Note: for EU-SILC based indicators the changes generally actually refer to 2015-2016 for income and household work intensity indicators. For LFS-based indicators (LTU rate, early school leavers, youth unemployment ratio, NEETs (15-24), ER (55-64)) the changes refer to the period 2017-2018.

Annex 6: Summary overview of the ‘social trends to watch’ and number of Member States with deterioration or improvement over 2016-2017 as identified by the 2019 update of the Social Protection Performance Monitor.

This category groups two different cases: i) Member States with levels worse than the EU average and with the situation deteriorating or not improving sufficiently fast; ii) Member States with levels in line with the EU average but with the situation deteriorating much faster than the EU average

scoring between -0.5 and -1.0 in levels and less than 1.0 in changes or scoring between -0.5 and 0.5 in levels and less than -1.0 in changes (and presenting a change lower than zero)

Member States with levels better or much better than the EU average but with the situation deteriorating much faster than the EU average

Member States with levels better than the EU average and with the situation improving or not deteriorating much faster than the EU average

scoring between 1.0 and 0.5 in levels and more than -1.0 in changes or scoring between -0.5 and 0.5 in levels and more than 1.0 in changes

Member States with levels much better than the EU average and with the situation improving or not deteriorating much faster than the EU average

The tables below provide the classification based on z-scores for those indicators for which a high value is assessed as a good performance (e.g. employment rate, participation into childcare, etc).

This category groups two different cases: i) Member States with levels worse than the EU average and with the situation deteriorating or not improving sufficiently fast; ii) Member States with levels in line with the EU average but with the situation deteriorating much faster than the EU average

scoring between 0.5 and 1.0 in levels and more than -1.0 in changes or scoring between -0.5 and 0.5 in levels and more than 1.0 in changes (and presenting a change higher than zero)

Member States with levels better or much better than the EU average but with the situation deteriorating much faster than the EU average

Member States with levels better than the EU average and with the situation improving or not deteriorating much faster than the EU average

scoring between -1.0 and -0.5 in levels and less than 1 in changes or scoring between -0.5 and 0.5 in levels and less than -1.0 in changes

Member States with levels much better than the EU average and with the situation improving or not deteriorating much faster than the EU average

The tables below provide the classification based on z-scores for those indicators for which a low value is assessed as a good performance (e.g. unemployment rate, AROPE, etc).

By combining the evaluation of levels and changes it is then possible to classify the overall performance of a country according to each indicator within one of the following seven categories. The colour coding is reflected in the respective figures in the body of the report.

The most important issue within this approach is setting cut-off points. Given that no parametric assumption can be made about the distribution of the observed raw values, it is common to use a “rule of thumb” in selecting the thresholds. According to the analysis of the key indicators used in the scoreboard, it was agreed to consider:

Then the distributions of scores (separately for levels and changes) are analised. This approach enables expressing for each Member State its raw indicator value in terms of how many standard deviations it deviates from the (unweighted) average. The performance of each MS is assessed and classified on the basis of the resulting z-scores against a set of pre-defined thresholds, set as standard deviation multiples.

For each indicator, levels and changes are converted to standard scores (also known as z-scores) to apply the same metric to all the indicators. This is achieved by standardising raw values of both levels and changes according to the formula:

In 2017 the Commission in agreement with the Employment Committee and the Social Protection Committee has decided to apply the methodology to the social scoreboard accompanying the European Pillar of Social Rights.

In mid-2015 the European Commission, the Employment Committee and the Social Protection Committee agreed on a methodology for assessing Member States' performance on the scoreboard of key employment and social indicators. As part of the agreement, the methodology aimed at providing, for each indicator, a measure of the relative standing of each Member State within the distribution of the indicator values (scores) of the EU. The methodology is applied jointly to year-levels (levels) as well as to one-year changes (changes), thus enabling a holistic assessment of MS performance.

Note: the gender employment gap is defined as the difference between the male employment rate and the female employment rate among those persons aged 20-64 years; the male employment rate was consistently higher than the female employment rate across all regions.

Note: EUnw and EAnw refer to the non-weighted averages for EU and the euro area. On 2 December 2019, statistical significance estimates for changes of LFS and SILC-based indicators are not available.

Note: EUnw and EAnw refer to the non-weighted averages for EU and the euro area. On 2 December 2019, statistical significance estimates for changes of LFS and SILC-based indicators are not available.

EUROPEAN COMMISSION Brussels, 17.12.2019 COM(2019) 653 final PROPOSAL FOR A JOINT EMPLOYMENT REPORT

FROM THE COMMISSION AND THE COUNCIL

accompanying the Communication from the Commission





























on the Annual Sustainable Growth Strategy 2020





































TABLE OF CONTENTS FOREWORD KEY MESSAGES 1. OVERVIEW OF LABOUR MARKET AND SOCIAL TRENDS AND CHALLENGES IN THE EUROPEAN UNION 1.1 Labour market trends 1.2 Social trends 2. SNAPSHOTS FROM THE SOCIAL SCOREBOARD 2.1. The scoreboard explained 2.2. Evidence from the social scoreboard 3. EMPLOYMENT AND SOCIAL REFORMS – MEMBER STATES PERFORMANCE AND ACTION 3.1. Guideline 5: Boosting demand for labour 3.1.1 Key indicators 3.1.2 Policy response 3.2. Guideline 6: Enhancing labour supply and improving access to employment, skills and competences 3.2.1 Key indicators 3.2.2 Policy response 3.3. Guideline 7: Enhancing the functioning of labour markets and the effectiveness of social dialogue 3.3.1 Key indicators

3.3.2 Policy response 3.4. Guideline 8: Promoting equal opportunities for all, fostering social inclusion and combatting poverty 3.4.1 Key indicators 3.4.2 Policy response



FOREWORD The Joint Employment Report (JER) by the European Commission and the Council is mandated by Article 148 of the Treaty on the Functioning of the European Union (TFEU). The initial proposal for this report by the European Commission is part of the Autumn package, which includes the Annual Sustainable Growth Strategy launching the European Semester cycle. The Joint Employment Report provides an annual overview of key employment and social developments in Europe as well as Member States' reform actions, in line with the Guidelines for the Employment Policies of the Member States. The reporting on these reforms follows the structure of the Guidelines: boosting demand for labour (Guideline 5), enhancing labour supply and improving access to employment, skills and competences (Guideline 6), enhancing the functioning of labour markets and the effectiveness of social dialogue (Guideline 7), and promoting equal opportunities for all, fostering social inclusion and combatting poverty (Guideline 8). In addition, the Joint Employment Report monitors Member States' performance in relation to the Social Scoreboard set up in the context of the European Pillar of Social Rights. The Pillar was proclaimed jointly by the European Parliament, the Council and the Commission on 17 November 2017. It identifies principles and rights in three areas: i) equal opportunities and access to the labour market, ii) fair working conditions, and iii) social protection and inclusion. Monitoring of progress in these areas is underpinned by a detailed analysis of the Social Scoreboard accompanying the Pillar. The Joint Employment Report is structured as follows: an introductory chapter (Chapter 1) reports on main labour market and social trends in the European Union, to set the scene. Chapter 2 presents the main results from the analysis of the social scoreboard associated with the European Pillar of Social Rights. Chapter 3 provides a detailed cross-country description of key indicators (including from the social scoreboard) and policies implemented by Member States to address the Guidelines for Employment Policies.

KEY MESSAGES Europe is making progress in delivering on the European Pillar of Social Rights. According to the Social Scoreboard accompanying the Pillar, labour market and social trends in the EU continue to be positive for 9 out of the 14 headline indicators. The other 5 either remained stable or recorded, on average, a slight negative development compared to the previous year (i.e. early leavers from education or training, gender employment gap, impact of social transfers on poverty reduction, income quintile share ratio and self-reported unmet needs for medical care). Convergence across Member States was observed, to a different extent, for more than half of the headline indicators. All Member States, with the exception of the Netherlands, have at least one of the indicators significantly below average (or with an important negative trend). The Social Scoreboard points to positive labour market and social trends in the EU, but challenges remain 9 out of 14 headline indicators improved on average in the last year 14 Member States

have at least one “critical situation”, same number as in JER 2019 Net earnings of a single worker earning the average wage

is the indicator with most challenges Assessment of Social Scoreboard’s headline indicators, November 2019 Source: Commission services on Eurostat and OECD data Employment continues to increase, though at a slower pace than in past years. In the third quarter of 2019, 241.5 million of people were in employment in the EU, the highest level ever reached. Older and high-skilled workers continue to be the main drivers of employment growth. Due to the economic slowdown, employment growth is expected to be more muted in the remaining quarter of 2019 and in 2020. Therefore, the employment rate of people aged 20-64 is currently projected to approach the 75% Europe 2020 target in 2020, but remain slightly below it. Labour market performance is the best ever recorded 241.5 million

employed people in the third quarter of 2019 + 17 million

additional people in employment compared to the lowest point in mid-2013 73.9%

employment rate in the second quarter of 2019 Employment and unemployment rates in the EU and euro area *average of Q1 and Q2, seasonally adjusted. Source: Eurostat, LFS. Source: Eurostat, LFS Unemployment reached a record low at 6.3% in the third quarter of 2019. Convergence across Member States towards lower levels continues. Youth and long-term unemployment are declining too, though they are still high in some Member States. Labour shortages are mostly visible in Member States where unemployment is low, though the share of companies experiencing labour shortages is starting to decrease, due to the economic slowdown.

Labour shortages occur where unemployment is low 15.6 million unemployed people in Q3-2019 (‑11 million since the peak in 2013) 6.3% unemployment rate in Q3-2019 2.5% long-term unemployment rate (> 12 months) 14.4% Youth unemployment rate in Q3-2019 Labour shortage indicator (left) and unemployment rate (right) - 2018 Source: Eurostat, LFS and Business and Consumer Survey. The composite indicator includes all sectors (see LMWD 2019). The number of people who are at risk of poverty or social exclusion continued to steadily decline for a sixth consecutive year in 2018. In that year alone, around 2.7 million fewer people were at risk of poverty or social exclusion than in the previous year. In particular, severe material deprivation continued to decrease strongly, as did, to a lesser extent, the share of people living in households with very low work intensity, owing to the robust labour market performance. However, the share of people at risk of poverty (a relative poverty indicator) remained broadly stable compared to 2017. If the overall trend continues at the current pace, the EU could record by 2020 a decline of around 13 million people at risk of poverty or social exclusion since 2008 (against a Europe 2020 target of 20 million). Some groups, notably children and people with disabilities, face a substantially higher risk of poverty or social exclusion. The AROPE rate declines, thanks to a drop in severe material deprivation and improved labour market conditions 110 million people at risk of poverty or social exclusion, 7 million fewer than in 2008 24.3% of children are at risk of poverty or social exclusion, higher than the average 21% is the share of total income gained by the bottom 40% of the population At-risk-of-poverty or social exclusion rate

and its sub-components in the EU Source: Eurostat, SILC Income inequality slightly increased overall and remains at a high level compared to the pre-crisis period, although relatively favourable in international comparison. On average across the EU, the richest 20% of households have an income that exceeds that of the poorest 20% by about five times. In 2018 this ratio increased marginally, after a slight decline in the previous year. With few exceptions, Member States with the highest levels of income inequality have seen a further increase in 2018. The income share of the lower 40% of the population remained broadly stable in 2018 after recovering in 2017. Tackling income inequalities requires action by Member States in different areas, including the design of tax and benefit systems, (minimum) wage setting, fostering equal opportunities in education and training from early ages, ensuring access to affordable and quality services, promoting gender equality and addressing regional disparities. Gender equality remains a challenge. Gender gaps in employment (11.6 pps in 2018) and pay rates (16.2% in 2017) are substantial and almost stable since 2013. Large disparities across Member States persist. Parenthood and caring responsibilities, coupled with limited access to childcare and other (care) services, and monetary disincentives to labour market participation, are the main drivers of lower employment rates for women. In most Member States, parenthood has a negative impact on the employment rates of women, while the opposite occurs for men. Pay gaps occur in spite of women having on average higher qualification levels than men. They often translate into pension gaps later in life. Several Member States are taking action to improve access to affordable and quality care services, but challenges persist. Concrete measures to tackle the gender pay gap, mostly related to pay transparency, are only in place in a limited number of countries. Gender inequalities in employment and pay remain substantial 11.6pp

employment gender gap in 2018, almost stable since 2013

9.2pp

employment impact of parenthood (lower employment rate for women with young children compared to those with no children)

16.2%

gender pay gap (lower pay for women than for men) in 2017

35.2%

gender pension gap (lower pension for women than for men) in 2017 Gender employment gap 2003-2018, EU level

and by country (2018)

(percentage points, persons aged 20 – 64)



Source: Eurostat, LFS Wage growth gained pace in 2018, but remains overall moderate. In 2018 (and 2019) real wages caught up with productivity developments. Over the previous four years, they increased slightly below productivity growth in most euro area Member States. Wage growth has been generally faster (and above productivity growth) in Central and Eastern European countries, contributing to upward convergence within the EU. Currently, the net earnings level of a worker earning the average wage (corrected for purchasing power differences) in most Central and Eastern European Member States is still well below the EU average according to the Social Scoreboard. Balanced and sustainable wage growth should be responsive to labour market conditions and medium-term productivity developments, while taking into account possible implications on cost competitiveness, and respecting the autonomy of social partners. In some Member States there remains scope for real wages growth + 1.1% real wage growth in 2018 in the EU (+0.7% in the euro area) 9.5% workers at risk of poverty in the EU 16.2% in-work poverty among employees with a temporary contract Gap between real wage growth and productivity growth

(2013-2018, left), net earnings of a single worker

earning the average wage (2018, right) * Countries are ordered by the gap between growth of real compensation and growth of real productivity. Data for Ireland refer to the period 2015-2018. Source: Eurostat, AMECO database of the European Commission (Real compensation per employee, deflator GDP; Real labour productivity per person). In-work poverty remains at high levels overall and in many Member States. It is significantly higher for households with people working part-time or on temporary contracts. Adequate minimum wages, whether statutory or collectively bargained, can help prevent in-work poverty, while reducing wage inequality and supporting aggregate demand. In 2019, minimum wage levels were increased in almost all 22 Member States where a statutory minimum wage exists. Education, training and skills substantially influence people’s job prospects. On average in the EU, the employment rate is 56.1% for those who have not completed upper secondary school, 73.4% for those with medium-level qualifications and 84.5% for those with tertiary qualifications. Adapting to transformations in the economy and labour market, as well as to the environmental transition, requires continuous upskilling and reskilling. Despite the growing recognition of the challenge and a number of initiatives being rolled out across Member States, the participation of adults in learning activities has increased only to a limited extent in the last decade, and only a few Member States managed to achieve a more significant improvement. It remains particularly low (below 5%) for low-skilled adults. Though skills are critical for employability in all EU Member States, participation in adult learning remains low



Employment rates by educational attainment in 2018 (percentage points, persons aged 20 – 64) 28.4 pps gap between employment rates of low- and high-skilled workers





40.7% of population aged 30 to 34 successfully completed tertiary education (outperforming the Europe 2020 target)

11.1% of 25-to 64-year-olds participated in adult learning in 2018



only 4.3% of low-skilled adults participated in adult learning in the EU in 2018

Share of adults participating in learning, total and low-skilled in 2018

(percentage points, persons aged 20 – 64) Source: Eurostat. Temporary employment differs significantly across Member States, despite being relatively stable over recent years on average at around 14%. Challenges remain to ensure that involuntary temporary contracts are stepping-stones towards open-ended employment, avoiding “revolving doors” between unemployment and precarious jobs. Reforms are taking place in some Member States, with the aim of ensuring a balance between flexibility and security. These include, in some cases, stricter conditions for using temporary contracts and more clarity on working terms and conditions. Temporary contracts are often not a “stepping stone” 14.2% share of employees on temporary contracts in 2018 53% of all temporary employees are involuntary 25.6% of all temporary employees move to a permanent job within a year Involuntary temporary employees as share of total employees (left) and transition rate towards permanent jobs (right) Source: Eurostat, LFS. Platform work is an emerging employment form in European labour markets. European Commission's Joint Research Centre analysis based on the COLLEEM II survey, covering more than half Member States, indicates that 1.4% of workers in those countries provided labour services via platforms as their main job in 2018. One third of EU platform work is estimated to be cross-border. The working conditions of platform workers vary significantly, depending for instance on their legal status (worker or self-employed), the type of tasks they perform and the business model of their parent company. While opening new job opportunities and allowing for innovative business models to develop, the rise of platform work challenges existing labour market practices and legal frameworks (e.g. with regard to protection of working conditions, access to collective bargaining and to social protection systems), which are often not fully adapted to the new developments. In addition, it raises new questions over use of personal data and algorithmic management. Public Employment Services play a central role in implementing employment policies and facilitating the labour market matching through the delivery of guidance and active support. Member States have taken steps to reinforce the provision of individualised services and are making efforts to simplify and increase the coordination of services. Yet, the role of Public Employment Services as intermediaries remains uneven across Member States. Challenges remain as regards reaching out to those furthest away from the labour market. At the same time, efforts continue to enhance cooperation and exchange of information and best practices in the framework of the European Network of Public Employment Services. Several Member States have scope to improve matching via PES 44.3% of unemployed use public employment services for job search 21.6% of unemployed use private employment offices Share of unemployed people using public employment services for job search Source: Eurostat, LFS Housing costs are excessively high for a large (though declining) share of households. One European in ten is overburdened by housing costs. Not surprisingly, lowest income households and people living in cities are more affected. Severe housing deprivation is stable, decreasing in some Central and Eastern European Member States, where issues with housing quality have been more marked. Despite these improvements, a significant share of households in those countries suffer from poor housing conditions. Homelessness, the most extreme form of housing exclusion, increased over the last decade in most Member States. To tackle this challenge, many Member States have adopted strategies to deliver integrated responses to homelessness and housing exclusion. There is an increased recognition of the importance of prevention services and enhanced cooperation both at policy and service delivery level. Housing cost overburden is a challenge in several Member States 1 out of 10 Europeans are overburdened by housing costs 3.9% of the population suffer from severe housing deprivation 1.9% do not have either a bath, or a shower in their dwelling Share of the population living in a household where housing costs represent more than 40% of the disposable household income, 2018 Source: Eurostat, SILC.





Social protection systems are being modernised, with a number of Member States expanding their coverage and improving their adequacy. There are, however, still difficulties faced by several groups (notably self-employed and non-standard workers) who endure greater economic uncertainty with limited access to social protection. On average, the impact of social transfers (excluding pensions) on poverty reduction has declined in 2018. Furthermore, the risk and the depth of poverty for persons living in (quasi-)jobless households have continued to increase. On average, only around one third of short-term unemployed are covered by unemployment benefits. While minimum income schemes are currently in place in all Member States, their adequacy still varies considerably. Improving coverage and adequacy is key to modernising social protection systems On average, social transfers (excluding pensions) reduce poverty by 33.2% 32.9% of short-term unemployed (<12 months) are covered by unemployment benefits In 8 MS the self-employed do not have access to unemployment protection In 2 MS the net income of minimum income recipients is above the national poverty threshold Coverage of unemployment benefits for the short term unemployed (<12 months) Net income of minimum income recipients (income year: 2017) Note: since 2018 a minimum income scheme is also in place in Italy. The low wage earner considered earns 50% of the average wage and works full time. Source: European Commission analysis based on Eurostat data Demographic change present pension, healthcare and long-term care with a clear need to adapt. The working age population is already declining on average in the EU and is set to decline further. In 11 Member States it will go down by more than 3% in the next 5 years. At the same time, the old age dependency ratio is projected to increase strongly, prompting Member States to take action to modernise their pension, healthcare and long-term care systems, to preserve their adequacy and sustainability, while ensuring access to good quality services. Though the income replacement and poverty prevention capacity of pensions varies significantly among Member States, ensuring pension adequacy is gaining importance in the policy debate. At the same time, promoting access to and sustainability of long-term care systems is particularly challenging, as many Member States currently rely heavily on informal care. Consequently, some of them started reforms aiming at increasing the pool of carers and improving the situation of informal carers (most of whom are women). Population ageing requires a modernisation of

pension, healthcare and long-term care systems 1.7 % of population report unmet needs for medical care 10.2 healthy life years at 65 for women and 9.8 for men From 3 in 2018 to 2 in 2050 working adults supporting one retired person Old age dependency ratio (ratio between the number of persons aged 65+ and those aged between 15 and 64) in the EU Note: expressed per 100 persons of working age (15-64). The light blue area highlights the minimum and maximum projected values per year. Source: Eurostat, baseline projections Strengthening social market economy goes hand-in-hand with strengthening the quality of social dialogue. Involvement of social partners in the design and implementation of employment and social policies and reforms is acknowledged in the Employment Guidelines. Overall, the quality of the involvement at national and regional level has remained stable in the majority of Member States, though differences across countries remain. In addition, while the overall involvement of the social partners in the European Semester has progressed slowly, there is room for further development. In particular, this would require in some Member States more predictable and meaningful exchanges around the preparation of the National Reform Programmes, including in terms of the time allotted.



1.OVERVIEW OF LABOUR MARKET AND SOCIAL TRENDS AND CHALLENGES IN THE EUROPEAN UNION This section presents an overview of labour market and social trends and challenges in the European Union, providing a detailed analytical account of major employment and social policy areas. Detailed trends by Member States are provided in the following sections of the report. 1.1Labour market trends The number of people in employment increased for the fifth consecutive year in 2018, though at a slower pace than in 2017 (i.e. by 1.3% compared to 1.6%). Total employment kept increasing at a moderate rate also in the first three quarters of 2019, to reach 241.5 million in Q3-2019 – about 2.1 million more than one year earlier, and the highest level ever reached in the EU. In annual terms, total employment is projected to increase by 1% in 2019 and 0.5% in 2020. Compared to the lowest level recorded in the first quarter of 2013, more than 17 million additional people found a job in the EU, including 11 million in the euro area. The employment rate of people aged 20-64 continued rising towards the Europe 2020 target. In 2018, it increased by one percentage point up to 73.2% on annual average, and further reached 73.9% in the second quarter of 2019, 0.8 percentage points more than in the same quarter of the previous year. The employment rate increased at the same pace in the euro area, by 0.8 percentage points year up to 72.7% in the second quarter of 2019. Both in the EU and in the euro area these are the highest levels ever reached. If the positive trend continues at the current pace, the EU would be well placed to reach its 75% employment rate target. Yet, the current slowdown in economic activity, together with the tightening of labour markets in some Member States, suggests that the employment rate may increase more slowly in the next quarters of 2019 and in 2020, so that eventually it may only come close to the 2020 target without reaching it. An increase in labour market participation accompanied the positive trend of the employment rate. The activity rate for the age group 20-64 reached 78.7% in the EU and 78.5% in the euro area in the second quarter of 2019 (from respectively 78.4% and 78.3% one year before). As in previous years, the increase in labour market participation largely relied on older workers (aged 55-64) and, to a lesser extent, women. Figure 1: The employment and unemployment rates recorded the best performance ever in the EU Employment and unemployment rates in the EU and euro area *average of Q1 and Q2, seasonally adjusted. Source: Eurostat, LFS. Total hours worked are increasing more slowly but steadily, and have now finally surpassed the 2008 peak. Since the recovery started in 2013, the number of people in employment has increased significantly faster than the volume of hours worked (between Q2-2013 and Q2-2019 the former rose by 7.7%, compared to 7.1% for the latter). This partly reflects a long-term structural decline, exacerbated by an increase in (involuntary) part-time work in the aftermath of the crisis and a shift of employment towards sectors with lower working hour intensity. Nonetheless, the volume of worked hours has picked up in 2018, exceeding for the first time the 2008 peak level by 0.3%. The unemployment rate kept declining in 2018 and in the first three quarters of 2019. Strong job creation, in a context of moderately increasing labour market participation, translated into a further drop in unemployment. In the third quarter of 2019, the unemployment rate (15-74) decreased to 6.3% in the EU and 7.5% in the euro area, from respectively 6.7% and 8% one year before. In absolute numbers, this corresponds to 15.6 million unemployed people in the EU, about 1 million fewer than in the same quarter of the previous year, and almost 11 million fewer since the peak observed in the second quarter of 2013. In spite of a drop in unemployment rates, over the past year, across all Member States, a significant degree of heterogeneity persists (as shown in Section 3.1.1), with some countries at very low levels (and with small margins for further improvements) and others still far from their pre-crisis minimums.

Figure 2: While companies report a high level of labour shortages, there are signs of improving matching in the labour market Beveridge curve in the EU Source: Eurostat, LFS and Business and Consumer Survey. Note: seasonally adjusted figures. While slightly receding compared to one year ago, labour shortages are at a high level. Since the recovery started, the share of business indicating the availability of labour as a factor limiting production has increased continuously in the EU, from around 5% at the end of 2012 to around 20% in 2018. The Beveridge curve (Figure 2) shows that such an increase went along with a continuing fall in unemployment, though the outward shift in the curve that occurred between 2010 and 2013 points to a lower efficiency of matching in the post-crisis period compared to the pre-crisis one. With the recent economic slowdown, the number of companies reporting labour shortages has declined slightly in 2019, while unemployment has continued dropping, as mentioned above. Although it is early to judge whether the Beveridge curve is showing a change in trend, the behaviour of recent quarters suggests that an inward shift is occurring, consistent with an overall improvement in the matching process (although the situation differs substantially across Member States). Long-term and youth unemployment continue to decrease too. The continuing improvement in labour market conditions translated into a shrinking pool of long-term unemployed (i.e. those unemployed for more than one year). The number of people in this situation amounted to 6.2 million in the second quarter of 2019, i.e. 1.1 million (or 15%) fewer than in the same quarter of 2018. At 2.5% of the active population, long-term unemployment has reached the pre-crisis minimum of Q3-2008 (while in euro area it is still above, at 3.3% vs 2.8%). Looking at the situation of young jobseekers, a marked improvement is also visible. The youth unemployment rate recorded a reduction by 1 pp for the EU, down to 14.4% in the third quarter of 2019, and by 0.9 pps in the euro area, down to 15.8% (yet, rates above 30% are still recorded in Spain, Italy and Greece). Overall, 3.2 million people between 15 and 24 are unemployed in the EU, and this number expands to 5.5 million when all those neither in employment, nor in education or training (NEET) are considered. Nonetheless, the NEET rate improved over the last year, down to 10.2% in the EU and 10.3% in the euro area in Q1-2019 (from respectively 10.6% and 10.8% one year before). These rates are the lowest ever recorded. In spite of a decrease in the NEET rate, early school leaving has stabilised. After declining steadily over the last decade, the rate of early leavers from education and training (aged 18-24) stabilised at 10.6% in 2017 and 2018. Therefore, while being very close to the Europe 2020 target of 10%, there is room for further reduction. On the contrary, the Europe 2020 target for tertiary educational attainment (40% in the age group 30-34) was achieved in 2018, with a rate of 40.7% (0.8 pps more than in 2017). Figure 3: Older and high-skilled workers are the main drivers of employment growth Employment rates and employment growth across different groups in the EU Source: Eurostat, LFS. Older workers continue to be the main driver of employment growth. As in previous years, in 2018 older workers (55-64) recorded the largest increase in employment compared to other age classes (Figure 3): the number of employed persons in this group rose by 4.1% in 2018 (a similar growth rate as in 2017 when it reached 4.3%). The employment rate of older workers consequently increased by 1.6 pps to 58.7% in 2018, the highest level ever (more than 13 pps higher than in 2008). Employment also grew among other age groups, though at a slower pace. In particular, the number of young people (15-24) in employment rose at a comparable rate as in 2017 (1.5% vs. 1.6%), leading to an increase in the youth employment rate by 0.8 pps to 35.4% (yet, this rate remains 1.9 pps below the 2008 level). Employment for prime age adults (25-54) grew by 0.4%, resulting in an 80.4% employment rate in 2018. The employment rate of non-EU born people kept increasing. In the age bracket 20-64 it rose up to 64.5% in 2018 (1.5 pps more than in 2017), corresponding to an increase in absolute terms from 17.4 million to 18.3 million. The employment rate for this group compares to 73.9% for the average of native-born (0.9 pps more than in 2017). Therefore, while slightly narrowing, the gap remains sizeable, after having expanded during the crisis (more than 9 pps in 2018, compared to less than 5 pps in 2008). Employment keeps increasing slightly faster for women than for men, but the gender employment gap remains large. In 2018, employment growth was 0.2 pps quicker for women than for men (same value as in 2017). However, such a small difference was not sufficient to bring down the gender employment gap (i.e. the difference in employment rates by sex) which remained stable at 11.5 pps. After dropping significantly during the crisis (it amounted to 15 pps in 2008) reflecting a stronger impact of the recession on male employment, this indicator has remained almost unchanged since 2014. This gap appears particularly high for women aged 30-34 at 14.5 pps (mostly related to childbearing), for those aged 55-64 at 13.7 pps, and for low-skilled ones at 21.1 pps (compared to 10.9 pps and 6.8 pps respectively for the medium- and high-skilled). High-skilled people make out an increasing proportion of the workforce. This is part of a long-term trend, as employment relying on high-skill tasks is on the rise while Member States’ workforces are becoming more skilled, which reflects the increasing demand for and the supply of high-skilled workers in the economy. The number of employed people (age group 25-64) with higher education increased by 3.1% in 2018, leading to an employment rate of 85.8% within this group. An only slight increase of 0.2% was recorded among medium-skilled workers (i.e. those with upper secondary education) who achieved an employment rate of 76.4%. On the contrary, the number of low-skilled workers (i.e. with lower secondary education or below) kept dropping, by 0.8% (following a 0.3% in 2017). However, since the overall low-skilled population aged 25-64 is on a continuous decline (in 2018 alone it reduced by 1.7 million, or 2.7%) – as part of a trend reflecting population ageing and higher educational attainment among younger generations – this group's employment rate actually increased from 55.6% in 2017 to 56.8% in 2018. The gap between employment rates of low- and high-skilled workers continues decreasing (from a peak of 31.4 pps in 2013) but remains very high at 29 pps, pointing to the need for action to increase the employability of people with low education level, notably by upskilling and reskilling. Most of the additional jobs created in 2018 are permanent and full-time, but the share of temporary employees remains sizeable. Of the 2.7 million additional employees (15-64) recorded in 2018, almost all were on permanent contracts; the number of temporary employees increased by a mere 55 thousand in the same period (compared to 0.8 million the year before). Nonetheless, the increase in permanent contracts was not sufficient to bring down the overall share of temporary employees over total employees, which decreased by only 0.1 pps to 14.2% in 2018. Self-employment (15-64) dropped by 160 thousand, continuing the slow decline recorded in previous years and resulting in a share of 13.5% over total employment (down from 13.7% in 2017 and 14.4% in 2013). Finally, most additional jobs were full-time (+2.4 million), while the number of part-time workers remained roughly constant. Consequently, the proportion of part-time workers (aged 15-64) dropped slightly for the third year in a row (by 0.2 pps to 19.2% in 2018), though remaining almost 2 pps above the 2008 level. On the upside, the share of involuntary part-time workers among total part-timers kept decreasing (from a peak of 29.6% in 2014 to 24.6% in 2018) though remaining substantial. Looking at sectoral developments, employment continues to shift towards services. Following the trend of recent years, in 2018 the largest number of jobs was created in services (2.6 million additional persons in employment in 2018, or +1.5% compared to 2017; based on national accounts). Such an increase kept pushing up the share of services over total employment, which in the last decade increased continuously from 70.1% in 2008 to 74% in 2018. In absolute terms, industry recorded the second largest increase in 2018 (by 470 thousand), which corresponds to a rise by 1.3% over the previous year (in line with performance recorded in 2017 and 2016). For the second year in a row, the number of people employed in construction increased by more than 2% (or 337 thousand people), consolidating the recovery started in 2015. However, the number of employed persons in this sector is still almost 13% lower than in 2008. Finally, after having stabilised in 2017, employment in agriculture started decreasing again in 2018 (by 2.5%) in line with its long-term trend. The share of agriculture in total employment actually dropped from 5.4% in 2008 to 4.3% in 2018. 1.2Social trends The number of persons at risk of poverty or social exclusion , continued its steady decline. This declining trend continued for a sixth consecutive year in 2018 (Figure 4), and the number of people at risk of poverty or social exclusion fell to 110 million persons (or 21.9% of the total population), nearly 2.7 million fewer than in 2017 (around 2 percentage points less than in 2008). The overall trend reflected a decrease in severe material deprivation, and to a lesser extent, in the share of households with very low work intensity, while the at- risk-of-poverty rate remained broadly stable. This is overall in line with the recovery in employment, and increases in disposable income. If the positive trend continues at the current pace, the EU would be well placed to record by 2020 a decline of around 13 million people at risk of poverty or exclusion since 2008 (against a Europe 2020 target of 20 million). Yet, the current slowdown in economic activity suggests that the actual decline may be less prominent.

The sharp fall in the number of persons suffering from severe material deprivation is continuing. More than 3 million people were relieved of severe material deprivation in the year to 2018, bringing the overall number of persons affected down to 29.7 million or 5.9% of the EU population. This decline represents a significant improvement for a sixth year in a row, reflecting an improving material situation of households. As the fall in this indicator is driven by a good performance among those Member States for which severe material deprivation is highest (see Section 3.4), the overall improvement points to continued upwards social convergence. A robust labour market has contributed to a further reduction in the number of persons living in quasi-jobless households. The number of people living in households with very low work intensity further dropped by around 3 million people. These people represent 8.8% of the population, a level largely below the pre-crisis situation. Figure 4: The share of people at-risk-of-poverty or social exclusion is on the decline, but the share of those at-risk-of-poverty remains broadly stable Percentage of population at-risk-of-poverty or social exclusion (AROPE) and subcomponents (2005-2017). Source: Eurostat, SILC. The percentage of the population at risk of poverty remains high despite the strength of the recovery. The relative poverty indicator remains broadly stable, increasing marginally to 17.1% from 16.9% one year earlier. The number of people living in households with a disposable equivalised income below 60% of the national median is slightly above 86 million, one million people more than in the previous year. While the latest data from Eurostat flash estimates suggest that poverty rates are meant to decline, such decline has come to a halt after a strong improvement in 2017. The in-work poverty risk has remained broadly stable at a high level in 2018. In 2018, the percentage of people in work at risk of poverty increased by a 0.1 pps from 2017 and remains close to the peak registered in 2016. 9.5% of employed people live in a household whose income is below 60% of the median (1.2 pps higher than the minimum reached in 2010). People working part-time and with temporary contracts are more exposed to such risk, but in some Member States this risk is also relatively high for full-time workers and workers with a permanent contract (see also sections 3.1.1 and 3.4.1). Trends in the depth of poverty indicate that in some countries the economic growth is not benefitting all. The relative median income poverty gap, which measures how far away from the poverty line those at risk of poverty are (i.e. how poor the poor are), increased by half a point to 24.6% in 2018. This reflects diverse trends across Member States, that overall suggest that the poorest people are not always reached by positive impacts of the economic growth. The risk and the depth of poverty for persons living in (quasi-)jobless households have continued to increase. The at-risk of poverty rate for persons living in very low work intensity households (less than 20% of their capacity) is high (62.1% in 2018) and has steadily increased for a fifth consecutive year. This has been identified as a trend to watch by the Social Protection Committee . There are also growing differences between the median income of these people and the at-risk-of-poverty threshold (see Section 3.4.1), pointing to possible gaps in the adequacy and coverage of benefits. Despite continuing improvements, children continue to face a high risk of poverty or social exclusion. In 2018 the percentage of children at risk of poverty or social exclusion in the EU-28 fell by 0.6 pps to 24.3%. However, this rate remains higher than the one for the general population. In all Member States, children whose parents are low-skilled face a significantly higher risk of poverty or social exclusion, pointing to persisting inequalities of opportunities. Aggregate household incomes continue to grow. The gross disposable income of households (GDHI) rose for a fifth year in a row to 2018. The annual increase was in line with improvements in overall real GDP per capita (which rose by around 1.8%), suggesting that recent growth is benefitting households. Income inequality remains at a high level. On average, the richest 20% of households in Member States have an income that exceeds that of the poorest 20% of households by about five times. In 2018, this ratio increased after a first decline last year, and remains at a high level in many Member States (see Section 3.4). The latest Eurostat flash estimates suggest however that a decline is set to occur . The income share earned by the 40% of the population with the lowest incomes (S40) remained stable after an increase in 2017. In many countries this group, which consists of lower income workers and those in receipt of social benefits, had seen their share of income worsen or stagnate, even before the economic crisis. Further improvements in the S40 will however be required in order to reverse previous trends of the last decade.



2.SNAPSHOTS FROM THE SOCIAL SCOREBOARD The European Pillar of Social Rights was proclaimed jointly by the European Parliament, the Council and the Commission on 17 November 2017. It sets out a number of key principles and rights to support fair and well-functioning labour markets and welfare systems. It is designed as a compass for a renewed process of convergence among Member States towards better socio-economic conditions. The Council’s new strategic agenda for the EU 2019-2024 highlights that the European Pillar of Social Rights needs to be implemented at EU and Member State level, with due regard for respective competences. The Commission will come forward with a Communication launching an engagement towards an Action Plan for the implementation of the European Pillar of Social Rights at the beginning of 2020. The European Pillar of Social Rights is accompanied by a social scoreboard to monitor performances and track trends across Member States. The scoreboard provides a number of indicators (headline and secondary) to screen the employment and social performance of Member States on selected indicators along three broad dimensions, identified in the context of the Pillar: (i) equal opportunities and access to the labour market, (ii) dynamic labour markets and fair working conditions, and (iii) public support / social protection and inclusion. Since the 2018 edition, the Joint Employment Report includes the social scoreboard, the results of which are summarised in this Chapter as concerns headline indicators. The analysis is placed in the broader reform context presented in Chapter 3. 2.1.The scoreboard explained

The social scoreboard is a central tool for monitoring performance in the employment and social domains, and convergence towards better living and working conditions. In particular, it helps monitoring the situation of Member States on measurable dimensions of the Pillar, complementing the existing monitoring tools, in particular the Employment Performance Monitor and the Social Protection Performance Monitor. It notably includes 14 headline indicators that assess employment and social trends at large: -Equal opportunities and access to the labour market: §Share of early leavers from education and training, age 18-24 §Gender gap in employment rate, age 20-64 §Income inequality measured as quintile share ratio - S80/S20 §At-risk-of-poverty or social exclusion rate (AROPE) §Young people neither in employment nor in education or training (NEET rate), age 15-24 -Dynamic labour markets and fair working conditions: §Employment rate, age 20-64 §Unemployment rate, age 15-74 §Long-term unemployment rate, age 15-74 §Gross disposable income of households in real terms, per capita §Net earnings of a full-time single worker without children earning an average wage -Public support / Social protection and inclusion: §Impact of social transfers (other than pensions) on poverty reduction §Children aged less than 3 years in formal childcare §Self-reported unmet needs for medical care §Share of population with basic overall digital skills or above. Headline indicators are analysed using a common methodology agreed by the Employment Committee and the Social Protection Committee (see Annex 3 for details). This methodology evaluates the situation and developments in Member States by looking at levels and yearly changes of each of the headline indicators included in the social scoreboard. Levels and changes are classified according to their distance from the respective (unweighted) EU averages. Member States' performances on levels and changes are then combined (by using a predefined matrix) so that each Member State is assigned to one out of seven categories ("best performers", "better than average", "good but to monitor", "on average/neutral", "weak but improving", "to watch" and "critical situations"). On this basis, Table 1 provides a summary of the readings of the scoreboard according to the latest figures available for each indicator. A careful and non-mechanical reading of the table is warranted. For this purpose, a detailed analysis of the fourteen indicators, including longer-term trends and additional indicators, when relevant, is presented in Chapter 3. In addition, the forthcoming country reports will provide an in-depth analysis of all "critical situations" and additional socio-economic and policy background to better qualify country-specific challenges in the context of the European Semester. Together with further analysis included in the Employment Performance Monitor and the Social Protection Performance Monitor, this will provide an analytical basis for the subsequent Commission proposals for Country Specific Recommendations where appropriate.

For the first time, the 2020 Joint Employment Report integrates a regional dimension to the Social Scoreboard. During the last years, the Social Scoreboard was used to analyse country performance at the national level. However, the evolution of the indicators at the national level may mask important differences at regional level (while, in many Member States, a number of policies and funding are often decided at this level). Therefore, the regional dimension of the social situation and of convergence is gaining relevance, particularly within the framework of the European Semester. Against this background, this edition of the report features evidence on the regional situation, on the basis of the Social Scoreboard. In particular, a series of maps showing regional breakdowns by Member State are presented in Annex 3 for some Social Scoreboard headline indicators. Furthermore, the analysis in Chapter 3 reports, where relevant, findings at the regional level for the Member States where large disparities exist between NUTS 2 regions. The data and findings make it possible to better understand how different regions in a country fare as regards some key dimensions of the Pillar and helps monitor convergence within countries, assess the impact of regional policies and shape regional policy-making. 2.2.Evidence from the social scoreboard The analysis of the Scoreboard points to continuing positive labour market and social trends in the EU, although not all indicators are improving. Looking at average values for the EU, 9 out of 14 headline indicators recorded an improvement over the last available year (i.e. 2018 or 2017 depending on data availability). In comparative terms, (overall and long-term) unemployment rates recorded the most significant progress, reflecting positive developments in the labour market. As already in 2017, unemployment rates have decreased in all Member States in 2018. Yet, some other indicators remained stable compared to the previous year or even slightly worsened (i.e. early leavers from education or training, gender employment gap, income quintile share ratio, impact of social transfers on poverty reduction and self-reported unmet needs for medical care). As highlighted by the respective scatterplots in Chapter 3, more than half headline indicators exhibited, to a different extent, convergence across Member States over the last observed period (notable exceptions are the income quintile share ratio, self-reported unmet needs for medical care and the share of population with basic overall digital skills or above). Almost all Member States face challenges on at least one headline indicator. Considering the three most problematic classifications altogether (i.e. "critical situation", "to watch" and "weak but improving"), all Member States are flagged at least once, with the exception of the Netherlands. Looking at "critical situations" only (i.e. indicators for which the level is much worse than average, and either not improving sufficiently fast or deteriorating further), 14 Member States were flagged, the same number as in the 2019 Joint Employment Report. Estonia and Malta joined this group of countries (or “re-joined” it, after having left it in the previous year), while Hungary and Portugal left it. The count of challenges indicates some worsening across the board. Across the 14 domains assessed, overall 121 "critical situation", "to watch" or "weak but improving" cases are identified, i.e. about 31% of the total number of assessments (same number as in the 2019 JER). Of these, 40 are "critical situations" (corresponding to 10.3% of all assessments), compared to 41 in the 2019 JER (corresponding to 10.6% of all assessments). Looking at the three broad dimensions covered by the scoreboard, similarly to previous years, most challenges are flagged in the "public support/social protection and inclusion" domain, with an average of 9.8 cases (of which 3.5 "critical situations") per indicator. Children aged less than 3 years in formal childcare appears as the indicator with most flags, i.e. for 13 Member States (of which 5 in the bottom category). The dimensions of "equal opportunities and access to the labour market" and "dynamic labour markets and fair working conditions" follow, with an average of 9.6 and 6.8 flagged cases per indicator respectively (3 and 2.2 "critical situations" each). In the first domain, the most flagged indicators are early leavers from education and training, the gender employment gap and the at risk of poverty or social exclusion rate (10 times). In the latter, net earnings of a full-time single worker without children earning an average wage appears as the indicator with most numerous challenges (14 flags). As in past years, the situation of Member States and the severity of their challenges vary widely. Greece, Italy, Romania and Spain present "critical", "to watch", or "weak but improving" assessments on ten or more indicators (see Table 1). Of these countries, Italy reports the highest number of “critical situations” (eight), followed by Romania (seven), Greece (four) and Spain (two). Yet, Greece, Romania and Spain also report a number of positive assessments each: Greece is among the “best performers” on early school leaving and “better than average” on income inequality and participation in childcare; Romania is among the “best performers” on household disposable income per capita growth and “better than average” on the unemployment rate; Spain is among the “best performers” on participation to childcare and “better than average” on self-reported unmet needs for medical care. In terms of overall count of challenges, Bulgaria and Croatia (eight challenges), Estonia and Latvia (six challenges) follow. By contrast, Sweden is a "best performer" or "better than average" on eleven headline indicators, followed by the Czechia (nine indicators), Germany, Denmark, Malta and the Netherlands (eight indicators each). When looking at equal opportunities and access to the labour market, the largest improvements were recorded, on average, in terms of NEET and at-risk-of-poverty or social exclusion rates. However, the early school leaving rate stopped a long-term declining trend and only remained stable compared to the previous year, while the gender employment gap and the income quintile share ratio increased marginally. When looking by indicator: ·Spain, Italy and Malta face a "critical situation" when it comes to early leavers from education and training, compared to Greece, Croatia, Ireland, Lithuania, Poland and Slovenia as the "best performers"; ·Greece, Italy, and Romania score critical on the gender employment gap, compared to Finland, Latvia and Sweden as "best performers"; ·Lithuania, Latvia and Romania face a "critical situation" in terms of income inequality compared to the best performance of the Czechia, Finland, Slovenia and Slovakia; ·The situation as concerns the at-risk-of-poverty or social exclusion rate is critical in Lithuania and Latvia, compared to the Czechia, Slovenia and Slovakia as "best performers"; ·Bulgaria, Greece, Italy and Romania face a "critical situation" when looking at NEETs whereas Czechia, Germany and Luxembourg perform the best. Turning to dynamic labour markets and fair working conditions in the EU, on average the situation improved over the last year across all indicators, notably employment and unemployment rates (both overall and long-term), gross disposable household income (GDHI) per capita and net earnings of a full-time single worker without children earning an average wage. When looking by indicator: ·Croatia, Greece, Italy and Spain face a "critical situation" when it comes to their employment rate, compared to the Czechia, Estonia, Germany and Sweden as the "best performers"; ·Italy scores critical on the unemployment rate while the Czechia scores as "best performer"; ·Italy scores critical on the long-term unemployment rate (no "best performers" identified through the methodology, while 15 countries are "better than average") ·The growth in per capita GDHI is seen as a "critical situation" in Greece, Cyprus and Italy, compared to Bulgaria, Poland and Romania as "best performers"; ·The situation on net earnings of a full-time single worker without children earning an average wage is assessed as critical for Romania and Slovakia, while Austria, Germany, Ireland, Luxembourg, the Netherlands and the United Kingdom are the "best performers". As regards public support and social protection and inclusion, the situation has improved over the last year available in terms of childcare availability and digital skills. However, it has slightly worsened as concerns the impact of social transfers on poverty reduction and the self-reported unmet needs for medical care. When looking by indicator:

·Spain, Italy, Lithuania, Latvia and Romania face a "critical situation" when it comes to the ability of their social transfers to reduce the risk of poverty. This compares to Hungary and Ireland as the "best performers"; ·Czechia, Poland, Romania and Slovakia score critical on the participation of children aged less than 3 to formal childcare, compared to Belgium, Spain and Luxembourg as "best performers"; ·Estonia and Latvia face a "critical situation" in terms of self-reported unmet need for medical care (no "best performers" identified through the methodology, while nine countries are "better than average"); ·Bulgaria, Croatia and Romania face a "critical situation" when looking at levels of digital skills, while Finland, Luxembourg, the Netherlands and Sweden perform the best. Table 1. Summary of headline indicators of the Social Scoreboard Note: update of 2 December 2019. GDHI per capita growth not available for HR and MT. Net earnings of a full-time single worker without children earning the average wage not available for CY. Individuals' level of digital skills not available for IT. Breaks in series and other statistical flags are reported in Annexes 1 and 2. Box 1. Benchmarking - state of play The Communication of 26 April 2017 establishing a European Pillar of Social Rights identified benchmarking as a key tool to support structural reforms and foster upward convergence in the employment and social fields within the European Semester. Since then, benchmarking frameworks have been developed and discussed with Member States in several areas, in line with the common approach agreed by the Employment Committee (EMCO) and the Social Protection Committee (SPC), focusing on the identification of policy levers, which are accompanied by general principles for policy guidance and, when available, specific indicators. At this stage, policy levers are not accompanied by reference values, as the aim is to allow for comparison across Member States and mutual learning to incentivise the necessary reforms. The benchmarking framework on unemployment benefits and active labour market policies was first used in the 2018 European Semester, including indicators on the generosity and coverage of unemployment benefits and related activation policies. Work is ongoing on the development of indicators to finalise the framework in relation to the quality of early-support services to job seekers. The benchmarking framework on minimum income, covering the adequacy, coverage and activation components of minimum income schemes, was in turn fully integrated in the 2019 Semester, together with the benchmarking framework on adult skills and learning, which was agreed with the Employment Committee in October 2018. Work is currently ongoing on additional benchmarking frameworks for possible use in future Semester cycles, notably within EMCO on minimum wages and on mapping collective bargaining, and within SPC on pension adequacy and on childcare and support to children.



3. EMPLOYMENT AND SOCIAL REFORMS – MEMBER STATES PERFORMANCE AND ACTION This section presents an overview of recent key employment and social indicators and measures taken by the Member States in priority areas identified by the EU employment guidelines, as adopted by the Council in 2019. For each guideline, recent developments on a selection of key indicators are presented, as well as policy measures taken by Member States. As concerns the latter, the section draws on Member States’ National Reform Programmes 2019 and European Commission sources. If not specified otherwise, only policy measures implemented after June 2018 are presented in the report. An in-depth analysis of recent labour market developments can be found in the Labour Market and Wage Developments 2019 report and the Employment and Social Developments in Europe Review 2019. 3.1.Guideline 5: Boosting demand for labour This section looks at the implementation of the employment guideline no. 5, which recommends Member States to create conditions promoting labour demand and job creation. It first presents an overview of unemployment and employment rates by Member State, complementing the analysis at EU level made in Chapter 1, to highlight the relevance of the job creation challenge across countries. It then looks at self-employment dynamics and the changing nature of self-employment, as well at the shortages of skilled labour. Finally, it investigates wage, minimum wage and tax wedge developments and their impact on income and living standards, on job creation and competitiveness. Section 3.1.2 reports on policy measures implemented by Member States in these areas. 3.1.1 Key indicators While economic growth slowed down, unemployment continued to decline in all Member States in 2018 for the second consecutive year. As a result, in 2018 it stood below 5% in 10 Member States. In most of the countries with a high unemployment rate, the decline was faster than the average, confirming the convergence trend towards lower unemployment levels observed in recent years. In particular, Spain, Greece, Portugal, Croatia and Cyprus all experienced a reduction by at least 2 pps. Partial exceptions are France and Italy, where the decline, while steady, had a slower pace. In spite of the general improvement, disparities in unemployment rates remain considerable, with rates ranging from 2.1% in Czechia (ranked as “best performer”) to 19.2% in Greece (see Figure 5, which looks jointly at levels and changes according to the agreed methodology for assessing headline indicators of the social scoreboard). Large disparities also persist at regional level (see Annex 3) with some regions of Greece, Italy and Spain still recording unemployment rates above 20%. By 2018, unemployment had turned below pre-crisis levels in the majority of Member States (see Figure 6). Notable exceptions include France, Italy and Spain. In 2018, more than half of the unemployed people in the EU were concentrated in these three countries. Figure 5: Unemployment is converging towards lower levels Unemployment rate (15-74) and yearly change (Social Scoreboard headline indicator) Source: Eurostat, LFS. Period: 2018 levels and yearly changes with respect to 2017. Note: Axes are centred on the unweighted EU average. The legend is presented in the Annex.

Figure 6: Over the last five years, unemployment has decreased in all Member States Unemployment rate (15-74), multiannual comparison Source: Eurostat, LFS. The employment rate continued to increase and marked a new peak in the majority of Member States in 2018. All Member States registered an increase by at least 0.5 pps compared to 2017. As of 2018, half of the Member States had already reached the Europe 2020 75% target (and thirteen had reached their national employment target). However, as shown in Figure 7, convergence remains very limited. Employment growth is slower than the average in several countries with low starting levels, including Italy and France. At the same time, the highest increases were registered in countries with relatively high starting levels (Cyprus, Slovenia, Malta, Finland, Latvia). Job creation was sustained also in many countries that had already reached the 75% target (Lithuania, Denmark, the Netherlands, Czechia). As a result, disparities in the employment rate (age group 20-64) remain wide, with levels ranging from 80% or more in Sweden, Germany, Czechia and Estonia (the “best performers”) to around 60% in Greece (see Figure 7 and Figure 8). A number of Member States present significant regional disparities in employment rates (see Annex 3). Figure 7: Employment increased in all Member States, but convergence remains limited Employment rate (20-64) and yearly change (Social Scoreboard headline indicator) Source: Eurostat, LFS. Period: 2018 levels and yearly changes with respect to 2017. Note: Axes are centred on the unweighted EU average. The legend is presented in the Annex. Figure 8: Employment rate is at historical peaks in almost all Member States Employment rate (20-64), multiannual comparison Source: Eurostat, LFS. The number of self-employed was broadly unchanged in 2018, but continued its medium-term decline as a share of employment. Over the long term, the total number of self-employed has been broadly stable since 2008, while the share of self-employed on total employment has been slowly declining, from 14.3% in 2008 to 13.5% in 2018. However, in spite of this relative stability, the composition of self-employment has been undergoing a steady shift away from traditional activities towards higher value-added sectors. This shift is particularly marked for own-account workers (self-employed without employees), who make up more than 70% of self-employment. Since 2008, the number of own-account workers decreased by 25% in agriculture, 14% in trade and 5% in transportation. Over the same period, it rose by more than 30% in information and communication, professional, scientific and technical activities and by 40% in human health and social work activities. The share of non-traditional sectors among own-account workers rose from 36% in 2008 to 45% in 2018, with large differences between Member States. The increase was faster in rapidly growing economies such as Estonia, Latvia and Lithuania, while it was slower in countries where self-employment in non-traditional sectors was already widespread (e.g. Denmark, Germany, Italy). The change in the sectoral composition of self-employment at the EU level can be observed in Figure 9. The shift towards higher value-added sectors is also reflected in the average education levels of the self-employed. The share of the high-skilled (with tertiary education) among the self-employed increased to 36.1% in 2018 (up from 35.2% in 2017 and 26.6% in 2008). This increase was faster than among employees, where the share of high-skilled stood at 35.3% in 2018, up from 27.2% in 2008. This trend was particularly impressive among self-employed women, where the share with a tertiary education degree reached 44.5% in 2018, up from 30.8% in 2008. This suggests that investment in skills and human capital will be increasingly important in a context of rapid technological change and changing world of work. More details on the challenges and opportunities related to these trends can be found in section 3.3. Figure 9: The composition of self-employment is shifting towards services and non-traditional sectors Share of own-account workers by sector Source: Eurostat. AGRI: Agriculture, forestry and fishing (NACE A). MANUF: Manufacturing (NACE C). CONST: Construction (NACE F). TRADE: Wholesale and retail trade; repair of motor vehicles and motorcycles (NACE G). TRACC: Transportation and storage & Accommodation and food service activities (NACE H & I). Non traditional sectors: all other NACE activities, mostly services.

As labour markets become tighter, labour shortages can be identified in most Member States. Over recent years, an increasing share of employers is referring to labour as a factor limiting production. On average in the EU, this share has increased from 7.5% in 2013 to 21.8% in 2018 (see also Chapter 1). This constraint is in general more pronounced in Member States where the unemployment rate is at historically low levels, such as Hungary, Malta and Poland (see Figure 10). On the contrary, labour shortages are considered less as an impediment to production in the countries where the unemployment rate is the highest (Greece, Spain, Italy). Similarly, in countries with remaining labour market slack (e.g. Greece, Spain and Cyprus), a high share of workers appear to be over-qualified for their job, while this issue is generally less frequent in countries where the unemployment rate is low (see Figure 11). This suggests that upskilling and investment in skills, apart from being a driver of long-term growth, can be a powerful tool to promote employment in the short run, especially in those countries where the labour market conditions are already tight. Figure 10: Labour shortages are more pronounced where unemployment is lower Labour shortage composite indicator (left) and unemployment rate (right) – 2018 Source: Eurostat, LFS and Business and Consumer Survey. The composite indicator includes all sectors (see LMWD 2019). Figure 11: Over-qualification is highest in countries where unemployment is high Over-qualification rate (left) and unemployment rate (right) – 2018 Source: Eurostat, LFS. Over-qualification rate is defined as the share of people aged 20-64 with tertiary education and working in occupations at ISCO levels 4-9. Nominal wage growth slightly gained pace in several Member States, but remains overall moderate. For the first time since 2008, nominal compensation per employee increased in all Member States in 2018. The increases in 2018 ranged from 0.5% in Cyprus to 16.3% in Romania (Figure 12). In 2018, nominal wage growth was comparatively faster in most Central and Eastern European Member States. Member States with rapid nominal wage growth (above 7%) include Romania, Czechia, Estonia, Latvia, Lithuania and Poland. In contrast, nominal wage growth was lower – i.e. around or below 2% – in Southern Europe Member States, where unemployment levels tend to be comparatively higher. In 2018, real wage growth was positive in most Member States. The average growth remained moderate, at 1.1% in the EU and 0.7% in the euro area. Real wage growth was particularly fast in Romania, followed by Bulgaria, Poland, Estonia, Latvia and Czechia (all above 5%), thus contributing to increasing employees’ purchasing power and fostering upwards convergence in living conditions. At the other end of the spectrum, Cyprus, Spain, Finland and the Netherlands saw a decline in real wages. Real wage developments were close to zero also in Belgium, France, Ireland and the United Kingdom. The group of countries with low real wage growth is heterogeneous, including countries with high or relatively high unemployment rates (such as Spain, France and Cyprus) and countries with low rates (such as the Netherlands, the United Kingdom and Austria). Figure 12: Wage growth remains moderate, with the exception of Central and Eastern Europe Nominal and real wage developments – 2018 (yearly % change) Source: European Commission, AMECO database. In 2018, real wages grew faster than productivity in the majority of Member States, in particular in Central and Eastern Europe. A similar trend is expected in 2019. Over the medium term (2013-2018), real productivity and real wages have been both growing at a slow pace, with real wage growth trailing behind, especially in the first years of the recovery. As shown in Figure 13, over that period, real labour productivity per person employed has increased in the EU by 4.4%, slightly outpacing real wage growth (+3.1%). As a result of prolonged moderation, wages were in 2018 still below 2013 levels in 8 Member States (Italy, Spain, Cyprus, Greece, Finland, Croatia, Portugal, Belgium). In some countries, namely the Baltics, Romania, Bulgaria and Slovakia, wage growth largely outpaced productivity growth. This is consistent with low unemployment rates and emerging labour and skills shortages, and contributes to the catching-up process. At the same time it may have negative implications for cost competitiveness if the misalignment with productivity developments is protracted. Figure 13: Over the last five years, real wages grew slightly below productivity

Real wage and real productivity developments (percentage change between 2013 and 2018) Source: Eurostat, AMECO database of the European Commission (Real compensation per employee, deflator GDP; Real labour productivity per person). Countries are ordered by the gap between growth of real compensation and growth of real productivity (i.e. on the left of the graph, real productivity developments have outpaced real compensation). Data for Ireland refer to the period 2015-2018. While over the last five years the wage share has slightly decreased in the EU, a general trend towards convergence can be identified. Compared to 2013, the wage share decreased by 0.4 pp in the EU and by 0.7 pp in the euro area. However, it has increased in the majority of Central and Eastern Member States, where its level was comparatively low (including Latvia, Lithuania, Romania and Slovakia). At the same time, the wage share has receded in countries, such as Belgium and Slovenia, where its level was comparatively high. Among the largest EU countries, the wage share slightly decreased in France, Spain, Italy, United Kingdom and slightly increased in Germany and Poland (see Figure 14). Figure 14: Over the last five years, some convergence in the wage share can be identified. Change in the wage share 2013-2018 Source: AMECO database of the European Commission; Adjusted wage share; total economy; as percentage of GDP at current prices. In Ireland, the wage share declined by 9.4 pps in 2015 compared to 2014, due to statistical revisions. Net earnings continue to grow faster in Central and Eastern Europe, contributing to convergence in labour income levels. This trend is in line with the principles of the European Pillar of Social Rights, which sets upwards convergence in living standards as one of its main goals. At the same time, those countries experiencing higher than average net earnings growth also highlight a fast increase in unit labour cost, whose implications for competitiveness need to be monitored. A diverging trend can be identified between Southern and Western Europe: labour income stagnated or declined in Spain, Greece and Italy, despite relatively lower levels in absolute terms (but consistently with higher unemployment rates), while developments were more dynamic in countries with higher starting levels. This trend appears clearly from the u-shaped distribution of countries in Figure 15, which takes as a reference a single earner without children earning the average wage level, over a three-year period (2015-2018). On the lower end of the spectrum, Bulgaria, Lithuania and Hungary are classified as “weak but improving”, while Latvia, Romania and Slovakia, where net earnings have been growing less rapidly, are classified as “critical situations”. Among the “best performers”, net earnings in purchasing power standards are above 30 000 EUR in Luxembourg, Ireland and the United Kingdom. In these Member States, net earnings have been growing faster than in peer countries. Figure 15: Net earnings have been increasing rapidly in Central and Eastern Europe, thus supporting upwards convergence Net earnings and yearly change – average over three years (Social Scoreboard headline indicator) Source: Tax and benefits database (own calculations). Period: 2018 levels (3-year average) and average yearly changes 2015-2018. Note: Axes are centred on the unweighted EU average. The legend is presented in the Annex. Member States marked with an asterisk are those where nominal unit labour cost (NULC) exceeded the threshold set by the Macroeconomic Imbalances Procedure (MIP). The MIP scoreboard indicator is the percentage change over three years of NULC. The threshold is 9% for the euro area countries and 12% for the non-euro area countries. Data not available for Cyprus. Wage inequalities have remained broadly stable over the medium term. Wage growth, especially at the bottom of the wage scale, plays an important role in sustaining demand, reducing income inequalities and in-work poverty risk. Dispersion of gross earnings, measured as the ratio between the fifth and first decile (D5/D1), ranged in 2017 from 1.33 in Sweden to 2.02 in Ireland (based on OECD data). Wage setting institutions can have an impact on wage dispersion. In particular, stronger collective bargaining tends to be associated with a lower earnings inequality (European Commission, 2018). Collective bargaining coverage varies widely across Europe, reflecting different national traditions and institutions. In 2016, the share of employees covered by any form of collective wage agreement, as computed by OECD, ranged from 98% in Austria to 7.1% in Lithuania. Wage dynamics have also an impact on the risk of in-work poverty, which remains at historically high levels in most Member States. The share of persons who, while being at work, have an equivalised household disposable income below the risk-of-poverty threshold rose in the EU from 8.3% in 2010, to 9.6% in 2016. Since then, it remained broadly stable and stood at 9.5% on average in 2018. The highest level was recorded in Romania (15.3%), followed by Luxembourg, Spain, Italy, the United Kingdom and Greece – all above 11%. At the other end of the spectrum, the in-work poverty risk rate is below 4% in Finland and Czechia. The fastest decline compared to 2017 was registered in Romania, Greece and Hungary (around 2 pp). The in-work poverty risk is strongly associated with the type of contract: in 2018, 16.2% of the employees with a temporary contract were at risk of poverty, against 6.1% of those with a permanent contract. Figure 16: In-work poverty remains above 2010 levels in the majority of Member States. In-work at-risk-of-poverty rate, multiannual comparison Source: Eurostat, SILC. In most Member States, wage floors set a lower bound to the wage distribution. This is usually set by national statutory minimum wages (with the exception of Austria, Cyprus, Denmark, Finland, Italy and Sweden). Adequate minimum wages, whether statutory or collectively bargained at sectoral level, serve to multiple purposes: they reduce wage inequality, they represent an incentive to work, they may help reduce in-work poverty and they support aggregate demand by increasing the income of low-wage earning families, which have a higher propensity to consume. Transparent and predictable minimum wages also contribute to a business environment that supports investment and job creation, while avoiding unfair competition. At the same time, minimum wages increase the cost of hiring low-wage workers, which, depending on the structure of the economy and the macroeconomic situation, may have an impact on the employment opportunities of some groups. To take all these factors into account, in most Member States social partners are involved in minimum wage setting. In some countries, expert commissions are also involved in the process. For instance, this happens in all countries that introduced a statutory minimum wage (Germany, Ireland and the United Kingdom) in the recent past. Figure 17 shows the minimum wage as a percentage of the median and average wage across the EU in 2018. The highest minimum wages, as a ratio to the median, are recorded in France, Portugal, Slovenia and Romania, while the lowest are observed in Spain, Czechia and Estonia. As the potential impact of the minimum wage on both employment and living conditions is higher when a large share of the workforce is covered, this indicator should also be taken into account. In 2016, the proportion of those earning the statutory minimum wage or less stood at 7.2% in the median EU Member State (see Figure 18), with large differences across countries (from around 2% in Czechia and Malta to more than 12% in Poland and the United Kingdom).

Figure 17: Minimum wages in Europe range between one-third and half the average wage. Minimum wages as proportion of the median and average earnings of full-time workers (2018) Source: OECD. Notes: AT, CY, DK, FI, IT and SE do not have a statutory national minimum wage. For BG, HR and MT no information is provided by the OECD. Figure 18: The share of workers earning the minimum wage varies widely across Member States. Proportion of workers earning a certain share of the national minimum wages Source: Eurofound, Minimum wages in 2019: Annual review. In Central and Eastern Europe, increasing pressures on wages have been affecting all levels of wage setting, including minimum wages . Minimum wage earners saw an increase in their pay in almost all EU countries in 2019. On average, higher increases were registered in Central and Eastern Europe, where labour shortages have been emerging in recent years. However, the highest increases in nominal terms were recorded in Spain (22.3%) and Greece (10.9%), even if in the latter country, the minimum wage is still well below the pre-crisis level. Women continue to be significantly overrepresented among minimum wage earners in almost all EU countries – with the exception of Estonia and Bulgaria, where there is a relative gender balance. In 2017, the highest degrees of female overrepresentation among the minimum wage earners were found in Malta, the Netherlands, Czechia, Slovakia, Croatia and Belgium. Figure 19: The tax wedge has been generally declining, especially for low-wage earners. Tax wedge on labour, level in 2018 and change 2013/2018 Source: Tax and benefits database, European Commission/OECD. Note: Data are for single earners without children. Data updated on 17 June 2019. EU 28 is a non-weighted average. The tax burden on labour continues an overall gradual downward trend. In 2018, reductions in the tax wedge for single workers earning the average wage were most significant in Romania (‑4.7 pps), Estonia (-2.5 pps) and Hungary (-1.1 pps). The tax wedge increased in more than half of the EU Member States but generally to a very limited extent – the highest increases were registered in Bulgaria (0.6 pps) and Malta (0.4 pps). Overall, differences across countries remain sizeable (see Figure 19). The tax wedge ranges from less than 30% in Cyprus and Malta to around 50% in Belgium, Germany, Italy, France and Austria. A similar dispersion can be observed for low wage workers (defined as those earning 67% of the average wage), though different country patterns emerge as concerns the progressivity of tax rates. The long-term reduction trend in the tax wedge is particularly marked for low-income earners. Between 2013 and 2018, the non-weighted average tax wedge decreased in the EU on average by 1.7 pps (and by 2.0 pps for low-wage workers), with large reductions for both income groups in Romania, Hungary, Estonia and Belgium. Substantial reductions for low-income workers were recorded for Italy and France, as well as in Lithuania and Latvia. For the latter two countries, this reflects the introduction of progressive personal income tax schedules. Over the long term, some convergence in tax rates can be observed, even if the tax wedge increased in some countries where it was comparatively high (e.g. Germany, Slovenia, Czechia), while it was reduced in some countries where it was relatively low (e.g. Ireland and the United Kingdom). In September 2015, the Eurogroup agreed on a benchmarking of euro area Member States' tax burden on labour compared to the GDP-weighted average. The aim is to further inform and support reforms in the area of labour taxation. As part of this exercise, the Eurogroup looks at the tax wedge on labour for a single worker at the average wage and a single worker at a low wage. 3.1.2 Policy response As the labour market conditions improve, employment subsidies tend to be scaled down. Nonetheless, in many Member States, financial incentives remain in place to promote labour market integration of specific groups. For instance, in Belgium, under certain circumstances, employers of young employees (less than 21 years) can reduce their gross wage, the difference being compensated by a premium paid from the government to the employee. In Flanders (Belgium), the government strengthened targeted measures for older workers, for low-educated young people and for persons with disabilities. In France, the experimental subsidies for enterprises hiring residents of the most deprived urban areas are being gradually extended, including in Outermost regions. In Germany, under the Teilhabechancengesetz programme, in case of hiring of long-term unemployed, the State pays 75% of their wage in the first year and 50% in the second year. In Cyprus, under the apprenticeship programme for new graduates, apprentice lawyers, architects or engineers will be provided a monthly training allowance of EUR 650. Incentives are also provided for the employment of persons with disabilities. In Portugal, as part of the “Action Programme to tackle precariousness and foster collective bargaining”, support is provided to companies that hire simultaneously a young unemployed (or looking for a first job) and a long-term unemployed older person under a permanent contract. Support includes partial or total exemptions of payments to social security. Subsidies are also in place if professional traineeships are converted into permanent contracts for young people and long-term unemployed (changes were introduced in 2019 to streamline the application process). In Romania, employers who hire graduates with a permanent contract receive for each employee a monthly amount of RON 2250 lei (about EUR 475), for a period of 12 months (18 months for graduates with disabilities). The same amount is also granted for hiring unemployed aged over 45 years, unemployed single parents, long-term unemployed or young NEETs. Finally, the same amount can be granted (from the unemployment insurance budget) to employers who conclude an apprenticeship or traineeship contract. In Sweden, a new measure aimed at newly arrived and long-term unemployed is under discussion, where the State would subsidise a bit more than half of the wage cost. More details on measures targeted at specific groups can be found in section 3.2. Some Member States supported employment and labour income by reducing the tax wedge. In some cases, policy measures can also include changes in social security contributions. In Spain, several tax reliefs were adopted in 2018, including a full tax exemption of the maternity and paternity allowances, a deduction of expenses in early childhood education and childcare and deductions for taxpayers living with a dependent partner. In France, the former CICE (tax credit for employment and competitiveness) was transformed into a direct reduction of social security contributions of 6 pps on wages up to 2.5 times the minimum wage. In addition, a decrease by 3.9 pps of employers’ social security contributions will be applied for low wages. In Italy, a 15% flat tax was introduced for small businesses, professionals and artisans who declare revenues up to EUR 65 000. In Lithuania, in the frame of a major reform introducing a progressive personal income tax, the tax wedge on low and middle income earners will be reduced over a 3-year horizon. The labour taxation system is also being simplified, with an exemption of social security contributions for low-wage earners, including for the main pension scheme, coupled with an increase of the general social security contribution (CSG). In Hungary, employers' social security contributions were cut in 2019 from 19.5% to 17.5%. Moreover, no contributions have to be paid on labour income of pensioners, so to promote their participation to the labour market. Poland adopted a tax relief for young people under 26 years of age. In Malta, as part of the Making Work Pay initiative, the 2019 budget confirmed the cheque of EUR 40 to 68 for all individuals in employment earning less than EUR 60 000. The minimum contribution for the self-employed was raised by 1.9% in 2019, to finance an increase in protection, in terms of both coverage and duration. In Slovenia, the holiday allowance was exempted from income taxes and social security contributions up to the amount of the average wage. Several Member States are taking steps to improve the strength and transparency of the frameworks for wage setting and collective bargaining. In Greece, the principles of extension of collective agreements and of favourability (i.e. the possibility to depart from agreements only in favour of the employee) were restored. This has resulted so far in the extension of fifteen collective arrangements, covering more than 220 000 workers. In Croatia, legislation is under discussion to better harmonise wage setting across the state administration through the introduction of common wage grids and job complexity coefficients. The new legislation would also cover areas of the employment relationship of civil servants that are currently negotiated through collective bargaining, conditional upon the implementation of a new performance evaluation system. Latvia amended its labour law to facilitate sectoral bipartite agreements, by allowing them to derogate, under certain conditions, from the 100% supplement for overtime. In Lithuania, a draft bill aims to clarify the legal environment for social dialogue and collective bargaining at national, sectoral or administrative levels. Moreover, in order to strengthen the financial capacity of social partners, tax payers will have the possibility to devote 1 percent of their personal income tax to trade unions. In Slovakia, following an amendment to the labour code, employees are now allowed to share publicly their salary levels, which cannot be concealed by contract. In 2019, minimum wages increased in almost all Member States that have national statutory levels. An overview of the updates occurred in 2019 can be found in Table 2. For instance, in Estonia, the gross minimum wage was increased to EUR 540 in January 2019 from EUR 500 in 2018. The social partners agreed that until 2022 increases in the minimum wage would be calculated annually on the basis of labour productivity and economic growth. In Greece, the government increased the statutory minimum wage by 10.9% and abolished the sub-minimum wage for persons aged under 25. This is the first increase since 2012. In Spain, the statutory minimum wage was raised up to 12 600 EUR per year, as a result of a political agreement (without the social partners). In parallel, the Government announced the increase of the public wages by at least 2.25% in 2019, to be further increased by maximum 0.5 pp depending on the GDP growth. In Croatia, the minimum gross salary increased from KN 3440 to KN 3750 (approximately EUR 460 to EUR 505) – the highest increase since 2008. In Lithuania, the minimum salary was increased from monthly EUR 400 to 430, but following the personal income tax reform, this amounts to EUR 555. Slovakia’s minimum wage increased from EUR 480 to 520. In Latvia, while the national minimum wage was not increased, minimum wages were updated upwards in the building sector and in the teaching sector. In Poland, the government announced major increases in the minimum wage, which would almost double in nominal terms over the next five years (from 2250 PLN in 2019 to 4000 in 2024, i.e. from around EUR 525 to EUR 930). Finally, Italy and Cyprus are discussing proposals to introduce a statutory minimum wage by law. In Italy, a draft law proposes the introduction of a gross minimum hourly wage of EUR 9. In Cyprus, the government announced its intention to introduce a flat minimum wage once the economy reaches a stage of full employment, with an unemployment rate of 5%. According to forecasts, this is expected by 2020-2021.

Table 2: Monthly minimum wage updates in 2019 (in EUR) Country 2018 2019 Nominal increase Real increase Belgium 1 562.59 1 593.76 2.0% 0.2% Bulgaria 260.76 286.33 9.8% 7.4% Croatia 462.10 505.90 9.5% 8.4% Czechia 477.78 518.97 8.6% 7.2% Estonia 500.00 540.00 8.0% 5.0% France 1 498.47 1 521.22 1.5% 0.1% Germany 1 497.79 1 557.09 4.0% 2.2% Greece 683.76 758.33 10.9% 10.4% Hungary 444.69 464.20 4.4% 5.0% Ireland 1 613.95 1 656.20 2.6% 1.8% Latvia 430.00 430.00 0.0% -2.9% Lithuania 400.00 555.00 (430.00) 7.5% 5.0% Luxembourg 1 998.59 2 071.10 3.6% 2.0% Malta 747.54 761.97 1.9% 0.9% Netherlands 1 578.00 1 615.80 2.4% 0.4% Poland 502.75 523.09 4.1% 6.4% Portugal 676.67 700.00 3.5% 2.8% Romania 407.86 446.02 9.4% 6.0% Slovakia 480.00 520.00 8.3% 6.0% Slovenia 842.79 886.63 5.2% 3.9% Spain 858.55 1 050.00 22.3% 21.1% United Kingdom 1 638.36 1 746.73 4.9% 2.4% Source: Eurofound calculations. Harmonised figures on gross monthly wages in euro applicable to full-time working employees at the full adult rate. When converted in euro, real changes in the minimum wage in HU and PL are higher than nominal changes due to devaluations of the Hungarian forint and Polish złoty.

3.2.Guideline 6: Enhancing labour supply and improving access to employment, skills and competences This section looks at the implementation of the employment guideline no. 6, which recommends Member States to create conditions to promote labour supply, skills and competences. It presents indicators about educational and training attainment, outcomes and impact on skills development and the employability of the workforce. It then looks at labour market outcomes for various groups underrepresented in the labour market (e.g. young people, older workers, women, people with a migrant background and people with disabilities). Section 3.2.2 reports on policy measures of Member States in these areas and measures targeted at those groups. 3.2.1 Key indicators After a long period of uninterrupted progress, the share of early leavers from education and training has stagnated over the past two years. Reducing the early school-leaving rate is part of the education headline targets in the Europe 2020 strategy. Member States agreed to reduce the EU average early school-leaving rate to below 10% by 2020, starting from 14.7% in 2008. This share constantly declined until 2016, when it reached 10.7%. Since then, no major improvements have been recorded, with this indicator being stable at 10.6% both in 2017 and in 2018. As Figure 20 shows, the situation has remained almost unchanged in around half of the Member States, with annual fluctuations ranging between +0.2 and -0.2 percentage points. Major improvements were nonetheless registered in Romania (‑1.7 pps), Greece (-1.3 pps) and Luxembourg (-1 pp), while Sweden and Denmark have seen their share of early school leavers increasing by 1.6 and 1.4 percentage points respectively. Looking at the evolution in Member States that are flagged as “critical” (according to the Social Scoreboard classification), that is Malta, Spain and Italy, two different pictures arise. While the first two countries show a positive trend between 2017 and 2018, with a reduction of their early school leaving rate by -0.3 and -0.4 pps respectively, the percentage of early leavers in Italy has further increased, reaching 14.5% (+0.5 pps). In 2018, 17 Member States recorded early school leaving rates below 10%. The rate was still much higher than the EU target (and above the respective national targets) in Spain (17.9%), Malta (17.4%) and Romania (16.4%), while it was equal or below 5% in Ireland, Poland, Greece, Lithuania, Slovenia and Croatia. Over a decade (Figure 21), the early school-leaving rate dropped