European Union: Integrated guidelines for growth and jobs 2005-08

The European Commission has issued a set of integrated economic and employment guidelines to member states. This follows a mid-term review of the Lisbon strategy that aims to streamline the process and improve implementation. Member states will prepare and submit national employment plans on the basis of these guidelines this autumn.

In mid-April 2005, the European Commission issued a set of integrated guidelines for growth and jobs (COM (2005) 141 final), as part of an overhaul of the EU's Lisbon strategy. This strategy was launched in 2000 (EIRR 316 p.23), with the aim of revitalising Europe's economy and labour market, setting out economic and employment targets. However, the mid-term review of the strategy that took place at the 2005 spring economic and social council (see European Union: Lisbon strategy relaunched) found that the strategy was not performing well and that the EU was in danger of missing its employment targets. The council called for urgent action to relaunch it and refocus priorities on growth and employment.

The council requested that the commission draw up a set of integrated guidelines consisting of broad economic policy and employment recommendations, based on a three-year cycle. The new, single document replaces the previous separate economic guidelines and employment guidelines. At the same time, the council called for the simplification of the documentation that member states need to submit as part of the strategy. Where previously they had submitted one-year national action programmes, this process is to be streamlined, requiring them in future to draw up three-year national programmes and a single national Lisbon report each autumn on the progress of these three-year programmes. This simplified procedure should allow member states to concentrate on implementation.

The commission will then analyse and summarise the national submissions in an EU annual progress report in January each year. On the basis of this, the European Council will review progress each spring and decide on any adjustments to the guidelines. The entire process will be reviewed at the end of the third year of each cycle.

Following the publication of the integrated guidelines, the first national Lisbon reports will be submitted by member states in autumn 2006.

The employment guidelines (nos. 16-23) form the second section of the integrated guidelines.

Attracting and retaining workers and modernising social protection

Guidelines 16-19 address how to attract and retain more people in employment and modernise social protection systems.

Employment policies aiming at achieving full employment

Guideline 16 calls on member states to implement employment policies aimed at achieving full employment, improving quality and productivity at work, and strengthening social and territorial cohesion. Policies should contribute to achieving an average EU employment rate of 70% overall, at least 60% for women and 50% for older workers between the ages of 55 and 64. They should also reduce unemployment and economic inactivity. These are the original Lisbon targets, which remain unchanged. This guideline instructs member states to set national employment rate targets for 2008 and 2010.

Guideline 16 emphasises that raising employment levels is the most effective means of generating economic growth and promoting socially inclusive economies, while ensuring a safety net for those unable to work. It highlights the need to tackle "persistent employment gaps between women and men and the low employment rates of older workers and young people". It singles out youth unemployment, which is on average double the overall unemployment rate. As part of the contribution to a "lifecycle approach to work", it highlights the contribution of the European youth pact, which was adopted at the spring council as one of the instruments to achieve the Lisbon objectives of more growth and jobs in Europe. The pact aims to improve the education, training, mobility, vocational integration and social inclusion of young Europeans, and to facilitate the reconciliation of working life and family life.

Lifecycle approach to work

Guideline 17 seeks to promote a lifecycle approach to work through a variety of means, including improving employment for young people, the better reconciliation of work and private life, and adapting pension and healthcare systems. It highlights the importance of facilitating access to employment for young jobseekers and helping people who become unemployed to remain "closely attached to the labour market". This will also help combat social exclusion. It highlights the following as key actions: assisting with effective job searching, facilitating access to training and other active labour market measures and ensuring that work pays, as well as removing unemployment, poverty and inactivity traps. Further, it highlights the need to combat discrimination, promote access to employment for disabled people and integrate migrants and minorities.

Inclusive labour markets

This guideline recommends the use of active and preventive labour market measures including the early identification of needs, job search assistance and guidance and training as part of personalised action plans, as well as the provision of social services required to support the labour market inclusion of disadvantaged people. It seeks to improve social and territorial cohesion and eradicate poverty, to include the continuous review of tax and benefit systems and to ensure adequate levels of social protection.

Improving the matching of labour market needs

Guideline 19 advocates the modernisation and strengthening of labour market institutions, notably employment services, as well as greater transparency of employment and training opportunities at national and European level to facilitate mobility across Europe. It underlines that better anticipation of skills needs, labour market shortages and bottlenecks is required, as is the appropriate management of economic migration.

Improving adaptability and flexibility

The explanation accompanying the next two guidelines notes that Europe needs to improve its capacity to anticipate, trigger and absorb economic and social change, continuing: "This requires employment-friendly labour costs, modern forms of work organisation and well functioning labour markets, allowing more flexibility combined with employment security to meet the needs of companies and workers." It draws attention to globalisation and the continual introduction of new technologies, to which both workers and enterprises have to adapt and which brings disruption as well as structural changes that are beneficial to growth.

Guideline 20 recommends that member states promote flexibility and employment security and reduce labour market segmentation in a variety of ways. These include adapting employment legislation and reviewing the level of flexibility provided by permanent and non-permanent contracts, as well as better anticipating and managing change. It highlights the need to adapt in all areas, both in offering support for transitions in occupational status, such as training, self-employment, business and geographic mobility, promoting and disseminating better work organisation and health and safety, and in terms of diversity of contractual and working time arrangements. Finally, it stresses the need for determined action to transform undeclared work into regular employment.

To maximise job creation, preserve competitiveness and contribute to the general economic framework, the document observes that overall wage developments should be in line with productivity growth over the economic cycle and reflect the labour market system. Thus, guideline 21 aims to ensure employment-friendly wage and other labour cost developments by encouraging the right framework for wage-bargaining systems to reflect differences in productivity and labour market trends at sectoral and regional level. It advocates monitoring and reviewing the level of non-wage labour costs and their impact on employment, highlighting low-paid workers and those entering the labour market for the first time.

Increasing investment in human capital

The last two employment guidelines focus on the need for Europe to invest more in human capital. The text observes that too many people fail to enter or remain in the labour market because of a lack of skills, or due to skills mismatches. Therefore, to enhance access to employment for all ages and raise productivity levels and quality at work, the EU needs higher and more effective investment in human capital and lifelong learning. This will benefit individuals, enterprises, the economy and society. Member states are committed to establishing comprehensive lifelong learning strategies by 2006.

The text notes that knowledge-based and service-based economies require different skills from traditional industries, and skills constantly require updating and renewing. Therefore, member states should make better use of the structural funds and the European investment bank for investment in education and training.

Guideline 22 encourages member states to expand and improve investment in human capital. Its proposals include the following: the establishment of efficient lifelong learning strategies and the introduction of measures to reduce the number of pupils leaving school early; increased access to initial vocational, secondary and higher education; and enhanced participation in continuous workplace training throughout the lifecycle, especially for low-skilled and older workers.

The final guideline addresses the adaptation of education and training systems to respond to new competence requirements. It notes that the affordability, accessibility and responsiveness of lifelong learning systems is crucial; setting ambitious objectives and increasing the level of investment by all actors is not sufficient. It exhorts member states to better identify occupational needs and key competences and anticipate future skills requirements. It recommends broadening the supply of education and training tools, developing frameworks to support the transparency of qualifications, as well as their effective recognition and validation of non-formal learning.

In its final comments, the commission encourages member states to pay special attention to ensuring good governance of employment policies which, it recommends, "should establish a broad partnership for change by involving parliamentary bodies and stakeholders, including those at regional and local levels".

It underlines the central role played by the social partners and reminds member states that they should define commitments and targets in line with EU guidelines and recommendations.

The next steps

As mentioned above, the overhaul of the Lisbon strategy, following the mid-term review, does not change its concrete employment objectives, aiming instead to improve implementation at member state level and to streamline the reporting process. Although it is undeniable that real progress has been made in some areas over the past five years - including active labour market policies, adjusting social security benefits and pay levels to make work pay and reducing the incidence of early retirement - it would appear unlikely that all the employment targets envisaged by the Lisbon strategy will be met by 2010, particularly if economic growth is less than robust. Nevertheless, the coming five years will be a test of implementation by individual member states and there will no doubt be further improvements to the functioning of the EU's labour markets, even if this does not fulfil the original - some would say rather optimistic - Lisbon targets.