Proposal for a Council Decision on guidelines for the employment policies of the Member States
Date: 2004-04-07
Institutions: European Commission
Subjects: EU Member State, European Employment Strategy, employment policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.4.2004 
COM(2004) 239 final 

2004/0082 (CNS) 

COMMUNICATION FROM THE COMMISSION 

Strengthening the implementation of the European Employment Strategy 

_______ 

Proposal for a 

COUNCIL DECISION 

On guidelines for the employment policies of the Member States 

Recommendation for a 

COUNCIL RECOMMENDATION 

On the implementation of Member States' employment policies 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
 
 
TABLE OF CONTENTS 

COMMUNICATION FROM THE COMMISSION Strengthening the implementation  
of the European Employment Strategy ...................................................................................... 3 

PROPOSAL FOR A COUNCIL DECISION on guidelines for the employment policies  
of the Member States.................................................................................................................. 6 

RECOMMENDATION FOR A COUNCIL RECOMMENDATION on the implmentation  
of Member States' employment policies .................................................................................... 8 

ANNEX 1. Common recommendations to all Member States ................................................ 10 

ANNEX 2. Country-specific recommendations....................................................................... 12 

Belgium….................................................................................................................................................................................12 

Denmark…................................................................................................................................................................................12 

Germany…................................................................................................................................................................................13 

Greece……. ..............................................................................................................................................................................14 

Spain……..................................................................................................................................................................................15 

France……................................................................................................................................................................................16 

Ireland……. ..............................................................................................................................................................................17 

Italy……… ...............................................................................................................................................................................18 

Luxembourg ..............................................................................................................................................................................19 

The Netherlands ........................................................................................................................................................................20 

Austria……...............................................................................................................................................................................20 

Portugal…… .............................................................................................................................................................................21 

Finland…… ..............................................................................................................................................................................22 

Sweden…… ..............................................................................................................................................................................23 

United Kingdom........................................................................................................................................................................23 

ANNEX 3. Priorities for new Member States.......................................................................... 25 

Cyprus…… ...............................................................................................................................................................................25 

Czech Republic .........................................................................................................................................................................26 

Estonia……...............................................................................................................................................................................26 

Hungary….................................................................................................................................................................................27 

Lithuania….. .............................................................................................................................................................................28 

Latvia……. ...............................................................................................................................................................................28 

Malta…….. ...............................................................................................................................................................................29 

Poland……................................................................................................................................................................................30 

Slovenia…….............................................................................................................................................................................31 

Slovakia….................................................................................................................................................................................31 

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COMMUNICATION FROM THE COMMISSION 

Strengthening the implementation of the European Employment Strategy 

Heightening the political debate through more focused and 
 forceful EU recommendations to the Member States 

Europe needs more and better jobs. The European Council of March 2004 has underlined the 
urgency for Europe to take effective action. 

The European Employment Strategy (EES) has this role. In line with the Lisbon strategy the 
new  European  employment  guidelines  established  by  the  Council  in  2003  have  set  three 
overarching  objectives:  full  employment;  quality  and  productivity  at  work  and  strengthened 
social  cohesion  and  inclusion.  They  include  ten  specific  guidelines  and  guidance  on 
improving governance of employment policies.  

Reforms carried out under the Employment Guidelines in many Member States have proved 
their worth in improving labour market performance as confirmed by the employment growth 
of  earlier  years  and  by  the  resilience  of  employment  in  the  recent  economic  slowdown. 
However, EU progress towards the Lisbon 2010 target of a 70% overall employment rate has 
come  to  a  standstill  and,  at  64.3%,  it  is  now  clear  that  the  EU  will  miss  the  intermediate 
employment rate target for 2005 of 67%. Without further action the 2010 target will also be 
missed.1  Labour  productivity  growth  has  continued  to  slow  down  and  quality  in  work  and 
inclusive labour markets remain important challenges in many Member States. 

Against the background of economic  slowdown  and  at  the  request  from  Heads  of  State  and 
Government  at  the  Spring  Council  of  2003,  the  Commission  established  a  European 
Employment Taskforce headed by Wim Kok, former Prime Minister of the Netherlands. The 
Taskforce identified2 priorities for action of general relevance for Member States and specific 
reforms needed. The Employment Taskforce's assessment and policy messages are shared by 
the  Commission  and  the  Council.  They  are  fully  consistent  with  the  European  Employment 
Strategy  and  have  been  closely  integrated  in  the  2004  Joint  Council  and  Commission 
Employment Report (JER) to the European Council.  

If Europe is to meet its employment objectives in 2010 and increase its competitiveness and 
growth potential in the global economy, a trend break will be needed: both employment and 
productivity  growth  must  accelerate  strongly.  A  narrow  approach  to  labour  market  reforms 
will  not  suffice.  Sound  macro  economic  policies  are  necessary  to  secure  confidence  and 
stability. Structural reforms are needed in the goods, services and capital markets to support 
competitiveness and job creation. Progress on all fronts of the Lisbon agenda, as completed 
by  the  environmental  dimension  at  Göteborg,  notably  in  terms  of  research3  and  innovation, 
education  and  training,  the  development  of  the  employment  potential  of  environmental 

1 
2 

3 

This implies creating more than 15 million jobs in the EU 15 and more than 20 million in the EU 25. 
"Jobs,  Jobs,  jobs  –  Creating  more  Employment  in  Europe",  Report  of  the  Employment  Taskforce 
chaired by Wim Kok. 
In  this  context,  it  should  be  noted  that  the  Barcelona  European  Council  of  March  2002  has  set  an 
objective  to  increase  R&D  investment  to  3%  of  GDP,  two  third  to  be  financed  by  the  private  sector, 
whereas in 2002 this ratio was close to 2%. 

3 

 
 
  
 
                                                 
policies, in particular in the environmental goods and services sector, and the reform of social 
protection systems including pension arrangements,  must go hand  in  hand. Policies in these 
areas, including the recent Growth Initiative, should boost business investment both in human 
and physical capital, and create better conditions for job creation and productivity growth by 
strengthening Europe's capacity to manage change. 

The  reform  of  the  Employment  Strategy  in  2003  placed  the  emphasis  on  medium-term 
orientation and on establishing a policy framework that takes account of increased diversity in 
the enlarged EU. Member States must vigorously pursue the full range of policies defined in 
the  Employment  Guidelines  and  the  Union  must  give  more  attention  to  the  follow-up  and 
increase peer pressure. The Employment Taskforce  has confirmed the need to put emphasis 
on an intensive monitoring of reforms undertaken by the Member States, rather than engaging 
in a process of further change of the guidelines.  

The  existing  overall  policy  framework  is  therefore  adequate  and  appropriate  to  confront 
today's employment challenges in an EU of 25 Member States. The medium-term character of 
the  new  employment  guidelines  and  the  streamlining  with  the  Broad  Economic  Policy 
Guidelines  (BEPGs)  justify  stability  at  least  until  the  mid  term  assessment  in  2006.  The 
current  and  new  Member  States  must  pursue  their  employment  policies  in  2004  within  the 
same stable framework.  

The  Commission  highlights  the  need  to  support  and  stimulate  a  real  policy  debate  at  the 
highest political level on the implementation of the EES. In this context, the recommendations 
should  become  more  forceful  and  succinct.  This  direction  must  be  seen  together  with 
reinforced dissemination and mutual learning through exchange of experiences. The European 
Council has confirmed the four key areas for action identified by the Employment Taskforce 
and in the 2004 JER: 

•  increasing adaptability of workers and enterprises;  

•  attracting more people to the labour market and making work a real option for all;  

•  investing more and more effectively in human capital;  

•  ensuring effective implementation of reforms through better governance. 

These constitute four common recommendations to all Member States and the 2005 JER will 
need to look critically at their implementation.  

Since they were first used in 2000, the country-specific employment recommendations have 
contributed  to  steering  Member  States'  policy  reforms.  The  recommendations  allow  for  a 
differentiation  in  policy  guidance  between  Member  States  according  to  their  respective 
situation  and  progress  in  implementation.  With  an  increasing  diversity  of  labour  market 
situations within the EU after  enlargement,  they  assume  even greater  importance. The  2004 
recommendations  are,  therefore,  designed  to  play  this  role  in  a  strengthened  way.  They  are 
sharper and more focused. They address those issues needing priority attention. Many pertain 
to  areas  already  highlighted 
in  previous  years  but  still  not  yet  resolved.  Other 
recommendations address new issues which require immediate attention. 

The  new  Member  States  have  been  introduced  to  the  EES  via  the  Joint  Assessment  Papers 
(JAPs)  that  were  agreed  with  the  Commission  before  membership.  They  will  be  submitting 
NAPs for the first time in 2004 within the framework of the employment guidelines and the 

4 

 
 
  
 
BEPGs.  They  must  pay  special  attention  to  the  common  employment  recommendations 
directed at all Member States. They are also invited to address the particular issues and policy 
messages  identified  for  each  country  in  the  Employment  Taskforce  Report  and  the 
Commission's report4 on the implementation of the JAPs. 

More  needs  to  be  done  by  the  EU  and  national  authorities  to  support  the  exchange  of 
experience  between  all  stakeholders  concerned.  This  requires  a  culture  change  to  create  an 
environment  where  governments  and  enterprises  see  themselves  as  learning  organisations 
open  to  good  ideas  from  others  and  keen  on  sharing  experiences.  In  2004  the  Commission 
will launch a new ambitious programme of mutual learning centred on the exchange of good 
practice and the dissemination, including at regional level, of the experience of the EES. 

The EU mobilises considerable financial resources especially to promote the development and 
structural  adjustment  of  Member  States  and  regions  that  are  lagging  behind.  The  next 
generation  of  EU  funding  needs  to  be  more  closely  linked  to  the  implementation  of  the 
employment  guidelines,  targets  and  recommendations  to  Member  States5.  Active  labour 
market  measures  should  be  enhanced  and  public  and  private  investment  in  human  capital 
should be increased6. In this respect the Commission encourages Member States to make full 
use of the possibilities deriving from the Block exemption regulations on Employment aid and 
on Training aid designed to correct market failures and to support the implementation of the 
employment strategy. 

**** 

The  four  common  recommendations  to  all  Member  States  and  the  country-specific 
recommendations form a powerful package. Governance will be brought more to the fore of 
the  European  Employment  Strategy.  The  shorter,  more  concentrated,  and  strengthened 
recommendations  should  ensure  that  Member  States  are  better  able  to  focus  action  on  the 
main impediments.  

Combined with a reinforced exchange of good practices and mutual learning and a better link 
with  the  use  of  EU  financial  resources,  the  stronger  EU  recommendations  can  give  a  new 
dynamic  to  the  European  Employment  Strategy;  a  strategy  fully  involving  national 
parliaments,  the  social  partners,  other  stakeholders  and  promoting  reform  partnerships;  one 
that  will  form  a  key  component  of  the  Partnership  for  Change  recently  announced  by  the 
European Social Partners. 

The  NAPs  should  respond  to  the  strengthened  recommendations  and  themselves  be  tighter 
policy  documents  without  being  superficial  or  incomplete.  The  implementation  of  the 
recommendations will provide the main basis for the JER to be drawn up in late 2004/early 
2005.  Such  improvements  should  bring  about  a  more  hard-hitting  and  effective  European 
Employment Strategy, one that can contribute to taking the Lisbon process forward with more 
and better jobs. 

4 

5 

6 

"Progress in implementing the Joint Assessment Papers on employment policies in acceding countries" 
COM(2003) 663 of 6.11.2003 
"Building our common Future – Policy challenges and Budgetary means of the Enlarged Union 2007-
2013" COM(2004) 101 final/2 of 26.2.2004 
"Third Report on Economic and Social Cohesion", 18.2.2004 

5 

 
 
  
 
                                                 
2004/0082 (CNS) 

Proposal for a 

COUNCIL DECISION 

On guidelines for the employment policies of the Member States 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the Commission 7, 

Having regard to the Opinion of the European Parliament 8, 

Having regard to the Opinion of the European Economic and Social Committee 9, 

Having regard to the Opinion of the Committee of the Regions 10, 

Having regard to the Opinion of the Employment Committee, 

Whereas: 

(1) 

(2) 

(3) 

The European Employment Strategy has the leading role in the implementation of the 
employment  and  labour  market  objectives  of  the  Lisbon  strategy.  The  reform  of  the 
European  Employment  Strategy  in  2003  has  placed  the  emphasis  on  medium-term 
orientation  and  on  the  importance  of  implementation  of  the  full  range  of  policies 
recommended in the Employment Guidelines.  

The Employment Guidelines should be fully reviewed only every three years, while in 
the  intermediate  years  their  updating  should  remain  strictly  limited.  The  European 
Employment  Taskforce  recommended  more  forceful  recommendations  and  a  more 
effective use of peer review, rather than engaging in a process of further change of the 
Guidelines. 

The  examination  of  the  Member  States'  National  Action  Plans  for  employment 
contained in the Joint Employment Report 2003-2004 shows that Member States and 
the  social  partners  should  give  priority  to  increasing  adaptability  of  workers  and 
enterprises;  attracting  more  people  to  enter  and  remain  on  the  labour  market  and 
making  work  a  real  option  for  all;  investing  more  and  more  effectively  in  human 
capital  and  lifelong  learning;  and  ensuring  effective  implementation  of  reforms 

7 
8 
9 
10 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 

6 

 
 
  
 
                                                 
through  better  governance.  These  priorities  are  fully  consistent  with  and  can  be 
pursued in the context of the current Guidelines. 

(4) 

(5) 

The Employment Guidelines will apply to the new Member States upon accession. 

In  addition  to  these  Employment  Guidelines,  Member  States  should  fully  implement 
the Broad Economic Policy Guidelines and ensure that action is fully consistent with 
the maintenance of sound public finances and macro-economic stability. 

HAS DECIDED AS FOLLOWS: 

Article 1 

The guidelines for Member States' employment policies as set out in the annex to the Council 
decision of 22 July 2003 on guidelines for the employment policies of the Member States are 
maintained.  

Article 2 

All  aspects  of  the  guidelines  shall  be  taken  into  account  by  the  employment  policies  of 
Member  States  in  a  comprehensive  and  integrated  manner  and  reported  upon  in  National 
Action Plans submitted annually on the 1st of October.  

Done at Brussels, 

For the Council 
The President 
[…] 

7 

 
 
  
 
 
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

On the implementation of Member States' employment policies 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
128(4) thereof, 

Having regard to the Commission recommendation, 

Having regard to the opinion of the Employment Committee 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

The European Employment Strategy has the leading role in the implementation of the 
employment  and  labour  market  objectives  of  the  Lisbon  strategy.  The  successful 
implementation  of  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 specific priorities and improved governance.  

The reform of the European Employment Strategy in 2003 has placed the emphasis on 
medium-term orientation and on the importance of implementation of the full range of 
policies  recommended  in  the  Employment  Guidelines.  The  Employment  Guidelines 
should  therefore  be  fully  reviewed  only  every  three  years,  while  in  the  intermediate 
years their updating should remain strictly limited.  

The  Council  adopted  without  change  the  Guidelines  for  the  employment  policies  of 
the Member States in 2004 by Decision… 

The  Council  adopted  a  recommendation  on  the  implementation  of  Member  States' 
employment  policies  on  22  July  2003.11  The  examination  of  the  Member  States' 
National  Action  Plans  for  employment  contained  in  the  Joint  Employment  Report 
2003-2004  shows  that  Member  States  and  the  social  partners  have  given  limited 
responses to these Council recommendations.  

The European Employment Taskforce recommended that the EU should address more 
forceful recommendations to the Member States. Priority should be given to increasing 
adaptability of workers and enterprises; attracting more people to enter and remain on 
the  labour  market,  making  work  a  real  option  for  all;  investing  more  and  more 
learning;  and  ensuring  effective 
lifelong 
effectively 

in  human  capital  and 

11 

JO L 197 of 5.8.2003 

8 

 
 
  
 
                                                 
(6) 

(7) 

implementation  of  reforms  through  better  governance.  The  Council  and  the 
Commission  share  this  assessment  and  have  integrated  the  policy  messages  of  the 
Employment Taskforce report in the Joint Employment Report. 

the 

implementation  of 

the  Guidelines  and  2003  Council 
The  analysis  of 
recommendations  in  the  Joint  Employment  Report  and  the  general  and  country-
specific policy messages in the Employment Taskforce report provide the basis for the 
formulation of the EU recommendations for national employment policies in 2004.  

The Employment Guidelines will apply to the new Member States upon accession. All 
of the new Member States have reported over the last few years on the implementation 
of  Joint  Assessment  Papers  which  refer  to  the  Employment  Guidelines.  The  country 
specific messages contained in the report of the European Employment Taskforce are 
fully  consistent  with  the  examination  of  the  JAP  implementation  reports,  and  may 
serve  as  guidance  for  the  implementation  of  the  Employment  Guidelines  in  the  new 
Member States. 

HEREBY RECOMMENDS: 

1. 

2. 

3. 

That all Member States take action along the lines set out in Annex 1. 

That the Member States, to which the Council recommendation of 22 July 2003 was 
addressed, should take the actions set out in Annex 2, which replaces the Annex of 
that  recommendation,  and  report  on  their  follow  up  in  their  National  Action  Plans 
due to be submitted on 1 October 2004. 

That Member States joining the Union on 1st May 2004 address the priorities set out 
in Annex 3 in their National Action Plans due to be submitted on 1 October 2004. 

Done at Brussels, […] 

For the Council 
The President 
[…] 

9 

 
 
  
 
 
 
 
ANNEX 1 

COMMON RECOMMENDATIONS TO ALL MEMBER STATES 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the Guidelines and 2003 Council recommendations show that 
all Member States and the social partners should give immediate priority to: 

•  Increasing  adaptability  of  workers  and  enterprises.  Promote  flexibility  combined  with 
security  in  the  labour  market  by  focusing  on  improving  work  organisation  and  the 
attractiveness  –  for  employers  and  employees  –  of  both  standard12  and  non-standard 
labour  contracts  to  avoid  the  emergence  of  two-tier  labour  markets.  The  concept  of  job 
security  should  be  modernised  and  broadened  with  a  view  not  only  to  covering 
employment  protection  but  also  to  building  on  women  and  men’s  ability  to  remain  and 
progress  in  work.  Maximise  job  creation  and  raise  productivity  by  reducing  obstacles  to 
setting  up  new  businesses  and  by  promoting  better  anticipation  and  management  of 
restructuring.  

•  Attracting more people to enter and remain on the labour market: making work a real 
option for all. End unemployment, inactivity and low pay traps by adjusting the balance 
between  taxes  and  benefits.  Build  comprehensive  active  ageing  strategies,  including 
incentives  and  other  measures  for  workers  to  retire  later  and  for  employers  to  hire  and 
keep  older  workers  in  employment.  Further  develop  policies  to  increase  labour  market 
participation and entrepreneurship of women, young people, ethnic minorities, immigrants 
and  of  those  people  at  a  disadvantage.  Strengthen  active  labour  market  policies  for  the 
unemployed and the inactive, with personalised services to all those seeking employment. 
Pursue  make  work  pay  policies  through  both  financial  and  non-financial  incentives, 
including  individual  taxation,  quality  in  work  in  its  all  dimensions,  childcare  and  care 
facilities and other measures to reconcile work and family life. 

•  Investing  more  and  more  effectively  in  human  capital  and  lifelong  learning.  Set  out 
ambitious  policies  for  raising  levels  of  human  capital  and  R&D13  and  for  promoting 
entrepreneurial  attitudes  and  skills  through  education  at  all  levels.  Share  costs  and 
responsibilities  between  public  authorities,  companies  and  individuals  and  review 
incentives  for  increasing  investment  in  human  resources  in  enterprises.  Reduce  early 
school leaving and broaden the supply of training to improve access to lifelong learning, 
in particular for those most in need such as the low-skilled and older workers, taking into 
account  the  present  and  future  needs  of  the  labour  market.  Develop  innovative  learning 
and training methods (such as e-learning) and invest in skills related to new information 
and communication technologies.  

•  Ensuring effective implementation of reforms through better governance.  Build reform 
partnerships to mobilise the support and participation of the social partners and various 
stakeholders.  Define  clear  national  policies  and,  where  appropriate,  targets  to  reflect 
those set at a European level, and ensure an efficient use of public funds. Promote the role 
and  visibility  of  National  Action  Plans  as  key  instruments  in  bringing  together  these 

12 

13 

The  term  ‘standard  contracts’  is  meant  to  cover  contracts  of  unlimited  duration,  whether  full-time  or 
part-time. 
See the Barcelona target of increasing R&D investment to 3% of GDP.  

10 

 
 
  
 
                                                 
elements  in  the  programming  of  reform.  Ensure  that  they  demonstrate  the  adequacy, 
transparency and cost-effectiveness in the allocation of financial resources, including the 
use  of  EU  financial  resources,  to  the  implementation  of  the  Employment  Guidelines  and 
recommendations. Develop more effective mutual learning. 

11 

 
 
  
 
ANNEX 2 

COUNTRY SPECIFIC RECOMMENDATIONS 

BELGIUM 

Despite positive trends since 1997, the employment rate in Belgium remains markedly below 
the EU average and far below the Lisbon targets. The employment rate for older workers is 
amongst  the  lowest  in  the  EU25.  The  employment  rate  of  non-nationals  is  strikingly  low. 
After several years of steady decline, unemployment has started to rise. Participation of adults 
in education and training is stagnating. 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations show 
that Belgium should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  better anticipate and accompany restructuring of enterprises, in particular in the case of 

collective redundancies;  

•  further  reduce  non-wage  labour  costs,  in  particular  for  the  low-paid  while  safeguarding 

budgetary consolidation; 

•  improve  cooperation  between  regional  employment  services  to  support  mobility  between 

regions. 

Attracting more people to the labour market and making work a real option for all 

•  review  tax  and  benefit  systems  to  remove  subsisting  unemployment  traps  and  provide 

adequate incentives for active job search by reviewing the conditionality oft benefits; 

•  increase the coverage of unemployed adults, disadvantaged young people and immigrants 

in the measures run by the employment services; 

•  define  a  comprehensive  strategy  for  active  ageing,  including  the  removal  of  early 
retirement  schemes,  access  to  continuing  training,  the  promotion  of  a  flexible  working 
environment and effective job search for older unemployed workers. 

Investing more and more effectively in human capital and lifelong learning 

•  take action to reduce early school leaving;  

•  monitor  recent  inter-professional  agreements  to  raise  worker  participation  in  training, 

with special attention for the low-skilled. 

DENMARK 

Denmark  has  employment  rates  well  above  the  Lisbon  employment  targets,  including  for 
women  and  older  workers.  Despite  recent  increases,  particularly  hitting  graduates  and 

12 

 
 
  
 
 
worsening  the  long-term  unemployment,  unemployment  remains  relatively  low.  Given  the 
high employment rates, a key priority for Denmark is to ensure adequate labour supply in the 
longer term.  

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations show 
that Denmark should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  further reduce the overall fiscal pressure on labour safeguarding budgetary consolidation. 

Attracting more people to the labour market and making work a real option for all 

•  pursue  a  comprehensive  strategy  for  active  ageing,  including  the  removal  of  remaining 
incentives for early retirement, notably the Voluntary Early Retirement Benefit Scheme; 

•  review tax and benefit systems to reduce marginal tax rates and raise incentives for low-

income groups to work, including the unemployed and the inactive; 

•  monitor  the  impact  of  recent  reforms  to  integrate  immigrants  into  the  labour  market,  in 
particular  of  efforts  to  build  up  the  necessary  basic  skills  required  to  match  job 
requirements. 

Investing more and more effectively in human capital and lifelong learning 

•  reverse the deterioration of basic skills;  

•  monitor trends in vocational training in the light of recent increases in training fees. 

GERMANY 

The German employment rate is above the EU average but still far below the Lisbon targets. 
The employment rate for older workers is lagging behind. The employment rate for women 
exceeds the EU average but is still hampered by the lack of childcare provision, a high gender 
pay gap and tax disincentives. While performance varies across regions, overall, the German 
labour market has barely benefited from the years of economic growth in the EU since 1997. 
Unemployment and especially long-term unemployment remain among the highest in the EU. 
Addressing regional disparities between the eastern and western parts of the country remains 
a priority, especially in terms of job creation.  

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations show 
that Germany should give immediate priority to:  

Increasing adaptability of workers and enterprises 

•  review  the  financing  of  the  social  protection  systems  to  reduce  labour  costs  while 

safeguarding budgetary consolidation; 

13 

 
 
  
 
•  encourage  social  partners  to  further  develop  wage-setting  mechanisms  that  reflect  local, 
regional  and  sectoral  differences  in  productivity  and  labour  market  conditions;  combine 
negotiations  on  wages  with  progress  in  working  time  flexibility  and  the  provision  of 
training facilities for example through training accounts (see BEPG guideline 5); 

•  promote the development of SMEs, notably through simpler regulation and better access to 

financing; strengthen the entrepreneurial culture in the Eastern part of the country. 

Attracting more people to the labour market and making work a real option for all 

•  continue reform of the tax and social benefit system, thereby ensuring sufficient incentives 
to  take  up  work;  closely  monitor  and  evaluate  the  implementation  of  the  Hartz  reforms 
with respect to the efficiency of employment services, especially in the Eastern part of the 
country; 

•  review  tax  disincentives  to  female  participation  in  the  labour  market;  increase  childcare 
facilities,  especially  in  the  Western  Länder,  and  improve  the  correspondence  between 
school schedules and working hours; encourage social partners to reduce the gender pay 
gap in the private sector; 

•  develop  a  comprehensive  strategy  for  active  ageing  to  ensure  that  people  stay  in  work 
longer,  especially  after  the  age  of  60;  further  encourage  part-time  work  for  men  and 
increase access to training for older workers; 

•  strengthen efforts to integrate immigrants. 

Investing more and more effectively in human capital and lifelong learning 

•  improve  education  levels  of  the  workforce  and  strengthen  incentives  to  increase 
participation in lifelong learning, especially for the low-skilled, SME employees and older 
workers;  

•  continue the modernisation of the dual system; reduce early school leaving.  

GREECE 

Although job creation has increased recently, Greece still has one of the lowest employment 
rates  in  the  EU,  particularly  for  women,  and  declining  but  high  unemployment.  Undeclared 
work  is  substantial.  Labour  productivity  has  risen  significantly  but  remains  at  low  levels. 
Adult  participation  in  training  also  remains  particularly  low,  especially  given  the  low 
educational attainment of the working-age population. In recent years, increased immigration 
has contributed to labour supply.  

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations show 
that Greece should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  implement fully the agreed labour market reform package; raise the attractiveness of part-
time  work  and  develop  temporary  work  agencies  to  increase  the  diversity  of  work 
arrangements;  

14 

 
 
  
 
•  reduce non-wage labour cost safeguarding budgetary consolidation; transform undeclared 
work  into  regular  employment  by  improving  the  attractiveness  of  standard  and  non-
standard  contracts  to  employers  and  employees  and  strengthening  law  enforcement 
capacity; 

•  promote a more employment-friendly business environment. 

Attracting more people to the labour market and making work a real option for all 

•  take strong action to increase the level and effectiveness of active labour market policies 

so as to cover a larger share of the inactive and the unemployed;  

•  speed up the development of efficient employment services throughout the country offering 

preventative and personalised services; upgrade the statistical monitoring systems; 

•  raise incentives for women to participate in the labour market, including through part-time 
employment; increase the availability and affordability of care facilities for children and 
other dependants; 

•  define  a  comprehensive  strategy 

flexible  working 
arrangements, incentives to encourage older workers to remain longer in employment and 
support for skills development. 

for  active  ageing  providing 

Investing more and more effectively in human capital and lifelong learning 

•  reduce  early  school  leaving  and  strengthen  the  labour  market  relevance  of  tertiary 

education;  

•  review  incentives  to  promote  life-long  learning  and  increase  participation  in  training,  in 

particular for the low-skilled and for immigrants.  

SPAIN 

Between 1997 and 2002, Spain had the highest increase in employment rates and the highest 
reduction  in  unemployment  rates  among  the  Member  States.  However,  unemployment 
remains  well  above  the  EU  average,  while  the  employment  rate  remains  well  below.  With 
wide  differences  in  performances  across  regions,  addressing  regional  disparities  remains  a 
priority.  Female  participation  and  the  employment  rate  of  older  workers  remain  particularly 
low.  Moreover,  a  particularly  high  share  of  people  (about  a  third  of  all  workers)  is  still 
employed  under  fixed-term  contracts.  Labour  productivity  remains  at  low  levels.  Overall 
levels of educational attainment and participation of adults in training remain particularly low. 
In recent years, increased immigration has contributed to labour supply.  

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations show 
that Spain should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  promote  modernisation  of  work  organisation  to  strengthen  productivity  and  quality  at 

work;  

15 

 
 
  
 
•  revise  the  regulatory  framework  to  make  permanent  contracts  more  attractive  for 
employers  and  to  discourage  the  use  of  fixed-term  contracts  so  as  to  counter  the 
segmentation of the labour market; remove obstacles to part-time work; make temporary 
agency work more attractive for companies and workers;  

•  use  possibilities  of  wage  differentiation  according  to  local,  regional  and  sectoral 

conditions (see BEPG guideline 5).  

Attracting more people to the labour market and making work a real option for all 

•  raise  incentives  for  women  to  participate  in  the  labour  market;  increase  the  availability 

and affordability of care facilities for children and other dependants; 

•  ensure  greater  access  to  and  efficiency  of  active  labour  market  measures  for 
disadvantaged people, in particular young people, disabled people, immigrants and long-
term  unemployed;  complete  the  modernisation  of  the  public  employment  services, 
including the statistical monitoring system; strengthen the coordination between regional 
employment services ; and eliminate obstacles to geographical mobility; 

•  define  a  comprehensive  strategy 

flexible  working 
arrangements, incentives to encourage older workers to remain longer in employment and 
training. 

for  active  ageing  providing 

Investing more and more effectively in human capital and lifelong learning 

•  reduce  early  school  leaving  and  ensure  quality  and  labour-market  relevance  of  tertiary 

education;  

•  strengthen  incentives  for  lifelong  learning  to  increase  participation,  in  particular  for  the 

low-skilled. 

FRANCE 

In  France,  the  overall  employment  rate  is  below  the  EU  average.  The  employment  rate  for 
older  workers  (55-64)  is  one  of  the  lowest  in  the  EU.  Unemployment  fell  significantly 
between  1997  and  2000  but  has  risen  again  with  the  economic  slowdown.  Unemployment 
remains among the highest in the EU and it is particularly high for young people (15-24). The 
employment rate of non-nationals is strikingly low, notably for women. The share of fixed-
term  contracts  continues  to  exceed  the  EU-15  average,  whereas  participation  of  adults  in 
education and training remains below average. 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations shows 
that France should give immediate priority to:  

Increasing adaptability of workers and enterprises 

•  facilitate  the  transition  of  people  employed  under  fixed-term  contracts  into  permanent 
contracts to counter the segmentation of the labour market and increase opportunities to 
remain and progress in the labour market;  

16 

 
 
  
 
 
•  develop a more effective system of anticipation and management of restructuring; 

•  promote  a  business-friendly  environment  for  the  development  of  SMEs  and  monitor 

progress in increasing number of business start-ups. 

Attracting more people to the labour market and making work a real option for all 

•  monitor  the  impact  of  the  pension  reform  on  the  exit  age  and  develop  a  comprehensive 
strategy  for  active  ageing  to  retain  older  workers  longer  in  employment  by  adapting 
working conditions, greater access to training and removing early retirement schemes; 

•  improve coordination of employment services to strengthen the provision of individualised 
services; build effective pathways to work and training for unemployed young people and 
for immigrants, notably women; 

•  ensure proper evaluation of the recent reform of the unemployment insurance system and 

ensure that it is accompanied by appropriate requirements and effective job search. 

Investing more and more effectively in human capital and lifelong learning  

•  ensure that the social partners' agreement on vocational training effectively results in an 
increased share of the population participating in training, giving particular attention to 
the low-skilled and workers in SMEs;  

•  reduce  early  school  leaving;  facilitate  and  encourage  wider  and  easier  access  to 

apprenticeships. 

IRELAND 

Ireland has made impressive progress in terms of employment and productivity performances 
since  1997.  The  total  employment  rate  has  increased  from  57.5%  to  65.3%  while 
unemployment  has  fallen  by  nearly  two-thirds  and  long-term  unemployment  from  6.1%  to 
1.3%. Female participation in the labour force has improved, but there is still a significant gap 
between  employment  rates  for  women  and  men,  as  well  as  a  high  gender  pay  gap.  Labour 
shortages remain a problem although they are eased by increased immigration. A significant 
element  in  Ireland's  success  is  its  capacity  to  attract  foreign  direct  investment.  Social 
partnership,  its  tax  system,  a  good  regulatory  environment  and  investment  in  human  capital 
are also major factors.  

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report  of  the  implementation  of  the  EU  guidelines  and  2003  Council  Recommendations 
shows that Ireland should give immediate priority to: 

Attracting more people to the labour market and making work a real option for all 

•  increase access to active labour market measures for a larger share of the unemployed and 
inactive population and ensure their efficiency ; strengthen incentives to make work pay; 

•  increase the supply and affordability of childcare facilities and take urgent action to tackle 

the causes of the gender pay gap. 

17 

 
 
  
 
Investing more and more effectively in human capital and lifelong learning 

•  implement  a  coherent  lifelong  learning  strategy  to  reduce  early  school  leaving  and 
increase participation in training, especially for the low-skilled and for older workers.  

ITALY 

Despite improvements since 1997, the employment rate continues to be one of the lowest in 
the  EU.  Female  participation  and  the  employment  rate  of  older  workers  also  remain  among 
the lowest in the EU25. Unemployment has slowly decreased over the recent period, but still 
stands  above  the  EU15  average.  With  unemployment  at  about  5%  in  the  centre-north, 
compared to 18% in the south, addressing regional disparities is a priority. Undeclared work 
is  particularly  significant.  Overall  levels  of  educational  attainment  and  participation  in 
training remain particularly low. 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations show 
that Italy should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  simplify the regulatory environment in order to address the imbalances between permanent 
and  non-permanent  contracts  and  to  counter  the  segmentation  of  the  labour  market; 
remove obstacles to part-time work;  

•  pursue  further  reductions  of  non-wage  labour  costs,  especially  for  the  low-paid, 
into  regular 

safeguarding  budgetary  consolidation; 
employment by removing tax disincentives and improving law enforcement capacity; 

transform  undeclared  work 

•  encourage a review of wage bargaining systems to take account of regional labour market 

differences (see BEPG guideline 5). 

Attract more people to the labour market and make work a real option for all 

•  improve the level, coverage and effectiveness of unemployment insurance; 

•  develop effective employment services throughout the country, with particular attention for 
the situation of young people and immigrants; increase access to personalised services and 
participation  in  active  labour  market  schemes,  especially  in  the  South,  and  ensure  their 
efficiency;  implement  the  national  computerised  labour  market  data  system  without  any 
further delay; 

•  increase the availability and affordability of  care facilities for children, especially under 
three  years  of  age,  and  other  dependants  to  promote  female  participation  in  the  labour 
market; 

•  define  a  comprehensive  active  ageing  strategy,  providing  adequate  incentives  to  keep 

workers longer in employment and discouraging early retirement.  

18 

 
 
  
 
Investing more and more effectively in human capital and lifelong learning 

•  raise  educational  attainment  of  the  workforce;  reduce  early  school-leaving;  increase  the 

labour market relevance of tertiary education;  

•  strengthen  incentives  to  lifelong  learning  and  increase  participation  in  training,  in 
particular for the low skilled, through - inter alia - a quick launch of the inter-professional 
funds. 

LUXEMBOURG 

In Luxembourg, the employment rate is close to the EU average but still below the EU target. 
Unemployment remains low and the long-term unemployment rate is one of the lowest in the 
EU.  However,  the  economic  boom  of  the  late  1990s  has  not  led  to  increased  employment 
rates across the board. New jobs were notably taken up by cross-border workers and women, 
while employment of older workers remained at a very low level. Participation in education 
and training remains below the EU15 average. 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations shows 
that Luxembourg should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  support  the  development  of  start-ups  and  promote  business  training  with  a  view  to 

encouraging alternative sources of job creation; 

Attract more people to the labour market and make work a real option for all 

•  develop  a  comprehensive  strategy  for  active  ageing,  notably  in  the  private  sector  and 
strengthen  recent  initiatives  to  retain  workers  longer  in  employment  by  removing  early 
retirement schemes;  

•  promote work-oriented solutions for people covered by the disability scheme who are able 

to work; 

•  improve  services  to  facilitate  a  better  reconciliation  of  work  and  private  life,  and 
encourage  women  to  return  to  work  after  long  periods  outside  the  labour  market;  take 
action to tackle the causes of the gender pay gap. 

Investing more and more effectively in human capital and lifelong learning 

•  ensure effective implementation of the framework law on continuing training with a view to 
strengthening  incentives  for  lifelong  learning  and  increasing  participation  in  training, 
notably for the low-skilled; 

•  revise  the  overall  lifelong  learning  system  to  achieve  better  coherence  between  the 

education and training systems and reduce early school leaving. 

19 

 
 
  
 
The NETHERLANDS 

While  the  employment  rates  for  women  and  men  well  exceed  the  Lisbon  targets,  the 
employment  rate  of  immigrants  remains  low.  The  labour  market  is  characterised  by  an 
exceptionally high level of part-time work (about 44% of the workforce), and a high number 
of  people  on  disability  benefits.  The  employment  rate  of  older  workers  exceeds  the  EU 
average but is still far below the EU target. Unemployment has risen significantly since 2001, 
although it remains among the lowest in the EU. In the autumn of 2003 the government and 
the social partners have signed an agreement which, among other things, includes a freeze in 
the development of wages in 2004 and 2005.  

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations shows 
that the Netherlands should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  implement  and  closely  monitor  wage  developments  in  line  with  the  "Autumn  Agreement" 

between the government and the social partners (see BEPG guideline 5). 

Attracting more people to the labour market and making work a real option for all 

•  carry out systematic work ability screenings of the people on disability benefits and assist 
those, who are able to work, to prepare for and find a suitable job; pay special attention to 
over-represented groups in the disability scheme such as women under the age of 40; 

•  reinforce  the  preventative  approach  for  adults;  increase  effectiveness  of  and  access  to 
active measures for social benefit recipients and those with the greatest risk of inactivity; 
facilitate the integration of immigrants; 

•  combine the removal of early retirement schemes with incentives to retain workers longer 

in work and training, in particular for under-skilled older workers; 

•  facilitate transition from part-time to full-time jobs; take urgent action to tackle the causes 

of gender pay gaps; increase the affordability of childcare. 

Investing more and more effectively in human capital and lifelong learning 

•  take  action  to  reduce  early  school  leaving;  strengthen  incentives  to  develop  lifelong 
learning  and  increase  participation  in  training,  especially  for  the  low-skilled  and  the 
inactive.  

AUSTRIA 

Austria has achieved a high employment rate overall, and a relatively high employment rate 
for women, in line with the Lisbon targets. Unemployment is amongst the lowest in the EU. 
Social  partnership  plays  an  important  role  for  modernising  work  organisation,  improving 
labour  legislation  and  ensuring  satisfactory  wage  developments.  The  employment  rate  of 
older  workers,  however,  is  particularly  low.  Employment  growth  has  slowed  down  and 
unemployment  has  started  to  rise.  Participation  of  adults  in  education  and  training  is  below 
the EU average. The gender pay gap remains one of the highest in the EU. 

20 

 
 
  
 
The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council Recommendations show 
that Austria should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  monitor and if necessary complement reforms on severance pay legislation and entitlement 
to unemployment benefit for the self-employed to increase levels of occupational mobility.  

Attract more people to the labour market and make work a real option for all 

•  develop  a  comprehensive  strategy  for  active  ageing,  including  the  removal  of  early 
retirement  schemes,  broadening  the  incentives  to  retain  older  workers  longer  in 
employment,  notably  older  women;  monitor  the  impact  of  the  revision  of  the  pension 
system on the effective exit age and progress towards the national targets; 

•  take  action  to  tackle  the  causes  of  the  gender  pay  gap;  increase  the  availability  and 
affordability  of  childcare  facilities  and  evaluate  the  impact  of  the  present  childcare 
allowance scheme on the level and quality of female employment. 

Investing more and more effectively in human capital and lifelong learning 

•  review  incentives  to  increase  participation  in  training,  especially  for  the  low-skilled  and 

for immigrants;  

•  take action to reduce early school leaving; increase the labour market relevance of tertiary 

education. 

PORTUGAL 

Portugal is close to achieving the Lisbon target on overall employment and slightly exceeds 
the employment targets for women and older workers. The recent economic slowdown has led 
unemployment to rise, although it remains at a relatively low level in comparison to the EU. 
Levels of productivity, overall levels of educational attainment and access to training remain 
particularly low. Moreover, a significant share of people (more than 20%) is employed under 
fixed-term contracts. In recent years, increased immigration has contributed to labour supply. 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council recommendations show 
that Portugal should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  promote  modernisation  of  work  organisation  to  strengthen  productivity  and  quality  at 

work;  

•  building on the new Labour Code, make permanent contracts more attractive to employers 
as  well  as  employees,  and  counter  the  segmentation  of  the  labour  market;  raise  the 
attractiveness of part-time work;  

•  develop a more effective system of anticipation and management of restructuring.  

21 

 
 
  
 
Attracting more people to the labour market and making work a real option for all 

•  strengthen active labour market measures for the unemployed and the inactive and ensure 

their efficiency ; strengthen efforts to integrate immigrants;  

•  take action to tackle the causes of the gender pay gap in the private sector and increase the 

availability and affordability of care facilities for children and other dependants;  

•  develop  a  comprehensive  active  ageing  strategy,  including  removing  incentives  for  early 
retirement, increasing access to training and providing appropriate working environments.  

Investing more and more effectively in human capital and lifelong learning 

•  ensure  that  the  national  strategy  for  lifelong  learning  effectively  results  in  raising  the 
educational attainment of the whole workforce, in strengthening the incentives for lifelong 
learning and in increasing participation in training, in particular for the low-skilled;  

•  reduce  early  school  leaving  and  strengthen  the  labour  market  relevance  of  tertiary 

education. 

FINLAND 

Finland  is  close  to  the  overall  employment  rate  target  and  it  exceeds  the  employment  rate 
target for women. It has achieved a high increase in the participation of older workers over the 
last decade, coming close to the EU target for older workers. The unemployment rate is above 
the EU average, and is particularly high for young people.  

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report  of  the  implementation  of  the  EU  guidelines  and  2003  Council  Recommendations 
shows that Finland should give immediate priority to: 

Increasing adaptability of workers and enterprises 

•  reduce non-wage labour costs on the low-paid while maintaining sound public finances.  

Attracting more people to the labour market and making work a real option for all 

•  monitor  the  impact  of  recent  reforms  of  active  labour  market  policies  on  structural 
unemployment and regional disparities;  take special measures to facilitate  the  activation 
and integration of disadvantaged young people, disabled people and immigrants; 

•  further reform tax and benefit systems to remove unemployment traps;  

•  follow-up  the  national  strategy  for  active  ageing  by  improving  working  conditions, 

incentives and the provision of training for the low-skilled and older workers. 

Investing more and more effectively in human capital and lifelong learning 

•  take action to reduce early school leaving and increase training for the low-skilled. 

22 

 
 
  
 
SWEDEN 

Sweden exceeds all EU employment targets including those for women and for older workers. 
The total unemployment rate stands at about 5%. Efforts should be maintained to avoid labour 
supply  constraints.  In  view  of  the  ageing  population,  there  will  be  a  need  to  sustain  labour 
supply by exploiting potential sources of labour among immigrants, the young and the long-
term sick, and by improving incentives to work. 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report of the implementation of the EU guidelines and 2003 Council Recommendations show 
that Sweden should give immediate priority to: 

Increasing adaptability of workers and enterprises  

•  Facilitate the development of SMEs in particular by reducing administrative burdens. 

Attracting more people to the labour market and making work a real option for all 

•  address the rising number of people on long-term sick leave by promoting work-oriented 

solutions and improving conditions of work;  

•  eliminate remaining unemployment and inactivity traps; 

•  closely monitor the results of actions to integrate immigrants into the labour force. 

Investing more and more effectively in human capital and lifelong learning 

•  reduce  early  school-leaving  and  increase  access  to  training  for  the  low-skilled  and  the 
inactive; review education and training policy to address the issue of emerging bottlenecks 
and skills mismatches in low- and medium-skilled sectors. 

UNITED KINGDOM 

The  UK  exceeds  all  the  employment  rate  targets,  including  those  for  women  and  for  older 
workers.  Despite  the  slowdown  in  the  global  economy,  employment  rates  have  remained 
fairly  stable  and  unemployment  levels  are  well  below  the  EU  average.  However, 
concentrations of economic inactivity, and to a lesser extent unemployment, persist in certain 
communities and amongst particular groups. Productivity levels, especially as expressed per 
hour  worked,  remain  comparatively  low.  This  is  in  part  due  to  the  prevalence  of  low  skills 
amongst the workforce, including insufficient basic skills. The gender pay gap remains one of 
the largest in the EU. 

The  assessment  of  the  Employment  Taskforce  and  the  analysis  in  the  Joint  Employment 
Report  of  the  implementation  of  the  EU  guidelines  and  2003  Council  Recommendations 
shows that the United Kingdom should give immediate priority to: 

Increasing adaptability of worker and enterprises 

•  ensure  that  wage  developments  do  not  exceed  productivity  developments  (see  BEPG 

guideline 3). 

23 

 
 
  
 
Attracting more people to the labour market and making work a real option for all 

•  ensure  that  active  labour  market  policies  and  benefit  systems  prevent  de-skilling  and 
promote quality in work, by improving incentives to work and supporting the sustainable 
integration and progress in the labour market of inactive and unemployed people; address 
the  rising  number  of  people  claiming  sickness  or  disability  benefits,  and  give  particular 
attention to lone parents and people living in deprived areas; 

•  improve  the  access  to  and  affordability  of  childcare  and  care  for  other  dependants, 
increase access to training for low paid women in part-time work, and take urgent action 
to tackle the causes of the gender pay gap.  

Investing more and more effectively in human capital and lifelong learning 

•  implement  national  and  regional  skills  strategies  to  provide  better  incentives  for  lifelong 
learning and thereby increase productivity and quality in work; place particular emphasis 
on improving literacy and numeracy of the workforce, the participation and achievement 
of 16-19 year olds, and low-skilled adults working in poorly paid jobs. 

24 

 
 
  
 
ANNEX 3 

PRIORITIES FOR NEW MEMBER STATES 

As part of their preparation for membership and the adoption of the EU acquis in the field of 
employment and social policy (legislation, social dialogue, open method of coordination and 
structural  funds),  each  acceding  country  and  the  Commission  agreed  a  Joint  Assessment 
Paper (JAP) identifying its employment challenges and policy priorities. The purpose of this 
cooperation has been to contribute to bringing national employment policies more in line with 
the European Employment Strategy. 

The  implementation  of  the  policies  identified  in  the  JAPs  was  followed  up  with  periodic 
reviews.  To  successfully  pursue  the  on-going  restructuring  of  their  economies,  most  new 
Member  States,  together  with  the  social  partners,  need  to  further  develop  their  efforts  to 
modernise  their  employment  policies.  A  new  balance  between  flexibility  and  security, 
increased  participation  in  employment  and  investment  in  human  capital  through  lifelong 
learning  are  essential,  as  is  the  need  to  improve  the  health  of  the  workforce.  Social 
partnership, and significant improvements in the administrative capacity of public authorities 
are still crucial in most new Member States to achieve full implementation and efficient use 
of  European  Social  Fund  support,  a  major  tool  for  investing  in  human  capital  and  lifelong 
learning. 

CYPRUS 

The  employment  rate  in  Cyprus  is  well  above  the  EU15  average  and  unemployment  rate  is 
low.  The  share  of  foreign  workers,  who  are  often  employed  on  a  temporary  basis,  has 
increased significantly over the years in response to labour market needs.  

Increasing adaptability of workers and enterprises 

A particular challenge for Cyprus is to raise innovation capacities and to diversify the service 
sector.  

Attracting more people to the labour market and making work a real option for all 

While female participation stands above the EU average, more can be done to bridge gender 
gaps.  Measures  should  include  improving  care  facilities,  increasing  the  participation  of 
women in training, and raising the attractiveness of part-time work. 

Foreign workers who come to Cyprus on a temporary basis constitute a large number of the 
working  population.  There  is  therefore  a  case  for  a  review  of  policies  in  relation  to  the 
employment  of  foreign  workers,  both  in  terms  of  their  contribution  to  labour  market 
flexibility and of rights and opportunities for immigrant workers. 

Preventive  and  active  labour  market  measures  should  be  strengthened  to  address  individual 
needs  and  cover  a  larger  share  of  unemployed  and  disabled  people,  ageing  job-seekers  and 
women. Strengthening and modernising the public employment services is also a priority. 

Investing more and more effectively in human capital and lifelong learning 

Building on the reorganisation of education underway since 2000, Cyprus needs to develop a 
comprehensive  national  strategy  for  lifelong  learning.  This  should  contribute  to  reducing 

25 

 
 
  
 
school drop-outs, improving the links between initial education and continuing training and to 
ensuring greater participation in training.  

CZECH REPUBLIC  

The  employment  rate  in  the  Czech  Republic  is  slightly  above  the  EU15  average. 
Unemployment  is  around  the  EU15  average  but  has  been  slowly  increasing  since  the  mid-
1990s. The employment rate of older workers is close to the EU average but low, particularly 
for women, given the early statutory retirement age. Regional imbalances are important. 

Increasing adaptability of workers and enterprises 

In pursuing its strategy for economic and employment growth, the Czech Republic needs to 
ensure that wage developments remain in line with productivity developments.  

The high tax wedge on labour income and the high non-wage labour costs hinder job creation 
and  prices  low-skilled  labour  out  of  the  labour  market  and  into  welfare  benefits  and/or  into 
undeclared  work.  A  coherent  reform  of  the  tax  and  benefit  system  should  therefore  further 
discourage welfare dependency and ensure that regular work pays.  

Attracting more people to the labour market and making work a real option for all 

While standing above the EU average, raising the participation of women and older workers 
should  be  a  priority.  In  this  respect,  removing  obstacles  to  part-time  work  can  make  an 
important contribution. 

More efforts are needed to integrate the most vulnerable groups in the labour market. This is 
particularly needed in regions other than Prague and for the Roma population. This calls for 
preventive and active labour market measures, combined with  anti-discrimination measures, 
putting a strong emphasis on education, training, support to entrepreneurship and job creation. 
Modernising the public employment services should be seen as priority. 

Investing more and more effectively in human capital and lifelong learning 

Building  on  the  recent  strategy  for  human  resources  development,  raising  participation  in 
tertiary education and in training, both overall and for the low-skilled, seem crucial to sustain 
job creation and support occupational and geographic mobility.  

ESTONIA 

The employment rate in Estonia is a little below the EU15 average. The unemployment rate 
has decreased over the years but remains higher than the EU average. Moreover, the share of 
long-term unemployed is high. Estonia is expected to be most affected by the decline in the 
working-age population resulting from demographic change. 

Increasing adaptability of workers and enterprises 

Reducing  the  tax  wedge  on  labour,  especially  on  lower  wage  earners,  and  promoting 
contractual  and  working  time  diversity  could  contribute  to  creating  more  job  opportunities. 
This  should  go  hand-in-hand  with  efforts  to  improve  the  tax  systems  and  to  transform 
undeclared work into regular jobs. It is also important that wage developments remain in line 
with productivity developments.  

26 

 
 
  
 
Attracting more people to the labour market and making work a real option for all 

In the light of the rapid decline of its working age population, Estonia should seek to reduce 
levels of inactivity and to maintain and attract more people in the labour market. It remains 
essential for Estonia to raise further the participation of women, older workers and the low-
skilled.  

To  complement  to  the  recent  Unemployment  Insurance  Act,  it  would  seem  important  to 
strengthen  active  labour  market  measure  so  as  to  support  active  job  search,  provide  greater 
access  to  training  for  the  unemployed  and  ensure  that  the  labour  market  becomes  more 
inclusive.  Public  employment  services  should  also  benefit  from  increased  resources. 
Disadvantaged people, such as the long-term unemployed, young people, disabled and older 
jobs-seekers, need special attention. Belonging to an ethnic minority and lack of knowledge 
of the national language are particular risk factors.  

Investing more and more effectively in human capital and lifelong learning 

Bearing in mind the risk of mismatches, Estonia should be encouraged to improve access to 
training  for  all  employees,  especially  for  the  low-skilled.  Reducing  school-drop  outs  and 
ensuring  quality  of  education  and  training  is  a  particular  challenge.  Building  a  system  of 
lifelong learning has to be put clearly on the agenda. 

HUNGARY 

The employment rate in Hungary is low, particularly for the low-skilled, the disadvantaged, 
women and for older workers. At the same time, unemployment remains well below the EU15 
average.  This  is  explained  by  a  low  participation  rate,  i.e.  a  large  inactive  population  of 
working  age.  There  are  major  labour  market  imbalances  between  the  central  and  western 
regions,  where  the  'modern  economy'  is  concentrated,  and  the  rest  of  the  country.  Regional 
and sectoral mobility is low, while skills bottlenecks reflect both a lack of skilled labour and 
the insufficient responsiveness of education and training systems to labour market needs. 

Increasing adaptability of workers and enterprises 

The tax wedge on labour remains high and represents an obstacle to job creation and a factor 
likely to contribute to undeclared work. Moreover, given the slowdown in economic growth, 
further  efforts  are  required  to  ensure,  together  with  the  social  partners,  more  employment-
friendly wage developments. These are driven by the more competitive part of the economy 
and  therefore  not  necessarily  conducive  to  strengthening  the  job  creation  capacity  of  its 
weaker parts.  

Attracting more people to the labour market and making work a real option for all 

The  health  situation  of  workers  is  an  issue  of  concern,  which  may  partially  explain  low 
activity. To this end, there is a need for a policy  to promote better working conditions,  and 
improving  preventive  and  curative  healthcare.  Reforms  of  the  social  benefit  systems, 
including sickness benefits, should be pursued with the view to make work pay and to reduce 
undeclared work. 

This  should  be  accompanied  by  the  development  of  more  flexible  and  family-friendly 
working arrangements, including more attractive part-time work, in particular for women and 
older  workers.  Strengthening  preventive  and  active  labour  market  measures  for  the 
unemployed and the inactive is also necessary, especially in the most disadvantaged regions. 

27 

 
 
  
 
This  calls  for  modern  public  employment  services,  so  as  to  support  occupational  and 
geographic mobility. Building on the Integration Strategy, efforts are needed to improve the 
labour market prospects of the Roma population. 

Investing more and more effectively in human capital and lifelong learning 

Efforts  to  develop  lifelong  learning  strategies  should  be  pursued  and  should  encompass 
measures to reduce school drop-outs, to promote equal access to university education and to 
broaden access to training, in particular for the low-skilled and disadvantaged. 

LITHUANIA 

The  employment  rate  in  Lithuania  has  risen  slightly  recently  but  remains  well  below  the 
EU15 average. The unemployment rate has decreased significantly but is still well above the 
EU average. 

Increasing adaptability of workers and enterprises 

The still comparatively low share of employment in services is a challenge. Although efforts 
have been made to alleviate the tax burden, there is still a  high  tax wedge  on the low-paid, 
which hampers job creation. Social partners have a particular role to play in anticipating and 
accompanying restructuring. 

Attracting more people to the labour market and making work a real option for all 

Building  on  the  reform  of  social  assistance  and  further  efforts  to  make  work  pay,  
it seems important to strengthen active labour market policies to help unemployed or inactive 
people  move  back  into  employment.  Greater  access  to  training,  support  for  job  search, 
including geographic mobility, and the modernisation of the public employment services are 
key priorities. 

Although  the  participation  of  women  and  older  workers  is  comparatively  high  compared  to 
the  EU  average,  removing  obstacles  to  part-time  work  could  contribute  to  raising  levels 
further. 

Investing more and more effectively in human capital and lifelong learning 

Serious  efforts  are  needed  to  develop  lifelong  learning,  and  in  particular  to  modernise 
education, reduce school drop-outs and increase participation in training, in particular for the 
low-skilled. The participation of employers in training is low. 

LATVIA 

Supported  by  strong  economic  growth,  employment  in  Latvia  has  increased  quite  strongly 
over  the  last  two  years.  However,  the  overall  employment  rate  stands  below  the  EU15 
average. Unemployment remains above the EU15 average with wide regional variations. At 
the same time, labour and skill shortages exist in Riga. 

Increasing adaptability of workers and enterprises 

To  achieve  higher  job  creation,  it  is  important  to  support  the  development  of  the  services, 
especially in disadvantaged regions and to address the issue of undeclared work. The size of 

28 

 
 
  
 
undeclared  work  reduces  social  security  contributions  and  leads  to  a  high  tax  burden  on 
labour. 

Attracting more people to the labour market and making work a real option for all 

The  combination  of  the  minimum  wage  and  of the  tax  and  benefit  systems  should  be  made 
sufficiently attractive for people to take up a job in the formal economy. Particular attention 
needs to be paid to ensuring that women are encouraged to stay in the labour market. 

This  also  requires  greater  efforts  to  develop  active  and  preventive  policies  for  the 
unemployed,  in  particular  measures  supporting  job  search,  entrepreneurship,  geographic 
mobility  and  greater  access  to  training.  The  modernisation  of  public  employment  services 
should  be  seen  as  a  priority.  Particular  attention  is  needed  to  ensure  a  more  equitable  and 
inclusive  labour  market  for  the  young  and  the  low-skilled.  Belonging  to  an  ethnic  minority 
and lack of knowledge of the national language are particular risk factors. 

Investing more and more effectively in human capital and lifelong learning 

Overcoming  skills  gaps  and  skills  mismatches  is  a  particular  challenge.  More  efforts  are 
needed  to  increase  access  to  education  and  training,  reduce  school  drop-outs  and  increase 
access to training, in particular for the low-skilled. This should be part of an overall strategy 
to develop lifelong learning.  

MALTA 

The  employment  rate  in  Malta  is  particularly  low  compared  to  EU15  average.  The 
employment rate of older workers is particularly low. The employment rate of women is the 
lowest in the EU25: only a third of women of working age are in work Unemployment has 
increased slightly over the last two years but remains below the EU15 average. 

Increasing adaptability of workers and enterprises 

Key  challenges  facing  Malta  are  to  roll  out  its  privatisation  program  while  redeploying 
employees  as  necessary  and  progressively  to  reduce  administrative  costs  and  tax  burden  on 
labour. In this respect, it will be important to build on the provisions of the revised Business 
Promotion Act and to monitor its impact. 

Attracting more people to the labour market and making work a real option for all 

Malta's  over-riding  challenge  is  to  expand  its labour  supply  by  raising  the  employment  rate 
for  women.  Building  on  the  revised  Conditions  of  Employment  Regulations  Act,  further 
action  is  needed  to  raise  female  participation  in  the  formal  economy.  Increasing  childcare 
facilities would significantly contribute.  

A  reform  of  the  tax-and-benefit  systems  is  also  deemed  a  top  priority,  as  the  gap  between 
minimum wage and benefit level is recognised as too small to provide sufficient incentives to 
take  up  a  job.  This  reform  would  also  help  to  transform  undeclared  work  into  regular 
employment.  

Investing more and more effectively in human capital and lifelong learning 

Low levels of education among the workforce and skills' mismatches are a matter of concern. 
The  high  rates  of  early  school-leavers,  of  illiteracy  and  of  the  low-skilled  people  are 

29 

 
 
  
 
particularly  worrying.  Raising  general  educational  levels,  reducing  school  drop-outs  and 
raising participation in training, in particular for the low-skilled, are key priorities. Efforts to 
include the social partners in the development of a more systematic approach to education and 
training should be pursued. 

POLAND 

The employment rate in Poland is among the lowest in the EU25. The situation on the labour 
market has deteriorated during the last four years. The employment rates of women, of older 
workers,  of  young  people  and  of  the  low-skilled  are  particularly  low.  At  about  20%,  the 
unemployment rate is at its highest level since the start of the economic transformation, and 
the highest in EU25. 

Increasing adaptability of workers and enterprises 

Actions to enhance the creation of a more employment-friendly environment and measures to 
support  entrepreneurship  are  of  particular  importance,  especially  in  the  context  of 
restructuring. Building on recent measures to reduce labour costs for the low-skilled and the 
young, it seems important to review the tax-benefit system to address the high tax wedge on 
labour  in  a  comprehensive  manner,  particularly  at  the  lower  end  of  the  wage  scale.  This 
would also contribute to reducing undeclared work.  

Social  partners  have  a  key  role  not  only  for  sustaining  employment-friendly  wage 
developments  but  also  for  actively  promoting  change  at  enterprise  level  and  facilitating  job 
mobility. 

Attracting more people to the labour market and making work a real option for all 

As part of the endeavour to build up effective partnerships for employment at local level and 
to  develop  active  labour  market  policies,  Poland  should  accelerate  the  establishment  of  the 
new public employment services, with sufficient resources in terms of funding, staff numbers, 
training and equipment.  

It  is  also  important  that  the  reform  of  the  different  benefit  systems  including  disability 
benefits  and  social  assistance  continues  with  a  focus  on  promoting  active  job  search  and 
reintegration. Disadvantaged young people deserve particular attention. 

Efforts  to  remove  obstacles  to  part-time  work  would  also  contribute  to  sustaining  job 
opportunities for women and older workers. 

Investing more and more effectively in human capital and lifelong learning 

Building  on  efforts  to  develop  a  coherent  lifelong  learning  strategy,  it  will  be  important  to 
ensure  that  the  education  and  training  system  provides  new  labour  market  entrants  with  the 
skills needed in a labour market characterised by structural change. Particular attention will be 
needed  to  ensure  equal  access  to  education  and  to  improve  the  efficiency  and  quality  of 
education. Greater incentives to invest in training and to facilitate access to training as well as 
the  commitment  of  the  social  partners  are  key  requirements  for  the  development  of  the 
lifelong learning strategy. 

30 

 
 
  
 
SLOVENIA 

The employment rate in Slovenia is slightly below the EU15 average, but is particularly low 
for older workers. The unemployment rate is well below the EU average.  

Increasing adaptability of workers and enterprises 

The  interaction  between  the  minimum  wage  and  the  different  components  of  tax  burden  on 
labour should be assessed to increase activity and reduce undeclared work. It is important to 
pursue  the  efforts  in  order  to  promote  flexible  forms  of  work  while  maintaining  the 
appropriate balance between flexibility and security. 

Attracting more people to the labour market and making work a real option for all 

Increasing the employment of people over 55 is a clear priority for Slovenia. Further efforts 
should  include  reducing  the  use  of  early  retirement  schemes,  ensuring  consistency  between 
tax and benefit reforms (e.g. measures aimed at reducing undeclared work and at reforming 
pensions), to promote flexible forms of work and access to training for older workers.  

In order to make work pay, it is important to review the interactions between unemployment, 
social benefits and the minimum wage, to increase the incentive to take up a job in the formal 
economy.  

The public employment service has developed a comprehensive model of management in its 
implementation  of  the  preventive  approach,  yet  it  would  be  necessary  to  improve  staff 
training in the public employment service in order to deal efficiently with the most difficult to 
employ. The relations between private and public employment services could be intensified. 

Investing more and more effectively in human capital and lifelong learning 

Building  on  recent  progress  and  initiatives  to  develop  lifelong  learning  systems,  it  would 
seem important to increase the share of the adult population participating in further education 
and  training.  Adequate  resources  and  incentives  for  workers  and  employers  to  invest  in 
training as well as a clear definition of all stakeholders' roles are needed. Reducing drop-out 
rates appear to be an important problem. 

SLOVAKIA  

The  overall  employment  rate  in  Slovakia  remains  low  compared  to  the  EU15  average. 
Although  it  is  declining,  unemployment  is  still  very  high,  with  a  large  share  of  long-term 
unemployed.  The  employment  rate  of  women  is  low  and  the  employment  rate  of  young 
people,  of  the  low-skilled  and  of  older  workers  (especially  women)  is  particularly  low. 
Regional imbalances are important. 

Increasing adaptability of workers and enterprises 

Reducing the high tax wedge on labour, mostly composed of social contributions, is seen as a 
priority. Social partners should be encouraged to promote more contractual and working time 
diversity (e.g. remove obstacles to part-time work) so as to create more job opportunities and 
facilitate job mobility.  

31 

 
 
  
 
Attracting more people to the labour market and making work a real option for all 

Building  on  the  ongoing  reforms  of  the  tax  and  benefit  systems,  it  is  important  to  remove 
effectively  unemployment  and  inactivity  traps,  which  stand  at  a  very  high  level  for  certain 
groups  of  the  population,  as  well  as  reducing  undeclared  work.  The  implementation  and 
impact of the reforms should be properly monitored. 

In  addition  to  efforts  aimed  at  making  work  pay,  special  attention  is  needed  to  increase  the 
participation  of  older  workers  in  employment,  including  a  review  of  the  employment 
legislation,  more  flexible  forms  of  work  and  greater  use  of  part-time  work.  This  could  also 
contribute to raising female participation. 

The  financing  of  active  labour  market  policy  and  the  share  of  people  taking  part  in  active 
measures  remain  at  a  very  low  level.  It  is  important  to  consider  how  to  make  the  labour 
market more inclusive and  encourage  active  job search. This  calls for modern active labour 
market  policies,  greater  access  to  training  for  the  unemployed  and  the  inactive  and  modern 
public employment services to ensure a wider coverage of the population. Special attention is 
needed  for  groups  at  risk  (e.g.  the  long-term  unemployed,  young  people,  people  with 
disabilities, older workers) and disadvantaged regions. The new priority given to integrating 
the Roma population needs to be rapidly translated into action.  

Investing more and more effectively in human capital and lifelong learning 

The alarmingly high unemployment rate of young people points to the need to bridge the gap 
between skills acquired in the initial education and the skills needed to succeed on the labour 
market. Economic restructuring, regional and skills mismatches also call for greater support 
for  occupational  and  geographic  mobility  throughout  the  life-cycle.  Greater  incentives  to 
invest in training and to facilitate access to training are key requirements for the development 
of a lifelong learning strategy. 

32