Opinion of the European Economic and Social Committee on the Proposal for a Council decision on guidelines for the employment policies of the Member States

[COM(2022) 241 final]

(2022/C 486/22)

Rapporteur: Mariya MINTCHEVA

Referral Council of the European Union, 14.6.2022 Legal basis Article 148(2) of the Treaty on the Functioning of the European Union Section responsible Employment, Social Affairs and Citizenship Adopted in section 6.9.2022 Adopted at plenary 22.9.2022 Plenary session No 572 Outcome of vote (for/against/abstentions) 146/0/2

1. Conclusions and recommendations

1.1 The EESC considers that the proposed guidelines for the employment policies of the Member States are appropriate as they address the most urgent issues in the labour market.

1.2 The EESC draws attention to the current increasingly uncertain geopolitical situation. Its impact on future demand is expected to affect companies’ investment decisions and job security and delay the roll-out of investment plans by both the private and public sectors. With high inflation and increased energy prices that have a serious impact on purchasing power, along with the expected recession, it is even more necessary to ensure that there is a competitive base for sustainable investments. Member States should work towards a truly integrated single market and help SMEs to scale up.

1.3 In these turbulent times, steps must be taken to strengthen both the role of the social partners and their involvement in designing and implementing employment, social and economic reforms and policies, including by building their capacity. This is also important for the implementation of the European Pillar of Social Rights and the National Recovery and Resilience Plans. Civil society organisations active in employment and social issues, education and social service providers, social enterprises and welfare organisations need an enabling environment to deliver their services to vulnerable groups.

1.4 As labour shortages are on the rise again, effective measures should be implemented in order to encourage the social partners to work on skills needs at national level, with action adapted to individual sectors and local situations. With fast technological change and the twin transition, the ‘lifespan’ of previously acquired skills and competencies is getting ever shorter and lifelong acquisition of relevant skills and competencies is increasingly important for both workers and businesses. Labour mobility within the EU and legal labour migration should be encouraged.

1.5 The EESC believes that combined action by different policy instruments and measures negotiated by the social partners are needed to reduce in-work poverty. Apart from decent wages, including adequate minimum wages, these policy instruments can include well-designed and temporary financial incentives, accompanied by targeted and effective skilling and upskilling measures. Member States should be encouraged and supported to implement them in a coordinated way.

1.6 Targeted support is especially important for the long-term unemployed and/or inactive people, as it increases their chance of breaking (back) into the labour market and is an important factor in job retention. As the pandemic has hit young people particularly hard, youth-specific, inclusive, and forward-looking policy measures are crucial to ensure that young people are not left behind.

1.7 To lower the inactivity rate, efforts must be made to bring those further from the labour market back into it. If properly regulated through legislation or collective bargaining at national level, the various forms of work, work flexibility and telework could be important factors in enabling people from vulnerable groups to find work. Public employment services should be reinforced, including by digitalising their services and fostering cooperation with private employment services and other relevant labour market actors.

1.8 Member States, especially those identified as low performers in the Social Scoreboard, should be encouraged, also through the consistent use of EU resources, to facilitate an enabling framework for employers to employ people with disabilities or activate self-employed opportunities where possible. Social economy entities are key to supporting and implementing employment projects in this respect.

1.9 Measures to close the gender pay gap remain important, and the root causes of this issue should be addressed. The proposal for a Pay Transparency Directive, currently under discussion, should strengthen the application of the principle of equal pay between men and women for work of the same value, as one of the measures to address the gender pay gap, while remaining sensitive to concerns about additional burdens on companies and especially SMEs.

1.10 With a growing ageing population, increased life expectancy and a shrinking workforce, the challenges linked to social security and healthcare systems in the Member States need careful consideration in order to maintain the adequacy and financial sustainability of pension systems. Action is needed to enlarge the workforce through more inclusive labour markets, including by activating groups that are currently excluded from or under-represented in the labour market.

1.11 Once the Temporary Protection Directive became effective, Member States acted quickly to adapt their national regulatory frameworks to enable them to support Ukrainian refugees and third-country nationals living in Ukraine who have fled to Europe as a result of the war. Any bottlenecks need to be addressed.

2. General comments and background

2.1 During its 2022 cycle, the European Semester has resumed its broad economic and employment policy coordination while further adapting in line with the implementation requirements of the Recovery and Resilience Facility. The country reports published in May 2022 ( 1 ) include an assessment of progress made on the implementation of the European Pillar of Social Rights and its Action Plan, which sets social targets and indicators which are an integral part of the Semester and NRRPs. The link to the Social Scoreboard provides a targeted review of the implementation of the action plan. The country-specific recommendations have been streamlined.

2.2 In 2021, the guidelines for the employment policies of the Member States set out in the Annex to Council Decision (EU) 2020/1512 were maintained without any changes. In 2022, the European Commission has proposed a number of amendments, reflecting recent policy initiatives and adding new elements linked to the Russian invasion of Ukraine. The EESC welcomes the Commission’s focus on the post-COVID environment which aims to ensure sustainable growth.

2.3 The war in Ukraine has exacerbated supply disruptions and increased uncertainty. The EU economy is also indirectly exposed to the COVID-related health situation in other regions. The economic outlook in the EU anticipates lower growth and higher inflation, especially for 2022 ( 2 ) . The high inflation rates and the sharp increase in energy and gas prices are putting further pressure on companies (and their competitiveness) and households (and their purchasing power). This will inevitably affect the ability of some companies to create new jobs and will be a challenge for social protection systems in the months to come, requiring targeted policies to support labour market transitions.

2.4 While aiming to ensure inclusiveness and fairness, Member States’ employment policies should also reflect economic and social developments. The impact of labour market policies should be carefully assessed so that they stimulate a sustainable recovery rather than reduced employment rates, lower quality jobs and reduced purchasing power for individuals. Labour and skills shortages should be given more attention, and specific policy recommendations and initiatives in line with the EPSR Action Plan should follow.

3. Specific comments

3.1 Guideline 5: Boosting the demand for labour

3.1.1 Sustainable growth, quality job creation and employment participation (including older and younger people, women, people further away from the labour market, inactive persons, etc.) remain key economic and social challenges in Europe. To address them, a competitive base for investments must be ensured, exploiting the potential of the green and digital transitions. The EESC endorses the European Commission’s encouragement to the Member States to create a business environment able to foster responsible entrepreneurship and genuine self-employment, cut red tape, work towards a truly integrated and properly functioning single market and help SMEs to scale up. The EESC strongly recommends that micro-enterprises remain covered by Guideline 5.

3.1.2 Boosting demand for labour across the EU can be done by increasing investments, especially productive ones, in key sectors of the economy; addressing the burdensome impact of taxes on labour where necessary, without weakening social protection and ensuring revenue for the sustainability of welfare systems; strengthen the fight against tax evasion and tax fraud and the informal economy; making diverse forms of work, regulated by legislation or collective bargaining, available for employers and workers, while working to improve working conditions in new forms of work in order to make them attractive for workers.

3.1.3 The increasingly uncertain geopolitical situation and its impact on future demand are expected to affect companies’ investment decisions and job security and to delay the roll-out of investment plans by both the private and public sectors. Due to inflation, growth rates are falling and real wages are expected to shrink, before increasing moderately next year. The EESC notes the Commission’s view whereby in some sectors ‘concerns about job security rather than pay increases are likely to continue to have the upper hand in wage deals’ ( 3 ) . Inflation places pressure on wage increases and purchasing power. To avoid a very dangerous wage-price spiral and increase productivity, it is critical that there is space for the social partners to improve collective bargaining coverage and practices at sector and company level, where concrete actions could be taken.

3.1.4 At the same time, structural labour market measures are needed in order to create quality job opportunities. Labour mobility within the EU and legal labour migration should be encouraged. The EESC expects that the Commission’s package of 27 April 2022 on Legal migration — Attracting skills and talent to the EU will provide important support for the EU labour market.

3.1.5 The EESC welcomes both the emphasis on the circular economy as the sector with job creation potential and the support for sectors/regions that are especially impacted by the green transition due to their sectoral specialisation/regional concentration of a specific type of industry.

3.1.6 The EESC also draws attention to the resolution adopted by the 110th International Labour Conference on the inclusion of the principle of a safe and healthy working environment in the International Labour Organization’s Fundamental Principles and Rights at Work and underlines the constant need to invest in the culture of prevention of accidents, occupational diseases and risks in the workplace.

3.1.7 The EESC considers that adequate minimum wages, either set by law or collective bargaining, constitute a valuable instrument for addressing in-work poverty. However, they are not enough by themselves, and combined action by different policy instruments is necessary. These policy instruments can include well-designed and temporary financial incentives, remodelling the redistributive effect of the tax system, where appropriate, etc. Financial instruments should be combined with targeted and effective skilling and upskilling measures, as low-skilled workers face a higher risk of in-work poverty than high-skilled ones (19 % vs 4,9 %) ( 4 ) . Member States should be encouraged and supported to implement them in a coordinated way.

3.1.8 Social partners’ autonomy and their freedom to bargain collectively on a voluntary basis should be respected. Collective bargaining and increasing its coverage are still the best tools for striking the right balance on wage setting when it comes to fairness and responsiveness of wages to productivity developments, improving working conditions and social security contributions. Where there is a statutory minimum wage, the effective involvement of the social partners is equally important for identifying the right solutions to achieve upward socio-economic convergence adapted to the national situation. Where coverage of collective bargaining is weak, Member States should strive to create favourable conditions for the social partners to work on increasing it.

3.1.9 The social partners’ involvement has proven to be very valuable during the COVID-19 crisis. In these turbulent times, steps must be taken to strengthen both the role of the social partners and their involvement in designing and implementing employment, social and economic reforms and policies, including by building their capacity. This is also important for the implementation of the European Pillar of Social Rights and the National Recovery and Resilience Plans. The role of civil society organisations, linked to their respective policy areas, should also be taken into account.

3.2 Guideline 6: Enhancing labour supply and improving access to employment, lifelong acquisition of skills, and competences

3.2.1 The EESC is pleased that the title of the guideline has been changed to incorporate the concept of lifelong learning. With fast technological change and the twin green and digital transitions, the ‘lifespan’ of previously acquired skills and competencies is getting ever shorter and lifelong acquisition of relevant skills and competencies is increasingly important for both workers and businesses. That is why it is important to assess the shared responsibility for life-long learning (LLL) at workplace level.

3.2.2 The EESC welcomes the proposed approach offering comprehensive support measures that make it easier to manage labour market changes. Upskilling and reskilling opportunities ( 5 ) are crucial if individuals are to be able to keep up with labour market changes, and they need to be guaranteed and accessible throughout people’s professional lives (Principle 1 EPSR). However, lack of motivation to participate in training remains a serious challenge, and solutions should be explored. The social partners play an important role in assessing skills needs. Training funds have an important role in financing work-related training and national good practices should be promoted and shared between the Member States ( 6 )

3.2.3 Targeted support is especially important for the long-term unemployed and/or inactive people, as it increases their chance of breaking (back) into the labour market and is an important factor in job retention. Member States should be encouraged to reduce the period of 18 months of unemployment established for reaching out to long-term unemployed persons. There is an urgent need for targeted measures to attract young people with professional career paths.

3.2.4 Labour shortages are on the rise again, after falling during the COVID-19 crisis ( 7 ) . The lack of effective skills forecasts is a critical issue for employers across the EU. Investment in adult learning and skills development, linked closely to labour market needs, can play a crucial role in the economic recovery and building a social Europe.

3.2.5 This also applies to refugees fleeing the war in Ukraine. Apart from language training, action must be taken to ease the process of recognising qualifications which have already been acquired and which are necessary to integrate the labour market. The EESC accordingly welcomes the Commission’s guidance on access to the labour market, vocational education and training and adult learning for people fleeing Russia’s war of aggression against Ukraine ( 8 )

3.2.6 The investments necessary to implement the RePowerEU initiative will be closely linked to the need for a trained workforce. With regard to individual learning accounts (ILA) ( 9 ) , the EESC reiterates its opinion that the decision on whether or not to adopt the ILA as one of the mechanisms for providing and financing training must remain fully a matter for the Member States. In any case, ILA need to support access to recognised and validated training courses. The role of the social partners in designing and/or managing relevant training funds is very important.

3.2.7 The EESC agrees that efforts must be made to raise the overall qualifications level in all Member States. This is especially relevant at the beginning of the learning process but also throughout people’s entire professional lives. As rightly pointed out in the Joint Employment report 2022 ( 10 ) , the positive trend of a reduction in the share of early school leavers has slowed down, and the rates have fallen by only 1,1 percentage points between 2015 and 2020. Strengthening work-based VET systems in the Member States and the labour-market relevance of tertiary education is particularly important, as is increasing the number of STEM graduates from VET and in tertiary education, especially women.

3.2.8 The pandemic has hit young people particularly hard: they have been one of the groups most affected by the economic and social crisis triggered by the pandemic. The COVID-19 crisis has undone ten years of progress on jobs for young people. To prepare adequately for the changing world of work (globalisation, the climate crisis, demographic changes and technological advancements), governments and institutions must consider the impact of each of the megatrends. Youth-specific, inclusive, and forward-looking policy interventions are crucial to ensure that young people are not left behind ( 11 )

3.2.9 The gender pay gap remains a challenge in the EU. As it varies widely from country to country, the root causes of this issue should be tackled, such as labour market and education segregation, gender stereotypes, lack of accessible childcare and other care infrastructures, and unequal distribution of household and care duties. Where pay discrimination exists (including based on age), it must be rooted out. The European Commission’s proposal for a Pay Transparency Directive, currently under discussion, should result in helping Member States to strengthen the application of the principle of equal pay between men and women for work of the same value, as one of the measures to address the gender pay gap, while remaining sensitive to concerns about additional burdens on companies and especially SMEs.

3.3 Guideline 7: Enhancing the functioning of labour markets and the effectiveness of social dialogue

3.3.1 To improve the functioning of labour markets, the roles and responsibilities of different actors (public employment services (PES) and social services) must be overhauled. Consideration must be given to the potential for establishing partnerships between social services (to reach out to those further from the labour market and prepare them for training programmes), PES (tailored ALMPs (active labour market policies) with a retention component, guidance and counselling services) and private employment services (joint and/or complementary actions, i.e. sharing the vacancy database). The efficiency of policy measures must be assessed, rethought or redesigned where necessary. PES capacity should be enhanced, including by digitalising their services. Cooperation with private employment services and other relevant labour market actors should also be encouraged.

3.3.2 The social partners have a key role to play here, especially in the context of local labour markets and sectors in transition, where they can help smooth the transition between sectors, jobs and/or occupations. Civil society organisations also play an important role, with their specific expertise in various forms of employment (especially for vulnerable groups) and social issues, as well as being providers of educational and social services of general interest.

3.3.3 The inactivity rate is still relatively high throughout the EU ( 12 ) . Now is the time to bring those further from the labour market back into it. If properly regulated by legislation or collective bargaining at national level in order to guarantee fair working conditions, the various forms of work, work flexibility and telework could be important factors in enabling people, particularly those from vulnerable groups, to find work. Social infrastructures and services such as childcare or long-term care enable people with caring responsibilities to contemplate entering the labour market.

3.3.4 Working with the social partners is the key to promoting fair, transparent and predictable working conditions, which balance rights with obligations. The EESC shares the view that employment relationships leading to informal and insecure working conditions should be prevented, including in platform work, for which a draft directive is under discussion. The EESC points out that any measures regulating new working patterns, including platform work, should regulate flexible work arrangements, at the appropriate European and national level, while providing essential safeguards for the adequate protection of workers. The role of the social partners should be respected.

3.4 Guideline 8: Promoting equal opportunities for all, fostering social inclusion and fighting poverty

3.4.1 Promoting equal opportunities for all and inclusive labour markets is especially important now when Europe is undergoing a number of crises, with a view to both delivering the goal of 78 % of people in employment set by the action plan for the implementation of the European Pillar of Social Rights and addressing labour shortages. This is true for everyone who is under-represented in the labour market, but also in light of the massive wave of people who have fled the war in Ukraine. Once the Temporary Protection Directive became effective, Member States acted quickly to adapt their national regulatory frameworks to enable them to support Ukrainian refugees and third-country nationals living in Ukraine who have fled to Europe as a result of the war. Any bottlenecks need to be addressed.

3.4.2 A tailored approach to various vulnerable groups (i.e. older workers, (young) people with disabilities, people with caring responsibilities, the long-term unemployed and people with patchy employment history, NEETs, migrants, etc.) is needed. Employment differences between rural and urban areas should also be taken into account. EU funds should be used as a lever to encourage the Member States, especially those identified as low performers in the Social Scoreboard, to provide incentives for employers to employ people with disabilities or to promote self-employment. Decent work is the best tool for reducing poverty and recognising human dignity.

3.4.3 Temporary benefits and income support measures should be provided for the time required in order to accompany unemployed people or low-earners to new and better employment opportunities. In-work benefits ( 13 ) , together with structural measures to facilitate the inclusion of vulnerable groups, can facilitate their entry to the labour market, but should be transitory emergency and complementary measures, since an adequate wage policy enabling a decent standard of living, should be encouraged and supported.

3.4.4 Social economy enterprises are important, especially as entry-level jobs for the most vulnerable and to provide services at regional level. The EESC welcomes the Commission’s Social Economy Action Plan and urges the Commission to set assessment projects of best projects at national level.

3.4.5 The emphasis on children is particularly welcomed. Child poverty should be addressed by means of comprehensive and integrated measures, and action to implement the Child Guarantee should be encouraged. The Committee totally agrees that the availability of affordable, accessible and quality services such as early childhood education and care, out-of-school care, education, training, housing, and health and long-term care is key for reducing child poverty and ensuring equal opportunities. More broadly, effective access to quality social services linked to the individual’s needs should be strengthened; the COVID-19 crisis shone a harsh spotlight on this, and this topic must not be forgotten once the pandemic has come to an end.

3.4.6 At the same time, the green transition leading to the energy transition and especially the recent hikes in energy prices are making life even more complicated for vulnerable groups ( 14 ) . Despite political commitments, there is still work to be done to address energy poverty and make sure measures taken are well targeted and effective.

3.4.7 The combination of a growing ageing population increased life expectancy and a shrinking workforce means that an increasing number of older persons will be economically dependent unless we succeed in enlarging the workforce through more inclusive labour markets, including by activating groups that are currently excluded or under-represented in the labour market. Action is needed to address the challenges faced by the social security and healthcare systems in Member States. The adequacy and financial sustainability of pension systems for all is a crucial policy in all Member States. The EESC welcomes the comprehensive approach proposed by the Commission on equal opportunities for men and women as regards acquiring pension rights and the need for active ageing strategies to facilitate the labour market participation of older persons and reduce the gender pension gap. The EESC underlines the importance of avoiding fragmented work periods during people’s active working lives in order to support social security systems through contributions and ensure that people are entitled to an adequate pension income on retirement.

Brussels, 22 September 2022. The President of the European Economic and Social Committee Christa SCHWENG

(1) 2022 European Semester: Country Reports.

(2) European Economic Forecast. Spring 2022.

(3) Spring 2022 Economic Forecast: Russian invasion tests EU economic resilience.

(4) Joint Employment report 2022.

(5) See also LMO study report The work of the future: ensuring lifelong learning and training of employees.

(6) EESC opinion on the Learning and employability package (OJ C 323, 26.8.2022, p. 62).

(7) Joint employment report 2022.

(8) C(2022) 4050 final.

(9) Council Recommendation on individual learning accounts.

(10) Adopted by the Council on 14 March 2022.

(11) The EESC is currently working on an information report on The equal treatment of young people in the labour market.

(12) The highest inactivity rate is found in Italy (over 37 % in 2021). An inactivity rate of over 30 % can also be found in Croatia, Romania, Greece and Belgium. More data on the economically inactive population in Europe can be found here.

(13) The OECD defines IWB as ‘permanent work-contingent tax credits, tax allowances or equivalent work-contingent benefit schemes, designed with the dual purpose of alleviating in-work poverty and increasing work incentives for low-income workers’.

(14) See also the Opinion of the European Economic and Social Committee on ‘Proposal for a Regulation of the European Parliament and of the Council establishing a Social Climate Fund’ (OJ C 152, 6.4.2022, p. 158).