2003/578/EC: Council Decision of 22 July 2003 on guidelines for the employment policies of the Member States
Date: 2003-07-22
Institutions: Council of the European Union
Subjects: EU Member State, European Employment Strategy, economic and social cohesion, employment policy, full employment, integration into employment, work productivity

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(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 22 July 2003

on guidelines for the employment policies of the Member States

(2003/578/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 128(2) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parliament (2),

Having regard to the opinion of the European Economic and
Social Committee (3),

Having regard to the opinion of
Regions (4),

the Committee of

the

Having regard to the opinion of the Employment Committee,

Whereas:

(1)

(2)

Article 2 of the Treaty on the European Union sets the
Union the objective of promoting economic and social
progress and a high level of employment. Article 125 of
the Treaty establishing the European Community states
that Member States and the Community shall work
towards developing a coordinated strategy for employ-
ment and particularly for promoting a skilled, trained
and adaptable workforce and labour markets responsive
to economic change.

Following the extraordinary European Council meeting
on employment on 20 and 21 November 1997 in
Luxembourg, the Council resolution of 15 December
1997 on the 1998 employment guidelines (5) launched

(1) Proposal of 8 April 2003 (not yet published in the Official Journal).
(2) Opinion of 3 June 2003 (not yet published in the Official Journal).
(3) Opinion of 14 May 2003 (not yet published in the Official Journal).
(4) Opinion of 3 July 2003 (not yet published in the Official Journal).
(5) OJ C 30, 28.1.1998, p. 1.

(3)

(4)

(5)

a process with high visibility, strong political commit-
ment and a wide-ranging acceptance by all parties
concerned.

The Lisbon European Council on 23 and 24 March
2000 set a new strategic goal for the European Union to
become the most competitive and dynamic knowledge-
based economy in the world capable of sustainable
economic growth with more and better jobs and greater
social cohesion. To this end the Council agreed overall
employment targets and employment targets for women,
the Stockholm
for 2010, which were completed at
European Council on 23 and 24 March 2001, by inter-
mediate targets for January 2005, and a new target for
2010, reflecting the demographic challenge,
for the
employment rate of older women and men.

The Nice European Council on 7, 8 and 9 December
2000 approved the European Social Agenda, which
states that the return to full employment involves ambi-
tious policies in terms of increasing employment rates,
reducing
and
improving job quality.

inequality

reducing

regional

gaps,

The Barcelona European Council of 15 and 16 March
2002 called for a strengthening of
the European
Employment Strategy through a reinforced, simplified
and better-governed process, with a time frame aligned
to 2010, and which incorporates the targets and goals of
the Lisbon strategy. The Barcelona European Council
also requested a streamlining of policy coordination
processes, with synchronised calendars for the adoption
the broad economic policy guidelines and the
of
employment guidelines.

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(6)

(7)

(8)

The Brussels European Council of 20 and 21 March
2003 confirmed that the employment strategy has the
leading role in the implementation of the employment
and labour market objectives of the Lisbon strategy, and
that the employment strategy and the broad economic
the overarching
guidelines, which provide
policy
economic policy coordination for
the Community,
should operate in a consistent way. The same European
Council called for guidelines to be limited in number
and to be result orientated, allowing Member States to
design the appropriate mix of action, and for them to be
supported by appropriate targets. 2003 provides a parti-
cular opportunity to use streamlined key policy coordi-
nation instruments — the broad economic policy guide-
lines, the employment guidelines and the internal market
strategy — and give them a new three-year perspective.

The employment strategy has been exhaustively evalu-
ated, including a thorough mid-term review, completed
in 2000, and a major evaluation of the experiences of
the first five years completed in 2002. This evaluation
pointed to the need for continuity in the strategy to
address remaining structural weaknesses, as well as the
need to address new challenges facing an enlarged
European Union.

implementation of

The successful
the Lisbon agenda
calls for the employment policies of Member States to
foster, in a balanced manner the three complementary
and mutually supportive objectives of full employment,
quality and productivity at work, and social cohesion
and inclusion. The achievement of
these objectives
requires further structural reforms concentrating on 10
key interrelated priorities and special attention should be
paid to the coherent governance of the process. Policy
reforms require a gender-mainstreaming approach in
implementing all actions.

(9)

On 6 December 2001 the Council adopted a series of
indicators to measure 10 dimensions for investing in
quality in work and called for these indicators to be used
in monitoring the European employment guidelines and
recommendations.

(10) Active and preventative policies should be effective and
contribute to the goals of full employment and social
inclusion by ensuring that unemployed and inactive
people, are able to compete in and integrate into the
labour market. Those policies should be supported by
modern labour market institutions.

(11) Member States should encourage the creation of more
and better jobs by fostering entrepreneurship and inno-
vation in a favourable business environment. Member
States are committed to implementing the European
Charter for Small Enterprises and are engaged in a
process of benchmarking of the enterprise policy.

(12)

In this context

firms and workers

Providing the right balance between flexibility and
security will help support the competitiveness of firms,
increase quality and productivity at work and facilitate
the adaptation of
to economic
change.
the Barcelona and Brussels
European Councils called in particular for a review of
legislation, while respecting the role of
employment
Social Partners. Levels of health and safety standards at
work should be raised in line with the new Community
strategy for 2002 to 2006. Particular focus should be
placed on high-risk sectors for accidents at work. Access
of workers to training is an essential element of the
balance between flexibility and security and the partici-
pation of all workers should be supported, taking into
account
for workers,
returns on investment
employers as well as society as a whole. Economic
restructuring poses a challenge for employment both in
current and future Member States and calls for positive
management involving all relevant actors, including the
Social Partners.

the

(13)

The Barcelona European Council welcomed the Commis-
sion action plan on skills and mobility and the Council
Resolution of 3 June 2002 on skills and mobility further
invited the Commission, Member States and the Social
Partners to undertake the measures required. Better
occupational and geographic mobility and job matching
will help increase employment and social cohesion,
taking into account the labour aspects of immigration.

(14)

is critical

The implementation of coherent and comprehensive life-
in delivering full
long learning strategies
employment, improved quality and productivity at work,
and better social cohesion. The Barcelona European
Council welcomed the Commission communication
‘Making a European area of lifelong learning’ which spelt
out the essential building blocks of lifelong learning stra-
tegies of partnership, insight into demand for learning,
adequate resources, facilitating access to learning oppor-
tunities, creating a learning culture, and striving for
excellence. The ongoing process on concrete future
objectives for education systems, launched by the Lisbon

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European Council, plays an important role with respect
to human capital development and synergies with the
Employment strategy should be fully exploited. On 5 to
6 May 2003, the Council adopted a series of bench-
marks of European average performance in education
and training, several of which are of particular relevance
in the context of employment policies. The Lisbon
European Council called for a substantial per capita
increase in investment in human resources. This requires
sufficient incentives for employers and individuals, and
redirecting public finance towards more efficient invest-
ment in human resources across the learning spectrum.

need to tackle discrimination, provide a personalised
approach to individual needs, and create adequate job
opportunities by providing recruitment
incentives for
employers. Council Decision 2001/903/EC (1) of 3
December 2001 designated 2003 as the ‘European year
of people with disabilities’. Access to the labour market
is a major priority with respect to people with disabil-
ities who are estimated to represent some 37 million
people in the European Union, many of whom have the
ability and desire to work.

(15) An adequate labour supply is needed in order to meet
the demographic challenge, support economic growth,
promote full employment, and support the sustainability
of social protection systems. The joint report from the
Commission and the Council,
‘Increasing labour-force
participation and promoting active ageing’ adopted by
the Council on 7 March 2002, concludes that
this
requires developing comprehensive national strategies
based on a life cycle approach. Policies should exploit
the employment potential of all categories of persons.
the
The Barcelona European Council
European Union should seek, by 2010, a progressive
increase of about five years in the effective average exit
age at which people stop working. This age was esti-
mated at 59,9 in 2001.

agreed that

(16) Gender gaps in the labour market should be progres-
sively eliminated, if the European Union is to deliver full
increase quality at work and promote
employment,
social
inclusion and cohesion. This requires both a
gender mainstreaming approach and specific policy
actions to create the conditions for women and men to
enter, re-enter, and remain in the labour market. The
Barcelona European Council agreed that by 2010
Member States should provide childcare to at least 90 %
of children between three years old and the mandatory
school age and at least 33 % of children under three
years of age. The underlying factors of the gender gaps
in unemployment and in pay should be addressed and
targets on the reduction of such gaps should be achieved
as a result, without calling into question the principle of
wage differentiation according to productivity and
labour market situation.

(17)

The effective integration into the labour market of
people at a disadvantage will deliver increased social
inclusion, employment rates, and improve the sustain-
ability of social protection systems. Policy responses

(18)

In order to improve the prospects for full employment
and social cohesion, the balance between income from
work against
income in unemployment or inactivity
should be such as to encourage people to enter, re-enter
and to remain in the labour market, and to foster job
creation.

(19) Undeclared work is taken to mean ‘any paid activities
that are lawful as regards their nature but not declared
to public authorities’. Studies estimate the size of the
informal economy on average at between 7 % and 16 %
of EU GDP. This should be turned into regular work in
order to improve the overall business environment, the
quality in work of those concerned, social cohesion and
the sustainability of public finance and social protection
systems. Improving knowledge about the extent of unde-
clared work in Member States and the European Union
should be encouraged.

(20)

Employment and unemployment disparities between
regions in the European Union remain large and will
increase after enlargement. They should be tackled
through a broad approach involving actors at all levels
in order
to support economic and social cohesion,
making use of the Community Structural Funds.

(21)

The evaluation of the first five years of the employment
strategy highlighted better governance as a key for the
strategy's future effectiveness. A successful implementa-
tion of employment policies depends on partnership at
all levels, the involvement of a number of operational
services, and adequate financial resources to support the
implementation of the employment guidelines. Member
States have responsibility for the effective implementa-
tion of the employment guidelines, including ensuring a
balanced delivery at regional and local level.

(1) OJ L 335, 19.12.2001, p. 15.

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(22)

The effective implementation of the employment guide-
lines requires active participation of social partners, at all
stages, from designing policies to their implementation.
At the Social Summit on 13 December 2001 the Social
Partners expressed the need to develop and improve
coordination of tripartite consultation. It was also agreed
that a Tripartite Social Summit for Growth and Employ-
ment would be held before each spring European
Council.

(23)

In addition to the employment guidelines, Member
States should fully implement the broad economic policy
guidelines and ensure that their action is fully consistent
with the maintenance of sound public finances and
macroeconomic stability,

HAS DECIDED AS FOLLOWS:

Sole Article

for Member States'

The guidelines
employment policies
(‘employment guidelines’), annexed hereto, are hereby adopted.
Member States shall take them into account in their employ-
ment policies.

Done at Brussels, 22 July 2003.

For the Council

The President

G. ALEMANNO

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ANNEX

THE EMPLOYMENT GUIDELINES

A European strategy for full employment and better jobs for all

Member States shall conduct their employment policies with a view to implementing the objectives and priorities for
action and progressing towards the targets specified below. Special attention will be given to ensuring good governance
of employment policies.

In addition to the Employment guidelines and their associated Employment recommendations, Member States should
fully implement the Broad economic policy guidelines and ensure that the two instruments operate in a consistent way.

Reflecting the Lisbon agenda, the employment policies of Member States shall foster the three overarching and interre-
lated objectives of full employment, quality and productivity at work, and social cohesion and inclusion.

These objectives should be pursued in a balanced manner, reflecting their equal importance in achieving the ambitions
of the Union. They should be pursued involving all relevant actors. Synergies should be fully exploited, building on the
positive interaction between the three objectives. Equal opportunities and gender equality are vital for making progress
towards the three objectives.

Such an approach would also contribute to reducing unemployment and inactivity.

Full employment

Member States shall aim to achieve full employment by implementing a comprehensive policy approach incorporating
demand and supply side measures and thus raise employment rates towards the Lisbon and Stockholm targets.

Policies shall contribute towards achieving on average for the European Union:

— an overall employment rate of 67 % in 2005 and 70 % in 2010,

— an employment rate for women of 57 % in 2005 and 60 % in 2010,

— an employment rate of 50 % for older workers (55 to 64) in 2010.

Any national targets should be consistent with the outcome expected at European Union level and should take account
of particular national circumstances.

Improving quality and productivity at work

Improved quality at work is closely interlinked with the move towards a competitive and knowledge-based economy
and should be pursued through a concerted effort between all actors and particularly through social dialogue. Quality is
a multi-dimensional concept addressing both job characteristics and the wider labour market. It encompasses intrinsic
quality at work, skills, lifelong learning and career development, gender equality, health and safety at work, flexibility
and security, inclusion and access to the labour market, work organisation and work-life balance, social dialogue and
worker involvement, diversity and non-discrimination, and overall work performance.

Increasing employment rates must go hand in hand with raising overall labour productivity. Quality at work can help
increase labour productivity and the synergies between both should be fully exploited. This represents a specific chal-
lenge for social dialogue.

Strengthening social cohesion and inclusion

Employment is a key means to social inclusion. In synergy with the open method of coordination in the field of social
inclusion, employment policies should facilitate participation in employment through promoting access to quality
employment for all women and men who are capable of working; combating discrimination on the labour market and
preventing the exclusion of people from the world of work.

Economic and social cohesion should be promoted by reducing regional employment and unemployment disparities,
tackling the employment problems of deprived areas in the European Union and positively supporting economic and
social restructuring.

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SPECIFIC GUIDELINES

In pursuing the three overarching objectives, Member States shall
implement policies which take account of the
following specific guidelines which are priorities for action. In doing so they shall adopt a gender-mainstreaming
approach across each of the priorities.

1. ACTIVE AND PREVENTATIVE MEASURES FOR THE UNEMPLOYED AND INACTIVE

Member States will develop and implement active and preventative measures for the unemployed and the inactive
designed to prevent inflow into long-term unemployment, and to promote the sustainable integration into employ-
ment of unemployed and inactive people. Member States will:

(a) ensure that, at an early stage of their unemployment spell, all jobseekers benefit from an early identification of
their needs and from services such as advice and guidance, job search assistance and personalised action plans;

(b) based on the above identification, offer jobseekers access to effective and efficient measures to enhance their
employability and chances of integration, with special attention given to people facing the greatest difficulties in
the labour market.

Member States will ensure that:

— every unemployed person is offered a new start before reaching six months of unemployment in the case of
young people and 12 months of unemployment in the case of adults in the form of training, retraining,
work practice, a job, or other employability measure, combined where appropriate with ongoing job search
assistance,

— by 2010, 25 % of the long-term unemployed participate in an active measure in the form of training,
retraining, work practice, or other employability measure, with the aim of achieving the average of the three
most advanced Member States;

(c) modernise and strengthen labour market institutions, in particular employment services,

(d) ensure regular evaluation of the effectiveness and efficiency of labour market programmes and review them

accordingly.

2. JOB CREATION AND ENTREPRENEURSHIP

Member States will encourage the creation of more and better jobs by fostering entrepreneurship,
innovation,
investment capacity and a favourable business environment for all enterprises. Particular attention will be given to
exploiting the job creation potential of new enterprises, of the service sector and of R & D. Supported by the
process of benchmarking of enterprise policy and the implementation of the European Charter for Small Enterprises,
policy initiatives will focus on:

— simplifying and reducing administrative and regulatory burdens for business start-ups and SMEs and for the
hiring of staff, facilitating access to capital for start-ups, new and existing SMEs and enterprises with a high
growth and job creation potential (see also BEPGs, guideline 11),

— promoting education and training in entrepreneurial and management skills and providing support, including

through training to make entrepreneurship a career option for all.

3. ADDRESS CHANGE AND PROMOTE ADAPTABILITY AND MOBILITY IN THE LABOUR MARKET

Member States will facilitate the adaptability of workers and firms to change, taking account of the need for both
flexibility and security and emphasising the key role of the social partners in this respect.

Member States will review and, where appropriate, reform overly restrictive elements in employment legislation that
affect labour market dynamics and the employment of those groups facing difficult access to the labour market,
foster corporate social responsibility, and undertake other appropriate measures to
develop social dialogue,
promote:

— diversity of contractual and working arrangements, including arrangements on working time, favouring career

progression, a better balance between work and private life and between flexibility and security,

— access for workers, in particular for low skill workers, to training,

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— better working conditions, including health and safety; policies will aim to achieve in particular: a substantial

reduction in the incidence rate of accidents at work and of occupational diseases,

— the design and dissemination of innovative and sustainable forms of work organisation, which support labour

productivity and quality at work,

— the anticipation and the positive management of economic change and restructuring.

Member States will address labour shortages and bottlenecks through a range of measures such as by promoting
occupational mobility and removing obstacles to geographic mobility, especially by implementing the skills and
mobility action plan, improving the recognition and transparency of qualifications and competencies, the transfer-
ability of social security and pensions rights, providing appropriate incentives in tax and benefit systems, and taking
into account labour market aspects of immigration.

The transparency of employment and training opportunities at national and European level should be promoted in
order to support effective job matching. In particular, by 2005, jobseekers throughout the EU should be able to
consult all job vacancies advertised through Member States' employment services.

4. PROMOTE DEVELOPMENT OF HUMAN CAPITAL AND LIFELONG LEARNING

Member States will implement lifelong learning strategies, including through improving the quality and efficiency of
education and training systems, in order to equip all individuals with the skills required for a modern workforce in
a knowledge-based society, to permit their career development and to reduce skills mismatch and bottlenecks in the
labour market.

In accordance with national priorities, policies will aim in particular to achieve the following outcomes by 2010:

— at least 85 % of 22-year olds in the European Union should have completed upper secondary education,

— the European Union average level of participation in lifelong learning should be at least 12,5 % of the adult

working-age population (25 to 64 age group).

Policies will aim in particular to achieve an increase in investment in human resources. In this context, it is impor-
tant that there is a significant increase in investment by enterprises in the training of adults with a view to
promoting productivity, competitiveness and active ageing. Efficient investment in human capital by employers and
individuals will be facilitated.

5. INCREASE LABOUR SUPPLY AND PROMOTE ACTIVE AGEING

Member States will promote an adequate availability of labour and employment opportunities to support economic
growth and employment, taking into account labour mobility, as indicated in specific guideline 3. In particular, they
will:

— increase labour market participation by using the potential of all groups of the population, through a compre-
hensive approach covering in particular the availability and attractiveness of jobs, making work pay, raising
skills, and providing adequate support measures,

— promote active ageing, notably by fostering working conditions conducive to job retention — such as access to
continuing training, recognising the special importance of health and safety at work, innovative and flexible
forms of work organisation — and eliminating incentives for early exit from the labour market, notably by
reforming early retirement schemes and ensuring that it pays to remain active in the labour market; and
encouraging employers to employ older workers,

In particular, policies will aim to achieve by 2010 an increase by five years, at European Union level, of the
effective average exit age from the labour market (estimated at 59,9 in 2001). In this respect, the social partners
have an important role to play. Any national targets should be consistent with the outcome expected at the
European Union level and should take account of particular national circumstances,

— and, where appropriate, give full consideration to the additional labour supply resulting from immigration.

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6. GENDER EQUALITY

Member States will, through an integrated approach combining gender mainstreaming and specific policy actions,
encourage female labour market participation and achieve a substantial reduction in gender gaps in employment
rates, unemployment rates, and pay by 2010. The role of the social partners is crucial in this respect. In particular,
with a view to its elimination, policies will aim to achieve by 2010 a substantial reduction in the gender pay gap in
each Member State, through a multi-faceted approach addressing the underlying factors of the gender pay gap,
including sectoral and occupational segregation, education and training, job classifications and pay systems, aware-
ness-raising and transparency.

Particular attention will be given to reconciling work and private life, notably through the provision of care services
for children and other dependants, encouraging the sharing of family and professional responsibilities and facili-
tating return to work after a period of absence. Member States should remove disincentives to female labour force
participation and strive, taking into account the demand for childcare facilities and in line with national patterns of
childcare provision, to provide childcare by 2010 to at least 90 % of children between three years old and the
mandatory school age and at least 33 % of children under three years of age.

7. PROMOTE THE INTEGRATION OF AND COMBAT THE DISCRIMINATION AGAINST PEOPLE AT A

DISADVANTAGE IN THE LABOUR MARKET

Member States will foster the integration of people facing particular difficulties on the labour market, such as early
school leavers, low-skilled workers, people with disabilities, immigrants, and ethnic minorities, by developing their
employability, increasing job opportunities and preventing all forms of discrimination against them.

In particular, policies will aim to achieve by 2010:

— an EU average rate of no more than 10 % early school leavers,

— a significant reduction in each Member State in the unemployment gaps for people at a disadvantage, according

to any national targets and definitions,

— a significant reduction in each Member State in the unemployment gaps between non-EU and EU nationals,

according to any national targets.

8. MAKE WORK PAY THROUGH INCENTIVES TO ENHANCE WORK ATTRACTIVENESS

Member States will reform financial incentives with a view to making work attractive and encouraging men and
women to seek, take up and remain in work. In this context, Member States should develop appropriate policies
with a view to reducing the number of working poor. They will review and, where appropriate, reform tax and
benefit systems and their interaction with a view to eliminating unemployment, poverty and inactivity traps, and
encouraging the participation of women, low-skilled workers, older workers, people with disabilities and those
furthest from the labour market in employment.

Whilst preserving an adequate level of social protection, Member States will in particular review replacement rates
and benefit duration; ensure effective benefit management, notably with respect to the link with effective job search,
including access to activation measures to support employability, taking into account individual situations; consider
the provision of in-work benefits, where appropriate; and work with a view to eliminating inactivity traps.

In particular, policies will aim at achieving by 2010 a significant reduction in high marginal effective tax rates and,
where appropriate, in the tax burden on low paid workers, reflecting national circumstances.

9. TRANSFORM UNDECLARED WORK INTO REGULAR EMPLOYMENT

Member States should develop and implement broad actions and measures to eliminate undeclared work, which
combine simplification of the business environment, removing disincentives and providing appropriate incentives in
the tax and benefits system, improved law enforcement and the application of sanctions. They should undertake the
necessary efforts at national and EU level to measure the extent of the problem and progress achieved at national
level.

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10. ADDRESS REGIONAL EMPLOYMENT DISPARITIES

Member States should implement a broad approach towards reducing regional employment and unemployment
disparities. The potential for job creation at the local level, including in the social economy, should be supported
and partnerships between all relevant actors should be encouraged. Member States will:

— promote favourable conditions for private sector activity and investment in regions lagging behind,

— ensure that public support in regions lagging behind is focused on investment in human and knowledge capital,

as well as adequate infrastructure (see also BEPGs, guidelines 18 and 19).

The potential of the Cohesion and Structural Funds and the European Investment Bank should be fully exploited.

GOOD GOVERNANCE AND PARTNERSHIP IN THE IMPLEMENTATION OF THE EMPLOYMENT
GUIDELINES

Member States will ensure the effective implementation of the Employment guidelines, including at the regional and
local level.

Involvement of parliamentary bodies, social partners and other relevant actors

Good governance and partnership are important issues for the implementation of the European employment strategy,
while fully respecting national traditions and practices. The European Parliament will play an important role in this
respect. Responsibility for implementation of the European employment strategy lies with the Member States. In accor-
dance with national traditions, relevant parliamentary bodies as well as relevant actors in the field of employment at
national, regional and local level have important contributions to make.

In accordance with their national traditions and practices, Social Partners at national level should be invited to ensure
the effective implementation of the Employment guidelines and to report on their most significant contributions in all
areas under their responsibility, in particular concerning the management of change and adaptability, synergy between
flexibility and security, human capital development, gender equality, making work pay and active ageing as well as
health and safety at work.

European Social Partners at interprofessional and sectoral level are invited to contribute to the implementation of the
Employment guidelines and to support efforts undertaken by the national social partners at all levels, such as at interpro-
fessional, sectoral and local level. As announced in their joint work programme, the European social partners at interpro-
fessional level will report annually on their contribution to the implementation of the Employment guidelines. European
Social Partners at sectoral level are invited to report on their respective actions.

Moreover, operational services should deliver the employment policies in an efficient and effective way.

Adequate allocation of financial resources

Member States will ensure transparency and cost-effectiveness in the allocation of financial resources to the implementa-
tion of the Employment guidelines, while complying with the need for sound public finances in line with the Broad
economic policy guidelines.

They will fully exploit the potential contribution of the Community Structural Funds, in particular the European Social
Fund, to support the delivery of policies and to strengthen the institutional capacity in the field of employment.