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# 52004DC0323

**Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Community activities concerning analysis, research and co-operation in the field of employment-Final report /* COM/2004/0323 final */ **

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS - Community activities concerning analysis, research and co-operation in the field of employment-Final report

The Council Decision 98/171/EC of 23 February 1998 established, for the period from 1 January 1998 to 31 December 2000, Community activities concerning analysis, research and co-operation (ARC) among Member States in the field of employment and the labour market. In accordance with Article 10 of this Decision the Commission hereby submits the final report on the activities carried out under this programme.

1. Background

This programme had been prepared in the mid-90s to provide a basis for the activities carried out by the Commission in support of policy initiatives in the field of employment. These activities originally arose from the strategy set out in the White Paper Growth, Competitiveness and Employment and the Essen Conclusions. In 1997 the Employment Title of the Treaty was agreed in Amsterdam but Article 129, providing incentive measures, was not yet operational. The provisions on employment policy coordination were implemented early according to the suggestions of the European Council on Employment in Luxembourg. This led to the intensification of the need to support the employment policies and in particular the development of the European Employment Strategy. Hence, the ARC programme was seen as an interim measure for carrying out necessary activities in support of the Employment Strategy, until the new Decision on Employment Incentive Measures was adopted on the basis of Article 129 of the Amsterdam Treaty [1].Over the three-year period, the programme developed an essential supporting role for the Employment Strategy [2]. This final report presents an overview of the programme after the end of the period in which activities were launched and implemented. The last commitments were made in December 2000. The nature of some of the major studies launched particularly in the latter part of the programme, however, meant that many were only completed in the course of 2001 and some in 2002.

[1] OJ L 170 of 29.6.2002, p. 1.

[2] Due to extended initial consultation procedures, activities could only start in the second half of 1998.

The main objectives of the programme were the following:

- Fostering co-operation in analysis, research and monitoring;

- Identifying best practise and promoting exchanges and transfers of information and experience;

- Developing an active information policy.

2. The Activities

The activities carried out as part of the ARC programme can be grouped under headings which reflect the objectives defined in decision 98/171/EC (see section 1)

- Statistics related work;

- Analysis and studies;

- Identification and transfer of good practice;

- Mainstreaming of employment;

- Dissemination of information;

- Special events (Presidency Conferences, meetings and exchanges with the USA and Japan).

In general, activities served to achieve more than one of the programme objectives as they were presented. For instance, results from analysis and research increased awareness on the European Employment Strategy (EES) and research activities underpinned the selection and dissemination of good practice. The following table provides an overview of the multiple role of activities by indicating the relationships between the main objectives and the activities under the programme.

Cross-reference table highlighting internal coherence between objectives and activities

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++ = very relevant,+ = relevant,

3. Financial Procedures

The financial procedures which were used to carry out this programme were those that govern similar activities in the Commission. In summary they involve:

- Open tenders for all major projects over EUR 100,000.

- Restricted calls for tenders, which were considered only in exceptional circumstances. The rules were similar to those of the open tenders.

- Calls for expression of interest or calls for proposals for the award of subsidies to interesting and innovative projects in Member States, particularly those that contribute to the exchange of good practice and experience. The procedures for the calls for proposals were also lengthy and resource consuming, with some 8 months from start to finish.

- There were limitations on the number and the amount of ad hoc subsidies. These were effectively limited to events that had a close policy link with the priorities of the incumbent Council Presidency.

- A limited number of Direct Agreements were used for very small and urgently needed activities in line with the existing thresholds for DAs at the time.

4. Statistics related activities (Section 1.2 In The Annex)

With the support of the ARC Committee, considerable importance was placed on statistics related activities in the programme. This had two aims: first, the improvement of the reliability and comparability of statistics in the field of employment which are used for analysis and for measuring performance of the employment strategy. Second, the development of appropriate tools and methodology, to improve the measurement of policy indicators in connection with the employment strategy. This involved financial assistance to Eurostat for the development of comparable statistics and for the other elements of the programme for the analysis and policy support for the employment strategy. This financial assistance was managed by Eurostat and used for new projects to improve the reliability and comparability of statistics. Emphasis was placed on the development of the continuous Labour Force Survey, which supplies the data for up-to-date and accurate employment trends in the Member States based on agreed performance indicators. Funding was also used for the series of ad hoc modules of the Labour Force Survey. They provide information on specific topics, not covered by the regular survey. These included modules on working time and on the transition from school to work. A major project carried out throughout the life of the programme was to establish a labour market policies database, a key instrument for the evaluation of the National Action Plans. This work was carried out in collaboration with Eurostat.

Other projects connected with this heading included the study to develop the diamond charts approach included in the Joint Employment Reports of 1998 and 1999, and a project which was launched in 2000 to develop a range of indicators of labour market flexibility including the following elements: labour supply availability, health situation of the labour force, level of education and training, capacity to utilise new technology, working time flexibility, industrial relations at both the micro and macro level, labour cost flexibility, labour taxation, contract flexibility, and labour mobility. All of these covered all 15 EU Member States, the USA and Japan.

Moreover, at the end of 2000, a pilot survey of the unemployed was launched with the voluntary participation of ten Member States in order to monitor guidelines on activation and prevention. The purpose was to improve comparability of data and provide additional insights on national administrative and statistical systems. The results were useful for the policy impact evaluation of the Employment Strategy.

Statistics activities have contributed to a better understanding of indicators used in the National Action Plans, through an increased use of data from the new databases. Overall, work on statistics has contributed to a more coherent elaboration of the Joint Employment Report.

5. Analysis and studies (section 1.3 in the annex)

The activities carried out under this heading of the programme are designed to support the assessment and further development of the employment strategy. To this end, they fall into two main categories:

- Specific support for the implementation of the Employment Guidelines;

- Research into labour market issues which relate to the further development of the employment strategy.

5.1. Specific support

Analytical support was necessary in order to give concrete substance to the policy orientations advocated by the Employment Guidelines. ARC supported work on the early identification of the unemployed, a study on the skills gap, a study on unemployment benefit systems and active labour market policies in relation to the preventive approach, and a series of projects related to entrepreneurship.

5.2. Analytical research

Prospective analysis and studies advance our understanding of the functioning of the European labour market and underpin the long-term development of the Employment Strategy by identifying new issues and challenges. Throughout the period of the programme, the Employment in Europe report has continued to present a quantitative analysis of employment trends and policy challenges in the Union. Improvements in the formulation of the Employment Strategy were examined at special events supported by the programme. Themes in joint events with labour market officials from the USA and Japan included entrepreneurship, the service industry and aspects of job quality.

The effects of globalisation were the focus of a number of studies that have pointed out the dominant role of technological advances and the importance of active policies by governments. In 1999 the programme included a market survey that showed a continuous shift towards market services as a share of total employment, due to globalisation. All aspects of employment in the services sector were examined in depth in further analysis, publications and at events organised under the programme. Research work under the programme has also revealed the employment potential of the cultural sector in Europe and particularly of the audio-visual industry, which is characterised by a high percentage of freelancers and micro-enterprises.

A study reviewed policies to combat undeclared work and confirmed that a policy mix, appropriate for each Member State, is necessary and should include both preventive actions and sanctions. An analysis of patterns of employment-enhancing growth pointed out the importance of investment growth for job creation and examined the impact of other factors.

Another study looked at wages and job quality in Europe and found earnings mobility in the European economies to be greater than that of the USA. For many individuals in the EU, low-pay employment is a transitory situation but there is also a group of people that tend to be stuck in a low pay/no pay cycle. Women are severely under-represented in high-wage jobs in Europe.

An analysis of tax benefits systems demonstrated the need for accurate monitoring of benefits and a report on restructuring public expenditure confirmed that both active and passive policies for employment are continually increasing in importance in Member States' budgets.

Enlargement started to become a major preoccupation of the programme and a study looked at the impact of enlargement on employment and the labour market, in particular resulting from the liberalisation of trade, capital flows and free movement of workers.

Information and results of the studies were published regularly on the web together with theoretical analysis and practical illustrations. Findings from analysis and studies under the programme were used as major input in several Commission documents: the Joint Employment Report and the Employment in Europe report that are produced every year and in the first of the Commission's Spring Reports. In addition, these studies provided material for Commission Communications and Commission working papers that were discussed in the Employment Committee (EMCO) that has an advisory status to promote coordination between Member States on employment and labour market policies.

6. Identification and transfer of good practice (Section 2 in the annex)

This part of the programme was based on the earlier work done in the Commission in developing the concept of Action-Research Programmes and the exchange of information and good practice, with particular emphasis on the ability to replicate successful policy approaches and projects. This work had resulted in the establishment of the Mutual Information System on Employment Policies (MISEP) and the Community System of Documentation on Employment (SYSDEM) programmes relating to labour market policies and documentation respectively, and the Local Employment Development and long-term unemployment programmes.

Employment Observatory (section 1.1 in the annex)

With the adoption of the Employment Guidelines and the implementation of the National Action Plans, this part of the ARC programme supported the activities carried out jointly by the Commission and the Member States in monitoring the way in which the Guidelines are translated into national policies and actions. The European Employment Observatory has consolidated several of these activities and has become a reference point for information, publications and focused analysis on national or sectoral labour issues. It has contributed to the production of the Joint Employment Report, the assessment of the National Action Plans and the Commission's Spring Report.

Peer Review of best practice (section 2.1 in the annex)

A key element in the Luxembourg Process consists of the identification and evaluation of employment and labour market policies which have produced good results in originating countries. The Peer Review Method, which has been supported throughout the life of the programme, aims at evaluating the transferability of employment and labour market policies through multilateral and independent expert assessment. A first round of reviews was carried out in 1998-99. In 1999 a further two-year programme was launched with a view to providing a more regular and solid information base for supporting the employment strategy. The results of the peer reviews continue to be published regularly on a website (http:// www.peerreview-employment.org) and were regularly included in major Commission documents like the Joint Employment Report and the policy impact evaluation of the Employment Strategy. A conference has examined the role of the peer review process and recognised its important contribution to mutual learning, to the understanding of labour market policies and often to helping in the transfer of good practice among Member States.

Public Employment Services (section 2.3 in the annex)

The Public Employment Services (PES) play a major role in explaining the policy measures arising from the Employment Guidelines. This is reflected in the activities of the Public Employment Services that have been supported financially by the ARC programme. Apart from the regular twice-yearly meetings of the Heads of PES, the following studies have helped PES to adapt their work to the Guidelines:

- modernisation of the PES so that they could better support the objectives of the European Employment strategy;

- analysis of self-service systems by comparative exploration and impact estimation of such services in PES;

- support for organisation of events leading to a better understanding of employment services delivery systems;

- involvement of the social partners in PES to enhance their efficiency;

- regionalisation of PES with identification of the difficulties encountered in that process and in implementing the EES.

While the Joint Employment Report was the main instrument for assessing the implementation of the Employment Guidelines in national policies, more in-depth studies of the National Action Plans for Employment (NAPs) were carried out. The aim was to study certain policy initiatives which occupy a central place in the NAPs in more depth, with a view to assessing their impact on the employment situation as well as the interaction with other social policies.

7. Mainstreaming of employment policies (SECTIONS 2.2 AND 3 IN THE ANNEX)

Taking employment into account in Community policies and initiatives is a major element in the Employment Title of the Treaty (Art 127). It has been integrated into the ARC programme activities.

Among the issues for which activities have been launched during the programme there were the following conferences supported by studies.

- Sustainable development and employment;

- The employment potential of culture;

- Unemployment and public health;

- New areas of employment growth;

- Entrepreneurship and employment.

At the end of 2000, a major study was also launched on the potential of Community policies for employment promotion. The aim of this study was to identify the policy orientations/ actions which were likely to play a key role in support of employment at Community level and their interactions with national actions for promoting employment. The studies aimed to assess, qualitatively if necessary, the extent to which these policies influenced employment developments and how they were likely to do so. The results were included in a major report drawn up by the Commission in accordance with the provisions of Article 127.

8. Diffusion and dissemination (SECTION 3 IN THE ANNEX)

Throughout the period of the programme, the Commission has pursued an active publication and dissemination policy. Apart from the Employment in Europe report and the Joint Employment Report, all studies with a wider application have been published either in printed form or, increasingly, on the internet.

Furthermore, the Commission considers that an active exploitation of the results of studies and research projects can often best be achieved through the organisation of seminars and workshops. The organisation of a workshop to discuss and assess the results of studies was therefore an integral part of several contracts. The study was presented to an appropriate audience of academics and policy makers. Such seminars were held on restructuring public expenditure, services sector employment, entrepreneurship and employment, concepts and measurement of European labour market flexibility/adaptability indices, mainstreaming of employment and undeclared work.

The annual "Employment Week" played a significant role in disseminating the objectives of the employment strategy to decision makers dealing with employment matters. It attracted a Europe-wide audience and included presentations, exhibitions, and conferences on employment policy. The programme allowed the Commission to take a prominent position in the exhibition which it used to promote a better understanding by the stakeholders of the aims of the Employment Strategy.

8.1 Conferences and seminars (SECTION 3 IN THE ANNEX)

Calls for proposals for innovative projects in support of the Employment Strategy were launched and supported by this programme. Projects were required to be linked to the Employment Strategy, and to be innovative and trans-national. Most focussed on methodology, such as the one to promote the benchmarking process, one on learning from neighbours in the Southern Baltic Region, one developing regional learning networks and the annual conference of European Labour Economists which looked at mobility and migration, occupational choice and income distribution. Others focussed on specific policy areas such as employment in cities, arts graduates and the sports sector.

Exchanges with the USA, Canada, and Japan provided useful inputs. Joint events with labour ministry officials from these countries, studies and publication of good practice in labour market policies helped in the formulation of proposals for policy initiatives in the EU. The co-operation with the USA and Canada is continuing in the EIM programme and helped in developing mutual learning and regular exchange of good practice.

9. Presidency events (section 3 in the annex)

Throughout the life of the programme, a number of Conferences held in the context of the priorities of the incumbent Presidencies were regularly supported. Themes included:

- Social policy and the Amsterdam Treaty;

- A Working Culture ;

- Culture, new technology and employment;

- Jobs Conference of the EU and the Organisation for Economic Cooperation and Development (OECD), on employment strategies;

- Conference on the peer review method and long term unemployment;

- Conference on a successful Monetary Union.

These Conferences were events with a wider impact and participation. They were usually opened by Ministers. Participants included officials and labour market experts from all Member States, social partners and on some occasion officials and experts from the Acceding and the European Economic Area (EEA) countries. They reviewed and discussed developments in selected themes relevant to the European Employment Strategy. Each Council Presidency has given particular attention and prominence to these events and disseminated the results. For instance, one presidency Conference examined the peer review process with the focus on the long term unemployed. Four countries presented their policy response to this problem and the discussions compared each approach within the context of the EES. At the end, there was an overall evaluation of the peer review method from prominent academics, officials and experts from several countries. The conclusions of the conference were very supportive of the peer review process, as a complement to the EES, and suggested improvements and wider dissemination of the results.

10. The role of the Arc committee, Links with other Committees, programmes and organisations

In line with Council Decision 98/171/EC a Committee, composed of representatives of research-related departments of employment and labour ministries of the Member States, was established for the ARC programme. Its main tasks were to discuss and approve the work programmes proposed by the Commission every year, and to be consulted on the individual projects to be carried out within each work programme. The Employment Committee (EMCO) has been closely involved in the programme.

Apart from the approval of work programmes, the ARC Committee followed closely the activities of major projects during implementation. There were presentations of studies to the ARC, and regular presentations to the EMCO of papers and studies produced as a result of the programme activities.

The Commission ensured consistency and complementarity of the ARC programme with other initiatives in the Commission and with the activities of other organisations or institutions. The main objective of Commission initiatives in this area was to underpin the successful implementation of the employment strategy.

The ARC was distinct from other programmes due to its horizontal and research oriented nature. Its role was to support the employment strategy by undertaking analysis, research and cooperation activities in the field of employment and the labour market mainly at EU level. Only exceptionally has the ARC programme, in line with Article 129 of the Treaty mandate, co-financed innovative projects that support the employment strategy at national or local level.

However, a number of other Commission programmes complemented ARC and supported the implementation of the employment strategy at national or local level. In this context, the objectives of the social inclusion programme were to enhance the effectiveness and efficiency of Community and Member States' policies and actions by developing the capacity of the players concerned to address social exclusion. The European Social Fund underpinned the employment strategy by assistance either through national operational programmes, under Objectives 1, 2 and 3, or through the EQUAL community initiative programme. Support under Article 6 of the European Social Fund was directed towards innovative measures that prevent and combat unemployment and develop human resources and social integration. Article 6 activities constituted a direct interface between policy and practice and facilitated communication of policies to practitioners as well as reactions and feedback from them. A wide range of projects was supported by Local Development and Employment Initiatives that aimed either at establishing sustainable partnerships through the Territorial Employment Pacts or at promoting local job creation by innovative pilot projects in the third sector e.g. in areas not subject to market forces or the public sector.

Co-operation with international organisations, Candidate Countries and other countries in programme activities was pursued consistently. Several international organisations participated in ARC activities and with their experience and expertise provided very useful inputs. Cooperation with them helped in the brainstorming of difficult issues. Discussion with experts from the OECD or the International Labour Organisation (ILO) contributed to a better understanding of delicate issues in the labour markets. Close contacts and common events with the ILO and the OECD have helped to achieve a better definition of activities and avoid duplication in these activities.

11. Human resources and ARC

The ARC as well as the Employment Incentive Measures programme depend on adequate in-house resources to prepare, launch and implement activities, and even more so, to support exploitation of the results and the drawing of meaningful and practical policy conclusions. It is difficult, however, to estimate the exact amount of effort required on the part of each official managing activities under the programme. His/her work was integrated in each of the relevant units and included a number of interrelated tasks promoting the Employment Strategy, for which the ARC activities provided valuable inputs. In addition, dissemination of the results required time and effort.

Experience from this programme in the Employment and ESF Policy Development and Coordination directorate, has shown that at least one person dealing with financial matters and one official per unit involved in running the projects are required for an efficient management of this programme.

Finally, resources for ex-ante and mid-term evaluation are necessary. They would help to identify measurable targets for the programme so that an ex-post evaluation could be able to assess the impact of the programme. Such resources are included in the EIM.

12. Summary and Conclusion

The ARC programme on Commission activities in the field of Analysis, Research and Cooperation in employment was conceived in the aftermath of the White Paper on Growth, Competitiveness and Employment and at a time when the Essen Conclusions shaped policies on Employment. It came into being just after the adoption of the first Employment Guidelines in the Luxembourg European Council of November 1997. At the same time the Amsterdam Treaty had just articulated necessary Treaty provisions on employment and indeed the succeeding programme on Employment Incentive Measures (EIM) reflects more closely this link.

The important contribution made by the ARC can only be understood in the context of the Employment Strategy. The strategy encompasses the co-ordination of Member States' employment policies on the basis of commonly-agreed employment guidelines that are in line with the coordination of macroeconomic policy, with a view to laying the foundation for growth and to boosting employment. While not specifically designed as such, ARC has become an essential tool in support of the European Employment Strategy, used by the Commission, the Member States, social partners and other actors. Each of its constituent parts has contributed to the monitoring and development of the Strategy, from the underlying analysis of current and prospective issues and the assessment of the impact of Community policies, to the interactive process represented by the peer review process and the evaluation of the National Action Plans.

The programme was effectively complemented by other Community initiatives, and the cooperation with outside organisations was very useful. Exploring further synergies with programmes and organisations will help also in underpinning the European Employment Strategy with all necessary information and policy suggestions.

Social partners, due to their networks and their organisational structures, are well placed to compile information effectively and to promote exchange of best practice. Further involvement of the social partners in the programme activities in their fields of competence, will further benefit the aims of the programme and of the Employment Strategy.

A better use of channels for the dissemination of the results would have further increased the impact of the ARC programme. More human resources and continuous involvement of Non-Governmental Organisations (NGOs) would have helped in making the results of the programme more widely available. NGOs, in particular, can act as effective disseminators of information. They have access to networks and resources that can be very useful in making programme activities known to the stakeholders of each activity. The succeeding EIM programme consistently tries to involve NGOs in its activities.

Overall, the programme provided a framework for employment related initiatives in the Commission and supported effectively the European Employment Strategy. The financial support for Eurostat has led to considerable improvements in employment statistics, particularly as regards the comparability and timeliness of data. Further improvements were evident as the continuous Labour Force Survey began to be implemented in Member States. The Labour Force Survey is today considered the most authoritative source of statistical information on the EU labour market.

The studies supported by the programme explore the analytical ground for the development of the EES. The Employment in Europe report provided a solid overview of the trends and key challenges.

The Peer Review process, the European Observatory and cross-country studies have been major contributors to the Employment Guidelines and helped the Member States in delivering policy initiatives effectively. The joint effort of the directorate for Employment in the Commission, Eurostat and OECD to develop appropriate monitoring systems for active labour market policies produced useful results. Further involvement of the Candidate Countries in most of the programme activities would have been beneficial and has been pursued in the subsequent EIM programme.

Regarding the management of ARC, experience suggested that a reduction in the number of smaller projects and an increase in project evaluation activities helped in achieving a better focus of the activities and economised on the required resources. This had an influence in the succeeding EIM programme which includes more evaluation work. Several additional factors need to be taken into account. Among them is the need for flexibility in the programme, quick response to market developments and appropriate focus on specific unforeseen problems in the labour market.

A trend, that started from the ARC programme and continued in the EIM programme, was the gradual re-integration of key analytical activities within the Commission units. This contributes to higher quality and coherent policy conclusions. For instance, the Employment in Europe report is now produced in-house and valuable help from programmes such as the ARC is only sought for technical aspects. The evaluation of the European Employment Strategy has also been produced internally.

Finally, the knowledge gained managing the ARC programme has been very useful for improvements in the successive EIM programme. As this report has been drafted after the end of the ARC programme but during the third year of the EIM programme, it is apparent that such improvements benefited the new programme. For instance, the consistent streamlining of the EIM activities to the aims of the European Employment Strategy, and the implementation of an active information policy to increase awareness on the Employment Strategy, have been key factors in improving the contribution of the incentive measures to the realisation of the Strategy's objectives.

Budgetary Annex

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