Draft Report from the Commission to the Council - Draft Joint Employment Report (JER) 2009/2010
Date: 2009-12-15
Institutions: European Commission
Subjects: EU aid, employment policy, financial aid, labour market, report, social policy, vocational training

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EUROPEAN COMMISSION 

Brussels, 15.12.2009 
COM(2009) 674 final 

DRAFT REPORT FROM THE COMMISSION TO THE COUNCIL 

Draft Joint Employment Report (JER) 2009/2010 

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DRAFT REPORT FROM THE COMMISSION TO THE COUNCIL 

Draft Joint Employment Report (JER) 2009/2010 

1. 

THE EMPLOYMENT SITUATION IN 2009 AND OUTLOOK TO 2011 

Despite  signs  of  economic  recovery  in  the  EU,  employment  prospects  generally  remain 
unfavourable, with overall unemployment still on the rise, albeit at a diminishing pace. After a 
period  of  strongly  improving  labour  market  performance  until  early  2008,  the  worldwide 
financial  and  economic  crisis  has  threatened  much  of  this  previous  success.  While  some 
Member  States  have  seen  much  worse  outcomes  than  others,  developments  since  mid-2008 
are marked by falling demand for new workers (around -30%), employment contraction (-
1.9%  =  4.3  million  jobs),  and  rising  unemployment  especially  among  groups  already  in  a 
relatively  weaker  labour  market  situation  before  the  crisis  (young  people,  low-skilled, 
migrants).  This 
the 
sectors/occupations most affected by the downturn, but also the growing use of flexible work 
arrangements, especially for the less-experienced workers, who were thus the first to lose their 
jobs  (between  Q2  2008  and  Q2  2009  employment  among  temporary  workers  fell  by  1.7 
million, of which 1 million in ES). 

the  business  contraction 

severe  deterioration 

reflects 

in 

The unemployment increase in the EU was not as strong as could have been expected from 
the rapid GDP decrease. Several countries have introduced measures to avoid mass dismissal 
including  wage  subsidies  and  adjusting  working  time.  Wage  moderation  and  other 
concessions in return for employment have also helped maintain jobs in several sectors1.  

The latest Commission forecast foresees a gradual economic recovery over the next two years 
(EU GDP + 0.7% in 2010 and + 1.6% in 2011)2. However, the positive impact on the labour 
market will take time to manifest itself, given the lag before employment reacts to a change in 
economic activity. With an estimated fall in employment of 2.3% in 2009 and a further 1.2% 
in  2010  (equivalent  to  an  employment  contraction  of  around  7.5  million  during  these  two 
years), unemployment is forecast to rise further across almost all Member States, potentially 
reaching 10.3% by 2010 and remaining at 10.2% in 2011, up more than 3pp. on 2008 levels.  

Whether the economic recovery will result in a considerable creation of new jobs or ‘jobless 
growth’ will largely depend on successful exit strategies preparing individuals and companies 
to meet structural challenges, and on the efficiency of public policies in modernising labour 
markets  to  provide  both  high  levels  of  flexibility  and  security.  Member  States  will  need  to 
regularly  assess  the  effectiveness  of  crisis  measures  in  a  constructive  dialogue  with  social 
partners and supported by EU-wide mutual learning. 

1 

2 

A  detailed  analysis  of  trends  and  policy  responses  to  the  employment  crisis  gives  the  Commission's 
Background paper to the EPSCO Council of 30.11.2009. For detailed data, see also the Commission's 
DG EMPL Monthly Labour Market Monitor and the 2009 Employment in Europe Report. 
EC Autumn forecast of 3.11.2009. 

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2. 

MEMBER STATES EMPLOYMENT MEASURES IN 2009 

To provide an immediate stimulus to the economy, and to protect vulnerable groups from the 
impact  of  the  crisis  on  labour  markets,  Member  States  have  stepped  up  considerably  their 
employment  and  social  policies  under  the  three  priorities  of  the  European  Employment 
Strategy3.  

2.1. 

Increasing labour supply and modernising social protection systems 

Because of  the risk of  a further  increase in unemployment, additional efforts  to avoid long-
term  unemployment  and  permanent  inactivity  remain  necessary  to  preserve  human  capital. 
Moreover, continued efforts to increase labour supply, especially for groups with structurally 
low  labour  market  participation,  are  essential  to  restore  sustainable  economic  growth  and 
strengthen social cohesion. Despite efforts to address the pressing concerns of specific groups 
(youth, migrants, low-skilled, people with disabilities) setting the right incentives to work for 
these groups proves difficult, and more so in times of crisis. Member States have introduced 
measures to improve work incentives and make work pay, by reducing taxes or raising in-
work benefits: increased tax-free income thresholds or an upward adjustment of brackets (AT, 
BE, DE, DK, FI, LV, MT, SE, SK); reinforced income supplements and targeted in-work tax 
incentives  (BE,  ES,  FR,  LT,  LV,  NL,  SE,  SK);  as  well  as  reduced  income  tax  rates,  often 
targeted at low income earners (AT, DK, FI, FR, HU, LT, LU, LV, PL, SE, UK). Other tax 
reductions are aimed at stimulating mothers' return to work (MT) or supporting families (AT). 
These  reforms  have  improved  work  incentives  for  low  income  earners,  and  more  should  be 
done  to  achieve  a  high  and  balanced  labour  market  participation,  in  terms  of  skills  levels, 
gender (exclusion is a particular risk for women especially those having care responsibilities) 
and age.  

The employment situation of young people 

The  rise  of  unemployment  among  young  people  (aged  15-24)  has  been  dramatic  in  2009 
calling for stronger policy action, in particular by delivering better transition pathways from 
education  to  employment,  and  a  stronger  provision  and  quality  of  vocational  education  and 
training (VET), including EU and national financial support to companies. VET systems may 
limit the impact of the crisis on the young (DE), and the increase of apprenticeship training 
(FIN,  FR,  UK)  has  potential  to  become  a  more  permanent  VET  provision.  Job  subsidy 
schemes (BG, EL, FR, IT, UK) support labour demand for young workers. 

Labour market segmentation is a structural challenge in several Member States, and the crisis 
has shown how it imposes  the  burden  of labour flexibility mainly on young people through 
the  more  widespread  use  of  a-typical  contracts.  Vigorous  efforts  are  needed  to  reduce  early 
school  leaving  and  the  segregation  and  discrimination  of  young  people  with  a  migrant  or 
minority  background  or  disability.  However,  progress  has  been  made,  and  several  recent 
initiatives go in the right direction: an education or training guarantee (AT, DE), jobcentres' 
immediate support to at-risk young (DK), the Labour Foundation's  support  to  young people 
after  job  loss  (AT)  or  outreach  services  for  young  people  not  in  education  nor  employment 
(MT, SI).  

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See the Commission's EERP report of December 2009. 

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The  current  labour  market  outlook  compounds  the  urgency  of  implementing  comprehensive 
active  inclusion  strategies  with  balanced  and  integrated  action  across  the  three  pillars: 
inclusive  labour  markets,  access  to  quality  services,  and  adequate  income  support.  Tax 
reforms including lowering labour taxation (see p.6) can help support labour market inclusion. 
Several Member States have put in place positive measures in support for those furthest from 
the  labour  market:  targeted  employment  subsidies  (FI,  FR,  HU,  IT,  LT,  PL,  SE)  and 
incentives  for  the  employment  of  people  with  disabilities  (ES,  IE,  RO).  Complementary 
measures include enhanced and/or more accessible training programs in most Member States 
and promotion of jobs in the social economy or non-profit sector (AT, ES, PL, PT, SI), and 
workfare  schemes  (LV).  Direct  public  sector  job  creation  has  only  been  envisaged  in  a  few 
countries  (ES,  CY,  HU,  SK),  either  as  a  consequence  of  public  spending  constraints  or  of 
hesitation  as  regards  the  efficiency  of  such  measures.  Most  Member  States  have 
mainstreamed actions into their policies in favour of disadvantaged groups. In addressing the 
specific problems which affect Roma and other similarly marginalised groups, some countries 
are following an 'explicit but not exclusive' approach. It is important that progress made in the 
implementation of these policies is monitored and evaluated on a continuous basis, including 
their interaction with mainstream policies. 

Older workers have not been at particular risk of losing their job due to the crisis so far, but 
they  face  substantial  difficulties  in  becoming  re-employed.  Several  Member  States  have 
introduced specific measures to support older workers' labour market participation (NL, PL, 
PT)  and  to  stimulate  demand  for  older  workers  (NL).  Although  there  is  general  agreement 
regarding the need to avoid early retirement, there are indications that some countries may be 
reverting to this option. This should be avoided through better employment opportunities for 
older  workers,  supporting  their  skills'  upgrading  to  facilitate  labour  market  re-entry  and 
improved incentives to continue working via pension systems and other tax/benefit structures. 

Despite a global falling demand for new workers, some countries (BE, DE, FI, FR, LT) facing 
labour  and  skills  shortages  continue  to  actively  promote  labour  supply  through  economic 
migration. Specific measures to attract highly skilled people (DE, FI, FR, LT), simpler visa 
extension and residence permit procedures (FI, PT) and special visa and residence permits for 
the highly qualified  (FR,  IE).  However, Member States need to pursue more vigorously the 
longer  term  integration  of  migrants  and  their  descendants  already  living  in  the  EU,  among 
whom unemployment has increased strongly during the crisis. Current policies focus mainly 
on  raising  qualification  levels  and  facilitating  overall  integration.  Further  action  is  needed 
including encouraging companies to employ a more diverse workforce, for example through 
diversity charters (BE, DE, ES, FR). 

Public  Employment  Services  (PES)  must  tackle  the  increasing  number  of  unemployed 
people and their modernisation is an effective means to cope with the new challenges. Indeed 
this  has  been  pursued  through  organisational  mergers/intensified  cooperation  of  integration 
and  insurance  services  (DK,  EE,  EL,  FI,  FR,  HU,  NL,  SI),  new  types  of  service  delivery 
combining  web-based  and  personal  services  (EE,  EL,  IE,  MT,  RO,  UK/Scotland),  special 
counselling  for  companies  to  train  employees  and  early  proactive  intervention  in  case  of 
redundancy (AT, BG, DK, EE, IE, MT, NL) and outplacement guidance for employees and 
employers  (DE,  BE,  FI,  IE,  LU,  PT,  UK).  Some  PES  have  intensified  cooperation  with 
private employment agencies (AT, FR, NL). These approaches could inspire further reforms 
in other countries, and more systematic evaluation could enlarge the evidence base regarding 
which procedures and programmes are the most effective and efficient, especially in times of 
increasing budget constraints.  

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Social  protection  systems  have  suffered  a  strong  stress  test  with  the  sharp  increase  in 
unemployment.  Automatic  stabilisers  have  been  instrumental  in  cushioning  the  immediate 
social impact of the downturn though to different degrees within the EU; therefore a number 
of Member States saw the need to adjust the duration (CZ, ES, LT, RO), level (BE, BG, CZ, 
EL) or coverage (IT, PT) of benefits, or to establish new or larger income support schemes for 
those  not  qualifying  for  unemployment  benefits  (e.g.  FR,  LV).  Beyond  the  group  of  people 
qualifying  for  unemployed  benefits,  some  Member  States  also  stepped  up  support  to 
vulnerable groups (BE, CY, FR, PL) and low income pensioners (CY, RO). The capacity to 
meet the rising demand for social security varies greatly among Member States; this challenge 
will inevitably increase over time and underscores the need for strong activation policies. 

Female employment 

Labour market data indicate that in 2009 women were generally not as adversely affected as 
men by unemployment. However, strong gender imbalances persist in many Member States, 
with  lower  activity  and  higher  unemployment  rates  of  women.  Due  to  the  crisis,  some 
measures for gender equality have been delayed or cancelled and no new measure have been 
taken  except  support  to  new  jobs  in  the  care  sector  (FI,  NL,  UK).  Gender  mainstreaming 
should  be  more  actively  applied  in  employment  policies,  notably  when  defining  and 
to  promote 
implementing  recovery  policies.  Many  Member  States  have  continued 
reconciliation between work, private and family life, mainly through increased access and/or 
quality of childcare services for small children or pre-schoolers, and through support for care 
of other dependants (ES, PT). Recent reforms in maternity leave schemes and/or benefits 
aim  at  reinforcing  female  participation/returning  to  the  labour  market  (AT,  DE,  HU)  and 
improving  rights  to  parental/paternity  leave  or  protection  of  workers  taking  leave  (BG,  NL, 
PT). Rights to flexible working arrangements (HU, RO, SK, UK) and protection of workers in 
flexible  employment  (LT,  SK)  have  been  improved.  While  the  gender  pay  gap  remains 
insufficiently addressed by most Member States, some new measures have been taken: better 
transparency  (DE,  UK),  re-examination  of  job  evaluation  schemes  (BE),  involvement  of 
labour inspection and new research (NL), and a new tripartite strategy (FI).  

2.2. 

Improving the adaptability of workers and enterprises 

Member  States  have  over  the  last  two  years  focussed  on  the  development  of  the  flexicurity 
approach, and started to formulate comprehensive flexicurity pathways in line with individual 
structural  challenges  and  starting  positions.  With  the  onset  of  the  crisis  the  pressure  for 
adaptability  has  increased  enormously  and  has  shifted  attention  to  measures  helping 
adaptation to the new context in a rather short term perspective. The main measures taken in 
this  respect  are  temporary  adjustments  to  falling  production  through  flexible  work 
arrangements,  mostly short  time  working  arrangements  to  avoid  dismissals  and  the  loss  of 
human capital4.  

Some  Member  States  under  huge  economic  pressure  have  introduced  or  envisage  wage 
moderation  in  the  public  sector  (BG,  EL,  LT,  LV,  RO).  In  NL,  economy  wide  wage 
moderation over the medium term was traded against cuts in social security contributions.  

High non-wage labour costs and a high tax wedge are a major impediment to employment. 
Despite progress in recent years, the EU 27 average tax wedge on labour costs remains at its 

4 

More details on STWA gives the Commission paper to EPSCO (cf. footnote 1). 

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2000 level of around 40½%. Action taken to reduce the tax burden on labour includes the 
reduction of social security contributions (BE, BG, CZ, DE, ES, FI, HU, SE) and revising the 
tax system to reduce labour costs. To keep people in jobs and/or promote recruitment, labour 
costs  have  been  reduced  in  a  number  of  Member  States,  with  varied  targeting  at  low-wage 
workers (CZ), SMEs (NL), self-employed (SK) or otherwise through tax benefit incentives to 
stimulate unemployed to set up a business (PT). An alternative approach tested in SE allows 
employers to defer social contributions and taxes for up to 12 months, to help cash flow and 
ease credit constraints. 

Labour market segmentation remains a challenge. While a few countries (BG, CY, EE, HU, 
LT, PT) have revised employment protection legislation over recent years, in line with the 
flexicurity  approach,  more  action  is  needed  to  prevent  the  segmentation  of  labour  markets 
which  threatens  long-term  labour  market  performance,  in  particular  for  specific  vulnerable 
groups. In 2008 already, most Member States saw a declining share of fixed-term contracts, 
including temporary agency work, as the crisis tends to hit these types of work arrangements 
first.  Developments  in  2009  highlight  that  labour  market  segmentation  concentrates  the 
‘flexibility’  mainly  on  workers  under  fixed  term  contracts;  this  inequality  is  harmful  and 
inefficient  and  calls  for  a  better  distribution  of  the  flexibility/security  balance  among  all 
workers.  

Undeclared work remains a persistent feature; in a number of Member States its share of in 
the  national  economy  is  around  one  fifth  and  some  action  is  being  taken.  In  PT,  irregular 
independent  worker  contracts  are  now  being  severely  penalised.  A  few  countries  (BG,  CY, 
EL,  HU,  MT)  have  improved  inspection  mechanisms  and  increased  sanctions  or  introduced 
successful voucher systems (BE). Overall, the commitment to transform undeclared work into 
formal employment needs stronger action.  

Geographical  mobility  in  the  EU  remains  low.  Only  few  Member  States  have  taken  new 
action  which  includes  regional  job  fairs  (BG),  special  support  offered  to  move  between 
regions (DE, ES, LT) as well as investment in transport infrastructure (LT, SK). Incentives to 
step up labour  mobility, such as commuters tax allowances, were increased in AT, DE, ES, 
LT, NL and SK. 

2.3. 

Increasing investment in skills and human capital 

The economic downturn underlines the urgency of reforming education and training systems, 
of investing more in the upskilling of the workforce, and of ensuring a better match between 
education,  skills  and  labour  market  needs  and  more  mobility  e.g.  through  better  language 
skills. In this respect, most Member States face a range of structural challenges. Some reforms 
have been designed and implemented, but results are still mixed and much remains to be done 
with a focus on pro-growth policies (education, innovation and green technologies).  

Skills  upgrading  strategies  as  short-term  measures  have  been  implemented  in  several 
Member  States,  often  with  ESF  support.  To  protect  workers’  employability,  on-the-job 
training has been stepped up (AT, BG, CY, EL, IT, LU, MT, PT, SE, UK). These measures 
are best when focussed on identifying new jobs and their skills requirements. Several Member 
States  have  developed  new  skills  strategies  that  are  better  tailored  to  meet  labour  market 
needs  (AT,  BE,  DK,  MT,  RO,  SK).  In  addition,  improved  cooperation  between  social 
partners in identifying future needs and developing curricula has been accelerated (BE, BG, 
MT, SI) with social partners playing a key role in some Member States (BG, DK, FI, LU).  

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Member  States'  capacity  for  forecasting  and  anticipating  skills  needs  varies.  A  new 
advanced  system  is  been  developed  in  FI  with  ESF  support.  Short  term  forecasting  is 
necessary  to  prevent  bottlenecks.  Some  Member  States  describe  stimulating  studies  and 
approaches for skills anticipation (labour market analysis, surveys among employers in CY, 
IE, LT, RO), often with support from ESF. Both skills forecasting and anticipation should be 
enhanced in the future, also through assessment of future needs by industry and trainers. 

Some Member States (AT, BE, DE, EE, ES, IE, MT, NL, PT) have laid out more long-term, 
specific  plans  for  gaining  qualifications.  There  is  a  clear  trend  towards  competence  based 
teaching and learning, in particular in school curricula. The implementation of the European 
Qualifications Framework (EQF) promoting a greater transparency of qualifications based 
on learning outcomes is entering a crucial phase. Most Member States are making significant 
progress  in  developing  national  qualifications  frameworks,  covering  all  levels  and  types  of 
education  and  training,  and  in  referencing  their  frameworks  to  the  EQF  by  2010.  Some 
Member States have stepped up efforts to facilitate validation of non-formal and informal 
learning  (AT,  ES,  FR,  IE,  LT,  LU,  NL,  SE,  SI)5.  Some  countries  have  taken  initiatives  to 
strengthen the role of higher education in continuing professional or personal development 
for  those  already  in  the  workforce  (BE,  EL,  FI,  IT,  LT,  NL).  However,  higher  education 
institutions  still  need  stronger  incentives  to  develop  more  flexible  curricula  and  attendance 
modes and to expand the validation of prior learning. 

The  funding  of  lifelong  learning  is  a  crucial  aspect  especially  in  a  context  of  spending 
constraints  for  both  public  and  private  budgets.  Many  Member  States  have  increased 
expenditure  on  lifelong  learning  for  the  low  skilled  and  the  unemployed.  Some  have 
introduced support for combining short-time work and further training (BE, CZ, DE, FR, IE, 
LU,  LV,  PT).  Efforts  for  training  and  retraining  of  adults  also  include  measures  to  target 
resources towards higher  education  (DE, IE, UK).  Funding  mechanisms  to  help  SMEs  train 
workers have been put in place (DE, HU, SI).  

2.4. 

The use of EU financial support to enhance priority actions  

In order to help Member States finance anti-crisis action with aid from EU financial resources 
aimed  at  supporting  people,  the  Commission  modified  European  Social  Fund  (ESF) 
programming  and  management  to  improve  the  ESF  capacity  to  expedite  programmes  and 
target  them  at  sectors  and  groups  most  in  need  of  support.  Some  Member  States  (AT,  DE, 
HU,  IE,  LT,  LV,  NL,  UK)  have  used  the  possibility  of  amending  their  Operational 
Programmes  for  crisis  adjustment,  while  others  used  the  already  existing  flexibility  of  ESF 
programmes to target interventions to those hit by the crisis.  

Member  States  have  also  used  the  ESF  for  implementation  of  the  EERP  priorities,  for 
example  to  widen  the  coverage  of  unemployment  benefits  (IT),  to  extend  ESF  potential 
beneficiaries  to  all  age  groups  (AT),  to  extend  short-time  working  schemes  (DE,  EL)  and 
combine  them  with  training  (CZ)  or  to  increase  support  for  entrepreneurship  (PT).  Other 
Member  States  modified  their  ESF  programmes  by  taking  short  term  anti-crisis  measures 
specifically  targeted  at  unemployed  people,  such  as  transferring  resources  to  actions 
supporting  employability  of  unemployed  (UK/Wales),  to  reorient  priorities  towards 
unemployed  (IE),  or  to  adapt  to  important  socio-economic  changes  in  a  particular  region 

5 

See COM(2009) 640, 24.11.2009. 

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(ES/Navarra).  PL  changed  the  selection  criteria  to  ensure  ESF  projects  are  accessible  to 
workers in the sectors particularly affected by the crisis. 

The  number  of  applications  from  Member  States  to  the  European  Globalisation  Fund 
(EGF) rose strongly in 2009 (20 compared to 5 in 2008). In total 12 countries have requested 
support  for  24 300  workers  who  lost  their  jobs  in  sectors  such  as  steel  and  automotive 
industry, manufacturing, construction and plane for a total amount of € 152.7 million. 

3. 

THE WAY FORWARD 

Member States' employment measures in response to the crisis have significantly contributed 
to stabilising economies and have, in many cases, reduced the adverse impact on employment 
in  2009.  However,  many  challenges  lie  ahead:  the  crisis  has  accentuated  structural 
problems,  particularly  the  risk  of  higher  long-term  and  structural  unemployment,  of 
persisting  skills  mismatches,  and  of  labour  market  exclusion  of  the  most  disadvantaged 
groups.  Furthermore,  EU  social  and  territorial  cohesion  is  at  risk  since  the  crisis  has 
affected countries and regions in very different manners and degrees of intensity, resulting in 
different labour market outcomes.  

Given  the  prospect  of  still  rising  unemployment  and  the  dearth  of  job  vacancies  in  2010, 
robust labour market measures will remain essential over the short term. In this framework, 
the key issue is to enhance the coherence between short-term measures and longer-term 
structural reforms.  

The  over-extension  of  some  of  the  measures  undertaken  over  recent  months  to  tackle  the 
employment  crisis could have a negative longer term impact on productivity,  labour market 
performance  and  Member  States'  budgetary  positions.  Improving  employment  security, 
supporting  transitions  and  reducing  labour  market  segmentation  as  well  as  safeguarding 
budgetary  equilibria  are  particularly  important,  highlighting  the  need  for  comprehensive 
policy  responses  in  line  with  the  flexicurity  approach.  Thus,  with  positive  signals  on  a 
moderate pick up in economic activity in 2010, the key issue over coming months will be to 
determine  when  and  how  to  gradually  phase  out  crisis  measures.  Phasing-out  stimulus 
measures  too  early  could  have  a  negative  impact  on  employment  and  labour  demand  while 
phasing them out too late could have a negative impact on recovery and jeopardize medium-
term  growth  objectives  with  a  slower  reduction  in  unemployment,  low  productivity,  or  an 
unsustainable budgetary position.  

While  constraints  and  situations  differ  and  will  require  different  strategies,  Member  States 
have  a  number  of  common  employment  policy  objectives:  higher  unemployment  must  be 
reversed  and  prevented  from  becoming  structural;  job  transitions,  especially  matching 
between skills and jobs, need to be improved; the young and others hardest hit by the crisis 
need sustained support; skills upgrading must be better linked to labour market requirements; 
and  labour  market  participation  must  be  further  enhanced  especially  for  women,  older 
workers and immigrants. A coordinated approach across Europe with active involvement 
of social partners is instrumental in meeting these objectives. 

In this context, there are three broad types of challenges for future employment policies in 
which crisis measures need to be adjusted within a framework of ongoing structural reforms: 

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-  The  need  to  reinforce  existing  crisis  measures.  This  will  arise  particularly,  though  not 
exclusively,  for  those  Member  States  where  unemployment  is  expected  to  increase 
significantly  next  year.  Here  the  key  is  to  focus  on  improving  the  effectiveness  of  these 
measures. In particular, short time working arrangements can remain temporarily justified for 
sustainable  jobs  as  long  as  unemployment  keeps  growing  -  but  eligibility  criteria  must  be 
much  stricter  compared  to  those  applied  in  2009.  These  schemes,  which  can  mitigate  the 
social impact of the crisis in the short-term, save considerable firing and hiring costs for firms 
and  prevent  the  loss  of  firm-specific  human  capital,  may  lead  companies  to  get  massively 
overstaffed  over  the  longer  term  and  may  risk  delaying  necessary  restructuring.  Member 
States faced with increasing unemployment should also consider giving more weight to other 
measures  which  have  shown  to  have  a  favourable  impact  on  labour  markets,  particularly 
stepping  up  the  capacity  of  Public  Employment  Services  to  provide  a  more  personalised 
approach in pre-redundancy job search assistance. Moreover, a number of temporary changes 
introduced  during  the  crisis  could  be  the  occasion  for  opening  to  more  stable  structural 
reforms improving the efficiency and effectiveness of specific labour market institutions. 
This  is  notably  the  case  for  changes  introduced  in  some  countries  concerning  the  design  of 
unemployment insurance schemes or of ALMPs. Finally, short-term measures in line with the 
flexicurity  approach  including  proper  work  incentives  can  be  an  important  tool  to  address 
labour market segmentation.  

- The need to re-orient crisis measures. This will arise especially in countries under strong 
pressure  for  fiscal  consolidation.  Here  the  key  issue  is  to  reduce  inactivity  and 
unemployment  traps  (notably  to  reinforce  female  participation)  while  ensuring  income 
security for those most in need and those experiencing transitions. It is also true that, while 
the counterproductive passive measures introduced in past recessions should be avoided (early 
retirement,  exit  towards  disability  and  sickness  benefit  schemes),  income  support  measures 
have provided relief to many in need since the onset of the crisis, and have thus contributed to 
preventing  poverty.  Moreover,  experience  shows  that  it  is  extremely  difficult  for  people 
furthest from the labour market to make effective use of active measures such as training and 
job counselling. Member States should also consider improving both internal and external 
flexibility. It is a priority to tackle increasing labour market segmentation with a view to 
improve  the  situation  of  people  on  non-standard  contracts  who  often  have  inadequate 
coverage  by  unemployment  insurance  systems  and  active  labour  market  policies  (as  their 
provision is usually linked to benefits). The ultimate goal is to shift the focus from protection 
on the job to insurance in the market. 

-  The  need  to  phase-out  crisis  measures.  This  will  be  an  immediate  concern  in  countries 
where the economic and employment outlook is most favourable and the focus can be fully on 
structural reforms. Here there will be additional pressure on the longer-term labour market 
reform measures that will now be faced with higher numbers of unemployed; increasing the 
effectiveness  of  these  measures  will  be  a  high  priority.  Flexicurity-inspired  reforms  that 
improve  the  flexibility  and  security  of  labour  markets  are  called  for,  including  balancing 
employment  protection  and  security  in  the  market,  bridging  the  gaps  between  emerging 
demands  and  the  skills  currently  available  in  the  labour  market,  promoting  labour  mobility 
across regions and between occupations, and enhancing the response of wages to productivity 
developments. The ultimate objective is to increase the economy's resilience to future sector 
or country specific shocks. 

EN 

9 

   EN