COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 13.11.1998 
COM(1998) 641 final 
COMMUNICATION FROM THE COMMISSION 
"MODERNISING PUBLIC EMPLOYMENT SERVICES 
TO SUPPORT THE EUROPEAN EMPLOYMENT STRA TEGY" 
Executive summary 
While Member States remain responsible for employment policy, including organising, 
staffing and running their Public Employment Services (PESs), this Communication calls 
for concerted action on modernising the Public Employment Services as a contribution to 
the European employment strategy. PESs have an important role to play in implementing 
the strategy, with 100 000 employees providing information, brokerage, and market 
adjustment services to,employers.and jobseekers in more than ,5000 locations throughout 
the Union. PESs help to make the labour market operate.more efficiently by creating the 
link between the market and the people seeking work. Their contribution in terms of 
matching demand and supply will remain of great importance in the decades to come, 
particularly as labour shortages emerge with the decline in the population of working age 
in various regions of the European Union. 
The 1998 National Action Plans for Employment confirm that the PESs have a major role 
to play in all Member States in implementing to the Employment Guidelines - even a 
central one as regards the preventive strategy of offering a new start before six months of 
unemployment for young people, and before twelve months for adults. These 
responsibilities will require a serious effort by the PESs themselves as well as by 
Member States to develop the efficiency and effectiveness of the PES. They also give 
added urgency to the current reforms in most Member States aimed at adapting the PESs 
to operate in a new and rapidly changing labour market environment. 
Member States should create the right conditions for the PESs to work more effectively. 
in a market with a growing number of employment service providers. The aim should be 
to help them access a sufficient number of job vacancies, develop systematic case 
management procedures for all registered unemployed jobseekers, and play their part in 
the co-ordinated delivery of all public services to jobseekers with the ultimate aim of 
getting people back into work. 
Within the framework set by their governments, PESs should make a constant effort to 
improve-the quality of their services to jobseekers and employers, make better use of 
modern information and communication technology, and develop strong partnerships 
with other actors in the labour market (e. g the social partners, local authorities, benefit 
agencies, education and training providers). 
The social partners, at local, regional and national level, need to develop their role as a 
full partner of the PES, creating a link between their human resource policies and 
activities and the work of the PESs, so as to find a closer match between labour supply 
and demand. 
The European Commission will encourage the process of modernisation under the 
European employment strategy. It will ensure that due attention is given to the 
institutional framework for implementing policy within the cycle of formulating and 
updating the Employment Guidelines, and establishing and implementing the National 
Action Plans. It will support co-operation between PESs across Europe in order to 
facilitate exchanges of information and best practice on operational issues and to develop 
common activities at EU level.; It will work to further develop the EURES network as a 
key instrument for European labour mobility. 
The current revision of the European Social Fund regulation will enable resources to be 
focused more on the objectives of the European employment strategy. Modernising 
employment services and making them more efficient are among the activities eligible 
for ESF financial support. 
1. Introduction 
As a result of the Amsterdam Intergovernmental Conference of June 1997, the European 
employment strategy is now embedded within the new Treaty. The first Employment 
Guidelines - endorsed at the extraordinary European Council on employment in 
November 1997 and formally adopted on 15 December - place strong emphasis on 
creating jobs and preventing unemployment. 
With more than 5000 local employment offices throughout the Union, and approximately 
160 000 erriployees^^some 100 000-of whom directly;service employers and jobseekers), 
Public Employment Services are a key institutional component of this new approach to 
employment policy, and are essential for its implementation. If Member States are to 
meet the ambitious targets set out in the 1998 Guidelines, the capacity of PESs may need 
to be increased and ongoing reforms speeded up. 
The need to strengthen and modernise the PESs has been recognised in the EU for several 
years. With profound changes in the labour market environment, PESs in every Member 
State of the Union are facing challenges which call for a redefinition of their role and 
priorities, as well as a rethink of their institutional setting and management methods. The 
emergence of an ambitious European employment strategy only adds to the urgency. 
Optimising the contribution made by the PESs to the employment strategy will depend to 
a large extent on what the PESs do themselves. Many of them are already engaged in a 
process of modernisation in order to improve their performance2. To further this process, 
the heads of PESs agreed in 1997 to intensify co-operation, exchange know-how and 
share the operational experience they have acquired, with the support of the European 
Commission. 
However, the environment within which the PESs operate is largely determined by 
governments, with the involvement of other public and private sector bodies, including 
the social partners. So these actors too will have to play their part. 
This Communication intends to address the issue of PES modernisation from a European 
perspective. It seeks to improve the institutional conditions for the successful 
implementation of the European employment strategy. 
2. The PESs: a key instrument for the European employment strategy 
The fundamental aims of the Employment Guidelines are to increase employment and 
reduce, unemployment, especially long-term and youth unemployment. These aims must 
be attained through co-ordinated action in four areas: employ ability, entrepreneurship, 
adaptability and equal opportunities. A substantial part of the Guidelines focuses on 
enhancing the functioning of the labour market. In that respect Public Employment 
Services, as central institutions on the labour market, have a major role to play. 
1 Staff engaged in the financial part of benefits administration not included. 
2 See Joint Employment Report 1997, chapter 3.4.2' 
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2.1 The core functions of the PESs 
While no uniform model exists for how a PES should be set up or for the range of 
responsibilities it should have, the PES in Europe has traditionally fulfilled three core 
functions. 
Information: PESs offer a unique and usually nation-wide service as providers of labour 
market information. The information they provide includes extensive data on vacancies 
and potential applicants. They assist people choosing a new career, and those wanting to 
re-focus their career perspectives. They provide information on training and retraining 
opportunities. They can offer information on human resource issues to employers 
considering specific investments or reorganisations. And they provide an important 
source of information on labour market developments for the formulation and 
implementation of labour market policy. 
The fact that all unemployment benefit claimants are registered gives the PESs extensive 
coverage of jobseekers, particularly the unemployed. A valuable service can thus be 
offered to employers. Coverage of vacancies by the' PESs is also considerable. Statistics 
indicate that, during the early 1990s, between 35% and 40% of vacancies occurring each 
year were notified to the PESs in Germany, Sweden and the United Kingdom. The figure 
is lower in other Member States, but in most cases exceeds 20%. Several Member States 
- France for example - have recently increased their share of notified vacancies. 
The use of modern technology by the PESs improves the quality of, and access to, 
information on labour market supply and demand. Information can be provided not only 
on the local and regional labour markets, but also on the national and even the 
international level, thus increasing job and recruitment opportunities. Through Internet 
and other media, information can also be made available at any time and any place. 
Wide coverage of, and free access to, PES information enhances market transparency. It 
can be argued that this is as important a contribution to the functioning of the labour 
market as placement services. It helps ensure both equitable access to labour market 
information and increased quality and efficiency of the matching process. 
Brokerage: Brokerage services are the core business of all PESs. Over time these 
services have been developed in a variety of specific forms catering for the differentiated 
needs of jobseekers and employers with vacancies. They range from fully open 
presentation of vacancies to more selective mediation between jobseekers and employers, 
and from quick job matching procedures to intensive job search assistance. 
The share of the total market that different national PESs obtain in the filling of 
vacancies varies considerably. Figures for the EU show that Member State PESs 
intervene in between 10% and 30% of total hirings, although the number of unemployed 
people receiving some form of help from PESs in finding employment is substantially 
higher. The PES is often the most important source of assistance to those jobseekers who 
have the most difficulty finding a job. In addition, employers who have difficulties filling 
vacancies usually use the PES as at least one of the channels for search and recruitment. 
Through their extensive and varied brokerage activities PESs help to ensure wide and 
effective market participation, a more effective matching process and a more equitable 
spread of market opportunities. 
The available evaluation literature3 indicates that individual job search assistance, which 
forms an integral part of a PES's brokerage activities, is one of the most effective active1 
labour market measures for (re-)integrating unemployed jobseekers. If provided at an 
early stage, it helps reduce the duration of unemployment, especially for disadvantaged 
jobseekers, and results in considerable savings on benefit expenditure, at a relatively low 
cost to the public budget. - ... ... •„.;.. 
Market adjustment: A distinctive feature of Public Employment Services is their close 
involvement in implementing labour market policies which help to adjust mismatches 
between supply and demand. 
In 1995, around 185 billion ECU (3.3% of Union GDP) was spent on income support for 
the unemployed and active labour market programmes, ranging from counselling and 
brokerage to training and subsidised employment. One third of this sum (65 billion ECU) 
went on active measures, which were to a large degree organised through PESs. The 
share of national GDP spent on active labour market programmes ranged from 0.37% in 
Austria to 3.00%> in Sweden. PES involvement in labour market training puts them in the 
front line of government moves to bridge the skills gaps which hamper growth and 
employment in specific sectors or areas. 
In 1995 expenditure on income support for the unemployed came to some 120 billion 
ECU, or nearly twice the amount spent on active measures. Unemployment benefit 
systems have an important influence on labour market behaviour. Being guaranteed a 
certain standard of living makes it easier for employees to accept structural change and 
the ensuing need for frequent re-skilling. It also gives unemployed workers time to search 
for suitable jobs. Excessively generous benefits, though, may have disincentive effects on 
jobseekers. By linking unemployment benefits to active job search efforts and/or 
participation in active programmes, PESs can alleviate such disincentive effects and 
enhance labour market efficiency. Moreover, PESs are a major element in transforming 
passive income support schemes as far as possible into active labour market measures (of 
various kinds). 
Different countries have different ways of involving their PESs in the implementation of 
passive and.active policies. At one end of the spectrum, the German 'Bundesanstalt fur 
Arbeit' covers all aspects of active and passive labour market intervention, while at the 
other end, the French 'Agence Nationale pour PEmploi' is primarily engaged in 
information and brokerage. Other PESs lie somewhere in the middle. The VDAB in 
Belgium or FAS in Ireland combine information and brokerage with responsibility for 
training without being directly involved in benefit administration. The UK 'Employment 
Service' combines information and brokerage with the payment of benefits, while 
training programmes are to a large extent run by external agencies. 
3 Review done by the Organisation for Economic Co-operation and Development in 1993 and updated in 
1995 (OECD Employment Outlook 1993, Ch. 2) 
Nowhere do PESs try to organise all service delivery by themselves. Increasingly over 
the past decade, they have tended to bring in and co-operate with many other players 
responsible for specific parts of service delivery, sometimes as subcontractors to the PES. 
On the other hand, even where PESs have a more restricted remit (say, information and 
brokerage), they try to play a part in the urgent and essential task of coordinating all 
(active and passive) services on the level of the individual jobseeker and employer, 
according to clearly defined principles and political priorities. 
Across the Member- States expenditure on PESs'. staff and equipment ranges from less 
than 0.10% to around 0.25% of GDP. This range reflects individual Member States' 
expenditure on active and passive labour market programmes and the part played by 
PESs in implementing these programmes. Excluding the administration of benefits and 
programmes, expenditure on PESs is estimated to be below 5% of total expenditure on 
active and passive policies. It is a fairly modest investment which can bring a substantial 
return in terms of increased market efficiency and of savings on unemployment benefits. 
2.2 An essential actor in the European employment strategy 
PESs are a key institutional component of the new European approach to employment 
policy as reflected in the 1998 Employment Guidelines. National Action Plans confirm 
that PESs play a particularly important role with respect to the first pillar of the 
Guidelines, i.e. employability, while they are also deeply involved in the fourth pillar, i.e. 
policies to strengthen equal opportunities. However they can also contribute, as reported 
by several Member States, to the success of specific efforts within the other two pillars: 
entrepreneur ship and adaptability. 
Improving employability: Since the mid-seventies, when labour markets became 
characterised by a high level of unemployment and limited overall demand for labour, 
efforts have been made to ensure that, even where it is not feasible to provide all 
jobseekers with a job in the short term, unemployed persons at least maintain or improve 
their ability to find a job. Counselling in job search techniques,, incentives to go in for 
training or to take up Work, improved access to training and work experience, are all 
important instruments in this respect. They are largely delivered through the PESs, be it 
directly or by drawing in other actors capable of managing part of these instruments more 
effectively and/or efficiently. PESs also encourage more people to take up work by 
providing extra support and assistance to specific groups such as people with disabilities 
and ethnic minorities. 
The high priority given by the 1998 Guidelines to improving workers' employability 
present the PESs with a sizeable challenge. The 1998 National Action Plans for 
Employment show that Member States place their PESs in a position of prime 
responsibility for achieving the first two Guidelines that require them to offer "every 
unemployed young person ... a new start before reaching six months of unemployment, in 
the form of training, retraining, work practice, a job or other employability measure" 
and to offer "every unemployed adult... afresh start before reaching twelve months of 
unemployment, by one of the aforementioned means or, more generally, by 
accompanying individual vocational guidance ". The PESs are also very much involved 
in implementing the third Guideline that sets a quantified target to raise the number of 
unemployed people who are offered training or any similar measure. If these three critical 
commitments are to be met, many PESs will have to review their operations and 
innovate. Moreover, for the required large-scale case management, sufficient resources 
need to be provided, and appropriate links between the PESs, training and counselling 
bodies and the business community need to be put in place. 
With regard to the transition from school to work, the 1998 Employment Guidelines 
stress the need to provide young people with the aptitudes required for entering the job 
market. To help facilitate this, the PESs in -many countries play a part in operating 
apprenticeship training' systems^-mobilising training places and mediating in their 
allocation to young workers. 
Developing entrepreneurship: As part of the policies to develop entrepreneurship the 
Employment Guidelines call for more self-employment and for making more of potential 
sources of local employment in social services and activities that serve needs not yet 
satisfied by the market. In several Member States PESs seek to promote self-
employment, through specific schemes directed at unemployed jobseekers or workers 
threatened with redundancy in the context of company restructuring. These include 
training and other support measures, and often involve a more active use of 
unemployment benefit schemes. Furthermore, PESs . help to pinpoint and develop 
potential sources of employment. At a local level, they are increasingly involved in 
partnerships with other public and private bodies to develop local strategies for job 
creation in response to new social or environmental needs. 
Encouraging adaptability of business and their employees: Although the sheer scale of 
unemployment may force the PESs to give priority to managing the unemployed 
population and movements into and out of it, they can still contribute to the management 
of structural change within enterprises and branches of the economy by helping workers 
and employers to minimise the risks of unemployment and to find alternative job 
opportunities. To a greater or lesser extent, most Member States' PESs are involved in 
various programmes for training, retraining and redeploying -workers who are having to 
cope with structural change and may be in danger of losing their job. 
A well functioning labour market is essential if business is to adapt smoothly to change. 
As the main public institution at the interface between employers and the external labour 
market, PESs can contribute in important ways to this priority in the Guidelines. In 
addition, through active co-operation with the social partners, PESs can play a part in 
alleviating any tensions that might arise between the adaptability goal - focusing on 
employed workers within a company - and the employability goal - focusing on 
unemployed workers. 
Strengthening policies for equal opportunities between women and men: As is clearly 
shown in the National Action Plans for Employment - e.g. for Germany, Austria, France, 
Portugal, Ireland, the United Kingdom, Sweden and Denmark - PESs have an important 
role to play in enhancing equal opportunities in the labour market. This means boosting 
female participation in the labour market, and promoting a more equal gender 
representation in occupational sectors which have had a traditional gender bias; it also 
means helping both women and men who want to return to work after an absence. Some 
Member States are trying to involve men and women in active measures pro rata to their 
share of unemployment. 
PESs also bear important responsibilities with regard to equal opportunities policies in a 
wider sense. They play a vital role in improving the employment chances of handicapped 
workers and are often prominent in fighting inequality for people of different race or 
ethnic origin, different age groups, and so on. 
Thus, although PESs have differing remits and organisational set-ups, they are in every 
Member State crucial to the implementation of labour market policy, including the 
National Action Plans under the European employment strategy. PESs help to speed up 
and improve labour allocation. They help to keep the labour force employable, both 
adapting it to changing - employment structures-and acting as-* a- force-against 
marginalisation. They contribute to a more equitable distribution of job opportunities and 
of access to training and other employment back-up facilities. They help to boost the 
labour supply to overcome labour shortages. Beyond the immediate concerns of the 
labour market, they also contribute to maintaining social cohesion. 
3. The need for modernisation 
To be effective, PESs have to adapt to an environment that is changing rapidly. All over 
Europe, labour markets are in transformation, as is the relationship of public authorities 
to these markets. These changes require the PESs to rethink their institutional role, 
working methods, goals and objectives. At the same time, like other parts of the public 
sector, most PESs have come under increasing pressure to live within tighter budgets. 
3.1. A changing environment 
The characteristics of jobseekers have begun to change as more highly educated young 
people enter an ageing European work-force. Female participation in the labour market 
has greatly increased, and work and family responsibilities are more often combined as 
families become less dependent on a single breadwinner. Ethnic minority populations, 
who bring their own specific labour market characteristics, have increased. 
The needs of employers are also changing. The types and range of skills are changing as 
the economy moves from being industrial to service-based and the degree of job 
differentiation in the market increases. Faced with the unrelenting pace of technological 
change and the need for competitiveness, employers also require more highly skilled and 
better qualified workers able to adapt to the constantly changing content of jobs. 
Employment relationships are changing too, as working hours and working times are 
becoming more varied, a greater degree of functional mobility, is required and new types 
of temporary work are emerging. Further challenges arise out of high and persistent 
levels of unemployment, including long-term unemployment (LTU), unevenly spread 
across demographic groups. From this a new strong political commitment has emerged to 
combat such unemployment. Increasingly, public concerns have widened to groups 
outside the traditional definition of the labour force, with moves to (re-)connect broader 
population groups to the labour market (e.g. people on disability and other benefits as 
well as people who are completely outside the labour market). 
To sum up: Changing needs on the demand and supply side and the accelerated speed of 
change have made the labour market more complex. At the same time effective 
•9 
management of human resources has become a crucial success factor in a more 
competitive market economy, while (re-)integration of a considerable part of the labour 
force has become a difficult problem. These trends combine to make up a new market 
reality with a continuously growing need for various types of professional intermediary 
services leading to changes in practical arrangements: 
(a) Short-term employment contracts are increasingly, being used by employers to test 
employees as a precursor to permanent employment. 
(b) Within the context of restructuring, the social partners .have for,a .long time been 
involved in retraining and other measures. During the last two decades they have in many 
countries increased their efforts in this field, on the one hand adapting workers in 
. employment to changed job contents, on the other getting increasingly involved in the 
re-integration of unemployed persons. This is often done in partnership with the PES. 
(c) The education system has become less isolated from the labour market through the 
spread of dual arrangements in some countries (apprenticeship systems and the expansion 
of traineeships within full-time education) and through a great expansion of adult 
(vocational) training. Vocational training itself has become a very complex market with 
myriad providers and users. In integrating employers into this market, training has also 
acquired a matchmaking function. 
(d) More labour market information is becoming available cheaply through new 
information and communication technology. 
(e) New providers of intermediary services are entering the labour market, adding to the 
quantity and range of services offered. Private agencies organised on a commercial basis 
operate for employers who are willing to pay for their services. They assist in the 
selection and recruitment of workers as well as in the outplacement of redundant 
workers. They also cater for the increasing need for workers to be employed on flexible 
contracts. In particular temporary employment agencies have spread widely in. some 
Member States of the Union, most impressively in the United Kingdom, Netherlands, 
Belgium and France. Several have developed into large multinational enterprises, . 
meanwhile diversifying their employment services far beyond the original activity of 
merely hiring out temporary workers for short contracts. They not only work on contracts 
with individual enterprises but may also provide services under contracts arising from 
bipartite agreements at enterprise or sector level. Being primarily focused on fee-paying 
employers, it is clear that the commercial intermediary agencies also serve the interests of 
manyjobseekers. 
In some countries, trade unions have again started to organise placement services, 
particularly in relation to the unemployment insurance schemes they manage (for 
example in Denmark). 
In addition, a number of countries have seen the development of agencies and 
organisations that supplement the activities of the PESs for different categories of non-
employed workers who need better chances to get (re-)integrated into the labour market. 
These service providers are completely or largely financed by the public purse, either 
through the PES that buys in their services or through other institutions (ministries of 
employment, local authorities, social benefit administrations etc.). Commercial agencies 
sometimes also join in, developing side-line activities in the public domain. 
10 
On an international level the new ILO Convention on Fee-Charging Employment 
Agencies No 181, due to replace Convention No 96 of 1949, creates a legal basis for 
these new service providers, while requiring ratifying States to take adequate precautions 
against possible forms of abuse in the labour market. Despite the spread of commercial 
agencies in the market, it has to be said that their contribution to matching unemployed 
jobseekers to vacancies (which is a major PES task) is still somewhat meagre, even in 
Member States where they flourish most. 
Not only the market environment of the PESs is undergoing change - their political and 
institutional environment is too. The traditional method of State management of the 
labour market, often building upon tight tripartite consultation, has begun to give way to 
more decentralised and less regulative approaches. Within this context PESs often have 
acquired a more autonomous position at some distance from their supervising ministries. 
They now have to prosper in a more competitive environment and build their market 
position on serving their customers well instead of deriving their position from 
ministerial powers. 
3.2. The challenges of adjustment 
To be successful the PES has to respond to all these changes. In some areas the 
challenges are clear. PESs have to develop their position in new thriving segments of the 
labour market, notably parts of the service sector and areas where flexible contract 
arrangements are common. Being largely service institutions operating in the information 
sector, the PESs also need to keep pace with new information and communication 
technologies and use them in their daily work. 
In other areas, how to respond is not so clear. PESs have to deal with forces that are 
pulling them in different directions. They have to strike new balances between these 
forces. Approaches developed in the past have to be reviewed and re-adapted: 
(a) Serving jobseekers and employers - PESs have to reconcile the often diverging 
demands of employers and jobseekers. Unemployed jobseekers, especially the most 
disadvantaged, require a lot of resources and attention (systematic case management is 
recognised as being a key instrument in the fight against LTU). But focusing too much on 
the jobseekers' side may be to the detriment of the service to employers. Maintaining a 
balance is already harder within the new competitive environment, where employers have 
begun to view the PES as only one of the possible suppliers of employment services. 
Consideration will therefore need to be given to the quality and comprehensiveness of 
services offered to employers, and the terms on which they are delivered. 
(b) Building a relationship with other service providers - Only a limited range of 
commercial employment services compete with the activities of the PES. A considerable 
part is related to rather different segments of the market (for instance recruitment of 
managers and other key staff). Progressive de-monopolisation of the market for 
employment services does mean, however, that the PESs need to develop a relationship 
with other intermediary agents on that market. In market segments where PESs and other 
service providers coexist, there are various new options for organising the public 
11 
involvement in employment services. PESs may withdraw from some activities because 
others can do them better. This may be akin to outsourcing, which has long been a 
familiar phenomenon with regard to training services, but is now impinging on 
counselling, guidance and brokerage itself. It may however also lead to a more 
fundamental division of labour; one example is the separate organisational structure on 
regional and municipal level that was recently established in some countries - Denmark, 
Ireland and some others - to deal with very disadvantaged jobseekers. Joint ventures may 
also be experimented with in some areas, as is the case in the Netherlands. But there is a 
competitive element as well, with private agencies spurring the PES to perform better in 
order to keep arid develop its' market share, which" it needs if it is to "be effective in ternis 
of its social objectives. Within these competitive market conditions PESs also have to 
consider to what extent they should develop some paid-for services themselves, to 
achieve a position in which they can offer employers comprehensive services on a par 
with those of their commercial counterparts. All in all it is clear that PESs at present have 
to define more clearly what their proper role and added value in the market is, compared 
to both commercial and non-commercial service providers. 
In all cases governments are obliged to comply with the basic principles of fair 
competition on the market for employment services as set out in Articles 85 and 86 of 
the European Treaty. This means that a PES, when in competition with other 
undertakings, must refrain from entering into anti-competitive contracts with them unless 
such contracts are exempted under Article 85(3), and it also means that a PES, when in 
the position of dominant player in the market, must not abuse that position. 
The new situation also means an opportunity for governments to expose the PESs to 
some market testing. To the competition for market shares, arising from the liberalisation 
as such, this testing adds competition for government assignments to implement part of 
the public services (specific programmes, parts of the case management load, and so on). 
Experiments are already in progress to some extent in the United Kingdom and the 
Netherlands. 
(c) Placing jobseekers and administrating benefits - Making the benefit system more 
conducive to employment leads to the need for a closer link between the management of 
unemployment benefits and the delivery of employment services. However, the rationale 
behind benefit administration is not automatically compatible with the objective of 
placing people in jobs. 
(d) Delivering public policy and providing a service - While the strength of the PES 
increasingly depends on its position as a service enterprise in the market, it remains an 
important delivery agency of public policies, something which may have the effect of 
burdening the PES with administrative tasks that foster a bureaucratic culture. 
Periodically renewable 'agreements' between PESs and Ministries can be used to 
reconcile the need for policy delivery and operational independence. 
(e) Establishing the appropriate level of delegation - Regional and local public 
authorities are more and more engaged in the fight against unemployment. Authority has 
to be devolved within the PESs if they are to be successful partners in employment policy 
at a regional and local level. But this will have to be reconciled with arguments that 
strongly favour the maintenance of a unified national system (equality of treatment, 
unification of the unemployment insurance system and economies of scale). 
12 
(f) Providing a national service in a European context - National, labour markets will 
increasingly have to be managed within a wider European perspective. International 
labour mobility will become a more important factor during the next two decades than it 
has been during the last 30 years. Highly skilled new generations of young workers will 
be more able and willing to work in another country and will find new opportunities to do 
so in possibly tighter labour markets with shortages of modern skills. To be successful in 
the European market, where 90% of EU production is sold, employers will seek to recruit 
multilingual persons drawing on different cultures, languages and professional skills. 
Building on the established EURES network, PESs will have an important role to play in 
facilitating the free movement of labour. " " • • - • -• 
3.3. The modernisation process 
The process of modernisation is underway in most Member States. PESs are often being 
organised in a more decentralised way and local employment offices have been given 
more scope for gearing their resources to the local labour market. PESs are already to 
some degree decentralised in Sweden, Finland, Denmark and the Netherlands, and 
progress in this direction has been made in Germany, Austria, Ireland, Belgium and 
France. The ongoing regionalisation of PESs in Italy and Spain will provide an 
opportunity to support the process of modernisation. 
The PES monopoly on the delivery of employment services has been abolished in most 
Member States and, where it still exists, a move towards more liberal conditions is 
clearly observable (in Italy and Spain for instance). As a consequence most PESs have 
begun to build new relationships with the growing number of private agencies. Partly 
related to that, efforts are being made in many countries, including France, Austria and 
Germany^ to increase the level of customer orientation. 
In addition, many Member States are seeking to rearrange the relationship between 
benefit administration and the delivery of employment > services. In Denmark the 
exchange of information between the employment offices and the benefit agency is about 
to be strengthened. In France, unemployed jobseekers are referred to the benefit agencies 
by the PES when they first register. In the Netherlands unified client dossiers (containing 
all dealings with jobseekers) and one-stop offices for benefit case management and job 
brokerage are being developed. In the United Kingdom a new tight link between benefit 
administration and the delivery of employment services was made with the introduction 
of the Jobseekers' Allowance. 
The process of reform, however, still has a long way to go. Some initiatives are still at an 
early stage, while others are proceeding in a rather fragmented way without sufficient 
linkage between the various issues and without the involvement of all relevant actors. 
The solutions will not necessarily be the same for all Member States. Reforms will 
depend in part on the specific national set-up. of the PESs, which have evolved 
independently and been moulded by the national socio-economic system. But in many 
respects, the challenge of modernisation is the same everywhere because all of Europe 
faces the same changing environment. 
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4. A programme for concerted action to modernise and empower the PESs 
The emerging European employment strategy provides a new incentive to proceed to a 
rapid process of modernising and strengthening Public Employment Services. 
Employment services financed through public funds and/or statutory payroll levies are an 
important instrument in implementing the Guidelines, and the National Action Plans 
clearly place the PESs at the centre of the national delivery systems for such employment 
services. Concerted, action by all relevant parties is required, which involves the PESs 
themselves as well as national governments, local and regional public authorities and the 
social partners. The European employment strategy stimulates a shared interest at 
European level in an effective delivery system and calls for European support, for national 
efforts. 
4.1. Priorities for concerted action 
To ensure that the PESs meet the challenges of the modern labour market and are able to 
live up to the targets set under the European employment strategy the following 
requirements should be fulfilled: 
PESs should a) obtain substantial access to vacancies, b) develop arrangements for the 
systematic case management of all registered unemployed jobseekers, c) contribute to the 
co-ordinated delivery of all public services to jobseekers, focused on their reintegration, 
and d) develop strong partnerships with other relevant actors on the market. In addition, 
there is a need for a more active approach to the promotion of occupational as well as 
geographic mobility in Europe as a means of increasing job opportunities and improving 
job matching. 
* Promoting access to vacancies 
If they are to have any chance of tackling unemployment, PESs should strive for a 
substantial access to vacancies. Only then can they use various techniques of brokerage 
and job search assistance to build a bridge to the market and provide job openings for 
disadvantaged categories who are, or are at risk of becoming, long-term unemployed. To 
achieve such a market share PESs need to build good relations with employers, based on 
confidence in the professionalism of their services. 
Employment offices therefore need to move towards becoming service enterprises. This 
will entail a wide-ranging programme of action, including better identification of 
employers' needs, broader and more up-to-date service packages, the development of 
specific enterprise and sector 'desks', and action aimed at improving the public image of 
the PESs. Such a business-oriented approach will also entail a review of internal 
management methods and the use of quality management techniques. 
In addition, new information and communication technologies should be exploited to 
build comprehensive and accessible self-service systems. These first-line services to 
employers and jobseekers should be backed up with easy access to more personalised 
assistance. 
14 
* Ensuring systematic case management 
The emphasis in the Guidelines on preventive action against youth unemployment and 
LTU - especially the reference to early identification of individual needs and the 
commitments to make offers before the 6 and 12-month thresholds - increases the 
pressure on the PESs to go in for systematic case management of the unemployed. This 
entails careful diagnosis of individual needs and close monitoring of unemployed 
jobseekers throughout their stay on the register. Such an approach, based on regular 
interviews, has proved-successful' in- preventing peopledrifting-into T.TU. The most 
difficult clients require tailor-made individual action plans. 
This, and the further development of individualised service packages, tend to draw 
heavily on available resources, thus reinforcing the need to make more efficient use of 
staff and financial resources. 
* Contributing to the co-ordinated delivery of all services to jobseekers 
Improving people's employability requires close interaction and co-ordination of all 
public services to individual jobseekers, including income replacement, information, 
counselling and brokerage, as well as the application of special adjustment measures such 
as facilities for vocational (re-)training. PESs should play their full role in this co­
ordinated delivery of all public labour market services. This does not mean that the PES 
as a distinct organisation should take on all responsibilities and all practical service 
activities. But certainly the PES is well placed and well equipped to help interconnect 
the various parts of the delivery system for jobseekers. 
In Member States with poorly integrated employment services, such co-ordinated 
delivery of all public labour market services may demand a redesign of existing case 
management procedures. The creation of one-stop shops at local level for all public 
services is an important issue in this respect. In Member States where institutional 
integration is more fully developed, increasing co-ordination problems may have to be 
solved, between for example the PES and municipal authorities responsible for the social 
assistance system. 
* Exploiting synergy between PESs and other relevant actors 
The PESs should review their relations with other actors in the market, and exploit 
possible synergy. This entails : 
(a) building networks with regional/local authorities which have become more involved 
in employment policy for social as well as economic reasons and which are responsible 
for important policy instruments (social assistance schemes, educational and training 
facilities, welfare schemes and so on). Successful co-operation may require more 
decision making powers for local PES offices; 
(b) co-operation with the social partners, who are increasingly developing new and varied 
employment policies on a bi-partite basis within particular sectors and branches of the 
economy; 
15 
(c) co-operation with institutions in the field of vocational education. These have 
multiplied with the growing importance of training and have become more directly 
interwoven with the placement process and all the actors engaged in it; 
(d) better co-ordination with institutions aimed at the (re-)integration of jobless people 
who are not registered as unemployed; and 
(e) developing good relations with the expanding sector of private employment services. 
In addition, partnerships with self-help institutions for the unemployed can improve 
service delivery. ......,, ;. 
* Using PESs to facilitate international labour mobility 
Both the introduction of economic and monetary union and the development of a co­
ordinated European employment strategy increase the importance of reducing obstacles 
to the free movement of workers. More easy geographic mobility will facilitate labour 
market and economic adjustment. The EURES network, established in 1993 by the PESs 
and the European Commission - and also involving the social partners and local actors in 
a number of cross-border structures - is the ideal vehicle for facilitating and encouraging 
mobility. To optimise its potential, EURES needs to become more strongly rooted within 
the different national PESs and provide users with a higher-quality service - whether 
employers, workers or jobseekers. 
4.2. The action required 
Together, PESs, governments, the social partners and the European Union have to make a 
concerted effort to achieve progress on the above priorities. 
*PESs 
PESs should be strategic and lead actors on this stage. They have to offer a professional 
service to employers. They have to devise effective methods and procedures to service 
the flows of unemployed jobseekers. They have to develop new relationships with other 
actors in the labour market, such as private employment agencies, local and regional 
authorities and benefit agencies. 
PESs should fully exploit the opportunities offered by European co-operation. By 
exchanging best practice, it is possible to develop a broader European basis of experience 
and a network of mutual support established, and to set up joint projects which will help 
speed up the ongoing modernisation process and give it the right direction. One example 
is the development of self-service systems using modern information and communication 
technology. There are considerable potential benefits from sharing the costs of research 
and development, particularly as systems will increasingly need to be developed to 
specifications which allow Europe-wide accessibility. Another example is the 
development of certain common standards, e.g. quality standards for service delivery. 
PESs should support the fuller integration of EURES into their services, thus bringing a 
greater European dimension to their information, counselling and brokerage services to 
jobseekers and employers. 
16 
* Member States 
As part of their commitment to the European employment strategy, Member States 
should give their full support to PES modernisation and foster PES development. Such 
support, if well designed, is productive and cost-efficient in both social and financial 
terms. 
Within the context of an overall expenditure restructuring, adequate resourcing of PES, 
especially in terms of the size and-quality of staff, is a.vital ..pre-condition for then-
success. The challenging targets set out in the Employment Guidelines increase the need 
to review resources. 
Governments should also seek to create an appropriate institutional environment for the 
PESs. This means, in particular, striking the right balance between central political 
steering and a sufficient degree of operational independence. Annual or multi-annual 
agreements, already used in several Member States, may help do this. In addition, some 
degree of decentralised management is necessary to allow the PES to adjust to the 
different needs of the local and regional labour markets. Thirdly, the spread of other 
intermediary agencies in a more liberalised, market for employment services might be 
exploited in appropriate ways to seek enhanced effectiveness and efficiency in the 
delivery of public services. Fourthly, Member States should ensure a clear distribution of 
responsibilities and accountabilities between all actors involved in the delivery of active 
and passive employment services. 
Furthermore, governments should create and maintain an adequate level and structure of 
facilities for training, work experience and other means for market adjustment. PESs can 
only perform their market functions in a satisfactory way if these facilities can be offered 
to create new opportunities for unemployed jobseekers who cannot be sufficiently 
assisted by merely offering them a mix of information, counselling, guidance and . 
brokerage services. 
The Commission invites Member States to pay due attention - when implementing their 
National Action Plans - to preparing PESs for their instrumental role in the 
implementation of the Employment Guidelines. Measures for modernising the PESs and 
strengthening their role as delivery mechanism for public services should be included. 
* Social Partners 
The dual objective of adapting the employed to economic and technological change and 
keeping unemployed people employable requires a joint effort from the public authorities 
and the social partners. The social partners have, for a number of years and to differing 
degrees, been involved in the management of PESs in most Member States. The 
Employment Guidelines stress the role of the social partners in improving the 
adaptability of firms and their employees, and call for their participation in employability 
policies through the early conclusion of agreements to boost opportunities for 
unemployed jobseekers. In many cases this will lead to a practical co-operation with the 
PESs. 
17 
^European Union 
Within the context of the employment strategy, the Commission will use all available 
instruments to support the above process. 
The Commission supports co-operation between European Public Employment Services 
in order to facilitate exchanges of information and best practice on operational issues of 
common interest and to develop common activities at EU level. Such co-operation was 
initiated in 1997. It entails a work programme and bi-annual meetings of the heads of 
PESs. Ad hoc working groups of PES experts have already been established to carry out 
the work programme,-with the Commission acting as facilitator to the groups. 
The major common activity involving all Member States' PESs (as well as PESs from 
Norway and Iceland) at the moment is the EURES network. Responsibility for EURES at 
Commission level has recently been transferred to the directorate in charge . of 
employment policy, reflecting the will to make more of the EURES contribution to the 
employment strategy. EURES remains an essential tool in enabling European workers to 
exercise their freedom of movement, and employers to have wider access to a Europe-
wide labour supply. As such it can also improve the overall functioning of the European 
labour market. In addition to the need for market adjustment facilities (like training and 
education) to be made available on an adequate scale and density, increased geographical 
mobility of workers can help to reduce the skills gap in the Community, improve the 
employability of workers and facilitate the closer integration of labour markets. 
The Commission will support research to promote better knowledge and understanding 
of PESs' requirements, and will disseminate the results of this work. The Council 
Decision of 23 February 19984 "on Community research, analysis and co-operation in the 
fields of employment and labour market" offers new opportunities. In addition, the 
Commission will look into the possibility of supporting pilot projects under the new 
budget line on "Incentive measures in the field of employment". 
PESs have always been an important mechanism for implementing programmes 
supported by the European Social Fund, acting either directly or through other 
institutions. Improvement of employment services is mentioned in the regional objectives 
of the Fund. The Commission's Initiative on Territorial Employment Pacts furthermore 
calls upon the relevant regional and local partners, including the PESs, to take an active 
role in job creation. 
The current revision of the ESF regulation will enable resources to be used more 
effectively in co-financing Member States' programmes for meeting the objectives of the 
Employment Strategy. The development of structures and systems for policy 
implementation feature explicitly as activities eligible for financial support from the 
Fund, e.g. the modernisation and improved efficiency of employment services. 
The Commission will use its role in the social dialogue to investigate, together with the 
social partners, existing and potential areas for successful partnerships with the PESs at 
enterprise, branch and sector level. 
. 4 Official Journal of the European Communities, L 63/26 of 4. 3. 98 
.18 
In view of the central role played by the PESs in.the employment.strategy:and more generally 
in the labour market, the Commission will give due attention to them in developing 
partnerships with Central and Eastern European and other applicant countries. Support will 
be given to PES initiatives aimed at strengthening their role both as service providers in the 
labour market and as instruments for the delivery of employment policy. 
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ISSN 0254-1475 
COM(98) 641 final 
DOCUMENTS 
EN 04 01 13 05 
Catalogue number : CB-CO-98-634-EN-C 
Office for Official Publications of the European Communities 
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