EUROPEAN COMMISSION Strasbourg, 22.11.2022 COM(2022) 783 final PROPOSAL FOR A JOINT EMPLOYMENT REPORT

FROM THE COMMISSION AND THE COUNCIL



Table of Contents KEY MESSAGES CHAPTER 1. OVERVIEW OF LABOUR MARKET AND SOCIAL TRENDS IN THE EUROPEAN UNION, HEADLINE TARGETS AND SNAPSHOTS FROM THE SOCIAL SCOREBOARD 1.1 Labour market trends 1.2 Social trends 1.3 EU headline and national targets by 2030 1.4 Overview of challenges based on the Social Scoreboard CHAPTER 2. EMPLOYMENT AND SOCIAL REFORMS – MEMBER STATES’ PERFORMANCE AND ACTION 2.1 Guideline 5: Boosting the demand for labour 2.2 Guideline 6: Enhancing labour supply and improving access to employment, skills and competences 2.3 Guideline 7: Enhancing the functioning of labour markets and the effectiveness of social dialogue 2.4 Guideline 8: Promoting equal opportunities for all, fostering social inclusion and fighting poverty



KEY MESSAGES

The Joint Employment Report (JER) by the European Commission and the Council monitors the employment situation in the Union and the implementation of the Employment Guidelines, in line with Article 148 of the TFEU. The report provides an annual overview of key employment and social developments in the Union and of Member States’ recent policy measures, in line with the Guidelines for the Employment Policies of the Member States . It also identifies related key priority areas for policy action. On the basis of the Commission’s proposal, and following exchanges in the relevant Council advisory committees, the final text will be adopted by the Employment, Social Policy, Health and Consumer Affairs (EPSCO) Council. Addressing the challenges identified in the report will contribute to achieving upward social convergence, strengthen the Union’s drive towards fair green and digital transitions and contribute to facing demographic change, as well as the achievement of the Sustainable Development Goals. The 2023 JER maintains a strong focus on the implementation of the European Pillar of Social Rights, in line with the Action Plan of March 2021 welcomed by the EU Leaders in the Porto Social Summit. The reinforced monitoring of the implementation of the Pillar principles in the areas of equal opportunities and access to the labour market, fair working conditions and social protection and inclusion is continued in this edition of the report. This is done notably via thematic boxes covering key challenges in these areas, in light of the socio-economic outlook and most recent policy initiatives. The report integrates the 2030 EU headline targets on employment, skills, and poverty reduction welcomed by the EU leaders in Porto and by the June 2021 European Council. It also covers for the first time the national targets put forward by the Member States, as presented and discussed in the June 2022 EPSCO Council following a process of bilateral discussions with the Commission services and multilateral reviews with the Employment Committee and the Social Protection Committee. The report further incorporates the objectives of the Union of Equality strategies and covers the challenges faced by groups affected by inequalities. The 2030 national targets put forward by the Member States express a high degree of ambition at the aggregate EU level, which is expected to foster upward social convergence in the Union over the next decade. Taken together, the national employment targets exceed the ambition of the corresponding EU headline target of at least 78% by 0.5 pps. At the same time, Member States together committed to lifting 600,000 persons more out of poverty than requested by the EU headline target of at least 15 million fewer people at risk of poverty or social exclusion. National targets on skills were set at various levels of ambition, in line with the need to contribute to the 2030 EU headline target of having at least 60% of adults in training every year, adding up to an aggregate commitment of 57.6%. The 2030 national targets will play a key part in fostering policy action towards upward social convergence. Together with cohesion policy funds, the implementation of the reforms and investments in Member States’ recovery and resilience plans (RRPs) supports a fair, inclusive and sustainable recovery. On top of the support provided by the European Social Fund Plus, the European Regional Development Fund and the Just Transition Fund over 2021-27, the Recovery and Resilience Facility (RRF) promotes the Union’s economic, social, and territorial cohesion by improving the resilience, crisis preparedness, adjustment capacity, and growth potential of the Member States and fostering high quality employment creation through relevant reforms and investment. In this way, the Facility also contributes to the implementation of the European Pillar of Social Rights, with particular attention to addressing the challenges identified in the country-specific recommendations. Four of the six pillars that define the scope of the Facility are relevant in this regard, namely: (i) smart, sustainable and inclusive growth; (ii) social and territorial cohesion; (iii) health, and economic, social, and institutional resilience, and (iv) policies for the next generation, children and the youth. To date, the Commission has disbursed more than EUR 137 billion under the Facility in both grants and loans as well as pre-financing. As of 15 November, 106 milestones and targets attributed to the social categories have been fulfilled out of 357 in total (i.e. around 30%). Around 30% of milestones and targets fulfilled by Member States so far are attributed to the above mentioned four pillars of the RRF. As part of the policy response analysis, the Joint Employment Report also includes a selection of measures supported by EU funding, notably the RRF, the European Social Fund Plus, the European Regional Development Fund and the Just Transition Fund. All these will support growth and employment prospects as well as social and economic cohesion and resilience in the Union. The analysis in the 2023 JER is supported by the Social Scoreboard. As part of the Pillar Action Plan of March 2021, the Commission proposed a revision of the Social Scoreboard, to allow for a better monitoring of the Pillar principles with a revised set of headline indicators, which was endorsed by EPSCO in June 2021. This includes new indicators on key policy dimensions like adult learning, the labour market integration of persons with disabilities, the risk of poverty or social exclusion of children, and the housing cost overburden. The revised set of headline indicators allows a more accurate identification of key employment, skills, and social challenges in the EU and in the Member States and a closer monitoring of upward social convergence as set out in the figure below. Following the mandate by the Czech Presidency, an ad-hoc Working Group was created to discuss on a possible enhanced social convergence assessment framework in the context of the European Semester and is reporting on its work to the EPSCO Council’s advisory committees. Employment, skills, and social challenges across EU Member States by headline indicators of the Social Scoreboard Notes: 1) Data for the indicator on adults’ participation in learning is not yet available; 2) Data is missing for some indicators on some countries – see Note for Table 1.4.1 in section 1.4. Legends for all indicators are presented in Annexes. After a robust recovery in 2021 and the first half of 2022, EU labour markets are facing uncertainties related to the impact of Russia’s war of aggression against Ukraine and strong inflationary pressures. EU labour markets performed strongly in 2021, in the aftermath of the COVID-19 pandemic and the lifting of the necessary containment measures. They kept improving in the first half of 2022, when the employment rate reached a record high (74.8% and 74.3% in the EU and the euro area respectively in Q2-2022, above the pre-crisis levels by 1.6 pps and 1.4 pps). In September 2022, the EU unemployment rate reached a record low of 6% in the EU (and at 6.6% in the euro area), down from 6.7% and 7.3% respectively one year before. At the same time, the NEET rate decreased to 11.7% from 13.3% a year before in the EU, while youth unemployment reached 14.4%, down from 17.5%. The long-term unemployment rate slightly increased in 2021. Nonetheless, since mid-2021 inflation has increased to historical highs, strongly impacting on the purchasing power of households and the profitability of businesses. Economic growth for 2022 and 2023 has been revised downwards in the latest European Commission forecasts, with the outlook significantly impacted by Russia’s war of aggression against Ukraine. Employment growth is projected at 1.7% in 2022, before coming to a standstill in 2023 and moderately edging up to 0.4% in 2024. Exceptional policy interventions have been taken at EU and Member States’ level to respond to the ongoing energy crisis (more details further down and in Section 2.4). Looking ahead, the ongoing energy crisis situation calls for effective economic, employment and social policy coordination that fosters inclusive, job-rich, and sustainable growth and protects people in vulnerable situations. Labour market outcomes remain strong though uncertainty has increased due to Russia’s war of aggression on Ukraine 74.8 %

employment rate in Q2-2022 (2 pps higher than one year earlier) 79.4 %

activity rate (20-64) in Q2-2022 (1.1 pps higher than one year earlier) 6.1%

unemployment rate in Q2-2022 (1.2 pps lower than in Q2-2021) 14.3%

youth unemployment rate (15-24), 3.2 pps lower than one year earlier Key labour market indicators in the EU‑27 (%, quarterly) Source: Eurostat database [ lfsi_emp_q ], [ une_rt_q ], [ une_ltu_q ] and [ lfsi_neet_q ]. Seasonally adjusted, not calendar adjusted data. Labour shortages have been on the rise since the outbreak of the COVID-19 pandemic Above 4% vacancy rates

in professional, scientific, and technical activities, information and communication and construction since early 2022 Job vacancy rates in the EU by economic activity (%, quarterly data) Note: NACE 2 activities, B-S (Industry, construction, and services (except activities of households as employers and extra-territorial organisations and bodies), C (manufacturing), F (construction), G-I (wholesale and retail trade, transport, accommodation, and food services), J (information and communication), M-N (professional, scientific, and technical activities). Source: Eurostat [teilm310] Vacancy rates have doubled in key sectors since early 2022 Against the current high-inflation context, wage setting mechanisms should continue to reflect socio-economic conditions, to preserve employment and competitiveness, and mitigate losses in purchasing power, in particular for low earners. The acceleration of inflation observed after the first half of 2021 and further in 2022, due to Russia’s war of aggression against Ukraine, has led to a decline in real wages, especially among low-wage earners. This calls for ensuring adequate wage adjustments that mitigate the loss in purchasing power and reduce the risks of increasing poverty (including energy poverty), while remaining consistent with the overall objective of tackling high inflation. In the current macroeconomic environment, wage increases at the bottom of the distribution are not expected to feed unwarranted inflationary pressures or to affect competitiveness. Collective bargaining has a prominent role to play in delivering balanced wage-setting outcomes in the current context, respecting the role of social partners and aligned with prevalent wage setting practices across Member States, taking also into account the particular cost pressures experienced by some companies and sectors as well as by workers. To promote employment and preserve purchasing power, there remains further scope for lowering the tax wedge for low- and middle-income earners in several Member States. Adequate minimum wages can help protect the purchasing power of low-wage earners and prevent increases of in-work poverty, while sustaining demand and strengthening incentives to work. Many workers are not protected by adequate minimum wages in the EU. Overall, almost one in ten employed persons are at risk of poverty. Moreover, minimum wages have decreased in real terms in almost all Member States. Mitigating the effects of recent substantial price increases is particularly important with regard to low-wage earners, which are strongest hit by high energy and food prices. The Directive on adequate minimum wages establishes a framework with clear rules to improve the adequacy of statutory minimum wages in those Member States that have them in place. The Directive will help support vulnerable households by encouraging the setting of statutory minimum wages at adequate levels, taking into account the purchasing power of the minimum wage, the socioeconomic conditions and long-term productivity developments among others. Moreover, regular updates of minimum wages in line with the Directive would help prevent losses in purchasing power among minimum wage earners in the current context. The Directive also contains provisions to promote collective bargaining and to enhance enforcement and monitoring mechanisms in all Member States. In particular, it requires the establishment of an action plan and setting up a framework of enabling conditions for collective bargaining where its coverage rate is lower than 80%. While there is a two-year period to transpose the Directive into national legislation, a frontloaded implementation can encourage Member States’ efforts to help ensure adequate working and living conditions for workers. In addition, temporary budgetary support measures targeted at low earners can help to alleviate the loss of purchasing power due to the energy crisis. Inflation has eroded recent increases in minimum wages Nominal compensation per employee increased by 4.9% in Q2‑2022 (vs. Q2-2021). Change in statutory minimum wages in real and nominal terms

(growth rate, %) Note: Member States are ranked in descending order of the magnitude of the increase in statutory minimum wages in real terms in 2022. Source: Network of Eurofound Correspondents and Eurostat [ prc_hicp_midx ], Eurofound calculations Yet, real wages declined by 3.3% in Q2‑2022 (vs. Q2-2021). In 16 out of 21 Member States real minimum wages declined in 2022 up to August. Fixed-term employment increased only slightly in 2021 in most Member States on the back of more favourable economic conditions. While significant differences are observed between Member States in the share of temporary employees and their transition rates into permanent employment (with some countries facing challenges in this respect), temporary contracts continue to be more widespread among young people and women in most Member States. The share of part-time employment in the EU was broadly stable in 2021, but involuntary part-time work still affects a significant share of employees in many countries. When entrenched, the widespread use of temporary or part-time employment, in particular if involuntary, may result in lower human capital development, productivity, and social mobility, which are detrimental for potential growth. In this context, strengthening labour inspectorates and the impact of deterrent measures can contribute to a better labour market functioning, while also promoting safe working conditions and access to social protection. These actions, alongside tailored active labour market policies, can encourage upward job transitions, and support a smooth reallocation of labour between sectors or occupations, including those linked to the green and digital transitions. The recovery has not increased the share of temporary contracts but transition rates to permanent jobs vary across Member States 13.3%

workers (20-64) on temporary contracts in Q2-2022 (0.4 pps less than in Q4-2019) 50.4% young

(15-24) and 14.3% female employees on temporary contracts in Q2-2022 7.8% employees (20-64) on involuntary temporary contracts in the EU in 2021 Employment changes by professional status (thousands, age 20-64, year-on-year change based on non-seasonally adjusted data), EU-27 Temporary employees as a percentage of the total number of employees (20-64, %, 2020) and transition rate to permanent jobs (%, average for 2018, 2019 and 2020), EU-27. Source: Eurostat [lfsq_egaps], [lfsa_etpgan], [ilc_lvhl32] and [lfsq_etgaed]. Note: Break in time series from Q1-2021.

Emerging work practices, such as telework and platform work, can bring societal and economic benefits, but require adaptation of regulations, policies, and work culture. The pandemic has increased the use of telework: in sharp contrast to one tenth of employees in 2019, by 2021 almost a quarter teleworked from home. New experiences with telework show that mixing it with in-person work can help hybrid-teleworkers enjoy overall better work-life balance, besides increased productivity. To avoid effects that lower the quality of work, such as regularly working long hours, many Member States took action to regulate telework, yielding a landscape of diverse approaches. Besides telework, platform work has gained relevance, contributing to job creation but also posing challenges to fair working conditions. Also enabled by digital technologies, over 28 million persons in the EU have already done work through platforms. Algorithmic management, possible misclassification of the employment status and the lack of cross-border transparency are key issues that are addressed by the Commission’s proposal for a related directive. As telework and platform work become increasingly important, it is key to ensure adequate digital skills in the society at large, so that no digital divides emerge, including in relation to older workers and the low-skilled. Telework can lead to a better work-life balance with hybrid work contributing to mitigate the risk of working longer hours 13%

of employees teleworking report poor work-life balance vs… Poor work-life balance reported for all employees and teleworkers in Member States (%, 2021) Note: Poor work life balance includes employees responding, ‘not very well’ and ‘not at all well’ to the question about ‘how working hours fit in with their family or social commitments outside work’. Source: Eurofound, European Working Conditions Telephone Survey (EWCTS) 2021 . 18%

… of employees working on the employer’s premises. Hybrid working patterns

provide for better work-life balance in most Member States Russia’s war of aggression against Ukraine has triggered a significant inflow of displaced persons into the EU, with related needs for labour market and social integration. To help address the humanitarian crisis and foster the integration of Ukrainian refugees in the EU, the European Commission activated for the first time the Temporary Protection Directive and extended it in October 2022 until March 2024. This calls for providing residence permits, along with access to education, the labour market and social protection. Needs relate in particular to overcoming barriers to labour market integration, notably via language courses, and to accommodation, childcare and schooling, as well as long-term care or mental health support. Displaced persons from Ukraine together with regular migration from other countries, may contribute, to alleviating labour shortages in the Union in the medium- to long-run, especially in occupations where the above-mentioned barriers to labour market integration are less binding, as well as to addressing in part the demographic challenge posed by low birth rates. To help this process, the Commission has launched the EU Talent Pool pilot initiative, a new tool to help people fleeing the war find a job in the EU. Overall, effective access to social protection, healthcare, childcare, and schooling as well as the recognition of qualifications, are essential for a successful integration. The labour market recovery led to improving employment outcomes for most population groups though challenges persist Employment rates by gender and age group in the EU-27 and by country of birth,

seasonally adjusted data, not calendar adjusted (in %) Source: Eurostat, and [lfsi_emp_q] EU LFS. 4.8 million

more people in employment in the EU in Q2-2022 compared to Q2-2021 (1.7 million more than in Q4-19) Youth, the non-EU born and women

experienced the highest employment growth rates since Q2-2021 Yet,

10.7 pps gender employment gap in Q2-2022, though decreasing from 11.2 pps in Q4-2019 8.3 pps employment gap between EU and non-EU born in Q2-2022 (7.6 pps in Q4-2019) The labour market situation of the youth remains challenging, particularly for women and people with a migrant background, and calls for specific and tailored policy actions. Following a peak in the second half of 2020, the youth unemployment rate in the EU bounced back to pre-crisis level in 2021 and was at 14.3% in Q2-2022. It remains nonetheless almost three times larger than the unemployment rate for the overall population aged 25-74. Moreover, the share of 15-29-year-olds neither in employment nor in education or training (NEET) decreased to 11.6% by Q2-2022, from 13.2% in Q2-2021, which is lower than before the pandemic but still relatively high. This affected in particular young women and people with a migrant background. In annual terms, substantial differences remained between Member States in 2021 in relation to NEET rates for the 15-29-year-olds. Policy action should be taken to alleviate the structural challenges that young people face on the labour market, including to prevent risks of longer-term negative effects on young people’s skills and labour market prospects. The reinforced Youth Guarantee should be used to offer quality employment, further education, apprenticeships, or traineeships within four months of becoming unemployed or leaving formal education . To complement this, the Aim, Learn, Master, Achieve (ALMA) initiative helps disadvantaged NEETs to gain professional experience abroad. Long-standing challenges to women’s labour market participation and equal pay for equal jobs remain, reflecting persisting gender inequalities in the labour market. The gender employment gap declined only slightly during the labour market rebound in 2021. Unpaid work, including care obligations, prevented eight times more women than men from seeking paid employment and made five times more women take up part-time employment involuntarily. This underlines the importance of adequate work-life balance policies and effective access to quality and affordable care services. Adapting early childhood education and care, as well as long-term care systems, in line with the European Care Strategy presented by the Commission on 7 September 2022, while also tackling shortages and capacity constraints in those domains, has the potential to improve the labour market prospects of those currently providing unpaid care work, and the quality of care for those receiving it. At the same time, tax and benefits systems in a number of EU countries continue to provide disincentives to take up paid work or increase working time for second earners (78% of whom are women) and should be addressed with appropriate reforms. There is considerable potential for a stronger labour market participation of persons with disabilities and older workers. The disability employment gap for persons with disabilities stood at 23 pps in 2021 in the EU, almost at the same level of the time when measurement started in 2014, underlining the need for policy action. To help address this challenge, the Disability Employment Package, launched on 20 September 2022, provides guidance and practices in six different areas, from recruitment to job retention, and will be developed jointly with relevant stakeholders by 2024. Reflecting demographic changes and increases in retirement age in many Member States, the employment rate of people aged 55-64 further increased in 2021, following the trend of the last decade and reaching 60.5%. Still, it remains almost 20 pps lower than that for the 25-54-year-olds. The gender employment gap among older workers has remained stable at 12.7 pps, and is higher than the corresponding figure for the 20-64 age group (10.8 pps). Active labour market policies, including those promoting life-long learning and support in job search, are essential to tap into the potential of persons with disabilities and older workers. Pupils from poor socio-economic background often lack basic skills, including digital ones, which hampers their labour market opportunities and further lifelong skills acquisition, calling for improvements of equity in education. Despite the positive trend in recent years, approximately 3.1 million young people leave education early and too many of them fail to acquire a minimum level of basic skills. This is especially true for those from disadvantaged backgrounds, which also further decreases their chances to enrol in tertiary education, and to fully develop and exploit their potential in life. During the COVID-19 pandemic, physical school closures, and the necessary confinement measures also put a strong pressure on the mental health and wellbeing of adolescents, which may further increase the risk of underachievement and disengagement from education. Member States are facing increasing teacher shortages, especially in STEM subjects and in socio-economically disadvantaged localities. Unattractive career perspectives for teachers lead to a low number of candidates entering initial teacher education and many novice teachers leaving the profession in the first years. Teacher shortages negatively affect the quality of education at all levels, including in early childhood education and care and universities, and also for skills needed for the digital and green transitions. In particular, the accelerated digital transition has accentuated pre-existing digital skills gaps and exposed new emerging inequalities. Learning losses have emerged due to limited access to digital resources among those with low socio-economic status as well as migrant and Roma children. Achieving the EU-level targets set as part of the European Education Area will require an increased policy focus on addressing educational inequalities and improving students’ well-being, including via more comprehensive and systemic approaches and cross-sectoral cooperation, in line with the Commission’s proposal for a Council Recommendation on Pathways to School success, as well as providing affordable and quality education, in line with the reinforced European Child Guarantee. Socio-economic background is a key determinant of educational achievement, with large differences across Member States A 19.5 pps gap in underachievement between learners from disadvantaged and better socio-economic backgrounds Overall better average performance correlates with

smaller gaps between low and high socio-economic status Combined underachievement rate in reading, mathematics, and science by socioeconomic status (%, 2018) Source: JRC calculations based on OECD PISA 2018 data . The digital transition, which has been accelerated by the COVID-19 pandemic, has strongly increased the demand for digital skills, but not everyone is well prepared for it. Digital skills are required for an increasingly wide variety of jobs (90% of them already now). In this context, low levels of digital skills are detrimental to employability and productivity growth and create bottlenecks to the digital transition and to potential growth. According to recent data, only 54% of adults had at least basic digital skills in the EU in 2021, with a large variation across Member States. People with low educational attainment, the unemployed and persons outside the labour force tend to have lower levels of digital skills and fewer opportunities to develop such skills. The low level of digital skills in wide segments of the population may also produce new types of disadvantages, in the context of increasingly digitalised services, notably in relation to access to education and training, but also digitalised public services more widely, including Public Employment Services (PES). To close the digital divide, digital skills programmes are needed for the population at large, complemented by targeted ones, tailored to the skills profiles and labour market situation of specific groups. The EU aims to equip at least 80% of the population with at least basic digital skills by 2030 and increase the number of ICT specialists to 20 million (around 10% of those in employment, starting from a low level of 4.5% in 2021), for both men and women. A structured dialogue on digital education and skills was launched by the Commission for this purpose in 2021. Digital skills have become a transversal competence, yet levels vary widely across Member States 90% of jobs require digital skills In 2021 in the EU, only 54% of adults had at least basic digital skills By 2030, the EU aims to equip 80% of adults with at least basic digital skills Individuals who have basic or above basic overall digital skills

(% of 16-74 year-olds, 2021) Note: Some administrative units on islands and outermost regions are not represented. Source: Eurostat LFS EDAT_LFSE_02. © EuroGeographics for the administrative boundaries.

Europe needs to further develop the skills of its workforce, including to support the green and energy transition, to remain competitive, promote quality employment and safeguard its social model. On top of the digital transformation, the shift to a climate-neutral society has been changing the skills demanded on the labour market. The current socio-economic and geopolitical situation is further emphasizing the need for upskilling and reskilling of the workforce in support to job transitions and to address already important labour and skills shortages, including in the green economy. The 2023 European Year of Skills is expected to provide an important policy impulse to the promotion of lifelong skills acquisition, which is essential in order to achieve the big transformations that our economies and societies are facing. Active participation in learning activities of the existing labour force, after effective initial education and training, is paramount to ensure that skills are constantly updated. Quality higher education institutions are also important to developing the high-end skills needed for resilient, inclusive, and sustainable European economies. The 2030 EU headline target on adult learning requires that at least 60% of adults participate in learning every year in the EU by 2030. The latest data available from 2016 point to a still too low participation rate (over the last twelve months) in the EU, at 37.4% of the population aged 25 to 64 years, highlighting the need for significantly stepping up progress to reach the ambitious national targets set for 2030. Moreover, in all Member States, low-qualified adults tend to participate in training less than those with upper secondary qualification, who in turn have lower participation rates than tertiary graduates. Participation of adults in learning is also more frequent in urban than in rural areas. The Council Recommendation on individual learning accounts of 16 June 2022 outlines how Member States can combine financial and non-financial support in an effective way to empower all adults to develop their skills throughout their working life and make progress towards the adult learning target over the coming decade. Also, the Council Recommendation on a European approach to micro-credentials for lifelong learning and employability of 16 June 2022 seeks to ensure the quality, recognition and understanding of micro-credentials that are increasingly being used across education, training, and labour market systems. Adults’ participation in learning is still too low, especially for the low-skilled 10.8%

of adults participated in learning (over the previous 4 weeks) in the EU in 2021 Among low-qualified adults, only 4.3% participated in learning In 2016, 37.4% of adults participated in some form of education and training over the previous 12 months Participation of adults in learning by educational attainment (low, medium, and high qualified) in the last four weeks (2021, %) Participation of adults in learning by educational attainment (low, medium, and high qualified) in the last 12 months (2016, %) Source: Eurostat [ trng_lfs_03 ], LFS and [ special extraction ], AES. Aggregate real household incomes grew in the EU in 2021, along with GDP and market incomes, on the back of the post-COVID recovery, but contracted in 2022. In Q2‑2021, real household income grew by a remarkable 4.5% (year-on-year), as real GDP growth peaked at 14.1%. The resilience of household incomes to the COVID-19 shock in 2020 relates to the functioning of the automatic stabilisers and the massive and prompt policy responses put in place at Member States and EU level, which largely mitigated the negative socio-economic consequences of the pandemic. However, the period starting from Q3‑2021 witnessed a strong deceleration in household real income growth, dragged down by the rapidly rising inflation, despite growth of nominal compensations of employees. By Q2-2022, real gross disposable household income contracted for the first time since the COVID‑19 shock in Q2‑2020, while real GDP growth decelerated. Recent high inflation has negatively affected aggregate households’ real income growth observed in 2022 Real gross disposable HH income contracted in the EU in Q2-2022 Growth of real GDP and real gross disposable household income and its main components (%, EU-27) Source: Eurostat, National Accounts [ nasq_10_nf_tr ] and [ namq_10_gdp ]. Notes: see body of the Report. Income inequality broadly stable in the majority of Member States Despite the COVID-19 crisis, the share of people at risk of poverty or social exclusion (AROPE) was broadly stable throughout 2020 and estimated to remain so in 2021, after having improved in previous years, thanks to the measures deployed by the EU and Member States to mitigate the negative impact of the pandemic. Around one out of five persons was at risk of poverty or social exclusion in the EU in 2020 and no significant changes are estimated for 2021 either, although with important differences across countries. The at-risk-of-poverty rate and the share of persons living in (quasi)-jobless households have both remained practically unchanged in the wake of the pandemic, while severe material and social deprivation continued to decrease in 2021. Although with signs of divergence across Member States, income inequality also showed broad stability in 2020-21. This was thanks to substantial and swift policy action, including short-time work schemes and other job-retention and policy measures to support the vulnerable in the COVID-19 crisis. Indeed, the poverty reducing impact of social transfers rose to an unprecedented level (having increased in the large majority of Member States), reducing poverty by more than one third on average in the EU. Still, persons in non-standard employment were more than three times more likely to be at risk of poverty (at 16.6%) than those in standard employment (5%). Early estimates of social protection expenditure in 2021 for 24 Member States show that their share of GDP decreased compared to 2020 (29.2% vs 30.7%), still remaining above the pre-crisis level (27.1% in 2019). In almost all Member States, the share of expenditure for healthcare and sickness benefits increased while the weight of unemployment benefits decreased. The risk of poverty or social exclusion for specific population groups remained also broadly unchanged in 2020-21, though continuing to flag particular challenges for some of them. The share of non-EU born and of Roma at risk of poverty or social exclusion remained broadly unchanged in the EU while the share of persons with disabilities decreased despite the outbreak of the pandemic. Nonetheless, these groups are still systematically more exposed to poverty and social exclusion than the rest of the population. To fight the higher risk of poverty and social exclusion of persons with disabilities, Member States should address gaps in social protection to reduce inequalities, including by compensating extra costs related to disability and eligibility for disability benefits. Among children, the risk of poverty or social exclusion remained also broadly stable in 2020-21, but higher than for the overall population and with signs of divergence across Member States. In addition, families with children continued to experience high housing deprivation. Children growing up in poverty or social exclusion are less likely to do well in school, enjoy good health, and realise their full potential later in life, calling for urgent policy action to address the challenge in line with the reinforced European Child Guarantee. The risk of poverty or social exclusion remained broadly stable on average in 2020-21 in the EU, but varies significantly across Member States and is higher for children One in five people at risk of poverty or social exclusion in 2021 in the EU, ranging from 10.7% to 34.4% across Member States At-risk-of-poverty or social exclusion rates for the total population and for children (0-17) (%, 2021) Source: Eurostat [ilc_peps01n], EU-SILC The risk of poverty or social exclusion is higher for children in the EU(24.4%), as in most Member States High and increasing energy prices and related inflationary pressures risk negatively affecting purchasing power, in particular for vulnerable households, and generating increases in energy poverty, calling for temporary and targeted support. The spike in energy prices in 2021-22 has negatively impacted on the purchasing power of low- and middle-income households (with an estimated 12% increase in their living costs on average), especially regarding food and energy. Higher overall transport costs, and residential energy costs, mainly related to heating and cooling, also imply an increased risk for households of falling into energy poverty. In particular, the inability to keep home adequately warm affects low-income earners the hardest. Around two out of ten persons at risk of poverty were already unable to keep their home adequately warm in 2021, which is more than twice as high as for the overall population. The Commission has put forward several measures to address the energy crisis. In October 2021, it presented a Communication on energy prices, including a toolbox, outlining what Member States could do under existing EU rules to help vulnerable consumers and businesses to face high prices. The Council regulation of 6 October 2022 on an emergency intervention to address high energy prices extended the toolbox and is also expected to yield additional public revenues from the unexpected profits from infra-marginal technologies and the solidarity contribution on fossil fuel companies. These revenues will be directed to households and businesses that increasingly risk not being able to pay their energy bills and are expected to help prevent poverty risks and inequalities from rising. Over the past year, Member States introduced exceptional and temporary measures to deal with the ongoing energy crisis. With price pressures broadening, it is particularly important to closely monitor their distributional effects and rely on temporary support measures that are better targeted to the vulnerable. Reducing household expenditure for energy and reliance on fossil fuels, including by mobilising investments into energy efficiency, including buildings renovation, and renewable energy in line with REPowerEU, also contributes to protect households’ purchasing power in light of rising energy prices. Such support measures are the best long-term solutions to high energy prices and should also be primarily targeted to the vulnerable. The increase in energy prices negatively impacts on overall living costs for low- and middle-income households Almost half of the 9.7% increase in living costs in the EU between 2021 and 2022 was due to energy price increases 6.9% of the total population and 16.4% of those at risk of poverty were unable to keep home adequately warm in 2021 Contribution of expenditure types to living costs increases for the first and the third fifth of the population (as ordered by income, %) (first and second bar by Member State, respectively) Note: Cost of living increases are computed for expenditure shares at the average within the first and third quintile of the equivalised disposable household income distribution. Member States sorted by contribution of housing-related energy price changes for the first quintile. Source: JRC calculations based on HICP inflation data from Eurostat indicator [ prc_hicp_manr ] as of September 2022 and microdata from the 2015 wave of the EU-HBS. The adequacy of minimum income schemes has been eroding in most Member States in 2020, in comparison to 2019, and gaps in coverage remain. Minimum income protection, along the active inclusion approach, plays a key role in preventing and mitigating the risk of poverty or social exclusion. All Member States have last resort income support schemes in place, and on average the adequacy of minimum income has remained broadly unchanged in the EU over the last decade (but with substantial variation across Member States), while a slight deterioration was observed overall in 2020. Improvements in coverage were observed between 2015 and 2020, which can contribute to preventing increases in the depth of poverty and in material deprivation, but challenges remain in terms of effectiveness. To support upward convergence among Member States and the fight against poverty and social exclusion, the Commission has put forward a proposal for a Council Recommendation on adequate minimum income ensuring active inclusion, which outlines areas for further modernisation of minimum income schemes along the active inclusion approach. The adequacy of social safety nets differs across Member States Minimum income benefits at less than half of the poverty threshold in one third of Member States in 2019 Net income of minimum income recipients as percent of at-risk-of-poverty threshold (smoothed over three years), and income of a low-wage earner

(2009 and 2020) Source: DG EMPL computation from EU-SILC microdata. Note: For IE data reflects income year 2020 for MI benefits. For IE, IT, LU and LV, AROP SILC 2020 threshold not yet available. The chart concerns single childless persons. Net income of a minimum income recipient may also include other types of benefits (e.g. housing benefits) than minimum income. The low wage earner considered earns 50% of the average wage and works full time. The impact of transfers on poverty reduction varies between 16% and 52% across Member States Self-reported unmet needs for medical care decreased in the EU on avearge in 2021, but considerable variation remains among Member States, while a strong increase in the demand for long-term care services is observed, driven by population ageing. People in low-income households are more likely to report unmet medical needs, though the extent of the gap with the overall population differs across Member States. Labour and skills shortages in the healthcare sector may still cause bottlenecks in service provision, despite the lessening of the COVID-19-related pressure on healthcare systems. A number of Member States embarked on systemic healthcare reforms, including related to primary healthcare provision. It is key to complete these, along with the progressive digitalisation of the services, to increase the quality of provision and improve its resilience. At the same time, under the effect of demographic change, the number of persons potentially in need of long-term care (LTC) is projected to rise in the EU from 30.8 million in 2019 to 33.7 million in 2030 and further to 38.1 million in 2050. This reinforces the need to address challenges related to the availability, affordability, and quality of LTC, while taking into account overall sustainability of public finances. Although all Member States offer some social protection coverage, 35.7% of people in the EU reported that they do not use (more) home care services for financial reasons, 9.7% mentioned shortages in supply and 2.1% cited quality concerns. In particular, even after social protection, the out-of-pocket costs for care can be very high, representing more than 50% of median income for older people with severe long-term care needs in many Member States. To maximise the contribution of long-term care services to social fairness, gender equality, and job creation, the Commission put forward a European Care Strategy, accompanied by a proposal for a Council Recommendation on access to affordable high-quality long-term care. Member States are taking steps to adjust their social protection systems to the changing demographic and labour market context in order to address challenges related to adequacy, accessibilility, and fiscal sustainability. After the pandemic highlighted some gaps in access to social protection, several Member States have introduced reforms to their national social protection systems, targeting non-standard workers and the self-employed. Demographic change continues to pose long-term challenges to pension systems, including as regards the impact on public finances of population ageing and the related pension healthcare, and long-term care systems, in terms of adequacy, accessibilility, and fiscal sustainability. A broad range of policy measures, spanning pension, labour market, tax and health policies are required to successfully tackle the challenges facing pension systems, including in relation to the presistent gender pension gap. Predictable, meaningful, and timely involvement of social partners plays an important role to ensure that reforms and investment are designed and implemented effectively. Employment Guideline 7 and principle 8 of the European Pillar of Social Rights call upon Member States to ensure the timely and meaningful involvement of the social partners in the design and implementation of employment, social and, where relevant, economic reforms and policies, including by supporting their increased capacity. During the health crisis, social dialogue and collective bargaining were key for a strong health sector, contributing to an increase in the EU’s preparedness to potential future health crises. At the same time, several Member States invited social partners, in line with their national practices and institutional frameworks, to discuss, negotiate and/or implement measures to support working conditions, the functioning of the labour market, equal opportunities and health and safety at the workplace. More recently, the cooperation with social partners has been key to implement appropriate support policies in favour of the integration of Ukrainian citizens and other displaced persons into the European labour markets, including to sectors facing labour shortages. The involvement of civil society organisations is also instrumental to the delivery of quality reforms and policies in Member States. The involvement of social partners and civil society is also important in relation to the recovery and resilience plans. ******

Member States should take action to address the employment, skills and social policy challenges identified in this Joint Employment Report. The analysis presented in the report highlights a number of priority areas for policy actions. These should aim to address the challenges that have emerged in the current socio-economic context and promote sustainable and inclusive growth, by fostering quality job creation and transitions throughout the working life and across sectors, improving social and economic resilience, and ensuring fair green and digital transitions, while progressing towards the EU headline and national targets on employment, skills, and poverty reduction by 2030. In line with the Employment Guidelines, Member States are invited to: ·Mitigate the negative impact of inflationary pressures including notably from high energy prices, on the purchasing power of vulnerable households, including to prevent an increase in energy poverty, via temporary and targeted support measures, while maintaining incentives to reduce energy consumption and improving energy efficiency; ·In line with national practices and in full respect of the role of the social partners, promote wage developments that mitigate the loss in purchasing power, in particular for low-wage earners, including via timely updates of statutory minimum wages, while reflecting macroeconomic conditions, preserving employment and competitiveness, and remaining consistent with the objective of tackling high inflation; ·Ensure the availability of short-time work schemes and other job retention measures designed in a way to preserve human capital, support fair restructuring processes where needed, ease job transitions and help the modernisation of the economy, notably via associated upskilling and reskilling, also in view of the potential labour market impact of the energy crisis and related industrial transformations; ·Strengthen the efficiency and effectiveness of active labour market policies and the capacity of public employment services, also by investing in accessible digital infrastructure and services, skills monitoring and forecasting as well as adequate training of staff, with a view to promoting job creation and job-to-job transitions, including towards the digital and green economy, and tackling labour and skills shortages; ·Provide support to workers and households most affected by the economic and social transformations prompted by climate change and the necessary green transition, as well as digitalisation, in particular to those vulnerable, notably through employment services and training measures, well-designed, targeted and time-bound employment programmes, as well as targeted and well-designed hiring and transition incentives, adequate income security with an active inclusion approach and the promotion of entrepreneurship, relying on the full and meaningful involvement of workers and their representatives in the anticipation of change and the management of restructuring processes, in line with the Council Recommendation on ensuring a fair transition towards climate neutrality; ·Enhance the labour market prospects of young people, including by promoting inclusive and quality vocational education and training and tertiary education, offering targeted employment services’ support (including mentoring, guidance and counselling), as well as supporting quality apprenticeships and traineeships, in line with the reinforced Youth Guarantee; ·Ensure gender equality and strengthen the labour market participation of women, including by fostering equal opportunities and career progression, as well as ensuring transparency in pay structures; promote the reconciliation of work, family and private life, including through access to affordable, quality long-term care and early childhood education and care services, as well as access to suitable family-related leave and flexible working arrangements for parents and other people with caring responsibilities, in line with the European Care Strategy; ·Foster equal opportunities and improve learning outcomes by addressing early school leaving, including through the provision of affordable and good quality early childhood education and care, in line with the European Child Guarantee and the relevant national action plans, as well as by addressing teacher shortages. Support access to education of children from disadvantaged groups and remote areas, and promote training at all qualification levels; ·Boost the digital competences of pupils and adults and increase the digital talent pool in the labour market by developing digital education and training ecosystems supported by key enablers, such as high-speed connectivity for schools, equipment, and teacher training; and support institutions with know-how on digitalisation with a special focus on inclusion and on reducing the digital divide; ·Support upskilling and reskilling of adults to adapt to a changing labour market, including among others by strengthening the provision of individual training entitlements, notably delivered through individual learning accounts, and fostering the development, implementation and recognition of microcredentials, in line with the Council Recommendations on individual learnng accounts and on a European approach to microcredentials for lifelong learning and employability; ·Adapt labour market regulations and tax and benefit systems to reduce and prevent labour market segmentation and foster quality job creation, including a possible reduction of the tax wedge notably for low- earners; ·Ensure that workers in atypical work situations and platform work and the self-employed have access to adequate social protection, in line with the Council Recommendation on Access to Social Protection; ·Ensure healthy, safe and well-adapted working environments, and that flexible working arrangements are available; ·Promote collective bargaining, social dialogue and timely and meaningful social partners’ involvement, including in relation to the implementation of the recovery and resilience plans as well as the European Semester process; ·Invest in adequate and sustainable social protection systems for all, in line with the Council Recommendation on Access to Social Protection, including minimum income schemes that rely on the active inclusion approach, in line with the proposal for a Council Recommendation on adequate minimum income ensuring active inclusion; support reforms to ensure adequate levels of protection and improve the protection of those who are not or not sufficiently covered; improve adequacy of benefits, transferability of rights, access to quality services and support for the labour market integration of those who are able to work; in doing the above, ensure the balance of funding sources and preserve the overall sustainability of public finances; ·Assess the distributional impacts of reforms of investments on the income of various groups across the population, in line with the Communication on better assessing the distributional impact of Member States’ policies; ·Provide all children at risk of poverty or social exclusion with free and effective access to healthcare, early childhood education and care, education and school-based activities, effective access to healthy nutrition and adequate housing, in line with the European Child Guarantee;

·Address homelessness as the most extreme form of poverty; promote the investment in the renovation of residential and social housing, as well as integrated social services; ease access to quality and affordable housing, social housing or housing assistance, where appropriate; ·Invest in healthcare system capacity including primary care and public health capacity, coordination of care, healthcare staff and eHealth; reduce out-of-pocket payments, improve healthcare coverage and promote upskilling and reskilling of health workers; ·Strengthen the provision of quality, affordable and sustainable long-term care services, in line with the European Care Strategy; ·Ensure inclusive and fiscally sustainable pension systems that allow for adequate incomes in old age and inter-generational fairness. EU funding, including through the European Social Fund Plus, the European Regional Development Fund, the Just Transition Fund and the Recovery and Resilience Facility for eligible investments and reforms, supports Member States to step up policy action in these domains.



CHAPTER 1. OVERVIEW OF LABOUR MARKET AND SOCIAL TRENDS IN THE EUROPEAN UNION, HEADLINE TARGETS AND SNAPSHOTS FROM THE SOCIAL SCOREBOARD 1.1 Labour market trends The labour market recovery continued in 2022 with employment surpassing pre-crisis levels, albeit with significant differences across sectors. In the second quarter of 2022, the total number of people in employment reached 213.4 million in the EU (164 million in the euro area). This is 3.5 million (2.7 for the euro area) above the peak of Q4-2019. The employment rate (20-64) stood at 74.8% in the EU in Q2-2022 (74.3% in the euro area), which is 1.9 pps (1.6 pps for the euro area) above the pre-pandemic highs. On a yearly basis, the employment rate stood at 73.1% in 2021 in the EU (72.5% in the euro area), 0.4 pps above the 2019 value (with no change observed in the euro area). Among the occupations with the highest employment growth, the information and communication technology (ICT) sector has seen an increase by 21% between Q4-2019 and Q2-2022, adding 1.1 million more jobs. This was followed by real estate activities (an increase by 18% or 190,000 more employed people), and professional, scientific and technical activities (an increase by 7.9% or 0.58 million persons). Public administration and defence recorded 0.71 million additional jobs in Q2-2022 than in Q4‑2019 (an increase by 5.3%). This was followed by construction (an increase by 6.1%) and professional, scientific and technical activities (an increase by 3.1%). On the contrary, manufacturing, accommodation and food services, and administrative support activities have not yet recovered the pre-crisis employment levels (around 0.2 million fewer employed people in each of them in Q2-2022 compared to Q4-2019). Overall, employment growth is forecast at 1.7% in 2022, before coming to a standstill in 2023 and moderately edging to 0.4% in 2024, in a context of high uncertainty. People fleeing the war in Ukraine to the EU are expected to enter labour markets only gradually, with tangible effects only from next year. Workers exiting from short-time work schemes and the decrease recorded in absences from work have supported an increase in total hours worked since 2021. The number of hours worked in the EU has recovered slowly but steadily since the low in Q2-2020, reaching a total of 85.9 billion in Q2-2022. This is the highest value ever recorded for this indicator. At the same time, quarterly absences from work continued their downward trend, from 17.5% of total employment in Q2-2020 to 8.9% in Q2-2022. These figures continue to highlight the important role that short-time work schemes have played for many workers and businesses, more than two years after the start of the COVID-19 crisis (see Section 2.1). Labour market measures introduced at EU and Member States level in the context of the COVID-19 pandemic (notably SURE, REACT-EU and the Coronavirus Response Investment Initiative, CRII and CRII plus) allowed firms to retain employees and skills, and help the self-employed to gradually resume their activities upon the lifting of the containment measures. The fourth bi-annual report on the implementation of SURE indicates that the instrument supported approximately 31.5 million persons and 2.5 million firms in 2020, which represented almost one third of total employment and of total firms in the 19 beneficiary Member States. Nominal wage growth started to pick up, but is expected to remain below inflation in 2022. In 2021, nominal compensation of employees increased in all Member States and by 4.1% at aggregate level in the EU, on a yearly basis, outpacing the average growth rate of around 1.9% in the period from 2013 to 2019. This increase was largely driven by the strong economic recovery and the rebound in hours worked (see Section 2.1 for details at Member States level). Elevated inflation and tightening labour markets further contributed to a slight acceleration of nominal wages in the first half of 2022. However, nominal increases have been largely eroded by increased inflation, resulting in a significant decline in real wages by 3.3% in the EU in Q2-2022 (year-on-year), amidst growing concerns for the adverse social consequences of the negative impact on purchasing power, especially for low-wage earners. Going forward, wage growth is expected to slow down due to the worsening of the economic situation. The shares of employees on temporary contracts and of those in self-employment have not increased signficantly, as the labour market became more dynamic. The share of persons on temporary contracts among all employees (20-64) increased slightly from 12.6% in 2020 to 13% in 2021. It reached 13.1% in Q2-2022 (0.8 pps higher than the same quarter of 2020), still lower than in Q4-2019 (13.9%). In 2021, figures were higher among women (13.8% vs 12.2% for men) and for young employees (15-24) (50.9% vs 12.9% and 6.5% for the 25-54 and the 55-64 age groups respectively – see also Section 2.3). The percentage of employees on temporary contracts was also significantly higher for the low skilled (19.2% in 2021) compared to the medium- and high-skilled (11.7% and 12.2%, respectively). The number of self-employed (20-64) decreased by 0.9 million people between 2019 and 2021. In quarterly terms, there were 25.7 million self-employed in Q2-2022, 0.6 million lower than in Q4-2019. Employment grows in parallel with vacancy rates, highlighting the need to further support labour market participation, job matching, and transitions. The vacancy rate in industry, construction and services stood at 3% in Q2-2022 in the EU-27 (3.2% in the euro area), which is 0.8 pps (0.9 pps) higher than in Q2-2021 and also above pre-pandemic levels (2.1% in Q4-2019 for the EU and 2.2% for the euro area). However, there are significant differences across Member States and occupations (see Section 2.1). Although recent evidence suggests that their increase is not a structural phenomenon, careful monitoring of the job vacancy rate is key for the assessment of potential mismatches on the labour markets. Section 2.3 analyses the adaptations carried out by the public employment services to improve the effectiveness and efficiency of matching between job-seekers and vacancies, including digital and in-person services and partnerships with employers and social services. Overall, unemployment rates in most EU Member States and the euro area have been moving closer or below pre-crisis levels. The unemployment rate (15-74) in the EU continued its downward trend reaching 6.1% in Q2-2022 (the lowest level ever recorded) and well below the most recent peak of 7.8% in Q3-2020. In the euro area, the unemployment rate was slightly higher, at 6.6% in Q2-2022 (2.1 pps below its value in Q3-2020). Monthly data show that the unemployment rate has further decreased to 6% in the EU in August 2022 (6.6% in the euro area), below the pre-pandemic levels. However, there is a significant heterogeneity across Member States (see Section 2.1). The long-term unemployment rate reached 2.4% of the active population in Q2-2022 in the EU (2.7% in the euro area), which is 0.2 pps and 0.3 pps lower, respectively, than in Q4-2019. The labour market performance of women continues to improve, although significant gender gaps persist. It went up to 67.7% in 2021 (20-64 years), 1.6 pps higher than in 2020, while for men it increased to 78.5%, 1.3 pps above 2020 – see Figure 1.1.1. In quarterly terms, the employment rate of women stood at 69.5% in Q2-2022, 2.1 pps higher than in Q1-2021 and above its pre-crisis level of 67.3% in Q4-2019. The gender employment gap remains almost unchanged, at 10.7 pps in Q2-2022, 0.2 pps below the level of Q2-2021. The activity rate (20-64) of women increased to 74.1% in Q2-2022, 1.8 pps more than in Q4-2019, while for men (84.8%) it was 1 pp higher than in Q4-2019. Labour market outcomes of young people have been improving recently, but they remain far from pre-crisis levels in some Member States. Despite an overall positive performance, the youth employment rate (15-24) has not yet recovered from the COVID crisis - with 32.7% in 2021, it is still 0.8 pps below the level reached in 2019 – see Figure 1.1.1. Recent developments show rapid improvement, with 34.9% reached in Q2-2022 (1.5 pps above Q4-2019). As regards the youth unemployment rate (15-24), it decreased from 18.3% in Q1-2021 to 14.3% in Q2-2022. In annual rates, at 16.6% in 2021 it remains more than 1 pp above the pre-pandemic level. Overall, some 9.3 million young people (15-29) were neither in employment, nor in education or training (NEET) in 2021 (13.1%); some 8.3 million in Q2-2022 (11.7%). Figure 1.1.1: The employment rate has been recovering to pre-pandemic levels or above, driven by improvements among young people, women and the high-skilled Employment rates by gender, age group and educational attainment level in the EU-27, seasonally adjusted data, not calendar adjusted (%)

Source: Eurostat, [ lfsi_emp_a ] and [lfsa_egaed] , EU LFS. Labour market participation continues to increase, with stronger dynamics among older adults and women. The EU activity rate for those aged 20-64 stood at 73.6% in 2021, 0.4 pps and 1.3 pps higher than in 2019 and 2020, respectively. In Q2-2022, it stood at 79.4%, 1.1 pps higher than one year before and 1.4 pps above its level in Q4-2019. The increase continues to be largely driven by older persons and women. Changes in the activity rate of the 55-64 age group (up by 3.1 pps from 62.3% in Q4-2019 to 65.4% in Q2-2022) were three times higher than the increase observed for the 15-24 (by 1 pps) and the 25-54 year-olds (by 1.2 pps). The number of high skilled workers in the economy has been increasing together with the employment gap by skills level. The number of people (aged 25-64) with higher education in employment increased by 2.6% in 2021, while the employment for medium- and low-skilled workers (i.e., ISCED 0-2 and 0-4) dropped by 0.5% and 1.9%, respectively – see Figure 1.1.1. The gap between employment rates of low- and high-skilled workers stood at 30.1 pps in 2021, 1 pp higher than in 2020 (see Section 2.2). Labour market outcomes of people born outside the EU recovered to the pre-crisis levels, but significant gaps remain compared to EU-born citizens. In 2021, the employment rate (20-64) of people not born in the EU stood at 66.7%, still 1 pp below the 2019 value, and 6.4 pps lower than that of the native-born. The quarterly employment rate of people born outside the EU stood at 69.3% in Q2-2022, 1.5 pps higher than in Q4-2019 – see Figure 1.1.2. The unemployment rate (15-74) of the foreign born population was 11.8% in 2021, 0.6 pps lower than in 2020 (see Section 2.2). Women not born in the EU experience comparatively higher levels of unemployment (13.2% in 2021) than men not born in the EU (10.7%). In quarterly terms, the unemployment rate of foreign born (9.8% in Q2-2022) continued its downward trend since Q1-2021 (13.5%) and is currently 0.8 pps below the level in Q4-2019. Recent data highlight the main obstacles faced by foreign born people (15-74) when it comes to getting a suitable job in their host country (e.g., lack of recognition of formal qualifications, of language skills or restricted right to work due to citizenship or residence permit, among others). Figure 1.1.2: Significant differences exist in labour market outcomes between people born in and outside the EU-27 Employment, unemployment and activity rates based on the country of origin (EU-27 or foreign country), seasonally adjusted data, not calendar adjusted (in %) Note: 20-64 age cohort for employment and activity rates, 15-74 age cohort for unemployment rates. Source: Eurostat, [ lfsq_ergacob ], [ lfsq_urgacob ] and [ lfsq_argacob ], EU LFS. 1.2 Social trends Households’ real incomes increased in the EU in 2021 on the back of the post-COVID recovery and the partial continuation of policy measures to mitigate the impact of the pandemic; increased inflation is expected to affect purchasing power going forward. Growth of real gross disposable household income (GDHI, quarterly, year-on-year) recovered to pre-pandemic levels in 2021 on average (2% against 2.2% on avearge in 2018-19) – see Figure 1.2.1. It stood at a remarkable 4.5% in Q2‑2021 and a more moderate 1.7% in Q3-2021, to further decelerate until Q2-2022. This growth was driven by the recovery during 2021, also allowing the gradual phase out of the emergency measures. A key force behind the deceleration was the rapid decrease in the contribution of employees’ and self-employed persons’ compensations in real terms, contrasting with the strong increase in real GDP from Q3-2021 to Q1‑2022. An important factor behind this trend is the rapid rise in inflation, as discussed in section 1.1, that severely restricted the contribution of the compensation of employees to GDHI growth in Q2-2022, despite favourable nominal wage developments (see section 2.1.1 for more details). As a result, real household incomes contracted in Q2‑2022 for the first time since the COVID‑19 shock in Q2‑2020 and for the second time after the crisis in 2013. Beyond the average changes in real incomes, there are considerable differences across income levels, with a higher than average impact of price changes for lower and for some middle-income households that devote higher shares of their expenditure baskets to energy and food (see also Pillar Box 7 in section 2.4.1 on the effect of price increases and energy poverty). Figure 1.2.1: Recent price increases have negatively affected the recovery of aggregate households’ real income growth observed after the COVID-19 crisis Growth in real gross disposable household income (GDHI) and its main components and real GDP growth, (EU‑27, year-on-year quarterly growth rates) Notes: DG EMPL calculations. Nominal GDHI was deflated using the price index of household final consumption expenditure. The real GDHI growth for the EU is estimated as a weighted average of Member States’ values for those with avilable quarterly data based on the ESA2010 (overall 95% of EU GDHI). Source: Eurostat, National Accounts [ nasq_10_nf_tr ] and [ namq_10_gdp ]. Data are not seasonally adjusted. Overall, income inequality seems to have remained broadly stable in the EU during the COVID-19 crisis. The income quintile share ratio for the top and bottom quintiles (S80/S20) was 4.97 in 2021, against a value of 4.89 in 2020 (referring to 2020 and 2019 incomes, respectively). The broad stability of income inequality in the year when the pandemic broke out is the result of the extensive public support put in place by Member States, also with EU support, and the functioning of strong automatic stabilisers via the tax and benefit systems, having mitigated effects in particular for vulnerable groups. Eurostat’s flash estimates of the EU-average income quintile share ratio for income year 2021 also show stability, reflecting the impact of the recovery and the partial continuation of policy interventions to mitigate the negative socio-economic impacts of the crisis. In view of more recent developments, including the energy crisis and related inflationary pressures, monitoring developments on inequalities going forward will be the more important. The assessment of the distributional impact of policy measures is crucial to make sure that measures taken help further reduce income inequalities and combat poverty. The share of people at risk of poverty or social exclusion remained overall stable despite the COVID-19 crisis. In 2021, the at-risk-of-poverty or social exclusion (AROPE) rate stood at 21.7% in the EU, practically unchanged from the previous year (21.6%). This stability comes after an overall decline in the number of persons at risk of poverty or social exclusion in the EU-27 over the last decade, and reflects the cushioning effect of policy responses adopted across Member States and at the EU level during the COVID-19 crisis – see Figure 1.2.2. Figure 1.2.2: The number of persons at risk of poverty or social exclusion has decreased over the last decade and remained stable in the aftermath of the COVID-19 crisis Year-on-Year change in number of persons at-risk-of poverty or social exclusion (AROPE, thousands, EU-27)

Note: Data refer to AROPE (New definition) for the years 2016-2021, and to AROPE (Old definition) for the years 2006-2015 (See chapter 1.4 for details). Data for AROPE (New definition) are indeed available as from 2015 only. The aggregate for EU27 has been built based on national trends; when there is a break for a given Member States or data is not available the contribution to the change in the number of persons at risk of poverty or exclusion is considered to be zero. Source: [ ilc_peps01n ] and [ ilc_peps01 ], EU-SILC. All three components of the AROPE indicator did not see significant changes in 2021 at EU level. In 2021, the at-risk-of poverty rate (AROP, referring to 2020 incomes) was stable in the EU at 16.8% (16.7% in 2020, referring to income year 2019). According to Eurostat flash estimates, the AROP rate is estimated to remain stable at the EU level also in the income year 2021. The severe material and social deprivation rate slightly decreased in 2021, from 6.8% to 6.3%, continuing its declining trend from the years before. The share of persons living in quasi-jobless households, which had been declining since 2015, increased slightly, by 0.6 pps, to 8.9% in 2021 (referring to the situation in the previous calendar year). This broad stability in figures is due to the cushioning effect of short-time work schemes and other job retention measures counteracting the effects of the necessary lockdowns. The rising impact of social transfers (other than pensions) on poverty reduction in the first year of the pandemic further witnesses of the positive effects of the decisive policy response to COVID-19 at Member State and EU level. In 2021 (referring to 2020 incomes), social transfers reduced poverty by more than one third (36.3%) on average in the EU. The impact of social transfers on poverty reduction had remained overall stable at around 32%, with minor fluctuations since 2015, but increased to unprecented levels in 2021 (by 3.3 pps, i.e. by 10%). Energy poverty was declining until the first half of 2021, but is expected to rise going forward, under the effect of the ongoing energy crisis. Before energy prices started to substantially increase in 2022 due to the Russia’s war of aggression against Ukraine, energy poverty (as measured conventionally at EU level by the share of people unable to keep home adequately warm) was on an overall declining path at the EU level, down to 6.9% in 2021 from 9.6% in 2015. However, over this period, the share remained much higher for the population at risk of poverty, up to more than twice as high in 2021, at 16.4%. The recent surge in energy prices challenges the progress made over recent years and risks increasing energy poverty across the income distribution – see Pillar Box 7 in section 2.4.1. The Commission put forward a number of initiatives that will support Member States in alleviating energy poverty and the impact of rising energy prices, in particular for low-income households. Already in October 2021, the Commission adopted a Communication on Tackling rising energy prices, presenting a toolbox to address the impact of price increases and to strengthen resilience against shocks, followed in September 2022 by a Proposal for a Council regulation to tackle price rises and ease pressure on households across the EU. In-work poverty remains a challenge for EU Member States. The share of employed working-age people at risk of poverty in the EU slightly increased from 2010 to 2019 (by 0.5 pps), but remained stable between 2020 and 2021 (referring to 2020 incomes), decreasing only by 0.1 pps to 8.9%. The containment of in-work poverty during the first year of the pandemic is also the result of the swift policy intervention put in place by Member States and supported by the EU. As mitigating policy measures have been largely phased out, in-work poverty, especially for vulnerable groups, has to be closely monitored, also in light of the recent negative impact of inflation on real wages. The share of children at risk of poverty or social exclusion remained also broadly stable during the COVID-19 crisis. The at-risk-of-poverty or social exclusion (AROPE) rate for children in 2021 stood at 24.4%, only 0.4 pps higher than in 2020, and remains significantly lower than in 2015 (27.4%). Children living in households experiencing monetary poverty (the AROP rate for children) remained broadly stable in 2021 (referring to income year 2020) at 19.5% (only slightly up from 19.2% in the year before), while the indicator on the share of children living in quasi-jobless households for 2021 (referring to the situation in the previous calendar year) stood at 8.3%, up from 7.6% in 2020 (referring to income year 2019). Severe material and social deprivation of children is back to pre-pandemic levels at 7.5% in 2021, down from 8.3% in 2020. The risk of poverty or social exclusion among older people (65+) has been increasing since 2015. The AROPE rate for people aged 65 or above in 2021 was higher than in 2015 (19.6% vs 18%). This increase was driven by a steady rise in monetary poverty (AROP), now higher among older people than for the working-age (18-64) population (21.6%), mostly as a result of rising working-age incomes. Material deprivation among the elderly has continued decreasing, standing at 5.3% in 2021 (down from 7.4% in 2015) against 6.3% for the working-age population. Some population groups are more likely to be in poverty or social exclusion than the overall population. Despite an overall decrease across Member States in 2021, the at-risk-of-poverty or social exclusion rate remains higher for persons with disabilities as well as for those with a migrant background than for the total population and the native-born, respectively. Poverty and social exclusion among Roma remained broadly unchanged during the pandemic but remains much higher than for the rest of the population, with even larger gaps for children. 1.3 EU headline and national targets by 2030 In the Pillar Action Plan, the Commission put forward 2030 EU headline targets on employment, skills and poverty reduction that were welcomed by the EU Leaders in Porto and the June 2021 European Council, and invited the Member States to define their own national targets as a contribution to the common endeavour. The Porto Social Commitment of 7 May 2021 also called on Member States to set ambitious national targets which, taking due account of the starting position of each country, constituted an adequate contribution to the achievement of the European targets. In the Porto Declaration of 8 May 2021, EU leaders stressed the importance of closely following, including at the highest level, the progress achieved towards the implementation of the European Pillar of Social Rights and the EU headline targets for 2030. The Heads of State or Government welcomed the EU headline targets in the 24-25 June 2021 European Council, in line with the Porto Declaration. Between September 2021 and June 2022, at the invitation of the Commission, Member States came forward with their national targets. These were subject to intensive consultations, in most cases with the involvement of different stakeholders, including national parliaments, social partners, non-governmental organisations, local authorities and members of the academic community. National targets were discussed in bilateral meetings with the Commission services and multilateral discussions took place in the Employment Committee (EMCO) and the Social Protection Committee (SPC). The national target setting process was concluded in the June 2022 EPSCO, where national targets put forward by all Member States (see Table 1.3.1) were discussed. Most Member States (21) also set complementary goals on at least one domain. In most cases, Member States (19) included a complementary goal to reduce the number of children at risk of poverty or social exclusion, and in a good number of cases they put forward complementary goals on reducing the gender employment gap, increasing the share of population with at least basic digital skills, and decreasing the share of young people neither in employment nor in education or training (NEETs). Table 1.3.1: 2030 EU headline and national targets by Member State Employment (%) Adult learning (%) Poverty reduction

(AROPE, thousand) EU headline 78.0 60.0 -15,000 All MS together 78.5 57.6 -15,600* BE 80.0 60.9 -279 BG 79.0 35.4 -787 CZ 82.2 45.0 -120 DK 80.0 60.0 -30(1) DE 83.0 65.0 -1,200(2) EE 81.3 52.3 -39 IE 78.2 64.2 -90 EL 71.1 40.0 -860 ES 76.0 60.0 -2,815 FR 78.0 65.0 -1,100 HR 75.0 55.0 -298 IT 73.0 60.0 3,200 CY 80.0 61.0 -10 LV 80.0 60.0 -95 LT 80.7 53.7 -223 LU 77.6 62.5 -4 HU 85.0 60.0 -292 MT 84.6 57.6 (3) NL 82.5 62.0 -163 AT 79.9 62.0 -204 PL 78.3 51.7 -1,500 PT 80.0 60.0 -765 RO 74.7 17.4 -2,532 SI 79.5 60.0 -9 SK 76.5 50.0 -70 FI 80.0 60.0 -100 SE 82.0 60.0 -15 Note: (*) The aggregate of the poverty reduction target for all Member States equals at least 15.6 million excluding Member States which do not express their target in terms of AROPE levels. (1) Denmark expresses its national poverty reduction target as a reduction in the number of persons living in households with very low work intensity (VLWI) by 30,000. (2) Germany expresses its national poverty reduction target as a reduction in the number of persons living in households with very low work intensity (VLWI) by 1.2 million. (3) Malta expresses its national poverty reduction target as a reduction of the AROPE rate by 3.1 percentage points. A high level of employment is a key priority for 2030 to ensure that everyone can participate fully in the economy and society. As the labour market recovered after the COVID‑19 crisis, the EU-average employment rate increased to 73.1% in 2021, which is 4.9 pps below, but moving closer to the 2030 EU headline target of 78% – see Figure 1.3.1. Member States set ambitious 2030 national employment rate targets, adding up to an overall high level of 78.5%. Many of them set their national target above the EU headline of 78%. Member States starting from lower rates tended to set relatively more ambitious targets, which supports upward convergence in the Union. By 2021, the employment rate moved closer to their national targets in most of them – see Figure 1.3.2. Figure 1.3.1: The EU employment rate increased in the aftermath of the COVID-19 crisis

Employment rate in the EU-27 and the related 2030 EU headline target (20-64 year olds, %) Source: Eurostat [ lfsi_emp_a ], EU LFS. Figure 1.3.2: Member States have set ambitious national targets for employment and almost all of them recorded employment growth in 2021 Employment rate (2020 and 2021, 20-64 year olds, %) and related national 2030 targets for Member States Source: Eurostat [ lfsi_emp_a ] and table on 2030 national targets . The ambitious 2030 EU headline target on adult participation in learning reflects the need to ensure workers’ potential to contribute to economic growth is maintained. Such contribution requires employability and the capacity to adapt, as well as making transitions, also in view of the green and the digital transformations, but also the ability to innovate and increase productivity. Developing adequate skills is a key enabler for all of them. The related headline target is set in terms of the ‘adult participation in learning in the last 12 months’ indicator, which will be available from 2023 on in every second year. The indicator values were on an increasing trend from 2007 to the latest data point available for 2016 – see Figure 1.3.3. This rate of improvement will need to be maintained to reach the target by 2030 at EU level. Member states set their national targets on skills at various levels of ambition, in line with the need to contribute to the EU headline target, adding up to an aggregate commitment of 57.6% (which falls slightly short of the 60% EU headline target) – see Figure 1.3.4. Figure 1.3.3: Adult participation in learning has been on a rising trend that needs to be maintained to reach the 2030 EU headline target Adult participation rate in learning during the past 12 months in the EU-27 and the 2030 EU headline target (20‑64 year olds, %) Source: Eurostat special exctraction of the Adults’ participation rate in learning during the past 12 months withouth guided on the job training (GOJT), from the Adult Education Survey, available online . Figure 1.3.4: Substantial efforts are needed at Member State level to reach national skills targets and contribute to the EU-level ambition Adult participation in learning during the past 12 months (2011 and 2016, 20‑64 year olds, %) and national 2030 targets for Member States Source: Eurostat special exctraction of the Adults participation in learning during the past 12 months without guided on the job training (GOJT) from the Adult Education Survey, available online and table on 2030 national targets . Achieving an ambitious decline in poverty and social exclusion is essential to ensure inclusive growth and upward convergence in the EU. The related EU headline target is to reduce the number of people at risk of poverty or social exclusion (AROPE) by at least 15 million by 2030. The trend before the pandemic is in line with the decrease needed to move closer to this target – see Figure 1.3.5. In 2020 and 2021, the number persons AROPE increased, but this may be the result of a statistical artefact. A number of Member States have set their own national targets at ambitious levels, adding up to a reduction in AROPE of 15.6 million by 2030 in the EU (above the EU headline target of 15 million), if counting only those Member States having used the AROPE indicator for setting their national targets – see Figure 1.3.6. Counting also Denmark, Germany and Malta that have used different indicators to set targets, the implied aggregate ambition for poverty reduction would be even higher. Figure 1.3.5: A decreasing trend in AROPE was observed pre-pandemic, but more efforts are needed to reach the 2030 EU headline target Change in EU-27 AROPE level and the related 2030 EU headline target (total population, thousand persons)

Note: Break in series in 2020 (see footnote 21). Source: Eurostat [ ilc_peps01n ], EU-SILC. Figure 1.3.6: A number of Member States set ambitious national targets Changes in AROPE levels from 2019 to 2021 and national 2030 targets (total population, thousand persons) Note: Break in series in 2020 for DE, FR, IE, DK, LU. Break in series in 2021 for LU. DK and DE express their national target as a reduction in the number of persons living in households with very low work intensity (VLWI) by 30,000 and 1.2 million, respectively. MT expresses its national target as a reduction of the AROPE rate by 3.1 percentage points. Source: Eurostat [ ilc_peps01n ], and table on 2030 national targets . 1.4 Overview of challenges based on the Social Scoreboard The Social Scoreboard supports the monitoring of the European Pillar of Social Rights, contributing to assessing key employment and social challenges in the Member States. The Social Scoreboard, proposed in its current form by the Commission in the Pillar Action Plan of March 2021 and subsequently discussed with the Employment Committee (EMCO) and the Social Protection Committee (SPC), covers comprehensively the Pillar principles, as the main quantitative tool to monitor progress towards the implementation of the Pillar in the context of the European Semester. The headline indicators of the Social Scoreboard were endorsed by the Employment, Social Policy, Health and Consumer Affairs (EPSCO) Council on 14 June 2021. The Scoreboard complements the existing monitoring tools, in particular the Employment Performance Monitor and the Social Protection Performance Monitor. The analysis in the 2023 Joint Employment Report relies on the Social Scoreboard headline indicators endorsed by the Council. Headline indicators respond to principles of parsimony, availability, comparability, and statistical robustness. The indicators, linked to each of the three Pillar chapters, are as follows: ·Equal opportunities oAdults’ participation in learning during the last 12 months (age 25-64) oEarly leavers from education and training (% of population aged 18-24) oShare of individuals who have basic or above basic overall digital skills (% of population aged 16-74) oYouth neither in employment nor in education or training (NEET) rate (% of total population aged 15-29) oGender employment gap (percentage points) oIncome quintile ratio (S80/S20) ·Fair working conditions oEmployment rate (% of population aged 20-64) oUnemployment rate (% of active population aged 15-74)

oLong-term unemployment rate (% active population aged 15-74) oGross disposable household income (GDHI) per capita growth (2008=100) ·Social protection and inclusion oAt-risk-of-poverty or social exclusion (AROPE) rate (% of total population) oAt-risk-of-poverty or social exclusion (AROPE) rate for children (% of population aged 0-17) oImpact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) oDisability employment gap (age 20-64) oHousing cost overburden (% of total population) oChildren aged less than 3 years in formal childcare (% of population under 3-years-old) oSelf-reported unmet need for medical care (% of population 16+) The ‘Disability employment gap’ headline indicator temporarily uses EU-SILC as the statistical source, but will switch to the EU-LFS for improved accuracy as of 2022, providing data in 2023. The Commission services, including Eurostat, will continue to monitor its quality and will review the indicator in the medium term, once LFS-based data become available, and will support further steps to improve cross-country comparability and explore the development of additional indicators in this area. The headline indicator ‘Adult participation in learning during the past 12 months’ will also use the EU-LFS from 2022 onwards, after having been collected only through the Adult Education Survey before (with last edition for 2016). A thorough analysis of the data from the two survey sources will be conducted when data will become available in order to ensure data quality and comparability. To ensure the monitoring of the Employment Guidelines 6 and 7, including with regard to active labour market policies, this Joint Employment Report will exceptionally use the indicator on adult participation in learning in the past 4 weeks (age 25-64). Headline indicators are analysed using the common methodology agreed by EMCO and SPC (see Annex 4 for more details). This methodology evaluates the situation and developments in Member States by looking at levels and changes with respect to the preceding year 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 using an agreed rule so that each Member State is assigned to one out of seven categories (‘best performers’, ‘better than average’, ‘on average/neutral’, ‘good but to monitor’, ‘weak but improving’, ‘to watch’ and ‘critical situations’). On this basis, Table 1.4.1 provides a summary of the readings of the scoreboard according to the latest figures available for each indicator. The Social Scoreboard headline indicators point at key challenges in EU Member States across the three areas of equal opportunities and access to the labour market, fair working conditions and social protection and inclusion. Among the indicators flagging the largest number of Members States marked as in ‘critical situations’ (red in Figure 1.4.1) are early leavers from education and training, GDHI per capita growh, the AROPE rate for children as well as the impact of social transfers (other than pensions) on poverty reduction (5 Member States in ‘critical situations’). These indicators record one more Member State in this situation in 2021 compared to 2020, with the only exception of the impact of social transfers on poverty reduction, for which the count is one Member State lower. A large number of critical challenges (red mark for 4 Member States) are flagged also on the youth NEET rate, the gender employment gap, the income quintile ratio, the employment rate, the disability employment gap, as well as the self-reported unmet needs for medical care. There are fewer Members States in a ‘to watch’ situation than in 2021, the largest number being flagged on children aged less than 3 years in formal childcare (6) as well as the share of individuals with at least basic digital skills (6) and the disability employment gap (5). A more detailed analysis is presented in Chapter 2, relying also a rich set of contextual indicators. Figure 1.4.1: Employment, skills and social challenges across EU Member States by headline indicator in the Social Scoreboard The share of Member States with specific classification among all classified (see legend) for each headline indicator and also aggregated for the three Pillar chapters Notes: 1) Data for the indicator on adults’ participation in learning is not yet available; 2) Data is missing for some countries in some indicators – see Note for Table 1.4.1. Legends for all indicators are presented in Annexes. Source: Social Scoreboard designations as in Table 1.4.1.





Table 1.4.1: Social Scoreboard headline indicators: overview of challenges across Member States Best performers Better than average Good but to monitor On average Weak but improving To watch Critical situations Equal opportunities Early leavers from education and training

(% of population aged 18-24) 2021 EL, HR, IE, SI CZ, LT, NL, PL, PT AT, BE, DK, FI, FR, LV, SK ES, MT CY, EE, LU, SE BG, DE, HU, IT, RO Share of individuals who have basic or above basic overall digital skills

(% of population aged 16-74) 2021 DK, IE, NL, FI ES, HR, LU, AT, SE BE, CZ, EE, EL, FR, LV, MT, PT, SK DE, IT, CY, LT, HU, SI BG, PL, RO Youth NEET rate

(% of total population aged 15‑29) 2021 NL, SE, SI AT, DE, DK, FI, HU, IE, MT, PT LU BE, CZ, EE, FR, LT, LV, PL ES CY, HR, SK BG, EL, IT, RO Gender employment gap

(percentage points) 2021 EE, FI, LT DK, FR, IE, PT, SE LV, SI AT, BE, BG, DE, ES, HR, HU, LU, NL MT CY, PL, SK CZ, EL, IT, RO Income quintile ratio (S80/S20) 2021 BE, CZ, FI, SI AT, CY, DK, HU, IE, LU, NL, PL, SE DE, EE, FR, HR BG EL, IT, MT, PT ES, LT, LV, RO Fair working conditions Employment rate

(% of population aged 20-64) 2021 CZ, NL, SE DE, DK, EE, HU, IE, LT, MT, PL AT, BG, CY, FI, FR, LU, PT, SI, SK EL BE, LV ES, HR, IT, RO Unemployment rate

(% of active population aged 15-74) 2021 CZ, DE, MT, PL DK, HU, LT, LU, NL, SI AT, BG, CY, EE, FI, FR, HR, IE, LV, PT, RO, SK EL BE, SE ES, IT Long-term unemployment rate

(% active population aged 15-74) 2021 CZ, DE, DK, HU, MT, NL, PL AT, BE, BG, CY, EE, FI, FR, IE, LT, LU, LV, PT, RO, SE, SI EL HR, SK ES, IT GDHI per capita growth

(2008=100) 2020 HU, LT, PL, RO EE, IE, MT, SI, SK CZ, DE, DK, FI, FR, HR, LU, LV, NL, PT, SE BE AT, CY, EL, ES, IT Social protection and inclusion At risk of poverty or social exclusion rate

(% of total population) 2021 CZ, FI, SI AT, BE, CY, DK, NL, PL, SE SK DE, EE, FR, HR, HU, IE, MT BG, LT, RO IT, LU, PT EL, ES, LV At risk of poverty or social exclusion rate for children

(% of population aged 0-17) 2021 CZ, DK, FI, NL, SI BE, EE, HR, LT, PL AT, CY, DE, FR, HU, IE, LV, MT, PT, SE, SK BG EL, ES, IT, LU, RO Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) 2021 BE, DK, FI, IE AT, CZ, FR, SE, SI CY, DE, LT, NL, PL BG, ES, IT EE, LU, MT EL, HR, LV, PT, RO Disability employment gap (percentage points) 2021 DK, ES, IT, LU, LV, PT BG, EE, SE CZ, EL, FI, FR, LT, MT, NL, SI AT, CY, DE, HR, HU BE, IE, PL, RO Housing cost overburden (% of total population) 2021 CY, EE, FI, HR, HU, IE, LT, LU, MT, SI AT, BE, CZ, IT, LV, PL, RO, SE BG, EL DE, ES, NL, PT DK Children aged less than 3 years in formal childcare (% of population under 3-years-old) 2021 DK, ES, FR, LU, NL, SE CY, EL, HR, SI BE AT, EE, FI, LV BG, DE, IE, LT, MT, PL CZ, HU, RO Self-reported unmet need for medical care (% of population 16+) 2021 CY, DE, MT AT, BG, CZ, ES, HU, LU, NL BE, DK, FR, HR, IE, LT, PL, PT, SE EE, LV EL, FI, RO, SI Note: update of 21 October 2022. Due to substantial changes in the definition of the Share of individuals who have basic or above basic overall digital skills indicator in 2021, a comparable value for 2019 is not available, therefore analysis of this indicator relies, exceptionally, only on 2021 levels. Income quintile ratio, Impact of social transfers, Disability employment gap, Housing cost overburden, Children aged less than 3 years in formal childcare and Self-reported unmet need for medical care not available for Slovakia; GDHI per capita growth not available for more than half of the Member States, analysis is based on 2020 values; Housing cost overburden not available for France. Breaks in series and other flags are reported in Annexes 1 and 2. Benchmarking frameworks supporting analysis and policy making The 2017 Communication on establishing the European Pillar of Social Rights proposed benchmarking as a tool to support structural reforms and foster upward convergence in the employment and social fields. As a multilateral exercise, benchmarking frameworks combine quantitative indicators (on performance and outcomes) with the qualitative analysis of policy design features and policy levers that affect the quality and results of policy making. In addition, the benchmarking frameworks, together with the Social Scoreboard indicators, help inform the analysis in the European Semester and the Joint Employment Report. Since 2017, benchmarking frameworks in several areas have been developed by the Commission and discussed with Member States, in line with a common approach agreed by the Employment Committee (EMCO) and the Social Protection Committee (SPC). The frameworks agreed so far address the areas of 1) unemployment benefits and active labour market policies, 2) adult skills and learning, 3) minimum income (see Pillar Box 8 on Minimum Income benchmarking in section 2.4.1), 4) childcare and support to children and 5) pensions. Among the benchmarking frameworks developed within the EMCO, work is ongoing to finalise the framework on unemployment benefits and active labour market policies. While the part of the framework on unemployment benefits is already complete and fully operational, work is being pursued in cooperation with EMCO on the development of policy lever indicators to monitor the quality of the early support services provided by the Public Employment Services to unemployed job seekers. Among the benchmarking frameworks developed within the SPC, the one on pensions was agreed in February 2022. It consists of indicators of old-age poverty and income maintenance after retiring, as well as context indicators on life expectancy and public expenditure. Policy levers indicate the key features of pension schemes having an impact on pension adequacy. By strengthening the common understanding of the pertinent indicators and policy levers in a policy area, benchmarking frameworks make a strong contribution to the implementation of the European Pillar of Social Rights. The main results of these exercises are reported in the Joint Employment Report, as relevant.

CHAPTER 2. EMPLOYMENT AND SOCIAL REFORMS – MEMBER STATES’ PERFORMANCE AND ACTION 2.1 Guideline 5: Boosting the demand for labour This section looks