DRAFT JOINT EMPLOYMENT REPORT FROM THE COMMISSION AND THE COUNCIL accompanying the Communication from the Commission on the Annual Growth Survey 2016
Date: 2015-11-26
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: EU employment policy, economic growth, employment statistics, fiscal policy, job creation, long-term unemployment, social change, social dialogue, wage determination, youth unemployment

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 26.11.2015  COM(2015) 700 final   DRAFT JOINT EMPLOYMENT REPORT  FROM THE COMMISSION AND THE COUNCIL   accompanying the Communication from the Commission  on the Annual Growth Survey 2016  
 
 
DRAFT JOINT EMPLOYMENT REPORT  

FROM THE COMMISSION AND THE COUNCIL  

accompanying the Communication from the Commission  

on the Annual Growth Survey 2016 

The  draft  Joint  Employment  Report  (JER),  mandated  by  Article  148  TFEU,  is  part  of  the 

Annual Growth Survey (AGS) package launching the European Semester. As a key input to 

EU  economic  governance,  the  JER  provides  an  annual  overview  of  key  employment  and 

social  developments  in  Europe  as  well  as  Member  States'  reform  actions  in  line  with  the 

Guidelines for the Employment Policies of the Member States and AGS priorities.  

In this context, the draft Joint Employment Report 2016 indicates the following:  

The employment and social situation slowly improves while signs of divergence among and 

within Member States persist. In line with the gradual economic recovery, employment rates 

are increasing again, and unemployment rates are falling in almost all of the Member States. 

In 2014, the annual unemployment rate for the EU-28 was still over 10%, and higher in the 

euro area, but have further decreased in the course of 2015. Youth unemployment and long-

term  unemployment  are  also  declining  since  2013,  while  remaining  at  overall  high  levels. 

Wide  differences  between  Member  States  persist,  despite  the  timid  convergence  in  labour 

market conditions observed in 2014. Household incomes in the EU rose slightly in 2014 and 

early  2015,  benefitting  from  stronger  economic  activity  and  improving  labour  market 

circumstances.  The  number  and  proportion  of  people  at-risk-of  poverty  or  social  exclusion 

stabilised  overall  in  both  2013  and  2014.  But  social  developments  still  point  to  further 

divergence across the EU as the scoreboard of key employment and social indicators shows 

in  relation  to  at-risk-of  poverty  and  inequality  developments.  Based  on  good  practices,  a 

number of common benchmarks could be defined, to support upward convergence processes, 

while recognising the diversity of starting points and practices across Member States. 

Reforms  supporting  well-functioning,  dynamic  and  inclusive  labour  markets  must 

continue.  Several  Member  States  have  pursued  reforms,  with  positive  effects  visible  for 

instance  in  increasing  employment  rates.  However,  more  efforts  are  needed  to  stimulate 

growth  and  create  a  positive  environment  for  the  creation  of  quality  jobs.  Considering  that 

recent  employment  growth  is  largely  accounted  for  by  an  increase  in  fixed-term  contracts, 

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Member  States  should  also  continue,  and  in  some  cases  step  up,  measures  addressing  the 

challenge  of  segmented  labour  markets,  ensuring  a  proper  balance  between  flexibility  and 

security. 

Tax systems must better support job creation. Reforms of tax systems have been initiated so 

as to reduce disincentives to take up jobs and - at the same time - decrease labour taxation to 

support  companies  (re)hire,  often  targeted  at  groups  such  as  the  young  and  long-term 

unemployed.  Even  so,  in  recent  years  the  overall  tax  wedge  on  labour  has  increased  in  a 

considerable  number  of  Member  States,  notably  for  low-wage  and  average  wage  earners. 

This  trend  is  worrying  in  light  of  still  high  unemployment  rates  in  many  Member  States, 

considering that high tax wedge levels can constrain both labour demand and labour supply.  

Wage-setting  has  been  overall  displaying  continued  wage  moderation.  Reforms  have 

strengthened wage-setting mechanisms that promote the alignment of wage developments to 

productivity  and  to  support  households'  disposable  income,  with  a  particular  focus  on 

minimum  wages.  Overall,  recent  wage  developments  appear  to  be  rather  balanced  in  most 

Member States and have contributed to rebalancing within the Euro Area. Real wages move 

broadly  in  line  with  productivity  in  most  Member  States,  with  a  few  exceptions.  This  is  a 

positive development for the countries' internal and external equilibrium even if some further 

adjustments are needed.   

Investment  in  human  capital  through  education  and  training  has  been  predominantly 

focused on the young but some Member States have also engaged in broad efforts to reform 

their  education  systems  or  extend  adult  education  and  vocational  training  opportunities. 

However, public expenditure on education decreased in almost half of Member States and fell 

by 3.2% for the EU as a whole compared to 2010. Modernisation, better alignment of skills 

and  labour  market  needs  and  sustained  investment  in  education  and  training,  including 

digital  skills,  are  essential  for  future  employment,  economic  growth  and  competitiveness  in 

the EU.  

Member States sustained their efforts to support youth employment and address high levels 

of  NEETs  (those  not  in  employment,  education  or  training.  The  Youth  Guarantee  has 

become a driver for improving school-to-work transitions and reducing youth unemployment, 

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and first results have now become visible with the share of young people not in employment, 

education  or  training  decreasing.  However,  continued  implementation,  also  supported 

through  national  funding  sources  and  a  focus  on  structural  reform  will  be  essential  for 

sustainable achievements. The EU youth unemployment rate has started to decrease but not in 

all countries and cross-country differences remain considerable.  

Labour  market  reintegration  of  long-term  unemployed  must  remain  a  priority.  Long-term 

unemployment  now  accounts  for  50%  of  unemployment,  posing  an  important  challenge  to 

employment  and  social  policies.  The  probability  to  transit  from  unemployment  to  inactivity 

increases  with  the  time  spent  in  unemployment.  This  can  have  important  negative 

consequences  for  economic  growth,  also  in  view  of  required  productivity  increases  and 

demographic  change.  Transitions  from  long-term  unemployment  to  employment  should  in 

many Member States be better supported through active labour market measures.  Immediate 

action  on  both  the  demand  and  supply  side  is  needed  before  the  long-term  unemployed 

become discouraged and move into inactivity.  

Ongoing social dialogue reform is mostly linked to collective bargaining reform and also to 

workers'  representation.  Collective  bargaining  is  becoming  more  decentralised  from  the 

(cross-) industry level to the company level. In those Member States where (cross-) industry 

collective agreements exist, the scope for company level agreements to set working conditions 

has increased. In such contexts of decentralised collective bargaining, structures for workers' 

representation  and  the  coordination  of  bargaining  with  higher  levels  and  horizontally  are 

crucial to secure increased productivity and employment as well as a fair share of wages for 

workers.  Involvement  of  social  partners  in  policy  design  and  implementation  needs  to  be 

improved.   

Despite  the  fact  that  women  are  increasingly  well  qualified,  even  out-performing  men  in 

terms  of  educational  attainment,  they  continue  to  be  underrepresented  in  the  labour 

market.  The  gender  employment  gap  remains  especially  wide  for  parents  and  people  with 

caring  responsibilities,  suggesting  the  need  for  further  action  e.g.  in  the  area  of  childcare, 

while  the  substantial  gender  gap  in  pensions  in  the  EU  stands  at  40%,  reflecting  the  lower 

pay  and  shorter  careers  of  women.  It  leads  to  the  need  for  further  action  towards  a 

comprehensive  integration  of  the  work-life  balance  approach  into  policy  making,  including 

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care  facilities,  leave  and  flexible  working  time  arrangement,  as  well  as  tax  and  benefit 

systems free of disincentives for second earners to work or work more. 

Member  States  have  continued  to  modernise  their  social  protection  systems  to  facilitate 

labour  market  participation  and  to  prevent  and  protect  against  risks  throughout  the  life-

course.    Social  protection  systems  must  better  protect  against  social  exclusion  and  poverty 

and  become  encompassing  instruments  at  the  service  of  individual  development,  labour 

market and life-course transitions and social cohesion. Adequate pensions remain contingent 

on the ability of women and men to have longer and fuller careers with active ageing policies 

sufficiently covering health and training. Investment in the working age population, including 

through the provision  of childcare, is essential  to secure  inclusive employment  outcomes  as 

well  as  sustainable  public  finances.  Health  systems  contribute  to  individual  and  collective 

welfare  and  economic  prosperity.  Sound  reforms  ensure  a  sustainable  financial  basis  and 

encourage the provision of, and access to effective primary health care services.  

In  the  course  of  2015  Member  States  have  been  faced  with  the  need  to  respond  to  an 

increasing  inflow  of  refugees,  with  some  Member  States  particularly  affected.  Member 

States  have  taken  decisions  on  integration  packages  as  well  as  dissuading  measures.  If 

short-term impact via higher public spending is relatively small, albeit more pronounced for 

some  Member  States,  in  the  medium  to  long  term,  labour  market  integration  matters  most.  

Member States must ensure that asylum seekers have access to the labour market at the latest 

within 9 months from the date when they apply for international protection.   

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1. 

LABOUR MARKET AND SOCIAL TRENDS AND CHALLENGES IN THE 
EUROPEAN UNION 

This  section  presents  an  overview  of  labour  market  and  social  trends  and  challenges  in  the 

European Union. It commences with the general findings deriving from the scoreboard of key 

employment and social indicators. What follows is more detailed analytical account of major 

employment and social areas.  

1.1 

General findings from the scoreboard of key employment and social indicators 

In its current third edition, the scoreboard of key employment and social indicators constitutes 

now  a  part  and  parcel  of  the  Joint  Employment  Report.  As  confirmed  by  the  latest 
Employment Guidelines1, the scoreboard is a particularly useful tool to contribute to detecting 

key  employment  and  social  problems  and  divergences  in  a  timely  way  and  identify  areas 

where policy response is most needed. This is done by carefully monitoring and interpreting 

both  levels  and  changes  of  each  indicator.  The  Commission  drew  on  the  results  of  the 

scoreboard when drafting the 2015 Country Reports and Country Specific Recommendations 

with the aim of better underpinning challenges and policy advice. 

The  analysis  of  the  findings  from  the  scoreboard  feeds  into  better  understanding  of 

employment  and  social  developments.  This  in  turn  contributes  to  a  stronger  focus  on 

employment  and  social  performance  in  the  European  Semester  as  promoted  by  the  Five 
Presidents  Report  on  Completing  Europe's  Economic  and  Monetary  Union2  and  outlined  in 
the  recent  Communication  on  Steps  towards  Completing  Economic  and  Monetary  Union3. 

Improvements to the interpretation of the scoreboard help to objectively identify employment 

and social divergence trends. The scoreboard should be read in conjunction with findings of 

other instruments such as the Employment Performance Monitor (EPM), the Social Protection 

Performance  Monitor  (SPPM)  and  the  scoreboard  of  the  Macroeconomic  Imbalances 
Procedure (MIP) with its recently added employment headline indicators4.  

1 Council Decision on guidelines for the employment policies of the Member States for 2015, Brussels, 21 
September 2015, 11360/15 
2 Available at: http://ec.europa.eu/priorities/economic-monetary-union/docs/5-presidents-report_en.pdf 
3 COM (2015) 600 final, of 21.10.2015. 
4 Cf.  2016 Alert Mechanism Report (AMR)  

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Potentially  worrying  key  employment  and  social  developments  and  levels  leading  to 

divergences  across  the  EU  and  warranting  further  analysis  and  possibly  stronger  policy 

response are detected along three dimensions (see detailed tables in Annex): 

•  For each Member State, the change in the indicator in a certain year as compared with 

earlier periods in time (historical trend); 

•  For each Member State, the difference from the EU and the euro zone average rates in 

the same year (providing a snapshot of existing employment and social disparities); 

•  The  change  in  the  indicator  between  two  consecutive  years  in  each  Member  State 

relative to the change at  the EU and euro zone levels (indicative of the dynamics of 

socio-economic convergence/divergence). 

Looking at historical developments and distances to the EU average based on the scoreboard5 

shows that Member States have been hit by the crisis in different ways and the recovery has 

been uneven. In around half of the EU Member States, there are developments in at least two 

indicators that raise some concern.  

Six  Member  States  (Greece,  Croatia,  Cyprus,  Portugal,  Spain  and  Italy)  face  a  number  of 

substantial  employment  and  social  challenges.  The  situation  in  two  Member  States  (France 

and  Finland)  points  to  problematic  developments  in  the  unemployment  and  youth 

unemployment rates, accompanied by a decrease in disposable income in Finland. Indicators 

highlighting phenomena  related to social exclusion  are flagged for five countries (Romania, 

Bulgaria,  Lithuania,  Latvia  and  Estonia).  Finally  two  Member  States  (Malta,  Luxembourg) 

represent  a  mix  of  a  problematic  situation  in  one  indicator  with  a  good  but  deteriorating 

performance in another.     

In  detail,  Greece  faces  a  critical  situation  across  all  indicators.  Croatia  shows  problematic 

developments  and  levels  in  unemployment,  NEETs  and  poverty  indicators.  In  Cyprus,  the 

general  and  youth  unemployment  rates  as  well  as  the  at-risk-of-poverty  indicator  show 

worrying trends while the NEETs rate is considered as weak but improving. Italy shows very 

worrying trends in indicators related to the situation of young people on the labour market as 

well  as  quite  problematic  developments  in  the  general  unemployment  rate  and  social 

indicators. In Portugal general and youth unemployment rates are still worrying but have been 

5 Please refer to the previous section for the detailed overview per indicator. 

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improving in the recent period. These positive changes have not yet translated into the social 

area  with  AROP  and  inequality  indicators  showing  still  high  levels.  In  Spain,  the 

developments  regarding  unemployment  and  NEET  rates  have  been  improving  (from 

problematic  levels)  while  the  situation  regarding  youth  unemployment,  poverty  and 

inequalities remains challenging.   

Finland  has  recorded  negative  developments  in  all  three  employment  indicators,  in  view  of 

very high increases recorded over the last period, and records a worsening in gross household 

disposable  income.  In  France,  the  general  and  youth  unemployment  rates  are  above  the  EU 

average and still increasing.  

While the labour market situation in several countries is stable or improving, a more worrying 

situation  can  be  detected  regarding  the  social  indicators.  Romania  faces  critical  situations 

regarding  NEETs  rate,  AROP  and  inequalities.  Bulgaria  experienced  the  second  highest 

growth  in  inequalities,  from  already  high  levels  while  the  situation  regarding  NEETs  still 

considered  as  weak  (but  improving).  Both  social  indicators  are  still  seen  as  problematic  in 

Latvia, Lithuania and Estonia.  

The  developments  in  two  Member  States  show  a  mixed  picture  with  some  indicators 

deteriorating  from  good  or  already  problematic  levels.  In  Luxembourg,  the  NEETs  rate 

increased  (from  still  good  levels)  and  the  inequality  indicator  points  to  problems  to  watch. 

Malta experienced high increases in the AROP  rate (from the relatively good levels) and in 

the NEETs rate.  

In  addition,  Austria  shows  an  overall  good  or  very  good  situation  across  all  indicators, 

although a slight deterioration is observable as concerns the total unemployment and NEET 

rates. 

1.2 

Labour market trends and challenges 

The economic recovery in the EU started in the course of 2013, and most labour market 

indicators have began to improve soon after. However, the depth of the crisis and the slow 

recovery, particularly in the Euro Area, have not yet allowed to reach the pre-crisis levels of 

real GDP. Employment rates are now increasing again (Figure 1). In 2014, the employment 

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rate  (20-64  year  -  olds)  increased  by  0.8  percentage  points  (pps)  compared  to  the  previous 
year, to 69.2% in the EU-28 and by 0.4 pps to 68.1% in the EA-196. At the same time, the 

activity rate (15-64) rose by 0.3 and 0.1 pps, respectively, reaching a level of 72.3% in both 

the  EU-28  and  the  EA-19.  The  steady  increase  in  unemployment  that  had  started  in  2008 

reverted in 2013, with the unemployment rate (15-74) falling from 10.8% to 10.2% in the EU-

28 and from 12.0% to 11.6% in the EA-19 between 2013 and 2014 The decreasing trend was 

confirmed in the first half of 2015, as the unemployment rate decreased by respectively 0.7 

pps in the EU-28 and 0.5 pps in the euro area compared to the same period of 2014.  

Figure 1: Employment, unemployment and activity rates, EU-28, total and for women 

Source: Eurostat, LFS 

Trends in employment and unemployment are driven by movements in job finding and 

job  separation  rates.  From  the  low  levels  seen  in  the  beginning  of  2013,  job  finding  rates 

have recovered, while at the same time job separation rates have started to decline since early 

6 [2015 update when available] 

9 

 
 
 
 
                                                            
2012. The observed declines in unemployment over 2013 and 2014 have been mostly linked 

to  reductions  in  job  separation  rates,  while  job  finding  rates,  altough  recovering,  are  still 

below pre-crisis levels and remain particularly low for job seekers with long unemployment 

spells. 

Employment  growth  dynamics  have  been  different  across  Member  States,  economic 

sectors and types of contract. In 2014, employment rates (age group 20-64) increased in all 

Member  States  compared  to  2013,  except  for  Finland  (-0.2  pps),  Austria  (-0.4),  and  the 

Netherlands (-0.5). However, differences in the levels remain, with 2014 rates ranging from 

53.3%  in  Greece  and  slightly  below  60%  in  Croatia,  Italy  and  Spain  to  over  75%  in  the 

Netherlands  (75.4%),  Denmark  (75.9%),  the  UK  (76.2%),  Germany  (77.7%),  and  Sweden 

(80.0%).  As  regards  sectoral  developments,  the  improvement  in  employment  rates  has  now 

reached  most  sectors,  including  those  most  affected  by  the  crisis  such  as  agriculture, 

construction and industry. Looking at contract types, in line with expectations, over the past 

years employment has been most volatile for temporary contracts, and less so for permanent 

contracts  or  self-employment,  which  have  remained  more  or  less  stable  since  2011.  From 

2013 the increase in overall employment has been mainly driven by an increase in temporary 

contracts.  As Figure 2 shows, the use of temporary contracts varies widely between Member 

States, with 2014 shares ranging from below 5% in Romania and the Baltic countries to more 

than 20% in the Netherlands, Portugal, Spain and Poland. Transition rates from temporary to 

permanent contracts also vary between countries, and it seems that transition rates are highest 

(lowest) for those countries where the share of temporary contracts is lowest (highest). Both 

the shares of temporary contracts and the transitions from temporary to permanent contracts 

are  indicative  of  how  flexible  labour  markets  are.  They  also  possibly  reflect  differences  in 

employment  protection  legislation  across  countries  and  the  extent  to  which  national  labour 

markets are characterised by insider-outsider effects. This is of particular concern in countries 

using temporary contracts on a wide scale, where temporary contracts often do not improve 

the chances of getting a permanent full-time job, as shown in Figure 2.  

Non-standard  employment  contracts  are  more  prevalent  among  women,  young  people  and 

non-routine  manual  work.  These  appear  to  be  associated  with  a  wage  penalty  and  to  be 
concentrated  among  low  earners7.  Another  facet  of  job  precariousness  is  the  extent  of 

7 OECD (2015) – In It Together: Why Less Inequality Benefits All 

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involuntary part-time work, which has increased from 16.7% to 19.6% of total employment 
and the spread and diversification of forms of casual working8.   

Figure 2: Share of temporary contracts and transitions from temporary to permanent  

Source: Eurostat, LFS and SILC. Short description: Data on transitions for BG, EL, PT, HR refer to 2012, for AT to 2014. 
Data on transitions are not available for IE and SE. 

The evolution of employment reflects (net) job creation trends, with small- and medium-

sized enterprises (SMEs) being traditionally seen as the engine of employment growth. 

Between  2002  and  2010,  85%  of  new  jobs  in  the  EU  were  created  by  SMEs.  By  contrast, 

between 2010 and 2013, employment in SMEs in the EU fell by 0.5%. To date and in many 

Member  States,  credit  availability  to  the  non-financial  sector  remains  weak,  due  to  both 

supply  and  demand  factors  including  sectorial  restructuring  and  deleveraging  that  followed 

the financial crisis. Limited access to finance is also likely to curb the number of start-ups. In 

2014, the number of self-employed increased at about the same pace as employment, leaving 

the self-employment rate at EU level unchanged at 14.6%, below the 15% rate seen for 2004-

2006. The self-employment rate of women continued to be around 10%, while the male rate 

remained  roughly  one  in  five.  The  level  and  changes  in  Member  States’  self-employment 

rates are very unequal and reflect a number of factors, such as framework conditions, national 

entrepreneurial spirit and opportunities for paid employment. The rates are significantly above 

the levels observed 10 years ago in the Netherlands, Slovakia, Slovenia, Greece, the United 

Kingdom and the Czech Republic. 

8 Eurofound (2015) - Developments in working life in Europe: EurWORK annual review 2014 

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Activity rates differ across population groups and Member States. They move in a more 

stable way than employment rates, potentially indicating only modest discouragement effects. 

Consistent with longer term trends, they have been showing a consistent increase for certain 

groups,  in  particular  women  and  older  workers,  while  activity  rates  have  decreased  for  the 

low-skilled and male youths aged 15 to 24 years. Although differences  in activity rates have 

narrowed over time, both between men and women and between older and prime age workers, 

they  remain sizeable. In 2014, the activity rate of women stood at 66.5% in the EU-28; while 

still  11.5  pps  below  that  for  men,  the  difference  decreased  from  13.2  pps  in  2010.  Gender 

differences  in  full-time/part-time  work  add  to  differences  in  activity  rates  and  translate  into 

gender pay gaps which over the working life accumulate into gender pension gaps. Between 

2010 and 2014, the difference in activity rates  between older workers (55-64) and prime age 

workers  (25-54)  decreased  from  35.4  to  29.6  pps.  In  contrast,  the  differences  between 

nationals  and  non-nationals  and  between  persons  with  and  without  disabilities  have  not 

diminished. Across countries, considerable variation remains, in overall activity rates (ranging 

from  63.9%  in  Italy  to  81.5%  in  Sweden  in  2014)  and  for  specific  groups,  reflecting 

differences in economic conditions, institutional set-ups, and workers' individual preferences.  

Unemployment  and  youth  unemployment  have  started  to  decrease,  but  not  in  all 

Member  States,  and  cross-country  differences  remain  considerable.  Based  on  findings 

from  the  scoreboard  of  key  employment  and  social  indicators,  some  convergence  on 

unemployment rates can be observed across Europe, with stronger-than-average decreases in 

a number of Member States which had recorded very high levels of unemployment (Spain and 

Portugal are the most relevant examples, followed by Greece). Still, as Figure 3 shows, in the 

first half of 2015 unemployment rates ranged from around 5% in Germany to more than 20% 

in Spain and Greece. The unemployment rate also appears very high in Croatia and Cyprus, 

with a continued increase in the latter. 

A deteriorating trend, with significantly higher than average increases, can be observed in a 

number of countries performing relatively better in terms of unemployment rate levels. This is 

the  case  of  Belgium,  France,  Finland  and  Austria  (the  latter,  though,  still  presenting  a  very 

low unemployment rate of 5.1%). Among these countries, Finland shows the highest increase 

in the EU28, by 0.8 pps. While unemployment is decreasing in Italy, the pace of reduction is 

slow compared to the average. These developments should be carefully analysed as they may 

turn into longer-term trends.  

12 

 
 
In a gender perspective, the decrease in the unemployment rate is overall comparable for men 

and  women  (by  0.8  and  0.7  pps  respectively  in  the  EU28).  Unemployment  rates  of  women 

remain problematic in Southern Europe (especially in Greece and Spain) and in some Eastern 

European countries (Croatia, Slovakia). 

Figure 3: Unemployment rate and yearly change, as reported in the scoreboard of key   

employment and social indicators  

Source:  Eurostat,  LFS  (DG  EMPL  calculations).  Period:  1st  semester  2015  levels  and  yearly  changes  with 
respect to 1st semester 2014. Note: Axes are centred on the unweighted EU28 average. EU28 and EA19 refer to 
the respective weighted averages. The legend is presented in the Annex. 

As  shown  in  Figure  4,  cross-country  differences  are  even  larger  as  regards  youth 

unemployment  rates.  Two  countries  (Greece  and  Spain)  still  present  levels  of  youth 

unemployment rate of around 50%, two (Italy and Croatia) above 40% and two (Cyprus and 

Portugal) above 30%; these countries also show the highest values for women. Although the 

negative slope of the regression line suggests that Member States have begun converging, in 

these  countries  a  faster  decrease  would  be  necessary  to  quickly  bring  youth  unemployment 

back  to  reasonable  levels.  In  this  group,  Portugal  appears  to  be  the  country  that  converges 

most  quickly.  A  small  group  of  countries  (including  France  and  Finland)  show  signs  of 

deterioration in youth unemployment from a comparatively good starting point. The case of 

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Finland  deserves  particular  attention,  in  view  of  an  increase  by  2.5  pps  over  the  period 

reflecting  the  weak  economic  conditions  (largest  increase  in  the  EU28,  as  for  the  overall 

unemployment rate). 

Figure 4: Youth unemployment rate and yearly change, as reported in the scoreboard of  

key employment and social indicators  

Source:  Eurostat,  LFS  (DG  EMPL  calculations).  Period:  1st  semester  2015  levels  and  yearly  changes  with 
respect to 1st semester 2014. Note: Axes are centred on the unweighted EU28 average. EU28 and EA19 refer to 
the respective weighted averages. The legend is presented in the Annex. 

The share of young people not in employment, education or training (NEET rate) is also 

decreasing  (Figure  5).  However,  very  high  NEET  rates  are  still  recorded  by  a  number  of 

countries (Ireland, Cyprus, Spain, Romania, Greece, Croatia, Bulgaria and Italy, the latter two 

countries  with  values  above  20%).  Among  women,  the  highest  share  of  NEETs  is  also 

observed in Greece, Italy, Romania and Bulgaria. While Spain, Bulgaria, Greece and Cyprus 

seem  to  be  converging  at  a  reasonably  quick  rate,  the  speed  of  adjustment  (if  any)  appears 

insufficient  in  Italy,  Croatia  and  Romania.  Also  in  this  case,  a  few  Member  States  with 

relatively  low  –  or  close  to  the  average  –  NEET  rates  show  yearly  changes  significantly 

higher than the EU average. This is the case of Luxembourg, Austria, Finland and Malta. 

Figure  5:  NEET  rate  and  yearly  change,  as  reported  in  the  scoreboard  of  key 

employment and social indicators 

14 

 
 
 
  
 
  
Source: Eurostat, LFS (DG EMPL calculations). Break in series in FR and ES. Period: 2014 levels and yearly 
changes with respect to 2013. Note: Axes are centred on the unweighted EU28 average. EU28 and EA19 refer to 
the respective weighted averages. The legend is presented in the Annex. 

Early school leaving rates have improved for most countries. In 2014 early school leaving 

decreased  in  20  Member  States  compared  to  2013,  while  a  relatively  strong  increase  was 

observed  in  Estonia.  Notwithstanding  positive  developments  in  a  large  majority  of  Member 

States, levels remain particularly high for several countries (Malta, Italy, Portugal and Spain). 

In addition, foreign-born young people have on average 10 percentage points higher rates than 
the native-born, with peaks of around 20 points in Greece and Italy.9 

Despite  the  overall  improvement  on  the  labour  market,  long-term  unemployment 

remains  at  very  high  levels  in  several  Member  States.  Following  the  crisis,  long-term 

unemployment rates increased in all Member States between 2008 and 2014, with the notable 

exception  of  Germany  (Figure  6).  Overall,  rates  are  still  relatively  high,  in  particular  in 

Greece, and to a lesser extent in Spain, with the rate observed in 2014 in both cases still very 

close  to  its  maximum  level.  Long-term  unemployment  affects  men,  young  people  and  low-

skilled  workers  relatively  more  than  other  groups  on  the  labour  market,  and  especially  hits 

those that used to work in declining occupations and sectors. The overall state of the economy 

remains an important factor in determining changes in the levels and flows to and from long-

9 See "Education and Training Monitor 2015" (http://ec.europa.eu/education/tools/et-monitor_en.htm) 

15 

 
 
 
 
                                                            
term  unemployment,  but  there  are  also  strong  country-specific  effects  mostly  related  to 

institutional differences. 

Figure 6: Long-term unemployment rates (2008, 2014 and maximum levels) 

Source: Employment and Social Developments in Europe (ESDE) 2015, European Commission 

There  are  differences  between  Member  States  as  regards  the  dynamics  of  long-term 

unemployment. Figure 7 shows transition rates for the long-term unemployed between 2013 

and 2014. For several Member States persistence rates in long-term unemployment (the long-

term unemployed that are still unemployed one year later) are considerable and reach levels 

above  50%  in  Lithuania,  Bulgaria,  Greece  and  Slovakia.  On  the  other  hand,  outflows  to 

employment  occur  comparatively  frequently  in  Denmark,  Sweden,  Estonia  and  Slovenia. 

Outflows  to  inactivity  are  likely  to  reflect  discouraged  worker  effects,  and  are  particularly 

large in Italy, and to a somewhat lesser extent in Finland, Estonia, and Latvia. 

Figure 7: Labour market status in 2014 of those in long-term unemployment in 2013 

Source:  Employment and Social Developments in Europe (ESDE) 2015, European Commission  

16 

 
 
 
 
 
Despite  the  largely  unfavourable  situation  for  the  long-term  unemployed,  overall 

spending on active labour market policies has gone down in quite a few Member States, 

reflecting tight government budgets. Between 2007 and 2012 total spending (as a share of 

GDP in 2007) decreased in 8 Member States, while spending per person wanting to work fell 

in  13  countries  (Figure  8).  It  mainly  increased  in  Member  States  where  levels  were 

comparatively  low  in  2007.  Although  more  recent  cross-country  spending  data  are  not 

available  yet,  it  is  not  likely  that  spending  has  substantially  improved  overall  given  that 

government  budgets  have  remained  tight  also  after  2012  in  many  Member  States. 

Furthermore,  in  a  considerable  number  of  countries,  ALMP  expenditure  is  not  strongly 

targeted at the long-term unemployed, with rates below 20% of expenditure targeting in about 

half  the  Member  States.  PES  coverage,  benefit  coverage  and  participation  in  education  and 

training  for  the  long-term  unemployed  also  seem  to  have  decreased  over  time  in  several 

Member  States,  possibly  linked  to  difficulties  of  reaching-out  to  the  very  long-term 
unemployed (2 years and over). 10 

Figure 8: Annual real growth of ALMP expenditure, 2007-2012 

Source:  Eurostat,  LMP  database.  DG  EMPL  calculations  of  EU-28  average  value.  Note:  Member  States  are  arranged  into 
low/medium/high spender groups by 2007 spending on ALMP (cat. 1-7, % of GDP). EU-28 aggregate estimated by using, 
due to missing data, for the United Kingdom and Greece 2010 value for 2011-13, and for Spain, France, Cyprus, Malta and 
Romania using the 2012 value also for 2013, and excluding Croatia. Croatia and Portugal not included due to lack of data and 
breaks in series. *Due to breaks in series, for Greece, France and the United Kingdom 2007-2010 averages used instead of 
2007-2012, for Slovakia 2008-2012 period used, and for Cyprus the 2007-2011 period was used. 

Lower  activation  of  the  (long-term)  unemployed  may  add  to  already  existing  skills 

bottlenecks. Less spending on activating the (long-term) unemployed may, in particular if it 

10 "Preventing and Fighting Long-Term Unemployment", in: Employment and Social Developments in Europe 
2015, European Commission. 

17 

 
 
 
 
                                                            
concerns  training,  prevent  them  from  acquiring  the  skills  that  they  need  to  regain 

employment.  This  would  not  only  increase  persistence  rates  in  unemployment,  but  it  would 

also add to already existing skills bottlenecks. As Figure 9 shows, in several Member States a 

sizeable  share  of  employers  report  difficulties  in  finding  staff  with  the  required  skills. 

Relatively  large  difficulties  are  found  for  the  Baltic  countries  (which  may  be  related  to 

comparatively large outflows of people from these countries to other EU Member States) and 

also  for  low  unemployment  countries  such  as  Austria,  Belgium  and  Germany.  Fewer 

difficulties are reported for Member States such as Spain, Greece, Croatia, and Cyprus, where 

the  lack  of  labour  supply  is  not  a  constraining  factor  on  hiring.  Better  quality  and  further 

investments in lifelong learning provision would contribute to diminishing skills bottlenecks. 

According  to  Eurostat  figures,  between  2009  and  2014  lifelong  learning  increased  in  a  vast 

majority of Member States (not in Croatia, Cyprus, Greece, Poland, Spain and Slovenia), but 

large differences remain, with 2014 figures on participation in lifelong learning ranging from 

1.5% in Romania and 1.8% in Bulgaria to over 25% in Finland, Sweden and Denmark.   

Figure 9: Difficulties finding staff with the required skills in European firms, 2013 

Source: 3rd European Company Survey (2013), Eurofound (Reading Note: Proportion of firms replying affirmatively to the 
question ‘Did your establishment encounter difficulties in finding staff with the required skills?’) 

Difficulties  in  finding  staff  may  have  various  causes,  one  of  which  is  workers  lacking  the 

right skills.  Recent analyses on skills mismatch indicate though that only less than half of the 

recruitment  difficulties  constitute  genuine  skill  shortages,  while  almost  a  third  can  be 

attributed  to  unattractive  pay.  Atypical  working  hours  and  lack  of  training  opportunities  on 

the job, together with unattractive pay, reduce the ability of employers to attract workers. In 

18 

 
 
 
addition,  research  shows  that  the  companies  which  are  unable  to  find  workers  with  the 
required skills are often those unwilling to offer long-term contracts11.   

Europe's  growth  potential  is  threatened  by  structural  weaknesses  in  its  skills  base. 

Recent data from the OECD-EC Survey on Adult Skills (PIAAC)  show that about 20% of the 

working-age  population  have  only  low  basic  skills  (literacy  and  numeracy),  and  in  some 

countries (France, Spain, Italy) this proportion is even higher. Only a few countries (Estonia, 

Denmark, Finland, the Netherlands and Sweden) have a high proportion of people with very 

good basic skills and most European countries do not come near the top-performing countries 

outside Europe (such as Japan or Australia). Regarding digital skills, in 2014 on average 22% 

of the EU population had no digital skills, ranging from 5% in Luxemburg to 45% in Bulgaria 
and  46%  in  Romania12.  Considering  that  to  function  effectively  in  the  digital  society  an 

individual needs more than low level skills (e.g. only being able to send emails), 40% of the 

EU  population  can  be  considered  as  insufficiently  digitally  skilled.  Data  on  government 

spending  confirm  an  increasing  risk  of  investment  gaps  in  human  capital,  as  public 

expenditure on education has recorded a 3.2% decrease since 2010, with decreases in eleven 

Member States in the most recent year 2013. Europe is not investing effectively in education 

and  skills,  which  poses  a  threat  to  its  competitive  position  in  the  medium  term  and  to  the 

employability of its labour force.  

Labour  mobility  is  a  potentially  important  adjustment  mechanism  for  reducing  cross-

country  differences  in unemployment and for resolving skills  bottlenecks.  The intra-EU 

mobility rates shown in Figure 10 display a relatively clear pattern, with people moving out of 

countries  that  were  hit  hardest  by  the  crisis  towards  countries  that  weathered  the  crisis 

relatively well. This has added to longer-term flows from Central and Eastern Europe to the 

richer  North-Western  European  countries.  In  terms  of  absolute  numbers,  the  net  outflow  is 

largest in Spain and Poland, while the net inflow is largest in Germany and the UK. Overall, 

mobility  across  EU  countries  remains  modest.  Mobile  citizens  are  on  average  young  and 

highly educated, contributing to address skills shortages in receiving countries but also posing 

some  challenges  for  the  countries  that  they  leave  behind  even  if  they  contribute  to 

11 "Supporting Skills Development and Matching in the EU", in: Employment and Social Developments in 
Europe 2015, European Commission. 
12 According to the composite index of digital skills based on the Digital Competence Framework, 
https://ec.europa.eu/jrc/sites/default/files/lb-na-26035-enn.pdf.  

19 

 
 
 
 
                                                            
remittances.13 Full transparency and comparability of qualifications across the EU could ease 

the mobility of workers by helping employers to understand and trust qualifications gained by 

an individual in another Member State. To this end, the Member States are referencing their 

national qualification to the European Qualifications Framework.  

Figure 10: Net intra-EU mobility rates and flows, 2013 

Source: Labour Market and Wage Developments in Europe 2015, European Commission. Note: Luxemburg omitted as out-
of-scale outlier. Net intra-EU mobility rates are computed as the difference between immigration and emigration to and from 
other EU countries over total population at the beginning of the year per 1,000 inhabitants. 

Wage  developments  seem  to  be  in  line  with  productivity  in  most  Member  States  and 

have  contributed  to  rebalancing  within  the  Euro  Area.  Up  to  2008,  unit  labour  cost 

developments were increasing faster in Euro Area deficit countries than in surplus countries. 

This  trend  was  then  reversed,  which  contributed  to  restoring  the  external  equilibria  of  the 

affected Member States. Moreover, as Figure 11 shows, in recent years real wages seem to be 

moving more or less in line with productivity (contrary to what was observed the years before 

in  several  countries),  with  only  small  deviations  in  many  countries  (with  the  exception  of 

Cyprus,  Greece,  Spain,  Estonia,  Romania  and  Bulgaria).  This  is  overall  a  positive 

development for the countries' internal and external equilibrium.  

Figure 11: Real compensation and productivity, average growth rates 2012-2014 

13 Employment and Social Developments in Europe 2015, European Commission. 

20 

 
 
 
                                                            
 
Source: Labour Market and Wage Developments in Europe 2015, European Commission  

In  recent  years  the  tax  wedge  on  labour  has  increased  in  a  considerable  number  of 

Member  States,  especially  for  low-wage  and  average  wage  earners,  adding  to  already 
high  levels  in  several  countries.14  Tax  wedge  levels  differ  substantially  between  Member 

States,  ranging  from  below  30%  in  Malta  and  Ireland  to  more  than  45%  in  Belgium, 

Germany,  France  and  Hungary  in  2014  (and  for  Austria  and  Italy  only  for  average  wage 

earners). Figure 12 shows the change between 2010 and 2014 in the tax wedge (single earner, 

no children) at both 67% and 100% of the average wage. The tax wedge decreased in only 8 

countries  at  both  income  levels,  most  strongly  in  the  United  Kingdom  and  France.  On  the 

contrary, comparatively strong increases can be seen for Malta (100% level, but from a low 

level),  and  for  Luxemburg,  Portugal,  Slovakia,  Hungary  and  Ireland  (at  both  the  67%  and 

100% level, but in Ireland from a low level). These trends are a matter of concern in light of 

still  high  unemployment  rates  in  many  Member  States.  Reductions  in  the  tax  wedge, 

appropriately  financed,  would  increase  demand,  growth  and  support  job  creation,  and 
contribute to the smooth functioning of the EMU15. 

Figure 12: Change between 2010 and 2014 in the tax wedge 

14 The tax wedge on labour is composed of personal income taxes plus employers' and employees' social security 
contributions. 
15 See several Eurogroup statements, e.g. Eurogroup Statement, Structural reform agenda - thematic discussions 
on growth and jobs - Common principles for reforms reducing the tax burden on labour, Milan, 12 September 
2014. 

21 

BEBGCZDKDEEEIEELESFRHRITCYLTLUHUMTNLATPLPTROSISKFISEUK-101234-4.5-2.5-0.51.53.55.5ProductivityReal compensation 
 
 
                                                            
Source: Tax and benefits database, OECD/EC. Note: Data are for single earner households (no children), 2013 data instead of 
2014 for BG, LT, LV, MT and RO. 

1.3 

Social trends and challenges 

Household  incomes  in  the  EU  are  on  the  rise  again,  benefitting  from  stronger  economic 

activity  and  improving  labour  market  circumstances.  On  average  in  the  EU,  Real  gross 

disposable household income (GHDI) was estimated to have risen by 2.2% over the year to 

the  first  quarter  of  2015  (Figure  13).  The  rise  of  real  household  income  was  driven  by 

increases in market income, mostly wages, and to a lesser extent from self-employment and 

net  property  income.  Taxes  on  income  and  wealth  slightly  reduced  the  progression  of  real 

GHDI income in 2014 and the first quarter of 2015.  

22 

 
 
 
 
 
 
Figure 13: Change of GHDI and its components in the EU 

Source: Eurostat, National Accounts (DG EMPL calculations) 

A closer look at country performance confirms that most Member States have benefitted 

from an increase in GHDI in 2014. Evidence from the scoreboard of key employment and 
social  indicators  (Figure  14)16  shows  that  in  the  majority  of  Member  States  real  disposable 

income  of  households  has  increased  over  2014.  Sweden,  Lithuania,  Hungary,  Slovakia  and 

Latvia have experienced the largest improvement in household income, with increases higher 

than 2% on a yearly basis. On the contrary, a decrease was recorded in United Kingdom, Italy 

and  Finland,  the  latter  case  to  be  read  in  parallel  with  the  general  deterioration  in 

unemployment indicators. No data are available yet to assess the recent evolution of GHDI in 

some countries heavily hit by the crisis (e.g. Greece and Cyprus). 

16  Data  on  GHDI  extracted  on  28th  October  2015.  Figures  for  2014  are  not  available  on  that  date  for  nine 
Member States (Bulgaria, Ireland, Greece, Croatia, Cyprus, Luxembourg, Malta, Poland and Romania). 

23 

 
 
 
 
 
 
                                                            
Figure 14: Change of GHDI in 2014, as reported in the scoreboard of key employment  

and social indicators 

Source: Eurostat, national accounts (DG EMPL calculations). 

The  share  of  people  at-risk-of-poverty  or  social  exclusion  (AROPE)  stabilised  in  2013 

and 2014 after a continuous increase between 2009 and 2012.  

The  Europe  2020  poverty  reduction  target  is  measured  using  the  at-risk-of-poverty  or 

exclusion (AROPE) rate, provided by Eurostat. The AROPE ratio is the share of people:  

• 

at risk of poverty (AROP), i.e. equivalised17 household disposable income (after social 

transfers and after pensions) below 60% of the median national household disposable income; 

• 

• 

OR severely materially deprived (SMD)18;  
OR living in households with very low work intensity19. 

The AROPE rate in the 28 EU Member States (EU-28) decreased slightly in 2014 to 24.4%20 

or 122 million people, down from 24.5% in 2013 and 24.7% in 2012. Nevertheless, it was still 

1 percentage point higher than in 2009 (23.3%). 

17 Eurostat applies an equivalisation factor calculated according to the OECD-modified scale. It gives a weight of 
1.0 to the first person aged 14 or more, a weight of 0.5 to other persons aged 14 or more and a weight of 0.3 to 
persons aged 0-13. Eurostat provides a detailed definition in http://ec.europa.eu/eurostat/statistics-
explained/index.php/Glossary:Material_deprivation 
18 People are considered severely materially deprived whenever they cannot afford at least 3 items (goods and 
services) out of a list of 10 items deemed important.  
19 People living in households with very low work intensity are those aged 0-59 living in households where the 
adults (aged 18-59) work less than 20% of their total work potential during the past year. 
20 The 2014 AROPE data is an estimate provided by Eurostat, on the basis of the data provided by most Member 
States.  

24 

 
 
 
 
                                                            
Jobless  households  and  severe  material  deprivation  explain  most  of  the  evolution  in 

AROPE.  In  2013,  severe  material  deprivation  decreased  slightly  to  9.6%  of  the  whole 
population.  Based  on  EUROSTAT  provisional  data  for  201421,  it  is  expected  to  have 

decreased  further  since  then  while  remaining  well  above  the  8.2%  of  2009  (see  Figure  15). 

Moreover  the  share  of  jobless  households  rose  to  10.8%  in  2013,  well  above  the  pre-crisis 

level of 9.1%. The at-risk of poverty rate, which refers the group of people who receive less 
than 60% of median household income after transfers22 remained stable at around 16.6%, but 

the poverty thresholds under which people are considered to be at the risk of poverty are still 

declining,  reflecting a  continuous deterioration of living  standards. The degree to which the 

risk  of  poverty  and  social  exclusion  could  be  contained  has  been  contingent  on  national 

automatic stabilisers.    

Figure 15: Trends in poverty and social exclusion in the EU 

Source: Eurostat, EU-SILC.  

Note: Provisional figures for 2014. EU27 till 2009; jobless households: % of population aged 0 to 59; AROPE, 
AROP: previous year income; SMD: current year; jobless households: previous year.  

Nine  Member  States  achieved  AROPE  rates  below  20%  in  2013  and  2014  (the  Czech 

Republic,  the  Netherlands,  Finland,  Sweden,  France,  Austria,  Denmark,  Luxembourg  and 

Slovakia) which broadly remained at the same level as in 2009. On the contrary, six Member 

21 More information on early results for material deprivation statistics could be obtained from the respective 
EUROSTAT publication available at: http://ec.europa.eu/eurostat/statistics-
explained/index.php/Material_deprivation_statistics_-_early_results 
22 Less than 60% of the national median household income after social transfers. 

25 

 
 
 
 
                                                            
States  had  AROPE  rates  above  30%,  and  among  them,  4  countries  achieved  reductions  of 

their national AROPE rate from the previous year (Figure 16).  

Figure  16:  At-risk-of-poverty  or  social  exclusion  rates  (AROPE)  as  %  of  total 

population  

Source: Eurostat, EU-SILC  

The  working  age  population  and  their  children  were  the  most  at  risk  of  poverty  and 

social exclusion, while the elderly were better protected by the relative stability of pensions 

compared to earnings from employment (Figure 17). The risk of poverty and exclusion of the 

working age population increased from 23% in 2008 to 25.3% in 2013 due to job losses and 

rising  in-work  poverty.    Men  continued  to  be  at  a  slightly  lower  risk  of  poverty  or  social 

exclusion than women in the EU 28 Member States in 2013: the AROPE rate for men stood at 

23.6%, compared to 25.4% for women.  

26 

 
 
 
 
 
 
Figure 17:  Risk of poverty and social exclusion by age group, labour market status and 

skill level, 2008 and change 2008-2013 

           Source: Eurostat, EU-SILC 

Looking  at the working age  population (age group 18-64),  evidence  from the scoreboard of 

key  employment  and  social  indicators  shows  that  three  countries  with  at-risk-of-poverty 

(AROP)  levels  above  or  around  EU  average  (Cyprus,  Portugal  and  Romania)  experienced 

further increases in 2013. In Cyprus and Portugal the magnitude of the increase was elevated 

(respectively 2.2 and 1.5 pps). Other countries with poverty levels much higher than average 

(Greece,  Spain  and  Lithuania)  did  not  record  any  statistically  significant  downward 

development; their situation thus remains critical. Among the countries with relatively lower 

at-risk-of-poverty  levels, the situation of Malta and Sweden was to  watch,  in  view of  much 
higher than average increases. As displayed in Figure 1823, the positive slope of the regression 

line indicated a diverging trend across Member States. 

23 Based on EU-SILC survey data, confidence intervals have been computed around point estimates for at-risk-
of-poverty and income inequality (S80-S20) indicators. The results of this computation have been embedded in 
the methodology for classifying Member States. Accordingly, in Figures 16 and 18 yearly changes not 
statistically different from zero are replaced by this value. Similarly, levels not statistically different from the 
(unweighted) EU average are replaced by this value. Detailed about the methodology can be found in Annex, 

27 

 
 
 
         
 
 
 
 
                                                            
Figure 18: At-risk-of-poverty rates in working age (18-64), as reported in the scoreboard 

of key employment and social indicators 

Source: Eurostat, EU-SILC (DG EMPL calculations). Period: 2013 level and change 2012-2013. 
Note:  Axes  are  centred  on  the  unweighted  EU28  average.  EU28  and  EA19  refer  to  the  respective  weighted 
averages.  The  legend  is  presented  in  the  Annex.  Statistically  insignificant  changes  and  differences  to  the 
(unweighted) EU average are set to zero. For methodological information, consult the Annex.  

The  unemployed  are  facing  the  highest  risk  of  poverty  and  exclusion,  but  in-work 

poverty  also  increased  during  the  crisis  even  if  the  in-work  AROP  rate  stabilised  on 

average in the 28 EU Member States, at 8.9% in 2013 compared to 9.0% in 2012. The in-

work  poverty  rate  varied  from  3.7%  in  Finland  to  18%  in  Romania.  Reductions  in 

unemployment will contribute to reducing levels of poverty but only half of the poor who find 
a job actually escape poverty24. Indeed, the impact of job creation and employment growth on 

poverty depends on whether the new jobs offer a living wage (both in terms of hours worked 

and hourly wage) and on whether they go to job rich, or job poor, households. 

While the risk of poverty or exclusion of children stabilised in 2013 in most countries, it was 

still very high at 27.7% and the share of children in jobless households continued to increase 

(9.7%  in  the  EU  in  2013).  Children's  living  standards  greatly  depend  on  the  parents'  labour 

market  situation.  Children  living  in  jobless  households,  with  lone  parents,  or  with  only  one 

parent  working,  face  much  greater  risk  of  poverty.  In  many  countries,  cash  transfers 

24 See Employment and Social Development in Europe 2013 

28 

 
 
 
 
 
                                                            
contribute to reduce the risk of poverty of children by compensating to a varying extent the 

lack  of  work  income  (from  less  than  20%  in  Greece  and  Romania  to  more  than  50%  in 

Sweden, Germany, Austria, the United Kingdom and Ireland).  

Persons with disabilities tend to experience higher AROPE rates (30% in 2013) and the 

risk is increasing with the degree of disability (severe – moderate). The AROPE gap between 

persons  with  and  without  disabilities  (8.5  p.p.in  the  EU)  is  not  decreasing.  Educational 

attainment continued to be a key driver of differences in monetary poverty rates. AROP 

rates for persons having achieved tertiary education (levels 5 and 6) were less than one third 

the AROP rate for persons having achieved a primary or lower secondary level of education. 

In  2013,  the  rates  were  7.5%  and  23.7%  respectively.  For  persons  with  upper  secondary 

education the corresponding rate was 14.5%. 

Income inequality remained broadly stable in 2013.  The S80-S20 ratio,25 included in  the 

scoreboard of key employment and social indicators, recorded a slight increase (by 0.1 pps) in 

the euro  area, while remaining  almost constant  in  EU28 (Figure 19). However, a broad and 

increasing  dispersion  of  inequality  figures  was  observed  across  Europe,  as  a  result,  among 

others,  of  the  different  impact  of  the  crisis  on  employment  and  households'  disposable 

income, the different redistributive role of tax and benefits systems, and different stances of 

national social protection systems. The highest inequality figures were observed in Portugal, 

Lithuania, Spain, Latvia, Greece, Bulgaria and Romania, all displaying a S80-S20 ratio higher 

than six. Among these countries, relevant increases were recorded by Lithuania and Bulgaria. 

Luxembourg also showed a much higher than average increase in income inequality in 2013, 

although its level remained relatively lower. 

25 The S80-S20 measures the ratio between the incomes of the 20% of the population with the highest incomes 
and the incomes of the 20% with lowest incomes, based on SILC data. 

29 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure  19:  Inequality  (S80/S20  measure),  as  reported  in  the  scoreboard  of  key 

employment and social indicators  

Source: Eurostat, EU-SILC (DG EMPL calculations). Period: 2013 level and change 2012 – 2013. 
Note:  Axes  are  centred  on  the  unweighted  EU28  average.  EU28  and  EA19  refer  to  the  respective  weighted 
averages.  The  legend  is  presented  in  the  Annex.  Statistically  insignificant  changes  are  set  to  zero.  For 
methodological information, consult the Annex.  

Social protection expenditure as a share of GDP increased slightly on average in the 28 

EU Member States. It rose to 29.4% of EU-28 GDP in 2012 from 29.0% of GDP in 2011. 

Ten Member States devoted more than 30% of their GDP to social protection expenditures in 

2012  (Denmark,  France,  the  Netherlands,  Ireland,  Greece,  Finland,  Belgium,  Sweden,  Italy 

and  Austria),  while  in  eight  countries  it  was  less  than  20%  (Latvia,  Estonia,  Romania, 

Lithuania,  Bulgaria,  Poland,  Slovakia  and  Malta).    In  terms  of  expenditure  shares,  in  2013 

more than half of total spending was related to old age (pensions; Figure 20). 

Figure 20: Social expenditure components in 2013, EU-28, as % of total social protection 
expenditure 

Source: Eurostat, ESSPROS  

30 

 
 
 
 
In  2014,  while  the  economic  environment  improved,  both  cash  and  in-kind  expenditure 

increased  in  real  term  in  the  EU  and  the  EA  at  a  faster  pace  than  in  2013  (Figure  21). 

However, the increase of in-kind benefits in 2014 only partially compensated for the declines 

observed  between  2010  and  2012.  Most  Member  States  registered  similar  increases,  except 

for Ireland, Greece, Spain, Cyprus, Croatia and Slovenia where in-kind benefits continued to 

decline. 

Figure  21:  Breakdown  of  the  annual  change  in  real  public  social  expenditure  between 
the contributions from in-cash and in-kind benefits (2001–14) in EU28 and EA19 

Source: Eurostat, National Accounts (DG EMPL calculations). Note: the values for 2014 are an estimate based 
on National Accounts. Note: When no data are available in the National Accounts (annual), the data were either 
based  on  National  Accounts  (quarterly)  or  the  AMECO  database  (in  the  latter  case  by  usually  applying 
calculated growth rates to the data available from National Accounts (annual). 

Changes in the tax-benefit system over the period 2008-14 had a strong impact on household 
incomes across the Member States26. In some countries, the measures adopted since 2008 lead 

to a strong reduction of household incomes (-17% in Greece, -4.5% in Latvia, and around -4% 

in Italy and Estonia), even if the impact was generally greater on high incomes than on low 

incomes.  More  recently,  in  most  of  the  Member  States  assessed,  the  measures  adopted  in 

2013-14 had a positive overall impact on incomes and in most cases were more beneficial to 

lower  income  groups.  It  can  be  noted  that  in  countries  that  experienced  a  similar  average 

impact  on  household  incomes  the  distributional  impact  of  measures  over  the  period  2008-

2014  varied  between  lower  and  higher  income  groups,  highlighting  the  importance  of  the 

design of measures in terms of policy outcomes. 

In some countries, access to healthcare for low income households has become more difficult. 

On  average  in  the  EU,  6.4%  of  people  living  in  low  income  households  (lowest  quintile) 

26 De Agostini and al (2015) The effect of tax-benefit changes on the income distribution in 2008-2014 

31 

 
 
 
 
 
                                                            
reported an unmet need for healthcare27, against 1.5% of those living richer households (top 

quintile). The gap in access to healthcare between rich and poor increased during the crisis in 

Member States (Figure 22).  

Figure 22: Self-reported unmet need for medical exam (lowest quintile-top quintile) 

Source:  Eurostat,  EU-SILC.  Notes:  Reason:  too  expensive  or  too  far  to  travel  or  waiting  list.  No  (Eurostat 

published data available for SI)  

27 People reporting that they did not go to the doctor even if they needed it because it is too expensive, waiting 
time is too long or because it is too far from where they live.  

32 

 
 
 
 
 
 
 
 
 
                                                            
2.  

EMPLOYMENT AND SOCIAL REFORMS – MEMBER STATE ACTION  

This section presents an overview of recent key employment and social reforms and measures 

taken  by  the  Member  States  in  priority  areas  identified  by  the  new  EU  employment 
guidelines.28  The  guidelines  for  the  employment  policies  of  the  Member  States  combine 

demand  and  supply  side  orientations  and,  while  addressed  to  Member  States,  should  be 

implemented  fully  associating  social  partners  and  stakeholders.  The  section  draws  on 

LABREF  2014  data  as  well  as  Member  States’  National  Reform  Programmes  2015  and 
European Commission sources.29 

2.1   Boosting demand for labour  

Employment subsidies remain a widely used instrument to support employment and job 

creation,  with  some  countries  having  scaled  up  or  fine-tuned  existing  programmes 

(Lithuania, Sweden, Ireland), and others having introduced new schemes altogether (Cyprus, 

France,  Romania  and 

Italy).  Start-up 

incentives 

including  measures  encouraging 

entrepreneurship were decided in Spain, Cyprus, Portugal and Slovakia.  

Member  States’  action  in  the  field  of  labour  taxation  has  since  the  onset  of  the  crisis 

shown  a  relationship  between  government  budget  balance  and  the  direction  of  labour 

taxation  reforms.  On  average,  countries  with  a  persistent  negative  budget  balance  have 

passed more reform measures that increased the taxation on labour. Moving towards reducing 

the  high  tax  wedge  on  labour  remains  a  challenge  but  several  countries  did  recently  pass 

measures to lower the tax wedge.  

Structural reductions of social security contributions were introduced or reinforced to support 

labour  demand  in  France,  Greece,  Latvia,  Belgium,  Italy,  Romania  and  Sweden.  Targeted 

reductions for vulnerable groups were made in Croatia, Slovenia, Portugal, Slovakia, Belgium 

and the UK. Spain introduced in 2015 a reduced social security contribution rate for hiring on 

28 Commission proposal for a Council decision on guidelines for the employment policies of the Member States, 
2 March 2015; Council Decision on guidelines for the employment policies of the Member States, 5 October 
2015. 
29 Exhaustive analysis of labour market developments and wages since 2008 can be found the ‘Labour market 
developments and wages in 2015’ Report, European Commission, DG Employment, Social Affairs and 
Inclusion, 2015.   

33 

 
 
 
 
 
                                                            
open-ended  contracts.  Finland 

reduced  employee  social  security  contributions 

to 

counterbalance low wage growth. In Italy, the 2015 Stability Law introduced several measures 

to lower the tax wedge on labour, including reduced labour costs  for employers, tax credits 

for  low-wage  earners  and  a  three-year  reduction  of  social  security  contributions  for  open 

ended hires in 2015. In France, the 'Responsibility and Solidarity Pact' added in 2014 further 

reductions in social security contributions for low and medium wage earners to the existing 

non-targeted tax credits for competitiveness and employment.  Greece introduced a new tax 

scale, abolished the tax free thresholds and replaced it by targeted tax credits. 

Following  far-reaching  action  in  preceding  years,  wage-setting  has  generally  come  to 

show  real  wages  move  in  line  with  productivity  developments,  with  some  countries 

recently taking measures to address the minimum wage. Inter-sectorial wage moderation 

agreements were agreed in Finland for 2014-2015 and in Spain for 2015-2016. In Slovenia a 

Social Agreement was concluded in 2015 setting collective agreements, inflation and a share 

of  sectorial  productivity  as  the  basis  for  private  sector  wage-setting.  To  ensure  alignment 

between wage and productivity developments, the Belgian government temporarily suspended 

automatic  wage  indexation  until  2016,  while  in  Cyprus  the  suspension  of  wage  indexation 

was  extended  to  2016  also  for  the  private  sector.  There  were  new  mechanisms  to  set  the 

minimum wage in Greece (as of 2017), Ireland and Croatia, and the introduction of a national 
statutory  minimum  wage  in  Germany  as  of  2015.  In  Portugal,  the  13th  and  14th  month  of 

public wages were reinstated following a Constitutional Court ruling. In the United Kingdom, 

the government is introducing a national living wage which is determined by a different set of 

criteria than that which applied to the existing national minimum wage. 

2.2   Enhancing labour supply, skills and competences 

In  a  number  of  Member  States  reductions  in  personal  income  taxes  have  supported 

labour  market  participation.  Reductions  in  personal  income  taxes,  notably  to  tackle  the 

poor  financial  position  and  disincentives  to  work  of  low-income  groups,  were  passed  in 

Spain,  Latvia.  Others  increased  the  lower  income  threshold  or  tax  credits  (Sweden,  Latvia, 

Lithuania,  the  Netherlands  and  Germany).  Austria  made  significant  changes  in  the  personal 

income tax in 2015, including through a reduction in the entry rate for personal income tax.   

Pension reforms continue to focus on rebalancing time spent in work and in retirement, 

mainly through higher pensionable ages, tighter eligibility conditions and reduced early 

34 

 
 
 
retirement  opportunities.  Over  the  past  year,  several  Member  States  (Belgium,  Bulgaria, 

Netherlands,  Portugal  and  the  United  Kingdom)  have  adopted  new  or  brought  forward 

previously planned increases of the pensionable age.  In  total,  25 of 28  Member States  have 

now  legislated  current  or  future  increases.  Among  those,  seven  (Cyprus,  Denmark,  Greece, 

Italy,  Netherlands,  Portugal    and  Slovakia)  have  explicitly  linked  the  pensionable  age  to 

future  gains  in  life  expectancy,  and  more  countries  (Belgium,  Finland,  Slovenia)  are 

considering doing the same. 

More Member States are taking steps to reduce labour market exit through early retirement, 

for  instance,  by  increasing  the  eligibility  age  and/or  career  length  requirement  (Belgium, 

Latvia)  or  phasing  out  specific  early  retirement  benefits  or  schemes  (Luxembourg,  Poland). 

Several Member States (Bulgaria, Denmark, Croatia) have introduced more stringent criteria 

and  procedures  regulating  access  to  disability  benefits,  to  ensure  they  are  targeted  at  the 

genuinely deserving and not used as a proxy early retirement scheme.  

Some  Member  States  have  undertaken  reforms  in  2014-2015  to  enhance  work-life 

balance  policies  with  view  of  increasing  labour  market  participation.  Austria  has 

announced  investments  totalling  EUR  800  million  by  the  year  2018/2019  for  increasing the 

number and availability of places in all-day schools, as well as for improving the quality of 

their services. The United Kingdom has introduced shared parental leave, allowing parents to 

share 52 weeks of paid leave and pay following the birth or adoption of a child.  

Enhancing  women’s  labour  market  participation  can  help  to  address  their  increased  risk  of 

poverty  and  social  exclusion,  especially  in  case  of  single  parent  families,  as  well  as  help 

prevent their experience of poverty in old age due to lower pension entitlements.  

Encouraging  more  women  to  enter  and  stay  on  the  labour  market  can  also  help  to 

counterbalance  the  effects  of  a  shrinking  working-age  population  projected  in  most  EU 

Member States by enhancing labour supply. It would thereby help reduce the strain on public 

finances and social protection systems,  make  better use  of women’s skills  and  competences 

and raise growth potential and competitiveness.   

Structural weaknesses in education and training systems continue to have an impact on 

skills  levels.  Recent  reforms  in  Italy  have  targeted  a  stabilisation  of  the  public  educational 

system via permanent contracts for people working in the sector. In 2015, Spain reformed the 

organisation and governance of its so-called training for employment subsystem in an effort 

35 

 
 
to  link  training  contents  with  labour  market  needs,  while  in  Sweden  a  new  adult  education 

initiative  will  increase  the  number  of  places  in  the  municipal  adult  education  system. 

Improving the skills intelligence (skills needs assessment, anticipation and forecasting) and its 

use to steer the education and training offer could help to achieve a better balance between the 

demand for and the supply of skills.  While some Member States have an established tradition 

of  quantitative  and  qualitative  forecasting  and  clear  cooperation  mechanisms  between 

education and training institutions and labour market actors (e.g. Denmark, Sweden), others 

have  less  coherent  systems.  Some  Member  States  are  in  the  process  of  developing  skills 

intelligence  (e.g.  Estonia,  Romania),  often  with  the  support  of  the  European  Social  Fund 
(ESF)30. Still, public expenditure on education decreased in almost half of Member States and 
fell by 3.2% for the EU as a whole compared to 201031. 

Member States sustained efforts to support youth employment and address high levels 

of  NEETs.  Substantive  Member  State  action  has  focused  on  improving  the  quality  of 

education and training for better school-to-work transitions. Germany amended its law to 

implement  "assisted  vocational  training",  allowing  for  a  better  preparation  and  follow-up  of 

disadvantaged young people as well as providing services to companies engaged in training of 

disadvantaged young people. In France, a comprehensive plan to reduce early school leaving 

is being implemented since end 2014. For pupils at risk aged 15 or more, a specific "adapted 

initial  training  path"  combining  regular  education  with  out  of  school  activities  is  being 

experimented. For early-school leavers aged between 16 and 25 a legal right to get back into 

education or training has been introduced. 

Poland has taken measures to provide internships for students both with major companies and 

in public administration. Denmark implements a major vocational education reform as from 

2015  inter  alia  with  a  view  to  reducing  drop-out,  promoting  the  popularity  of  vocational 

education and increasing apprenticeship opportunities. In Bulgaria changes have been made to 

the legislation on the provision of internships and work is ongoing to adapt curricula to better 

meet  labour  market  needs.  In  Austria  a  focus  on  youth  was  also  very  much  on  education, 

including  reforms  in  vocational  training  as  well  as  in  higher  education,  in  order  to  better 

facilitate the pathway from education to working life. A reform of the “Vocational Training 

Act”  aims  to  further  improve  the  apprenticeship  training  system  and  to  enhance  its  quality. 

30 Skills Governance in the EU Member States, Synthesis Report, October 2015 (forthcoming, link to be added 
later by C4) 
31 Data for 2013, Education and Training Monitor 2015  

36 

 
 
                                                            
Italy approved a school reform which promotes the use of traineeships and focuses on a co-

operation with companies,  

Efforts to support early activation of NEETs and outreach towards young people furthest 

away  from  the  labour  market  were  stepped  up  in  many  Member  States.  Jointly  with  the 

European Commission, Latvia, Finland, Portugal and Romania have developed activities in early 

2015 to increase awareness of opportunities offered by the Youth Guarantee, encourage NEETs 

to  register  with  providers  and  benefit  from  support.  Portugal  has  created  a  broad  network  of 

partners to increase outreach to NEETs. Besides, a Youth  Guarantee online platform has been 

put  in  place  where  each  NEET  can  register,  and  be  automatically  redirected  to  the  Public 

Employment Services (PES), EURES network or to the centres for qualification and professional 

training.    In  Sweden  municipalities'  responsibility  for  intervening  vis-à-vis  young  NEETs  has 

been  considerably  strengthened  as  from  January  2015.  Bulgaria  launched  the  National 

programme  “Activating  the  inactive”  with  the  aim  to  register  discouraged  NEETs  with  the 

Labour offices, and to involve them in training or help them returning to education and includes 

the appointment of Roma mediators.  Croatia is developing a NEETs tracking system in 2015 to 

address increases in the numbers of NEETs as part of a comprehensive human resources register. 

Breaking down barriers between the key players of school to work transition (education, PES, 

employers) has been another important priority. In Belgium, supporting youth employment and 

stepping up the implementation of the Youth Guarantee is a key priority within the 2025 Strategy for 

Brussels, adopted in June 2015. With the support of the ESF, the strategy involves all the relevant 

ministers and is implemented in partnership between key governance levels, in order to build bridges 

between  the  employment,  education  and  youth  sectors.  Partly  inspired  by  the  Youth  Guarantee, 

Germany continued to establish youth employment agencies/local alliances to support young people 

in the transition from school to work –bringing the number to at least 186 by September 2014. They 

foster  close  cooperation  between  various  local  actors,  including  PES,  schools  and  social  welfare 

services. More model projects are planned with ESF financing from 2015 onwards stepping up also 

socio-pedagogical assistance and work opportunities for disadvantaged youth. 

Some  Member  States  dedicated  efforts  at  supporting  job  creation  and  boosting  labour 

market  opportunities  for  young  people.  Croatia  launched  11  new  ALMP  measures  in  2014 

under the ʻYoung and Creative’ package, which now includes employment and self-employment 

subsidies, training and specialisation subsidies, traineeships for work, community service and job 

preservation.  The  Employment  Service  of  Slovenia  launched  the  Work  Trials  programme  in 

37 

 
 
2015, intended to allow unemployed persons aged up to 29 years to test their knowledge, skills 

and habits at a specific workplace.  

Vocational  rehabilitation  is  key  for  the  participation  of  persons  with  disabilities  in  the 

labour  market.  Finland  made  changes  to  enable  early  access  to  vocational  rehabilitation  to 

prevent  retirement  on  a  disability  pension.  From  October  2015  a  rehabilitee  should  be  able  to 

receive a partial rehabilitation allowance from the Social Insurance Institution for those days of 

rehabilitation when a person works only part-time. Croatia introduced amendments to the Act on 

Vocational  Rehabilitation  and  Employment  of  Persons  with  Disabilities  in  December  2014  to 

improve  their  professional  rehabilitation  and  employment  and  the  Act  also  provides  for 

establishment of regional centres for vocational rehabilitation.  

In many Member States and for particular groups there is a sizeable risk of long-term 

unemployment  becoming  entrenched  and 

translating 

into  higher 

structural 

unemployment.  A number of Member States have launched new active measures targeting 

the  long-term  unemployed.  Portugal  launched  in  2015  a  scheme  supporting  6  months 

traineeships  for  long-term  unemployed  older  than  30  years.  In  Spain,  a  national  activation 

programme  which  started  at  the  end  of  2014  is  providing  financial  support  to  long-term 

unemployed  who  are  not  covered  by  any  benefits,  while  reinforcing  job  search  and  job 

acceptance requirements and assigning an individual case handler to the 400.000 beneficiaries 

envisaged. 

Finland  started  implementing  in  2015  a  reform  of  support  to  the  long-term  unemployed, 

providing  a  single  point  of  contact  to  better  coordinate  employment  services,  benefits  and 

social services for the long-term unemployed at municipal level. In France, the national action 

plan against long-term unemployment adopted in 2015 combines a reinforced of personalised, 

intensive  counselling,  aiming  to  reach  460.000  beneficiaries  in  2017,  an  increased  offer  of 

subsidised  contracts  and  vocational  training  and  a  new  scheme  of  work-based  training  for 

older  workers  or  those  with  lower  qualifications,  as  well  as  better  access  to  childcare  and 

housing support.   

Economic  recovery  and  lower  inflows  to  long-term  unemployment  and  an  improving 

budgetary  situation  open  up  opportunities  for  additional  interventions.  However,  long-term 

38 

 
 
 
 
unemployment  is  addressed  by  current  reforms  in  less  than  half  of  the  Member  States.  A 

Commission  proposal  for  a  Council  Recommendation  on  the  integration  of  the  long-term 

unemployed into the labour market is being discussed by Member States.  

2.3   Enhancing the functioning of labour markets 

Member  States’  action  to  modernise  employment  protection  legislation  continued 

particularly  in  countries  with  major  imbalances  and  segmented  labour  markets. 

However  the  direction of  reforms does  only in  some cases  aims to  los  the  gap between 

labour market insiders and outsiders.  In Italy, a wide-ranging enabling law (the so-called 

Jobs  Act)  was  adopted  in  late  2014  (with  final  implementing  decrees  adopted  in  September 

2015), involving among other the simplification of contracts and labour law procedures and 

the  reduction  of  the  scope  for  reinstatement  following  unfair  dismissals.  The  Work  and 

Security  Act  passed  in  the  Netherlands  in  2014  introduces  a  cap  on  severance  payments  or 

damages  for  unfair  dismissal,  while  increasing  protection  for  temporary  workers.  A  broad 

labour  code reform was passed in  Croatia, leading  to  lower costs, simplified procedures  for 

individual  and  collective  dismissals,  easier  access  to  temporary  agency  work  and  more 

flexible  working  time  organisation.  Collective  dismissal  procedures  were  also  simplified  in 

Latvia.  In  Bulgaria  the  Labour  Code  was  amended  to  increase  working  time  flexibility  and 

regulate the possibility to sign daily labour contracts for short term seasonal agricultural work.  

Despite a high degree of segmentation, a number of countries facilitated the access to fixed-

term contracts (Czech Republic) or increased their duration or renewal possibilities (Croatia, 

Italy, Latvia and temporarily also in Portugal). A minority of countries reinforced regulations 

on fixed-term contracts (Poland), and more specifically on the use of temporary agency work 

(Slovenia,  France,  Denmark  and  Slovakia).  The  UK  introduced  a  fee  for  employment 

tribunals, to contain the number of cases brought to court.     

In  line  with  action  undertaken  in previous  years,  enhancing  the  effectiveness  of  public 

employment  services  continued  in  a  considerable  number  of  Member  States.  Denmark 

and Latvia improved jobseekers' profiling and targeting of job search assistance and services, 

while Poland and Slovakia put a greater focus on services to vulnerable groups. Sweden and 

Lithuania  improved  the  case  handling  of  young  people  and  school  drop  outs.  Enhanced 

cooperation between different actors, in some cases linked to conditional allocation of funds 

across  offices,  was  decided  in  Belgium,  the  Netherlands,  Spain  and  Slovakia.  As  well  as 

reorganisation  of  the  Public  Employment  Service  in  Ireland,  additional  employment  service 

39 

 
 
capacity, primarily focussed on the long-term unemployed, has been contracted from private 

sector providers under the JobPath Programme. 

Reform of social dialogue is ongoing in many Member States.  The reforms touch upon 

the functioning and effectiveness of social dialogue. They are mostly linked to collective 

bargaining but also have an impact on workers’ representation.  Germany, Slovakia and 

Portugal eased the criteria for the extension of sectorial collective agreements on wages, the 

latter thereby partly turning back the practice under the financial assistance programme. The 

unlimited validity of expired collective agreements was abolished in Croatia. In Portugal, the 

validity  of  expired  and  not  renewed  collective  agreements  was  reduced  in  2014  and  the 

possibility  of  a  negotiated  suspension  of  collective  agreements  in  firms  in  difficulties  was 

introduced.  The  Italian  social  partners  signed  an  inter-sectorial  agreement  that  clarifies  the 

criteria  for  the  measurement  of  the  representativeness  of  trade  unions  and  sets  the  pace  for 

broadening  the  scope  of  decentralised  collective  bargaining.  New  legislation  on  trade  union 

activity was passed in  Croatia in  2014. In  France the government in  2015 brought in  social 

dialogue  reform  to  modernise  employees’  representations  and  rationalise  employers’ 

obligations  for  informing  and  consulting  employees’  representatives.  Annual  collective 

bargaining  is  to  be  re-organised  around  prescribed  main  axes.  In  Germany  in  2015  the 

'Tarifeinheitsgesetz'  was  adopted,  an  act  that  ensures  that  in  case  there  are  overlapping  and 

conflicting  collective  agreements  in  a  company,  only  the  agreement  which  was  signed  with 

the  trade  union  with  most  members  (in  this  company)  shall  be  applicable.  In  the  United 

Kingdom a new 2015 Trade Union Bill holds reforms for trade unions and industrial action.    

The involvement of social partners in designing and implementing policies and reforms 

requires  further  monitoring.  In  the  majority  of  Member  States  there  is  some  form  of 

involvement  of  social  partners  in  preparing  the  National  Reform  Programmes.  The  quality 

and  depth  of  this  involvement  and  the  extent  to  which  social  partners  are  in  a  position  to 

influence the contents of the National Reform programmes (NRPs) varies significantly. Less 

Member  States  effectively  involve  social  partners  in  the  implementation  of  country-specific 

recommendations or related reforms and policies. 

2.4 

Ensuring fairness, combatting poverty and promoting equal opportunities 

Efforts  to  contain  or  reduce  poverty  and  increase  labour  market  participation  have 

included  major  overhauls  of  social  benefit  systems,  support  of  ALMPs,  and  targeted 

measures for those at higher risk of poverty. Some Member States increased the amount of 

40 

 
 
income  support  (Belgium,  Estonia,  Croatia,  Sweden,  Romania),  while  others  improved  the 

design of the measures by introducing tapering of  benefits (Malta, Latvia) or in-work benefits 

(Estonia). A number of Member States are introducing or strengthening activating measures 

as  part  of  their  policy  to  better  address  working-age  poverty  (Austria,  Bulgaria,  Germany, 

Denmark,  Netherlands).  Various  financial  and  non-financial  incentives  are  also  being 

introduced to facilitate a return to the labour market (Belgium, Finland, France, Latvia, Malta, 

Poland).  Reforms  of  the  social  assistance  and  unemployment  systems  are  planned  or  in 

progress in a number of countries (Belgium, Croatia, Greece, Ireland, Romania, Sweden). 

Belgium continues the reform of the unemployment benefit system to ensure an appropriate 

balance  between  benefits  and  effective  job  search  assistance  and  training  opportunities.  As 

part  of  its  reform  of  the  welfare  system,  Romania  is  set  to  introduce  a  minimum  social 

insertion  income,  combining  three  existing  means  tested  programmes,  better  targeting  the 

beneficiaries and reducing the administrative costs. Greece has launched a pilot programme to 

introduce a minimum income scheme in the country. Ireland continued efforts to reduce the 

prevalence  of  low  work  intensity  households  through  integrated  service  delivery  (one-stop-

shop) and linking benefit entitlements more closely with activation services.  

Growing  concerns  about  the  effects  of  increasing  numbers  of  children  affected  by 

poverty  have  seen  many  Member  States  step  up  investment  towards  children.  Income 

support  measures  for  families  with  children  were  strengthened  or  expanded  in  Bulgaria, 

Czech  Republic  Poland  and  Romania,  while  Belgium  and  Malta  introduced  supplements  to 

child benefits for children growing up in low-income families. Support for parents' access to 

the  labour market  and incentives  to  work  were  enhanced in  Hungary,  Malta  and  the  United 

Kingdom.  Investment  in  education,  and  specifically  in  early  childhood  education  and  care 

(ECEC), has been sustained in several Member States, reflecting a growing awareness of the 

fundamental  role  of  the  pre-school  years  in  shaping  children's  cognitive  and  social  skills. 

Finland  introduced  compulsory  pre-school  education  and  Croatia  introduced  one  year  of 

compulsory  pre-school  education  before  the  start  of  primary  education.  Austria  provided 

additional  public  funding  to  improve  education  outcomes  in  ECEC,  United  Kingdom 

introduced  15  hours  free  childcare  per  week  for  3  and  4  year  olds  and  measures  aimed  at 

young  disadvantaged  children.  Funding  was  also  increased  in  some  Member  States  for  the 

expansion  of  childcare  facilities  (Belgium,  Bulgaria,  Czech  Republic,  Germany,  Estonia, 

Poland,  United  Kingdom),  after  school  options  (Ireland),  or  all-day  school  places  (Austria). 

Bulgaria continued to improve the quality of alternative care and support to children growing 

41 

 
 
up  outside  of  their  family.  Finland  also  adopted  several  measures  to  strengthen  child 

protection in these situations.    

Recent  pension  reforms  have  helped  to  contain  the  long-term  increase  of  pension 
expenditure  in  most  Member  States32.  Their  impact  on  pension  adequacy  remains 
contingent on the ability of women and men to have longer and fuller careers33, which is 

not  uniform  across  professional  groups  and  genders.  The  great  majority  of  Member  States' 

reforms  have  focussed  on  raising  the  pensionable  age  and  on  restricting  early  retirement  if 

reforms are not always flanked by active ageing policies.  Some Member States have retained 

or  re-introduced  specific earlier  retirement conditions for persons with  lengthy careers or in 

arduous  jobs.  The  restriction  of  access  to  early retirement  is  presenting  governments  and/or 

social  partners  with  the  challenge  of  finding  alternative  solutions  to  late-career  problems  of 

age management and health in the workplace and the labour market.  

At present, the gender pension gap in the EU remains at 40%, reflecting the gender pay gap 

and  the  shorter  and  more  interrupted  average  careers  of  women.  The  overall  shift  towards 

more  earnings-related  pensions  means  that  pension  systems  will  not  be  equipped  to 

compensate  for  these  imbalances.  As  part  of  the  efforts  to  enable  women  attain  longer 

working lives, almost all Member States (except Romania) have equalised pensionable ages 

for women and men or adopted future reforms to that effect, although in some cases they will 

be fully completed as late as 2040ies. 

A  great  number  of  reforms  have  also  changed  the  indexation  of  pension  benefits  to  less 

generous  uprating  mechanisms.  The  impact  on  adequacy  will  depend  on  developments  in 

wages and prices. 

Health  systems  contribute  to  preserving  and  restoring  good  health  of  the  EU's 

population.  In  addition  to  collective  and  individual  welfare,  this  supports  economic 

prosperity through improving labour market participation, labour productivity and reducing 

absence from work.  Obviously, health systems have a cost: a large share of expenditure on 

health  systems  in  the  EU  is  borne  by  public  means,  hence  they  have  to  remain  fiscally 

sustainable.   

32 The 2015 Ageing Report, 
http://ec.europa.eu/economy_finance/publications/european_economy/2015/pdf/ee3_en.pdf  
33 The 2015 Pension Adequacy Report, http://ec.europa.eu/social/BlobServlet?docId=14529&langId=en 

42 

 
 
                                                            
 
There is a need to assess the performance of health care and long-term care systems and 

to  implement  sound  and  ambitious  reforms.    These  include  ensuring  a  sustainable 

financing  basis,  encouraging  the  provision  of  and  access  to  effective  primary  health  care 

services, thus reducing the unnecessary use of specialist and hospital care, ensuring the cost-

effective use of medicines, better public procurement, improving integration of care through 

up  to  date  information  channels  (such  as  e-health),  deploying  methodologies  to  assess  the 

relative  effectiveness  of  health  technologies  and  costs  of  care  for  decision-making  purposes 

and improving health promotion and disease prevention. 

Important  health  care  reforms  have  been  implemented  in  most  Member  States.  The 

numerous  structural  reforms  implemented  include  a  restructuring  of  primary  and  secondary 

care,  greater  care  coordination,  more  intensive  and  interoperable  use  of  ICT  and  e-Health 

solutions  (Bulgaria,  Czech  Republic,  Croatia,  Hungary,  Malta,  Poland,  Portugal,  Romania, 

Slovenia,  Slovakia  and  the  United  Kingdom),  a  shift  in  the  pharmaceutical  policies  toward 

price  regulation  and  generic  substitution,  as  well  as  the  introduction  of  financial  and  non-

financial incentives for both providers and users of health care services. In order to improve 

the  delivery  of  health  care  services,  several  Member  States  (Bulgaria,  the  Czech  Republic, 

Germany,  Croatia,  Ireland,  Poland,  Portugal,  Sweden,  and  the  United  Kingdom)  introduced 

policies aimed at optimising the use of treatments and the prescription patterns.  

The  ageing  of  the  health  workforce  coupled  with  challenges  to  recruit  or  to  retain  health 

workers  due  to  demanding  working  conditions  and  relatively  low  pay  in  some  health  care 

occupations are leading in many countries to health workforce shortages. To counteract this, 

some  Member  States  (Belgium,  the  Czech  Republic,  Germany,  Spain,  Croatia,  Ireland, 

Latvia,  Poland,  Sweden)  adopted  measures to  facilitate the  training  and upskilling  of  health 

care professionals and to offer wage increases and support in order to increase the appeal of 

the health care sector. 

Several Member States are in the process of adopting or implementing major reforms in 

the  area  of  long-term  care  with  the  aim  of  ensuring  a  more  efficient  use  of  existing 

resources.  Reform  measures  focus  on  further  developing  home  care  services  and 

strengthening care integration.  

Long-term  care  financing  arrangements  have  been  modified  in  a  number  of  Member  States 

(Austria,  Belgium,  Bulgaria,  Hungary,  Germany,  Luxembourg).  While  some  decided  to 

43 

 
 
increase public funding and to reduce private cost-sharing, others lowered existing eligibility 

thresholds for public support or introduced other measures for cost-containment.  

A  limited  number  of  Member  States  have  reported  measures  for  preventing  dependency 

which  were  mostly  related  to  better  prevention  and  early  diagnosis  of  dementia  (Austria, 

Bulgaria,  Ireland).  National  governments  put  a  stronger  emphasis  on  improving  service 

delivery  by  making  care  more  patient-centred,  by  promoting  the  transfer  from  institutional 

care  to  community-based  care,  by  developing  and  assuring  new  quality  standards  and  by 

increasing staff levels.  

Some  Member  States  (Belgium,  Czech  Republic,  Germany,  Finland)  improved  the  support 

provided to informal carers through new strategies, better opportunities for reconciling work 

and care responsibilities and through legal recognition of informal carers. 

Considerable  commitments  were  taken  to  improve  access  to  affordable  housing.  Some 

Member States adopted plans for construction of housing or social housing (Czech Republic, 

France,  Ireland,  Portugal,  Slovenia,  and  the  United  Kingdom).  Bulgaria  used  the  European 

Regional Development Fund to improve access to housing for people in vulnerable situations. 

Extending  schemes  to  help  first-home  buyers  were  reported  in  Hungary  and  a  mobility 

scheme  for  social  housing  tenants  in  the  United  Kingdom.  The  conditions  of  housing 

allowance, including eligibility criteria and thresholds were revised (Czech Republic, Finland) 

and  rent  controls/guarantees  were  put  into  place  for  social  purposes  (Belgium,  Czech 

Republic, France, Netherlands).  

Many  programmes  aimed  at  tackling  over-indebtedness  and  evictions,  such  as  the  debt 

detection business cases in the Netherlands and the pilot projects helping evicted families in 

Slovenia.  The  eligibility  threshold  for  insolvency  protection  was  lowered  in  Latvia,  while 

Cyprus  offered  subsidised  mortgage  interest  payments  for  vulnerable  households.  Targeted 

efforts  were  also  made  to  confront  energy  poverty  (Belgium)  and  integrate  social  housing 

service provisions (Ireland). 

Some  measures  aiming  at  facilitating  the  social  inclusion  of  people  at-risk,  such  as 

persons  with  disabilities,  Roma,  or  persons  from  a  migrant  background  have  been 

implemented  at  national  level.  Estonia  started  to  implement  a  Work  Ability  Reform  that 

introduced  a  qualitative  shift  from  evaluating  the  incapacity  to  work  to  focus  instead  on 

assessing an individual's ability to work and facilitate integration into the labour market and 

44 

 
 
social life. Similarly, the Netherlands adopted a Participation Pact to boost participation in the 

labour  market  of  people  with  disabilities,  and  unskilled  people,  both  in  the  private  and  the 

public sectors. 

Equal access to high quality and inclusive education is the first and most important step 

to  social  inclusion.  Trends  towards  inclusive  education  of  vulnerable  children  are  evident. 

Belgium  (Flanders)  developed  the  new  Act  “M-Decree”  that  provides  for  reasonable 

accommodation in mainstream education. The Czech Republic approved the Educational Act 

containing  5  degrees  of  supported  measures  to  improve  conditions  of  school  for  inclusive 

education. Denmark set a target of 96% of students of public schools in mainstream education 

in 2015 and established the Centre for Inclusive Education and Special Needs Education. 

Many  persons  with  disabilities  face  severe  forms  of  exclusion,  i.e.  live  in  institutions. 

However, trends towards transfer from institutions to community based care and independent 

living are evident in some countries and are being facilitated by the European Structural and 

Investment  Funds.  For  example  Finland  decreased  significantly  the  number  of  persons  with 

intellectual disabilities living in long-term institutional care and replaced this care mainly by 

24 hour services. The goal is to replace institutional care by individual housing and services 

by 2020  

Measures to promote the  integration of  Roma have been undertaken in some Member 

States.  In  January  2015  Romania  adopted  a  revised  National  Strategy  for  inclusion  of 

Romanian citizens belonging to the Roma minority for 2014-2020 while Lithuania adopted an 

Action  Plan  for  Roma  integration  into  the  Lithuanian  society  for  2015-2020.  In  2015  the 

Czech Republic adopted a strategy for Roma integration up to 2020. Other countries such as 

Hungary, Slovakia and Poland revised their national Strategies and Action Plans, in particular 

to fulfil the ex-ante conditionality related to ESF Investment Priority 9.2. 

In  Slovakia,  the  number  of  assistant  teachers  for  children  with  special  needs,  including 

children  from  socially  disadvantaged  environments,  has  been  significantly  increased  for  the 

school  year  2014-2015  and  a  further  increase  is  budgeted  for  2015.  A  proposal  for 

compulsory  enrolment in ECEC for children from socially disadvantaged environments was 

made for Roma communities, without concrete plans for its implementation at this stage.  

An  increasing  inflow  of  refugees  is  presenting  governments  and  society  at  large  with 

receiving  and  integrating  an  increasing  number  of  people,  with  some  Member  States 

45 

 
 
particularly  affected.  There  have  been  decisions  on  integration  packages  as  well  as 

dissuading  measures.  In  Austria  an  integration  package  focusses  on  language  support  and 

labour market integration, with most of the budget earmarked for labour market integration. 

The  Public  Employment  Services  started  pilots  to  improve  the  labour  market  prospects  for 

people entitled to asylum as of mid-2015. In Sweden the 2015-2018 introduction assignment 

which aims to favour a faster integration of newly arrived refugees and foreign born into the 

labour  market  has  been  augmented.  To  identify  skills  of  new  arrivals  at  an  early  stage  the 

Government  has  set  aside  funds  within  existing  frameworks  for  a  pilot  project  for  skills 

mapping  of  recently  arrived  migrants 

living 

in 

the  Swedish  Migration  Board’s 

accommodation  centres.  In  Germany,  the  Federal  Employment  Agency  and  the  Federal 

Agency of Migration and Refugees launched an ESF-funded pilot project to promote a quick 

integration of refugees into the labour market, with model employment agencies for refugees 

set  up  in  six  German  regions.  On  the  other  hand  measures  anticipated  to  have  a  dissuasive 

effect  such  as  the  replacement  of  cash  payments  by  benefits  in  kind  are  being  taken  and 

refugees  from  regions  identified  as  safe  are  subject  to  a  speeded-up  asylum  procedure.    In 

Denmark, dissuasive measures reduced special integration allowances below the existing cash 

benefits for participant in integration programs, the accrual principle for family benefits and 

child benefit for refugees was restored while a harmonization of eligibility rules for old age 

pension  also  no  longer  exempt  refugees  from  the  accrual  principle.  In  the  United  Kingdom 

new  restrictions  on  access  to  means-tested  benefits  have  been  introduced  discouraging 

migrants going to the UK without job prospects. These effectively prevent newcomers from 

claiming means-tested benefits under Universal Credit without having worked in the UK first. 

The new restrictions follow on from earlier limits on claims for Jobseeker’s Allowance, Child 

Benefit and Child Tax Credit.  

Member  States  must  ensure  that  asylum  seekers  have  effective  access  to  the  labour 

market  at  the  latest  within  9  months  from  the  date  when  they  apply  for  international 
protection34.    Some  Member  States  allow  asylum  seekers  to  integrate  in  the  labour  market 

earlier and some Member States are proposing to do so. As part of the EU migration agenda 

to help the Member States respond to the most  immediate needs of asylum seekers, such as 

for  housing,  supplies  and  services,  the  Commission  adopted  a  Communication  on  public 

34 See Directive 2013/33/EU of the European Parliament and of the Council of 26 June 2013 laying down 
standards for the reception of applicants for international protection. 

46 

 
 
                                                            
procurement  rules  for  refugee  support  measures.35  Concretely  and  immediately,  European 

Social Fund (ESF) investments can support vocational training, counselling, access to health 

and social services as well as campaigns to combat discrimination.  

A first assessment of the macroeconomic impact of the refugee influx shows that if the short-

term impact via higher public spending is relatively small, albeit more pronounced for some 

Member States, in the medium to long term, it has a positive effect on growth provided that 
labour market integration is successful36.  

35 Communication from the Commission to the European Parliament and the Council on public procurement 
rules in connection with the current asylum crisis, COM(2015)454 
36 European Economic Forecast Autumn 2015 

47 

 
 
                                                            
Annex 1 Scoreboard of key employment and social indicators with EU averages as reference points* 

48 

Y-Y change (S1.2014-S1.2015)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (S1.2014-S1.2015)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (2013-2014)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (2013-2014)Y-Y for MS to Y-Y for EUY-Y change (2012-2013)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (2012-2013)Distance to EU averageY-Y for MS to Y-Y for EUEU28 (weighted)-0.7~~-1.8~~-0.5~~0.7~0.1~~0.0~~EA19 (weighted)-0.5~~-1.4~~-0.3~~0.7~0.1~~0.1EU28 (unweighted)-0.8~~-2.5~~-0.5~~1.3~0.2~~0.0~~EA19 (unweighted)-0.80.80.0-2.40.80.1-0.4-0.30.11.30.00.30.10.10.00.00.0BE0.3-1.21.1-1.2-0.91.3-0.7-0.3-0.20.5-0.8-0.1*-2.2-0.3-0.2-1.0-0.2BG-2.00.1-1.2-2.8-0.3-0.3-1.47.9-0.9::-0.3*1.5*-0.5*0.51.80.5CZ-0.9-4.4-0.1-3.0-9.0-0.5-1.0-4.2-0.51.60.3-0.7-7.0-0.9-0.1*-1.4-0.1*DK-0.3-3.60.5-2.5-11.90.0-0.2-6.50.30.1-1.20.2*-1.5*0.0-0.2*-0.5-0.2*DE-0.3-5.10.5-0.7-15.41.80.1-5.90.61.50.20.3*1.30.1*0.3-0.20.3EE-1.4-3.7-0.6-6.3-12.1-3.80.4-0.60.92.00.7-0.4*1.7-0.60.1*0.70.1*IE-2.1-0.1-1.3-4.2-1.3-1.7-0.92.9-0.4::-1.4-1.6-1.6-0.2*-0.3-0.2*EL-1.515.6-0.7-3.728.3-1.2-1.36.8-0.8::0.3*8.50.1*0.01.80.0ES-2.113.0-1.3-4.027.1-1.5-1.54.8-1.00.6-0.70.04.8-0.2*-0.2*1.5-0.2*FR0.20.51.00.71.93.20.2-0.90.71.2-0.10.0-1.9-0.20.0-0.30.0HR-0.66.70.2-1.620.90.9-0.37.00.2::-0.3*2.2-0.5*-0.1*0.5-0.1*IT-0.22.50.6-0.919.61.6-0.19.80.4-0.3-1.60.2*3.20.00.2*0.90.2*CY-0.15.90.7-3.411.1-0.9-1.74.7-1.2::2.2-1.2*2.00.2*0.10.2*LV-1.3-0.1-0.5-4.5-7.1-2.0-1.0-0.3-0.54.93.6-0.5*3.2-0.7*-0.2*1.5-0.2*LT-1.8-0.5-1.0-2.6-4.8-0.1-1.2-2.4-0.72.41.11.1*3.40.9*0.81.30.8LU0.0-3.90.8-1.0-3.91.51.3-6.01.8::0.5*-0.6*0.3*0.5-0.20.5HU-0.8-2.70.0-2.4-3.80.1-1.91.3-1.42.81.50.7*-1.3*0.5*0.2*-0.60.2*MT-0.3-4.20.5-0.7-10.81.80.6-1.81.1::1.2-2.01.00.2-0.70.2NL-0.7-2.90.1-2.2-11.50.3-0.1-6.80.41.1-0.20.8-4.70.60.0-1.20.0AT0.1-4.20.9-0.6-12.61.90.4-4.60.90.5-0.8-0.4*-2.7-0.6*-0.1*-0.7-0.1*PL-1.8-2.2-1.0-3.7-1.5-1.2-0.2-0.30.3::0.2*1.10.00.00.10.0PT-1.63.1-0.8-4.29.5-1.7-1.80.0-1.30.2-1.11.52.81.30.2*1.20.2*RO0.0-3.00.8-1.90.20.60.04.70.5::0.55.90.3*0.3*1.80.3*SI-0.5-0.50.3-3.9-5.6-1.40.2-2.90.71.40.10.8-2.60.60.2-1.20.2SK-1.81.9-1.0-4.83.8-2.3-0.90.5-0.43.21.9-0.2*-3.5-0.4*-0.1*-1.2-0.1*FI0.8-0.61.62.50.05.00.9-2.11.4-0.9-2.2-1.1-4.3-1.3-0.1*-1.2-0.1SE-0.3-2.20.5-2.3-1.60.2-0.3-5.10.22.10.81.1-1.60.90.0-1.10.0UK-0.9-4.3-0.1-2.3-7.10.2-1.3-0.4-0.8-0.2-1.5-0.6-0.9*-0.8-0.4-0.2-0.4Unemployment rateYouth unemploymentReal growth in gross household disposable incomeAt-risk-of-poverty rate (18-64)Inequalities - S80/S20Youth URNEETs 
 
 
 
  
 
 
Source: Eurostat, EU LFS, National Accounts and EU-SILC (DG EMPL calculations)  

For each indicator (except for real growth in GHDI as it is represented as a monetary value) the three columns refer to i) year on year change in absolute 
terms; ii) the difference from the EU (or Euro Area) average rates in the same year iii) the year on year change for the country relative to the year on year 
change at the EU or EA levels (indicating whether the country's situation is deteriorating/improving faster than the rest of the EU/EA reflecting the dynamics 
of socio-economic divergence/convergence). S1 stands for 1st semester and is based on quarterly seasonally adjusted data.   

*indicates changes and difference to the EU that are not statistically significant, in further analysis in Chapter 2 they will be set to 0. 

49 

 
 
 
 
 
Annex 2 Scoreboard of key employment and social indicators with Eurozone averages as reference points  

50 

Y-Y change (S1.2014-S1.2015)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (S1.2014-S1.2015)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (2013-2014)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (2013-2014)Y-Y for MS to Y-Y for EAY-Y change (2012-2013)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (2012-2013)Distance to EA averageY-Y for MS to Y-Y for EAEU28 (weighted)-0.7~~-1.8~~-0.5~~0.7~0.1~~0.0~~EA19 (weighted)-0.5~~-1.4~~-0.3~~0.7~0.1~~0.1~~EU28 (unweighted)-0.8-0.80.0-2.5-0.8-0.1-0.50.3-0.11.30.00.2-0.1-0.10.00.00.0EA19 (unweighted)-0.8~~-2.4~~-0.4~~1.3~0.3~~0.0~~BE0.3-2.01.1-1.2-1.71.2-0.70.0-0.30.5-0.8-0.1*-2.3-0.4-0.2-1.0-0.2BG-2.0-0.7-1.2-2.8-1.1-0.4-1.48.2-1.0::-0.3*1.4*-0.6*0.51.80.5CZ-0.9-5.2-0.1-3.0-9.8-0.6-1.0-3.9-0.61.60.3-0.7-7.1-1.0-0.1*-1.4-0.1*DK-0.3-4.40.5-2.5-12.7-0.1-0.2-6.20.20.1-1.20.2*-1.6*-0.1*-0.2*-0.5-0.2*DE-0.3-5.90.5-0.7-16.21.70.1-5.60.51.50.20.3*1.20.00.3-0.20.3EE-1.4-4.5-0.6-6.3-12.9-3.90.4-0.30.82.00.7-0.4*1.6-0.70.1*0.70.1*IE-2.1-0.9-1.3-4.2-2.1-1.8-0.93.2-0.5::-1.4-1.7-1.7-0.2*-0.3-0.2*EL-1.514.8-0.7-3.727.5-1.3-1.37.1-0.9::0.3*8.40.00.01.80.0ES-2.112.2-1.3-4.026.3-1.6-1.55.1-1.10.6-0.70.04.7-0.3*-0.2*1.5-0.2*FR0.2-0.31.00.71.13.10.2-0.60.61.2-0.10.0-2.0-0.30.0-0.30.0HR-0.65.90.2-1.620.10.8-0.37.30.1::-0.3*2.1-0.6*-0.1*0.5-0.1*IT-0.21.70.6-0.918.81.5-0.110.10.3-0.3-1.60.2*3.1-0.1*0.2*0.90.2*CY-0.15.10.7-3.410.3-1.0-1.75.0-1.3::2.2-1.3*1.90.2*0.10.2*LV-1.3-0.9-0.5-4.5-7.9-2.1-1.00.0-0.64.93.6-0.5*3.1-0.8*-0.2*1.5-0.2*LT-1.8-1.3-1.0-2.6-5.6-0.2-1.2-2.1-0.82.41.11.1*3.30.8*0.81.30.8LU0.0-4.70.8-1.0-4.71.41.3-5.71.7::0.5*-0.7*0.2*0.5-0.20.5HU-0.8-3.50.0-2.4-4.60.0-1.91.6-1.52.81.50.7*-1.4*0.4*0.2*-0.60.2*MT-0.3-5.00.5-0.7-11.61.70.6-1.51.0::1.2-2.10.90.2-0.70.2NL-0.7-3.70.1-2.2-12.30.2-0.1-6.50.31.1-0.20.8-4.80.50.0-1.20.0AT0.1-5.00.9-0.6-13.41.80.4-4.30.80.5-0.8-0.4*-2.8-0.7*-0.1*-0.7-0.1*PL-1.8-3.0-1.0-3.7-2.3-1.3-0.20.00.2::0.2*1.0-0.1*0.00.10.0PT-1.62.3-0.8-4.28.7-1.8-1.80.3-1.40.2-1.11.52.71.20.2*1.20.2*RO0.0-3.80.8-1.9-0.60.50.05.00.4::0.55.80.2*0.3*1.80.3*SI-0.5-1.30.3-3.9-6.4-1.50.2-2.60.61.40.10.8-2.70.50.2-1.20.2SK-1.81.1-1.0-4.83.0-2.4-0.90.8-0.53.21.9-0.2*-3.6-0.5*-0.1*-1.2-0.1*FI0.8-1.41.62.5-0.84.90.9-1.81.3-0.9-2.2-1.1-4.4-1.4-0.1*-1.2-0.1SE-0.3-3.00.5-2.3-2.40.1-0.3-4.80.12.10.81.1-1.70.80.0-1.10.0UK-0.9-5.1-0.1-2.3-7.90.1-1.3-0.1-0.9-0.2-1.5-0.6-1.0*-0.9-0.4-0.2-0.4Unemployment rateYouth unemploymentReal growth in gross household disposable incomeAt-risk-of-poverty rate (18-64)Inequalities - S80/S20Youth URNEETs 
 
 
 
Annex 3 Scoreboard of key employment and social indicators with absolute values in three consecutive years 

Source: Eurostat, EU LFS, National Accounts and EU-SILC (DG EMPL calculations) 

51 

20132014S1.201520132014S1.2015201220132014201220132014201120122013201120122013EU28 (weighted)10.910.29.723.722.220.913.213.012.5-1.0-0.30.715.916.316.45.05.05.0EA19 (weighted)12.011.611.224.423.722.613.112.912.6-1.8-0.40.716.116.616.75.04.95.0EU28 (unweighted)11.210.59.926.424.522.612.812.812.3-1.50.11.315.215.415.64.84.84.8EA19 (unweighted)11.811.310.726.625.223.412.612.412.0-2.0-0.21.315.215.415.74.74.84.8BE8.48.58.723.723.221.712.312.712.00.6-0.60.512.913.513.43.94.03.8BG13.011.410.028.423.822.321.521.620.2-1.25.9:18.217.417.16.56.16.6CZ7.06.15.518.915.913.68.99.18.1-1.2-0.81.69.19.38.63.53.53.4DK7.06.66.313.012.610.76.66.05.8-0.4-1.30.113.113.914.14.44.54.3DE5.25.04.87.87.77.27.16.36.40.70.71.516.416.616.94.54.34.6EE8.67.46.218.715.010.512.211.311.70.26.22.018.017.717.35.35.45.5IE13.111.39.826.823.921.318.716.115.2-0.4-0.6:15.115.414.04.64.74.5EL27.526.525.558.352.450.920.220.419.1-7.4-8.3:20.023.824.16.06.66.6ES26.124.522.955.553.249.718.618.617.1-5.4-1.80.619.020.420.46.36.56.3FR10.310.310.424.924.224.512.511.211.4-0.8-0.11.213.513.713.74.64.54.5HR17.317.316.650.045.543.516.619.619.3-2.9-3.4:18.618.117.85.65.45.3IT12.112.712.440.042.742.221.022.222.1-5.3-0.6-0.318.518.618.85.65.55.7CY15.916.115.838.936.033.716.018.717.0-7.9-4.5:11.512.214.44.34.74.9LV11.910.89.823.219.615.514.913.012.01.65.54.920.219.318.86.56.56.3LT11.810.79.421.919.317.811.211.19.90.24.32.420.217.919.05.85.36.1LU5.96.06.016.922.318.75.95.06.3:::13.114.515.04.04.14.6HU10.27.77.226.620.418.814.815.513.6-3.31.42.813.613.614.33.94.04.2MT6.45.95.713.011.811.810.69.910.5:::13.112.413.64.03.94.1NL7.37.47.013.212.711.14.95.65.5-1.4-1.01.110.510.110.93.83.63.6AT5.45.65.79.710.310.06.87.37.71.9-1.80.513.113.312.94.14.24.1PL10.39.07.727.323.921.111.812.212.01.12.8:17.116.516.75.04.94.9PT16.414.113.038.134.732.113.914.112.3-5.3-1.00.216.216.918.45.75.86.0RO7.16.86.923.724.022.816.817.017.0-3.2::21.021.021.56.26.36.6SI10.19.79.421.620.217.09.39.29.4-3.8-1.91.411.712.213.03.53.43.6SK14.213.211.833.729.726.413.813.712.8-1.71.73.212.412.312.13.83.73.6FI8.28.79.319.920.522.68.69.310.20.10.4-0.912.812.411.33.73.73.6SE8.07.97.723.622.921.07.87.57.23.71.72.112.512.914.03.63.73.7UK7.66.15.620.716.915.513.913.211.92.6-0.7-0.214.115.314.75.35.04.6Unemployment rateYouth unemploymentAt-risk-of-poverty rate (18-64)Inequalities - S80/S20Youth URNEETsReal growth in gross household disposable income 
 
 
 
 
Annex 4: Summary of the reading of the scoreboard of key employment and social indicators  

52 

Unemployment rateYouth unemployment rateNEET rateGross Disposable Household IncomeAt-risk-of-poverty rateInequalityS80/S20Best performersOn averageBelgiumDenmarkAustriaHungaryMaltaUnited KingdomLatviaSloveniaSwedenIrelandPolandSloveniaBelgiumLithuaniaHungarySwedenRomaniaBulgariaLuxembourg LatviaUnited KingdomBelgiumFrancePolandSlovakiaCzech RepublicGermanyEstoniaSpainNetherlandFranceSloveniaBulgariaDenmark Germany Luxembourg PolandHungaryCroatiaFrancePolandGermanyCyprusIrelandAustriaBelgiumFranceSloveniaIrelandUnited KingdomBetter than averageEstoniaCzech RepublicDenmarkHungaryNetherlandsUnited KingdomLuxembourgMaltaRomaniaBulgariaIrelandLithuaniaPolandSlovakiaLatviaCzech RepublicNetherlandsUnited KingdomSlovakiaMaltaCzech RepublicLithuaniaSloveniaHungaryPortugalLithuaniaSwedenCzech Republic  SlovakiaFinlandNetherlandsSwedenSloveniaGermanyDenmarkGermanyAustriaEstoniaDenmarkNetherlandsSwedenGermanyLatviaHungarySlovakiaCzech Republic FinlandSlovakiaNetherlands 
 
   
  
Annex 5 Methodological note on the identification of trends and levels in the scoreboard  

In mid-2015 the European Commission and Member States discussed ways of improving the analysis, reading and interpretation of the scoreboard of key employment and 
social indicators in view of the next version of the JER and in particular, the issue of developing a methodology for assessing MS performance on the basis of the scoreboard 
It was agreed that the methodology to be applied should be able to provide, for each indicator, a measure of the relative standing of each MS, according to its indicator value 
(score),  within  the  distribution  of  the  indicator  values  (scores)  of  the  EU28.  The  methodology  is  to  be  applied  to  both  year-levels  (levels)  as  well  as  to  one-year  changes 
(changes) thus enabling a holistic assessment of MS performance.   

To  achieve  this  goal  a  commonly  used  and  straightforward  approach  can  be  applied.  This  involves    analysing,  for  each  indicator,  the  distribution  of  levels  and  changes, 
respectively, and detecting the observations (Member States scores) that significantly deviate from the common trend - that is, in statistical terms,  detecting the  “outliers” of 
the distribution of the scores of the EU28 for that indicator.  

In order for this approach to be applied, before proceeding with the analysis it is opportune to convert, for each indicator, the MS scores to standard scores (also known as z-
scores), which have the advantage of providing a way to equate different metrics, thus allowing the same metric to be applied for all the indicators.  

This is achieved by standardising raw values of both levels and changes, for each indicator, according to the formula: 

[                         (            )]
                   (            )

This approach enables expressing for each Member State its raw indicator value in terms of how many standard deviations it deviates from the average.  Then the performance 
of each  MS can be assessed and classified on the basis of the resulting z-scores against a set of pre-defined thresholds, which can be set as standard deviation multiples. It 
should be noted that a comparable methodology has been already agreed and used in the past in the context of the LIME Assessment Framework37.  

The most important issue within this approach is setting cut-off points. Given that no parametric assumption can be made about the distribution of the observed raw values for 
the employment indicators38, it is common to use a “rule of thumb” in selecting the thresholds. According to the analysis of the key indicators used in  the scoreboard, and 
considering that the lower the unemployment and NEET indicators the better the performance, the proposal is to consider39:   

37 European Commission (2008), “The LIME Assessment Framework (LAF): A methodological tool to compare, in the context of the Lisbon Strategy, the performance of EU 
Member States in terms of GDP and in terms of twenty policy areas affecting growth”, European Economy Occasional Papers n. 41/2008. 

53 

 
 
 
 
 
 
                     
 
 
                                                            
1.  Any score below -1 as a very good performance  
2.  Any score between -1 and -0.5 as a good performance 
3.  Any score between -0.5 and 0.5 as a neutral performance 
4.  Any score between 0.5 and 1 as a bad performance 
5.  Any score higher than 1 as a very bad performance40 

The present methodology suggested is to evaluate the performance for all indicators for each MS for both levels and changes. The outcome of this step will thus be, for each 
of the indicators, the evaluation of Member States scores for both levels and changes according to the five criteria, as shown in Table 1:  

Table 1: Suggestion for z-scores threshold values 

z-scores threshold values 

-1.0 

- 0.5 

0 

0.5 

1.0 

(lower than) 

(lower than) 

(between) 
Assessment 

(Higher than) 

(Higher than) 

Levels 

Very Low 

Low 

On average 

High 

Very High 

Changes 

Much lower 
than average 

Lower than 
average 

On average 

Higher than 
average 

Much higher 
than average 

38 Both normality and T-shaped distribution tests were carried out resulting in the rejection of any distributional hypothesis. 
39 Different cut-off points settings were discussed internally to the working group. This proposal reflects the outcomes of such process. 
40 In case of normality, chosen cut-off points roughly corresponds to 15 %, 30%, 50%, 70% and 85% of cumulative distribution. 

54 

 
 
  
  
 
 
 
 
  
 
 
 
                                                                                                                                                                                                                                                                                              
By combining the evaluation of levels and changes it is possible to classify the overall performance of a country according to each indicator within one of the following seven 
categories. The colour coding is reflected in Figures 3, 4, 5, 17 and 18. 

Best performers   

scoring less than -1.0 levels and less than 1.0 in changes 

Better than average 

On average / neutral 

Good but deteriorating 

scoring between -1.0 and -0.5 in levels and less than 1 in changes 
or  scoring  between  -0.5  and  0.5  in  levels  and  less  than  -1.0  in 
changes 
scoring between -0.5 and 0.5 in levels and between -1.0 and 1.0 in 
changes 
scoring  less  than  -0.5  in  levels  and  more  than  1  in  changes,  and 
presenting a change higher than zero41 

Weak but improving 

scoring more than 0.5 in levels and less than -1.0 in changes 

To watch 

scoring  between  0.5  and  1.0  in  levels  and  more  than  -1.0  in 
changes or scoring between  -0.5 and 0.5 in levels and more than 
1.0 in changes 

Critical situations 

scoring more than 1.0 in levels and more than -1.0 in changes 

Member  States  with  levels  much  better  than  the  EU  average  and 
with the situation improving or not deteriorating much faster than 
the EU average 
Member States with levels better than the EU average and with the 
situation  improving  or  not  deteriorating  much  faster  than  the  EU 
average 
Member  States  with  levels  on  average  and  with  the  situation  not 
improving nor deteriorating much faster than the EU average 
Member  States  with  levels  better  or  much  better  than  the  EU 
average  but  with  the  situation  deteriorating  much  faster  than  the 
EU average 
Member  States  with  levels  worse  or  much  worse  than  the  EU 
average but with the situation improving much faster than the EU 
average 
This  category  groups  two  different  cases:  i)  Member  States  with 
levels  worse  than  the  EU  average  and  with  the  situation 
deteriorating or not improving sufficiently fast; ii) Member States 
with  levels  in  line  with  the  EU  average  but  with  the  situation 
deteriorating much faster than the EU average 
Member  States  with  levels  much  worse  than  the  EU  average  and 
with the situation deteriorating or not improving sufficiently fast 

   As for the gross household disposable income (GHDI), which is only presented in changes, the following classification has been used (see Figure 14). 

Best performers   
Better than average 
On average / neutral 
To watch 
Critical situations 

scoring more than 1.0 in changes 
scoring between 1.0 and 0.5 in changes 
scoring between -0.5 and 0.5 in changes  
scoring between -0.5 and -1.0 in changes 
scoring less than -1.0 in changes 

Member States with changes much higher than the EU average  
Member States with changes higher than the EU average  
Member States with changes on average  
Member States with changes lower than the EU average  
Member States with changes much lower than the EU average  

41 The latter condition prevents a Member State presenting "low" or "very low" level to be flagged as "deteriorating" when showing a change "much higher than average", but 
still decreasing. 

55 

 
 
 
 
                                                            
Confidence intervals computation for social indicators and their application in the methodology 

EU-SILC is a sample survey, which means that only a small part of the population (the sample) is interviewed. From the results obtained on the sample, statistical theory 
allows then to estimate certain characteristics of the whole population with a margin of error that can be quantified. This means that when looking at indicators we should also 
look at the related accuracy measures; in the same way, when looking at a nominal change in the value of an indicator from one year to the next we should also take into 
account accuracy measures as it may occur that, given the inherent margin of statistical error, in reality there is no change in the value of that indicator.  

EU-SILC is a complex survey involving different sampling design in different countries. For this reason, "to the book" standard methods for calculating accuracy measures 
are not directly applicable. Eurostat, with the substantial methodological support of the Net-SILC2 network of experts, has chosen to apply a "linearization" approach coupled 
with the “ultimate cluster” method for variance estimation. The estimates generated are then used to assess whether year-to-year changes or differences in levels relative to the 
EU average are statistically significant or not.  

Cut-off points summary table 

Very low 

Low 

On average 

High 

Very high 

UR 

YUR 

NEET 

GHDI 

AROP (18-64) 

S80-S20 ratio 

Levels 

less than 4.9% 

less than 7.4% 

between 7.4% and 12.4% 

more than 12.4%  more than 14.9% 

Changes 

less than -1.6pp 

less than -1.2pp 

between -1.2pp and -0.4pp 

more than -0.4pp  more than 0.0 pp 

Levels 

less than 11.0% 

less than 16.8% 

between 16.8% and 28.5% 

more than 28.5%  more than 34.3% 

Changes 

less than -4.2pp 

less than -3.3pp 

between -3.3pp and -1.5pp 

more than -1.5pp  more than -0.6pp 

Levels 

less than 7.7% 

less than 10.0% 

between 10.0% and 14.5% 

more than 14.5%  more than 16.8% 

Changes 

less than -1.3pp 

less than -0.9pp 

between -0.9pp and -0.1pp 

more than -0.1pp  more than 0.4pp 

Changes 

less than -0.1% 

less than 0.6% 

between 0.6% and 2.0% 

more than 2.0% 

more than 2.7% 

Levels 

less than 12.2% 

less than 13.9% 

between 13.9% and 17.3% 

more than 17.3%  more than 19.0% 

Changes 

less than -0.6pp 

less than -0.2pp 

between -0.2pp and 0.6pp 

more than 0.6pp 

more than 1.0 pp 

Levels 

less than 3.8 

less than 4.3 

between 4.3% and 5.4 

more than 5.4 

more than 5.9 

Changes 

less than -0.2 

less than -0.1 

between -0.1 and 0.2 

more than 0.2 

more than 0.3 

56 

 
 
 
 
 
 
 
Annex 6 Summary overview of Key Employment Challenges and particularly good labour market outcomes according to the Employment 
Performance Monitor (C=challenge; G=good labour market outcome) – adopted in June 201542  

42 http://data.consilium.europa.eu/doc/document/ST-9307-2015-INIT/en/pdf 

57 

CountryLabour market participationLabour market functioning, combatting segmentationActive labour market policiesSocial securitywork-life balanceJob creationGender equalityskill supply and productivity, lifelong learningEducation and training systemswage setting mechanisms and labour cost developmentBECCCC/GCCCCCCBGCCCC/GCCCCCCZC/GCGCCGGDKC/GGC/GC/GC/GDEGCCCGCCC/GEEGGCC/GCCCC/GIECCC/GC/GC/GC/GELCCCCCCCESCC/GCCCC/GC/GCCGFRC/GCGCC/GCCHRCC/GCCCGC/GC/GITC/GCCC/GC/GCC/GCCCCYCCCGCCC/GC/GC/GLVC/GGCCCCC/GCLTC/GCCCCCGC/GC/GLUC/GCCGC/GCHUC/GCCC/GC/GCMTC/GGC/GCC/GGC/GCCNLC/GCC/GCATC/GGGC/GCC/GCC/GPLCCCCCCCC/GPTCCCGCCCROCC/GCC/GCCCCCCSICC/GCCGGGCGC/GSKCCCCCCCC/GFICCCGGGCSEC/GGGGCGC/GUKC/GGCCGCC/G 
 
 
 
                                                            
Annex 7: Summary overview of the ‘social trends to watch’ and Member States with statistically significant deterioration and improvement as  

identified by the Social Protection Committee 

58 

 
 
 
 
Note: The social trends to watch for 2012-2013, as adopted by the SPC on 23 February 2015 on the basis of the available data at that moment in 

time, identify deterioration in more than 1/3 of MSs and are highlighted in red in the table above (Source: Social Europe: Aiming for inclusive 

growth. Annual Report of the Social Protection Committee on the social situation in the European Union 2014) 

59 

2012-2013  MS with significant deteriorationMS with significant improvementAt risk of poverty or social exclusion rateDE, EL, MT, NL, PT, SI, SE, UKBE, BG, CZ, FR, HR, IT, LV, LT, PL, RO, FIAt-risk-of-poverty rate CY, EE, LT, LU, MT, NL, PT, SIBE, CZ, FR, FISevere material deprivation rate DK, DE, EL, CY, LU, NL, PT, UKBE, BG, EE, FR, HR, IT, LV, LT, PL, RO, FIShare of population (0-59) living in (quasi-)jobless housholdsDK, EL, ES, IT, CY, LU, NL, PT, SI, SE, UK EE, FR, HR, LV, RORelative median at-risk-of-poverty gap EL, IT, LT, LU, MT, AT, PT, RO, SI, SKCZ, EE, HR, CY, LV, UKPersistent at-risk-of-poverty rate EL, LT, ATIncome quantile ratio (S80/S20)BG, DE, LT, LU, HU, MT, SIBE, UKChildren at risk of poverty or social exclusionEL, LT, PT, SI, UKBE, CZ, FR, HR, IT, LV, RO, FIAROP for the population living in (quasi-)jobless householdsEE, FR, IT, CY, LU, PTDE, FI, UKIn-work at-risk-of-poverty rate DE, CY, LT, LU, HU, MT, PT, SIBE, CZ, DK, EE, EL, RO, UKLong-term unemployment rate EL, ES, IT, CY, PTEE, IE, LV, LTEarly school leavers SKBE, DK, IE, EL, ES, FR, CY, LU, PT, UKYouth unemployment ratio (15-24) BE, HR, CY, NLDK, EE, IE, LV, LUNEET (18-24) BE, HR, IT, CY, NLDE, IE, FR, LV, LU, MTEmployment rate for older workers (55-64) CYBE, BG, CZ, DE, EE, IE, FR, HR, IT, LV, LT, HU, MT, NL, AT, PL, UKAt risk of poverty or social exclusion rate for the elderly (65+) EE, LV, LU, UKBE, BG, DK, FR, IT, CY, LT, HU, MT, PL, PT, RO, SK, FI, SEMedian relative income ratio of elderly peopleCY, HU, SKAggregate replacement ratio BGEL, IT, LT, HU, MT, SK, UKSelf-reported unmet need for medical care EL, IT, LVHousing cost overburden rate CZ, EL, HR, IT, LU, NL, SI, FI, UKBE, EE, FR, HU, ROReal change in gross household disposable incomeBE, CZ, DK, EL, IT, NL, AT, PT, SI, FI, UKDE, ES, LV, LT, HU, SK