Communication from the Commission - Key messages from the Employment in Europe 2008 Report
Date: 2008-11-18
Institutions: European Commission
Subjects: continuing vocational training, employment policy, job mobility, labour market, reassignment, remuneration of work

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 18.11.2008 
COM(2008) 758 final 

COMMUNICATION FROM THE COMMISSION 

Key messages from the Employment in Europe 2008 Report 

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COMMUNICATION FROM THE COMMISSION 

Key messages from the Employment in Europe 2008 Report 

1. INTRODUCTION AND KEY FINDINGS OF THE REPORT 

This Communication presents the main findings of the Employment in Europe 2008 report. It 
is the 20th edition of the report, which has become one of the European Commission's main 
tools  in  helping  Member  States  to  analyse,  formulate  and  implement  their  employment 
policies. 

Employment in Europe traditionally provides an overview of the employment situation in the 
EU and focuses on a limited number of topics that are high on the EU’s employment policy 
agenda.  

The key findings of the 2008 report include: 

–  A generally solid employment performance in the EU, with net employment growth of 3.5 
million  people  in  2007  and  continuing  employment  creation,  albeit  at  a  reduced  pace,  in 
the  first  half  of  2008.  However,  there  are  significant  downside  risks  to  the  near-term 
outlook  due  to  the  ongoing  turbulence  in  financial  markets,  increasing  housing  market 
corrections and weakening global trade growth. 

–  Although a trade-off between employment and productivity growth may exist in the short 
to medium run, the implementation of an adequate policy mix has the potential to mitigate 
it.  

–  Recent  immigrants1  have  made  a  significant  contribution  to  overall  economic  and 
employment  growth  in  the  EU  since  2000,  addressing  labour  and  skill  shortages  and 
increasing labour market flexibility. There are contrasting situations between Southern and 
Northern  Member  States  with  regard  to  the  labour  market  integration  of  migrants,  to  the 
way their skills are utilised, and the quality of their jobs. 

–  The  evidence  accumulated  since  the  2004  enlargement  suggests  a  generally  positive 

economic impact of recent EU mobility and no serious labour market disturbances. 

–  A review of available evidence and research suggests room for improvement in the current 
EU concept of job quality by extending it to wages and work intensity. Synergies, rather 
than trade-offs, exist between overall labour market performance, labour productivity, and 
job  quality.  Member  States  with  more  favourable  job  quality  outcomes  are  also  those 
which rank high in terms of employment rates and productivity levels. 

–  Different ways for workers to accumulate skills (e.g. formal education, vocational training, 
and  work-related  experience)  combine  with  different  forms  of  gaining  access  to 
employment.  In  order  to  improve  the  quality  of  job  matching,  facilitate  transitions,  and 

1 

The analysis in the report is focused on recent immigrants, i.e. immigration post-2000 

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anticipate the process of change, it is necessary to improve both the scope and accuracy of 
the 
the  available 
corresponding skill requirements. 

information  on  present  and  future  occupational  demand  and 

2. COOLING OFF OF THE EU LABOUR MARKET AFTER STRONG PERFORMANCE IN 2007 

Towards  the  end  of  2007  economic  growth  started to slow down,  following the  world-wide 
turmoil  in  financial  markets  and  soaring  commodity  and  energy  prices.  Although  EU  GDP 
growth  fell  gradually  from  levels  of  around  3%  in  2006  and  2007  to  an  estimated  1.4%  in 
2008, the impact of the slowdown on the labour market appeared modest until mid-2008 
(on  the  basis  of  data  available  until  early  autumn  2008).  However,  the  outlook  for 
employment is expected to be less favourable in the months to come. 

Employment  growth  in  the  EU  slowed  from  a  strong  1.6%  in  2006  and  2007,  to  a  more 
moderate 1.3% year-on-year in the second quarter of 2008. The strong performance in 2007 
alone  boosted  employment  levels  by  3.5  million  people.  However,  marked  differences  are 
starting  to  emerge  between  Member  States.  Whereas  in  2007  employment  growth  was 
positive  in  all  EU  Member  States  except  Hungary,  year-on-year  employment  growth  had 
weakened markedly in several by mid-2008, and notably in Denmark, France, Germany, Italy, 
Lithuania, Spain, Sweden and the UK.  

Until mid-2008 the unemployment rate remained stable at the levels reached in 2007, despite 
the  first  signs  of  a  slowdown  of  the  EU  economy  in  the  second  half  of  2007,  suggesting  a 
resilience of the labour market to economic shocks. In 2007, the unemployment rate stood at 
single-digit  levels  in  all  Member  States  except  Slovakia.  The  lowest  rate  was  in  the 
Netherlands, where it was 3.2%, while it reached 11.1% in Slovakia. However, a reversal of 
the  favourable  unemployment  trends  was  noted  in  a  number  of  Member  States  including 
Spain, Italy, Ireland and the United Kingdom.  

Thanks to good growth performance in 2007, the overall EU employment rate increased by 
nearly  1  percentage  point  to  65.4%  in  2007,  though  still  4.6  percentage  points  below  the 
Lisbon target. The employment rate for female workers stood at 58.3% and for older workers 
at  44.7%,  compared  with  the  targets  for  2010  of  60%  and  50%  respectively.  In  view  of 
weakened  employment  growth  performance,  it  is  thus  unlikely  that  the  Lisbon  targets  for 
employment, other than for women, will be achieved by 2010. 

The  overall  employment  rate  stood  at  above  70%  in  seven  Member  States,  while  in  six 
others  it  lay  within  three  percentage  points  of  the  target.  However,  in  Romania,  Italy, 
Hungary,  Poland  and  Malta,  it  remained  more  than  10  percentage  points  below  the  70% 
target. The 60% target for female workers was met in 15 Member States, while two others 
were  within  3  percentage  points  of  the  target.  In  Greece,  Italy  and  Malta,  the  rate  was  still 
more than 10 percentage points below the target. The 50% target for older workers was met 
in 12 Member States, but for 10 others, including the large Member States of France, Italy and 
Poland, the shortfall was more than 10 percentage points.  

Labour productivity growth (in terms of real GDP per employed person) remains a concern 
and  could  weaken  further  if  the  slowdown  observed  in  the  first  half  of  2008  persists  or 
deteriorates.  

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In 2007, labour productivity growth was no more than 0.5% in Denmark, Italy, Luxembourg 
and Sweden, while strong growth was recorded in most of the new Member States, with the 
highest rates (above 6.5%) in Estonia, Latvia, Lithuania and, especially, Slovakia. Among the 
larger old Member States, labour productivity growth weakened significantly in Germany and 
France, and remained weak in Spain and Italy. 

The EU should focus on simultaneously increasing its employment and labour productivity if 
it is to achieve its social and economic objectives.  

Although no inverse relation is to be expected between employment and labour productivity 
growth  in  the  long  run,  various  factors  (including  changes  in  multi-factor  productivity,  the 
capital intensity of production, the stock of human capital and aggregate demand) may cause a 
trade-off between employment and productivity growth in the short to medium term, but well-
run polices can have a mitigating effect. Such policies require structural reforms not only in 
the  labour  market  but  also  in  the  services,  product  and  financial  markets  and  a  stable 
macroeconomic environment. 

3. THIRD-COUNTRY IMMIGRATION AND INTRA-EU MOBILITY 

Third-country immigrants in the EU labour markets: a major contribution to growth and 
an important policy challenge 

Against  a  background  of  ageing  European  societies  and  growing  labour  market  needs, 
immigration  is  set  to  increase  in  the  coming  decades.  While  immigration  provides 
opportunities  —  in  particular  to  alleviate  the  effects  of  population  ageing,  help  deal  with 
labour  and  skill  shortages,  and  more  generally  to  fuel  economic  growth  —  it  also  brings 
challenges. 

Member  States  are  characterised  by  diverse  immigration  histories  and  recent  immigration 
patterns, with varied immigrant population compositions in terms of region of origin, cultural 
background, skill level, socio-economic characteristics and channels of entry into the EU. All 
this,  together  with  the  existing  heterogeneity  in  the  Member  States  in  terms  of  institutional 
frameworks and immigration rules, has an impact on labour market integration of immigrants 
from country to country.  

A  much  more  significant  phenomenon  than  intra-EU  mobility  of  EU  citizens,  immigration 
from third countries has seen a substantial increase in recent years, rising threefold between 
the mid-1990s and early 2000s. Indeed, non-EU immigrants who arrived within the last seven 
years  account  for  almost  one  third  of  all  non-EU  immigrants  of  working  age.  At  the  same 
time, inflows have become more diversified, with a greater influx of people from Central and 
South America and much greater migration to countries in Southern Europe than before.  

Recently arrived immigrants have made a significant contribution to overall economic growth 
and  employment  expansion  (around  a  quarter)  in  the  EU  since  2000,  with  only  limited 
impacts on domestic wages and employment. They have clearly helped to alleviate labour and 
skill shortages, tending to be employed in those sectors where demand has been greatest, in 
particular  at  the  low-skill  end  of  the  jobs  spectrum.  Evidence  suggests  they  have  generally 
been  complementary  to  EU-born  workers  rather  than  substitutes  and  have  contributed  to 
greater labour market flexibility. 

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However, the EU still tends to attract mainly less-skilled immigrants: 48% of recent working-
age migrants are low-skilled and only one in five is high-skilled. 

Access  to  employment  is  a  key  element  for  successful integration into host societies; yet in 
many  Member  States  the  labour  market  situation  for  immigrants  is  substantially  worse  than 
for people born in the EU — they tend to have lower employment rates and are often more 
likely to be unemployed, or are employed in jobs of lower quality or for which they are over-
qualified.  

In the new immigration countries of Southern Europe that have received high flows of labour 
immigration  over  recent  years,  immigrants  perform  better  than  the  EU-born  on  the  labour 
market.  In  the  remaining  old  Member  States,  where  other  immigration  channels  have  been 
relatively more important, immigrants tend to have poorer overall labour market outcomes (in 
terms of employment rates) compared to the EU-born.  

In  most  Member  States,  recent  immigrants,  in  particular  women  and  people  from  certain 
regions of origin, face significant delays in gaining a foothold in the labour market, which can 
have longer-term impacts on their labour market outcomes. 

In  general,  countries  of  Southern  Europe  seem  to  be  more  successful  at  getting  immigrants 
into  employment,  but  with  a  greater  risk  of their being over-qualified and exposed to lower 
quality and precarious employment. In contrast, Northern Member States show a lower rate of 
immigrant over-qualification but have greater gaps in participation and employment rates, and 
higher unemployment rates, for immigrants compared with those born in the EU. 

The  main  factors  underlying  the  differences  across  Member  States  in  immigrants’  labour 
market integration include the immigration channel for entry, country of origin, host-country 
language proficiency, availability of support and integration measures on entry, labour market 
rigidities and access restrictions in the host country, incomplete recognition of qualifications 
acquired outside the EU, lack of information on the labour market and discrimination. These 
suggest where policy measures to raise immigrants’ labour market integration and outcomes 
should focus. 

Labour mobility since the recent enlargements: a generally positive experience2 

Four years after the EU 2004 enlargement and over a year after the accession of Bulgaria and 
Romania, practically all of the available evidence suggests that the economic impact of recent 
intra-EU mobility has been on balance positive, and that it has not led to serious disturbances 
on  the  labour  market,  even  in  Member  States  that  have  seen  a  relatively  large  inflow  of 
migrants from new Member States. 

Available data suggests that the number of EU-10 residents in the EU-15 may have increased 
by over a million and of Romanians and Bulgarians by over 850 000 since 2003. These are 
significant numbers, particularly given the relatively short time span. 

In terms of recent mobility from the EU-10, Ireland and the UK have been the main ‘receiving 
countries’, and to a lesser extent Austria and Germany. 

2 

A more detailed account of the key findings on this subject is contained in the Commission report on 
The impact of free movement of workers in the context of EU enlargement, adopted together with this 
Communication (COM(2008) 765 final) 

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Flows  from  Bulgaria  and  Romania  have  been  directed  mainly  towards  Spain  and  Italy, 
involving mostly Romanian nationals — a process which started well before the EU accession 
of Romania and Bulgaria in 2007.  

Relative  to  their  population  size,  Romania  and  Bulgaria  have  also  been  the  main  ‘sending 
countries’, together with Lithuania, Cyprus, Poland, Latvia, Slovakia, Estonia, and Portugal, 
while the outflow from the other new Member States has been much less significant. 

Despite  their  significant  size,  intra-EU  mobility  flows  since  enlargement  never  acquired  the 
‘tidal  wave’  dimensions  initially  feared  by  some  observers.  Between  2003  and  2007,  the 
average  population  share  of  EU-10  foreigners  resident  in  the  EU-15  increased  from  around 
0.2% to 0.5%.  

In the same period, the population share of Romanian and Bulgarian nationals resident in the 
EU-15 rose from 0.1% to 0.4% — a process that started well before 2007. By comparison, the 
population  share  of  EU-15  nationals  resident  in  another  EU-15  country  grew  from  1.5%  to 
about 1.7% and of non-EU-27 nationals from 3.6% to 4.3%. 

Moreover,  there  is  no  indication  that  recent  intra-EU  mobility  flows  have  exceeded  the 
absorption  capacities  of  labour  markets.  In  both  the  main  receiving  and  sending  countries, 
local  workers’  wages  have  continued  to  rise  and  unemployment  has  declined  since 
enlargement.  

Even  when  analysing  the  isolated  effects  of  migration  and  mobility  on  wages  and 
unemployment,  empirical  studies  have  consistently  found  very  small  impacts  on  local 
workers’ wages and employment. 

A  further  surge  of  labour  mobility  from  the  new  Member  States  seems  unlikely.  Evidence 
suggests  that  increasing  convergence  in  income  and  employment  between  old  and  new 
Member States is already lowering the economic incentive to move and is likely to contribute 
to  a  further  decline  in  labour  supply  from  the  new  Member  States.  In  addition,  due  to  a 
substantial shrinkage of young cohorts, the pool of potential mobile workers from central and 
eastern  Member  States  is  declining,  which  is  likely  to  reduce  geographical  mobility  flows 
within the EU in the future. 

In fact, mobility flows to the UK and Ireland, which appear to have peaked in 2006, declined 
significantly in 2007 and the first quarter of 2008. Indeed, there are indications of increasing 
return flows, particularly from the UK. Furthermore, the opening of labour markets for EU-8 
workers  in  most  other  EU-15  countries  since  2006  may  have  led  to  a  limited  diversion  of 
migration  flows  to  other  Member  States.  Many  people  from  Bulgaria  and  Romania  have 
already moved and have been working elsewhere in the EU over recent years. This suggests 
that  many  of  those  who  wanted  to  move  have  already  done  so  and  that  the  potential  of 
additional migration from Bulgaria and Romania is limited. 

From  the  perspective  of  the  new  Member  States,  in  particular  the  ‘high-mobility’  ones, 
substantial  outflows  of  workers  are  often  perceived  as  a  mixed  blessing.  On  the  one  hand, 
outflows  have  helped  to  reduce  unemployment.  On  the  other,  outflows  of  predominately 
young and high-skilled people have raised concerns about ‘brain drain’ and labour shortages 
in  the  sending  countries.  But  there  are  a  number  of  factors  that  may  help  to  alleviate  these 
problems, such as the significant recent rise in higher enrolment rates for university education 
in most new Member States, the temporary nature of much of the mobility, and the fact that 

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many of those who do come back often do so with improved working skills and international 
contacts which can be of benefit to the home country. 

4. MEASURING JOB QUALITY IN THE EU 

Job quality is fully enshrined in the European Employment Strategy, reflected in the call for 
more and better jobs. However, significant employment growth in the EU over the last decade 
has coincided with widespread concerns about the quality of many European jobs, related to 
the rising incidence of temporary work, the increased exposure to competitive pressures, and 
perceptions of deteriorating working conditions and higher work intensity. This calls for job 
quality outcomes and trends in the EU to be re-assessed. 

The  quality  of  jobs  cannot  be  fully  captured  by  wages;  due  to  market  failures  such  as 
incomplete  information  concerning,  for  instance,  the  level  of  human  capital.  Moreover,  job 
satisfaction  appears  to  depend  not  only  on  a  job’s  outcome,  such  as  wages,  but  also  on  the 
conditions  and  processes  leading  to  them,  including  work  organisation,  autonomy,  work 
intensity and health and safety at work.  

Taking  a  lifelong  perspective,  the  possibility  of  reconciling  work  with  private  and  family 
responsibilities, together with the probability of positive labour market transitions and career 
advancement, are also key dimensions of job quality.  

Recent  theoretical  developments,  as  well  as  ongoing  work  on  job  quality  frameworks  in 
various international institutions, provide an opportunity for reviewing the current EU concept 
of job quality. While the EU concept acknowledges the multi-dimensionality of job quality, 
incorporating both objective and subjective variables (such as job satisfaction), there is room 
for improvement. The current concept does not include important variables such as wages and 
work intensity, and  only  partially covers such dimensions  as training and education. On the 
other  hand,  it  includes  aggregate economic  variables  not  directly  related  to  specific  job  and 
worker characteristics.  

With these considerations in mind, a dataset covering the EU-27 in 2005-2006 was analysed, 
with a view to identifying the dimensions which capture the essence of job quality across the 
EU. The following four key dimensions were identified:  

i) 
ii) 
iii) 
iv) 

socio-economic security (including levels and distribution of wages);  
education and training;  
working conditions (including work intensity); 
reconciliation of working and non-working life/gender balance. 

An analysis of the performance of Member States with respect to these dimensions brings out 
different types of key challenges for Nordic, Continental, Southern and new Member States. 
These  typical  situations  are  broadly  consistent  with  the  four  types  of  country  situations  and 
challenges described with respect to flexicurity (see Employment in Europe 2006 and 2007). 

The inclusion of wages and work intensity and the exclusion of indicators of macroeconomic 
performance  (not  directly  pertaining  to  job  quality)  are  fundamental  to  improving  the 
characterisation  of  national  job  quality  outcomes,  compared  to  the  original  definition  of  job 
quality. 

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A dynamic analysis of job quality on the basis of a synthetic index composed of a narrow set 
of  variables  indicates  that  the  typology  of  countries  according  to  their job  quality  situations 
tends to be relatively stable over time.  

Characterisation of job quality in terms of economy-wide indicators highlights the synergies, 
rather  than  trade-offs,  between  overall  labour  market  performance,  labour  productivity  and 
job quality. In fact, Member States with more favourable job quality outcomes are also those 
which rank high in terms of employment rates and productivity levels.  

5. EDUCATION AND EMPLOYMENT: DIFFERENT PATHWAYS ACROSS OCCUPATIONS 

A  recurrent  concern  of  policy-makers  in  the  fields  of  education  and  employment  is  the 
perceived mismatch between workers’ education and skill levels, and actual job requirements 
in  the  labour  market.  Globalisation,  technological  change,  an  ageing  population,  and  wider 
societal changes  have all served  to increase  uncertainty  about  the  future  and contribute to a 
sense of insecurity. Workers are increasingly more likely to undergo numerous transitions and 
perform different tasks during their working lives. Consequently, they need to be supported 
during  such  frequent  transitions  by  a  series  of  measures,  such  as  unemployment  benefits, 
training subsidies, counselling and career guidance.  

Policy-makers have responded with a variety of initiatives aimed at better anticipating future 
labour  market  needs  and  at  better  management  of  the  process  of  change.  Addressing  these 
issues requires an integrated policy strategy that raises the skills levels, including transversal 
ones, facilitates transitions and modernises labour market institutions. A regular assessment of 
future  skill  needs  will  be  critical  for  designing  adequate  lifelong  learning  strategies  and 
efficient labour market policies, and thereby helping to turn flexicurity policies into practice.  

The  New  Skills  for  New  Jobs  initiative  primarily  aims  to  improve  the  availability  and  the 
quality of information on present and future occupational demand and the corresponding skill 
requirements,  in  order  to  enhance  the  quality  of  job  matching.  Despite  the  usual  caveats 
associated  with  occupational  projections,  such  exercises  constitute  an  indispensable  tool  to 
better  inform  policy-makers  and  achieve  a  better  matching  between  demand  and  supply  of 
skills.  

In  addition  to  occupational  demand  and  skill  requirement  projections,  more  qualitative 
exercises should be carried out, such as foresight analyses, employer surveys, case studies or 
job competence modelling exercises. These exercises are essential to identifying new trends in 
competence requirements and changes in the content of occupations. A combination of both 
quantitative  and  qualitative  methods,  covering  different  time  spans  and  updated  at  regular 
intervals, would keep policy-makers informed and assist them in improving job matching in 
the EU and adapting education and training systems to new needs. 

Job  matching  is  particularly  affected  by  market  failures  due  to  insufficient  information  or 
incorrect expectations. In fact, workers often lack information about the best job opportunities 
available.  One  possible  way  to  gather  and  disseminate  such  information  would  be  the 
development  of  a  harmonised  EU  ‘career  exploration  tool’  inspired  by  best  international 
practices.  Such  a  tool  could  be  used  by  many  individuals  and  organisations  for  various 
purposes (e.g. job counselling and occupational projections).  

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An  empirical  analysis  of  the  relationship  between  education  and  occupations  at  EU  level 
carried  out  in  the  report  allows  for  a  richer  characterisation  that  partly  depends  on  firms' 
human resources policies. For example, employers differ in the importance given to fields of 
education versus work-experience; access to some occupations is limited to certain levels of 
education  and  fields  of  studies;  a  number  of  occupations  are  open  to  workers  with  distinct 
profiles;  and  some  occupations  offer  better  opportunities  for  continuous  vocational  training, 
benefiting from complementarities with the initial level of education. The analysis undertaken 
tentatively  identifies  eight  different  ways  for  workers  to  accumulate  skills  over  a  lifecycle 
(e.g.  formal  education,  vocational  training  and  work-related  experience)  that  combine  with 
different forms of gaining access to employment. These results, together with information on 
institutions  and  policies,  could  contribute  to  a  better  mapping  of  jobs  and  training 
opportunities, eventually improving the matching between the supply and demand for skills.  

6. CONCLUSIONS 

Despite the increasing signs of slower economic growth, the strong performance of EU labour 
markets continued in 2007, leading to a net increase of 3.5 million in total employment.  

The  deteriorating  economic  environment,  particularly  in  terms  the  turbulence  in  financial 
systems, is exacerbating the risks for employment in the near future. Over recent years most 
Member  States  have  implemented  important  structural  reforms  in  the  area  of  employment, 
and the current cyclical downturn will put the robustness of these reforms to the test.  

Increasing  uncertainty  and  rapidly  changing  conditions  are  becoming  the  standard 
environment for EU labour markets and related policy-making. Growing inflows of migrant 
workers from outside the EU, together with the rise in intra-EU mobility flows following the 
two  most  recent  enlargements,  have  been  major  factors  driving  economic  growth  and 
employment outcomes in recent years, but are also shaping economic and social conditions in 
the  EU  in  a  broader  sense.  Looking  at  these  phenomena,  this  year’s  report  highlights  their 
largely positive contribution and identifies a number of important policy challenges resulting 
from this new situation. 

Flexicurity has been an important recent EU policy response to the vanishing old certainties in 
European labour markets. Previous issues of Employment in Europe have made an analytical 
contribution  to  assessing  the  merits  of  flexicurity  policies.  By  revisiting  the  issue  of  job 
quality,  this  year’s  report  puts  flexicurity  into  a  broader  context  and  finds  not  only 
complementarities  between  these  two  concepts,  but  also  important  synergies  between  job 
quality and overall economic and employment performance.  

Finally, improved matching and smoother transitions in the labour market are among the key 
aims of the flexicurity approach. This report thus stresses the importance of grasping the links 
between  education  and  occupations  in  this  respect.  It  highlights  the  role  of  public bodies in 
identifying current and future job opportunities and related skill requirements, as envisaged by 
the New Skills for New Jobs initiative, and the need for further investing in the development 
of the skills of both young people and adults. 

The “Employment in Europe 2008” report is published on the following website: 
http://ec.europa.eu/social/main.jsp?catId=119&langId=en  

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