Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - Taking stock of five years of the European Employment Strategy
Date: 2002-07-17
Institutions: European Commission
Subjects: European Employment Strategy, cooperation policy, employment policy, labour market, structural fluctuation

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 17.7.2002
COM (2002) 416 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE
EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND
THE COMMITTEE OF THE REGIONS

TAKING STOCK OF FIVE YEARS OF THE EUROPEAN EMPLOYMENT
STRATEGY

EXECUTIVE SUMMARY

The  European  Employment  Strategy  (EES)  was  launched  at  the  Luxembourg  Jobs  Summit
(1997) against a background of high levels of unemployment. The Lisbon European Council
of  2000  updated  the  Strategy  -  adopting  the  goal  of  full  employment;  setting  medium  term
employment  targets  and  integrating  the  Strategy  into  a  wider  framework  of  policy  co-
ordination.

The  European  Social  Agenda  -  endorsed  at  the  Nice  European  Council  –  called  for  an  in-
depth  review  of  the  first  five  years  of  the  EES  in  2002.  The  recent  Barcelona  European
Council called for a reinforced Employment Strategy and provided directions for the future of
the EES.

This  Communication  reviews  the  experience  of  five  years  of  the  EES  on  the  basis  of  an
overall  EU  labour  market  performance  assessment  and  an  evaluation  of  the  policies
implemented by the Member States under the "Luxembourg" process. It also reviews the main
issues, which will have to be addressed when re-designing the Strategy for the future.

In recent years, the EU labour market performance has visibly improved, with more than 10
million  new  jobs  created  since  1997  (6  million  of  which  were  taken  up  by  women)  and  4
million less unemployed, while the active population continued to grow by 5 million people.
The evaluation confirms the structural character of these improvements, through reductions in
levels of structural unemployment, a more employment-intensive pattern of economic growth
and a more rapid labour market response to economic and social changes.

It  is  obviously  difficult  to  establish  how  much  of  the  overall  improvement  in  employment
performance in the Union during the past five years can be attributed to the introduction of the
EES  and  how  much  to  the  economic  improvement.  However,  there  have  been  significant
changes in national employment policies, with a clear convergence towards the common EU
objectives set out in the EES policy guidelines.

A number of specific policy changes have taken place. Employment policies and the role of
public employment services have been reshaped to support an active and preventive approach.
In some Member States tax-benefit systems have been adapted in line with the principles of
activation.  Labour  taxation  started  to  become  more  employment  friendly.  Education  and
training systems increasingly adapted to labour market needs. Progress in modernising work
organisation has occurred, notably in terms of working time arrangements and more flexible
work contracts. Gender mainstreaming has become generalised, with various initiatives taken
to  tackle  the  gender  gaps,  including  the  provision  of  childcare  facilities  to  improve  the
reconciliation of work and family life. And new common paradigms such as lifelong learning
and  quality  at  work  were  recognised  as  policy  priorities,  with  convergence  in  these  areas
starting to take place.

Beyond this general process of policy convergence, the open method of co-ordination of the
Luxembourg  process  has  demonstrated  its  added  value  in  fostering  partnerships  and  new
working methods, both at national and EU level. Overall, the Strategy has brought a shift in
national  policy  formulation  and  focus  –  away  from  managing  unemployment,  towards
managing employment growth.

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Despite  progress,  there  remain  serious  employment  challenges  –  not  least  in  terms  of
responding  to  demographic  trends,  the  emergence  of  bottlenecks,  regional  differences  in
performance,  and  the  ongoing  economic  and  social  restructuring,  globalisation  and
enlargement.

In  order  to  cope  effectively  with  these  challenges,  the  Luxembourg  process  has  to  be
refocused on its main  priorities  :  creating  more  and  better  jobs,  and  promoting  an  inclusive
labour  market.  To  this  end,  the  Communication  identifies  four  main  issues  for  the  EES
reform: (a) the need to set clear objectives in response to the policy challenges, (b) the need to
simplify  the  policy  guidelines  without  undermining  their  effectiveness,  (c)  the  need  to
improve  governance  and  partnership  in  the  execution  of  the  strategy  and  (d)  the  need  to
ensure greater consistency and complementarity with respect to other relevant EU processes,
notably the Broad Economic Policy Guidelines.

The Communication is intended as an input to the debate on the future of the Strategy, which
will lead to a proposal from the Commission for Employment Guidelines for 2003.

3

Table of contents

1.

1.1.

1.2.

2.

2.1.

2.2.

INTRODUCTION ....................................................................................................... 5

Need for a review ......................................................................................................... 5

The European Employment Strategy : origin and developments................................. 5

MAIN CONCLUSIONS FROM THE IMPACT EVALUATION OF THE
EUROPEAN EMPLOYMENT STRATEGY.............................................................. 7

Structural employment improvements have taken place in the EU ............................. 7

National employment policies converge towards the agreed objectives and guidelines9

2.2.1. A positive impact on policy overall ............................................................................. 9

2.2.2.

Employability : now accepted as a life time concept................................................. 10

2.2.3.

Entrepreneurship : key to job creation ....................................................................... 12

2.2.4. Adaptability : complex relationship between flexibility, security and job quality .... 13

2.2.5.

Equal opportunities between women and men : greater awareness but insufficient
evaluation ................................................................................................................... 14

2.3.

The Luxembourg process proved effective in fostering policy co-operation ............ 15

3.

3.1.

3.2.

3.3.

3.4.

4.

ISSUES FOR THE DEBATE ON THE FUTURE OF THE EUROPEAN
EMPLOYMENT STRATEGY .................................................................................. 17

Responding to medium-term challenges.................................................................... 17

Simplifying the guidelines without undermining their effectiveness ........................ 19

Improving governance and partnership...................................................................... 20

Improving consistency and complementarity between relevant EU processes ......... 21

ANNEXES ................................................................................................................. 22

Annex 1 : Evaluation methodology.......................................................................................... 22

Annex 2 : Review of key policy changes in relation to the EES in the areas of active labour

market policy, modernisation of work organisation and equal opportunities............ 23

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1.

1.1

INTRODUCTION

Need for a review

When the Luxembourg Jobs Summit launched the European Employment Strategy  (EES) at
the end of 1997, the ambition was to achieve decisive progress within five years, in particular
in  the  field  of  long-term  and  youth  unemployment.  A  Mid-Term  Review  was  conducted  in
2000, which credited the EES for political progress, while noting that the period of three years
was too short to assess its impact on jobs. Therefore the need for a fully fledged review of the
EES  was  reflected  in  the  European  Social  Agenda,  as  endorsed  by  the  Nice  European
Council,  "to  complete  the  review  and  the  impact  assessment  of  the  strategy  in  2002  with  a
view to contributing to the further development of the strategy".

This  Communication  reviews,  in  section  2,  the  experience  of  five  years  of  the  EES  on  the
basis of an impact assessment, both in terms of the process and of the policies implemented.
Section 3 deals with the main issues which will have to be considered when re-designing the
EES  for  the  future,  taking  into  account  the  various  policy  inputs  from  the  EU  institutions
(notably  the  Barcelona  European  Council  conclusions)  as  well  as  the  conclusions  from  the
evaluation.

This  Communication  is  intended  as  a  basis  for  debate  at  all  levels.  EU  institutions  -  the
Council,  European  Parliament,  Economic  and  Social  Committee  and  Committee  of  the
Regions  –  are  invited  to  give  their  views  on  the  Commission  analysis,  as  well  as  the
Employment Committee, the Social Partners, civil society and other interested parties. Taking
into  account  the  views  expressed,  the  Commission  will  submit  proposals  for  the  next
generation of Employment Guidelines with a view to their adoption by the Council in 2003.

1.2

The European Employment Strategy : origin and developments

In  the  '90s,  political  consensus  developed  around  the  structural  nature  of  Europe's
employment problem and on the need to increase the employment intensity of growth1. Both
the monetary stabilisation policy, followed to prepare for EMU, and the common nature of the
employment  and  unemployment  challenge,  called  for  a  more  co-ordinated  employment
oriented policy response at European level.

The debate, begun during the negotiation of the Maastricht Treaty (1992), which strengthened
the social dimension of the European model through a social protocol, led to the agreement at
the Amsterdam European Council (June 1997) on new employment provisions in the Treaty.
While confirming national competence for employment policy, employment was declared in
Art.  126  a  matter  of  common  concern  and  Member  States  were  called  on  to  develop  a  co-
ordinated  employment  strategy  at  EU  level.  Largely  inspired  by  the  Treaty  provisions  on
economic policy co-ordination2 and by the co-ordination of employment policies launched at
the Essen European Council of 1994, the new Art. 128 instituted a framework for developing
national employment policies on the basis of shared European priorities and interests. Under
this new framework, policy co-ordination would be fostered by a "management by objectives"
approach.  Accordingly  :  European  Employment  Guidelines  are  decided  each  year  by  the
Council following a proposal from the Commission ; these Guidelines have to be taken into

1 Cf. the Delors White Book on Growth, Competitiveness and Employment, 1993
2 Art. 98 and 99 TEU

5

                                                
account in national action plans (NAPs), which are assessed through the Joint Employment
Report from the Commission and the Council, with a view to set the next annual guidelines.
Since  2000,  the  Council,  following  a  proposal  from  the  Commission,  issues  specific
recommendations to Member States, in order to complement the Employment Guidelines. The
"management by objectives" approach is also supported by the setting of measurable targets at
EU  or  national  level  in  a  number  of  areas,  as  well  as  by  the  progressive  development  of
statistical  indicators  –  agreed  between  the  Commission  and  Member  States  -  to  measure
progress.

The  implementation  of  the  Strategy  allowed  a  diversity  of  approaches  and  called  for  the
involvement  of  all  relevant  actors,  in  accordance  with  the  wide  diversity  in  national
institutional set-up and social dialogue practices. This openness of the co-ordination process
led, inter alia, to calls on the social partners, both at national and EU level, to develop specific
actions, and to initiatives to develop regional and local involvement. Since the entry into force
of  the  new  treaty  in  1999,  the  European  Parliament,  other  Community  institutions  and  the
Employment  Committee  have  also  played  an  active  part  in  the  development  of  the
Employment Guidelines through consultation.

The Luxembourg "Jobs" Summit (November 1997), against the background of high levels of
unemployment and in anticipation of the entry into force of the Amsterdam Treaty, launched
the implementation of the new open method of co-ordination embedded in art. 128, endorsing
the first set of Employment Guidelines. These were presented under four integrated strands of
action, the so-called pillars of the Employment Guidelines : employability, entrepreneurship,
adaptability,  and  equal  opportunities.  These  actions  constitute  a  comprehensive  response  to
the  employment  challenge,  integrating  essential  supply  and  demand  oriented  policies.  By
contributing to labour market reforms in a way that is consistent with, and complementary to,
the Broad Economic Policy Guidelines, the EES helps to enhance the growth potential of the
EU.

The  Lisbon  European  Council  (March  2000),  while  continuing  to  call  for  greater  efforts  to
reduce the still high numbers of unemployed people, set full employment  as an  overarching
long-term  goal  for  the  new  European  economy  in  the  form  of  ambitious  targets  for
employment  rates  for  2010  (70  %  overall  and  60  %  for  women).  The  Summit  also
recommended  new  or  strengthened  priorities  (for  example  skills  and  mobility,  lifelong
learning),  which  were  reflected  in  the  Employment  Guidelines  for  2001  through  new
horizontal  objectives.  Subsequent  adaptations  to  the  Employment  Guidelines  were  mainly
triggered by the Stockholm Summit conclusions3.

The Nice European Council of December 2000 introduced the issue of quality as the guiding
thread of the Social Policy Agenda, and in particular quality in work as an important objective
of  the  EES.  It  stressed  the  multidimensional  character  of  the  quality  issue,  concerning  both
job characteristics and the wider labour market context, and stated that it should be promoted
through actions across all the pillars.

The  Barcelona  European  Council  in  March  2002  identified  "Active  policies  towards  full
employment:  more  and  better  jobs"  amongst  the  three  areas  requiring  specific  impetus.  It
underlined that full employment in the EU is at the core of the Lisbon strategy and constitutes

3 The  Stockholm  European  Council  complemented  the  Lisbon  targets  with  intermediate  targets  for  the
employment rate to be reached in 2005: 67 % overall and 57 % for women. In addition, a new employment
rate target of 50% was set for older persons (for 2010).

6

                                                
the essential goal of economic and social policies. In light of the above, the European Council
called  for  a  reinforced  Employment  Strategy  and  provided  directions  for  the  future  of  the
EES.

2

MAIN  CONCLUSIONS  FROM  THE  IMPACT  EVALUATION  OF  THE
EUROPEAN EMPLOYMENT STRATEGY

To underpin the review of the EES, the Commission and the Member States agreed in 2001,
within the Employment Committee, on a joint work programme. The Commission would co-
ordinate an impact evaluation, based on national policy impact evaluation studies following a
common  thematic  breakdown,  and  carry  out  an  EU-wide  employment  performance
assessment.  The  results  of  this  evaluation  exercise,  which  were  discussed  with  the  Member
States  within  the  Employment  Committee,  are  summarised  below.  In  spite  of  the
aforementioned inputs, the technical difficulties of a precise impact evaluation should not be
under-estimated,  considering  the  interaction  between  different  policies,  the  simultaneous
improvement  of  the  economic  situation  and  the  relatively  short  period  under  review  as
compared to the long term nature of certain structural reforms (see methodological Annex 1).

The evaluation of the past five years points to clear structural improvements in the EU labour
market. Despite marked differences between Member States and the difficulty of establishing
clear  causal  relationships  between  overall  performance  and  specific  policies,  over  the  same
period  a  significant  degree  of  convergence  of  national  employment  policies  towards  the
objectives and  the  guidelines defined under the EES can be  discerned.  The  open  method  of
co-ordination  itself  has  demonstrated  its  value  in  fostering  partnerships  and  new  working
methods, albeit with marked differences between Member States.

2.1

Structural employment improvements have taken place in the EU

Recent years have been characterised by impressive job creation and a substantial decline in
unemployment,  against  a  background  of  strong  GDP  growth.  In  the  five-year  timespan
between 1997 and 2001 :

- 

the  total  number  of  jobs  grew  by  slightly  more  than  10  million  (+  6.5%),  of  which  6
million were taken up by women,

-  unemployment declined by more than 4 million (- 25%),

-  while labour force participation grew by nearly 5 million4, driven largely by women.

In view of the difficulty to disentangle the influence of structural reforms and cyclical effects
on the labour market, the Commission services have assessed the longer-term sustainability of
some  structural  changes  in  relation  to  key  objectives  of  the  EES5.  Inter  alia  the  following
major changes could be established6 :

-  during the second half of the 1990s, structural unemployment declined for the Union as a
whole  (coinciding  with  the  rate  of  decline  in  long-term  unemployment).  Since  1997  (the

4 Employment grew from 157.5 (1997) to 167,8 million (2001); unemployment went down from 17.0 (1997)

to 12.9 million (2001); the labour force increased from 166.2 (1997) to 171.1 million (2001).

5 Notably  the  reduction  of  unemployment  (Luxembourg  Summit),  the  Lisbon  and  Stockholm  targets  for

employment rates, and labour market adaptability (art. 125 TEU)
6 See Employment in Europe 2001, chapter 3 and the 2002 edition.

7

                                                
period covered by the Luxembourg strategy), the decline in structural unemployment has
accelerated  further,  amounting  to  1,4%.  This  is  all  the  more  remarkable  given  the
increasing trend in labour market participation, which occurred at the same time.

-  economic  growth  translated  into  stronger  employment  growth  in  the  1990s  than  in  the
previous two decades. The relationship between GDP  growth and employment growth in
the  1970s,  the  1980s  and  the  1990s  shows  that  the  job  content  of  economic  growth  has
increased.

- 

- 

the  increased  job  content  of  economic  growth  since  the  second  half  of  the  1990s  also
results  from  a  change  in  the  growth  pattern  :  growth  in  productivity  per  hour  and  in
employment were more positively correlated than in previous periods when rising capital-
labour substitution tended to lead to higher unemployment. Productivity improvements in
EU regions and sectors are closely related to a better educated and higher skilled working-
age  population  and  there  is  evidence  of  a  positive  link  between  quality  in  work  and
productivity.

there  is  also  evidence  that  the  responsiveness  of  employment  and  participation  to
improvements  in  the  economy  increased  in  the  1990s7.  When  the  economy  picked  up,
employment  responded  in  the  1990s  much  more  strongly  than  in  the  1980s  thereby
allowing  for  unemployment  to  decline  more  markedly.  In  periods  of  high  capacity
utilisation in the 1990s more people entered the labour market, labour force participation
went up, allowing employment to increase more than in the 1980s. Increases in the share of
contracts of limited duration provide evidence of a more rapid and stronger responsiveness
of employment to cyclical variations.

While  many  factors  may  explain  job  rich  growth  and  the  rising  responsiveness  of
employment,  wage  moderation  is  considered  as  one  key  factor.  With  EMU  providing  a
macro-economic framework in which nominal wage restraint became meaningful, the social
partners  pursued  employment-friendly  wage  agreements  over  a  long  period  thereby
contributing to the improved employment performance.

Notwithstanding  these  positive  outcomes,  which  illustrate  the  success  of  a  mix  of
employment  policies  and  stability  oriented  economic  policies,  considerable  structural
problems and challenges persist :

-  almost  13  million  people  (2001)  are  still  unemployed  (of  which  42%are  long-term
unemployed) ; further reduction of unemployment is a condition for achieving an inclusive
labour market;

-  sustained efforts will be needed in order to achieve the Lisbon employment rate targets of
70 % overall in 2010, and in particular the 50 % target for older workers. The Joint Report8
on  increasing  labour  force  participation  prepared  for  the  Barcelona  European  Council
estimated the necessary increases in employment between 2002 and 2010 at 15,4 million,
of which 9,6 for women and 7,4 for older workers;

7 This  is  also  the  conclusion  of  a  recent  study  by  the  IMF  with  respect  to  the  employment  response.  IMF
(2001) Selected Euro-Area Countries : Rules-Based Fiscal Policy and Job-Rich growth in France, Germany,
Italy and Spain - Report with supplementary information, November 2001, Country Report n° 01/203.
Increasing labour force participation and promoting active ageing" Council doc. N° 6707 of 8 March 2002,
adopted on the basis of COM(2002) 9 final of 24.01.2002

8

8

                                                
-  differences in productivity between the US and the EU are still increasing slightly; whereas
the gap in productivity per worker was 17,3 % in 1996, it increased to 19,5 % in 2001; the
positive link between job quality and productivity will have to be exploited to bridge this
gap;

-  regional  differences,  notably  in  terms  of  unemployment,  remain  a  problem  in  several

Member States9.

2.2

National  employment  policies  converge  towards  the  agreed  objectives  and
guidelines

While a few Member States were already implementing policies largely in line with the key
principles of activation and prevention before the launch of the EES, clear convergence can be
noted  for  other  Member  States  -  albeit  at  different  paces.  The  influence  of  the  EES  spread
from the employability pillar to the other pillars of the strategy. Changes take time, however,
and much remains to be done under each pillar, especially to move towards longer term and
more comprehensive approaches.

2.2.1

A positive impact on policy overall

The comprehensive approach of the EES generally strengthened national employment policy
coherence  and  framework.  Policies  under  each  pillar  were  progressively  adjusted  and
employment  priorities  were  mainstreamed  into  other  policy  areas  like  taxation  and  social
security.  In  addition,  the  Strategy  has  brought  about  a  gradual  change  in  priority  from
managing  unemployment  to  managing  employment  growth,  and  has  become  gradually
embedded in national policy formulation.

Beyond the clear convergence towards the active labour market principles of the EES in the
earlier  years of the  strategy,  the  evaluation  shows that  other  policies  were  also  significantly
influenced  by  the  EES  (notably  gender  equality  and  social  inclusion  policies).  A  detailed
review of national measures in key areas can be found in Annex 2. This may be related to the
emphasis the Guidelines put on maintaining a proper policy mix based on the four pillars.

Member  States'  political  commitment  was  reflected  in  the  NAPs  and  the  practice  of  setting
targets  was  taken  over  by  a  significant  number  of  Member  States,  first  through  targets  to
reduce  unemployment,  and,  following  the  Lisbon  Summit,  through  long-term  employment
targets.  Over  the  years,  the  EES  has  added  momentum  to  longer  term  structural  reforms  in
labour  markets,  not  least  through  the  use  of  recommendations,  addressed  to  individual
Member States, adopted by the Council on a proposal from the Commission.

The  EES  also  fostered  political  agreement  on  new  common  paradigms,  such  as  lifelong
learning  and  quality  in  work.  The  need  for  lifelong  learning,  and  the  complementarity
between  education  and  training  systems  has  become  generally  accepted  and  Member  States
are all in the process of re-designing their education and training policies in a more integrated
way10. Quality in work appeared as a new  priority  in  the  Employment  Guidelines  for  2000.
On the basis of a Commission Communication11, work started to monitor this issue through

9 Regional differences are inter alia illustrated in the Joint Employment Report 2001.
10 The building blocks for coherent and comprehensive lifelong learning strategies have been presented in the
Communication  "Making  a  European  Area  of  Lifelong  Learning  a  Reality"  from  the  Commission
COM(2001)678 final

11 "Employment and social policies: a framework for investing in quality" – COM(2001)313 of 20.6.2001

9

                                                
common indicators reflecting the different dimension of quality. A first list of indicators was
endorsed by the Council in December 2001 and will support the monitoring process.

However,  policy  changes  take  time  and  further  progress  towards  fully  balanced  and
comprehensive policies are needed. Member States' policy mixes are still unevenly specified
across the different pillars and their approaches towards some key issues (e.g. active ageing)
seem piecemeal. Moreover, the credibility of their commitment to the Strategy is limited by
the still widespread reluctance to set targets (e.g. on investment in human resources) and the
continuing lack of visibility of a budgetary dimension (in particular the ESF contribution ).

2.2.2

Employability : now accepted as a life time concept

Whereas,  at  the  launch  of  the  EES,  employability  was  mainly  seen  as  the  cure  for  the
unemployed, the concept was progressively widened to cover the whole life cycle,  covering
the prevention of early school leaving, prevention of unemployment, increasing access to an
inclusive  labour  market,  enhancing  the  capacity  of  workers  to  remain  active  and  promoting
the continued updating of skills.

Long-term unemployment was successfully reduced, but the search for greater effectiveness
of measures appears necessary

Prevention  and  activation  were  the  cornerstones  of  the  approach  to  reduce  long-term
unemployment. They aimed at preventing inflows into long-term unemployment and to speed
up the outflows through an increased use of active measures such as training, work experience
and subsidised employment for the unemployed.

Targets  for  prevention  and  activation  were  specified  in  the  Employment  Guidelines.  The
majority  of  Member  States  have  made  considerable  efforts  to  improve  the  coverage  of  the
unemployed by the preventive approach, both for youth and adults, but the approach has not
yet reached all persons at risk in each of the Member States. On the other hand, the share of
active measures in labour market expenditure followed an overall upward trend. The target set
in  the  Employment  Guidelines  to  offer  active  measures  such  as  training  and  subsidised
employment to 20% of the unemployed was generally reached and the benchmark of the three
most  advanced  Member  States  even  increased  from  20%  to  about  50%  in  recent  years.
Beyond  the  convergence  effect,  the  focus  on  quantitative  targets  has  also  been  effective  in
promoting a modernisation of public employment services and in reorienting their placement
and reintegration activities.

In this context, the share of long term unemployed in total unemployment was reduced from
50% to 42%, and long-term unemployment declined from 5% of the labour force in 1997 to
3.2 % in 2001. Although the success of prevention and activation depends on many contextual
and  individual  factors,  some  general  conclusions  can  be  drawn  as  to  the  effectiveness  of
typical  measures  :  training  measures  prove  to  be  effective  for  particular  target  groups  (e.g.
women  re-entering  the  labour  market,  educated  immigrants)  ;  the  results  with  subsidised
employment  are  mixed  (subsidised  employment  in  the  private  sector  being  more  effective
than job creation in the public sector) ; self employment grants show positive results, although
the  scope  for  wide  application  of  such  formula  may  be  limited  ;  job-search  assistance  as  a
basic measure seems generally effective ; the experience shows that the effects of large scale
non-personalised programmes (such as for youth) are less convincing, reflecting the fact that
larger programmes may suffer from inadequate targeting.

10

The  questions  of  the  sustainable  integration  of  the  unemployed  in  the  labour  market,  the
follow-up  of  beneficiaries  and  the  cost-effectiveness  of  active  measures  deserve  more
attention.  This  implies  a  better  identification  of  persons  at  risk  at  an  early  stage,  and  both
preventive and active measures tailored to personal needs, in order to make "the right offer to
the right person at the right time". The experience from the past also suggests that, in order to
improve  the  monitoring  and  evaluation  of  ALMP  measures,  further  efforts  to  improve
definitions, statistics and indicators are necessary.

Tax-benefit systems have undergone reforms but disincentives remain

The  EES  has  stimulated  governments  to  introduce  or  pursue  employment  friendly  social
security and taxation reforms in accordance with national specificities. Incentives to take up a
job or to work longer have been introduced by most Member States in the tax-benefit systems
over the years, often in combination with active measures. However, in a number of Member
States,  further  restrictions  or  conditions  on  benefits  bear  the  risk  of  creating  adverse  social
effects of poverty or undeclared work, which calls for improved interaction between tax and
benefit systems.

Member States have become more alert to unemployment, poverty and retirement traps, and
some  examples  have  emerged  of  successful  removal  of  such  traps  through  employment-
oriented reforms in the social benefit or early retirement systems.

The promotion of active ageing requires increased emphasis

The  longer-term  thinking  reflected  in  the  Lisbon  and  Stockholm  targets  also  led  to  greater
awareness of the issue of active ageing. At the beginning of the EES, this issue was mainly
covered  under  the  tax-benefit  agenda,  but  it  became  a  separate  guideline  in  2000  with  a
broader  focus.  According  to  the  impact  evaluation,  early  retirement  systems  have  not  been
sufficiently  addressed  in  most  Member  States.  This  confirms  the  conclusions  of  the  Joint
report12 on raising labour market participation, presented to the Barcelona European Council,
that life  cycle  comprehensive  approach  is  needed  to  promote  adaptability  and  active  ageing
and discourage early retirement.

Despite efforts, risk of increasing gaps in education and training

The EES has given an important boost to lifelong learning policies and has played a role in
making  lifelong  learning  a  top  political  priority.  Education  and  training  have  increasingly
been used as preventive and active labour market tools to promote employability, adaptability
and  competitiveness.  The  emergence  of  bottlenecks  and  skills  gaps13  has  underlined  the
importance of competence development throughout the whole life cycle.

This has helped to consolidate the positive long-term trend in participation in education and
training and attainment levels14. Nevertheless, lifelong learning is far from being a reality for
all, as  illustrated by  the  continuing  very  low  level  of  participation  of  older  workers15,  SME

12 "Increasing labour force participation and promoting active ageing" Council doc. N° 6707 of 8 March 2002,

adopted on the basis of COM(2002) 9 final of 24.01.2002

13 See also COM(2002)72 of 13.2.2002 Commission's Action Plan for skills and mobility.
14 The overall participation rate of the 25-64 population in education or training increased from 5,7 % in 1995
to 8,4 % in 2000 and those with at least an upper secondary qualification rose from 52 % to 60,3 % over the
same period.

15 Those aged between 55-64 are five times less likely to take part in education or training than those aged 25-
34. The participation rate for those with low skills is 6 and a half times lower than that of those  with  high

11

                                                
employees and those on flexible work contracts. More worryingly, there are some signs of a
widening  gap  in  access  to  training  between  those  with  low  skills  and  the  higher  educated.
Furthermore, despite successes in some Member States, school dropout  rates remain high at
over 19%, often a factor behind youth unemployment.

The evaluation points, in particular, to the need to increase the participation of critical groups
such  as  older  workers  and  the  low  skilled.  The  importance  of  continuing  training  is
acknowledged by  all  as  a  key  factor  in promoting  an adaptable,  competitive and  productive
workforce  and  shared  responsibility  for  financing  labour  force  training  seems  to  have  been
accepted in principle, however, in practice investment rates for each actor (governments and
social  partners,  enterprises  and  individual  workers)  remain  generally  low.  Several  Member
States are testing financial incentive schemes aimed  at individuals as well as enterprises but
these are mainly still in the development phase and stable conditions for financing continuing
training are generally lacking.

More comprehensive action needed for an inclusive labour market

Active  measures  were  prominent  in  Member  States'  policies  to  improve  access  of
disadvantaged  people  (i.a.  people  with  disabilities,  ethnic  minorities,  immigrants)  to  the
labour  market.  Other  initiatives  included  legislative  reforms  to  combat  discrimination,  in
particular  in  the  context  of  the  transposition  of  Article  13  directives,  and  increased  co-
operation between institutions involved in the re-integration of disadvantaged persons.

However, the employment position of disadvantaged people remains weak, as reflected in the
stable  gap  in  employment  rates  compared  to  the  population  in  general.  It  would  seem  that
active  measures  have  prevented  a  widening  of  the  gap,  especially  in  the  recent  period  of
strong employment creation which has created a favourable context for integrating the more
employable  workers  in  the  labour  market.  Experience  from  some  Member  States  provided
convincing evidence of the success of such measures.

In order to achieve greater effectiveness, the evaluation points to the need for better tailored
active and preventive measures, comprehensive approaches involving both the supply and the
demand side (awareness of employers, enforcement of anti-discrimination), as well as a close
link with the wider policies for social inclusion. The need to improve the statistical basis for
developing such measures and for their assessment is also stressed.

2.2.3

Entrepreneurship : key to job creation

The entrepreneurship pillar focuses on the improvement of the business environment, on the
development of the services sector as a source of employment, and on labour taxation.

Indications of positive employment effects of a better business environment

Member  States  have  responded  with  numerous  specific  measures  to  the  requirement  in  the
Employment  Guidelines  for  administrative  simplification  (for  example  through  impact
assessment  of  new  legislation,  reducing  obstacles  for  start-ups,  simpler  and  on-line
procedures for company registration, incentives for hiring additional staff etc.) and increased
the  fight  against  undeclared  work  (a  strengthened  priority  since  2001).  The  progress  which

skills and 4 times lower than those with medium skills. The gap in participation rates between those with low
education and those with high education rose from 9,4 % in 1995 to 13,3 % in 2000.

12

                                                                                                                                                        
has been  made  could  be  improved  through  further  efforts,  by  the  Member  States,  to  reduce
administrative burdens thus nurturing a better European business environment.

In recent years, 90% of the new jobs were created in the services sector. ALMP programmes
have helped the unemployed to create and take up jobs, mainly in the services sector, and a
considerable  share  of  these  jobs  proved  to  be  sustainable.  The  time  needed  to  start  up  a
business has been reduced, but surveys  of SME's,  show that  administrative burdens  are  still
considered as a major constraint for business performance.

With  the  exception  of  tax  reductions  for  small  companies,  positive  effects  of  measures  to
improve the climate for entrepreneurship and job creation can only be presumed owing to the
lack  of  reliable  indicators  and  evaluation.  The  development  of  statistics  and  indicators  to
monitor  the  impact  of  measures  in  the  field  of  entrepreneurship  on  employment  should  be
considered as a priority.

Employment effect of taxation measures can still be increased

The rising trend in the overall  tax burden on  labour  has been reversed, with a reduction at
EU level of about 2%16 between 1997 and 2001. The reduction was even more visible for the
low-paid, with 3% on average, achieved mainly through reduced social security contributions.
This  points  to  a  trend  to  make  tax  systems  more  employment  friendly.  The  evaluation
confirmed  distinct  job  creation  effects  of  taxation  measures:  particularly  effective  are
reductions  in  payroll  taxes  and  employers’  Social  Security  Contributions  (SSC)  targeted  at
low paid  workers,  who  experience  the highest  benefit dependency;  other  effective measures
include reductions of personal income taxes and employee SSC, tax deductions for childcare
or education expenses targeted at sensitive groups.

The practice confirms that benefit reforms and labour taxation in general are increasingly seen
as mutually complementary employment policy instruments by the  Member States. The mix
of benefit and taxation measures could however be improved with a view to maximising the
impact on labour market participation or to preventing early withdrawal.

2.2.4

Adaptability : complex relationship between flexibility, security and job quality

Actions under the adaptability pillar deal with the modernisation of work organisation and the
regulatory framework, the introduction of new forms of work and workers' skills, with the aim
of  improving  the  adaptability  of  enterprises  ;  such  actions  call  for  joint  responsibility  of
governments, the social partners and enterprises.

The EES has helped to focus the attention of public authorities, social partners and enterprises
on  important aspects  of  adaptability  and  competitiveness.  The  main  policy  developments  in
the  area  of  adaptability  over  the  past  five  years  were  related  to  more  flexible  types  of
employment  relationships17,  and  more  flexible  working  time  arrangements,  in  particular
through annual reference periods of working time, thereby reducing overtime.

Member  States,  often  in  close  consultation  and  concertation  with  social  partners  through
tripartite dialogue, have provided a  legal framework  facilitating these  developments. Within
the  scope  provided  by  the  respective  national  institutional  settings,  social  partners  at  lower

16 Provisionally based on the implicit tax rate.
17 Several countries have adopted legislation on part time work e.g. See annex 2.

13

                                                
levels  have  taken  up  the  new  opportunities  provided  for  them  and  have  made  them  more
concrete in their bilateral agreements.

Beyond  working  time  arrangements,  the  broader  scope  of  work  organisation  has  not  yet
received  sufficient  attention.  A  wider  approach  to  modernising  work  organisation  is  still
lacking,  although  some  progress,  notably  in  the  field  of  lifelong  learning,  has  to  be
acknowledged18.

Working  time  arrangements  are  seen  less  and  less  as  a  means  of  redistributing  work  and
increasing  the  available  number  of  jobs,  and  rather  as  a  way  to  increase  adaptability  to
economic activity and thus the long-term sustainability of employment. On the other hand, net
job  creation  in  some  countries  is  partially  due  to  the  increase  in  flexible  work  (fixed  term,
temporary  and  part  time).  Groups  particularly  concerned  by  flexible  work  include  young
people and women returners.

The  Employment  Guidelines  call  for  a  balance  between  flexibility  and  security.  The  most
visible  developments  in  terms  of  security  concerned  health  and  safety.  However,  there  is
evidence  of  continuing  disadvantages  for  the  workers  concerned  :  holders  of  jobs  of  short
duration  and  of  jobs  providing  low  earnings  and/or  no  access  to  training  are  more  likely  to
experience  inactivity  and  unemployment.  People  who  experience  frequent  spells  of
unemployment  and  inactivity  are  more  likely  to  drop  out  of  the  labour  market  for  long
periods. Surveys show that employees', perception of flexible work remains largely negative,
contrary to that of employers19 :only 28 % of employees with a fixed term contract declared to
have  chosen  this  status  voluntarily,  compared  to  72  %  in  the  case  of  people  with  part  time
contracts.

2.2.5

Equal  opportunities  between  women  and  men  :  greater  awareness  but  insufficient
evaluation

The  "equal  opportunities"  pillar  aims  to  enable  women  and  men  to  work  with  equal
opportunity  and  equal  responsibility.  The  guidelines  advocate  a  gender  mainstreaming
approach, the tackling of gender gaps and the reconciliation of work and family life.

Gender equality has received an important impetus through the EES. This is confirmed both
by  the  national  evaluations  and  by  a  qualitative  survey  carried  out  for  the  Commission.  An
important  element  in  this  respect  was  the  requirement  for  gender  mainstreaming  across  the
pillars  of  the  Employment  Guidelines  from  1999.  The  gender  gaps  in  employment,
unemployment,  pay  and  representation  have  become  areas  of  specific  action  for  Member
States. Reconciliation of work and family life became a policy priority in all Member States,
and many Member States began to focus on increasing the availability of childcare provision.

Over the period 1997-2001, women benefited from the majority of the new jobs created and
their employment rate increased from 50.6 % to 54.9 %. The gender gap in employment rate
has been reduced from 20 % to 18 % since 1997 whereas the gap in unemployment declined

18 A framework for actions for the lifelong development of competencies and qualifications was adopted by the
European  social  partners  in  February  2002,  as  a  follow  up  of  the  joint  declaration  of  social  partners  on
Lifelong  learning  presented  to  the  Laeken  European  Council.  Also  the  recent  agreement  on  telework  is
relevant in this context.
In  this  context,  the  Commission  services  carried  out  an  ad  hoc  Eurobarometer  Flash  survey  (N°  120)  on
flexible work.

19

14

                                                
from 12 % to 9 %. However, gender gaps (including pay gaps of 16 %20 on average) are still
considerable and need to be tackled in order to meet the Lisbon and Stockholm objectives.

The evaluation shows that too often governments tend to see the reduction of the gender gap
in employment and unemployment as a result of economic growth and improved framework
conditions for women's participation in the labour market, and do not sufficiently monitor the
impact  of  their  measures  as  required  by  the  Guidelines.  Further  progress  towards  women's
employment  targets  should  be  more  closely  monitored,  policies  strengthened  and  impact
evaluated more systematically. The reduction of gender gaps requires the active involvement
of  social  partners,  particularly  in  the  area  of  pay  and  parental  leave.  Childcare  provision,
which  involves  the  direct  responsibility  of  public  authorities  emerges  as  a  priority  area  for
direct government action, and new targets21 were set by the Barcelona Summit for 2010.

2.3

The Luxembourg process proved effective in fostering policy co-operation

The "open method of co-ordination" of the Luxembourg process has proven its worth and was
considered by the Lisbon Summit in 2000 as a model to be transposed into other policy fields
(such as social inclusion).

A framework for active co-operation of different actors

The EES has fostered  a recognition of  the  key  role  played  by  the  social  partners  in  a  wide
range of areas related to employment. While the initial guidelines only referred to the social
partners in relation to the specific area of adaptability, the  wider role and recognition of the
social partners was acknowledged after the Lisbon Summit. A horizontal objective now calls
on  Member  States  to  develop  a  comprehensive  partnership  with  the  social  partners,  and
invites the social partners at European level to define their own contribution to the process.

The  involvement  of  social  partners  in  the  preparation  of  the  NAPs  at  national  level  has
improved  steadily,  although  the  visibility  of  their  contribution  to  the  implementation  of  the
guidelines  could  be  greater.  The  invitation  made  to  the  social  partners  to  set  up  their  own
process  of  implementation22  has  not  yet  materialised,  but  there  have  been  encouraging
initiatives pointing to a progressively more active role of the social partners in the guidelines.
Potential synergies between the national and European levels could be further exploited.

The EES has supported the development of a territorial dimension to employment policies, as
demonstrated by the emergence, in recent years, of regional or local action plans (RAPs and
LAPs).  Local  and  regional  authorities,  whether  as  social  services  providers  or  local
employers, have increasingly become partners in the implementation of employment policies,
not least through the use of the European Social Fund, the priorities of which were aligned to
the EES in 2000.

New working methods to support co-operation

A recognised strength of the Luxembourg process is the multilateral surveillance. Based  on
annual  reporting  and  on  agreed  and  comparable  indicators,  it  has  stimulated  a  "stress  of
convergence" towards the best performers in the EU. The definition of indicators and targets

20 Figures for 1998 in the private sector, ranging from 7 % to 24 % between Member States.
21

Improvement of the provision of childcare by 2010 to at least 90% of children between 3 years old and the
mandatory school age, and at least 33% of children under 3 years of age.

22 Horizontal objective D and guideline 13

15

                                                
at EU level had a particularly stimulating effect. However, Member States have often resisted
setting national targets of their own.

The  annual  reporting  and  monitoring  has  led  to  increased  and  more  thorough  exchanges  of
information  between  Member  States,  and  the  peer  review  process  set  up  to  evaluate  the
transferability of good practices23 has allowed for more in-depth evaluations. Many Member
States have intensified their bilateral contacts and found inspiration in other Member States'
approaches.  The  establishment  of  the  Employment  Committee,  bringing  together,  at  regular
intervals,  the  top  national  officials  in  charge  of  designing  and  implementing  national
employment policies, has facilitated such intensified exchanges.

Institutional  co-operation  was  intensified  at  EU  level  between  different  Council  formations
(notably  EcoFin  and  Employment/Social  Affairs  ministers)  and  their  corresponding
committees24, as well as between Commission services in charge of designing and monitoring
various  employment  related  policy  processes  (e.g.  in  the  fields  of  education/training,
economic  policy,  taxation  or  entrepreneurship).  Co-operation  between  the  Commission  and
the Council, notably via the Employment Committee, has  been  strengthened. The European
Parliament was closely involved in the annual review process and thereby contributed to the
development  of  the  strategy,  while  the  other  institutions  also  made  valuable  contributions.
The  emphasis  on  employment  rather  than  labour  market  policies  has  meant  that  the  annual
preparation  of  the  National Action Plans  (NAPs)  at  national  level  has  stimulated  closer  co-
operation  between  ministerial  departments.  Public  employment  services,  represented  in  an
active EU level network, have been strongly mobilised around EU priorities.

While the main characteristics of the open method of co-ordination need to be preserved, in
view of the above mentioned advantages, some risks have emerged that should be tackled in
order  to  maintain  the  impetus  behind  the  EES.  The  emergence  of  a  number  of  "open  co-
ordination  processes"  in  related  areas  (notably  social  inclusion,,  education  and  training  and
pensions)  calls  for  close  co-ordination  and  synergy.  There  is  also  a  need  to  address  the
perceived  complexity  of  the  process.  More  efforts  at  dissemination  of  the  EES  would  be
needed, at EU, national, regional and local levels.

23 See http://peerreview.almp.org
24 E.g. the Employment Committee, the Economic Policy Committee and the Social Protection Committee

16

                                                
3.

ISSUES  FOR  THE  DEBATE  ON  THE  FUTURE  OF  THE  EUROPEAN
EMPLOYMENT STRATEGY

The  results  of  the  evaluation  described  above  confirm  that  the  main  priorities  set  by  the
Employment  Guidelines  remain  broadly  valid  for  the  future  and  that  further  policy  reforms
are required. The evaluation and various contributions made to the debate so far on the future
of the EES, in particular the conclusions of the Barcelona European Council, have enabled the
Commission to identify the four main issues for the reform of the EES that need to be further
examined.

3.1

Responding to medium-term challenges

The  context  of  the  EES  is  changing.  While  the  scale  of  unemployment  constituted  the
dominant challenge for the EU labour market at the launch of the Luxembourg process, recent
years have witnessed increasing recruitment difficulties in certain regions and sectors of the
EU.  The  coexistence  of  continuing  relatively  high  levels  of  unemployment  with  bottlenecks
could  well  characterise  the  period  to  come.  The  demographic  trends  will  lead  to  an  ageing
workforce and even a declining population of working age, raising serious concerns also for
the  sustainability  of  social  protection  systems.  Globalisation,  technological  change  and  the
move  towards  a  knowledge  and  information  society  are  all  further  accelerating  the  pace  of
economic  and  social  restructuring.  There  is  a  need  to  promote  wider  participation  in,  and
uptake of, the information society. Working life is also becoming more complex as working
patterns  become  more  irregular  and  a  number  of  transitions  need  to  be  accounted  for,
including  between  jobs,  between  different  working  status,  and  between  work  and  training,
career  breaks  and  care  periods.  Anticipation,  adaptability  and  the  promotion  of  change  are
essential  for  higher  productivity  and  competitiveness,  as  well  as  to  retain  people  longer  in
work and prevent social exclusion. The notion of investment itself is changing, with human
capital assuming a crucial role for growth, employment and social cohesion. Migration from
third countries into the EU is a reality today which cannot be ignored. While migration cannot
provide  the  answer  to  the  demographic  decline  or  skills  gaps  in  the  EU25,  well-designed
economic migration26 can make a contribution to solving future labour shortages, increasing
employment and economic growth.

The enlargement of the EU is imminent and will eventually lead to a 30 % increase in the size
of  the  EU  labour  market27  as  well  as  bring  more  diversity.  While  challenges  in  the  labour
markets of the candidate countries are not fundamentally different in nature from those of the
current Member States, they are often more acute28 and major restructuring still needs to take
place.  The  candidate  countries  and  the  Commission  have  bilaterally  established  joint
assessments of the employment situation and challenges of each country with reference to the

25 See report on the Social Situation in the European Union in 2002.
26

In its proposal for a Council Directive on the conditions of entry and residence of third-country nationals for
the purpose of paid employment and self-employed economic activities (COM(2001)386 of 11.7.2001)  the
Commission has already proposed a transparent common legal frame for economic migration.

27 71 million persons of working age could be added to the 248 million of the Fifteen (data for the 12 candidate

countries, year 2000).

28 The accession countries are facing slow employment growth, with an average employment rate of about 58
% in 2001 (EU : 63.9 %) ; high unemployment levels (some 13% on average in 2001 compared to 7.4 % in
the EU), in particular for youth ; low skills levels ; ageing of the working population and regional disparities.
However, with respect to gender gaps in employment, the performances of candidate countries are similar to
those of the EU for historical reasons.

17

                                                
EES  priorities.  Progress  reports  on  these  joint  assessments  are  being  submitted  and  will  be
reviewed by the Commission before the end of 2002.

The  overall  objectives  of  the  EES  should  be  seen,  inter  alia,  in  the  above  context.  Raising
employment  rates  to  reach  the  Lisbon  and  Stockholm  targets  is  a  central  objective  of  the
Lisbon  strategy.  Increasingly  this  will  become  a  condition  -  not  only  for  reducing
unemployment - but also for economic growth and for ensuring the sustainability of our social
model. But economic growth will also depend on the productivity of labour. The challenge for
the  EES  -  if  it  is  to  support  the  emergence  of  the  EU  as  the  most  competitive  economy  by
2010  -  will  be  to  promote  more  and  better  jobs  which  are  also  more  productive.  The
promotion of quality at work29, which supports employment - by making jobs more attractive
and by making work a real option - , inclusive labour markets and productivity should be seen
as a way to exploit the potential of the European social model as a productive factor, building
on  the  synergies  between  more  and  better  jobs.  The  reduction  of  remaining  disparities  in
access to the  labour market, both in  socio-economic  and regional  terms,  is  a  matter  both  of
equity and of efficiency. On the basis of these considerations, the Commission has identified
three main challenges for the future guidelines:

-  raising employment and participation rates in accordance with the  Lisbon and Stockholm

targets, thus also helping to reduce unemployment

- 

improving quality at work and promoting productive jobs

-  promoting an inclusive labour market, by reducing disparities at social (including gender)

and territorial levels.

Investment in human capital, skills development and lifelong learning are key to responding
to these challenges.

The  debate  on  the  future  of  the  EES  can  thus  focus  on  the  way  the  future  guidelines  will
support the ambitions and objectives of the Lisbon strategy. The alignment of the time frame
of the next Guidelines with the deadline of 2010, as requested by the Barcelona conclusions,
will support overall coherence with the Lisbon agenda.

The  EES  must  take  full  account  of  the  solid  experience  and  achievements  of  the  past  five
years. Experience has demonstrated the need for continuity and perseverance before policies
can be implemented and can produce their full impact on the labour market. In the changing
context,  more  than  ever,  the  EES  is  proving  its  worth  as  a  strategy  for  promoting  and
managing  change  in  order  to  facilitate  and  accompany  the  deep  economic  and  social
transformations in the new as well as the existing Member States. The European Social Fund
has  a  role  to  play  in  supporting  such  transformations  as  the  financial  arm  of  the  EES.  The
particularly high level of unemployment in the candidate countries will further strengthen the
relevance  of  active  measures  and  preventive  approaches,  calling  for  effective  and  efficient
employment  services.  The  promotion  of  a  favourable  business  environment  for  employment
creation is a priority, as is the balance between flexibility and security on the labour market.
In particular the conditions enabling the transition between paid and independent work, while
safeguarding job quality, merit increased attention. In accordance with the Joint Report (see
footnote  12)  the  EES  should  support  a  comprehensive  life-cycle  approach  to  raising  labour
force participation and promoting active ageing, based on the availability and attractiveness

29 See "Employment and social policies : a framework for investing in quality" – COM(2001)313 of 20.6.2001

18

                                                
of jobs, on making work pay and on a highly qualified workforce as well as on measures to
make work a real option for all and an inclusive labour market a reality. This would require,
inter alia, tackling undeclared work in a more determined way. Corporate social responsibility
can make a valuable contribution in a number of priority areas for the EES.

In  order  to  enable  effective  monitoring  of  progress  towards  the  objectives  of  the  EES,
continued  policy  priority  will  have  to  be  given  to  the  development  of  adequate  and
comparable statistics and indicators.

3.2

Simplifying the guidelines without undermining their effectiveness

The  current  Employment  Guidelines  are  widely  perceived  as  complex.  The  first  guidelines
(for 1998) included 19 specific actions under the four pillars. The 2002 Guidelines include 18
actions under the same four pillars. However most of these action points are now divided into
a number of sub-headings. In addition, six "horizontal objectives" have been added in the last
two  years.  As  a  result  of  these  modifications,  related  to  the  annual  review  process,  the
hierarchy of priorities in the Employment Guidelines has become blurred, and the pillars have
lost part of their intrinsic coherence.

Simpler  guidelines  would  clarify  the  priorities,  facilitate  communication  with  all  the
stakeholders  and  enable  more  effective  monitoring.  Simplification  could  come  mainly
through:

-  a  clearer  definition  of  the  overall  improvements  sought  in  the  EU  labour  market  via  the

EES, as a contribution to the Lisbon strategy

-  concentration on priorities

- 

increased emphasis on the results to be achieved

-  a focus on implementation, rather than on the annual elaboration of the guidelines, in line

with the Barcelona conclusions.

A number of conditions, however, need to be met in order to preserve the effectiveness of the
guidelines.

First,  the  Guidelines  must  keep  their  wide  policy  scope  reflecting  the  range  of  policies
contributing to the employment objectives and the integrated nature of the EES. The strategy
can  only  be  conceived  in  close  articulation  with  macro-economic  policies  and  structural
policies, which are favourable to growth  and competitiveness, as well as policies promoting
social inclusion. Synergy with other relevant policy processes should be exploited to the full.

Secondly, there is a need for  greater  stability of the  guidelines  to  underpin  a  result-oriented
approach.  Experience  has  shown  that  important  labour  market  measures  often  take  time  to
design,  adopt  and  implement,  and  even  longer  to  demonstrate  their  impact  on  the  labour
market  (for  example:  modernisation  of  employment  services,  reform  of  the  tax  systems
etc…). Regular  addition of new priorities or objectives  in  the  guidelines  on  the  occasion  of
annual reviews does not improve effectiveness. While a margin of manoeuvre has to be kept,
changes should be avoided until 2006, when an intermediate evaluation will be undertaken in
accordance with the Barcelona European Council conclusions.

Thirdly, the principle  of  annual  reporting  by  Member  States  on  the  progress  achieved  with
the implementation of the guidelines, provided by the Treaty, should be respected, in line with

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the Barcelona request to streamline the processes and to focus more on implementation. This
forms the basis of the multilateral surveillance which has proven to be of considerable added
value in the  Luxembourg process and is  a key  tool  for monitoring the  response by Member
States to the individual recommendations addressed to them by the Council. Whilst stability
in  the  guidelines  would  standardise  and  ease  the  burden  of  annual  reporting,  the  scope  for
further simplification should be examined, notably by focusing on new policy developments
and  on  the  follow  up  to  recommendations.  The  focus  on  implementation  should  also  be
reflected  in  the  annual  Joint  Employment  Report.  While  a  single  set  of  Guidelines  will
address all Member States in an increasingly diversified EU labour market, country specific
Employment  Recommendations  will  allow  for  justified  differentiation  between  Member
States according to their respective challenges and characteristics.

3.3

Improving governance and partnership

The  evaluation  of  the  EES  has  confirmed  the  benefits  of  a  partnership  approach  for  the
development and the implementation of the EES and has underlined the potential for further
improvements in this respect.

Co-operation with, and between, social partner organisations

Progress on key matters for the EES such as life-long learning, active ageing, gender equality
or  the  modernisation  of  work  organisation,  depends  crucially  on  the  active  support  of  the
social  partners.  The  Barcelona  European  Council  urged  the  Social  Partners  to  place  their
strategies in  the  various  territorial  and  sectoral  spheres  at  the  service  of  the  Lisbon  strategy
and called for a reinforcement of the role and responsibility of social partners in implementing
and  monitoring  the  Employment  Guidelines.  The  declaration  made  by  the  Social  Partners
before the Laeken Summit of December 2001 provides a strong basis to redefine the role of
Social partners in the EES. The Social Partners will be able to contribute to the broad policy
orientations  covering  the  whole  Lisbon  agenda  in  the  framework  of  the  proposed  Tripartite
Social Summit for Growth and Employment, and they will be consulted by the Commission
in  the  phase  of  preparation  of  the  next  Guidelines.  The  broader  responsibility  of  the  Social
Partners and their contribution to the implementation of the guidelines needs to be recognised
in full respect of their autonomy. The Social Partners at European level can integrate priority
aspects of the EES in their annual work programme, currently under preparation. In addition,
the Commission has encouraged EU level organisations of the social partners to explore the
potential  of  the  "open  method  of  co-ordination"  to  develop  relationships  with  their  national
counterparts.

Moreover, and as a complement to the social partners, a more effective involvement of civil
society organisations has also been identified as an essential  tool by several  Member States
and should be reinforced.

Co-operation at different territorial levels

The  mobilisation  of  actors  at  all  relevant  territorial  levels  is  also  important  for  an  efficient
delivery of the EES. In most Member States competences for different aspects of employment
policies are shared between different territorial levels. The regional and local levels are often
particularly  important  in  matters  such  as  training,  employment  services  or  in  relation  to
inclusive  labour  market  policies.  While  fully  respecting  the  principle  of  subsidiarity,  the
future EES should promote and encourage the role of actors at all territorial levels to support
the national and EU employment strategy and dissemination of good practice. Both "vertical"
co-operation  (between  national  and  sub-national  levels)  and  "horizontal"  co-operation

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(between relevant actors at the same territorial level) could be encouraged in this respect. In
addition, initiatives building on the local potential for employment creation should continue to
be encouraged, especially in view of the wide regional disparities existing in the EU in terms
of employment and unemployment.

Inter-departmental co-operation

Co-operation between different departments of both EU and national administrations should
be  further  encouraged,  reflecting  the  integrated  nature  of  the  EES  and  the  need  for  good
interaction with other EU-level processes such as social inclusion, education and training and
pensions.  This  is  particularly  relevant  between  employment  departments  and  those  dealing
with financial affairs, training and education, gender opportunities, social security, justice and
home affairs and information society affairs.

The  major  role  played  by  employment  services  in  the  successful  delivery  of  employment
policies  -  in  the  first  line  in  relation  to  the  prevention  and  the  activation  strategy,  but
importantly  in  other  fields  as  well,  such  as  equal  opportunities,  non  discrimination,  social
inclusion or lifelong learning – justifies a close involvement in the EES.

Despite the alignment of the ESF priorities to the EES in 2000, the link between policies and
their funding remains unclear. More transparency is needed to give a full picture of how the
European  Structural  Funds  support  the  Employment  Strategy.  There  will  be  a  need  to
examine how the ESF mainstream programmes and the EQUAL initiative can continue to put
their full thrust behind the strategy, not least in order to accompany the reforms needed in the
accession countries. The mid-term review of the ESF in 2003 will provide a first opportunity
to evaluate and re-examine this issue. There is also a need to examine how the contribution of
the ESF and other structural funds to the objectives of the EES can be made more visible in
the NAPs.

3.4

Improving consistency and complementarity between relevant EU processes

Since  Lisbon,  the  political  guidance  for  implementing  the  economic  and  social  agenda  is
given by the Spring European Council. The implementation is done through various processes
of different nature, including the EES and the economic co-ordination process as foreseen in
the Treaty,  as well  as  the Cardiff process on structural policies and the open method  of  co-
ordination in the fields of Social Inclusion, education and training, and pensions, in line with
the  political  guidance  given  by  the  Spring  European  Council.  The  Barcelona  European
Council  called  for  a  streamlining  of  the  relevant  processes,  and  more  specifically  for  a
synchronisation  of  the  Broad  Economic  Policy  Guidelines  (BEPGs)  and  the  Employment
Package as soon as feasible.

Such synchronisation, the details of which will be covered by a separate Communication, will
strengthen  the  overall  process  of  implementation  of  the  Lisbon  agenda.  The  Employment
package  will  thus  benefit  from  being  more  directly  related  to  the  overall  policy  approach.
While there is a strong interaction and interdependence  between economic and employment
objectives,  the  aim  should  be  to  improve  the  complementarity  and  mutually  supportive
character of the two sets of instruments. Synchronisation should lead to a better co-ordination
of the policy messages given via the two instruments, which would retain their autonomy.

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ANNEXES

Annex 1 :

Evaluation methodology

EU-wide performance assessment

The  purpose  of  the  Commission's  EU-wide  performance  assessment  was  to  look  at  the
sustainability  of  improvements  in  EU  labour  markets,  by  analysing  the  evolution  of
employment,  participation  and  unemployment  rates  over  long  periods.  The  assessment  is
mostly based on time series analysis comparing trends in the 1980s and in the 1990s, in some
cases,  the  second  half  of  1990s.  As  NAIRU30  is  the  only  broadly  available  concept  for
measuring structural changes in the labour market, the Commission estimates for NAIRU are
used and linked to employment and participation trends suggesting that progress in EU labour
markets in recent years is of structural nature. The work also reviews the limited evidence in
terms  of  Beveridge  curves  which  supports  the  overall  conclusions.  Extended  Okun's  Law
models detected an increase in the cyclical responsiveness of employment and unemployment
and, in particular, that labour markets have become more responsive in periods of economic
recovery.  This  methodology  is  adapted  to  assess  the  role  of  contracts  of  limited  duration.
Using cyclically adjusted series of employment, participation and growth, an increase in the
job content of economic growth is identified.

Elements of the analysis can be found in Employment in Europe 2002.

National impact evaluation studies

The national studies had to follow a standardised structure, with a range of thematic questions
covering  policy  reforms,  performance  and  impact.  Issues  only  recently  included  in  the
Employment Guidelines (such as bottlenecks in the labour market) were left outside the scope
of the studies. In most cases, the reports distinguish the different themes but do not follow the
agreed list of questions. The national reports and a technical synthesis from the Commission
services can be consulted on the Europa website31.

Surveys

In  the  context  of  the  evaluation,  the  Commission  organised  three  special  surveys  :  two
Eurobarometer "flash" surveys (N° 96 on the impact of preventive and active measures for the
unemployed ; N° 120 on atypical work) and a qualitative survey on gender equality through
the  "OPTEM"  network.  (details  also  available  from  DG  Press  and  Communication  on  the
Europa website).

30 "Non  Accelerating  Inflation  Rate  of  Unemployment".  The  analysis  of  Beveridge  curves,  which  show  the
year-by-year  evolution  of  unemployment  and  vacancies  and  allow  frictions  and  mismatches  in  the  labour
market to be detected, is less conclusive and limited by available data.

31 See http://europa.eu.int/comm/employment_social/empl&esf/ees

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Annex  2  :  Review  of  key  policy  changes  in  relation  to  the  EES  in  the  areas  of  active
labour  market  policy,  modernisation  of  work  organisation  and  equal
opportunities

BELGIUM

-  A further shift from curative to preventive policy as of 1999 with the integration pathways,

the Rosetta plan, and the reduction of unemployment traps.

-  Gender mainstreaming policies have been strengthened (new intergovernmental permanent
Committee  for  equal  opportunities).  In  2001  (under  the  Belgian  EU  Presidency),  greater
emphasis was given to quality of employment, equal pay and reconciliation of family and
working life.

DENMARK

-  1999 : last phase in labour market policy reform. In parallel, social policies have become
more  active  in  orientation  and  have  been  adapted  to  complement  labour  market  policies
directed towards the insured labour force.

-  The equal opportunities acts have been changed several times since 1997, often to comply
with  EU  recommendations  (Equal  Wages  Act  2001).  Gender  mainstreaming  has  been
established in legislation (2000).

GERMANY

-  The new Job-Aqtiv-Law (2002) is a direct response to the EES

-  The tripartite social dialogue within the Jobs Alliance, revived in 1998, is the platform for

modernising work organisation.

-  Gender  mainstreaming  new  statutory  regulations  (public  sector),  agreement  between  the

Federal Government and the central industry associations (private sector).

GREECE

-  PES reform was decided in 1998 but implementation will not be accomplished until 2003-

2005.

-  Labour  legislation  was  modernised  in  1998  with  the  introduction  of  part-time  work  and

parental leave.

-  In  the  field  of  equal  opportunities,  policies  became  more  ambitious  in  2001  (National
Action plan for equality 2001-2006,  Interministerial Commission  for equality  promotion)
and targets on gender gap were adopted.

SPAIN

-  The  role  of  the  PES,  which  had  became  more  autonomous  in  1994,  was  brought  in  line
with the preventive strategy of the EES  from late 1997.  ALMP expenditure increased by
nearly 50%.

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-  Labour  market  reforms  were  accelerated  through  the  introduction  of  new  contracts

("permanent employment-development" contract, part-time).

-  The EES had a particularly strong impact on equal opportunities (Equality Observatory set
up  in  '99  by  the  Institute  for  Women),  new  labour  legislation  and  ALMP  programmes
which introduced priority access for women.

FRANCE

-  The preventive approach was introduced with the "New Start" and "New services jobs for

youth" programmes (1998).

-  The working time legislation of 1998 sought to increase the involvement of social partners

in the search for a higher employment intensity of growth.

IRELAND

-  Implementation of the preventive strategy as of 1998, accompanied by PES reform.

-  New gender equality legislation (tax individualisation).

ITALY

-  Law  196  of  1997  started  the  PES  reform;  comprehensive  reform  of  active  measures  is

envisaged in White Paper of September 2001.

-  Introduction of part time legislation.

-  Regulation on parental leave.

NETHERLANDS

-  The comprehensive approach for young unemployed people (in existence since 1992) was

widened to adults.

-  High participation in part time work, existing since early 90s.

-  Equal opportunities policy strengthened through 65% target for female employment

AUSTRIA

-  As of 1998, reforms of labour market policies (e.g. individual pathways).

-  Social  dialogue  strengthened  around  the  NAP  (introduction  "bonus  malus''  system  for

maintaining older workers at work).

-  Measures to prevent female unemployment as a result of childcare duties (i.a. improvement

of care facilities).

LUXEMBOURG

-  PES reform as of 1998 in line with the preventive and active approach

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PORTUGAL

-  Initiatives "Interjovem" (for young long-term unemployed) and "Reage" (for employment

creation), reflecting the spirit of EES

-  Introduction of legislation for part time work (1999).

-  Specific  measures  to  promote  the  integration  of  women  (benefit  reforms,  ambitious

programme "Crèche 2000").

FINLAND

-  An  overhaul  of  active  labour  market  policy  was  undertaken  in  1998,  based  on  the

principles of the EES.

-  Gender mainstreaming became a part of government policy, largely as a result of the EES.

SWEDEN

-  ALMP  policies  advocated  by  the  Guidelines  existed  already  in  Sweden  in  1997,  but
qualitative  reforms  have  since  been  carried  out  (e.g.  the  "activity  guarantee  scheme"  ,
2000).

UNITED KINGDOM

-  The New Labour government programme coincided with main principles of the EES (New

Deal programmes, Welfare to Work etc.).

-  Setting up  of  the  "Partnership  at Work Fund"  in  1998  aimed  at  supporting  flexible  work

organisation.

-  National Childcare Strategy to help individuals balance work and family life.

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