EXPLANATORY MEMORANDUM

The Treaty on the Functioning of the European Union provides that Member States are to regard their economic policies and promoting employment as a matter of common concern and shall coordinate their action within the Council. In two distinct articles, it provides that the Council is to adopt broad economic policy guidelines (Article 121) and employment guidelines (Article 148), specifying that the latter must be consistent with the former. Given this legal basis, the guidelines for employment and economic policies are presented as two distinct – but intrinsically interconnected – legal instruments:

· A Council Recommendation on broad guidelines for the economic policies of the Member States and of the Union – Part I of the Integrated Guidelines;

· A Council Decision on guidelines for the employment policies of the Member States – Part II of the Integrated Guidelines.

The guidelines were first adopted together (‘integrated package’) in 2010, underpinning the Europe 2020 strategy. It was also decided in 2010 that the integrated guidelines should remain largely stable until 2014. Whilst the broad economic policy guidelines remain valid for any duration of time, the employment guidelines need to be drawn up each year.

The guidelines, other than framing the scope and direction for Member States’ policy coordination, also provide the basis for country specific recommendations in the respective domains.

The current set of 'integrated guidelines' are to underpin the Europe 2020 strategy within the context of the new approach to economic policy making built on investment, structural reform and fiscal responsibility as set out in the Commission's 2015 Annual Growth Survey. At the same time, the integrated guidelines are to support the achievement of smart, sustainable and inclusive growth and the aims of the European Semester of economic policy coordination.

The "Integrated Guidelines" are the following:

Guideline 1: Boosting investment

Guideline 2: Enhancing growth by the implementation of structural reforms

Guideline 3: Removing key barriers to growth and jobs at EU level

Guideline 4: Improving the sustainability and growth-friendliness of public finances

Guideline 5: Boosting demand for labour

Guideline 6: Enhancing labour supply and skills

Guideline 7: Enhancing the functioning of labour markets

Guideline 8: Ensuring fairness, combatting poverty and promoting equal opportunities

2015/0051 (NLE)

Proposal for a

COUNCIL DECISION

on guidelines for the employment policies of the Member States

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 148(2) thereof,

Having regard to the proposal from the European Commission,

Having regard to the opinion of the European Parliament[1],

Having regard to the opinion of the European Economic and Social Committee[2],

Having regard to the opinion of the Committee of the Regions[3],

Having regard to the opinion of the Employment Committee,

Whereas:

(1) Member States and the Union should work towards developing a coordinated strategy for employment and particularly for promoting a skilled, trained and adaptable workforce and labour markets responsive to economic change and with a view to achieving the full employment and social progress objectives set out in Article 3 of the Treaty on European Union. Member States, having regard to national practices related to the responsibilities of management and labour, are to regard promoting employment as a matter of common concern and coordinate their action in this respect within the Council.

(2) The Union must combat social exclusion and discrimination, ensure equal access to fundamental rights, and promote social justice and protection. In defining and implementing its policies and activities, the Union should take into account requirements linked to the guarantee of adequate social protection and the fight against social exclusion and a high level of education and training.

(3) The employment guidelines are consistent with the broad guidelines for the economic policies

(4) Member States should regard their economic policies as a matter of common concern and coordinate them within the Council. Employment guidelines and broad economic policy guidelines should be adopted by the Council to guide Member States’ and Union policies.

(5) In accordance with the Treaty provisions, the Union has developed and implemented policy coordination instruments for fiscal policy and macro-structural policies. The European Semester combines the different instruments in an overarching framework for integrated multilateral economic and budgetary surveillance. The streamlining and strengthening of the European Semester as set out in the Commission's 2015 Annual Growth Survey will further improve its functioning.

(6) The financial and economic crisis revealed and emphasised important weaknesses in the economy of the Union and its Member States. It has also underscored the close interdependence of the Member States' economies and labour markets. Moving the Union to a state of strong, sustainable and inclusive growth and job creation is the key challenge faced today. This requires coordinated and ambitious policy action both on Union and national level, in line with the provisions of the Treaty and the Union economic governance. Combining supply and demand side measures, these actions should encompass a boost to investment, a renewed commitment to structural reforms and exercising fiscal responsibility.

(7) Member States and the Union should also address the social impact of the crisis and aim at building a cohesive society in which people are empowered to anticipate and manage change, and can actively participate in society and the economy. Access and opportunities for all should be ensured and poverty and social exclusion reduced, in particular by ensuring an effective functioning of labour markets and social welfare systems and removing barriers to labour market participation. Member States should also make sure that the benefits of economic growth reach all citizens and all regions.

(8) Action in line with the guidelines is an important contribution to reaching the goals of the Europe 2020 strategy. The guidelines constitute an integrated set of European and national policies, which Member States and the Union should implement in order to achieve the positive spill-over effects of coordinated structural reforms, an appropriate overall economic policy mix and a more consistent contribution from European policies to the Europe 2020 strategy’s objectives.

(9) While these guidelines are addressed to Member States and the Union, they should be implemented in partnership with all national, regional and local authorities, closely associating parliaments, as well as social partners and representatives of civil society.

(10) The broad guidelines for economic policies give guidance to the Member States on implementing reforms, reflecting interdependence. They are in line with the Stability and Growth Pact. The guidelines should form the basis for country-specific recommendations that the Council may address to the Member States.

HAS ADOPTED THIS DECISION:

Article 1

The guidelines for Member States’ employment policies, as set out in the Annex, are hereby adopted. These guidelines shall form part of the ‘integrated guidelines’.

Article 2

The guidelines in the Annex shall be taken into account in the employment policies and reform programmes of the Member States, which should be reported in line with Article 148(3) of the Treaty.

This Decision is addressed to the Member States.

Done at Brussels,

For the Council

The President

[1] OJ C , , p.

[2] OJ C , , p.

[3] OJ C , , p.

ANNEX

Guidelines for the employment policies of the Member States Part II of the Integrated Guidelines

Guideline 5: Boosting demand for labour

Member States should facilitate job creation, reduce barriers for business to hire people, promote entrepreneurship and in particular support the creation and growth of small entreprises in order to increase the employment rate of women and men. Member States should also actively promote the social economy and foster social innovation.

The tax burden should be shifted away from labour to other sources of taxation that are less detrimental to employment and growth while protecting revenue for adequate social protection and growth enhancing expenditures. Reductions in labour taxation should be aimed at the relevant components of the tax burden and at removing barriers and disincentives to labour market participation, in particular for those furthest away from the labour market.

Member States should, together with the social partners, encourage wage-setting mechanisms allowing for a responsiveness of wages to productivity developments. In this respect, differences in skills and local labour market conditions as well as divergences in economic performance across regions, sectors and companies should be taken into account. When setting minimum wages, Member States and social partners should consider their impact on in-work poverty, job creation and competitiveness.

Guideline 6: Enhancing labour supply and skills

Member States should promote productivity and employability through an appropriate supply of relevant knowledge and skills. Member States should make the necessary investments in education and vocational training systems while improving their effectiveness and efficiency to raise the skill level of the workforce, allowing it to better anticipate and meet the rapidly changing needs of dynamic labour markets in an increasingly digital economy. Member States should step up efforts to improve access to quality adult learning for all and implement active ageing strategies to enable longer working lives.

High unemployment should be tackled and long-term unemployment prevented. The number of long-term unemployed should be significantly reduced by means of comprehensive and mutually reinforcing strategies, including the provision of specific active support to long-term unemployed to return to the labour market. The youth unemployment needs to be comprehesively addressed, including by equipping the relevant institutions with the necessary means to fully and consistently implement their national Youth Guarantee Implementation Plans

Structural weaknesses in education and training systems should be addressed to ensure quality learning outcomes and prevent and tackle early school leaving. Member States should increase educational attainment and consider dual learning systems and upgrading professional training while at the same time increase opportunities for recognising skills acquired outside the formal education system.

Barriers to labour market participation should be reduced, especially for women, older workers, young people, the disabled and legal migrants. Gender equality including equal pay must be ensured in the labour market as well as access to affordable quality early childhood education and care.

Member States should make a full use of European Social Fund and other Union funds support in order to improve employment, social inclusion, education and public administration.

Guideline 7: Enhancing the functioning of labour markets

Member States should reduce labour market segmentation. Employment protection rules and institutions should provide a suitable environment for recruitment while offering adequate levels of protection to those in employment and those seeking employment or employed on temporary contracts or independent work contracts. Quality employment should be ensured in terms of socio-economic security, education and training opportunities, working conditions (including health and safety) and work-life balance.

Member States should closely involve National Parliaments and social partners in the design and implementation of relevant reforms and policies, in line with national practices, while supporting the improvement of the functioning and effectiveness of social dialogue at national level.

Member States should strengthen active labour market policies by increasing their targeting, outreach, coverage and interplay with passive measures. These policies should aim at improving labour market matching and support sustainable transitions on the labour market, with public employment services delivering individualised support and implementing performance measurement systems. Member States should also ensure that their social protection systems effectively activate and enable those who can participate in the labour market, protect those (temporarily) excluded from the labour markets and/or unable to participate in it, and prepare individuals for potential risks, by investing in human capital Member States should promote inclusive labour markets open to all andalso put in place effective anti-discrimination measures.

Mobility of workers should be ensured with an aim of exploiting the full potential of the European labour market, including by enhancing the portability of pensions and the recognition of qualifications. Member States should at the same time guard against abuses of the existing rules.

Guideline 8: Ensuring fairness, combatting poverty and promoting equal opportunities

Member States should modernise their social protection systems to provide effective, efficient, and adequate protection throughout all stages of an individual’s life, ensuring fairness and addressing inequalities. There is a need for simplified and better targeted social policies complemented by affordable quality childcare and education, training and job assistance, housing support and accessible health care, access to basis services such as bank account and Internet and for action to prevent early school leaving and fight social exclusion.

For that puropose a variety of instruments should be used in a complementary manner, including labour activation enabling services and income suppoirt, targeted at individual needs. Social protection systems should be designed in a way that facilitate take up of all persons entitled, support investment in human capital, and help prevent, reduce and protect against poverty.

The pension systems should be reformed in order to secure their sustainability and adequacy for women and men in a context of increasing longevity and demographic change, including by linking statutory retirement ages to life expectancy, by increasing effective retirement ages, and by developing complementary retirement savings.

Member States should improve the accessibility, efficiency and effectiveness of healthcare and long term care systems, while safeguarding fiscal sustainability.