JOINT EMPLOYMENT REPORT 2000 - PART I : THE EUROPEAN UNION - PART II : THE MEMBER STATES

(presented by the Commission)

Executive Summary

This report is the third prepared in accordance with Article 128 of the Treaty of Amsterdam. It presents a comparative assessment of how the Member States have implemented the Employment Policy Guidelines of 1999 and how they have transposed the revised Guidelines for the year 2000 in their National Action Plans for Employment. It provides both an overall analysis across the four pillars of the European Employment Strategy (Part I) and a detailed analysis by Member State of their policies (Part II), with special attention paid to the way in which the Recommendations adopted by the Council on 14 February have been addressed.

1. The policy context: the European employment situation

The employment situation in the EU has steadily improved over the last couple of years, reflecting the positive overall economic climate as well as progress in reforming the labour markets. Long-standing problems, such as high unemployment and low participation in employment, start to be effectively addressed, while new challenges, such as labour shortages and skill gaps, are emerging. The following key developments illustrate the on-going improvement of the employment situation:

* 4 million new jobs have been created since 1997, mainly in services. The increase has been most apparent in highly-skilled managerial, professional and technical jobs, but it has also benefited undifferentiated service and sales workers. For the first time since 1990, the number of full-time jobs exceeded the number of part-time jobs created. Nevertheless, both part-time and temporary jobs continued to increase in 1999, and they now amount to almost 30% of the total number of jobs in the EU.

* As a result, the employment rate in the EU increased to 62.2% from 61.3 % in 1998, but the increase in full-time equivalent was less pronounced. Women were the main beneficiaries of employment growth; however their employment rate of 52.5 % still reflects an important gender gap of 18.5% relatively to males' employment.

* Unemployment has fallen by 4 million since 1994 to an average rate of 9.2% in 1999. While starting to decline after 1997, long-term unemployment remains a problem for 4.2% of the labour force.

* Youth unemployment, at 8,5 % of the age group 15-24, is now at its lowest in a decade. However, the labour market participation of older workers over 55 years of age stands now at 37 %, a very low level against the background of increasing tightness of the labour market in some Member States

* Most Member States have benefited from the improved economic conditions in 1999 and increased their employment rates. Some Member States already exceed the benchmarks set by the Lisbon Summit for the EU in 2010, in terms of the overall employment rate (Denmark, Sweden, the Netherlands and the UK) or the female employment rate (Denmark, Sweden, Finland, the Netherlands and the UK).

2. The assessment of Member States' employment policies in 1999

Structural reforms of the labour markets are making progress amidst growing optimism:

* It is clear that the Member States are reforming their labour markets in a much more favourable macroeconomic climate now than in 1997 when the Luxembourg process was initiated. This should encourage further strengthening of policy efforts.

* Progress in employment performance demonstrates that a mutually reinforcing virtuous cycle is being created, where stability oriented macroeconomic policies on the one hand and ongoing structural reforms of the Member States' labour markets on the other hand are reducing unemployment and social exclusion and generating more jobs.

* It should however also be recognised that the elements of an overall policy mix are related to different time horizons: Interest rates can be changed overnight, but the impact of human resources investment and institutional reforms in the labour markets require sustained efforts, and can only be expected to yield visible effects over time

* An overall impact of the European Employment Strategy on the improving employment situation is still difficult to identify. Most recent data refer to 1999, the year in which most policy reforms started to be implemented under the NAPs. However, a beneficial impact can be detected for specific groups or sectors in the case of certain new policies.

* The 52 Recommendations issued by the Council to the Member States for 2000, have demonstrated their value in focusing the Member States' efforts on key challenges. Most Member States have taken action to respond, while in some areas strengthened efforts are still required. As some of the actions require time to produce the desired impact, it is still too early to assess whether these are sufficient to remedy the situation on a lasting basis.

* There is a clear learning process in the provision and presentation of the Member States' policy. The implementation reports are becoming more focused, while in some Member States, there is still an over-emphasis on individual initiatives, rather than a comprehensive, mutually supportive policy mix.

* The process of setting measurable objectives and targets should be strengthened. Under those guidelines that set common targets, policy progress is more visible, and an objective assessment of impact is made possible, on the basis of common indicators, underpinning further policy development.

* In contrast, under many Guidelines where there are no such quantified objectives, or where target setting is left to individual Member States, policy progress is slow, and both efforts and effects are difficult to gauge from information focusing on a scattered set of unconnected measures.

Strong but uneven implementation of the four pillars requires increased attention to the policy-mix.

While a lot has already been achieved, there is an uneven implementation of the four pillars, at least judging from what the Member States report. This is particularly true for the adaptability pillar, and - to a lesser extent - for the entrepreneurship pillar. Thus, a fully fledged policy mix is not yet adequately developed in the Member States. The key highlights of the action taken under the four pillars are:

Employability - Pillar I

* There is a clear progress in the implementation of preventative and active policies. The majority of countries now appear to be capable of fulfilling the targets set in Guidelines 1 and 2 by 2002. However, Belgium, Greece and Italy still need to take significant steps in order to fulfil the targets set in Guidelines 1 and 2 by 2002. As far as Guideline 3 is concerned, 12 Member States are already complying with the 20% target for unemployed people in active measures.

* The review of tax-benefit systems lacks clear follow up (except in Denmark, the UK and the Netherlands) and this is worrying in view of the large proportion of the population which remains in long-term benefit dependency in several Member States, especially those in which labour market shortages are emerging.

* The promotion of lifelong learning is receiving an increasing response in all Member States although a comprehensive framework is generally lacking, and only a minority of Member States reported on national targets which they are required to set.

* In comparison to 1998, all Member States are giving more emphasis to providing better opportunities for disadvantaged unemployed persons to re-enter the labour market. In many Member States there has been a notable shift from individual programmes to a more mainstreamed approach in favour of people with disabilities. However, comparative analysis remains difficult due to the lack of basic data and different definitions, in particular for ethnic minorities.

Entrepreneurship - Pillar II

* With respect to the entrepreneurship pillar, further efforts need still to be made to move beyond the proliferation of individual initiatives to the establishment of a comprehensive policy framework and an enabling environment for an entrepreneurial culture in Europe.

* Almost all of the employment growth in 1999 occurred in the service sector but it is unclear how much this was due to employment or accompanying policies (most Member States are committed to liberalisation of formerly public services). However, the development of the social economy covering goods and services provided by a wide variety of mostly non-profit entities, remains disappointing.

* Despite the large number of measures announced in the NAPs, progress in reducing the tax burden on labour has been slow, and in some Member States average taxation of labour has not yet started to decrease.

Adaptability - Pillar III

* Under the adaptability pillar, the social partners, together with Governments, have a key responsibility for meeting the commitments of the Guidelines. In most Member States, partnerships, often tripartite, have developed to address adaptability issues, including life long learning. However, there is little evidence of progress on issues linked to the modernisation of work organisation. The only significant focus has been on working time issues, instead of a more comprehensive reform of working life.

* Progress on the incorporation of more adaptable forms of contract into Member States' labour law remains limited.

Equal opportunities - Pillar IV

* The Member States have an improved record on gender mainstreaming across the four pillars. Many Member States have also reported specific measures dealing with unemployment of women, the gender segregation and the gender pay gap. However, there is still a long way to go to take gender aspects into account in all policy actions.

* Policy measures to help reconcile work and family life vary to a high degree between Member States. A positive element is the increasing tendency to set targets for childcare provision, as recommended by the Lisbon Summit conclusions.

The role of the Public Employment Services

In the context of reforming labour market institutions, the Public Employment Services are recognised as being a key institution to implement the Employment Guidelines, in particular Guidelines 1, 2, and 3. Developing and/or modernising the PES is going on in a number of Member States, but these efforts must be stepped up in order to give the PES the strength and the tools to meet the requirements for an effective implementation of the strategy.

Implementing the European Employment Strategy at the local level

The Member States are recognising the importance of local level action for the overall success of the European Employment Strategy. However, here much more also needs to be done in the area of devolution, establishment of an enabling environment, encouraging partnership among the local actors and developing comprehensive local employment strategies for the provision of more and better jobs.

The role of the Structural Funds

The European Social Fund has, through the new Programme proposals, been given a key role as an instrument to underpin the European Employment Strategy, in accordance with the Fund Regulations. This is also recognised in the National Action Plans. The focus is on the preventative strategy in particular under the employability pillar. However, also equal opportunities receive a clearly identifiable share in the programmes. In countries with smaller programmes, the efforts are more focused on particular innovative aspects of labour market and human resources policy. Lifelong learning and the requirements of the information society are recognised in many programmes in line with the priorities highlighted at the Lisbon European council.

The role of the other Structural Funds, beyond the ESF, in the support for the European Employment Strategy is not sufficiently explicit, and referred to only by few countries. In addition, the participation of those responsible for the management of the Funds at the national level in the implementation of the National Action Plans for Employment could be much more organic. The challenge is also to translate the commitments in the overall Programming Documents into Operational programmes in line with the priorities of the National Action Plans.

3. Institutional and political issues

* As stated in the Mid-Term Review of the Luxembourg process, a number of institutional and political factors are also at play, which underpin a successful implementation of the European Employment Strategy, and will by itself contribute to the achievement of the objectives set by the Employment Guidelines. These include:

* The emergence of new structures and institutions for decision making and evaluation of the employment policies, which have put employment at the centre of European and national policy making and improved the synergies and co-ordination between the various policy areas;

* An increased involvement of different actors in the process;

* A demonstrated commitment by governments and all of the other actors to contribute within their sphere of competence to the Employment Strategy.

* An increased transparency of target setting, exchange of best practice and peer review, which in itself is an element of confidence building in economic policy. There is a continued momentum in the "open method of co-ordination" created by the Luxembourg process and endorsed by the Lisbon European Council.

The analysis contained in this Report underpins the recommendations addressed to Member States which the Commission is proposing this year for the second time following the entry into force of the new Treaty on 1 May 1999. The Commission has been mindful of the need to ensure consistency between these recommendations and those set out in the Broad Economic Policy Guidelines drawn up under Article 99(2) of the Treaty. Furthermore, Member States are required to implement their employment policies in a way which is consistent with the Broad Economic Guidelines in accordance with Article 126 of the Treaty.

In 2000 and 2001, Member States will be not only reforming their labour markets amidst continued favourable economic prospects, but also within the new policy context created by the conclusions of the extraordinary European Council of Lisbon in March 2000. There, a new paradigm is emerging, based on a strengthened commitment to achieve full employment through consistent efforts promoting knowledge, innovation and social cohesion. The promotion of lifelong learning, social inclusion and equal access for all to the labour markets have been put high on the agenda for European policy in order to create the most competitive and dynamic economy by the end of this decade. These commitments must therefore be taken into account in the further development of the Employment Policy Guidelines and the individual recommendations addressed to the Member States, thus enabling the Luxembourg process to make an essential contribution to the achievement of the Lisbon objectives.

Table of Contents

PART I : THE EUROPEAN UNION

1. Introduction

2. The employment situation

2.1. The EU macro-economic and employment context

2.2. Overview of Member States' employment performance

3. Assessment of National Action Plans

3.1. Pillar I: Employability

3.1.1. Overview of policy developments

3.1.2. Prevention and activation - compliance with common targets

3.1.3. Reforms of tax-benefit systems (Guideline 4)

3.1.4. Education and training (Guidelines 5 to 8)

3.1.5. Integration of disadvantaged groups in the labour market (Guideline 9)

3.2.1. Overview of policy developments

3.2.2. Simplifying the business environment (Guidelines 10 and 11)

3.2.3. Job creation in services and in the social economy (GL 12-13)

3.2.4. Employment and Taxation (GL 14)

3.3. Pillar III: Adaptability

3.3.1. Overview of policy developments

3.3.2. Modernisation of work organisation, adaptability in companies and training in companies

3.3.3. Adaptation of labour law

3.4. Pillar IV: Equal opportunities

3.4.1. Overview of policy developments

3.4.2. Reduction of gender gaps

3.4.3. Family-Friendly Policies

4. Horizontal aspects of the implementation of the NAPs

4.1. Towards a society based on knowledge and information

4.2. Role of the Structural Funds

4.3. The Role of the Social Partners

4.4. Role of local and regional authorities

4.5. Gender Mainstreaming in the NAPs

5. Mid-term review of the Luxembourg process

PART II : THE MEMBER STATES

BELGIUM

DENMARK

GERMANY

GREECE

SPAIN

FRANCE

IRELAND

ITALY

LUXEMBOURG

NETHERLANDS

AUSTRIA

PORTUGAL

FINLAND

SWEDEN

UNITED KINGDOM

JOINT EMPLOYMENT REPORT 2000 - PART I

THE EUROPEAN UNION

1. Introduction

This Report is submitted in accordance with Article 128 of the Treaty with the aim of presenting the conclusions drawn by the Commission from its examination of the measures taken by the Member States to implement the Employment Guidelines for 2000. It provides the basis for the Joint Employment Report that the Council and the Commission will submit to the European Council in Nice in December 2000. Moreover, the Commission will take into account its findings in the preparation of its proposals for a Council decision on the Employment Guidelines of 2001, as well as for Council Recommendations addressed to Member States on the implementation of their employment policies.

The Commission has been mindful of the need to ensure consistency between these recommendations and those set out in the Broad Economic Policy Guidelines drawn up under Article 99(2) of the Treaty. Furthermore, Member States are required to implement their employment policies in a way which is consistent with the Broad Economic Guidelines in accordance with Article 126 of the Treaty.

Like the two previous reports of 1998 and 1999, the present report is in two parts. The first part sets out a comparative assessment of the implementation of the Employment Guidelines by Member States in each of the four pillars, taking into account the different starting situations as well as the progress achieved since 1997 in terms of labour market performance. The second part presents, for each Member State, a detailed analysis of the policy measures implemented or announced under the National Action Plans, in the light of recent developments in their economic and employment situation. Special attention is given to the examination of the way in which each Member State has addressed the recommendations adopted by the Council for the current year.

This report is based on the information provided in the NAPs submitted by the Member States by 1st May 2000, including statistical data on indicators to monitor both EU and national targets. Account has been taken in some cases of supplementary information provided by national authorities on the occasion of the bilateral meetings held in June-July for checking the accuracy of the analysis contained in this report.

The process initiated by the European Council in Luxembourg in 1997 has established an ambitious framework for policy co-ordination in the EU in the area of employment. Given the structural nature of the reforms to be launched in this area, an immediate and visible impact should not be expected as a rule. The assessment of the implementation of the Employment Guidelines is carried out in this Report from a multi-annual perspective, by taking into account progress towards identified benchmarks. In some cases, however, there is already sufficiently strong evidence pointing to beneficial effects of major programmes or reforms, and such cases have been highlighted. The Commission intends to carry out a major impact evaluation of the European Employment Strategy whose findings should feed into the review of the strategy in 2002.

In relation to previous years, there are two major differences characterising the economic and political context surrounding the presentation of this report:

On the economic side, and thanks to an improved economic policy framework, structural reforms bearing on labour markets are now being implemented against a more favourable economic outlook, leading in particular to strong demand for labour. This development will create new responsibilities for policy-makers, to the extent that more ambitious efforts for structural reform are required in order to sustain and accelerate economic and employment growth while maintaining financial and price stability.

Moreover, and while long-standing structural problems such as high youth and long-term unemployment are at last being reduced in most Member States, unemployment levels remain far too high. Structural problems remain in many countries, including uneven developments across social groups and regions, manifested in the phenomenon of dual labour markets and persistent regional disparities. In addition, some Member States (and not only those with low unemployment) are facing new problems such as labour shortages and skills gaps.

On the political side, the European Council of Lisbon has concluded that it needs to set a goal of full employment in Europe in an emerging new economy. The EU has set a new strategic goal for the next decade: to become the most competitive and dynamic economy, capable of sustained economic growth with more and better jobs and greater social cohesion. An overall strategy has been agreed to address the challenges in making the transition to a knowledge-based economy and society, modernising and strengthening the European social model by investing in people and building an active welfare state and continuing to apply a macro-economic policy mix conducive to favourable growth prospects, thereby enabling the European Union to regain the conditions for full employment, and to strengthen regional cohesion.

The Lisbon Summit conclusions recognise the fundamental and overarching role of the Learning Society for the achievement of the goal of full employment through the development of a knowledge-based society, and have thus given new emphasis to the priorities set out in the Employment Guidelines 2000 of developing lifelong learning policies and ICT skills.

If Lifelong Learning is to be developed as a basic component of the European Social Model, it has to be as a comprehensive strategy covering all aspects and stages of education and training. Indeed, it has been defined by the Member States and the Commission as : "encompassing all purposeful learning activity, whether formal or informal, undertaken on an ongoing basis with the aim to improve skills, knowledge and competence". Thus lifelong learning is overarching and integrated into all four pillars. It encompasses Member States' measures to promote the employability of young people, older workers and unemployed persons by improvements in the quality of and access to initial and continuing education and training systems, and by the development of work-based training. It includes, under the adaptability pillar, the development of partnerships by the majority of Member States between national authorities and the social partners to provide continuing training and address skills gaps, and also measures by Member States and entreprises to address barriers to investment in training. Member States' initiatives to integrate the teaching of entrepreneurship skills into education and training curricula is another aspect of lifelong learning, as are actions aimed at improving the access of women returning to training with the aim of strengthening equal opportunities.

In addressing the employment strategies for an Information Society for all at European level, a key issue for all Member States is the implementation of actions and programmes to ensure that education and training systems, and citizens at all levels, are fully equipped to participate in the Information Society and are prepared for the transition to a knowledge-based economy. The important priority being given to the encouragement of lifelong learning and the development of ICT skills can be seen in the emphasis in the Lisbon conclusions, the Employment Guidelines, the Commission's e-Europe Action Plan and, particularly, in the Commission's e-Learning initiative.

In order to implement the Lisbon strategy, no new processes in addition to those already in force - the Broad Economic Policy Guidelines, Luxembourg, Cardiff, Cologne - will be required. Instead, policy-making at the EU level in a number of areas - innovation, economic reform, education and training, social protection - will be strengthened by the adoption of an open method of co-ordination, based on guidelines, benchmarks and systematic monitoring. This method is now consolidated within the European Employment Strategy, so it can be expected that the analysis contained in the JER will provide decisive inputs to the Spring European Council to be held in Stockholm, devoted to economic and social questions and monitoring the progress towards the new strategic goals.

On the other hand, it is clear that the new political messages endorsed in Lisbon and the Social Policy Agenda (also to be adopted at the Nice Summit) will gear the strategy towards new and more ambitious goals. The Commission and the Member States have undertaken a Mid-term review of the Luxembourg process under the auspices of the Employment Committee whose results are summarised in Chapter 5 of the present report. Its purpose is to translate the conclusions of the Lisbon Summit into new proposals for enriching the Employment Guidelines of 2001, notably by giving them more concrete targets.

2. The employment situation [1]

[1] Additional information and analysis can be found in the Commission's Employment in Europe 2000 report.

2.1. The EU macro-economic and employment context

Positive prospects for growth and employment should encourage bolder economic reforms for a sustainable improvement in labour markets

Since mid-1999, the EU has seen a strong economic recovery , with average GDP growth being forecast at 3.4% in 2000, and 3.1% in 2001, up from 2 ½% in 1999. The pick-up has been driven by exports, partly thanks to the improved international environment, but with domestic demand also on a solid footing. Significant employment creation is expected during this year and the next thanks to strong growth and continued labour market reforms.

Unemployment has fallen from 9.2% in 1999 to 8.7% by mid-2000, and is expected to fall below 8% in 2001. But this is still too high and, moreover, it remains unevenly distributed among geographical areas and social groups. The employment creation that takes place in a period of rapid growth must not be allowed to obscure the considerable structural problems that remain in the labour markets of many Member States. At the same time, labour markets are becoming increasingly tight in some Member States and regions, with skill shortages and recruitment difficulties being reported across a range of sectors and occupations, and wage pressures beginning to emerge in some countries. Overall, however, wage developments remain moderate.

The EU has built very favourable economic fundamentals which are beginning to yield results. Inflation is relatively subdued, public sector deficits have been reduced remarkably, givingway to surpluses in some cases, long-term interest rates have fallen and the stock of government debt in terms of GDP is falling. Sustained economic growth of around 3% and a perceptible increase of the employment rate towards the 70 % benchmark should be a realistic prospect for the coming years, if such a sound macroeconomic background is maintained and the pace of economic reform is stepped up. To maintain the favourable economic outlook, it is essential that Member States take advantage of this situation and implement the reforms set out at Lisbon for preparing the transition to a competitive, dynamic and knowledge-based economy, and to modernise the European social model by investing in people and building an active welfare state.

Robust employment growth as economic recovery continues

In 1999, growth of real GDP averaged 2.4% over the Union as a whole, 0.3 percentage points less than in 1998. The number in employment, however, increased by marginally more in 1999 than in the previous year, 1.4% as opposed to 1.1%, a rise of almost 2.1 million in 1999 and 4 million in the two years (see Chart 1 in the Statistical Annex).

The effect of the significant rise in employment in 1998 and 1999 was to bring the overall increase in the number in work in the Union since the beginning of recovery in 1994 to just under 7 million, or 4½%, over five years.

The overall employment rate in the Union [2] rose to 62.2% in 1999 from 61.3% in 1998. However, this improvement was just sufficient to bring that rate back to the same level as in 1990 before the recession in the first part of the decade began.

[2] In this report, the employment rate is defined as the proportion of the population aged 15 to 64 in work. Source : European Labour Force Survey; yearly averageswhere available.

The increase in the full-time equivalent employment rate has been much less pronounced. In 1999, it averaged 56½% of working-age population, only just over 1 percentage point higher than in 1994.

Employment growth spans all types of work, but the proportion of part-time and temporary jobs continues to increase

For the first time since 1990, the number of full-time jobs exceeded the number of part-time jobs created. Some 63% of employment growth in 1999 is attributable to the increase in full-time jobs. Nevertheless, part-time working continued to expand in 1999, by almost 3% more than a year earlier and almost 19% more than 5 years earlier. Over the 5 years 1994 to 1999, they accounted for nearly 64% of net job creation.

Most of the new part-time jobs created have gone to women, who still account for 80% of all those working part-time. Over 70% of the net additional jobs created for women over the five years 1994 to 1999 were part-time ones. The number of men working part-time has also risen. Half of the net additional jobs created for men between 1994 and 1999 were part-time. In 1999, 33% of all women and 6% of all men in employment in the Union worked part-time, as opposed to 28% and 4% respectively, at the beginning of the decade (see Chart 2).

Also the number of new jobs with open-ended contracts in 1999 exceeded the number of new temporary jobs (i.e. ones with fixed-term contracts). Some 57% of the net additional jobs created for employees in 1999 were open-ended which is in line with the tendency observed over the recovery period 1994 to 1999. The proportion of employees in temporary jobs increased from 11% to 13% over this period. The relative growth in temporary working has been significantly higher among men than women (see Chart 2).

As a consequence, there has been over the last five years a constant rise in the proportion of workers taking part-time or temporary jobs, which now account for 28.4% of total employment in the EU (see Chart 2). This proportion reaches 45.7% in the case of female workers.

Women have taken up the majority of the new jobs created

A large proportion of the net additional jobs created in 1999 went to women, who accounted for 70% of the overall increase in employment, more than in 1998 but in line with the long-term tendency for increasing numbers of women to be in paid work. Over the five years 1994 to 1999, almost two thirds of the 6.8 million net additional jobs were taken by women.

As a result, the employment gap between men and women continued to narrow in 1999, with the employment rate for women aged 15 to 64 rising from 51% in 1998 to 53%,while that for men rose from 71% to 71½%. The gender gap therefore fell to 18½ percentage points, whereas at the beginning of the 1990s, it had stood at some 27 percentage points (see Chart 3).

Employment in services continued to account for the bulk of net job creation in the EU, but gains were also registered in industry

Most of the rise in employment since 1997 can be attributed to a growth in jobs in services, which much more than offset a continuing fall in employment in agriculture. Jobs in industry also increased, unlike the first three years of the recovery period, 1994 to 1997, when job losses occurred in some Member States, especially in Germany.

As a result, the employment rate in services increased in the EU from 40.3% to 41.6% between 1997 and 1999. As the employment rate in services in the US also increased over the same period from 54.5% to 55.5% the EU-US gap was maintained at 14 percentage points. In terms of the share of total employment in 1998 for the US this was 73.8% and for the EU 66.1% [3].

[3] Estimation based on the OECD Employment Outlook 2000.

While the service sector as a whole offers the greatest potential for increasing employment in the EU, there are huge differences in between service sub-sectors. Most of the additional jobs which have been created since the beginning of the recovery were concentrated in a few market services - computing, business, travel and air transport - but also in some "communal" services - mainly health and education, but also recreational and cultural activities - as well as personal services. In a number of more traditional services, job growth has been minimal or even negative - that has been the case in retail trade, land and water transport, postal services, banking and insurance, R&D and public administration.

New job opportunities have been very unevenly shared across occupations

Whereas the number of high-skilled managerial, professional and technical jobs, as well as sales and service workers, have increased at more than twice the rate of average job creation in the EU (0.9%) since 1994, manual jobs, both skilled and unskilled, have decreased in number over the same period. Clerical and office jobs have also increased but at a much slower rate.

This growth pattern has been almost identical between the two genders, and very little variation has been observed among Member States. However specific developments were witnessed in Portugal [4] (where job growth has concentrated in unskilled rather than in high-skilled occupations) and in Spain, France, Ireland and the Netherlands, where the number of jobs in manual occupations has continued to increase.

[4] A break in the statistical series in 1998 reduces the reliability of these results.

Employment growth over the last 5 years has been dramatic (more than 5 % a year) in occupations related to the information society (computing professionals), or driven by the global economy and the on-going transformations in management (business professionals, executives, creative artists), and the response to new social needs (social work, personal care and health professionals).

Unemployment continues to fall

The rate of unemployment in the Union averaged 9.2% in 1999, the third year in succession that the rate has fallen, down from 11.1% in 1994 (see Chart 4). In March 2000, there were 14.9 million people out of work in the Union, down from the peak of 18.7 million in February 1994. Since 1997 in particular, the fall in unemployment has been gaining momentum, reflecting the increased rate of employment growth. Nevertheless, unemployment in the Union in 1999 was still 2 million higher than it had been in 1991.

Unemployment of women in 1999, at 10.8% was still well above that of men (7.9%), though the rate for women declined slightly more than that of men during 1999, reflecting the higher rate of net job creation for women over the year.

Youth unemployment reaches the lowest point since the eighties but remains much too high

The number of young people unemployed in the Union averaged 8½% of those in the 15 to 24 age group in 1999. This was down from 9.2% in 1998 and from 10.7% in 1994 and was slightly lower than at the beginning of the decade. Youth unemployment fell by a similar amount during 1999 among men and women (0.8 percentage points). However, this should not obscure the serious nature of the problem for young job-seekers. The conventional youth unemployment rate (expressed in percentage of the labour force) was 17.7% in 1999.

Youth unemployment as a proportion of total unemployment has also declined, although this partly reflects the fall in the share of the 15 to 24 age group in the total population. Population in the age group 15-24 has been declining at an annual rate of 1.5% since the mid-1990s.

Long-term unemployment also declined but remains a serious problem

In line with the general improvement of the labour market situation, long-term unemployment, as measured by its ratio to the labour force (LTU rate) has dropped in 1999 to 4.2% for the whole Union, from 5.2% in 1997 and 4.9% in 1998. Over 2½% of the labour force had been unemployed for at least two years, down by some ½ percentage point from 1998.

Despite this improvement, long-term unemployment remains a serious problem in the EU. The present LTU rate is still far too high, well above the level reached in the beginning of the nineties. The unemployed who have been continuously without a job for more than 12 (24) months still represent 45% (29%) of the total number of unemployed. This situation continues to call for more active labour market policies. The fact that the LTU share has been declining since 1997 (down from 49%) indicates that the LTU stock is declining at a faster pace than overall unemployment, which suggests that the combined effect of strengthened active policies and labour market reforms in some Member States is starting to have a visible impact in terms of increased job opportunities for the long-term unemployed.

2.2. Overview of Member States' employment performance

The purpose of the present section is to assess the results that Member States are achieving under the European Employment Strategy on the basis of a comparative analysis of their evolving employment situation since 1997. This overview is underpinned by a battery of common performance indicators that have been developed in co-operation between the Commission and the Member States, under the auspices of the Employment Committee. The common indicators were selected so as to optimise comparability, reliability and timeliness, given the existing data constraints [5].

[5] For a description of the sources and methodology of the indicators used in this chapter, see Appendix.

Employment increased in all Member States but progress was uneven

In 1999 all Member States were able to take advantage of the improved economic conditions and increase their employment levels. However, the vigour in labour markets was very unevenly spread across Member States. Whereas Ireland has achieved robust employment growth of more than 5%, together with Luxembourg, Finland, Spain and the Netherlands (all performing above 2% in 1999), the majority of Member States registered growth rates close to the EU average of 1.4% and Germany only a marginal increase of 0.3% (see Chart 5).

The majority of Member States replicated in 1999 their employment growth performance of the previous year, the notable exceptions being Sweden and Finland, which have substantially improved job creation relative to 1998, and Denmark, Greece and Portugal, which experienced a slowdown.

All EU economies have been creating jobs since 1997 more rapidly than over the period 1990-96. In the large majority, this is due to faster GDP growth along with the effects of labour market reforms. For some Member States, these reforms may have an impact on the average growth of labour productivity per worker (apparent productivity), to the extent that they lead to an overall reduction of hours worked, expansion of part-time work or rapid development of service sectors. In the case of Denmark, Germany, Italy and the UK, net employment growth over the last couple of years is to a large extent associated with a slowdown in labour productivity per worker.

Employment rates are steadily increasing, and in some Member States already exceed the EU target of 70% ...

As a result of employment outpacing growth in working age population, in 1999 the employment rate increased in almost all Member States. The increase was highest in Ireland, Spain, Belgium and Finland, all of which registered increases of 2 percentage points or more. Since the start of the European Employment Strategy, two groups of Member States have succeeded in raising substantially their employment rates, with increases exceeding 4 percentage points over the two-year period (see Chart 6):

- Spain and Ireland, which reaped the benefits of strong demand for labour to improve on a difficult starting situation;

- Sweden, Finland and Portugal, which have managed to improve still further a situation already characterised by high levels of employment.

Across the Union, the employment rate is highest in Denmark (76.5%), and in Sweden, the Netherlands and the UK, it already exceeds the target of 70% set by the Lisbon Summit for the Union as a whole by the year 2010. Spain, Italy and Greece face the greatest challenge for making progress towards this target, as their employment rates stand below or near 55%. In Greece the employment rate showed a slight decrease in 1999.

Since the participation of prime-age males in employment tends to be quite uniform, the reasons for the wide variations of the employment rate across Member States have to be found primarily in the behaviour of women as well as younger and older people. As regards female employment, it is favoured inter alia by flexible labour legislation, particularly with respect to part-time working and parental leave, the availability of childcare services and a low marginal income tax rate for couples with two wage-earners.

The participation of women in employment is highest in Denmark (71.6%), Sweden,the UK, Finland and the Netherlands. All these Member States already exceed the 60% target set for the Union in 2010, while Austria and Portugal are very close. In Spain, Italy, Greece, Belgium and Luxembourg, the female employment rate is below or near 50% (see Chart 7).

... but the increase is much less visible in terms of full-time equivalents

Since 1997, the full-time equivalent [6] (FTE) employment rate has increased in all Member States, but at a slower pace than head-count employment. The changes have been smallest (i.e. less than one percentage point over two years) in the cases of Germany, France, Luxembourg, Austria and the UK, implying that the increase in the work volume has been modest in these countries.

[6] Full-time equivalent (FTE) employment, which equals the number of full-time equivalent jobs, is defined as total hours worked divided by the average annual number of hours worked in full-time jobs in each Member State. The FTE employment rate is calculated by dividing the FTE employment as defined above by the total population in the relevant age group.

Denmark has the highest FTE employment rate (68.6%), followed by Portugal, Finland, Sweden and Austria, with rates ranging between 65% and 63%.

Younger people turn increasingly to the labour market...

The employment rate for younger people varies considerably across Member States, reflecting the average length of participation in formal education, as well as the importance of in-work components in vocational training systems. It may also reflect the situation of labour markets, to the extent that a strong demand for labour encourages young people to finish their studies earlier.

The employment rate of young people (15-24) is highest in Denmark (66%), the Netherlands, Austria and the UK, (all above 55%), reflecting the large numbers engaged in formal apprenticeship or combining education and training with part-time work, and lowest in Belgium, France, Spain, Greece and Italy (all below 30%).

Since 1997, most Member States saw young people turn increasingly to the labour market, as shown by the rising activity rate [7] in the age group 15-24 in contrast with the trend observed throughout the nineties. The increases have been especially strong in Belgium, Finland, Greece, Ireland, the Netherlands, Portugal and Sweden.

[7] The sum of the youth unemployment ratio and the employment rate for the same age group.

... while older workers still tend to exit prematurely

Policies such as early retirement pensions, disability benefits and unemployment benefits unconnected to active job search after a certain age limit, have encouraged early withdrawal of older people from the labour market. As a result, the employment rate for those aged 55-64 has been declining and has now reached very low levels in the EU - slightly below 37% in 1999 (see Chart 8).

Such policies put a great strain on current social welfare expenditure while threatening the long-term sustainability of public pension systems, in the light of demographic projections pointing to a gradual increase in the share of dependent people. They also reduce the labour force potential that will be required to compensate for the reduction of young cohorts in the labour force.

There are large discrepancies in employment of older people across Member States, reflecting differences in the demographic structure, as well as the extent to which public policies have favoured early withdrawal from the labour market as a means to tackle industrial restructuring in a context of slow job creation. In Austria, Belgium, France, Italy and Luxembourg, not even one third of the population aged 55-64 is at work, whereas this proportion exceeds one half in Sweden (64.5%), Denmark and Portugal.

Since 1997, the employment rate of older people has continued to decline in France and Germany, and remained stable in Italy, while some progress has been registered elsewhere, and more particularly in Belgium, Denmark, Luxembourg, the Netherlands and the UK.

Unemployment is falling almost everywhere, and some labour markets show signs of emerging bottlenecks

Since 1997, unemployment has been declining consistently in almost all Member States (see Chart 9). Amidst those Member States with two-digit unemployment rates in 1997, the improvement has been most significant in Spain and Ireland (respectively 5 and 4 percentage points), as well as in Finland and Sweden, although to a smaller extent (about 2 ½ points). Improvements were more modest in Germany, France, and Italy, while in Greece unemployment has been rising.

The highest unemployment rate continues to be registered in Spain (15.9%), followed by France, Italy (both at 11.3%), Greece [8] (10.7%) and Finland (10.2%).

[8] 1998 data.

In some Member States, there is now a situation near to classical full employment, where most of the unemployed are temporarily switching between jobs (frictional unemployment). This is the case in Austria, Denmark, Luxembourg, the Netherlands, Ireland and Portugal (all with unemployment rates below or close to 5%). While such countries still have to face the problem of hard-to-place groups, which form the core of the dwindling stock of long-term unemployed, the key problem now is how to avoid labour shortages and inherent wage inflation pressures. For some, part of the answer will lie in the activation of those people who have had insufficient incentives to participate in the labour market, or were left out on account of high non-wage labour costs or low skill levels, and are not counted as unemployed although they may be willing to accept a job if they were offered one - (the so-called "discouraged workers"). For others, strengthened labour mobility can help in alleviating labour shortages.

Despite recent improvements, some Member States still show worryingly high levels of long-term unemployment...

Since 1997, the reduction in long-term unemployment has been more or less equally spread across Member States, with the most remarkable progress being observed in Spain, Ireland, Portugal, Sweden,the UK and the Netherlands. However, in 1999, the stock of the long-term unemployed still accounted for 5 % or more of the work force in Belgium, Greece, Spain and Italy. In all these Member States, women were strongly over-represented among the long-term unemployed.

... and of youth unemployment

In 1999, more than 10% of the young population (in the age bracket 15-24) was without a job in Italy, Finland, Spain and Greece. The gender distinction of youth unemployment is generally much less pronounced as compared with adults.

Along with a reduction in overall unemployment, the prospects of young people continued to improve, and in 1999 all Member States, with the exception of Belgium and Denmark, witnessed a drop in youth unemployment ratio. The improvement was more marked in Spain, Ireland and Sweden.

Regional disparities in unemployment

In some Member States unemployment rates vary considerably across regions reflecting long-standing asymmetries in their ability to attract investment. In some cases, such disparities may also indicate insufficient labour mobility and/or discrepancies between wages and productivity. As measured by the coefficient of variation [9] of unemployment rates across the NUTS 2 regions within each Member State in 1999, this problem was most acute in Italy, followed by Germany, Finland, Belgium and the Netherlands (see Chart 10)

[9] Standard deviation divided by average national unemployment rate.

A disturbing fact is that regional disparities in unemployment have risen since 1997, in the majority of countries, suggesting that the fall in unemployment has been less pronounced in those regions with highest unemployment.

3. Assessment of National Action Plans

3.1. Pillar I: Employability

3.1.1. Overview of policy developments

The Joint Employment Report 1999 concluded that the establishment of clear targets and deadlines in Guidelines 1 to 3 had helped to focus policy and to mobilise efforts in implementing a policy approach consistent with the European Employment Strategy. There was evidence of a move towards a more preventative approach in order to combat youth and long-term unemployment more effectively, in combination with strengthened active labour market policies.

The examination of the NAPs of 2000 broadly confirms further progress in this direction. Success in coming closer to full compliance with the common targets of guidelines 1 and 2 and achieving low rates of inflow into long-term unemployment is most evident in those Member States having already fully implemented the preventative approach for both young and adult unemployed persons (Sweden,the UK, Austria, Finland, Luxembourg). Progress is noticeable in varying degrees for those Member States that extended the coverage and intensity of new preventative policies based on individualised assistance and early action in accordance with pre-defined programmes (the Netherlands, Denmark, Germany, Ireland, Portugal, France, Spain). In some cases, however, delays or particular difficulties of implementation are noticed.

The response of the four Member States who received recommendations on this issue last year was, however, uneven. While Germany has extended individual pathways for prevention of adult long-term unemployment to effectively provide offers to all in need, before 12 months, and Belgium announced for 2000 new initiatives which bring labour market policy closer to the preventative approach advocated in guideline 1, there are now added reasons to doubt the capacity of Greece and Italy to comply with the common targets by the agreed deadline of 2002, unless efforts are stepped up considerably.

As regards compliance with guideline 3, activation has increased in the majority of Member States, and 12 Member States comply with the 20% target for unemployed people in active measures. The purpose and policy coverage of this guideline continues however to be interpreted differently by Member States, and further clarification is needed. Training actions are being offered on average to 47% of all participants in measures, whereas the remaining 53% participate in a very heterogeneous set of measures, ranging from public employment schemes with very little training content, to subsidised employment and start-up assistance. The present tendency towards increased activation is also confirmed by the rising share of active measures in total labour market expenditure.

Few Member States have started a comprehensive review of tax /benefit systems (Denmark, the UK and the Netherlands). Reform efforts in other Member States have been modest. A high proportion of the population in working age is rooted on long-term benefit dependency in several Member States, including some of those having low unemployment rates, like Denmark and the Netherlands. Further progress in tax-benefit reforms is essential towards meeting the objectives of reducing structural unemployment, improving employment performance and restoring full employment.

While the Employment Guidelines for 2000 have set more ambitious objectives for lifelong learning, the majority of Member States still need to develop stronger links between various policy measures so that measures and policies for education and training can be conceived and implemented within a comprehensive lifelong learning framework. Clear, quantified targets and benchmarks need to be set and respected, but only a minority of Member States are adequately and fully responding to the objectives set for Guideline 6 (the Netherlands, Denmark). Member States in a more difficult initial situation in terms of average educational attainment are required to make stronger efforts in order to address the challenge of lifelong learning.

As regards the implementation of guidelines 7 and 8, most Member States have broadened support for young people with learning difficulties in order to curb early school leaving and attack persistently high levels of illiteracy among certain groups and in certain areas. Considerable efforts are also under way to provide computers and Internet connections to students and increase their use in education and training. There are few measures aimed at improving the quality of education. The starting situation is however quite uneven across Member States, and progress towards the common targets set in the Employment Guidelines 2000, and confirmed by the Lisbon conclusions, should be monitored.

As regards Guideline 9, which seeks to promote the integration of disadvantaged groups in the labour market, further efforts are necessary in order to define the target groups more clearly, as well as the policy goals. Also, much more effort needs to be addressed to monitoring and evaluation of outcomes from different policies for disabled persons, ethnic minorities and other disadvantaged groups. This would enable the Member States to specify the instruments deployed for their implementation. The conclusions from the Lisbon Summit emphasise the need to promote an effective integration of disadvantaged groups in work.

3.1.2. Prevention and activation - compliance with common targets

The facts:

* In 1999, despite the improvement of the employment situation, still more than 2 million young people, or 50% of the unemployed in the age bracket 15-24, had been without a job for at least 6 months.

* The problem is most serious in Italy, Spain, France, Belgium and Greece, where 10% or more of the young population was without a job for at least 6 months. In 1999, clear improvements were observed in Spain and France, which reduced the young LTU rate respectively to 17.5% (from 23.1%) and to 9.6% (from 13.2%). In contrast, modest progress has been observed in Belgium, Italy or Greece.

* In 1999, there were more than 6 million adult long-term unemployed, of which more than half are women. 6 Member States presented the most serious starting situation in 1997, with an adult LTU rate close or above 5% - Spain, Italy, Ireland, Germany, Belgium and France. Until 1999, rapid progress was observed in Spain and Ireland, whereas in the other four countries progress has been more modest.

Good performance:

* The lowest rates of inflow into LTU (young people): Austria, Sweden and Denmark. Average: 5.5%.

* The lowest rates of inflow into LTU (adults): Austria, Denmark and Finland. Average: 5.2%.

Guidelines 1 and 2

The assessment of implementation of the preventive approach (Guidelines 1-2) takes into account three criteria:

- the conformity of the announced policies with the policy orientations emphasising individualised assistance and early intervention;

- the progress achieved in making operational the provision of individual offers to all young and adult unemployed before 6 and 12 months of unemployment respectively;

- the degree to which the common EU quantitative targets are met, as measured by agreed policy input indicators.

Account is also taken of the policy impact of the new preventative approach in terms of reducing unemployment and in particular inflows into long-term unemployment.

As far as the provision of indicators is concerned the overall situation has greatly improved, as 13 Member States (as against 5 in 1999) now provide the full array of common policy indicators, or at least data enabling their calculation on the basis of common definitions. Several of the Member States to which a recommendation on this issue had been addressed in 1999 made a positive effort to overcome this deficiency and supply the required data in their NAPs 2000 (Germany, Spain, the Netherlands). However, both accuracy and reliability of the quantitative evidence provided remains questionable in a number of cases, as documented in Table 1. Further effort in adapting national monitoring systems and in transforming national data into commonly agreed definitions is still required in order to improve comparability across Member States.

The existing quantitative as well as qualitative information is sufficient to draw a clear picture of the state of progress in the implementation of Guidelines 1 and 2. Three categories of Member States can be distinguished in this respect on the basis of the examination criteria mentioned above.

Member States that have put in place a system ensuring provision of individual offers to all young and adult unemployed before 6 and 12 months of unemployment respectively, and that are near to full compliance with the EU common targets are : Austria, Sweden, the UK, Luxembourg and Finland.

Member States extending the implementation of the preventative approach, in conformity with the Guidelines, which seem capable of fully complying with both guidelines 1 and 2 by or before 2002 are : Denmark, the Netherlands, Ireland, Germany, Spain, Portugal and France. In the three first countries, full implementation of the preventative approach has been already achieved with respect to guideline 1, and efforts concentrate now on its extension to the adult unemployed.

Member States that have not yet defined policies ensuring full provision of individual assistance and early action for young and for adult unemployed before the 6/12 month threshold, or have failed to ensure sufficient progress in implementation during 1999 are : Belgium, Greece and Italy.

In relation to 1998, the major changes are the inclusion of Finland and Luxembourg in the first cluster, and the confirmation by Germany of significant progress in implementing preventative measures in conformity with the guidelines.

Category I

Austria, which has complied very satisfactorily with Guidelines 1 and 2 in 1999, intensified job search training with the launch of a new measure (Job Coaching) and has put greater emphasis on the acquisition of ICT-related skills in training for the unemployed. Benefiting from a favourable labour market, Austria is on track to fulfil by 2002 its objective of halving the inflow rates into LTU, both for young and adult unemployed, which are already among the lowest in the EU (3.4% and 1% respectively).

Sweden, which has in place a well-established system based on early action and individualised assistance (starting at 3 months of unemployment) maintains its good performance regarding young unemployed but experienced a noticeable increase of adult inflows into LTU in 1999 (from 5.4% to 15%). However, improving the efficiency of the preventive approach for adults is a priority for 2000 and should contribute to reversing the situation.

Finland had achieved by the end of 1999 the full-scale implementation of its preventive approach, based on individual action plans. This is not yet reflected in the policy input indicators, which still show modest values, with 48% of young and 52% of adult unemployed crossing the 6th/12th threshold without having been offered individual assistance (non-compliance rate). In terms of the outcome, Finland scores fairly well but better results might still be expected in view of the level of prevention achieved.

In Luxembourg the implementation of the preventative approach was pursued on the basis of the new concept of job-seekers' individual socio-psychological follow-up. The preventative approach is more ambitious than the guidelines as it aims at addressing young and adult unemployed before they cross respectively 3 and 6 month unemployment. The level of effort has been significantly increased between 1998 and 1999, particularly regarding adult unemployed and the non-compliance rate decreased accordingly. However, there is still scope for improving the performance in terms of inflow into long-term unemployment.

The UK has pursued a preventative approach through the Job-Seekers' Allowance where job search assistance, flanked by strict benefit sanctions, is the major support offered to all young and adult unemployed before the 6th/12th month of unemployment. More specific and intensive support in terms of training, work experience or job schemes intervenes later, within the New Deal system. For adults aged between 25 and 49, the New Deal itself takes place quite late (after 24 months unemployment),but earlier access to intensive support is possible for some, in a more disadvantaged position. While complying fully in terms of the EU targets, and having reduced inflows into LTU measured at the 6th/12th month threshold, the UK still shows room for improvement in this respect. Efforts announced in NAP 2000 should lead to a stronger activation during the initial stage of New Deal scheme for young people (foreseen for June 2000) as well as to earlier adults' activation at 18 months (in 2001).

Category II

In accordance with the principle of a right and duty to undertake active job-search , embodied in the 1994 reforms, Denmark offers individualised assistance and employability measures to both young and adult unemployed. As reflected through the indicators, implementation was still at an early stage in 1999 but in order to fulfil the EU targets, new rules advancing activation of the young unemployed to 6 months were introduced by end 1999. The phasing-in of the rights and duties approach for adults was planned for 2000, but has been postponed to the beginning of 2001. Denmark scores fairly well regarding young unemployed rate of inflow into LTU (10%) and extremely well regarding adults' rate (4%). Given the present labour shortages, priority is given to improving efficiency and quality of activation, as well as avoiding possible disincentive effects of early activation on those unemployed having a good chance of finding a job by themselves.

Ireland extended the implementation of the preventative approach to the younger groups of adult unemployed as planned. The results are still modest both for youngsters and young adults with non-compliance rates of 58.8% and 52.9% respectively. Given the rapidly declining inflows into LTU, a stronger attention should be paid to the most vulnerable jobless persons. For 2000, it is planned to complete the extension of the preventative approach to the remaining age group (over 55), as well as to advance the first intervention to 9 months. On-going impact evaluation should help improving efficiency and better addressing those unemployed with greatest difficulties.

The Netherlands has put in place a two-stage preventative approach for young unemployed persons providing an individual action plan to all and subsidised jobs to those unable to find a job in 12 months. However, the level of young unemployed inflows into long-term unemployment at 12 months remains fairly high and might call for an improvement of the efficiency of the first stage and a review of possible disincentive effects in the second stage. Netherlands started implementing the "Comprehensive approach" towards adult unemployed as announced and aims at achieving completion by 2002. The quantitative information supplied does not permit an adequate assessment of progress. The monitoring system should be fully operational from 2001. Ambitious objectives are set for 2000 including the further implementation of the preventative approach for adults, its extension to those already long-term unemployed as well as stronger efforts towards the activation of the most difficult to place.

In 1999, Portugal extended the territorial coverage of the new preventative policies thus doubling and trebling respectively, the number of young and adult unemployed to be helped . This was matched by an appropriate policy effort more significant for young than for adult unemployed (the share of young unemployed crossing the threshold without having been offered an individual action plan was reduced from 33.4% to 18.7% whilst that of adult increased from 11.1% to 21.2%). Portugal however, still experiences a high rate of non-attendance to the first interview leading to the individual action plan, as well as a high inflow into LTU. As with Ireland, an impact evaluation will be carried out. Further territorial extension of the preventative approach is planned in order to achieve full coverage by 2000, and individualised intervention towards long-term unemployed persons is to be progressively implemented until 2002.

Spain made progress in implementing earlier intervention towards the two groups targeted by the guidelines as part of a wider policy of strengthened activation, supported by an important financial effort. In 1999, the objective set in terms of total number of interventions for all unemployed people was exceeded by 19%. Further progress towards a more individualised intervention were also made as announced, with the introduction of individual tutoring and integration plans in municipalities with highest unemployment but still on a pilot basis. The objectives for 2000 foresee a stable effort in terms of number of actions with a concentration of interventions on adult unemployed before the 12-month threshold. With non-compliance rate reaching 79% for young and 82% for adult unemployed Spain is still far from completion of the common target, despite a considerable decrease of the rates of inflow into long-term unemployment. [10].

[10] The basis for calculation of the indicators remains questionable as Spain indicates that the new information system enabling follow-up of all registrations to be used by the PES will only start being implemented in 2000 or 2001.

In France, the implementation of the "New Start" programme met national targets in terms of total number of beneficiaries, but was below expectations regarding the two groups targeted by the preventative approach. The long-term unemployed and persons at risk of exclusion were the main beneficiaries of the programme and 79% of young unemployed and nearly 75% of adults cross the 6th/12th month threshold without having been offered a new start. Whilst these results are in line with national policy priorities (fighting exclusion and focusing on those who are at the greatest distance from the labour market) they fall short of meeting the common EU-targets on prevention. Progress in reducing inflows into LTU is also slow, in particular for young unemployed. More decisive progress can be expected in 2000 as the objectives establish a new balance between prevention and reintegration (young and adult unemployed under 6/12 months unemployment should represent 62% of "New start" beneficiaries, against 26,5% in 1999).

Germany has started implementing an approach based on individual integration pathways addressing both young and adult unemployed before they cross the 6th/12th month threshold (including non-registered job seekers) which is expected to be implemented by all PES within two years. Actions needed to support earlier intervention towards adults were taken as announced and further effort is under consideration to enhance the efficiency of the new approach. Increasing the supply of training places, in particular apprenticeship places, continues to be the main action to prevent young people's unemployment. The indicators provided only cover the beginning of the implementation period and a further effort is needed to adapt the monitoring system in due time. The objectives are to reduce the rate of inflow into long-term unemployment to 10% both for young and adult unemployed by 2002 at the latest.

Category III

In this category, two different situations emerge from the analysis of the NAPs.

In Belgium, implementation has been unequal both regionally (only Flanders had established individualised early intervention in 1999) and by target groups, (preventative action remained mainly targeted at the lowest qualified school leavers). 50% of young people and 54% of adults reach 6/12 months of unemployment, without being offered an individual action plan. As a result, progress in reducing the rate of inflow into LTU has been slow. In 2000, federal and regional governments have agreed to extend the preventative approach to young and adult unemployed people (below 45 years of age). Implementation has started only for young people with low qualifications, with the launching of the "starter job for young people" (convention premier emploi jeunes) that asks companies (in private and public sector) to offer jobs equivalent to 3% of their workforce to young people within 6 months of leaving school. This measure is supported by individual integration pathways after 3 months unemployment intended for all young unemployed.

In the other two Member States the pace of reform is slower than expected, and there are now reasons for doubting that the EU common targets can be achieved by 2002, unless resolute effort is undertaken over the next couple of years.

In Italy, the decentralisation of the public employment services and the setting-up of a new employment information system are key conditions for the implementation of the individualised and early intervention. Progress has been made in carrying out reform, but not to a sufficient extent and pace to allow full implementation to be considered as possible before 2003 [11]. Most of the reforms of labour market measures and benefit schemes intended to contribute to the implementation of the preventive approach are also delayed. The greatest difficulties in the setting up of the Employment Centres are concentrated in Southern Italy where there is the highest need for an effective preventative approach.

[11] Only half of the regions now have new employment centres. The implementation of the new information system, which was expected to be operational in 2000, has been postponed until end 2000 and only 8 regions have started using the new system.

Greece made progress in modernising Public Employment Services as a pre-condition for the implementation of the preventative approach [12]. However, implementation has been modest and no clear deadlines are given in this respect. The new monitoring system is not yet operational. Intervention towards the unemployed remains largely based on a traditional target group approach, through a variety of programmes and measures, which were kept broadly unchanged in 1999. New reforms of the PES are announced which may, however, complicate the completion of the on-going reforms. In light of this, Greece will have difficulties in effectively implementing the preventative approach until 2002, unless significant steps are taken as a matter of urgency.

[12] 24 of the new employment promotion centres established in 1999, compared to 4 in 1998 and 24 more expected in 2000.

Guidelines 1 and 2 - Compliance table

>TABLE POSITION>

Notes:

(1) Compliance is defined as conformity of policies with the guidelines requiring provision of individualised assistance and early intervention to all young (adult) unemployed before 6 (12) months of unemployment, as well as evidence of progress achieved in making them operational.

(2) Italy has pledged full implementation of guidelines 1 and 2 by 2003.

Guideline 3

Compliance with the common target

Member States have committed themselves to raise the number of unemployed persons participating in training and similar measures to a level of at least 20%, in order to upgrade their skills and improve employability. On the basis of the data presented in this year's NAPs (see Table 4 in the Statistical Annex), 12 Member States are complying with the common target [13]. In relation to 1998, France, Italy, the Netherlands and Austria raised their activation rates so as to reach the target for the first time.

[13] The input indicator used for monitoring guideline 3 (activation rate) is defined as the annual average number of previously unemployed participants in active measures divided by the number of registered unemployed persons (stock). Active measures are defined in a broad sense to include training, job rotation and job sharing, employment incentives, integration of disabled people, direct job creation and start-up incentives.

Three Member States had not yet reached the benchmark in 1999:

Portugal has raised the activation rate, and is on track to comply with this Guideline in 2002, as planned.

Greece provides only national data, which make no distinction between registered unemployed and students/employed among participants. Therefore the activation rate cannot be calculated on the basis of the agreed indicator.

The UK stands clearly below the EU target in terms of the present definition of the indicator. The UK NAP provides supplementary data on participation in "job search assistance" and "intensive counselling" indicating that such forms of assistance cover 100% of registered unemployed.

More active policies ...

In 1999, there was a growing emphasis on active labour market policy by most Member States, while the numbers of registered unemployment declined. As a result, the activation rate increased or remained stable in the large majority of Member States [14], with the exception of Sweden, which still has the highest rate in the EU (87%).

[14] There are no data available on both years for Greece, Italy, France (just the rate) and the Netherlands.

The number of participants in active measures increased by slightly more than 10% between 1998 and 1999 for the set of 11 Member States which have provided absolute figures for both years [15] (see Table below)

[15] Ibidem.

In terms of expenditure, preliminary data for 1999 suggest that the share of active measures in total labour market spending is increasing [16]. In five Member States (Austria, Germany, Spain, Italy and the Netherlands) expenditure in active measures increased, while in other three (Finland, Denmark and Sweden) it has decreased, although at a slower rate than passive measures. In all eight Member States for which 1999 data are available, spending on passive measures declined, reflecting the reduction in unemployment. These trends can also be interpreted as an indication that a more active and preventative approach is being endorsed by Member States in their labour market policies.

[16] Employment Outlook 2000, OECD, June 2000.

...but less emphasis on traditional human resource development for the unemployed

The total number of participants in training measures declined by 16% (see Table) [17]. This decline is due to the sharp reduction of participants in training which has occurred in Germany, Spain and Sweden. In the other nine Member States which provide data enabling a comparison, the rate of participants in training actually increased or remained stable between 1998 and 1999, albeit less than proportionally to the increase in the overall activation rate (including training and other equivalent measures), with the exception of Belgium and Luxembourg.

[17] Ibidem.

In 1999, Sweden, Denmark and Luxembourg reached the highest share of participants in training, with an average of 28.7 %.

That the majority of Member States is increasing participation in a wide range of active measures rather than in training suggests a change in their reintegration policy. The range of support measures becomes more diversified, so that unemployed persons are offered a greater variety of individually tailored pathways to reintegration. In line with the progressive implementation of the preventative approach, the most effective combination of measures tends to be selected after consideration of the individual characteristics. Moreover, evaluation results presented in some NAPs indicate that measures focused only on training are less efficient than those combining work and training.

Total amount of unemployed in all measures and training measures in 1998 and 1999 (in thousands)

>TABLE POSITION>

(a) no data available for both years from Greece , Italy, France and the Netherlands.

Re-integration

Only four Member States (Denmark, Sweden, the UK and Finland) present data enabling to use an output indicator for Guidelines 3 defined as the share of participants in active measures returning to registered unemployment after 3 or 6 months. From this data it can be concluded that roughly between 25 and 40 % of the participants in active measures return to registered unemployment three months after the end of the programmes. High rates of return to unemployment shortly after attendance of active programmes call into question the quality of assistance provided, as well as eventual negative effects of long-term dependency upon income support schemes interacting with active job search.

It is crucial to obtain more comparable data on the outcome of active labour market measures. Member States should be encouraged to develop their monitoring systems in order to estimate the success rate of each major reintegration measure, and be able to assess their cost-efficiency.

Public Employment Services

Reflecting the role of an effective delivery system in the success of the policies to prevent and to reduce unemployment, the 2000 Guidelines call on Member States to pursue the modernisation of their Public Employment Services so that they can deal with the strategy of prevention and activation in the most effective way.

All Member States are currently undertaking serious efforts to enable their delivery systems to meet the challenges of the European Employment Strategy. The NAPs, while rarely providing a systematic description of these reforms, convey the impression of a modernisation process along three dimensions:

* Reforms of the organisational structure of the PES, including its relation to other actors. These reforms reflect a concern for: better co-ordination between passive and active measures ( the Netherlands, United Kingdom); strengthening the infrastructure for vocational training (Italy, Portugal); tailoring PES services to the needs and opportunities at regional and local level (Italy, Spain, Belgium, France, the Netherlands); improving the organisational and legislative framework for a nation-wide implementation of the 'new start' strategy (Germany, Ireland, Portugal, Greece).

* Improvement of PES staff resources. This includes both increased staff numbers (Germany, France, Finland, Spain) and upgrading of staff skills (Italy, Greece). Although a cut in staff resources may be envisaged in some countries as a consequence of the fall in unemployment, the ratio between staff and number of registered unemployed job-seekers seems to be increasing in most Member States.

* Improvement of PES working methods. The labour exchange function is becoming more efficient with the development of computer based self-service systems, mentioned specifically by Spain, Italy and United Kingdom, but currently in progress in most PES. This enables PES to use more staff for intensive services to jobseekers facing particular reintegration problems. The methodology of individual case management is developed in many PES (Germany, Ireland, Finland, Sweden, France, United Kingdom, the Netherlands), including better diagnostic instruments, earlier action, more frequent and more intensive service contacts, shifting the focus from placement in measures to placement in regular jobs. A stricter monitoring of job search behaviour of benefit recipients is achieved in view of the increased number of jobs available in many countries (Sweden, Finland).

3.1.3. Reforms of tax-benefit systems (Guideline 4)

Progress in reforming tax-benefit systems remains disappointing so far. A few Member States are in the process of a comprehensive review of their tax-benefit systems in order to improve its incentive structure, reinforce control systems and make the eligibility conditions tighter. Several Member States have initiated across-the-board reductions in social security contributions (SSC) and income taxes, while a few have introduced in-work benefits aimed at improving incentives to take up employment. In the majority of Member States, however, reforms have so far been modest and piecemeal and are limited to targeted reductions in taxes and SSC and tax credits. The developments of comprehensive reforms addressing the combined incentive impact of tax and benefit schemes remains, therefore, a priority for most Member States.

By and large, the NAPs fail to differentiate the effect of tax-benefit systems between women and men. However, these may have important effects on the willingness of women to seek work and on the closing of the gender gaps in general.

The effects of tax and benefit reforms are reflected in the overall functioning of the labour market and may take some years to fully materialize. It is therefore important to take account of earlier reforms in assessing performance.

A few Member States, including Denmark, the Netherlands and the UK, have extended their successful approaches to reform, most recently by developing policies aimed explicitly at making work pay. However, the continuing problem of large numbers of beneficiaries in passive benefit schemes needs to be tackled. Unemployment benefit systems need to be further reviewed in some Member States, particularly in Belgium and Germany, where unlimited benefit duration for some categories of unemployed and insufficient enforcement of eligibility criteria can increase the risk of long term benefit dependency. On the other hand, in Italy and Greece the benefit systems may need to be improved, in order to provide a comprehensive system of unemployment insurance and increase the efficiency of active labour market policies.

Targeted incentives encouraging employers to recruit previously unemployed people, are provided by several Member States. They include, for instance, subsidies/tax credits to employers for hiring low skilled workers, disabled, or unemployed receiving unemployment benefits. Others provide reduced employers' SSC for hiring the young seeking first job or those in long-term unemployment. Not many new measures are added to the various measures implemented in the last five years or so. Moreover, in the NAPs there is no sufficient evaluation of the efficiency of such measures.

Progress in Tax-benefit reforms 2000

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Most Member States have started to implement or are planning to introduce soon measures encouraging older people to stay longer in employment, by raising the retirement age or by introducing or strengthening disincentives to early retirement. The most comprehensive reforms are being undertaken or envisaged in Denmark, Germany, the Netherlands, Austria and Finland. Denmark revised the voluntary early retirement scheme by providing incentives for flexible labour market withdrawal and is planning a revision of the disability pension scheme. Finland introduced a package of measures to encourage active ageing, including the increase of the retirement age, disincentives to early retirement, facilitation of flexible part-time work and promotion of re-training. Germany is increasing retirement age as planned and adopted provisions for encouraging part-time work instead of earlier retirement. The Netherlands announced a package of measures, to be discussed with the Social Partners, which will reduce the favourable tax treatment of early retirement and re-introduce job search duties for older unemployed people. Austria implemented a policy package for active ageing focusing on flexible working arrangements, and envisages to adopt measures for raising early retirement age

Demand-targeted measures focus on subsidising the hiring of older workers or of older unemployed people. Such measures have been or are being implemented in Greece, Portugal and Sweden. In Spain (income support is combined with active measures targeted to long-term unemployed aged over 45, who are no longer entitled to unemployment benefits. In the UK, the New Deal for 50 plus and to a large extent the New Deal for disabled aim at encouraging participation of older people in the labour market.

3.1.4. Education and training (Guidelines 5 to 8)

The facts:

* In the EU over 60% of the adult population in working age (25-64) have attained at least upper secondary level education. However, significant disparities remain across Member States, as Spain, Greece, Ireland, Italy and Portugal have lower levels of educational attainment. The challenge is particularly pressing for Portugal (21.2 %) and Spain (34.9 %).

* A major effort to close this gap has been made in the last decade in all these Member States, which has raised the educational levels of younger generations. As a result the rate of upper-secondary level attainment already exceeds 50% for young adults (25-34 age bracket) in all of them, except Portugal, in comparison with a EU average slightly above 70%.

* Young women are now coming close to, or even exceed, the educational levels attained by young men.

Good performance:

* The highest education attainment levels (as measured by the percentage of adult people having attained upper secondary and higher education levels) : Sweden, Germany and Denmark. Average: 80%.

Europe has a largely well-educated workforce and high-performing education and training systems and can build on these strengths to face the challenges of upgrading skills, especially of an ageing workforce, and the continuing difficulties in making provision for generalised on-the-job training. In addition, large pockets of illiteracy remain in some areas, which, if not tackled appropriately, will irremediably place less educated workers at a disadvantage in the information and knowledge-based society.

Under guidelines 5 to 8, Member States and social partners are called upon to promote employability and the development of a skilled workforce able to adapt to the emerging knowledge-based economy, by developing comprehensive strategies for lifelong learning (particularly in ICT), improving initial education to equip young people with relevant skills and to reduce the drop-out rate and developing agreements to increase training provisions.

Encouraging a partnership approach

Under guideline 5, the social partners are called upon to conclude agreements to increase the possibilities for training, work experience, traineeships or other measures to promote employability of the adult and young unemployed.

Despite the clarification introduced in the 2000 Employment Guidelines on the aim of this guideline, less than half of the Member States report on whether or not the social partners have concluded agreements which offer to young and adult unemployed people employability measures. Overall policy and institutional frameworks are described by France, Italy and the UK, while Denmark, Finland, Germany and Greece focus on agreements and projects relating to specific sectors. An important policy development in some Member States (Finland, Denmark, the Netherlands and the UK) is the increasing involvement of social partners with local and regional authorities and other partners in education and training.

A detailed analysis of the role of partnership approach towards fostering continuous training and addressing the skill gap issue can be found in paragraph 3.3.2.

Lifelong learning

The facts:

* Participation in training and education activities during the last four weeks, as measured by the Labour Force Survey, remains very low in the Union, but has been rising since 1997. The participation rate of the population aged 25-64 amounted to 8% in 1999, up from 7.5 % in 1998 and 6.5% in 1997 [18].

[18] Source: European Labour Force Survey 1999; Data for Greece, Ireland and Austria are not available for 1999. The increase may partly be due to a change into questionnaire.

* The levels of participation in lifelong learning look inadequate in the cases of Portugal, Greece, Luxembourg, Italy, France, Spain, Germany and Ireland, where the participation rates in (recent) training of the adult working age population were below 6% in 1999. However, international comparisons are affected by insufficient harmonisation of data collection in this area [19].

[19] For Portugal, France and the Netherlands, data are collected only if participation in education and training is ongoing at the moment of the survey (as against in the last four weeks for the remaining Member States).

* There are also wide differences between age groups. In the EU, young people between 25-34 years old are currently seven times more likely to get training than those in the age-group 55-64. Moreover, the better educated are more likely to participate in education and training as adults; overall, those who attained a higher education degree are five times as likely to participate in education/training as those with at most lower secondary education level.

Good performance:

* The highest participation in education and training among adults: Sweden, Denmark and the UK. Average: 20.8%.

Lifelong learning has been defined by the Member States and the Commission as : "encompassing all purposeful learning activity, whether formal or informal, undertaken on an ongoing basis with the aim to improve skills, knowledge and competence". The data on participation in education and training as a secondary activity -in particular by adults - need therefore to be improved.

The most recent developments in labour markets have added new emphasis to the promotion of lifelong learning as a strategic instrument to harness the potential of EU labour force. The Joint Employment Report for 1999 had pointed at the emergence of skills gaps in the form of unfulfilled demand for a better skilled and trained workforce driven by the increasing role of knowledge and information in the new economy. In 2000, labour shortages have been identified as a major factor hampering economic growth in the National Action Plan reports of Belgium, Denmark, Ireland, the Netherlands, Finland and Sweden, as well as for Northern Italy. However, there are a number of sectors or occupations which suffer from particular skills shortages, and indeed recruitment difficulties are being reported across the board, from information technology to agriculture and retail.

Guideline 6 calls on Member States and the social partners to develop possibilities for lifelong learning and to set a target for participants benefiting from such measures. In response to the increasing priority for the promotion of lifelong learning, which is reflected inter alia, in the latest revisions of the Employment Guidelines, more Member States have taken steps in this direction. However, the majority of NAPs still insist in presenting a piecemeal approach, and a comprehensive strategy is firmly embraced only by those few countries that had already taken such a direction earlier on. Progress in the development and implementation of policies has generally been slow, especially so in those countries revealing more serious deficiencies in their starting position.

On the basis of the evidence presented in the NAPs, it is possible to cluster Member States in terms of progress achieved in the implementation of this guideline. Two criteria were used for this purpose:

* The extent to which the promotion of lifelong learning is carried out in a comprehensive and articulate manner.

* The setting of national comprehensive targets for measuring progress, in accordance with guideline 6;

The results are presented in the following compliance table:

Guideline 6 - Compliance table

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Members States can be clustered into four groups as regards their progress in implementing guideline 6:

* I. Adequate: Member States that have set out a comprehensive approach, make reasonable progress in implementing their strategic goals and have set targets to monitor progress (the Netherlands and Denmark).

* II. Adequate but not targeted: Member States that have set out a comprehensive approach and make reasonable progress in implementing their strategic goals, but failed to set national targets against which outcomes can be measured (Finland, Sweden and Ireland).

* III. Incomplete: Member States that either have a slow implementation process (the United Kingdom), or have introduced noteworthy policy initiatives but which are still at an early stage or too limited in their nature (Portugal, Austria, France and Germany), or lack a comprehensive strategy despite having set a national target (Belgium).

* IV. Insufficient: Member States that have not yet fulfilled the guideline in terms of promotion of lifelong learning policies in a comprehensive way (Italy, Greece, Luxembourg and Spain).

These differences highlight the fact that the preconditions for lifelong learning (in particular, the educational attainment among adults) and the needs that have to be addressed in order to implement a lifelong learning strategy vary significantly between Member States. While the difficulties pertaining to the less advanced situation of departure in some Member States have to be recognised, it is a matter for concern that those countries with the lowest levels of educational attainment and/or adult participation in education and training are prevalent in clusters III and IV.

As in 1999, national targets for lifelong learning were generally not used as a tool for measuring progress towards a strategic goal. In fact, only seven Member States (Belgium, the Netherlands, the UK, Austria, France, Denmark and Portugal) set targets for lifelong learning. Furthermore, these targets often only concern specific groups in the labour market (Austria, Belgium, Portugal, the Netherlands, France) or are regional (the UK) and in some cases have changed from last year (France and Belgium). None of the three Member States (Portugal, United Kingdom, Austria) that maintained the same targets as last year report on progress made. And two Member States which set targets last year (Sweden, Greece) fail to report on them.

Guideline 6 - Targets set by Member States in 2000

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A coherent strategy to co-ordinate the different phases of education and training (both in terms of curricula and recognition/certification of formal and non-formal learning) is not yet developed in the majority of Member States although elements of such a strategy are emerging in some countries (Finland, Ireland, Sweden) and to a lesser extent in Austria, Denmark, France, Greece, the Netherlands, Italy and the UK.

Member States describe a number of specific measures, which, although innovative, still appear to fail to add up to a coherent strategy. These include measures to grant a second chance to people who have not completed basic education or training, training for target groups who face particular problems (e.g., ethnic minorities, immigrants, low-income workers) as well as training leaves (Austria, Sweden) or job rotation (Denmark, Germany). Ireland and Portugal are in the process of establishing structures which will help underpin lifelong learning.

Several Member States are also in the process of carrying out pilot projects, introducing individual learning accounts ( the Netherlands,the UK), providing information and guidance services (e.g., resource centres, database directories on adult education) and incentives for companies (the Netherlands and the UK have quality awards for "Investors in people"). The validation and recognition of skills acquired at work or through non-formal learning has become a policy priority for a majority of Member States. Equally, distance learning measures are being introduced in a number of countries as a means to open up education and training for all. However, many of these projects are still in a preparatory stage.

Guideline 6 also asks Member States and the social partners to ensure easy access for training for older workers. Specific measures or policies to implement this objective are mentioned only by five Member States (Spain, France, Finland, Austria and Germany). Given the importance of updating skills and competencies for older workers - with regard both to social inclusion aspects, the skills gap and the ageing workforce - this issue needs to be better addressed.

Good practice

Finland: A strategy for lifelong learning

In terms of a comprehensive strategy for lifelong learning, Finland provides a good example that was described in some detail already in the National Action Plan for 1998. Lifelong learning, according to this strategy, is being developed under six themes that cover initial as well as continuing learning and bridges the distinction often made between education and training:

* a strong foundation for learning

* comprehensive learning

* public recognition of what has been learned

* information and support for building paths to learning

* updating the skills of teachers and trainers

The Finnish strategy can be considered best practice in terms of the comprehensiveness of the themes covered. However, it should be more clearly explained how these various themes are followed up through concrete implementation measures in order to achieve set objectives or targets.

Reducing early school leaving

The facts:

* In 1999, in the EU slightly less than 20% of people aged between 18 and 24 had left the education system too early, either on the completion of basic education or by dropping prematurely out of their studies.

* The problem of early exit from school is most serious in Portugal, where 45% of the young cohorts leave school with only the most basic skills, and also, but to a lesser extent, in Italy, Spain, Greece and Ireland (near or above 20%).

* Early school leaving among males tends to be more frequent than with young women, except in Luxembourg and Germany.

Good performance:

* The lowest proportion of young people having left school with only basic education levels: Sweden, Finland and Denmark. Average: 9.6%.

Guideline 7 aims to reduce the number of young people who leave the school system early. Early school leavers are defined as young people who drop out of school with only a basic education level, independently of having completed or not their studies leading to a certificate. All NAPs have introduced measures to combat early school leaving, except for Spain where no specific measures are reporte