Communication from the Commission - From guidelines to action: the national action plans for employment
Date: 1998-05-13
Institutions: European Commission
Subjects: action programme, economic policy, employment policy, social policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  13.05.1998 
COM(1998) 316 final 

COMMUNICATION FROM THE  COMMISSION 

FROM GUIDELINES TO ACTION:  THE NATIONAL ACTION 

PLANS FOR  EMPLOYMENT 

FROM GUIDELINES TO ACTION: THE NATIONAL ACTION 

PLANS FOR EMPLOYMENT 

Commission  Communication 

I. 

The  Luxembourg  process:  towards  a  more  effective  and  focused 
European Employment Strategy 

Following  the  agreement  at  the  Amsterdam  Summit  to  make  certain  provisions  of  the 
new  Treaty  regarding  employment  immediately  effective  and  the  Luxembourg  Jobs 
Summit in November  1997, the Council  adopted  the first  Employment Policy  Guidelines 
for  1998 on  15 December  1997. A common  structure  for  the National  Action  Plans was 
agreed at the end of January  and the Member Stales agreed  to submit  their  Plans by mid-
April.  In  order  to  support  the  Member  States  in  their  preparations  a  series  of  working 
meetings  between  the  Commission  and  the  national  authorities  in  each  of  the  fifteen 
Member States was held between January and March this year. 

The  objective  of  this  Communication  is  to  examine  what  the  Member  States  have 
committed  themselves  to  doing  in  their  National  Action  Plans  and  whether  these 
commitments  are  in  line  with  the  contents  and  objectives  of  the  1998  Employment 
Guidelines,  and  to  provide  the  basis  for  a  discussion  at  the  Cardiff  Summit  of  the 
progress underway. 

Following Cardiff,  it is foreseen  that the employment  situation in the Community  will be 
discussed  at the  European  Council  in  Vienna  in  December  1998  as  well  as  the  lessons 
which can be drawn from  the current exercise. This will also provide the opportunity  for 
assessing, on the basis of information  provided  by the Member States, whether they have 
followed  up  their  commitments  by  translating  their  Plans  into  actions,  whether  such 
actions adequately  address their problems and  needs, and whether there is, therefore,  real 
recognisable progress in attaining the objectives of the Guidelines. 

II. 

The  1998 National Action  Plans (NAPs):  overall  assessment 

The fact  that all fifteen  Member  States, in spite of the very  tight  lime-frame  of only  four 
months, have prepared, adopted  and delivered  their National  Action  Plans by the end of 
April must be regarded as a major political  achievement. 

An encouragingly positive response... 

The responses of Member  States as set out in the NAPs demonstrate that there is now a 
shared  commitment  to  making  progress  on  employment.  The  new  impulse  to 
employment  policies  generated  by  the  Luxembourg  process  has  been  welcomed  in  all 
Member  States  and  implementation  of  the  process  is  underway,  indicating  a  shared 
commitment  to  a  more  transparent  and  politically-driven 
implementation  of  the 
commonly agreed employment  policy objectives. 

This  progress  can  be  identified  in  terms  of  process  as  well  as  content.  As  regards  the 
process, it is clear that: 

>  There  is  a  move  towards  a  comprehensive  and  multi-annual  programme 
approach. All  Member  States have undertaken  a comprehensive  and,  in some  cases 
such  as  the  UK  and  the  Netherlands  critical,  self-assessment  of  present  problems, 
needs  and  policies  in  their  labour  market.  They  have  broadly  adapted  all  nineteen 
Guidelines  to  their  specific  national  conditions  and  have  initiated  a  multi-annual 
programme approach to address them. 

V  Member States arc pursuing an inclusive strategy. The preparation of the National 
Action  Plans  has  involved  the  key  actors  at  national  and,  in  some  cases,  regional 
levels, as well as social  partners, in accordance with different  national  circumstances. 
In  particular,  the  working  meetings  between  the  Commission  and  the  national 
authorities  brought  together  representatives  of  all  the  Ministries  concerned,  other 
relevant  bodies and  in  some cases representatives  of the  social  partners.  In the  UK, 
Portugal,  Austria  and  Ireland,  the  consultations  with  the  social  partners  have  led  to 
the inclusion of text which has been agreed with the relevant social partners. 

>  The  NAPs  embody  a  more  transparent  and  politically-driven  policy  approach 
open to scrutiny. The NAPs have been officially  adopted by the government  of each 
Member  State  and,  in  many  cases, have  been  discussed  in  the  national  Parliament, 
thereby enhancing their political status. The NAPs are open to scrutiny  in the country 
concerned  as  well  as by  the  other  Member  States,  thereby  increasing  the  degree  of 
political accountability  for the commitments set out in them. 

>  The  NAPs  build  on existing  employment  policy  foundations.  While  innovative  in 
many  respects,  the  Plans  do,  of  course,  build  upon  the  array  o(  labour  market 
measures  and  policies  already  in  place  for  some  time.  The  new  policy  impulse  is 
reflected  in terms of coverage, by  including  problems and  policy  areas not  addressed 
hitherto, intensity,  by enlarging  those  measures and  schemes  proving  to be  effective, 
and  partnership,  with  a  closer  and  more  active  involvement  by  social  partners  and 
others in the strategy. 

The Commission  considers  that the main  criterion  for  determining  the relevance  of a 
policy initiative is not the date of its enactment but whether it is proving successful  in 
attaining the objectives  set  in the Employment  Guidelines. This points to the need  to 
find  the  correct  balance  between  preserving 
'well-performing'  policies  and 
introducing  'innovative'  measures  as  part  of  an  ongoing  process.  Experience  shows 

that  progress  in  addressing  unemployment  implies  maintaining  a  consistent  strategy 
over a number of years. Examples of this are the Netherlands, Ireland, Denmark  and, 
more recently, Spain and Finland. 

In terms of content, the following positive elements can also be discerned: 

>  All  Member  States  declare  their political  commitment  to an  active  employment 
policy.  Many Member  States declare their intention to initiate, or to pursue,  reforms 
in  order  to  make  work  more  attractive  and jobs  worth  taking.  Measures  focus  on 
improving  incentives,  developing  skill  levels  and  providing  job  opportunities.  A 
comprehensive  approach  is seen to be essential  in any strategy  addressing the  causes 
rather  than  merely  the  consequences  of  unemployment.  Some  Member  States  are 
undertaking  an in-depth review of tax and benefit  systems to ensure that their  impact 
is  employment-friendly  and  conducive  to  entrepreneurship, job  creation,  and  active 
participation in working life (UK, Spain, Denmark, France, Belgium). 

r  There  is  a  clear  recognition  of  the  need  for  a  stronger  local  dimension  in 
employment  policy.  Progress  towards  decentralisation  and  more  autonomy  at  the 
local  level  is  recognised  as  essential,  while  maintaining  a  common  national  policy 
framework.  In  some  cases  (Spain,  Italy),  reforms  move  towards  more  responsibility 
for  regional  and  local  authorities  as  well  as  social  partners  for  the  delivery  of 
customer-tailored  services  closer  to  the  needs  of  the  unemployed  and  enterprises. 
Such  reforms  draw  from  the  positive  experience  in  countries  with  a  long  history  of 
labour  market  policy  devolved  to  regional  and  local  levels  (Austria,  Germany, 
Belgium,  Denmark,  Finland,  and  Sweden).  Moreover,  some  NAPs  (Italy,  Greece, 
Portugal)  mention  the  territorial  pacts  as  instruments  for  involving  all  actors  at  the 
local level. 

>  The  need  to  develop  and  modernise  the  Public  Employment  Service  (PES), 
including  bringing  its capacity  and  resources  into  line with  the  new  challenges, 
has  attracted  new  attention.  The  NAPs  confirm  that  the  PES  is  seen  as  a  key 
delivery  mechanism  for  an  active  and  preventive  strategy.  Even  though  they  are 
mentioned  mainly  in  relation  to  the  employability  pillar,  the  PES  can,  often  in 
partnership with other actors, play an important role in implementing  measures under 
the  other  three  pillars.  However,  the  NAPs  are  not  always  explicit  on  concrete 
measures envisaged  to strengthen  the PES. In many  Member States, this will  imply a 
global review of working procedures, budget and stalling resources, and  management 
of their  PES.  Some  NAPs  indicate  the  intention  to commit  further  resources  for  the 
PES (Germany, Finland, France, Portugal, Spain). 

>  Ail Member States  recognise the importance  of improving knowledge  and  skills 
levels. Many of the NAPs specify  areas of knowledge and skills which are considered 
to  be highly  relevant  for  reinforcing  employability  and  adaptability,  e.g.  basic  skills 
of  literacy  and  numeracy,  ICT  competence  and  mastering  foreign  languages.  More 
generally,  most  of  the  plans  emphasize  the  need  to  strengthen  the  link  between 
education,  training  and  working  life.  In  this  context,  apprenticeship and  traineeship 
are seen as playing a major role. 

>  One of the major achievements has been the enhanced involvement of the Social 
Partners. The NAPs have offered  the Social Partners the opportunity  to contribute to 
employment  policy.  They  have,  by  and  large,  demonstrated  a  clear  willingness  to 
observe  the  spirit  of  the  Guidelines  and,  in  some  countries,  have  committed 
themselves  to  open  negotiations  on  specific  isssues.  Furthermore,  the  fact  that  the 
NAPs process has been used to enable the social  partners to enrich  their dialogue  in 
countries and fields where it has been on hold, should not be underestimated. 

...but there are also a number of shortcomings 

The  examination  of the NAPs  reveals  a number  of  shortcomings  as  well.  This  is  to  be 
expected in a process which is still in its early stages. However, these shortcomings need 
to be addressed to provide  further  impetus to the Luxembourg process. They  include  the 
following: 

>  The  principal  focus  in  the  Plans  is on  the  first  two  pillars  "employability" and 
"entrepreneurship".  This  may  reflect  specific  national  priorities  but  also  the  fact 
that  the  "employability"  pillar  contains  the  three  EU-wide  operational  targets  which 
require  more  detailed  assessment.  Furthermore,  it  reflects  the  fact  that  the  pillars  of 
"adaptability" and  "equal opportunities" require, either a broad  involvement  of social 
partners  and  others,  or  a  set  of  flanking  policies  which  will  take  more  time  to 
develop.  Yet, the  Employment  Guidelines  are  based  on  an  integrated  approach:  the 
employment  challenge cannot be tackled  in a sustained  way,  if all the pillars are not 
addressed in an integrated, mutually supportive way. 

>  In some areas the Plans are vague or consist of a mere list of initiatives. The lack 
of details makes it difficult  to assess whether the package of measures is underpinned 
by an integrated  strategy.  It is also not always easy  to establish  a clear  indication  of 
priority  among  the  measures,  or to  identify  which  are the  measures  implemented  to 
provide  immediate  effects,  and  which  arc  undertaken  to  provide  an  impact  over  the 
medium  term.  Moreover,  there  is a real  risk  that  a plethora  of  measures  may  fail  to 
achieve the required "critical mass" and there is also the risk of dispersion of efforts. 

y  There is insufficient  information  and clarity about the total resource and budget 
implications.  Such  information  would  enable  the  budgetary  cost  and  eventual 
employment  effects  to  be  evaluated,  in  order  to  assess  whether  each  measure  will 
prove to be efficient  and deserve to be retained.  Furthermore, the NAPs do not enable 
one to assess whether  the present  favourable  economic climate  in the  Union  is being 
used to pursue a real and  sustained  shift  in public spending on employment  in  favour 
of  activation  measures,  compatible  with  the  continued  fiscal  consolidation.  This 
would  be understandable to the extent that the present  Plans have been  prepared  after 
the national budgets for  1998 had been adopted. 

>  Striking  a balance  between  reinsertion  of the excluded  and  preventing  the  drift 
into  long-term  unemployment  has proved  difficult.  The  majority  of the  measures 
included  in the  Action  Plans  tend  to  focus  on  those  already  unemployed  for  a  long 

time  (the  stock)  rather  than  the  inflow  into  long-term  unemployment.  As  some 
countries  have  a much  larger  backlog  of  long-term  unemployed  than others, there  is 
also  a  difference  in  approach  as  to  how  to  bring  the  high  levels  of  unemployment 
down. Although  measures to achieve a rapid  decrease  in the  stock  of  unemployment 
are necessary and welcome, sole reliance on them risks perpetuating the problem. 

>  In  most  of  the  NAPs,  the  link  between  the  ESF  and  individual  policies  and 
programmes is not sufficiently  developed. In general terms, the overall contribution 
of  the  ESF  is  acknowledged.  However,  most  Member  States  do  not  present  a 
systematic  breakdown,  both  quantitatively  and  qualitatively,  of  the  ESF  supported 
interventions  under  each  of  the  four  pillars,  although  countries  like  France,  Italy, 
Greece,  Ireland  and  Finland  provide  some  information  in  this  respect.  Making  this 
link more explicit would serve to improve the effectiveness  of ESF support. 

>  The  lack  of  appropriate  indicators  for  national  employment  policies  is  among 
the  least  satisfactory  aspects  of  the  NAPs.  The  majority  of  the  Plans  have  fallen 
short  of  defining  quantified  or  precise  policy  objectives  and  statistical  indicators 
which will underpin the evaluation of progress and outcomes. Employment  indicators 
are  often  vaguely  defined, just  mentioned  or  missing.  This  affects,  for  example,  the 
identification  of  target  groups  for  each  measure,  potential  indicators  to  measure 
policy  effort  (in  terms  of  financial  resources,  staff  and  technical  support),  or 
benchmarks  for  comparison  of  policy  outcomes.  The  shortcomings  are  particularly 
inconvenient in the case of the three EU-wide operational targets. 

III.  The National Action Plans  1998: thematic overview 

The  European  Union  is  experiencing  a  return  to  a  period  of  sound  and  sustained 
economic  growth.  In the NAPs, Mernber  States have committed  themselves  not  only  to 
pursuing  the macroeconomic  strategy  set out  in the  Broad  Economic  Policy  Guidelines, 
but  also  to  taking  effective  further  action  to  improve  the  functioning  of  markets  for 
goods,  services,  capital  and  labour.  Furthermore,  the  Member  States  reaffirm  that 
structural  reforms  and  the policy  objectives  as set  out  in their  Plan  are  necessary  to  the 
success of the overall economic strategy and that the Broad  Economic  Policy  Guidelines 
and the Employment Policy Guidelines are mutually consistent and supportive. 

While  countries  have  common  concerns,  the  NAPs  present  divergent  policy  responses 
which  reflect  differences  of  their  present  economic  situation  and  their  national  labour 
market  structures  as  well  as  the  specificities  of  their  labour  markets.  Yet,  the  present 
upbeat  economic  climate  has  influenced  the  optimistic  tone  of  the  Plans  and  has 
hightened  expectations  regarding job  growth  which,  in  turn,  explains  the  priority  being 
given  to measures oriented  towards  labour  supply.  Member  States differ  in their  starting 
point concerning policy  implementation, with some countries  finding  it necessary  to start 
major  reforms  in  some  areas  whereas  others  confine  themselves  to  'fine  tuning'  their 
policies to improve  efficiency. 

From the preliminary examination of the NAPs it emerges that those submitted  by  France 
and Spain have come closest to the standards of transparency  and articulation required  in 

this  exercise  in  terms  of  identification  of  the  problem,  quantification  of  the  effort, 
resourcing  and  specification  of  the  priorities,  in  particular  in  so  far  as  the  EU-wide 
operational  targets  are  concerned.  The  NAPs  of  Member  States  such  as  Luxembourg, 
Ireland,  Finland,  Belgium  and  the  UK,  although  less  quantified,  also  reflect 
a 
considerable effort  towards  specificity. 

The main results of the examination of the NAPs are as follows: 

III.l  Employ ability 

This  pillar  of  action  calls  Member  States  to  undertake  concrete  action  to  attaiii  tile 
following objectives: 

•  Implementing a  preventive  approach  so as to  reduce significantly  the  Inflow  of young  j 
j 

and adult unemployed persons into long-term unemployment (guidelines i  àsiiP£) 

•  Shifting  peMJg^ront welfare dependency to work and training, namely fhrdugh  a mor®  ! 
j 

active labour market policy (guideline 3); 

: 

•  BeysetojInQtoètserjihip  m  a-'^pimework  for  the  pt^teibft-of  tnsMfeg. Àû  Ufmmg  | 

itinglhetransitioD from ^hool to work (guidelines 6 

/ 

! 

=> Although  all  Member  States  have  endorsed  the  key  policy  objectives  under  this 
pillar,  and  provide  more  or  less  coherent  sets  of  actions  to  address  them,  there 
are  differences  as  regards  the  degree  of  commitments  to  introduce  changes  in 
domestic  policy  to  meet  in  particular  the  three  EU-wide  operational  targets.  In 
general  terms, it emerges that  the  majority  of NAPs  have  been  drafted  as  documents 
formulating  general  policy  orientations  rather  than  as  operational  instruments.  On 
several  key  aspects,  such  as  the  time  horizon,  resources,  monitoring  indicators  and 
articulation  between  existing  and planned  measures, there  is insufficient  information. 
This  leaves  considerable  uncertainty  as  to  the  extent  to  which  the  policy  objectives 
may  be  reached  within  the  agreed  five-year  period.  Although  the  progress  is  very 
substantial  when  compared  with  the  "multi-annual  programmes"  established  under 
the  Essen  process,  there  is  still  a  need  for  further  refinement  of  the  NAPs  as 
operational  instruments  in  order  to  increase  the  credibility  and  effectiveness  of  the 
whole process. 

=> Progress  is still to  be made  in terms of prevention  of long-term  unemployment  in 
order  to comply with the Guidelines. Most Member States committed themselves, in 
particular  through  the  first  two  guidelines,  to  a  common  European  preventive 
approach. This requires addressing the  inflow  into  long-term  unemployment  over  the 
period  of  5 years, by designing  the policy  mix  in such a way  that job  seekers are not 
required  to  wait  until  de-skilling  and  exclusion  sets  in.  Such  a  preventive  approach 
will,  in  the  medium-term  yield  a  more  sustainable  and  cost-effective  reduction  of 
unemployment  rates  than  the  mere  reliance  on  reinsertion  of  those  who  are  already 
excluded.  Four  Member  States  (France,  Spain,  Luxembourg,  UK)  have  announced  a 
clear  shift  of  their  policy  in  this  direction,  underpinned  by  quantified  targets  and  a 
6 

description  of  measures,  whereas  five  others  (Ireland,  Finland,  Belgium,  Germany, 
Netherlands) while moving in the same direction provided less detailed  quantification. 
Countries  with  a traditional  emphasis  on  a preventive  approach  (Denmark,  Sweden), 
while restating  their  support  for  the overall  policy  objective,  did  not  mention  how to 
achieve future targets. It should be noted that Sweden is moving towards targets which 
are  stricter  than  the  EU-wide  operational  targets.  Furthermore,  while  a  number  of 
countries announce specific  measures for job seekers at or immediately  after  the point 
when the unemployment  spell has reached  6 months for young people and  12 months 
for  adults,  these  measures  do  not  yet  reach  the  benchmark  established  by  the 
Employment Guidelines. 

> The establishment  of an Individual Action  Plan emerges as the starting point of a 
preventive  labour  market  strategy  for  a  large  number  of  Member  States.  As  a 
first step to  addressing  the  inflows,  a  number  of  countries  have  made  the  Individual 
Action  Plan  the  cornerstone  of  their  preventive  strategy.  This  represents  a  move 
towards an individualised  case management, a tailor-made approach, which enables an 
early  identification  of  those  at  risk,  and  also  more  sustainable job  access  as  such  an 
approach can be based on the needs of both the individual and the labour market. Such 
an approach may also avoid using scarce resources on those unemployed  who will by 
themselves  find  work.  Individual  action  plans  are  necessary  but  not,  however, 
sufficient.  They require a strengthening  of the Public Employment  Services as well as 
an  identification  of  the  concrete  action  which  can  have  a  measurable  impact  on 
reinsertion of unemployed job-seekers. This aspect is not always covered  sufficiently. 

> There is wide agreement  among Member States on the need  to strengthen  active 
policies  but  insufficient  specification  of  the  efforts  required  to  achieve  the  EU-
wide  target.  All  Member  States endorse  the objective  to  increase  training  and  other 
active  measures  for  the  stock  of  unemployed,  in  order  to  provide  them  with  the 
necessary  skills and incentives to re-enter employment.  However, the  identification  of 
the point  of departure  in each country  in relation  to the  European  benchmark  of 20% 
and subsequent evaluation of the policy effort  required  to reach  it, was not  undertaken 
by many Member  States. Six Member  States (Austria,  France,  Finland,  Luxembourg, 
Spain and Portugal) establish targets in line with the objective of reaching at least 20% 
of  participants  in  training  and  active  measures.  Five  countries  (Denmark,  Finland, 
Germany,  Sweden and the UK) declare that they have already  achieved  such a target. 
Still  others  announce  their  intention  to  increase  substantially  the  number  of 
participants in active measures. However,  in some cases, both the type of measures to 
be  included  and  the  target  population  need  to  be  clarified  further  in  order  to  ensure 
consistency of approach between Member States. 

Shifting  from  passive  to  active  policies  involves  also  a  thorough  review  of  the 
tax/benefit  systems.  The  NAPs  reflect  Member  States1  recognition  that  providing 
income support alone is not sufficient  to tackle  problems of unemployment  and  social 
exclusion. The need to give unemployed  persons  incentives and opportunities  in order 
to  enhance  their  employability  is  reiterated.  However,  most  NAPs  also  show  how 
difficult  it  is,  for  political  and  economic  reasons,  to  achieve  a  sizeable  shift  from 
passive to active policies in terms of public expenditure. Progress  in this direction  has 
been very  slow, and additional  efforts  are called  for.  Many NAPs also reveal  concern 

about  levels  of  welfare  dependency  and  announce  efforts  to  move  welfare  recipients 
from  inactivity  into  work  in  line  with  their  capacities,  as  well  as  to  ensure  that  more 
elderly  workers  retain  a  link  with  employment  before  legal  retirement  age.  Moreover, 
there  is  a  need  to  ensure  improved  co-ordination  between  the  delivery  of  active 
measures and the  social  security  systems, so that a greater number  of benefit  claimants 
will have better incentives to get back to work or participate  in training. 

Improving  training  and  education  systems  and  providing  skills  relevant  to  the 
labour  market  needs  is  the  most  effective  way  of  preventing  unemployment.  The 
NAPs  show  a common  concern  about  the  quality  of  general  education  and  vocational 
training  which  is seen  as a decisive  factor  for  ensuring  that young  people  secure  access 
to  the  world  of  work.  Most  Member  States  report  on  on-going  reforms  designed  to 
improve  quality  and/or  expand  the  capacity  of  the  national  training  and  education 
systems.  This  general  concern  is also  reflected  in  the emphasis  given  to the  increase  of 
the  overall  level  of  educational  qualifications  when  addressing  the  problem  of  drop 
outs,  although  the  definition  of  this  target  group  tends  to  vary  in  accordance  with 
national  circumstances. 

III.2 

Entrepreneurship 

This  pillar  of  action  calls  Member  States  to  undertake  concrete  action  to  attain  the 
following objectives: 

•  To reduce overhead costs and administrative  burdens for business (guidelines); 

•  To promote the development of self-employment  (guideline 9); 

•  To promote job creation in the social economy and at local level (guideline 10); 

•  To reduce the tax burden on labour (guideline 11); 

•  To examine ways of reducing VAT in some labour-intensive sectors (guideline 12). 

in 

the 

the  Commission 

recent  Communication  on 

=> The  inclusion  of  policy  objectives  pertaining  to  the  development  of  a  favourable 
business  environment  is  seen  as  a  positive  step  towards  a  closer  inter-action  with 
employment  and  labour  market  policy.  The  NAPs  display  a  wide  variety  of  policy 
measures  being  undertaken  or  planned,  some  of  them  in  line  with  the  suggestions 
made  by 
"Fostering 
Entrepreneurship"1.  There  appears  to  be  scope  for  interesting  exchange  of  experience 
on  some  of  the  most  innovative  measures.  One  may  refer,  in  this  context,  to  the 
proposals  for  the  creation  of  a 
single  registration  form  (Finland),  the  one-day 
procedure  for  the  registration  of  new  businesses  (France),  the  introduction  of 
entrepreneurship  courses  in  the  education  curricula  (Denmark),  the  liscal  incentives  to 
the  hiring  of  the  first  employee  (Spain,  Belgium)  and  "Business  Angels"  (Austria, 
Ciermany).  Improved  conditions  for  job  growth  include,  for  some  Member  States,  a 
favourable  environment  for  effective  competition,  access  to  venture  capital,  structural 
changes  and  the  liberalisation  of  the  markets  for  goods  and  services,  while  others 
stress  the  importance  of  promoting  high-lech,  fulure-orienlcd  industry  sectors,  like 
industries,  where  potential  for  job 
information  technology  or  environment-friendly 
creation  remains  largely  unexploited. 

COM(98)222. 

=> Member  States  increasingly  recognise  the  potential  for  employment  creation  in, 
the  social  economy,  local  activities  and  the  importance  of  new  activities  which 
meet  unfulfilled  social  demands.  Many  Member  States  have  announced  the 
commitment  to  develop  action  in  these  fields  but  only  a  few  provide  concrete  and 
relevant  examples  of  measures  and  pilot  projects.  The  French  programme  for  the 
creation  of jobs  for  the young  should  be highlighted  in this context.  The  contribution 
of the social economy,  in the majority  of NAPs, tends to focus  on the reintegration  of 
disadvantaged  groups, whereas its role in creating jobs  and  supporting the  emergence 
of new forms of services does not get the attention it deserves. The specific role of co 
operatives  and  mutual  societies  is recognised  in the NAPs  of  Belgium,  Spain,  Italy, 
Finland,  Sweden  and  Germany.  In some cases the public  sector  is called  on to play a 
directly  active  role; 
in  others  more  indirect  support  is  provided  through  fiscal  and 
administrative  incentives. Ffforts  are required  to demonstrate  the scope  for  sustainable 
employment  in the social  economy  and  the encouragement  of  job creation  in  meeting 
emerging needs. 

=> Most Member States opted not to set fiscal  targets, but important  tax reforms  arc 
being  pursued  in  some.  With  a  few  exceptions  (Netherlands,  Denmark,  Ireland) 
Member  States  did  not  set  concrete  targets  for  either  reducing  the  overall  burden  of 
taxation or reducing the fiscal  burden on labour. The  fact  that the budget decisions  for 
1998 had  already  been taken  by the time the NAPs were prepared, the present  policy 
of  continued  budgetary  consolidation  and  the  difficulties  to  find  alternative  stable 
sources of financing  social  security  systems, explain  the apparent  lack  o\^ ambition  in 
this domain.  However,  in recent years, several  Member  States  have taken  significant 
steps towards  reducing  non-wage  labour  costs,  in particular  for  low-income  workers. 
Lowering  non-wage  labour  costs  at  the  bottom  end  of  the  wage  range  can  foster 
sizeable job creation, especially  in low productivity sectors. In addition, some Member 
States  have  reformed  tax  systems  by  reducing  marginal  income  tax  rates  and 
introducing  tax credits, which  should  have a positive effect  in removing  desincentives 
to taking up low-paid jobs and avoiding poverty traps. 

Ill  3  Adaptability 

This  pillar  of  action  calls  Member  States  to  undertake  concrete  action  to  attain  the 
following  objectives: 

•  Social  partners  are  invited  to  negotiate  agreements  to  modernise  the  organisation  of 
work.  These  can  cover  different  expressions  of  working  time  and  forms  of  work. 
Flexibility and security should be balanced in these agreements (guideline 13). 

•  To respond to the increasingly diverse forms of employment, Member States will seek to 
introduce more adaptable types of contracts, while providing adequate levels of security 
(guideline 14). 

•  Member States will encourage the development of in-house training and investment in 

human resources (guideline 15). 

Social partners will need to shoulder their own responsibility  for supporting the 
employment  guidelines.  This  would  involve  a comprehensive  approach  integrating 
all  the  necessary  elements  of  adaptability:  modernisation  of  the  legislative 
framework,  updating  collective  agreements  and  bargaining,  new  forms  of  work 
organisation  and  the  management  of  working  time.  The  limitations  of  time, 
combined with the extensive nature of adaptability, has left this pillar underdeveloped 
in  most  contributions.  Formalised  agreements  (at  national  level)  on  the  range  of 
adaptability  issues have been  rare.  However,  even in the short time allowed  for  the 
preparation  of  the  plans  a  few  initiatives  could  be  detected.  In  Luxembourg,  the 
partners  participated  directly  in  establishing  the  NAP.  In  other  countries,  like 
Belgium  and Portugal, a new impulse was given  which may bear fruit  in  subsequent 
negotiations. 

The  dynamic  of developing  the NAPs  has  raised  awareness  of  the need  to  have 
an  integrated  and  comprehensive  approach  to  adapting  the  reorganisation  to 
structural  change.  Yet,  concrete  measures  supporting  new  forms  of  work 
organisation  have  not  been  clearly  set  out  in  the  NAPs.  A  few  initiatives  could  be 
detected  - social  partners  in  Portugal,  Ireland,  Austria  and  the  UK  have  signed joint 
the  modernisation  of  work  organisation. 
declarations  aimed  at  addressing 
Modernisation  of  the  contractual  framework,  particularly  for  part-time  work,  is 
progressing  but the  impact  of totally  new  forms  of work, e.g.  telework,  is still  being 
considered. 

Approaches  to  reorganisation  of working  time  reflect  the  different  roles  of  the 
State  and  the  social  partners.  For  a  number  of  Member  States  (France,  Italy, 
Belgium,  Luxembourg)  the  modernisation  of  work  organisation  is  linked  to  wider 
labour market policies on reduction/redistribution of working times, lifelong  learning 
and  the  social  security  system. 
In  these  countries,  an  integrated  approach  to 
legislative  change  has  been  instigated,  often  leaving  the  social  partners  to  negotiate 
aspects  of implementation.  Other countries  (Ireland,  UK) believe  that  the  role  of the 
State is to provide  fair  minimum  standards, leaving the social  partners themselves the 
task  of  agreeing  on  flexible  working  arrangements,  for  those  countries  with firmly 
established  tripartite traditions (Denmark,  Finland, Austria, Netherlands, Sweden) the 
various  aspects  of  adaptability  are  being  negotiated  through  already  established 
bodies. 

Training  is  generally  considered  as  a  powerful  force  for  adaptation  to  change. 
Across most of the Plans, policies combining  education,  training, taxation, and  legal 
reform  aspects with the aim  of improving  the  skills  of the  workforce  are present.  In 
all  Member  States,  tax  incentives  for  training  operate,  either  at  the  level  of  the 
individual  or  the  level  of  the  company.  In  some  cases  (UK,  Ireland,  Denmark, 
France), specific  new and targeted  measures for  promoting  investment  in training are 
announced.  The  contribution  of  the  FSF  (Objective  4  and  ADAPT)  to  promoting 
adaptability  has generally not been acknowledged. 

10 

ill.4  Equal  opportunities 

This  pillar  of  action  calls  on  Member  States  to  undertake  concrete  action  to  attain  the 
following objectives: 

•  Tackling gender gaps in employment and unemployment (guideline 16); 

•  Reconciling work and family life (guideline 17); 

•  Facilitating reintegration into the labour market (guideline 18); 

•  Promoting the integration of people with disabilities into working life (guideline 19). 

=> Preparing 

the  NAPs  has  raised  awareness  of  the 

importance  of  equal 
opportunities  policies,  both  with  respect  to  gender  and  disability.  All  Member 
Sates  have  taken  the  issue  on  board  in  their  NAPs  and  intend  to  take  new  action  or 
have  already  proposed  new  policy  measures.  Concrete  steps  forward  were  taken, 
particularly  in  the  area  of  childcare,  which  will  contribute  to  the  overall  goal  of 
employment  growth  by  increasing  labour  supply. 

=> The  content  of  the  NAPs  addressing  the  issue  of  equality  between  women  and 
men  appears  modest  and  insufficiently  detailed.  Strengthening  equal  opportunities 
is still  a relatively  new  component  of  Furopean  employment  strategy.  This  is  probably 
one  of  the  reasons  why  the  approach  to  equality-driven  policies  in  many  National 
Action  Plans  is  less  developed  than  that  to  other  policy  areas.  This  is  reflected  in  the 
relatively  limited  number  of  new  measures  proposed,  the  small  budgets  attributed  (if 
mentioned),  and  the  limited  number  of  quantitative 
targets  envisaged.  Without 
concrete  and  quantified  targets,  an  assessment  of  the  policy  initiatives  undertaken 
under  the  NAPs  is  difficult.  Also  the  internal  coherence  of  the  action  plans  could  be 
in  the  other  pillars 
improved  by  integrating  the  equal  opportunities  objective 
(mainstreaming) Although  a growing  number  of Member  States (Greece, France,  Italy, 
Spain,  Austria,  UK,  Sweden)  have  mentioned  this  concept,  there  is still  little  evidence 
of concrete applications  of  it. 

=> Providing  more  opportunities for  people  with  disabilities  is  now  a  full  component 
of  the  employment  strategy.  Member  States  are  firmly  committed  to  getting  more 
people  with  disabilities  into  jobs,  and  policy  actions  show  interest  in  mainstreaming 
this  issue  into other  policies  in  particular  on  employability.  Some  Member  States  draw 
attention  to  the  specific  problems  of  integration 
in  the  labour  market  oi'  other 
disadvantaged  groups  such  as ethnic  minorities. 

IV.  From Cardiff to Vienna: mapping the way ahead 

This  first  examination  of  the  NAPs  has  revealed  a  lot  of  light  and  some  shadows.  It  has 
also  revealed  scope for  further  work  to consolidate  the  Luxembourg  process. 

This  Communication  will  provide  a  basis  for  discussion  at  the  Cardiff  Summit  and  the 
Summit  conclusions  will  represent  a  further  impulse  to  the  work  already  underway  in 
Member  States, and with the  Social  Partners, to put into place the actions in the  NAPs. 

11 

The Joint Employment  Report, established by the Commission and the Council, will play 
a  key  role  in  the  follow-up  process  at  the  level  of  the  Union.  The  Commission  has 
already  started to prepare for this Report, which will be presented  in October. From July 
to  September,  the  Commission  will  organise  bilateral  discussions  with  each  Member 
State for the purposes of in-depth discussion of implementation  measures and procedures 
and to  gather detailed  information  on policy  developments, the  setting of indicators  and 
planned time horizons, and the allocation of financial and technical resources. 

These discussions will provide the framework  for the examination of the action taken by 
the  Member  States  to  implement  their  Action  Plan,  an  opportunity  to  provide  missing 
information  on envisaged  measures, as well  as the identification  of innovative  measures 
and  best  practices  under  each  pillar  which  are  the  most  promising  for  the  further 
development of the European employment strategy. 

With a view to these discussions  with  the  Member  States, the experience  gained  to date 
will  prove useful  in attending to some of the shortcomings  which  have been  identified  in 
the current set of limploymenl Guidelines. 

The  current  four  pillar  structure  has  proved  to  be  a  valuable  and  comprehensive 
framework  within  which  the  European  Employment  Strategy  can  evolve  and  be 
developed.  However,  in  the  course  of  preparing  their  National  Action  Plans,  several 
Member  States  have  identified  a  number  of  policy  issues  which  they  feel  must  be 
addressed  in order to meet the objectives  of their employment  strategies  but which  have 
been insufficiently  covered to date.  These issues include: 

-  Strengthening  the  shift  from  welfare  to  work, where  Member  States  have  committed 
themselves  to  reform  the tax  and  benefit  systems  to  encourage  entrepreneurship, job 
creation, active participation in the world of work, and to prevent social exclusion; this 
shift  has to be accompanied  by improvement  in the education  and training  systems as 
well as employment services; 

-  The mainstreaming  of equal  opportunities  in  future  developments  of the  employment 
strategy,  eg as concerns  care  for  children  and  other  dependants.  Moreover,  the equal 
opportunities  dimension  does  not explicitly  address  certain  areas of discrimination  in 
the labour market, in particular on grounds of race or ethnic origin; 

-  The  enhancement  of employment  opportunities  for  people  with  disabilities,  as  a key 
element  in combatting  long  term  unemployment  and  despite  the  considerable  efforts 
made by Member States in this domain; 

-  The  strengthening  of  the  local  dimension  of  the  employment  strategy,  where  the 
Member States need to integrate local initiatives and new sources of work  in the social 
economy  within  an  overall  development  strategy  and  the  development  of  integrated 
and sustained development strategies at the local level by local actors; 

-  Tackling  the  challenge  of  ageing  for  labour  market  policy,  to  find  solutions  to 
pressures related to early retirement, the emergence of bottlenecks of labour supply, as 
well as ensuring sustainability of pension and health systems. 

12 

Within  the  context  of  the  current  four-pillar  framework,  therefore,  the  Commission, 
together  with  the  Member  States,  will  carry  out  preparatory  work  to  underpin  further 
policy  development  in order  to  enable the  Employment  Guidelines  to better  capture  the 
diversity of the challenges the Member States face. 

A successful  continuation of the Luxembourg process is also dependent on decisive steps 
being taken without delay in the following  areas, which require the joint commitment and 
collaboration  of  the  Member  States,  the  Commission,  the  Social  Partners,  and  other 
actors concerned: 

Translate  the  policy  commitments  into  budgetary  commitments.  Implementing  the 
NAPs will require budget and staffing  commitments, reforms  of institutions and  services 
as well as a more effective  delivery of education and training. This poses a key challenge 
to  restructuring  public  expenditure  on  employment  policy  towards  activation  and 
prevention.  The present  favourable  economic  climate  is a challenge  and  an  opportunity. 
Member  States  should  examine  whether  and  how  the  current  favourable  economic 
prospects  will  allow,  within  the  limits  of  budgetary  consolidation,  a  decisive  shift  of 
resources towards meeting the objectives of the Employment  Guidelines, in line with the 
Florence  Summit  conclusions  in  1996.  Because  most  NAPs  were  prepared  after  the 
national  budget  for  1998  had  been  adopted,  Member  States  are  expected  to  better 
incorporate  the  commitments  in  the  NAPs  in  the  national  budget  proposal  for  1999. 
Where the Plan lacks clear orientation, targets and time horizons, the governments should 
take  the  opportunity  offered  in  the  next  budgetary  round  to  make  the  NAPs  more 
operational and concrete. 

Encourage  the  Social  Partners  to  reinforce,  implement  and  evaluate  the  impact  of 
their contributions  . Despite their willingness  to  respond  to the Guidelines  and  despite 
their  positive  contribution  to  the  preparation  of  many  NAPs,  their  input  needs  to  be 
reinforced  at  both  national  and  European  levels  and  its  impact  on  employment  duly 
evaluated.  Although  some  agreements  have  been  already  concluded,  for  instance 
regarding  work  opportunities  for  young  people  and  other  target  groups,  negotiations  in 
areas such as flexibility  of working life, work organisation  and  working  time, are  still to 
be  developed.  The  Social  Partners,  at  national  and  European  levels,  have  a  great 
responsibility,  as  called  for  in  the  Guidelines,  and  should  intensify  their  efforts  to 
contribute  to  the  modernisation  of  the  contractual  and  institutional  framework  for 
reconciling  flexibility  and  security,  establishment  of systems  for  life-long  learning, and 
the promotion  of  new  forms  of work  organisation  and  employment  patterns  such  as job 
rotation  systems.  Within  such  a  comprehensive  approach,  the  social  partners  need, 
therefore, to make an independent and proactive contribution  to the employment  strategy. 

Integrate  the  European  Social  Fund  better  into  the  mainstream  labour  market 
policies. The European  Social  Fund plays an important  role in supporting  national  labour 
market  policies  and  represents  from  one  or  two  percent  to  more  than  half  of  the  total 
spending  on  employment  policy.  The  role  of  F2SF  can  be  particularly  important  in 
countries  where  regions  have specific  competences  in  policy  implementation  (Germany, 
Italy)  and  in the  Cohesion  countries  (Spain,  Portugal,  Ireland,  and  Greece).  Only  a  few 
NAPs  (France,  Greece,  Ireland,  Italy,  Finland)  present 
information  on  a  breakdown  of 
ESF-supported  interventions  under  each  of  the  Guidelines,  their  impact  in  preventing 
youth  and  long-term  unemployment,  and  their  role  in  supporting  labour  market  policy. 
Beyond  its  quantitative  impact,  in  most  Member  States  the  ESF  experience  has  been 

13 

instrumental  in developing  certain policies  and  approaches. This  includes the  "pathways 
approach"  to  labour  market  integration,  the  creation  of  new  guidance  services,  the 
provision  of  care  services  and the promotion  of local  development.  The  Member  States 
should, therefore, take further  steps to report, in a more systematic and accurate way, on 
the  role  of  the  ESF  in  underpinning  the  National  Action  Plans.  The  Social  Fund  can 
support both innovative action and the implementation of policy measures under each of 
the  four  pillars.  A  key  issue  will  be  the  strengthening  of  the  strategy  of  prevention  of 
long-term unemployment in the ESF programmes. 

The  development  of  comparable  employment  indicators  needs  to  be  tackled 
urgently.  Without  precise  and  comparable  indicators,  the  verification  of  progress  at 
national  level becomes  difficult  and the multilateral  peer review risks losing much of its 
force  and  policy  impact.  This  requires,  in  particular,  agreement  on  a  set  of  basic 
indicators  of  employment  performance  and  especially  those  policy  indicators  related  to 
the three EU-wide operational targets. Such indicators must provide the preliminary  basis 
for  monitoring  whether  Member  States  implement  their  NAP  in  compliance  with  the 
Guidelines.  As  regards  the  policy  indicators  measuring  the  effort  required  to  attain  the 
expected  employment  outcomes,  transparency  and  common  understanding  of  national 
indicators and methodologies  must guarantee the appropriate  identification  of the starting 
point and trend  values. To develop a complete set of such comparable  indicators  is more 
ambitious and  will  be the outcome of a medium-term  process. As regards  the evaluation 
of the policy effort,  preparatory discussions have already started and the Commission has 
encouraged  national authorities to strengthen their efforts  to undertake the required joint 
technical work. 

In  conclusion,  it  must  be  recognised  that  the  National  Action  Plans  represent  a 
significant  step  forward  in  the  Luxembourg  process, and  the  Member  States  must 
move on to the implementation  phase  now.  It is important  to consolidate  the  progress 
already achieved and, while respecting the principle of subsidiarity,  it is also important  to 
keep  up  the  political  momentum  in  carrying  forward  the  employment  strategy  and  the 
national  objectives  specified  in  the NAPs. This will  not  be without  difficulty  nor will  it 
yield  immediate  results  in all  areas.  The Commission  encourages  the  Member  Slates  to 
continue  to  refine  and  clarify  their  intentions,  to  make  the  necessary  policy  shifts  as 
announced,  and to fill in any  gaps which  still  remain  in their  Plans. The Commission  is 
committed to continuing its efforts to support and facilitate  this process. 

* * * * * * * * * * * * * ** 

14 

ISSN 0254-1475 

COM(98) 316 final 

DOCUMENTS 

EN 

04  01  05  10 

Catalogue  number  :  CB-CO-98-325-EN-C 

ISBN 92-78-36319-7 

Office  lor Official  Publications of the European Communities 

L-2985 Luxembourg