2005: 67 percent
2010: 70 percent
Men
2001: 73 percent
2005
2010
Women
2001: 55 percent
2005: 57 percent
2010: 60 percent
Older Workers
2001: 38 percent
2005
2010: 50 percent
These targets have been integrated in the European Employment Strategy (EES) which is the employment lever of the Lisbon strategy. The EES was launched in 1997, with the Amsterdam Treaty, where Member States had declared "employment as a matter of common concern" and set up a division of labour which left the prime responsibility for employment policies with the Member States, but entrusted the EU with a coordinating function. The effectiveness of that approach has already become apparent. In 2002 an evaluation has been carried out, which reviewed the experience of five years EES on the basis of an overall EU labour market performance assessment and an evaluation of the policies implemented by the Member States. It revealed that the EU labour market performance has visibly improved, with more than 10 million new jobs created since 1997 (6 million of which were taken up by women) and 4 million less unemployed, while the active population continued to grow by 5 million people. The evaluation confirmed the structural character of these improvements, through reductions in levels of structural unemployment, a more employment-intensive pattern of economic growth and a more rapid labour market response to economic and social changes. There have been significant changes in national employment policies, with a clear convergence towards the common EU objectives. A number of specific policy changes have taken place. Employment policies have been reshaped to support unemployed as early as possible. Labour taxation started to become more employment friendly. Education and training systems increasingly adapted to labour market needs. Progress in modernising work organisation has occurred, notably in terms of working time arrangements and more flexible work contracts. Gender mainstreaming has become generalised, with various initiatives taken to tackle the gender gaps, including the provision of childcare facilities to improve the reconciliation of work and family life. And new common paradigms such as lifelong learning and quality at work were recognised as policy priorities. Overall, the Strategy has brought a shift in national policy formulation and focus - away from managing unemployment, towards managing employment growth. Beyond the general process of convergence towards successful policies, the open method of co-ordination of the Luxembourg process has demonstrated its added value in fostering partnerships and new working methods, both at national and EU level.
Challenges, however, remain. The most obvious being the economic downturn, which we have experienced since 2001, with decreasing GDP growth rates and recently increasing unemployment rates, although employment growth continued in 2001 with nearly 2 million new jobs created, and even in 2002 with some 500,000. The fact that EU labour markets have so far successfully withstood the deteriorating economic climate indicates that the employment strategy works and confirms the need to maintain Member States' commitment to it, and particularly its medium-term perspective, in order to better overcome the employment challenges. However, to reach the Lisbon targets requires the creation of 15 million more new jobs until 2010.
And, apart from the cyclical problems, challenges of a more structural nature either remain or are newly emerging. Very clearly, enlargement for instance will lead to a new employment situation in the European Union. The future new Member States show higher unemployment and lower employment rates than the present ones and to reach the Lisbon targets in an enlarged EU will require even more ambitious and pertinacious policies. There is another problem which present and future Member States share, that of demographic development which unavoidably will lead to decreasing and ageing labour forces. Economic and social restructuring is going on and in some sectors still accelerating, again constituting a particular challenge for the future Member States, where sectoral change is still well behind the present EU. All these problems can easily lead to increasing differences in performance between regions and policy must react on this.
The Commission has recently made proposals for a re-shaping - or up-dating - of the EES in order to better equip it with the instruments and objectives needed for successfully dealing with present and upcoming challenges. A stronger concentration on three main objectives was proposed: creating more and better jobs, and promoting an inclusive labour market, and the need to ensure greater consistency and complementarity with respect to other relevant EU processes, in particular the EU level coordination of economic policy. Several specific priorities are proposed: active and preventive measures for the unemployed and the inactive; making work pay, fostering entrepreneurship to create more and better jobs, combating undeclared work, promoting active ageing, promoting adaptability on the labour market, investment in human capital and life-long learning, gender equality, supporting integration and combating discrimination on the labour market for people at a disadvantage, helping address regional employment disparities.
The presentation of concrete objectives and targets will offer the basis for a wide debate and discussions under the Greek Presidency, including all interested parties, the Member States, the European Parliament and other European institutions and even accession countries.