DRAFT JOINT EMPLOYMENT REPORT FROM THE COMMISSION AND THE COUNCIL accompanying the Communication from the Commission on the Annual Growth Survey 2017
Date: 2016-11-16
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: EU Member State, equal pay, household income, job creation, labour market, marginalisation, poverty, social change, social situation, unemployment

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 16.11.2016  COM(2016) 729 final   DRAFT JOINT EMPLOYMENT REPORT  FROM THE COMMISSION AND THE COUNCIL   accompanying the Communication from the Commission  on the Annual Growth Survey 2017  
 
 
DRAFT JOINT EMPLOYMENT REPORT  

FROM THE COMMISSION AND THE COUNCIL  

accompanying the Communication from the Commission  

on the Annual Growth Survey 2017 

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 2017 indicates the following:  

The  employment  and  social  situation  is  improving  in  a  context  of  moderate  economic 

recovery.  As  a  result  the  75%  employment  rate  target  of  the  Europe  2020  strategy  may  be 

reached by 2020 provided the current trend continues. The employment rate in the age group 

20-64  is  for  the first  time  above  that  observed in  2008,  at 71.1%  (second  quarter of  2016). 

However,  poverty  remains  high  and  employment  and  social  outcomes  vary  significantly 

across countries.  

Most  labour  market  indicators  saw  an  improvement  in  2015  and  2016.  The  unemployment 

rate  kept  falling  and  stood  in  September  2016  at  8.5%  (10%  in  the  euro  area).  Youth 

unemployment  and  long-term  unemployment  also  continued  to  decline,  but  remain  high  in 

several  Member  States.  Activity  rates  are  increasing,  and  the  EU  created  more  than  four 

million jobs throughout 2015 and the first half of 2016. The employment rate of women in the 

EU in 2015 was still significantly below that of men, but the gap has been closing since 2008. 

Convergence  in  labour  market  conditions  gradually  continues  although  wide  differences 

between Member States persist. 

Household incomes in the EU rose in 2015, mostly through increases in labour income and a 

decrease in taxes and contributions. However, gross household income in the euro area has 

not  yet fully  recovered and  remains  slightly  below  levels  reached  in  2009.  The  number  and 

proportion of people at-risk-of poverty or social exclusion has started to decrease but is still 

high. The risk of poverty or social exclusion rate in the EU has now returned to its 2008 level 

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of 23.7%. Though recent improvements are welcome, a concerted effort is needed towards the 

target  of  lifting  at  least  20  million  people  from  poverty  or  social  exclusion  by  2020,  as  the 

number of people at risk of poverty or social exclusion in 2015 remains higher than in 2008. 

Overall  income  inequality  stabilised  on  a  high  level  in  historic  terms,  with  important 

divergences  across  the  EU,  as  shown  by  the  scoreboard  of  key  employment  and  social 

indicators. 

High inequality levels reduce the output of the economy and the potential for sustainable 

growth. Large and persistent inequalities do not only raise concerns in terms of fairness as 

they usually reflect a high risk of poverty and social exclusion but also in economic terms, as 

they lead to an under-utilisation of human capital. Inter-generational transmission of poverty 

compounds  these  negative  impacts.  The  design  of  education,  labour  market  and  social 

security institutions in some Member States does not adequately support their function as an 

investment  in  human  capital,  promoting  fairness  of  outcome;  thus  it  does  not  remedy  the 

unequal  opportunities  and  in  turn  contributes  to  persistent  and  ever  higher  income 

inequalities.  To  tackle  inequalities,  Member  States  can  take  action  in  different  areas, 

including  tax  and  benefits  systems,  wage  setting  policies  (including  the  minimum  wage), 

education and skills, and healthcare systems. 

Reforms  promoting  resilient  and  inclusive  labour  markets  must  continue,  stimulating  job 

creation and labour market participation while properly combining flexibility and adequate 

security.  Member  States  linking flexibility  in  working  arrangements  with  effective  active 

labour market policies and adequate social protection weathered the crisis more successfully. 

Many  Member  States  have  implemented  important  reform  agendas  in  recent  years,  with 

positive  effects  on  job  creation.  Still,  more  efforts  are  needed  to  promote  the  creation  of 

quality jobs and increase the inclusiveness of labour markets, by removing barriers to labour 

market  participation,  tackling  labour  market  segmentation  and  ensuring  that  social 

protection  systems  provide  adequate  income  support  and  enabling  services  to  all  while 

encouraging transitions into employment and making work pay. This would also help address 

rising levels of in-work poverty in some Member States. 

Tax  systems  should  better  support  job  creation  and  address  inequalities.  A  number  of 

Member States took steps to reduce the tax wedge, mostly targeting low income workers. They 

aimed  at  promoting  both  labour  demand  –  by  supporting  companies  (re)hire  –  and  labour 

supply – by reducing disincentives to take up jobs and increase take-home pay, especially for 

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disadvantaged  groups.  Even  so,  the  overall  tax  wedge  on  labour  remains  high  in  a 

considerable  number  of  Member  States.  In  addition,  in  some  Member  States  tax  systems 

continue to provide strong disincentives for second earners to work or to work more hours. 

Lower and well-designed taxation on labour could help stimulate employment growth, and in 

turn mitigate inequalities. 

Nominal  wages  have  increased  only  moderately  in  a  low  inflation  environment,  while 

several  Member  States  have  reformed  their  wage  setting  frameworks  in  cooperation  with 

social  partners.  Wage  developments  have  in  most  Member  States  been  aligned  with  labour 

productivity,  including  wage  increases  where  the  economic  context  provided  space.  Such 

alignment is necessary, over the medium run, to stimulate productivity gains and support of 

aggregate demand and growth. A small number of Member States have reformed their wage 

setting  frameworks  to  reinforce  the  role  of  social  partners  at  different  levels  of  bargaining. 

Action  was  also  taken  to  make  minimum  wage  setting  frameworks  more  transparent  and/or 

predictable. Wage-setting systems should further pursue coordination among different levels 

of  collective  bargaining,  while  allowing  a  certain  degree  of  flexibility  geographically  and 

across and within sectors.  

The involvement of social partners in the design and implementation of reforms is uneven 

across the EU. Though all Member States have bipartite or tripartite bodies to allow for the 

interaction  of  social  partners  and  their  consultation  in  the  design  and  implementation  of 

policies,  their  actual  involvement  varies  significantly.  Yet,  effective  social  dialogue,  in  line 

with national practices and conditions, is crucial to ensure fair and efficient reforms, increase 

their ownership and carefully assess their impact on different groups of the population. A few 

Member States took action in 2015 and 2016 to strengthen social dialogue and improve the 

involvement of social partners in employment and social policies.   

Member  States  have  continued  to  modernise  their  education  and  training  systems  to 

improve  the    skills  needed  to  adapt  to  labour  market  needs.  However,  inequalities  in 

educational uptake and outcomes are remaining. Reforms aimed inter alia at promoting the 

acquisition  of  basic  skills,  at  fostering  adult  learning  and  improving  the  labour  market 

relevance of tertiary education. In line with the New Skills Agenda for Europe, reform should 

focus on sustained investment in skills acquisition among youth and adults, better alignment 

of  skills  with  labour  market  needs  including  closer  business-education  partnerships  and  by 

tapping into the potential of apprenticeships. 

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Youth unemployment and the numbers of those not in employment, education or training 

(NEET)  continue  to  decline,  though  they  remain  very  high  in  some  Member  States.  The 

Youth  Guarantee  has  been  a  key  driver  of  improvement,  promoting  effective  action  by 

Member  States,  improving  coordination  among  different  actors  and  facilitating  structural 

reform  and  innovation  in  policy  design.  More  than  40%  of  all  NEETs  aged  15-24  were 

enrolled  in  the  Youth  Guarantee  in  2015.  In  several  Member  States,  the  Youth  Employment 

Initiative (YEI), targeting the EU regions that faced the highest youth unemployment  rates in 

2012,  played  a  key  role.  Despite  this  welcome  progress,  continuing  structural  reforms  and 

upscaling  measures  will  be  necessary  to  ensure  that  all  young  people-  and  especially  low-

skilled young people and those facing multiple barriers to entering the labour market- benefit 

from the Youth Guarantee.  

Tackling  long-term  unemployment  remains  a  priority.  Though  decreasing  in  2015  as  a 

percentage of the active population, long-term unemployment still accounts for almost 50% of 

total  unemployment,  and  remains  very  high  in  some  Member  States.  Increasing  duration  of 

unemployment  implies  depreciation  of  skills,  lower  attachment  to  the  labour  market  and 

ultimately  higher  risk  of  social  exclusion.  Moreover,  it  risks  turning  cyclical  unemployment 

into  structural,  with  negative  consequence  on  potential  growth.  Several  Member  States  are 

reinforcing  support  for  the  long-term  unemployed  through  individualised  support  and 

improved  coordination  between  employment  services  and  other  actors,  in  line  with  the 

Council  Recommendation  of  February  2016.  Still,  the  take-up  of  these  measures  is  uneven 

across Member States. 

Women continue to be underrepresented in the labour market and face an important pay 

differential.  They  outperform  men  in  terms  of  educational  attainment.  However,  the 

employment gap between women and men remains wide, in particular for mothers and women 

with  caring  responsibilities.  This  is  compounded  by  financial  disincentives  faced  by  women 

when entering the labour market or wanting to work more. A significant pay gap is observed 

in  several  Member  States.  Combined  with  shorter  careers,  this  often  translates  into  lower 

pensions  for  women.  This  indicates  that  a  comprehensive  integration  of  work-life  balance 

considerations into policy making is needed. Access to affordable and quality childcare and 

other  care  services,  leave  and  flexible  working  time  arrangements,  and  tax  and  benefit 

systems free of disincentives for second earners to work or to work more is of key importance 

in  order  to  move  towards  a  full  equal  treatment  of  women  and  support  upward  social 

mobility.  

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Efforts  have  continued  to  modernise  social  protection  systems  to  improve  coverage  and 

adequacy of benefits, access, quality and responsiveness of services and actively encourage 

labour  market  participation.  A  number  of  Member  States  have  put  in  place  policy  reforms 

aimed at improving the coverage and adequacy of social benefits while promoting activation. 

Measures are directed to a variety of groups, including low income earners, the unemployed, 

people  with  disabilities,  homeless  and  people  with  care  responsibilities.  Despite  reform 

progress,  high  levels  of  (child)  poverty  in  some  Member  States  remain  points  of  concern. 

Adequate  safety  nets  should  be  made  available  to  those  who  lack  sufficient  resources  for  a 

decent  standard  of  living,  including  support  for  labour  market  (re)integration  of  those  in 

working age.  

After a wave of reforms focusing on higher retirement ages, recent pension reforms present 

a  more  diverse  picture,  including  measures  to  safeguard  pension  adequacy  through 

minimum guarantees and indexation. While some Member States focused on improving the 

sustainability of their pension systems, for instance by increasing retirement age and limiting 

access to early retirement, some others focused on the protection of low-income pensioners, 

either by rising minimum pensions or through targeted additional benefits. Pension systems 

should ensure adequate standards of living, while preserving sustainability. To this aim, men 

and  women  should  be  encouraged  to  remain  longer  in  employment,  also  through  the 

availability  of  appropriate  work-life  balance  policies  and  the  modernisation  of  working 

environments. Supplementary pensions can play a key role, in particular where the adequacy 

of public pensions is expected to deteriorate. 

Health systems contribute to individual and collective welfare and economic prosperity. In a 

number  of  Member  States  healthcare  reforms  have  been  implemented  to  encourage  the 

provision of and access to effective primary health care services, to streamline and increase 

the  sustainability  of  specialist  and  hospital  care,  and  to  improve  the  access  to  affordable 

medicines used in a cost-effective way. Some Member States are also taking steps to improve 

the efficiency and quality of long-term care services. This would reduce obstacles to labour 

market participation for family carers, especially women.  

In  recent  years,  the  EU  has  experienced  an  unprecedented  influx  of  migrants  including 

refugees, with almost 1.8 million asylum applications filed in 2015 and the first half of 2016. 

This  underlines  the  importance  of  comprehensive  integration  strategies  in  order  to  ensure 

that refugees can be effectively integrated into the labour market and society more generally. 

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Several  Member  States  have  introduced  integration  packages  in  order  to  ensure  early 

intervention to those newly-arrived, including access to the labour market, skills assessment 
and training. In line with the Action Plan on the integration of third-country nationals1 that 

the Commission presented in June 2016, it is important that integration policies do not only 

focus  on  immediate  needs  but  also  aim  at  securing  successful  integration  in  the  medium  to 

long run as an integral part of Member States’ social inclusion strategies.  

1 COM(2016) 377 final. 

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1. 

OVERVIEW  OF  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 starts with a detailed analytical account of major employment and social 

areas,  which  is  followed  by  the  general  findings  deriving  from  the  scoreboard  of  key 

employment and social indicators.  

1.1 

Labour market trends  

The recovery in the labour market strengthened over 2015 and 2016, with a significant 

improvement  in  most  indicators.  The  employment  rate  (20-64  years  old)  increased  in  the 

EU by 0.9 percentage points (pps) in 2015 and kept rising up to 71.1% in the second quarter 

of 2016. This level is not only 1.5 pps higher than in Q2-2015 but also exceeds the pre-crisis 

level of 70.3% (yearly) in 2008. A comparable increase was recorded in the employment rate 

of the euro area, which attained nearly 70% in Q2-2016 (close to 70.2% registered on average 

in 2008). In absolute values, almost 4.2 million more people were in employment in Q2-2016 

compared  to  Q4-2014,  including  2.8  million  more  in  the  euro  area.  At  the  same  time,  the 

activity  rate  (15-64)  rose  moderately,  up  to  73%,  in  the  EU  while  the  unemployment  rate 

(15+) dropped to 8.6%, the lowest rate recorded since Q1-2009 (in the euro area, the activity 
and unemployment rates stood respectively at  72.9% and 10.1%2). Stronger labour demand, 

with  a  job  vacancy  rate  increasing  from  1.3%  in  2013  to  1.8%  in  the  first  two  quarters  of 

2016,  played  an  important  role.    Against  this  backdrop,  average  wage  growth  accelerated 

slightly in the EU in 2015, while it remained moderate in the euro area (see Section 2.1). 

Labour  market  disparities  across  Member  States  and  the  euro  area  continued  to  fall 

from  very  high  levels,  with  unemployment  rates  moving  closer  to  pre-crisis  levels. 

Continuing convergence in unemployment rates reflects stronger-than-average decreases in a 

number  of  Member  States  characterised  by  high  unemployment  rates  (in  particular  Cyprus, 

Croatia and Spain). By contrast, slight increases in the unemployement rate were recorded in 

Austria  and  Estonia,  though  starting  from  relatively  low  levels.  In  2015,  net  inflows  of 

population  were  the  strongest  in  countries  with  the  lowest  unemployment  rates  in  2014 

2 In September 2016, the monthly unemployment rate stood at 8.5% in the EU and 10% in the euro area. 

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(notably Austria, Germany and Luxembourg); some of the highest net outflows happened in 

countries with the highest unemployment rates. However, despite the observed convergence, 

significant differences persist in terms of unemployment rates (Figure 1), with values ranging 

from 5% or less in Czech Republic, Germany, Malta and the United Kingdom to more  than 

20% in Spain and Greece in the first half of 2016.  

Figure 1: Unemployment rate and yearly change, as reported in the scoreboard of key 
employment and social indicators  

Source: Eurostat, LFS (DG EMPL calculations). Period: 1st half 2016 levels and yearly changes with respect to 
1st half 2015. Note: Axes are centred on the unweighted EU average. The legend is presented in the Annex. 

Employment  growth  dynamics  have  been  different  across  age  groups  and  education 

levels.  As shown in  Figure  2, the largest increase  in  employment figures, by 3.8%  in  2015, 

was recorded among elderly workers (aged 55-64), whose activity rate increased by 1.4 pps to 

reach  57.3% in  2015. This  translated into a further increase in  the employment rate for this 

group,  to  53.3%  in  2015,  adding  to  the  steady  growth  experienced  in  the  last  decade. 

Conversely, employment growth was moderate among young (15-24) and prime age (25-54) 

workers. The activity rate of the latter has been almost stable for the fourth year in a row, at 

85.4%,  and  seems  therefore  to  have  reached  a  ceiling.  However,  evolutions  differed 

substantially  depending  on  skills  levels:  employment  growth  was  robust  for  high-skilled 

workers (with tertiary education), with an increase by 3.3% year-on-year, whereas low-skilled 

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workers  (with  lower  secondary  education  or  below)  experienced  a  decrease  of  1.4%  since 

2014.  This  confirms  a  trend  of  shrinking  employment  opportunities  for  the  low-skilled,  for 

whom the employment rate is still lower than in 2008. Employment growth was comparable 

across  genders;  both  male  and  female  employment  rates  slightly  increased  over  2015.  The 

large gap between female (64.3%) and male (75.9%) employment rates, which had decreased 

between 2008 and 2013, thus has remaind almost unaffected. Similarly, data (Figure 3) do not 

show any significant discrepancy in terms of full-time versus part-time employment growth.  

Figure 2: Employment rates and employment growth across different groups in the EU 

Source: Eurostat, LFS. 

The  employment  recovery  reflects  an  increase  in  the  number  of  employees,  and  the 

share  of  temporary  employees  remains  stable.  The  number  of  self-employed  workers 

declined marginally (by 0.4%), though this figure hides significant differences across Member 

States  (see  Section  2.1).  The  number  of  temporary  employees  increased  by  3%,  while 

permanent employees increased by 1.2%. This translated into a marginal increase in the share 

of temporary employees over total employees (to 14.2% in 2015), again with wide differences 

across  Member  States  (see  Section  2.3).  Most  job  creation  occurred  in  services  (+1.4%), 

followed  by  industry  (+0.7%),  while  jobs  in  agriculture  continued  to  fall  (-2.6%),  also 

explaining part of the decline of self-employment. The decline of employment in construction 

came to a halt in 2015, for the first time since 2008. 

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Figure 3: Employment growth (2014-15) across different groups in the EU 

Source: Eurostat, LFS 

Youth  and  long-term  unemployment  continued  to  decrease  in  2015,  following  the 

reduction in the overall unemployment rate. The youth unemployment rate (15-24), which 

peaked at 23.7% in the EU in 2013, dropped to 20.3% in 2015. This trend persisted in 2016 as 

the rate further declined to 18.9% in the first half of the year. However, it is higher in the EA-

19  (21.4%  in  the  first  half  of  2016)  and  there  remain  significant  disparities  across  Member 

States. The long-term unemployment rate (as a share of the active population) also declined to 

4.5% in 2015 from 5% in 2014 (and further decreased in the first half of 2016), but the slow 

reabsorption of long-term unemployment in some Member States, namely those most affected 

by the crisis, points to the risk that high unemployment turns structural.   

1.2 

Social trends  

The  financial  situation  of  EU  households  continued  to  improve  in  2015.  Real  Gross 

Disposable Household Income (GDHI) in the EU rose by around 2% in 2015, continuing to 

recover  from  the  income  losses  recorded  during  2010-2013.  This  improvement  mainly 

resulted from increases in labour income and a decrease in taxes and contributions (see Figure 

4).  

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Figure 4: GDP and GDHI growth and change in GDHI components in the EU 

Source: Eurostat, LFS 

Still, looking at the most recent EU data, this upward trend is not  reflected in poverty 
figures.3  The  share  of  the  EU  population  at  risk  of  poverty  (AROP)  stabilised  in  2015, 

increasing by 0.1 pps to 17.3% (in both EU and the euro area). This development follows an 

increase by 0.5 pps in 2014 (0.4 pps in the euro area) which was partly a consequence of the 

upward shift in the poverty thresholds, as household incomes started to recover in mid-2013. 

Similarly,  the  overall  share  of  working  poor  increased  by  0.5  pps  in  2014,  along  with  a 

growing  share  of  temporary  workers  (whose  income  is  usually  lower  than  permanent 

employees), and remained stable in 2015. 

The  percentage  of  people  at  risk  of  poverty  or  social  exclusion  in  the  EU  decreased 

further  in  2015  but  remains  very  high.  The  at-risk-of-poverty-or-social-exclusion  rate 

(AROPE) in the EU continued to decrease in 2015 to 23.7% (down from 24.4% in 2014 and 

24.6% in 2013), but remains close to its historical peak of 2012. It also decreased in the euro 

area, from 23.5% in 2014 to 23.1% in 2015 (back to 2013 levels). In 2015, around 119 million 

people were at risk of poverty or social exclusion, around 3.5 million people less than 2014. 

Even if the EU is still far from achieving its Europe 2020 target of lifting at least 20 million 

3 At the moment of writing (October 2016) estimated average figures for 2015 are available from Eurostat. An 
update will be provided in the revised version of the document, following discussion with Member States in the 
Employment Committee. 

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people from poverty or social exclusion by 2020, the number of people at risk of poverty or 

social exclusion is now again approaching the level of 2008, the reference year for which the 

Europe 2020 target was set: in 2015, there were around 1.2 million more people living at risk 
of poverty or social exclusion compared to 20084, 4.8 million fewer than in 2012 at the peak. 

The decrease of severe material deprivation points to improving living standards. Severe 

material  deprivation  decreased  by  0.8  pps  in  2015  to  reach 8.1%,  or  9.1  million  people less 

than at the peak in 2012. This trend, observed since 2013, is related to the above-mentioned 

improvement  in  the  financial  situation  of  households  linked  to  the  economic  recovery.  The 

share  of  people  living  in  (quasi)  jobless  households  (i.e.  the  population  aged  0-59  living  in 

households  with  very  low  work  intensity)  decreased  slightly  in  2015  to  10.5%,  driven  by 

improving labour market conditions, after a slight increase in 2014. 

Figure 5: At-risk-of-poverty-and-social-exclusion rate and its components in the EU27   

Source: Eurostat, EU-SILC (ilc_peps01, ilc_li02, ilc_mddd11, ilc_lvhl11). HR is excluded as data are not 
available for 2009. Note: AROPE combines AROP, SMD and households with zero or low work intensity 
(JLH). The dotted line corresponds to the estimated decrease necessary to attain the Europe 2020 target. 

Young  people,  children,  the  unemployed  and  third-country  nationals  are  among  those 

most  affected.  Almost  one  third  (31.2%)  of  young  people  (aged  18-24)  were  at  risk  of 

poverty  or  social  exclusion  in  2015.  This  is  mainly  due  to  unemployment,  precarious  work 

situations or the difficult socio-economic situation of the families of young people. Being in a 
single  earner  household  is  associated  with  higher  poverty  risk5.  The  AROPE  for  children 

(aged 0-17) decreased to 26.9% (from 27.8%) but remains high, owing to the labour market 

4 The average number of people at risk of poverty or social exclusion in the EU in 2008 is based on an estimation 
by Eurostat, as figures for Croatia are only available from 2010 on.  
5 See upcoming 2016 Employment and Social Developments in Europe Review, Chapter 2. 

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status  of  their  parents,  particularly  when  coupled  with  limited  access  to  social  services  and 

low income support. Elderly people (65+) have been relatively less affected and their risk of 

poverty or social exclusion has declined from 18.3% in 2013 to 17.4% in 2015, with women 

poorer than men (19.6% for women vs. 14.6% for men). Other groups affected by poverty and 

social  exclusion  are  the  unemployed  (66.6%)  third-country  nationals  (48.2%)  and  persons 

with disabilities (30.1% in 2014). 

Income inequality as measured by the income quintile share ratio has stabilised in 2015 

at a high level. The income quintile share ratio (or S80/S20 indicator, i.e. the ratio between 

the  incomes  of  the  20%  of  the  population  with  the  highest  incomes  and  the  incomes  of  the 

20%  with  lowest  incomes)  remained  stable  at  5.2  in  2015,  following  the  upward  trend  of 
recent years, especially in the euro area (Figure 6). The Gini coefficient also remained stable6, 

at 0.31 in 2015. Still, significant differences in levels and trends remain across Member States 
(see Section 2.4). Rising income inequalities, a common trend across developed economies7, 

do not only represent a concern in terms of fair distributional outcomes for the population but 

also a risk for long-term growth. 

Figure 6: S80/S20 income quintile share ratio 

Source: Eurostat. Data for HR not available before 2010.  

6 The Gini coefficient is an indicator with value between 0 and 1. Lower values indicate higher equality. In other 
words a value equal to 0 indicates everybody has the same income, a value equal to 1 indicates that one person 
has all the income.Note: To take into account the impact of differences in household size and composition, the 
total disposable household income is "equivalised".  
7 See OECD (2015). In it together – Why less inequality benefits all. Paris: OECD. 

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1.3 

General findings from the scoreboard of key employment and social indicators 

The  scoreboard  of  key  employment  and  social  indicators,  now  in  its  fourth  edition, 

allows  for  early  detection  of  key  employment  and  social  problems  and  possible 

divergences  across  Member  States  that  may  warrant  further  analysis.  The  scoreboard  (see 

annex 1 to 3) consists of six key indicators of employment and social trends: 

•  Unemployment rate (15-74); 

•  Youth unemployment rate (15-24);  

•  Young people neither in employment nor in education and training (NEET) as a 

share of the population aged 15-24; 

•  Gross disposable household income (GDHI, yearly change); 

•  At-risk-of-poverty rate in working age (18-64); 

• 

Income inequalities (the S80/S20 ratio). 

It also supports the identification of areas where policy response is most needed. As such it 

represents an important tool to monitor the impact of reforms under the European Semester. It 

helps underpin the challenges identified in the Country Reports and supports the drafting of 

Country  Specific  Recommendations.  The  results  of  the  scoreboard  should  be  read  in 

conjunction  with  the  analytical  findings  of  other  instruments  such  as  the  Employment 
Performance  Monitor  (EPM),  the  Social  Protection  Performance  Monitor  (SPPM)8  and  the 

scoreboard  of  the  Macroeconomic  Imbalances  Procedure  (MIP),  with  its  recently  added 
employment  headline  indicators9.  On  a  similar  note,  the  Five  Presidents'  Report  on 

Completing  Europe's  Economic  and  Monetary  Union  and  the  Communication  on  Steps 
towards Completing Economic and Monetary Union10 promote the use of benchmarking and 

cross-examination of Member States performances in order to identify underperformance and 

support  upward  convergence.  The  process  should  also  contribute  to  the  sharing  of  best 

practices.  Box  1  describes  the  rationale  and  the  state  of  play  of  developing  benchmarking 

indicators in the labour market domain.  

Recent trends of key indicators are recorded in the scoreboard according to three dimensions 

(see detailed tables in Annex): 

8  The  Employment  Performance  Monitor  (EPM)  and  the  Social  Protection  Performance  Monitor  (SPPM)  are 
drafted jointly by the Commission and, respectively, the EMCO and SPC Committees. They are adopted by the 
EPSCO Council.  
9 Cf.  2017 Alert Mechanism Report (AMR) 
10  COM(2015) 600 final. 

15 

 
 
 
                                                            
•  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 area 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  area  levels  (indicative  of  the  dynamics  of 

socio-economic convergence/divergence). 

Since 2016, the situation of Member States across key employment and social indicators 

is  assessed  through  a  commonly  agreed  methodology  which  looks  jointly  at  levels  and 

changes  of  each  indicator  (as  explained  in  Annex  4).  Based  on  this  methodology,  Table  1 

provides a summary of the readings of the scoreboard. As resulting from the analyses in this 

section and in Section 2 (see Figures 1, 14, 15, 26, 27 and 28), five Member States (Greece, 

Cyprus,  Portugal,  Spain  and  Italy)  face  a  number  of  substantial  employment  and  social 

challenges,  though  their  situation  is  mixed  in  terms  of  recent  developments.  Five  other 

Member  States  (Bulgaria,  Croatia,  Latvia,  Lithuania  and  Romania)  are  flagged  more  than 

once in the summary table, with varying degrees of severity, as concerns either employment 

or  social  indicators.  The  remainder  of  the  section  provides  a  detailed  reading  of  the 

scoreboard.     

Greece  still  presents  a  challenging  situation  across  all  employment  and  social  indicators, 

especially  as  concerns  the  overall  unemployment  rate  and  income  inequality.  Some 
improvements  were  recorded  for  the  NEET  rate  and  the  at-risk-of-poverty  rate  (AROP)11. 

Italy  maintains  critical  levels  on  indicators  related  to  the  situation  of  young  people  on  the 

labour  market,  while  the  overall  unemployment  rate  is  only  slowly  decreasing  compared  to 

the EU average. At the same time, the situation on social indicators, in particular the AROP 

rate, remains challenging. In Portugal overall and youth unemployment rates remain high in 

spite of moderate decreases. Both the at-risk-of-poverty and income inequality indicators also 

show  high  levels  compared  to  the  EU  average,  though  slightly  decreasing.  In  Spain, 

unemployment  and  NEET  rates  kept  improving  (though  levels  remain  problematic)  and  the 

situation  regarding  youth  unemployment,  poverty  and  inequalities  remains  challenging. 

Cyprus has recorded favourable developments in the overall and youth unemployment rates, 

11 The latter, though, might be affected by a fall in the poverty threshold. 

16 

 
 
 
 
                                                            
as well as in the NEET rate, all decreasing from very high levels. However, gross disposable 

household income growth is still negative in 2015, and the at-risk-of-poverty rate shows the 

largest increase. Romania still presents critical challenges regarding NEETs rate, AROP and 

inequalities, with the latter showing a considerable increase. Similarly, Lithuania registered a 

sharp rise in both AROP and income inequalities. Latvia showed the largest increase in youth 

unemployment,  while  the  situation  in  the  country  remains  stable  as  concerns  at-risk-of-

poverty rate and inequalities. In Croatia the general and youth unemployment rates are high, 

though  decreasing  fast.  In  Bulgaria,  high  NEET  rate  and  income  inequality  remain  critical 

challenges. 

As concerns NEETs, the situation is considered one "to watch" (due to either sudden increases 

or higher than average levels) in Finland, France, Ireland and Slovakia. Similarly, in addition 

to Italy, also Finland, France and Austria show a lower growth in GDHI compared to the EU 

average.  Finally,  a  couple  of  other  countries  should  also  be  closely  monitored  as  concerns 

AROP (Poland) and income inequality (Estonia). 

In three Member States some indicators show a slight deterioration albeit from good levels. In 

Austria and Estonia the unemployment rate (both overall and for youth) has increased faster 

than the EU average, though the level remains very low. A similar situation is observable for 

Denmark as concerns youth unemployment and the NEET rate.  

17 

 
 
 
 
 
Table 1: Summary of the scoreboard of key employment and social indicators  

Note: youth unemployment quarterly data not available for RO; GDHI data for BE, BG, EE, IE, EL, HR, LU, 
MT, PL not available at 26th October 2016; AROPE and S80/S20 data for IE not available at 26th October 2016.  

18 

Unemployment rateYouth unemployment rateNEET rateGross Disposable Household IncomeAt-risk-of-poverty rateInequalityS80/S20Czech RepublicFinland Slovenia SlovakiaBetter than averageDenmarkHungaryLuxembourgMaltaNetherlandsPolandRomaniaUnited KingdomBulgariaCzech RepublicHungaryLithuaniaMaltaNetherlandsUnited KingdomAustriaCzech RepublicHungaryLithuaniaLatviaSloveniaSlovakiaAustriaBelgiumDenmark EstoniaFinlandFranceLuxembourgMaltaNetherlandsSloveniaSwedenAustriaBelgiumDenmark France Hungary Luxembourg MaltaNetherlandsSwedenBest performersCzech RepublicGermanyGermanyGermanyLuxembourgNetherlandsSwedenDenmarkLatviaRomaniaCzech RepublicSlovakiaGood but to monitorAustriaEstoniaAustriaDenmarkEstoniaDenmarkBulgariaGreeceBelgiumBulgariaFinlandFranceIrelandLithuaniaSwedenSloveniaSlovakiaBelgiumFinlandFranceIrelandLuxembourgPolandSwedenSloveniaSlovakiaBelgiumEstoniaMaltaPolandPortugalUnited KingdomCzech RepublicGermanySpainHungaryLithuaniaNetherlandsPortugalSwedenSloveniaUnited KingdomCroatiaGermanyHungaryUnited KingdomCroatiaCyprusGermanyPolandUnited KingdomWeak but improvingCyprusSpainCroatiaCyprusCroatiaGreeceCyprusSpainBulgariaGreeceLatviaLithuaniaRomaniaSpainOn averageCritical situationsGreeceGreeceItalySpainBulgariaCroatiaItalyRomaniaCyprusItalyRomaniaSpainTo watchItalyLatviaPortugalLatviaPortugalFinlandFranceIrelandSlovakiaAustriaFinlandFranceItalyCyprusLatviaLithuaniaPolandPortugalEstoniaItalyPortugal 
 
 
Box 1. Benchmarking and pursuing best practices in the labour market  

The  Five  Presidents'  Report  underlined  that  a  stronger  focus  should  be  put  on  employment 
and social performance, stressing that the challenges are often similar across Member States, 
though there is no one-size-fits-all approach to follow.  

The  Commission  communication  of  October  2015  "On  steps  towards  completing  EMU"12  
foresees  policy  or  thematic  areas  to  be  progressively  addressed  by  benchmarking  and  by 
cross-examining  performance.  According  to  the  Communication,  "  (…)  Cross-examination 
aims to identify underperformance and support convergence towards best performers in areas 
of labour markets, competitiveness, business environment and public administrations, as well 
as  certain  aspects  of  tax  policy.  (…)  Benchmark  indicators  need  to  meet  two  requirements. 
First,  they  need  to  closely  relate  to  the  policy  levers,  such  that  they  can  lead  to  actual  and 
meaningful  policy  implications.  Second,  there  needs  to  be  robust  evidence  and  enough 
consensus  that  they  contribute  significantly  to  higher  level  objectives  such  as  jobs,  growth, 
competitiveness, social inclusion and fairness or financial stability".  

Benchmarking,  when  complemented  by  a  broader  economic  analysis,  can  inform  and 
reinforce reforms by supporting the process of mutual learning and convergence towards best 
practices implemented successfully in Member States. 

Since  March  2016,  a  pilot  exercise  has  been  held  on  benchmarking  unemployment  benefits 
and  active  labour  market  policies.  A  three  step  approach  has  been  developed  jointly  with 
Member States, taking into account the existing frameworks. In a first step, key challenges of 
the policy area considered are discussed and a set of related high level outcome indicators is 
identified.  In  the  second  step,  a  set  of  a  few  key  performance  indicators  allows  for  the 
identification  of  good  and  weak  performers.  In  a  third  step,  key  policy  levers  to  deliver 
upward convergence are identified.  

On  this  basis,  in  the  area  of  unemployment  benefits  and  active  labour  market  policies, 
indicators  have  been  identified  for  the  first  two  steps  and  under  the  third  step  four  policy 
levers have been identified to enable benchmarking: the duration, the level and the eligibility 
criteria for unemployment benefits and a policy principle of access to early support adapted to 
the labour market situation of individuals. Moreover, a benchmarking  exercise on skills  has 
been underway since September 2016.  

12 COM(2015) 600 final. 

19 

 
 
 
 
                                                            
2.  

EMPLOYMENT AND SOCIAL REFORMS – MEMBER STATES 
PERFORMANCE AND ACTION  

This  section  presents  an  overview  of  recent  key  employment  and  social  indicators  and 

measures  taken  by  the  Member  States  in  priority  areas  identified  by  the  EU  employment 
guidelines, as adopted by the Council in 201513 and adopted again, unchanged, in 2016.14 For 

each guideline, recent developments on a selection of key indicators are presented, as well as 

policy  measures  taken  by  Member  States.  The  section  draws  on  Member  States’  National 

Reform  Programmes  2016  and  European  Commission  sources.  If  not  specified  otherwise, 

only  policy  measures  implemented  after  June  2015  are  presented  in  the  report.  In-depth 

analysis of recent labour market developments can be found in the Labour Market and Wage 
Developments  2016  report15  and  the  Employment  and  Social  Developments  in  Europe 
Review 2016.16  

2.1   Guideline 5: Boosting demand for labour  

This  section  looks  at  the  implementation  of  the  employment  guideline  no.  5,  which 

recommends Member States to create conditions promoting labour demand and job creation. 

It  first  presents  indicators  about  entrepreneurship,  which  is  a  key  pre-condition  for  job 

creation,  as  well  as  a  source  of  employment  growth  per  se  (including  through  self-

employment).  It then looks at key macroeconomic determinants of hiring decisions, namely 

wage and tax wedge developments. Section 2.1.2 reports on policy measures implemented by 

Member  States  in  these  areas,  including  untargeted  hiring  subsidies  (subsidies  targeted  at 

specific disadvantaged groups are presented in Section 2.2.2).  

13 The guidelines have been fully reflected for the first time in the 2016 National Reform Programmes. 
14 Council Decision on guidelines for the employment policies of the Member States, 13 October 2016. 
15 European Commission (2016). Labour Market and Wage Developments in Europe. Annual review 2016 
Luxembourg: Publications Office of the European Union, October 2016 
16 Forthcoming. 

20 

 
 
 
 
 
 
                                                            
2.1.1  Key indicators 

New enterprises represent a significant source of job creation in the European Union. In 
201417,  newly  created  enterprises  accounted  for more  than  4%  of  total  employment18  in  the 

business sector in countries such as Poland, Latvia, Portugal, Lithuania and Slovakia. Small 
and medium enterprises (SMEs) accounted for almost 71% of overall employment growth19. 

These  figures  provide  an  idea  of  the  potential  for  job  creation  that  could  be  unleashed  by 
tackling  barriers  to  entrepreneurship  and  firm  growth20.  In  2014,  more  than  two  thirds  of 

Member  States  recorded  an  increase  in  the  number  of  new  firms  created.  Yet,  there  are 

significant differences as concerns firms' birth rate and their average size (Figure 7).  

Figure 7: Firms' birth rate and average size at birth, business economy, 2014 

Source: Eurostat, business demography. Note: no data available for EL. 

Self-employment  is  overall  declining,  mostly  due  to  sectoral  dynamics,  though  very 

different  patterns  are  observed  across  countries.  The  average  self-employment  rate 

decreased in 2015 from 14.4% to 14.1%, the lowest rate since 2008, as self-employment fell 

by  0.4%  while  total  employment  grew  1%  (see  Section  1).  Excluding  the  primary  sector 

17 Latest year for which data are available. 
18 This is the number of persons employed among enterprises newly born in 2014 divided by the total number of 
persons employed among the stock of enterprises active in the same year. 
19 European Commission (2015), Annual Report on European SMEs 2014/2015, November 2015.  
20 Small Business Act (SBA) Factsheets provide detailed country level analysis of SME statistics and policies, 
and can be consulted at: http://ec.europa.eu/growth/smes/business-friendly-environment/performance-review_en 

21 

 
 
 
 
 
                                                            
(agriculture,  forestry  and  fishing),  which  is  affected  by  a  structural  decline,  the  number  of 

self-employed  fell  only  by  0.1%  (instead  of  0.4%)  and  remained  above  the  2008  level. 

Nonetheless,  self-employment  rose  in  2015  in  almost  half  of  the  Member  States,  with  the 

largest  increases  in  absolute  terms  recorded  in  Poland,  Spain  and  Netherlands.  The  female 

share  in  self-employment  continued  its  slow  catch-up,  from  31.8%  of  the  total  in  2014  to 

32.2% in 2015 (it was 30.4% in 2008). Women represent 34.4% of the self-employed without 

employees  (own-account  workers)  and  43.9%  of  own-account  workers  with  tertiary 

education. However they are only around 26% of all self-employed with employees. 

Self-employment  by  people  born  outside  the  country  is  on  the  rise.  Though  89%  of  all 

self-employed  were  born  in  the  Member  State  in  which  they  are  active,  dynamics  are  very 

diverse. In 2015 a 1% decline in self-employment was recorded for this group, against rises of 

2.7%  and  4.7%  for  people  born  in,  respectively,  other  Member  States  and  outside  the  EU. 

Particularly  big  increases  for  the  latter  group  (over  5%)  were  recorded  in  Luxembourg, 

Ireland, Cyprus, Belgium, Austria, the United Kingdom and Sweden.  

In 2015, average wage growth accelerated slightly in the EU, while it remained moderate 

in  the  euro  area.  Nominal  compensation  per  employee  increased  by  3.2%  in  the  EU 

(compared to 1.6% in 2014), while it remained slightly above 1% in the euro area (Figure 8). 

In  conjunction  with  nearly  zero  inflation,  those  nominal  wage  increases  translated  almost 

entirely into real ones. This trend is consistent with falling unemployment across the board, 

though  very  different  patterns  emerge  when  looking  at  specific  countries.  Wage  increases 

were  fastest  in  the  Baltics  (especially  Latvia)  where  they  outpaced  labour  productivity 

growth. Sweden, Romania, Poland and Hungary also recorded relatively high growth of (real) 

compensation  per  employee,  though  (except  for  Hungary)  more  closely  aligned  with 

productivity.  On  the  opposite  side,  Greece,  Cyprus,  Portugal  and  Croatia  displayed  falls  in 

nominal  terms,  though  more  limited  than  in  previous  years.  Pay  increases  in  euro  area 

countries tended to be lower than in non-euro economies.  

22 

 
 
 
 
 
 
 
Figure 8: Wages, productivity and inflation - changes 2014/15  

Source: Eurostat. Note: the growth of value added per worker is not reported for IE (23.1%). 

The tax burden on labour remains broadly stable in Europe, with significant differences 

across Member States. When considering single workers earning the average wage (Figure 
9),  the tax wedge21  ranges  between less  than 30%  in  Ireland and Malta, and  almost  50%  in 

Belgium, Hungary, Germany, Austria, France and Italy. A similar dispersion can be observed 

for  lower  income  workers  (defined  as  those  earning  67%  of  the  average  wage),  though 

different  country  patterns  emerge  as  concerns  the  progressivity  of  tax  rates.  Between  2014 

and 2015 the average tax wedge remained broadly stable, though a number of Member States 

reduced  its  incidence  on  labour  costs  (Spain,  Greece  and  Estonia,  as  well  as  France  as 

concerns low income workers, by around 1 pp). A significant increase took place instead in 

Portugal (this country registered the highest increase of the tax wedge on average incomes in 

recent years). 

21 The tax wedge on labour is composed of personal income taxes plus employers' and employees' social security 
contributions. Contributions to occupational and private pension schemes, as well as targeted tax reliefs, are not 
included in the calculation. 

23 

 
 
 
 
 
 
 
                                                            
Figure 9: tax wedge on labour, level in 2015 and change 2014/15 

Source:  Tax  and  benefits  database,  OECD/EC.  Note:  data  are  for  single  earner  households  (no  children).  No 
2015 data available for countries marked by *. 

2.1.1  Policy response 

Several  Member  States  resorted  to  employment  subsidies  in  order  to  support 

employment  and  job  creation.  Most  measures  in  this  area  are  targeted  to  specific  groups 

facing labour  market integration problems (e.g. youth,  older people, long-term unemployed, 

refugees,  etc.).  They  often  involve  providing  financial  incentives  (or  tax/social  security 

contribution rebates) to employers for hiring workers falling in the targeted categories. Over 

the reference period (from the second half of 2015 on; see introductory statement of Section 

2), targeted hiring subsidies were introduced by Belgium, Denmark, Ireland, France, Cyprus, 

Malta,  Netherlands,  Austria,  Slovenia  and  Slovakia  (more  details to  be found  in  the  section 

2.2  of  the  report  dealing  with  the  specific  target  groups).  However,  some  countries  also 

introduced  (or  plan  to  introduce)  untargeted  hiring  subsidies,  i.e.  without  specific  eligibility 

conditions, usually with the aim of promoting open-ended employment. For instance, France 

introduced  a  EUR  4  000  premium  granted  over  2  years  for  the  hire  by  a  SME  (up  to  249 

employees) of an employee paid up to 1.3 times the minimum wage, on an open-ended or at 

24 

 
 
 
least 6-month contract. In Italy the incentives for open-ended hiring introduced in 2015 with 

the  Jobs  Act  were  maintained  in  2016,  but  with  reduced  amounts  and  for  two  years  only 

(rather  than  three).  Portugal  is  discussing  with  social  partners  potential  measures  to  create 

incentives  for  firms  to  hire  on  permanent  contracts,  such  as  changes  to  social  security 

contributions  to  discourage  the  abuse  of  temporary  contracts  and/or  financial  incentives  to 

companies  who  transform  temporary  contracts  into  permanent  ones.  Finland  is  planning  to 

introduce  the  possibility  of  using  the  unemployment  benefit  as  a  wage  subsidy,  to  make  it 

more appealing for employers to hire an unemployed person.   

Some  Member  States  are  taking  action  to  promote  entrepreneurship  and  start-ups, 

especially among young people. Some countries have implemented measures supporting the 

creation of social enterprises. In particular, Hungary introduced training and financial support 

to  young entrepreneurs, as  part of the Youth Guarantee, and to  social  enterprises (including 

through employment-related temporary wage subsidies for disadvantaged workers). Latvia is 

developing  a  new  regulatory  framework  for  social  entrepreneurship  and  has  introduced 

support  for  social  businesses,  aimed  at 

increasing  employment  opportunities  for 

disadvantaged groups.  Belgium and Ireland introduced tax incentives for the self-employed. 

Within a proposal aimed at using unemployment benefits for jobseekers' activation purposes, 

Finland  plans  to  provide  start-ups  with  grants  (also  for  young  people  working  as  part-time 

entrepreneurs) and wage subsidies, especially in view of hiring their first employee. Greece is 

implementing  programmes  to  support  start-ups  and  self-employment  by  tertiary  education 

graduates. 

The continued employment recovery in 2015 and 2016 was supported in several Member 

States  by  measures  reducing  the  tax  wedge  on  labour,  often  targeting  the  lowest 

incomes.  Tax  reforms  focused  on  personal  taxation  of  labour  incomes,  with  the  aim  of 

increasing  the  purchasing  power  of  low  income  workers,  in  order  to  reinforce  incentives  to 

work  while  tackling  in-work  poverty.  Measures  to  reduce  the  personal  income  tax,  either 

through tax rate reductions or changes in tax credits and/or brackets, have been implemented 

by  Belgium,  Germany,  Estonia,  Ireland,  Spain,  Netherlands,  Austria,  Slovakia,  Slovenia, 

Sweden  and  United  Kingdom.  In  Belgium,  a  tax  rate  reduction  was  combined  with  an 

increase  of the ceiling for tax-deductible expenses. Estonia adopted a system of tax refunds 

aiming to address in-work poverty, as well as an increase in the tax-free allowance. In Ireland, 

the 2016 Budget introduced an extension of income tax credits, and a reduction in Universal 

Social Charge (further cuts are announced for 2017). In the Netherlands, a tax reduction plan 

25 

 
 
worth EUR 5 billion aims at increasing the take home pay of workers, through a reduction of 

tax  brackets  and  an  increase  in  tax  credits.  Denmark  and  Lithuania  are  planning  reforms 

aimed at reducing and/or amending personal income taxation.  

In a limited number of Member States, tax wedge cuts were achieved through overall or 

targeted reductions in social security contributions. Such measures have been adopted for 

instance by Belgium, Estonia, France and the United Kingdom. In Belgium, employers' social 

security  contributions  will  gradually  decrease  between  2016  and  2019,  partly  phasing  out 

existing  wage  subsidies.  Specific  reductions  for  SMEs  and  self-employed  people  will  be 

broadened. In France a reduction of 1.8 pps is applied since April 2016 on employers' social 

contributions  (family)  on  wages  comprised  between  1.6  and  3.5  minimum  wages.  France  is 

also planning to  increase  the tax credit for competitiveness and employment (CICE),  which 

currently amounts to 6% of a company payroll limited to wages until 2.5 minimum wages. In 

Finland, the competitiveness agreement signed by social partners in March 2016 aims at a 5% 

one-off reduction of labour costs (recent estimates assess this reduction at roughly 3%), to be 

achieved  through  a  shift  in  social  contributions  from  employers  to  employees,  plus  some 

additional measures (including an increase in working hours, see section 2.3). 

In  line  with  the  trends  of  recent  years,  several  Member  States  are  modernising  their 

wage  setting  systems,  with  the  aim  of  making  wages  more  responsive  to  productivity 

developments.  Finland  has 

increased 

the  possibilities  for  company-level  collective 

bargaining,  as  sectoral  collective  agreements  may  contain  a  “crisis  clause”,  which  will 

determine  when  it  is  possible  to  deviate  from  the  collective  agreements  on  issues  such  as 

wages and working times. Moreover, all employers, including those who are not members of 

an  employers’  confederation  will  be  able  to  reach  an  agreement  locally,  in  line  with  the 

provisions of the collective agreement (see also section 2.3 of the report on social dialogue, 

also  concerning  the  French  attempts  of  simplifying  it  at  company  level).  Ireland  has  re-

established  its  sectoral  wage  setting  framework,  of  which  important  aspects  were  judged 

unconstitutional by the Supreme Court in 2013, by envisaging new rules for the extension of 

collective  agreements  to  all  workers  in  a  sector.  In  addition,  it  legislated  a  more  precise 

definition of the term collective bargaining, in order to clarify the conditions under which the 

Labour  Court  has  powers  to  settle  collective  labour  disputes  in  cases  where  collective 

bargaining arrangements are not in place in a company. In Belgium, the Federal Minister of 

Economy and Labour tabled a legislative proposal to reform the 1996 Competitiveness Law, 

26 

 
 
to be discussed with social partners, aiming at having a new collective bargaining framework 

in place by the end of 2016.  

Some  Member  States  took  steps  to  reform  their  minimum  wage  frameworks,  with  the 

aim of improving the transparency and/or predictability of its adjustments. For instance 

Ireland  created  in  2015  a Low  Pay  Commission,  representing  employees,  employers  and 

independent  experts,  aimed  at  making  annual  recommendations  to  the  government  on  the 

national minimum wage rate and related matters; following the recommendation of this newly 

set-up  Commission,  the  statutory  minimum  wage  was  increased  from  January  2016.  In 

Bulgaria,  the  government  plans  to  establish  towards  the  end  of  2016  the  criteria  for  the 

minimum  wage  setting  mechanism,  factoring  in  productivity  developments  (and  sometimes 

also poverty developments). Some other countries extended the coverage or adequacy of the 

minimum wage. In particular, in July 2016 Poland introduced a minimum wage for civil law 

mandate contract and self-employed, which will be in place in 2017. In the United Kingdom, 

a  new  ‘National  Living  Wage’  (NLW),  resulting  in  a  substantial  increase  in  the  National 

Minimum  Wage  (NMW)  for  workers  aged  25  and  over, was  introduced  in  April  2016.  The 

UK Government expects the NLW to reach 60% of median earnings by 2020. In Slovenia, in 

November  2015  the  Parliament  passed  a  bill  redefining  the  minimum  wage  by  excluding 

allowances for night work, Sunday work and work on public holidays (whose amount is to be 

determined in collective agreements).  

2.2   Guideline 6: Enhancing labour supply, skills and competences 

This  section  looks  at  the  implementation  of  the  employment  guideline  no.  6,  which 

recommends  Member  States  to  create  conditions  promoting  labour  supply,  skills  and 

competences. It first presents indicators about the impact of the education and training system 

on  the  employability  of  the  workforce  (basic  skills  proficiency,  participation  in  lifelong 

learning, and school-to-work transitions for different types of curricula) before going through 

labour  market  outcomes  for  various  groups  disadvantaged  in  relation  to  labour  market 

outcomes (e.g. young people, older workers, people with a migrant background, women and 

the long-term unemployed). Section 2.2.2 reports on policy measures from Member States in 

these areas, including (targeted) hiring subsidies and measures targeted at those disadvantaged 

groups including also people with disabilities. 

27 

 
 
 
2.2.1  Key indicators 

Educational attainment indicators kept increasing in 2015. Following the trend of the past 

decade,  the  early  school  leaving  rate  has  declined  in  most  Member  States,  decreasing  on 

average  by  0.2  pps  in  2015  to  11.0%.  However,  levels  close  to  20%  are  still  recorded  by 

Spain,  Malta  and  Romania,  and  six  other  Member  States  are  above  the  10%  Europe  2020 

headline  target.  Early  school  leaving  rates  are  higher  for  Roma  pupils  and  those  with  a 

migrant  background,  particularly  foreign-born  pupils.  Tertiary  education  attainment  among 

those  aged  30-34  has  also  been  consistently  and  significantly  increasing.  The  rate  currently 

stands at 38.7%, up by 0.8 pps in 2015 alone, with 17 Member States above the Europe 2020 

headline target of 40%.  

Tertiary  education  attainment  rates  are  significantly  higher  amongst  women  and  lower  for 

students  with  a  migrant  background.  However,  gender  imbalances  in  certain  fields  of  study 

are persistent, as men are the minority of graduates in health and education, while women are 

underrepresented  in  sciences  and  engineering  studies.  Parental  background  still  affects 
participation  in  higher  education22.  The  recent  inflows  of  large  number  of  young  asylum 

seekers  will  require  action  to  offer  them  a  good  start  in  education  and  training  in  order  to 
foster their integration in European societies and labour markets23. 

In spite of this increase, there are large disparities within and between Member States as 

concerns  the  acquisition  of  basic  skills,  such  as  literacy,  numeracy  and  science  (Figure 

10). According to the OECD's 2012 Programme for International Student Assessment (PISA) 

survey of basic competences, 22.1% of 15-year-old European students were low performers in 

maths,  17.8%  in  reading,  and  16.6%  in  science.  Socio-economic  disadvantage,  special 
educational needs and a migrant background24 are the most significant factors associated with 

low  achievement  in  basic  skills.  Schools  with  more  socio-economically  disadvantaged 

students  tend  to  have  relatively  lower-quality  resources.  However,  evidence  from  PISA 

22 European Commission, Education and Training Monitor 2016 
23 For detailed analysis see upcoming 2016 Employment and Social Developments in Europe Review chapter on 
Refugee  Integration  and  EC-OECD  Working  Paper  on  "How  are  refugees  faring  on  the  labour  market  in 
Europe?", Sept 2016. 
24  Evidence  shows  that  in  most  Member  States  people  with  a  migrant  background  remain  considerably 
disadvantaged even after adjusting for the socio-economic background, and that among foreign-born pupils those 
who arrive as young children have better outcomes than those arrived later.  See OECD-EU (2015), Settling In – 
Indicators  of  Immigrant  Integration  2015,  and  OECD  (2014),  International  Migration  Outlook  2014,  OECD 
Publishing. 

28 

 
 
 
                                                            
suggests that resource allocation also influences the performance of the education system as a 

whole,  and  equity  in  education  in  particular:  mathematics  performance  across  countries  is 
higher  where  resources  are  allocated  more  equitably  across  schools25,  with  high-performing 

economies tending to allocate resources more equitably across all schools, regardless of their 

socio-economic profile.  

Figure 10: Proportion of adults who are low performers in basic skills 

Source: Skills Matter, OECD Publishing, 2016 

Europe  also  has  a  very  large  number  of  adults  without  the  minimum  level  of  skills 

necessary to participate successfully in social and economic life. This is in part a result of 

early  school  leaving  and  underachievement  in  young  age,  as  well  as  of  the  obsolescence  of 

skills  later  in  life  and  low  participation  in  learning  during  adulthood.  The  OECD's  2012 

Survey  of  Adult  Skills  (PIAAC)  found  that  in  Italy,  Spain  and  Greece  a  third  or  more  of 

working-age  adults  display  low  levels  of  proficiency  in  literacy  and/or  numeracy  skills. 

Educational attainment is the strongest predictor of skills: 51% of adults who have very poor 

literacy and numeracy skills have not attained an upper-secondary qualification. Adults who 

lack minimum level of skills in turn face employment challenges: in every single EU Member 

State,  employment  rates  of  low-qualified  adults  are  significantly  lower  (and  unemployment 

rates higher) as compared to medium-qualified or highly-qualified adults.  

The EU average rate of adult participation in learning stood at 10.7% in 2014 and did 

not increase in 2015, in spite of a large and fast-evolving variety of needs. In particular, 

25 OECD (2014), PISA in Focus, 2014/10 (October) http://www.oecd.org/pisa/pisaproducts/pisainfocus/pisa-in-
focus-n44-(eng)-final.pdf. 

29 

 
 
 
                                                            
those who have left initial education or training without an adequate level of the basic skills 

need  the  opportunities  to  obtain  them  later  in  life.  Upskilling  and  reskilling  ensure  that  the 

skills remain relevant and up to date. In comparison to 2010, adult learning participation rates 

actually fell in 12 Member States and remained stable in others, except Luxembourg, France 

and  Hungary  (Figure  11),  with  significant  increases  in  the  two  last  cases.  In  addition,  low-

qualified adults are only half as likely to participate in any learning as general population, and 

the gap further increased between 2012 and 2015.  

Figure 11: Participation in lifelong learning in EU 28 

4
6
-
5
2
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o
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a
l
u
p
o
p
f
o
%

35

30

25

20

15

ET 2020 

10

5

0

O
R

G
B

R
H

K
S

L
E

L
P

V
L

T
L

E

I

E
B

U
H

T
M

T

I

Y
C

E
D

Z
C

T
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S
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R
F

I

L F
N

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S

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D

I

8 S
2
U
E

2015

2010

Source: Eurostat (LFS). Online data code: tesem250. Note: The indicator captures the participation rate in formal 
and non-formal education and training (last four weeks) of 25 to 64 year-olds. 

Labour-market relevance of education is crucial to foster young people's ability to find a 

job and contribute effectively to economic growth. On average in the EU, the employment 

rate  of  recent  graduates  from  higher  education  is  81.9%  whereas  for  those  with  upper 

secondary education attainment the rate is 70.8%. The gap is greater in Member States with 

lower overall youth employment rates (Figure 12). 

Effective vocational education and training (VET) also contributes to transitions to the 

labour market by fostering job-specific and transversal skills. Recent graduates with VET 

qualifications  at  upper  secondary  and  post-secondary  non-tertiary  level  generally  have  a 

smoother  transition  from  education  to  the  labour  market  and  higher  employment  rates  than 

graduates from general education pathways with comparable attainment levels (Figure 13). 

30 

 
 
 
 
 
 
 
 
Figure 12. Employment rate of recent secondary and tertiary education graduates 

(2015)  

Source: Eurostat (LFS). Note: employment rate of higher education (ISCED 5-8) and upper secondary education 
(ISCED  3-4)  graduates  aged  20-34  who  graduated  1  to  3  years  before  the  reference  year  and  who  are  not 
currently enrolled in any further formal or non-formal education or training. 

However,  despite  its  positive  effects,  initial  VET  is  still  not  as  attractive  as  general 

education pathways, with average enrolment stable over the last 10 years. At EU level, 

the  share  of  I-VET  students  in  the  total  upper secondary  student  population  is  48%  and the 

share  of  all  students  in  a  vocational  programme  at  upper  secondary,  post-secondary  non-

tertiary  and  short-cycle  tertiary  education  (ISCED  3-5)  amounts  to  39%.  Formal  VET 

programmes also attract mature students: 36.6% of VET students in the EU were 20 or older, 

i.e.  beyond  the  typical  age  for  secondary  education,  many  of  them  likely  returning  to  VET 

after making a break in their education pathway. This group accounts for well over half of all 

VET students in Denmark, Ireland, Spain and Finland. 

Overall, the youth unemployment rate decreased from a peak of almost 24% in 2013 to 

20.3%  in  2015,  but  it  is  still  nearly  4.4  pps  higher  than  it  was  in  2008.  In  the  first  half  of 

2016,  some  Member  States  still  recorded  levels  close  or  above  40%  (Italy,  Spain,  Greece) 

without  significant  decreases,  though  other  highly  impacted  Member  States  registered 

significant  improvements  (in  particular  Cyprus  and  Croatia).  The  dispersion  of  youth 

unemployment across Member States remains high, though decreasing over time (see Figure 

14,  where  the  diagonal  line  shows  a  negative  correlation  between  variations  and  levels  of 

youth unemployment).  

31 

 
 
 
 
Figure 13: Employment rates for different (post)secondary curricula (2015). 

Source:  Eurostat  (LFS,  2015).  The  indicator  measures  the  employment  rates  of  persons  aged  20  to  34  having 
completed education 1-3 years before the survey with a diploma from upper secondary education (ISCED 3) or 
post-secondary non tertiary education (ISCED 4), out of the people in the same age group who are currently not 
enrolled  in  any  further  formal  or  non-formal  education  or  training.  Break  in  time  series  for  LU  and  HU,  data 
unreliable for general education graduates in CZ, EE, HR, AT and SI; and for VET graduates in LU. 

Figure  14:  youth  unemployment  rate  (15-24)  and  yearly  change,  as  reported  in  the 
scoreboard of key employment and social indicators  

Source: Eurostat, LFS (DG EMPL calculations). Period: 1st half 2016 levels and yearly changes with respect to 
1st half 2015. Note: Axes are centred on the unweighted EU average. The legend is presented in the Annex. 

32 

 
 
 
 
 
In  addition  to  the  unemployed,  a  stable  share  of  young  people  aged  15-24  are  inactive 

and not in education or training. In total in the EU, in 2015, 6.6 million people aged 15-24 

were  neither  in  employment,  education  or  training  (NEET).  This  amounts  to  12.0%  of  the 

population in that age class, up from 10.9% in 2008 but down from a peak of 13.2% in 2012. 

As  observable  in  Figure  15,  high  NEET  rates  close  or  above  20%  are  still  recorded  in  a 

number  of  countries  (Croatia,  Bulgaria,  Italy  and  Romania,  the  latter  even  showing  a 

substantial increase in 2015). NEET rates have also posted significant increases in Denmark, 

Finland,  France  and  Slovakia.  Half  of  NEETs  were  inactive,  with  substantial  variations 

among Member States but a stable share at the EU level (Figure 16). Among female NEETs, 

inactivity is more frequent than unemployment, while the opposite occurs among men. 

Figure 15: NEET rate (15-24) and yearly change, as reported in the scoreboard of key 
employment and social indicators 

Source: Eurostat, LFS (DG EMPL calculations). Break in series in FR and ES. Period: 2015 levels and yearly 
changes with respect to 2014. Note: Axes are centred on the unweighted EU average. The legend is presented in 
the Annex. 

33 

 
 
 
 
 
 
 
Figure 16: Profile of NEETs (15-24 years old), 2015 (%)  

Source: Eurostat [edat_lfse_20]  

There is still also a major potential for increasing the employment rate of older workers, 

despite  substantial  growth  in  their  employment  rates  over  the  last  decade  in  many 

countries and the fact that older workers have weathered the crisis relatively better than other 

age  groups.  Demographic  developments  make  active  ageing  even  more  necessary.  In  2015, 

the  employment  rate  for  older  workers  (55-64)  ranged  from  34.3%  in  Greece  to  74.5%  in 

Sweden,  with  the  EU  average  at  53.3%  and  levels  below  40%  in  four  countries.  The 

employment rate of women aged 55-64 is slowly catching up, but remains lower at 46.9% in 

2015.  The  gender  gap  in  the  duration  of  working  lives  is  also  significant,  with  women 

participating on average 5.1 years less in the labour market than men (32.7 vs. 37.8 years in 

2014) (Figure 17). This average gap masks a substantial variation across Member States and 

relates to multiple drivers, including barriers such as insufficient access to care services and 

lower pensionable ages for women than men (see below for a detailed analysis). 

34 

 
 
 
 
 
 
Figure 17: Average duration of working life, 2014  

Source: Eurostat, LFS   

Data  also  show  high  activity  and  employment  gaps  for  people  with  disabilities26. 

Moreover  their  number,  driven  by  ageing,  is  expected  to  increase  from  80  million  to  120 

million by 2020 in the EU. In 2014, the activity gap (20-64 age group) between people with 

and  without  disabilities  in  the  EU  amounted  to  21.1  pps  (60.6%  versus  81.7%),  and  the 

employment  gap  to  23.8  pps  (48.7%  versus  72.5%).  In  particular,  in  Lithuania,  Ireland  and 

Malta the employment gap was close to 40 pps and in 12 countries higher than 30 pps. The 

employment rate of persons with disabilities based on the EU-SILC 2014 data is below 30% 

in Greece, Ireland, Malta and Croatia. Persons with disabilities usually exit the labour market 

earlier, having a very low employment rate at the  age 55-64 at 34.5%.  

The  non  EU-born  population  also  posts  lower-than-average  activity  and  employment 

rates, with an activity gap of 4.2 pps on average compared to the native population (age class 

20-64),  but  reaching  more  than  10  pps  in  seven  Member  States  (Figure  18).  This  inactivity 

gap is even higher for women. Also, the employment rate of the non-EU born is on average 

10.4 pps lower than that of the native born, but this gap reaches about 20 pps in three Member 

States, and above 15 pps in four others, with again an even stronger gap as far as women are 

concerned.  On  average  non-EU  born  women  have  an  employment  rate  13.5  pps  lower  than 

26  The  UN  Convention  on  the  Rights  of  Persons  with  Disabilities  defines  disability  as  "an  evolving  concept" 
resulting from "the interaction between persons with impairments and attitudinal and environmental barriers that 
hinder their full and effective participation in society on an equal basis with others", These impairments can be 
mild  to  severe,  physical,  mental,  intellectual  or  sensory  –  present  from  birth  or  acquired  in  the  course  of  life 
(including in employment) and particularly related to the ageing of the population.  

35 

 
 
 
                                                            
 
native-born women. Challenges often persist with the second generation: people (aged 25-54) 

born in the EU from non-EU born parents have a 5.7 pps lower employment rate and a 3.7 pps 

lower activity rate than those born to at least one native-born parent. 

Figure 18: Employment rate by country of birth, ages 20-64, 2015 and change since 2008 

Source:  Eurostat;  For  DE  there  is no  breakdown  for  non-EU  born,  but if  one  looks  at  the  gap between  native 
citizens and third country nationals, it reaches 22.6 pps.  

Labour  market  outcomes  of  immigrants  are  influenced  by  many  causes.  Beyond 

traditional  explanatory  factors  such  as  age,  gender,  education  level,  or  professional 

experience, these  outcomes  are also determined by the specific factors of proficiency  in  the 

host-country  language  and  transferability  of  skills  and  education  acquired  abroad.  Whether 

immigration  resulted  from  family  reunification,  economic  or  humanitarian  migration  also 

plays  a  role,  partly  because  it  impacts  on  the  previous  characteristics  but  also  because  it 

implies  different  abilities  for  and  needs  of  integration  measures.  Nevertheless,  even  when 
accounting for such differences, there remains a gap in the probability of being employed27. 

Part of this can be related to discrimination practices or lack of recognition of qualifications 

but also other unobserved characteristics such as the region of origin, which can for instance 

impact on gender roles and therefore on female labour market participation. Such challenges 

27 See European Commission (2016), "Mobility and Migration in the EU: Opportunities and Challenges" in 2015 
Employment and Social Developments in Europe Review 

36 

 
 
 
                                                            
might become more pronounced in view of the unprecedented inflow of asylum seekers, with 

almost 1.8 million asylum applications filed in 2015 and first half of 2016 alone28. 

In all Member States, employment rates of women are lower than those for men, with 

large variations across the EU. In 2015, the EU employment rate for men (aged 20-64) was 

75.9% while it reached only 64.3% for women (Figure 19), despite the fact that women are 

increasingly qualified and even out-perform men in terms of educational attainment. In 2015, 

43.4%  of  women  (aged  30-34)  had  tertiary  education  compared  to  34%  of  men.  A  female 

employment rate of 60 % or below, together with a high employment gender gap is found in 
eight  Member  States,  most  of  which  are  facing  severe  demographic  ageing29.  This 

employment gap between men and women (15-64) is particularly accentuated among refugees 

(17 pps) and migrants (19 pps). 

Figure 19: 
time workers by gender in 2015 

Employment rate of the population aged 20-64 and percentage of part-

Source: Eurostat, LFS. Note: Share of part-time workers over the total working population in each gender group. 
Countries ordered by increasing values of female employment rate. 

Gender  gaps  in  employment  are  particularly  acute  for parents,  with  women  still  more 

likely than men to assume childcare responsibilities. On average, the employment rate of 

women  with  a  young  child  is  8  pps  lower  than  the  employment  rate  of  women  without  a 

28 For detailed analysis see upcoming 2016 Employment and Social Developments in Europe Review chapter on 
Refugee  Integration  and  EC-OECD  Working  Paper  on  "How  are  refugees  faring  on  the  labour  market  in 
Europe?", Sept 2016. 
29 According to the population projection, the population of working-age would shrink in a majority of Member 
States, and especially so in Lithuania, Latvia, Bulgaria, Slovakia, Greece, Portugal, Poland, Estonia, Romania, 
Germany, 
report, 
(2015), 
http://ec.europa.eu/economy_finance/publications/european_economy/2015/pdf/ee3_en.pdf 

and  Hungary, 

Commission 

European 

Croatia 

Ageing 

see 

37 

 
 
 
                                                            
young child, and in some countries this difference is over 30 pps (Czech Republic, Slovakia, 

Hungary). In all EU Member States, on the contrary, fathers are more likely to be employed 

than  men  without  children.  The  mothers'  employment  rates  tend  to  be  higher  than  that  of 

women  who  do  not  have  children  in  countries  where  well-designed  and  equitably-shared 

work-life  balance  measures  are  in  place  (notably  Sweden  and  Denmark).  The  employment 
rate gap is particularly strong for low-skilled mothers as well as single parents30.  

Women  also  tend  to  assume  more  long-term  care  responsibilities,  and  face  strong 

financial disincentives when entering the labour market or wanting to work more. They 

are thus more likely to reduce working hours or exit employment altogether. More than 25% 

of  the  inactive  female  population  (20-64)  in  2015  was  inactive  because  of  family 

responsibilities  (including  care  for  children  and  incapacitated  adults)  in  Hungary,  Ireland,  

Slovakia, Estonia, Czech Republic  and the United  Kingdom. Moreover, in  some tax-benefit 

systems, cash transfers and tax-related support weaken financial incentives to work for second 

earners,  thus  hampering  female  labour  market  participation.  High  childcare  costs  can  be  a 

further  disincentive  to  start  or  return  to  work  for  a  second  earner  in  a  dual  earning  couple. 

This is particularly the case in the United Kingdom and Ireland where childcare-related costs 

represent on average more than 23% of net family income. For the EU as a whole, only 28% 

of  children  aged  0-3  years  old  were  cared  for  in  formal  care  services  in  2014  and  83%  of 

children  between  3  years  to  compulsory  school age.  Consequently,  lower  employment  rates 

for  women  combine  with  a  high  share  of  part-time  employment:  31.9  %  of  women  in 

employment compared to only 8.3% of men. This holds even more for parents, with 40.5% of 

mothers working part-time against 5.7% of fathers. 

30 See European Commission (2016) The efficiency and effectiveness of social protection systems over the life 
course, chapter 3.2. in Employment and Social Developments in Europe 2015. 

38 

 
 
 
 
                                                            
Figure 20: Unadjusted gender pay gap in 2008 and 2014 

Source:  Eurostat.  Note:  the  figures  show  the  difference  between  men's  and  women's  average  gross  hourly 
earnings as percentage of men's average gross hourly earnings - for paid employees, unadjusted for personal or 
job characteristics. Source: Eurostat; Industry, construction and services (except public administration, defence, 
compulsory social security). No data available for Greece and Ireland in 2014. 

In  addition  to  low  full-time  equivalent  employment  rates,  women  also  suffer  from  a 

significant pay gap. This amounted to 16.6% in 2014 in the EU, with large variations across 
Member States (see Figure 20)31. There are various potential reasons behind the gender pay 

gap,  such  as  differences  in  work  experience,  working  time,  type  of  job  or  sector  of 
employment. For the EU as a whole labour market segregation32 is relatively high, reaching 
25.3%  for  occupational  segregation  and  18.3%  for  sectoral  segregation33.  Women  tend  to 
work  in  sectors  that  are  relatively  less  well  paid34,  are  less  represented  in  management 

positions,  and  are  more  represented  than  men  in  part-time  work,  which  is  less  well 

remunerated than full time jobs per hour of work. Gender pay gaps in favour of men exist in 
almost  all  occupations.35  Moreover,  other  unobservable  factors  such  as  discrimination  can 

31 This is the 'unadjusted gender pay gap', as it does not take into account all of the factors that impact the gender 
pay gap, such as differences in education, labour market experience, hours worked, type of job, etc 
32  Labour  market  segregation  refers  to  the  distribution  of  women  in  different  jobs  and  sectors  as  compared  to 
men.  
33  The  two  percentages  reflect  the  proportion  of  the  employed  population  that  would  need  to  change 
occupation/sector in order to bring about an even distribution of men and women across occupations or sectors. 
The index varies between 0 (no segregation) and 50 (complete segregation). 
34 http://ec.europa.eu/justice/gender-equality/files/annual_reports/2016_annual_report_2015_web_en.pdf 
35 http://ec.europa.eu/justice/gender-equality/files/documents/150119_segregation_report_web_en.pdf 

39 

 
 
 
 
                                                            
contribute to the gender pay gap. Women's lower pay, shorter working time and shorter career 
duration have a negative impact on their overall earnings and pension entitlements. 36 

Long-term  unemployment  decreased  in  most  Member  States  between  2014  and  2015, 

but  it  remains  a  significant  challenge,  with  more  than  10.3  million  (Q1  2016)  Europeans 

looking for a job for more than one year, including 6.5 million for more than two years. As a 

share  of  the  active  population,  long-term  unemployment  increased  in  2015  in  Austria, 

Belgium,  Croatia,  Finland,  Luxembourg,  Netherlands,  Romania,  and  Sweden,  whereas  it 

decreased,  sometimes  significantly,  in  most  of  the  heavily  impacted  Member  States  (Figure 

21). However, it is still above 10% in Greece, Spain and Croatia, and above 5% in Slovakia, 

Portugal,  Italy,  Cyprus,  Bulgaria  and  Ireland.  As  unemployment  duration  increases,  the 

connection  to  the  labour  market  deteriorates,  with  a  sharp  drop  in  the  likelihood  of  re-

employment  in  stable  jobs,  and  an  increase  in  the  inactivity  risk,  due  to  decreasing 

employability and the accumulation of barriers to participation. 

Figure 21: Long-term unemployment rates (% of the active population), 2014 and 2015  

25

20

15

10

5

0

E
S

K
U

T
A

K
D

U
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I

E F
D

E
E

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L
P

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N

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H

T
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R
F

E
B

V
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8 S
2
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E

E
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9
1
-
A
E

G
B

Y
C

T
I

T
P

K
S

R
H

S
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L
E

Source: Eurostat, LFS 

2014

2015

There is large variation across Member States in the success of assisting the long-term 

unemployed  to  find  a  job.  The  quality  of  service  provision  to  the  long-term  unemployed 

remains  crucial  to  ensure  their  effective  integration  into  the  labour  market,  in  line  with  the 

Council  Recommendation  of  15  February  2016  on  the  integration  of  the  long-term 

unemployed into the labour market. 

36 In 2014, women received a pension that is on average 40% lower than men's pension and, in some countries, a 
third of elderly women have no pension at all. For this reason, women are at a much greater risk of poverty than 
men in old age; on average 15.7% of women 65+ are at risk of poverty as compared to 11.3 % of men. Slovenia, 
Sweden, Lithuania, Latvia and Estonia have gender pension gaps of 10 pps or more between women and men in 
old age. 

40 

 
 
 
                                                            
 
2.2.2  Policy response  

Policies  to  tackle  low  proficiency  in  basic  skills  have  received  special  attention  in 

Member  States  such  as  Cyprus,  Hungary,  and  Sweden  and  are  addressed  by  the 

Commission's  recent  proposal  for  a  Skills  Guarantee.  Often  Member  states  have  addressed 

this challenge by improving their VET systems. In Sweden, though, a recent initiative aimed 

at  early  intervention,  targeting  the  first  years  of  schooling  (i.e.  pre-school  class  and  1-3 

grade), with particular focus on basic skills. In Hungary and Slovakia, a specific objective has 

been the improvement of digital skills. In Cyprus the objective was to improve participation 

and to adapt VET to the labour market needs.  

Efforts  to  promote  inclusive  education  have  also  been  high  on  the  agenda,  with  the 

primary  objective  of  closing  the  educational  gap  of  disadvantaged  learners  (including 

learners  with  special  educational  needs,  migrants  and  Roma).  In  the  course  of  the  last  year 

initiatives to make education more inclusive were introduced in the Czech Republic, Greece, 

Poland, Portugal, and Slovakia. The measures aimed primarily at encouraging participation in 

mainstream  education  by  broader  groups  of  learners  (especially  from  the  disadvantaged 

groups)  and  from  an  earlier  age.  Hungary  lowered  the  compulsory  starting  age  of  early 

childhood education and care from five to three years; the Czech Republic adopted legislation 

to  lower  it  from  six  to  five  years  from  September  2017  on.  Greece  introduced  Educational 

Priority Zones, i.e. reception classes, remedial teaching and reception structures for educating 

migrants in primary schools. Portugal increased the number of scholarships for students from 

economic  vulnerable  background  and  is  also  increasing  the  public  provision  for  early 

childhood education and care. Slovakia came forward with an initiative related to preventing 

misplacement  of  children 

in  special  schools  solely  based  on 

their  disadvantaged 

socioeconomic  background.  In  Belgium  (Flemish  Community)  every  child,  including  those 

with special needs, now has the right to enrol in a mainstream school, provided this is possible 

with reasonable adaptations. 

Several  Member  States  emphasise  support  measures  for  teachers,  trainers,  school 

leaders and other educational staff. This is the case in Belgium (where first measures have 

been taken in both Flemish and French communities), the Czech Republic, Croatia, Cyprus, 

Latvia, Romania, Slovakia and Sweden. 

Member  states  are  making  efforts  to  raise  tertiary  education  attainment  and  the 

employability  of  higher  education  graduates.  Measures 

include  better  attracting 

41 

 
 
disadvantaged  and  vulnerable  groups,  developing  clear  progression  routes  from  vocational 

and  other  education  types  into  higher  education,  as  well  as  reducing  drop-out  rates.  In 

Sweden, the Government will finance around 14 600 new study places in higher education by 

2019  to  further  boost  participation.  The  Czech  Republic  and  Portugal  have  increased 

scholarships  and  support  to  people  from  economic  vulnerable  background.  Improving  the 

relevance of higher education is  taking  place  through  the increased use  of skills  projections 

and  graduate  employment  data,  the  involvement  of  employers  in  curriculum  design, 

developing a greater variety of study modes (part-time, distance, etc.) and further developing 

higher vocational education and professional higher education. Spain is further developing its 

graduate tracking system to measure employability of study programmes. Measures aimed at 

increasing  employability  are  being  pursued  in  Belgium,  in  particular  by  improving 

progression routes via short cycle programmes (Flemish Community) and dual or work-based 

education programmes at bachelor level (Federation Wallonia-Brussels). 

Policy  reforms  in  adult  learning  have  been  carried  out  to  ensure  that  education  and 

training  provision  meets  labour  market  needs.  Initiatives  in  this  area  have  recently  been 

put forward in Cyprus, Hungary, Lithuania, Romania and Sweden, usually focusing on basic 

skills  or  with  the  aim  at  keeping  skills  up-to-date  and  preventing  early  retirement.  As  an 

example, in Sweden the 'right to adult education' at upper secondary level was adopted as part 

of  the  2016  budget.  From  2017,  all  adults  will  have  the  right  to  complement  their  previous 

studies and obtain an upper secondary qualification that gives access to higher education and 

improves  their  chances  in  the  labour  market.  Hungary  is  aiming  at  developing  the  digital 

competencies  of  200,000  disadvantaged  persons.  Lithuania  paid  attention  to  conditions  for 

improving  the  quality  of  non-formal  adult  education  and  continuous  training.  Through  the 

New  Skills  Agenda  for  Europe,  the  Commission  encourages  sustained  investment  in  skills 

acquisition and better alignment of skills with labour market needs to promote the creation of 

quality jobs. 

Measures  promoting  relevant  and  high-quality  knowledge,  skills  and  competences 

throughout  lifelong  learning,  focusing  on  learning  outcomes  for  either  employability, 

innovation,  active  citizenship  and/or  well-being  have  also  been  taken  in  Ireland,  Spain, 

France, Croatia, Poland, and the United Kingdom 

Member  States  continued  to  improve  the  transparency  of  skills  and  qualifications. 

Poland,  Croatia  and  Finland  improved  their  national  qualification  frameworks.  Sweden  has 

42 

 
 
referenced  its  national  qualifications  framework  to  the  European  Qualifications  Framework. 

Austria and Sweden have focused on the assessment and validation of skills and qualifications 

of recently arrived migrants.  

Concerning  youth  employment,  the  Youth  Guarantee  has  been  a  catalyst  for  change. 

Member  States'  national  Youth  Guarantee  schemes  comprise  two  types  of  actions:  (1)  fast-

acting measures to provide tailored support to all young NEETs and (2) medium to long-term 

structural  reforms  to  improve  institutional  capacity  and  ensure  an  integrated  approach  to 

service  delivery.  In  terms  of  coverage,  across  the  EU,  41.9%  of  all  NEETs  aged  15-24  were 

enrolled in the Youth Guarantee in 2015, up from 40.4% in 2014. Full-scale implementation is 

still recent in a number of Member States, as many measures have required substantial reforms 

and broad partnerships. 

Investing in outreach activities targeting young people who are not registered with the 

PES  has  been  an  important  priority  in  many  Member  States.  Two-thirds  of  PES  are 

currently engaged in outreach work in the context of the YG implementation. In Sweden, 

the  strategy  "Paths  forwards  –  strategy  for  NEETs"  focuses  on  motivating  young  people 

above 15 to start or return to education and complete upper secondary school, or to work (the 

latter when relevant and only for those aged 20-25). The national coordinator for NEETs aims 

at ensuring better collaboration between government agencies, municipalities, county councils 

and organisations at national, regional and local level, and works in close collaboration with 

the  Delegation  for  young  people  in  work,  in  order  to  promote  local  agreements  between 

municipalities and the PES, and their implementation. In Croatia, the CISOK centres (lifelong 

career  guidance  centre) established  across  the  country  are increasingly  providing  job  search 

assistance, career counselling and outreach to NEETs. In Latvia, the outreach project "Know 

and Do" aims at engaging the NEETs in education and develop their skills.  

One-stop-shops  have  also  been  established  to  improve  accessibility  and  outreach.  They 

bring  together  various  youth-related  services  under  one-roof,  providing  a  broad  range  of 

services  in  a  flexible  and  accessible  way.  In  2015,  Finland  launched  one-stop  guidance 

centres for youth. Located in 35 municipalities so far, they provide low-threshold support  to 

all young people below the age of 30, including personal advice and guidance, support in life 

management, career planning, social skills, as well as education and employment support.  

In many Member States, the Youth Guarantee has more generally helped to break down 

silos  across  policy  areas  and  build  viable  partnerships.  Coordination  among  the 

43 

 
 
employment,  education  and  youth  policy  sectors  has  been  heightened.  In  Italy,  the 

implementation  of  the  Youth  Guarantee  has  led  to  the  creation  of  a  common  informatics 

system integrating the databases of the Ministries of Labour and of Education and the launch 

of dedicated initiatives to promote ALMPs and the Youth Guarantee in schools. In Lithuania, 

the  project  'Discover  Yourself'  implemented  in  all  municipalities  for  the  period  2015-2018, 

involves  a  cross-sectoral  partnership  of  local  PES  offices,  the  police,  children  rights 

protection  services,  social  workers  and  local  youth  centres  to  support  NEETs  in  gaining 

personal, social and professional skills. 

In addition, most Member States have used  targeted wage and recruitment subsidies, in 

many of them with support from EU funding, most notably the ESF and the Youth Employment 

Initiative (YEI). Since 2015, in Croatia, an amendment of the Law on Contributions enables 

employers who offer young people below the age of 30 a permanent employment contract to 

be  exempted  from  payment  of  contributions  for  health  insurance  and  employment 

contributions for a period of 5 years. Estonia launched ‘My First Job’ in 2015 which provides 

a  one-year  wage  subsidy  and  coverage  of  training  expenses  during  a  two-year  period.  In 

Lithuania,  employers  hiring  youth  registered  with  the  PES  can  receive  a  reimbursement  of 

50%  of the gross  wage for up to  6 months. Priority is given to  categories such as the long-

term unemployed youth, or young parents of 2 children. Sanctions are applied to employers 

who  dismiss  subsidised  workers  within  six  months  after  the  subsidy  period.  In  2015,  the 

measure involved 28% of all ALMP participants aged 16-29. In Cyprus, new schemes offer 

job  placements  to  less  than  25  years  old  unemployed  graduates  of  lower  secondary,  upper 

secondary and post-secondary education of up to 2 years, who have limited work experience, 

with a training allowance of EUR 125 per week for maximum 6 months. Tertiary education 

graduates  younger  than  35  are  also  eligible.  In  France,  young  people  aged  less  than  28  and 

having benefitted from a scholarship can apply, within 4 months after their graduation from 

tertiary  or  vocational  secondary  education,  for  a  "subsidy  for  first  job  search" ranging  from 

200  to  300  euros  a  month.  The  measure  is  expected  to  benefit  126 000  young  people. 

Moreover, a EUR 4400 premium is granted during the first year to companies with less than 

10  employees  welcoming  an  apprentice  between  16  and  18  years.  Romanian  authorities  are 

also  currently  working  on  changes  to  the  employment  legislation  to  provide  a  mix  of  more 

generous  activation  measures  tailor-made  to  groups  furthest  away  from  the  labour  market 

(including  entrepreneurship  and  employment  subsidies,  incentives  for  apprenticeships  and 

traineeships). 

44 

 
 
Specific  efforts  to  support  apprenticeship  reforms  and  the  better  regulation  of 

traineeships  have  been  stepped  up.  These  reforms  have  helped  to  better  align  young 

people's  skills  with  labour  market  needs  and  strengthen  business  community  engagement.  

Half of the EU Member States have undertaken – or report plans to undertake – legal changes 

to align their national framework with the Quality Framework for Traineeships of 2013. In the 

Member  States  that  have  already  adapted  their  legislation  (Bulgaria,  France,  Germany, 

Greece,  Lithuania,  Portugal,  Spain,  Sweden)  most  of  the  reforms  consist  in  limiting  the 

duration  of  traineeships  to  six  months  (in  Bulgaria  to  12  months),  clarifying  conditions  for 

longer traineeships and assigning mentors to provide guidance and supervise progress during 

the traineeship. 

Box 2. Making full use of the European Social Fund  (ESF) 

With a budget of 86.4 billion EUR for 2014-2020, the European Social Fund (ESF) is one the 
key  EU 
the  country-specific 
the  challenges 
recommendations  (CSRs),  with  regulations  providing  for  the  possibility  to  re-programme  to 
align with emerging challenges. 

to  address 

instrument 

identified 

in 

One of the key policy priorities for the ESF 2014-20 is youth employment tackled through 
both  the  fund  itself,  and  the  Youth  Employment  Initiative  (YEI).  Under  the  ESF,  EUR  6.3 
billion  are  directly  dedicated  to  youth  employment  actions,  while  young  people  are  also  a 
major  target  group  under  education,  lifelong  learning  and  social  inclusion  measures.  In 
addition, the YEI budget amounts to EUR 6.4 billion in total (composed of EUR 3.2 billion of 
YEI  resources  with  a  ESF  matching  allocation  of  EUR  3.2  billion).  The  YEI,  for  which  20 
Member  States  are  currently  eligible,  specifically  targets  young  people  who  are  not  in 
employment, education or training (NEET) focusing on the EU regions that faced the highest 
youth  unemployment  rates  in  2012.  To  ensure  a  swift  response  to  this  important  policy 
challenge, the YEI resources have been frontloaded in the EU budget for spending during the 
first  half  of  the  financial  cycle.  In  addition,  in  2015  the  Commission  released  an  increased 
pre-financing for the YEI worth around EUR 1 billion, to ensure faster mobilisation of youth 
employment and training measures on the ground. The increase had a positive impact for half 
of  the  Managing  Authorities  benefitting  from  the  YEI,  which  could  commit  more  funds 
and/or launch more projects.37 

However,  overall  2014  and  2015  have  been  marked,  for  both  the  ESF  and  the  YEI,  by  a 
relatively slow start of implementation in the Member States, with low declaration of eligible 
certified  expenditure  indicating  a  low  absorption  rate.  Nevertheless,  this  should  not  be 
interpreted  as  a  sign  of  lack  of  actions  and  implementation  on  the  ground.  Member  States 
have encountered delays in the designation of managing authorities and monitoring systems, 
which impacted on their speed in processing expenditure claims to the European Commission.  

Already,  data  show  that,  since  the  launch  of  the  operational  programmes,  over  2  million 
participants have benefitted from ESF support and 1.4 million young NEETs have benefitted 

37  Commission  study,  First  results  of  the  Youth  Employment  Initiative  –  A  final  report  to  DG  Employment, 
Social Affairs and Inclusion of the European Commission (2016). 

45 

 
 
 
 
 
 
                                                            
from  YEI-supported  interventions  -  notably  job  placements,  apprenticeships,  traineeships, 
self-employment measures and continued education and training. In the majority of Member 
States the YEI is seen as a key mechanism or lever through which to operationalise the Youth 
Guarantee Council Recommendation (2013). Although the progress in implementation varies 
between Member States, some projects already have a significant impact on the ground.  

Nearly  all  Member  States  have  taken  action  to  improve  the  quality,  supply,  or 

attractiveness of apprenticeships, in the spirit of the European Alliance for Apprenticeships 

launched  in  July  2013.  The  Danish  apprenticeship  reform,  passed  in  2013  but  implemented 

from  mid-2015  onwards,  aims  at  offering  apprentices  the  opportunity  to  obtain  a  general 

upper-secondary  qualification  opening  access 

to  higher  education.  In  France, 

the 

apprenticeship contracts now allow obtaining 85 professional qualifications approved by the 

Labour  ministry  (instead  of  the  Education  ministry),  provided  the  person  has  an  ISCED  3 

qualification  or  was  identified  as  an  early  school  leaver.  In  Austria,  the  Reform  of  the 

Vocational Training Act in 2015 strengthened the quality management in the apprenticeship 

training  system.  New  training  offers,  such  as  standardised  curricula  for  low-threshold  entry 

qualifications  and  partial  qualifications,  have  been  developed  for  disadvantaged  young 

persons. Reforms in the field of apprenticeships are also planned in Ireland and Slovenia. In 

Ireland,  the  apprenticeship  Council  (launched  end  2014)  is  tasked  with  mapping  out  the 

economic sectors where the expansion of apprenticeships can make a real difference to both 
employers  and  employees.  Following  a  call  for  proposals  closed  on  31st  march  2015,  a 

number of new Apprenticeships, tailor-made to meet labour market needs, were selected for 

development and rollout. The first new apprenticeship, in Insurance Practice, was launched in 

mid-September  2016.  In  Slovenia,  the  Apprenticeship  act  under  public  consultation  aims  at 

defining  an  overall  framework  for  apprenticeships  (including  eligibility,  working  and  social 

conditions, mutual obligations). 

Different  policy  initiatives  were  taken  to  promote  labour  market  integration  of  older 

workers.  Some Member States  have focused  on providing access to  adult  learning, such  as 

Romania with the adoption of a National Strategy on Lifelong Learning, with the main focus 

on  increasing  participation  in  lifelong  learning  of  people  usually  underrepresented  and 

disadvantaged in the labour market. Other Member States introduced specific activation plans 

and individualised employment services, including career counselling. In 2016, Luxembourg 

started the implementation of the professionalization placement programme notably intended 

for  job  seekers  at  least  45  years  old.  In  other  cases  Member  States  have  favoured  the 

46 

 
 
 
adaptation of work places and promoted healthy ageing at work. This has been an objective of 

the  Latvian  Active  Ageing  Strategy  for  Longer  and  Better  Working  Life,  which  involves 

skills  and  health  assessment,  development  of  individual  plan  at  the  enterprise  level  (incl. 

workplace  adjustment,  flexible  forms  of  work,  health  improvement  measures  etc.)  and 

training.  

Increasing incentives for the employment of older workers (e.g. bonuses) and removing 

disincentives in tax-benefit structures is under way in several member States.  Belgium, 

Germany and Austria have launched initiatives to increase incentives for employment of older 

workers. Germany plans to introduce more flexible conditions for people to continue to work 

up  to  and  beyond  the  general  retirement  age  by  providing  a  better  framework  to  combine 

earned  income  with  pension  earnings.  In  Belgium  two  regions  (Wallonia  and  Brussels) 

adopted reforms to improve the transferred employment incentive schemes for older workers. 

Specific  schemes  and  lifelong  learning  strategies  aim  at  supporting  people  with 

disabilities  or  other  disadvantaged  people 

in  obtaining  and  maintaining  paid 

employment in the open market. Recent concrete examples of such measures can be seen in 

Cyprus  (subsidies  for  employers  hiring  people  with  disabilities),  Luxembourg  (temporary 

work placement with an opportunity for permanent position), Malta (employment quotas) and 

Netherlands (job creation targeting people with disabilities). The recent National Strategy on 

Lifelong  Learning  in  Romania  has  set  out  an  objective  to  increase  participation  of  the 

disadvantaged groups, including people with disabilities. 

In the  context of  an unprecedented influx of asylum seekers, Member States have also 

put  an  increased  focus  on  labour  market  integration  of  people  with  a  migrant 

background.  Ensuring  early  intervention  to  those  newly-arrived,  involving  relevant 

stakeholders  such  as  employers  and  public  employment  services,  has  been  the  objective  of 

several initiatives. Sweden has designed early measures for the asylum application period, in 

particular language introduction and societal information. Once the newly-arrived are granted 

a residence permit, they have access to an introduction programme, with fast-tracks targeting 

professions at risk of shortages. Moreover, 200 agencies in the public sector have been tasked 

to offer traineeships to the newly arrived during 2016-2018. Companies also play a proactive 

role; those offering at least 100 jobs or traineeships to the newly-arrived have been grouped 

within the  so-called  "100  Club",  with  tailor-made  packages of  measures  from  the  PES.  The 

updated Finnish Government Integration Programme 2016-2019 also follows the objective of 

47 

 
 
a smooth transition for immigrants into, for example, studies or working life, by means of an 

effective  initial  cooperation  between  authorities  and  stakeholders.  In  the  same  vein,  but 

reflecting  a  federal  structure,  the  German  Länder  adopted  several  programmes,  plans  and 

agreements according to their needs (e.g. “Integration through Training and Work” agreement 

concluded  between  the  Bavarian  government,  the  Bavarian  business  community  and 

employment services). In Austria, the federal government established in September 2015 an 

"integration pool" of EUR 75 million to fund labour market integration measures for refugees, 

with  an  additional  EUR  40  million  per  year  allocated  for  2016  and  2017  in  the  Federal 

Budget. Against this backdrop, a pilot project is carried out by the PES, aiming at identifying 

individual needs and training requirements, with also provision of general information about 

job  seeking  and  the  education  system,  and  about  the  rights  and  duties  of  employees  and 

employers in Austria.  

Specific activation measures have also been designed through targeted revamps of social 

benefits and services. In Denmark, the integration allowance introduced in September 2015 

has  replaced  educational  or  social  assistance  in  order  to  increase  incentives  to  work  for 

immigrants.  Also,  refugees  are  now  deemed  capable  to  work  at  arrival,  the  public  sector 

integration  programme  is  going  to  focus  on  job-related  measures,  education  and  training  in 

the  Danish  language  and  will  be  more  labour-market  oriented,  and  the  job  centres  will 

strengthen  their  services  to  companies.  Moreover,  a  cash  bonus  scheme  is  introduced  for 

private companies that employ refugees in ordinary non-subsidized employment. 

Beyond measures aimed mostly at integrating the newly-arrived, several Member States 

have made efforts to tackle discrimination, through either new or amended existing pieces 

of legislation, or the development of specific projects. In Finland, the Non-Discrimination Act 

entered into force in 2015 expands the duty to promote equality and prevent discrimination. 

The  duty  applies  to  training  and  education  providers  as  well  as  educational  institutions  and 

employers,  affecting  in  particular  working  life  in  the  private  sector.  In  Belgium,  a  new 

commission  of  experts  was  established  by  the  Royal  Decree  of  18th  November  2015, 

gathering representatives of the judiciary, the legal professions, trade unions and employers' 

organisations with the aim of evaluating every five years the application and the effectiveness 

of anti-discrimination laws.  Spain has developed innovative projects in the framework of the 

National Strategy against racism, discrimination, xenophobia and other forms of intolerance: 

a  project  called  FRIDA  has  been  developed  throughout  2015  with  the  aim  of  training  and 

48 

 
 
raising  awareness  among  the  education  community.  Similar  programmes  are  going  to  be 

launched in the field of Justice and Health.  

The  provision  of  paid  maternity/parental  leave  tends  to  boost  female  labour  market 

participation, by helping women to reconcile work and family life. A balanced distribution 

of  paid  leave  between  women  and  men  has  been  shown  to  be  particularly  beneficial  in 

boosting  women’s  employment  after  having  children.  In  the  recent  period  a  number  of 

Member  States  (including  Germany,  Ireland,  Luxembourg,  Hungary,  Malta  and  Portugal) 

have  taken  initiatives  to  improve  their  paid  parental  leave  provisions.  As  an  example, 

Germany has flexibilised the rules on parental leave by allowing a leave of 24 months when 

the child is aged between three and eight, and letting it to be split into three blocks. Moreover, 

a balanced use of leave entitlements between women and men after childbirth (including the 

use  of  leave  arrangements  by  fathers)  has  been  shown  to  have  positive  effects  in  terms  of 

distribution  of  household  and  care  responsibilities  and  improved  female  labour  market 

outcomes,  including  faster  return  of  women  to  the  labour  market.  Moving  in  this  direction, 

Ireland recently introduced two weeks’ paid paternity leave and Portugal extended paternity 

leave to 25 working days (formerly 20 days), 15 of which are mandatory (formerly 10). Czech 

Republic  also  amended  parental  leave  arrangements  and  benefits  to  encourage  fathers’ 

involvement in childcare and encourage mothers who want to return to work earlier.  

Member States also introduced measures in the areas of childcare and long-term care to 

remove  obstacles  to  employment  for  family  carers,  especially  women.    For  example, 

Czech Republic has put forward initiatives to improve pre-school education and to strengthen 

the support of children with special needs. Czech Republic is also planning to adopt financial 

assistance and leave for informal carers of family dependants in 2017. Other Member States 

(including Bulgaria, Germany, Ireland, Slovakia, Luxembourg, and UK) have recently taken 

steps to improve affordability of childcare. Slovakia is planning to increase the allowance for 

carers  with  persons  who  have  a  severe  disability  by  the  end  of  2016,  and  to  increase  the 

period  of  pension  contributions  credited  to  the  carer.  Some  Member  States  also  intend  to 

address  financial  disincentives  to  work  arising  from  their  tax-benefit  systems.  For  instance, 

Austria and the United Kingdom have launched initiatives to expand favourable tax treatment 

of child allowances and child care expenses. 

Flexible working arrangements, such as telework, flexitime and reduced working hours, 

have  also  been  used  to  stimulate  employment  of  women.  In  Portugal  employees  with 

49 

 
 
parental  responsibilities  have  been  entitled  part-time  work  or  flexible  work  arrangements, 

such  as  telework.  Germany  recently  introduced  the  parental  allowance  ‘plus’,  which  allows 

parents  to  take  their  parental  leave  on  a  part-time  basis  and  gives  incentives  for  parents  to 

both  make  use  of  the  part-time  leave.  Czech  Republic  is  also  planning  measures  to  allow 

employees with parental responsibilities to flexible forms of entitlements (in case of children 

aged 3 or younger). Telework is possible at the decision of the employer.  

The  long-term  unemployed  face  frequently  a  combination  of  the  above-mentioned 

barriers; many Member States are reinforcing  support for them,  with sometimes, as a 

first  step,  measures  to  increase  registration  rates  with  the  employment  services,  which 

was on average at 71% in the EU in 2015. Romania is for instance introducing in the autumn 

2016  integrated  teams  bringing  together  social  services,  health  and  education  mediators, 

targeting the outreach and registration of the inactive and long-term unemployed in rural areas 

and in disadvantaged communities. 

A number of countries are reinforcing the individualisation of support provided to the 

long-term  unemployed,  in  line  with  the  Council  Recommendation  focusing  on  job 

integration agreements tailoring support to individual needs with clear rights and obligations 

for  both  the  unemployed  and  the  support  bodies.  In  France,  support  provided  by  the  public 

employment  service  has  become  more 

individualised  with  a  reinforced  competence 

assessment,  as  staff  is  reallocated  towards  intensified  counselling,  aiming  to  reach  460.000 

clients  at  risk  of  long-term  unemployment  by  2017.  In  Spain,  the  Common  Employment 

Services  Portfolio  from  2015  foresees  the  establishment  of  individualised  employment 

itineraries  and  personal  employment  agreements,  which  are  binding  for  those  receiving 

unemployment  benefits.  Moreover,  a  Programme  to  support  the  long-term  unemployed  was 

introduced  in  2016  to  strenghten  the  capacity  of  the  PES  with  a  view  to  providing 

individualised  support. The Danish job  centres have  in  2016 started a ‘Contact Plan’  that is 

based on intensified contact in the first six months of unemployment and after 16 months of 

unemployment.  The  long-term  unemployed  person  is  actively  involved  in  planning  the 

meetings and job counsellors are trained to use empowerment and motivational tools. Finland 

also plans a face-to-face interview with long-term unemployed every 3 months from 2017. 

A number of countries have accordingly outsourced employment services for the long-

term  unemployed.  Malta  introduced  a  Work  Programme  Initiative  outsourcing  profiling, 

training  and  job  placements  for  LTU  clients  aged  25-56.  Latvia  launched  in  August  2015  a 

50 

 
 
national  ESF  programme  (EUR  40  million)  which  involves  NGOs  as  service  providers  for 

individual  and  group  consultations,  career  consultations,  health  checks,  guidance, 

motivational programmes, addiction treatment programmes.  

Training provision for the long-term unemployed has been also reinforced in a number 

of countries. France launched in 2016 a EUR 1 billion plan for financing 500 000 additional 

trainings  for  jobseekers,  of  which  300 000  prioritised  to  long-term  and  low-qualified 

jobseekers  in  sectors  with  positive  regional  labour  and  economic  prospects.  Sweden  is 

strengthening  the  training  component  of  its  activation  guarantee  with  increased  possibilities 

for work training, vocation-specific courses within shortage professions at folk high schools 

for  up  to  24  months  and  possibility  for  the  LTU  to  study  while  still  receiving  "activity 

support" benefits for one year. 

Tailoring support to individual needs frequently required better coordination of services 

across  organisations,  and  Member  States  agreed  in  the  Council  Recommendation  to 

establish a single point of contact for the long-term unemployed. Data exchange and inter-

operability platforms are crucial for effective delivery of services. Slovakia is reinforcing the 

capacity of integrated labour offices, integrating employment counselling and the provision of 

social  benefits  and  creating  specialised  activation  centres  for  the  long-term  unemployed. 

Ireland has integrated income support and employment services in the Intreo centres, focused 

on individual case management. To reduce caseloads and increase the scope for individualised 

support,  the  'JobPath'  programme  has  outsourced  one-year-support  for  the  long-term 

unemployed, providing private partners with financial incentives to achieve sustainable exits 

from the programme with  payments  made  after 13, 26, 39, 52 weeks of employment  of the 

jobseeker.  While  some  countries  are  well-advanced  in  the  delivery  of  a  single  point  of 

contact,  other  countries  are  taking  first  steps  to  coordinate  service  provision  across 

organisations.  Bulgaria  is  piloting  service  integration  by  creating  through  an  ESF  financed 

project  65  one-stop-shop  centres  integrating  counselling  from  both  employment  and  social 

services.  

Successful integration also requires strong partnerships with employers. In the UK and 

Netherlands,  specialised  employer  teams  provide  a  single  point  of  contact  for  employers, 

regularly monitoring employment opportunities for the long-term unemployed and developing 

specific  knowledge  and  relationships  with  companies.  In  Portugal,  the  Reativar  programme 

measure  introduces  support  for  the  long-term  unemployed  above  age  31  taking  six  months 

51 

 
 
traineeships  at  a  private  institution,  through  a  monthly  grant  according  to  the  qualification 

level. The promoting institution provides certification at the end of the traineeship. The PES 

(IEFP)  pays  between  65%  and  80%  of  the  grant,  according  to  the  type  of  promoting 

institution  and  the  characteristics  of  the  participant.  In  Cyprus,  the  government  introduced 

new employment subsidies targeting the long-term unemployed, while Finland is preparing in 

2017  to  launch  work-based  learning  and  apprenticeships  programmes  tailored  to  the  long-

term  unemployed.  Slovakia  uses  the  ESF  to  introduce  tutoring  work  for  the  long-term 

unemployed  combining  an  employer  subsidy  with  a  mentorship  scheme  provided  by  the 

employer.   

2.3   Guideline 7: Enhancing the functioning of labour markets 

This  section  looks  at  the  implementation  of  the  employment  guideline  no.  7,  which 

recommends Member States to enhance the functioning of the labour market. It first presents 

indicators about the coverage of public employment services and activation measures which 

are crucial to increase labour market matching. Then it quantifies labour market segmentation  

through  labour  market  transitions,  while  stressing  the  various  types  of  costs  associated  to 

strictness of protection. Section 2.3.2 reports on policy measures from Member States in these 

areas,  including  fostering  labour  mobility  and  the  promotion  of  social  dialogue,  which  is 

important for a sense of ownership of reforms and thereby their effective implementation. 

2.3.1   Key indicators 

Public  Employment  Services  (PES)  are  a  crucial  stakeholder  to  match  supply  and 

demand, provided jobseekers are registered, in order to grant them access to active labour 

market measures and job search support. Variations in registration rates across countries (see 

Figure 22) are due to several factors, including the quality and attractiveness of PES services, 

the  level,  duration  and  eligibility  of  unemployment  and  social  benefits,  and  the  obligations 

and sanctioning mechanisms linked to these benefits.  

52 

 
 
 
 
 
Figure 22.  Share of long-term unemployed registered with employment services, 2015 

Source: Eurostat, Labour Force Survey 2015. Data for AT and IE not available 

All  in  all, the  use  of  the  PES  in  job  search  remains  uneven  across  the  EU  (Figure  23), 

with  also  a  risk  that  in  some  Member  States  the  most  vulnerable  jobseekers  turn  towards 

undeclared  work.  The  efficiency  of  PES  in  gathering  information  from  employers  on  job 

vacancies contributes to larger use of PES by jobseekers. 

Figure 23 - Use of PES in job search and share of unemployed jobseekers, 2014   

Source: Eurostat, Labour Force Survey 2014 

53 

 
 
 
 
 
Countries  with  the  lowest  long-term  unemployment  rates  are  among  those  where  the 

level of participation in ALMPs is the highest. For several other Member States, activation 

support does not seem proportional to the unemployment challenge that they face. 

Figure 24: Activation support (LMP participants per 100 persons wanting to work) and 
long-term unemployment rates by Member State, 2014 

25

20

15

10

5

0

70

60

50

40

30

20

10

0

SE AT LU DK FI DE UK MT CZ RO NL EE HU PL FR BE LV LT SI

IE BG CY IT PT SK HR ES EL

LTU 2014 (left-hand scale)

Activation support 2014 (right-hand scale)

Source: Eurostat, LMP database (Note: for activation support 2009 data for the UK, 2012 data for Cyprus and 
2013 data for Greece, Ireland and Spain).  

However, the design, coverage and targeting of active labour market policies (ALMPs) as 

well  as  the  way  they  are  implemented  impacts  on  their  effectiveness  and  efficiency. 

Unemployment  can  have  several  causes,  such  as  an  overall  lack  of  labour  demand,  skills 

mismatches, employment protection legislation or labour taxation, etc. (see the corresponding 

paragraphs  of  this  document).  Symmetrically,  activation  measures  can  focus  on  the  supply 

side  (like  employment  subsidies),  while  others  target  disadvantaged  groups  on  the  labour 

market or relate to the overall framing of the labour market (e.g. skills forecasting systems), 

or  to  the  design  of  social  benefits,  which  is  why  ALMP  measures  are  reflected  –  albeit  to 

different  extents  -  under  Sections  2.2,  2.3  and  2.4  of  the  policy  response.  Different  ALMPs 

will  be  fit  for  different  types  of  unemployed  and  different  circumstances,  which  calls  for 

effective  profiling  techniques  and  developing  an  evaluation  culture.  For  instance,  hiring 

incentives for firms can come with relatively large deadweight losses or crowding-out effects. 

Effectiveness  of  direct  employment  creation  in  the  public  sector  also  proves  frequently 

questionable.  In  general,  ALMPs  which  are  part  of  individualised  and  targeted  support 

54 

 
 
 
 
 
schemes appear to be more successful. ALMPs which redistribute incentives to outsiders on 

the labour market tend to prove particularly effective during recoveries. 

In this regard, labour market segmentation is still significant in many Member States. 

This  implies  that  often  different  “segments”  coexist  in  the  labour  force:  on  the  one  hand, 

workers  characterised  by  stable  employment  relationships,  protection  against  dismissal,  and 

full access to social protection; on the other hand, non-standard employment contracts, with 

limited  or  no  protection  against  dismissal,  unstable  employment  relationships,  and  (often) 

limited  access  to  social  protection.  In  a  segmented  labour  market,  fixed-term  workers  are 

typically  in  this  condition  against  their  will,  performing  tasks  that  are  not  temporary  by 

nature, and there are limited transitions to the more protected segment of the labour force; in 

practice, temporary contracts often represent "dead ends" rather than "stepping stones". The 

combination  of  high  shares  of  fixed-term  employees  and  low  transition  rates  towards 

permanent  employment  seems  particularly  worrying  in  countries  such  as  Poland,  Spain  and 

France (Figure 25).  

Figure 25: Share of temporary employment (2015) and transition rates from temporary 
to permanent contracts (2014-15) 

Source: Eurostat, LFS and SILC. Data for transition rates from 2014 for DE, IE, EL, LT, MT, RO, UK. 

The involvement of social partners in the design and implementation of relevant policies 

and reforms is uneven across the EU, which deserves attention. While all Member States 

dispose of bipartite or tripartite bodies to allow for interactions between social partners, and in 

some cases public authorities, the degree and impact of the involvement of social partners in 

55 

 
 
 
 
 
policies  and  reforms  depends  strongly  on  the  general  attitude  of  public  authorities  towards 

them,  on  the  relationship  between  political  decision-makers  and  representatives  of  social 

partner  organisations,  on  the  capacity  of  these  organisations  and  the  substance  of  their 

contributions. The involvement of social partners in the Semester often reflects their overall 

involvement in national decision-making processes. 

2.3.2   Policy response  

Key  institutions  to  enhance  the  functioning  of  labour  markets  and  help  matching  are 

Member  States'  Public  Employment  Services  (PES),  which  have  all  participated  in 

benchlearning  visits  to  identify  strengths  and  areas  for  improvement,  drawing  on  the 
European Public Employment Service Network (PES Network)38. Following a process of self-

assessment and peer review, reports have been produced describing good practices and areas 

for  improvement  (AFIs).  Each  PES  will  decide  how  it  follows  up,  and  will  report  back  on 

reforms undertaken to the PES Network Board 12 months later. 

However,  Member States'  PES continue to  operate in a climate of  restricted resources 

and  therefore  efforts  have  been  continued  to  optimise  targeting  of  service  delivery. 

Several  PES  are  developing  efficiency  programmes  which  are  intended  to  maintain  and, 

where possible, improve service provision whilst enabling an increased focus on the hardest 

to help. In Estonia the government adopted the new Employment programme for 2016-2017, 

which  entered  into  force  in  January  2016.  More  than  20  different  active  labour  market 

measures  are  available  aiming  at  providing  help  according  to  the  individual  needs  of  the 

jobseekers. In Hungary, a new profiling system has been operating nation-wide since 2016 in 

order  to  provide  customised  efficient  labour  market  services,  subsidies  and  labour  market 

programmes based on the individual characteristics of the client.  

The  development  of  skills  forecasting  systems  in  several  Member  States  helps  public 

employment  services  fulfil  their  objectives.  In  Malta,  an  IT  tool  for  employers  and  job 

seekers  has  been  designed.  It  creates  a  Virtual  Labour  Market,  matching  job  search  with 

current vacancies taking into account skills and aptitudes. This measure is meant to contribute 

38  Decision  573/2014/EU  of  the  European  Parliament  and  of  the  Council  on  Enhanced  co-operation  between 
Public 
http://csdle.lex.unict.it/Archive/LW/EU%20social%20law/ 
(PES), 
EU%20legislation%20in%20force/Decisions/20140529-115645_14_573_COPE_enpdf.pdf   

Employment 

Services 

56 

 
 
 
 
                                                            
to  a  more  efficient  public  employment  service  and  will  also  assist  in  policy  development 

through skills needs information. In Latvia, a significant amount has been devoted to a project 

consisting in  improving short-term labour market forecasts, including information provision 

about demand for specific skills and professions and creation of a user-friendly tool showing 

the outlook on labour market demand and supply.  

Accordingly,  PES  are  enhancing  their  efforts  to  strengthen  their  collaboration  with 

employers so as to encourage recruitment from their caseloads of jobseekers. The focus 

on meeting employer demand is an essential  component of the PES intervention to assist in 

achieving  a  labour  market  balance.  In  Luxembourg  an  agreement  between  the  Union  des 

entreprises  luxembourgeoises  (UEL),  the  government  and  the  PES  (ADEM)  was  concluded 

under  the  programme  "Entreprises, partenaires  pour  l'emploi",  in  order  to  recruit  5,000  job-

seekers  between  2015  and  2017.  This  programme  aims  for  a  close  cooperation  to  carry  out 

specific actions such as setting up exchange of information, developing partnerships between 

ADEM  and  private  companies,  developing  targeted  training  for  job-seekers  meeting  the 

companies'  requirements.  In  March  2016,  a  job  board  within  ADEM  was  set  up  to  increase 

the  opportunities  to  meet  for  job  seekers  and  employers.  In  Romania,  the  Institutional 

Strategy of the National Employment Agency (NEA) aims at developing activities dedicated 

to employers in order to increase the occupancy rate of vacancies. 

Member  States  are  also  developing  one-stop  shops,  in  line  with  the  Council 

recommendation  on  the  integration  of  the  long-term  unemployed.  In  Portugal,  services 

provided by Public Employment Services and Social Services are being brought together. In 

Romania, the case management approach is being introduced, also for social services, in the 

context of the PES reform, with the purpose of increasing activation and the link between the 

two  types  of  services.  Integrated  teams  are  set  up  for  disadvantaged  communities.  Finland 

also rolled out a network of multi-sectoral joint employment and social services for the long-

term unemployed, in operation since the beginning of 2016. This allows for an integrated and 

personalised approach to activation and support for the return to employment. 

With  the  same  objective  to  develop  holistic  and  coherent  approaches,  some  Member 

States  have  also  taken  steps  to  improve  the  overall  governance  and  consistency  of 

ALMPs. In Italy, the Jobs Act established a new national agency for an active labour market 

(ANPAL)  to  coordinate  a  wide  network  of  institutions  and  agencies  (e.g.  National  Social 

Security  Institute,  National  Insurance  Institute  for  Employment  Injuries,  employment 

57 

 
 
services, chambers of commerce, schools) responsible for the management and monitoring of 

active  labour  market  policies.  The  Ministry  of  Labour  and  Social  Policies  is  in  charge  of 

directing,  monitoring  and  evaluating  the  ANPAL.  It  is  also  foreseen  that  a  further 

administrative  decree,  based  on  an  agreement  between  the  national  Government  and  the 

Regions, will define triennial guidelines and objectives for ALMPs, and the standards for the 

delivery  of  services  across  the  national  territory.  Cyprus  is  also  currently  implementing  a 

monitoring  and  evaluation  system  for  its  ALMPs.  The  "User  Requirements"  and  "Function 

Definitions" have been finalised and the system for the continuous monitoring and evaluation 

of ALMPs is expected to be operational by the end of 2016. In Finland, the government has 

proposed in April 2016 to loosen the notion of acceptable job offer in terms of type of job, 

location and wage offered. Consultation is ongoing. In Spain the Annual Plan on Employment 

Policy  for  2016,  serving  as  framework  for  the  coordination  and  execution  of  active  labour 

market policies, is based on a holistic set of indicators covering the whole service provision. 

For  many  Member  States,  promoting  the  efficiency  of  labour  markets  also  means 

promoting  geographical  labour  mobility  within  their  own  borders.  Portugal  adopted  a 

programme  called  "Support  to  Geographical  Mobility  on  the  Labour  Market",  aiming  at 

incentivising the unemployed to accept distant job offers. There are two categories of support 

based  on  the  length  of  the  work  contract:  support  for  commuting  in  case  of  temporary 

mobility (work contract of at least one month at a distance of at least 50km from the worker’s 

residence), or support for move of residence in case of permanent mobility (work contract of 

at least 12 months at a distance of at least 100km), with a one-off move allowance topped by 

monthly allowances during a maximum period of six months. In Czech Republic also, support 

to  regional  mobility  is  now  granted  by  the  Labour  Office  to  the  job  seekers  registered  for 
more than 5 months in several regions39, covering commuting costs to a new job outside the 

region.  In  Bulgaria,  it  is  planned  to  update  the  law  for  employment  promotion  in  order  to 

provide  funding  for  childcare,  kindergarten,  rental  expenses  and  internet  subscription  to  all 

unemployed  people  who  start  a  job  more  than  50  km  away  from  their  place  of  residence. 

Romania  also  plans  to  co-finance  a  national  scheme  to  increase  internal  mobility,  via  a 

comprehensive package. This includes support for the registered unemployed who start a job 

more  than  15  km  away  from  their  place  of  residence,  as  well  as  a  settling-in  allowance  for 

those who change their domicile more than 50 km away from their current place of residence.. 

39 Usti, South Moravia, Olomouc, Moravia and Karlovy Vary. 

58 

 
 
                                                            
Beyond  providing  quality  support,  services  and  information  to  promote  employment, 

several  Member  States  have  taken  further  action  to  tackle  undeclared  work,  in 

particular  by  strengthening  labour  inspections.  In  Italy,  a  legislative  decree  adopted  in 

September  2015  has  rationalised  the  system  of  labour  inspections  through  the  creation  of  a 

national inspectorate incorporating three previously distinct institutions and changed the way 

inspections work. The convention between the Agency and the Ministry of Labour, defining 

objectives and activities of the agency, still has to be adopted. In Malta, the Employment and 

Training Services Act was amended in June 2016 following public consultations, with more 

stringent  financial  penalties  imposed  on  irregular  employment,  and  a  reinforcement  of  the 

capacity  of  the  labour  inspectorate  (Law  Compliance  Unit)  within  the  Public  Employment 

Service.  In  Cyprus,  the  Ministry  of  labour,  Welfare  and  Social  Insurance  has  identified  the 

key  components  necessary  to  efficiently  fight  undeclared  work.  A  review  of  the  system  of 

labour  inspections  will  be  promoted  in  order  to  improve  their  effectiveness  and  efficiency. 

Greece also intends to adopt an integrated action plan to fight undeclared and under-declared 

work. 

Although  many  Member  States  had  already  taken  steps  on  employment  protection 

legislation,  some  have  recently  amended  their  legislation  on  individual  dismissals,  or 

envisage  to  do  so.  In  France,  the  newly  adopted  "El  Khomri"  Law  on  labour,  modernising 

social  dialogue  and  securing  professional  pathways,  aims  at  better  specifying  circumstances 

that  can  justify  an  individual  dismissal  for  economic  reasons.  It  complements  the  currently 

existing list of justifications (business interruption, technological change, reorganization of a 

company  in  order  to  safeguard  its  competitiveness)  by  adding  cases  of  fewer  orders  or 

revenues  for  a  number  of  consecutive  quarters  (drops  with  respect  to  the  previous  year), 

losses in the operating margins for a certain number of months, or significant decrease in cash 

revenues.  The  law  also  enables  branch-level  collective  agreements  to  set  the  number  of 

quarters  after  which  a  decrease  in  the  number  of  orders,  in  the  operating  margins,  or  in 

revenues,  would  constitute  an  economic  individual  dismissal.  In  the  absence  of  such  an 

agreement, it sets a number of valid quarters depending on the size of the company.  

Several  Member  States  have  devoted  particular  attention  to  the  individual  work 

litigation processes. In France, a reform of individual work litigation has taken place, aiming 

at accelerating the timespan. It reinforces the role of the conciliation phase, enabling it to be 

judged  in  the  absence  of  one  of  the  confronting  parties.  Moreover,  the  process  can  be 

accelerated by orienting some cases in front of "reduced format" courts having to judge within 

59 

 
 
3  months  maximum,  while  complex  cases  can  now  be  directly  brought  in  front  of  a  court 

chaired by a professional judge in a decisive capacity (départage).  In Ireland, the workplace 

Relations Act, adopted in May 2015 and enforced in October, has streamlined the bodies and 

procedures  which  deal  with  the  adjudication  of  industrial  disputes  and  the  resolution  of 

complaints  about  breaches  of  employment  legislation.  A  new  Workplace  Relations 

Commission  (WRC)  will  take  over  the  functions  of  the  National  Employment  Rights 

Authority,  the  Labour  Relations  Commission  (LRC),  some  of  the  functions  of  the 

Employment  Appeals  Tribunal  (EAT)  and  the  functions  of  the  Director  of  the  Equality 

Tribunal.  The  appeal  functions  of  the  EAT  will  be  transferred  to  the  Labour  Court.  This 

means that there will be a single point of entry and a single route of appeal, namely an eight 

member board comprising a chairperson, representatives from employers and employees and 

experts. The LRC, established in 1990, and the EAT, established in 1967, will be dissolved. 

Action  has  also  been  taken  against  labour  market  segmentation,  in  particular  by 

limiting  the  use  of  fixed  term  contracts,  and  limiting  the  types  of  labour  contracts 

provided for in the labour code. This is in particular the case in Poland, with the reform of the 

labour code adopted in August 2015, and enforced in February 2016. A broader reform of the 

labour code is also planned; Codification Committees for the preparation of the new Labour 

Codes were set up in September 2016. In Lithuania, a new legislation for the labour code was 

vetoed  by  the  President  in  July  2016,  and  it  has  been  returned  to  the  Parliament  for  further 

discussion.  If  finally  adopted,  it  could  become  operational  in  January  2017.  The  goal  is  to 

balance  employment  protection  between  flexibility  and  security,  in  order  to  encourage 

employers to create more (legal) jobs. A streamlining of the labour legislation is also planned 

in Greece, through codification into a Labour Law Code. 

However, in some cases the regulation of working time has been made more flexible to 

allow  additional  economic  adjustment  capacities  without  translating  into  additional 

segmentation. In Czech Republic, a "partial unemployment contribution" has been introduced, 

based  on  the  German  model  of  "Kurzarbeit"  (short-time  working).  Under  the  new  law, 

companies facing financial difficulty or affected by natural disasters have the power to reduce 

the salaries of employees who cannot be assigned sufficient work, by up to 30%. In addition, 

they can apply for a contribution from the State, up to 20% of the employee´s salary, but this 

contribution cannot exceed 12.5% of the average salary in the industry, and cannot be granted 

for  more  than  six  months  (an  opportunity  to  re-apply  exists).  Amendments  to  the  Labour 

Code  have  also  increased  the  flexibility  of  working  arrangements,  in  particular  as  regards 

60 

 
 
scheduling/entitlements to working hours and leaves, or 'teleworking'-related provisions, with 

also  a  strengthening  of  reconciliation  tools  such  as  'homeworking'.  In  the  same  vein,  the 

Belgian Federal labour Minister proposed to the social partners to reform labour market laws 

regarding  working  time  (annualised  hours),  agency  work  of  unlimited  duration,  occasional 

teleworking  and  other  elements  of  organisation  of  working  time  including  career-break 

accounts or donation of leave days. In France, the so-called "Macron law" has extended from 

2 to 5 years the maximum length of agreements to secure employment (Accords de maintien 

de  l'emploi),  which  enable  companies  facing  difficulties  to  adjust  working  time  and  work 

compensation (in the limit of 1.2 minimum wages per month). Individual refusals are a real 

and serious cause for economic dismissal, but the firm has to accompany personal transition 

notably  through  training.  Moreover,  companies  can  now  reach  agreements  to  preserve  and 

develop  employment  (a  new  type  of  more  forward-looking  agreements,  not  only  aiming  at 

"securing")  resulting  in  a  reorganisation  and  reduction  of  working  time  (but  without 

decreasing the monthly income of the employees). 

Sometimes  working  time  has  also  been  used  as  a  parameter  to  improve  cost-

competitiveness,  like  in  Finland,  where  the  so-called  "competitiveness agreement"  includes 

an increase of annual working time by 24 hours, while it is up to each sector to decide in the 

relevant  collective  agreement  whether  this  is  reached  by  cutting  holidays  or  increasing 

working  hours.  In  France,  following  the  newly  adopted  "El  Khomri"  Law  on  labour, 

modernising  social  dialogue  and  securing  professional  pathways,  majority  company-level 

agreements  will  now  by  default  set  rules  applying  to  working  time,  working  time 

organisation, daily rest, holidays and paid leave. As the scope of lock clauses at branch level 

has  been  substantially  narrowed,  agreement  at  company  level  can  be  more  flexible  than  at 

branch level regarding many additional aspects of working time. The principle notably applies 

to the bonus pay rate for extra hours, which can be reduced down to a minimum of 10% in 

case of agreement (25% applicable without). 

By  representing  both  supply  and  demand  side  of  the  labour  markets,  social  partners 

contribute  to  enhance  their  functioning  through  adequate  involvement  in  reforms,  and 

several Member States take steps to strengthen their role. Lithuania adopted in February 2016 

an action plan for strengthening social dialogue, including capacity building measures, which 

should be implemented by the end of 2016. In Romania a public consultation was launched in 

November  2015  on  a  National  Strategy  on  social  dialogue  to  clarify  the  role  of  the  social 

61 

 
 
partners, review the legislation in the field, build capacity for the social partners and increase 

their involvement in employment policies.   

Several  Member  States  have  revised  the  role  of  social  partners  in  wage-setting  and 

working  conditions,  the  most  prominent  areas  for  their  autonomous  action  (see  also 

Section 2.1.2). In France, a law adopted in August 2015 aimed at simplifying company level 

social dialogue. It has regrouped compulsory consultation and bargaining themes, with only 3 

compulsory yearly consultations instead of 17, and 3 blocs of collective bargaining instead of 

12:  wage-working  time,  quality  of  working  life,  jobs  and  careers  management.  The  law 

foresees that bargaining can take place every 3 years (maximum timeframe) instead of every 

year based on a majority agreement. It also introduced the capacity for companies between 50 

and 300 employees to merge their different social dialogue compulsory entities and similarly 

for companies  over 300 employees  under the condition  of majority  agreement.  In  Finland a 

notable  step  towards  changing  the  wage  setting  system  was  taken  by  a  tripartite 

Competitiveness  Agreement  signed  by  the  government  and  social  partners  in  March  2016 
which has been in the process of being implemented through collective agreements in the 3rd 

quarter  of  2016.  In  2017,  a  new  bargaining  model  will  be  tested.  The  possibilities  for  local 

collective bargaining will increase according to the terms set by the social partners at sector 

level and not through legislation as previously planned. The role of union representatives will 

be  strengthened  and  the  aim  is  to  improve  information  flows  in  work  places.  As  far  as  the 

public  sector  is  concerned,  Croatia  aims  at  revising  its  salary  system,  including  by 

establishing a stronger coordination process for collective negotiations by appointing a central 

authority  for  keeping  records,  coordination  and  monitoring  of  collective  agreements  and 

negotiations, and adopting guidelines for the conclusion of such agreements. 

Moreover, most Member States with statutory minimum wages involved social partners, 

at  least  when  it  comes  to  major  revisions  (for  macroeconomic  aspects  of  minimum  wage 

setting,  see  Section  2.1).  In  Estonia,  the  cross-industry  social  partners  jointly  decided  on  a 

minimum  wage  via  a  bipartite  agreement  that  is  implemented  by  government  decree.  In  

Portugal,  the  government  decided  on  an  increase  of  the  minimum  wage  following 

negotiations with social partners during which the largest trade union confederation opposed 

to  the  proposed  reduction  of  social  security  contributions  by  employers.  Ultimately  the 

government and social partners agreed on a quarterly monitoring of the implementation of the 

62 

 
 
agreement.  Conversely,  in  July  2016  Slovakian  social  partners  failed  to  agree  on  the 

minimum wage adjustment for 2017. 

Social partners have also been involved in policy-making associated to new challenges. 

In  Denmark,  the  government  and  social  partners  reached  an  agreement  in  March  2016  to 

ensure  better  integration  in  the  labour  market  of  refugees  and  persons  reunified.  The 

agreement  provides  new  and  better  possibilities  for  companies  to  employ  refugees  without 

qualifications and having low productivity which does not corresponds to the minimum wages 

set by collective bargaining. This involves for instance that a cash bonus scheme is introduced 

for  private  companies  that  employ  refugees  in  ordinary  non-subsidized  employment.  In 

Slovenia, following discussions with social partners, measures were adopted to prevent illegal 

use of atypical forms of work.   

2.4  Guideline 8: Fostering social inclusion, combatting poverty and promoting equal 

opportunities 

This  section  looks  at  the  implementation  of  the  employment  guideline  no.  8,  which 

recommends Member States to modernise their social protection systems, in order to combat 

poverty and social exclusion. It first presents an overview of the social situation in Member 

States  by  key  indicators,  including  disposable  income,  poverty  and  social  inclusion,  and 

access  to  healthcare.  Section  2.4.2  reports  on  policy  measures  from  Member  States  in  the 

areas  of  social  protection  systems,  including  unemployment  benefits,  housing  policies, 

childcare, long-term care, healthcare, pensions and inclusion of people with disabilities. 

2.4.1  Key indicators  

Nearly  all  Member  States  benefitted  from  growth  in  household  income.  In  2015,  gross 

disposable  household  income  (GDHI)  increased  in  all  Member  States  except  Cyprus  (by 

0.8%) (Figure 26).  By contrast, the highest increases  were recorded in  Denmark (by  7.3%), 
Romania (by 5.8%) and Latvia (by 5.4%)40.  

40 At 26th October 2016 (cut-off date for the scoreboard of key employment and social indicators), GDHI data 
were missing for nine Member States. 

63 

 
 
 
 
                                                            
There  were  growing  differences  in  the  level  of  income  inequalities  across  the  Member 

States,  as  measured  by  the  S80/S20  indicator.  Between  2014  and  2015  inequality,  as 

measured  by  the  ratio  between  the  incomes  of  the  20%  of  the  population  with  the  highest 

incomes  and  the  incomes  of  the  20%  with  lowest  incomes,  intensified  in  Lithuania  (by  1.4 

pps) followed by Romania, Bulgaria, Spain, Malta and the United Kingdom (with increases 

included between 0.1 and 0.3 pps). A slight decline was registered in Slovakia (by 0.4 pps), 

Estonia  and  Germany  (by  0.3  pps),  Cyprus  and  Portugal  (by  0.2  pps).  Overall,  the  highest 

income inequalities are found in  Romania, Lithuania, Bulgaria and Spain where the median 

equivalised  income  of  the  richest  20%  of  the  population  is  around  7  times  more  that  of  the 

poorest 20%. As shown in Figure 27, a diverging trend in inequality figures was observed in 

2015,  as  the  Member  States  with  highest  inequality  levels  also  experienced  the  largest 

increases. 

Figure 26: Change of GDHI in 2015, as reported in the scoreboard of key employment 

and social indicators  

Source: Eurostat, national accounts (DG EMPL calculations). Note: data for BE, BG, EE, IE, EL, HR, LU, MT, 
PL not available at 26th October 2016. 

64 

 
 
 
 
Figure  27:  Income  inequality  (S80/S20  measure),  as  reported  in  the  scoreboard  of  key 
employment and social indicators  

Source: Eurostat, EU-SILC (DG EMPL calculations). Period: 2015 level and change 2014-2015.  
Note: no data available for Ireland (26th October 2016). Axes are centred on the unweighted EU average. The 
legend is presented in the Annex. 

The at-risk-of poverty and social exclusion (AROPE) rate decreased in 2015, with strong 

variations across the Member States. In Romania and Bulgaria the AROPE rate was around 

40%,  whereas  in Czech  Republic,  the Netherlands,  Finland  and  Sweden  the  rate  was  below 

17%.  While  some  Member  States  such  as as Estonia,  Hungary,  Latvia,  Malta  and  Romania 

made  good  progress  in  reducing  the  number  of  poor  or  socially  excluded  people  in  2015 

(reduction between 3.6 pps in Hungary and 1.4 pps in Malta), Bulgaria, Cyprus and Lithuania 

experienced substantial increases over the year (Lithuania by 2 pps, Bulgaria by 1.2 pps, and 

Cyprus by 1.5 pps). One reason for the disparity in poverty and social exclusion rates across 

the  EU  is  the  uneven  impact  of  the  economic  crisis  and  the  way  labour  market  and  social 

systems  reacted  to  the  economic  downturn,  as  well  as  the  fiscal  consolidation  packages 

implemented in the majority of the Member States. 

Monetary poverty has slightly increased for the working age population. Twelve Member 

States  experienced  increasing  at-risk-of-poverty  rates  in  the  age  group  18-64  between  2014 

and 2015. The AROP rate increased notably in Cyprus (by 2.5 pps), Lithuania (by 1.9 pps), 

65 

 
 
 
 
and Poland (by 0.9 pps). Among the Member States that recorded a decrease, one can mention 

in particular Estonia (by 1.5 pps) and Greece (by 1 pp). However, in Greece the improvement 

of  the  poverty  rate  must  be  seen  together  with  a  notable  decline  in  poverty  thresholds 

reflecting the deterioration in overall economic performance. The highest poverty rates for the 

working  age  population  (close  to  or  higher  than  20%)  were  registered  in  Romania,  Spain, 

Greece and Italy. As evident from Figure 28, the divergence in poverty rates across Member 

States came to a halt in 2015, but there is also no evidence of convergence.  

Figure 28: 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: 2015 level and change 2014-2015. 
Note: no data available for Ireland (26th October 2016). Axes are centred on the unweighted EU average. The 
legend is presented in the Annex.  

The  share  of  people  living  in  jobless  households  has  decreased.  Along  with  improving 

labour  market  conditions,  seventeen  Member  States  saw  a  reduction  in  2015  compared  to 

2014, with the biggest reduction in Hungary (by 3.4 pps), Latvia (by 1.8 pps) and Spain (by 

1.7  pps).  The  highest  shares  of  people  living  in  jobless  households  were  in Greece  (16.8%) 

and  Spain  (15.4%),  while  the  lowest  in  Estonia  (6.6%),  Sweden  (5.8%)  and  Luxembourg 

66 

 
 
 
 
 
(5.7%). Over a longer time horizon, nine Member States recorded an increase in the share of 

people  living  in  jobless  households  between  2015  and  2012,  with  the  biggest  increases 

observed in Cyprus (by 1.2 pps), Romania (by 1.5 pps), and Finland (by 0.8 pps).  

Severe material deprivation decreased further in 2015. This was mainly due to the strong 

declines in Hungary (by 4.6 pps), Latvia (by 2.8), Romania (by 2.3 pps) as well as Poland (by 

2.3 pps). However, severe material deprivation also increased in a number countries, notably 

in  Bulgaria  (by  1.1  pps)  and  Greece  (by  0.7  pps),  but  also  in  Denmark  (by  0.5  pps)  and 

Luxembourg  (by  0.6  pps).  The  overall  levels  of  severe  material  deprivation  differed  widely 

across  the  Member  States,  notably  due  to  the  differences  in  living  standards  and  the 

effectiveness  of  social  policies,  from 34.2%  in Bulgaria  to  as  low  as  2%  in  Luxemburg  and 

0.7% in Sweden.  

Poverty  or  social  exclusion  among  children  and  young  people  decreased  slightly  but 

remain  high.  The  AROPE  rate  for  young  people  (18-24)  in  2015  went  down  notably 

in Slovenia (by  3.4 pps), Hungary (by 3.8 pps), Denmark (by  2.6 pps) and Portugal  (by 2.9 

pps). Nonetheless, it increased in  Bulgaria (by 4.4 pps), Spain  (by  3.1 pps), Cyprus (by  2.2 

pps),  Netherlands  (by  2.4  pps),  and  Finland  (by  2.4  pps).  The  highest  rates  of  poverty  or 

social  exclusion  for  youth  were  in Greece  (over  50%),  but  also  in  Romania,  Denmark 

and Bulgaria (above 40%). The AROPE rate for children also decreased slightly overall (see 

Section  1.2)  but  it  remains  high  in  a  number  of  countries,  as  a  consequence  of  the 

deterioration of labour market conditions for the working-age population as well as a growing 

number  of  jobless  households  and  of  people  living  on  low  income.  Eight  Member  States 

registered an increase in the AROPE rate for children, particularly Lithuania and Cyprus  (by 

around 4 pps). Five Member States recorded substantial decreases, particularly Hungary (by 

5.7 pps), Luxembourg (by 3.4 pps), Latvia (by 4 pps), Malta (by 3.1 pps) and Romania (by 

3.7 pps). Alarming levels of AROPE among children are observed in Romania (around 50%), 

Bulgaria,  and  Hungary  (over  40%).  In  Greece,  Spain,  Italy,  the  United  Kingdom,  Portugal, 

Latvia, and Lithuania the poverty and social exclusion rate for children stood above 30%. 

People  with  disabilities,  third  country  nationals  and  the  unemployed  are  particularly 

affected by poverty or social exclusion. The AROPE rate of people with disabilities showed 

in 2014 peaks in Bulgaria (52.6%), Latvia (43.2%), Romania (42.3%) and Lithuania (40.9%). 

The  gap  between  the  AROPE  rate  of  people  with  disabilities  and  the  one  of  the  whole 

population  went  up  to 17.8  pps  in  Belgium,  18.3  pps  in  Latvia  and  18.5  pps  in Lithuania. 

67 

 
 
When  looking  at  the  situation  of  third-country  nationals,  in  2014  the  gap  between 

their AROPE rate and the one of host-country nationals reached over 53 pps in Belgium, over 

35  pps  in Greece,  Spain  and  Sweden  and  over  30  pps  in Finland,  France  and  Slovenia.  The 

AROPE rate among the unemployed ranged between as much as 84.7% in Germany and over 

70%  in  Romania,  Bulgaria,  Hungary,  Lithuania,  the  United  Kingdom,  the  Netherlands  and 

Greece to around 50% in France and Sweden.   

In spite of an overall stabilisation in 2015, in-work poverty levels and developments were 

fairly mixed across the Member States, reflecting different labour market features. The 

in-work at-risk-of-poverty rate varied greatly across the EU, from 3.5% in Finland and 4% in 

Czech  Republic  to 13.2%  in  Spain,  13.4%  in Greece  and 18.6%  in Romania.  It  increased 

notably in Hungary (by 2.6 pps), Lithuania (by 1.8 pp), Cyprus (by 1.4 pps), and Latvia (by 

1.1 pps). On the other hand, the strongest reduction was in Bulgaria and Estonia (by 1.5 pps), 

which had experienced previously an increase.  

In several Member States, access to healthcare remains difficult for a significant part of 

the  population  and  in  particular  low-income  households.  The  proportion  of  the  EU 

population facing unmet needs for medical examination due to either too high costs, too long 

waiting  time  or  travelling  distance,  has  slightly  increased  since  2011  according  to  the 

corresponding survey-based indicator, with marked increases in Greece, Estonia, Ireland and 

Portugal.  The  share  of  the  population  impacted  exceeded  6%  in  2014  in  Latvia,  Estonia, 

Greece, Romania, Poland and Italy (mostly due to costs in Latvia, Greece, Romania and Italy, 

and to waiting times in Estonia and Poland). However, noticeable decreases were recorded in 

Latvia as well as in other Member States with relatively high unmet needs, such as Romania, 

Bulgaria  and  Croatia. Overall,  although  the  recent  increase  of  unmet  needs  results  from  the 

waiting time component (see Figure 29), costs remain the main barrier. On average in the EU, 

6.4% of people living in low income households (bottom quintile) in 2014 reported an unmet 

need for healthcare, against 1.5% of those living in richer households (top quintile), and this 

income quintile gap has widened since 2011. This can be considered against the backdrop of 
substantial shares of "out-of-pocket spending41" within total health expenditures in a number 

of countries (Figure 30).  

41 Out-of-pocket expenditure are the sum of co-payment to the various insurance funds present in the health care 
system and of over-the-counter (and other direct) payments for goods and services purchased by private 
households as direct and ultimate payer. 

68 

 
 
 
                                                            
Figure 29: Self-reported unmet needs for medical examination, 2011 and 2014  

Source: Eurostat, EU-SILC.   

Figure 30: Out-of-pocket medical spending as a % of current health expenditure, 2013  

Source:  Eurostat,  OECD  and  WHO  health  data  and  Commission  services  calculations.  See  European 
Commission (2016), Joint Report on Health Care and Long-Term Care Systems & Fiscal Sustainability, October 
2016. 

2.4.2  Policy response 

A number of Member States have put in place policy reforms aimed at addressing issues 

related  to  the  coverage  and  adequacy  of  social  benefits  and  their  link  to  activation,  in 

line  with  the  Active  Inclusion  principles.  Estonia  raised  the  unemployment  allowance 

69 

 
 
 
 
 
by 10%. Moreover, it introduced a new procedure to assess ability to work and a broader set 

of activation measures helping people re-enter the labour market. Italy extended the coverage 

and  duration  of  the  unemployment  insurance  and  revised  the  activation  and  conditionality 

modalities. Unemployment benefits are now more inclusive, have a broader coverage and last 

longer.  The  originally  temporary  unemployment  assistance  scheme  has  now  been  made 

permanent.  Moreover, the  allocation  of  benefits  is  now  conditional  to  signing  up  an  "active 

inclusion"  contract.  Italy  also  extended  to  the  national  territory  a  measure  against  poverty 

called  SIA  (Support  for  Active  inclusion)  combining  economic  support  and  activation 

programmes as part of a National Plan against poverty and social exlusion. France raised the 

amount  of  the  minimum  income  for  non-working  people  by  2%  in  September  2015.  It  also 

merged  two  wage  support  schemes  into  a  single  bonus  with  the  aim  of  reinforcing  its 

activation component and increasing its take-up by the households at the bottom of the wage 

scale.  Croatia  increased  the  amount  of  the  guaranteed  minimum  income  benefit  for  single 

persons  not  capable  to  work  and  for  single  parent  households  by 15%.  Denmark  increased 

incentives  for  the  unemployed  to  take  up  work,  even  if  only  for  short  periods.  Malta  is 

introducing  several  measures  including  gradual  tapering  of  benefits  for  those  entering  into 

employment,  as  well  as  in-work  benefits.  In  Slovakia,  lowering  of  social  contributions  in 

2015  has  helped  to  contain  labour  costs  and  provided  incentives  for  low-wage  earners  to 

work.  

Other Member States aimed at ensuring the social inclusion of those who cannot work. 

Greece adopted the National Strategy on Social Inclusion to tackle poverty, social exclusion 

and  discrimination.  Romania 

intends 

to  develop 

integrated 

intervention 

teams  for 

marginalised communities and implements a holistic package of anti-poverty measures.  

Several Member States took steps to facilitate access to quality social services. Bulgaria is 

piloting  the  Centres  for  Employment  and  Social  Assistance  which  is  a  new  model  of 

integrated social and employment services. Croatia is in the process of establishing one-stop-

shops which are meant to serve as the single administrative point for the provision of social 

services. 

A number of Member States undertook reforms in the provision of housing, with a view 

to improve the housing outcomes of disadvantaged people and promote labour mobility. 

Czech  Republic  introduced  a  new  law  for  facilitating  access  to  social  housing  by 

disadvantaged groups. Spain adopted a comprehensive homelessness strategy for 2015-2020, 

70 

 
 
which  includes  concrete  targets  to  prevent  and  reduce  homelessness  and  tackle  the  social 

consequences of evictions. Housing policy goals also appeared as part of integrated poverty 

and social policy strategies. In its national anti-poverty package, Romania launched a set of 

measures to provide a safety net for the poorest, following a single and coordinated approach. 

These measures are envisaged to include grants to renovate housing in critical condition. The 

new  integral  family  support  plan  of  Spain  aims  at  covering  housing  initiatives  as  well.  To 

improve the affordability of housing, Ireland introduced in July 2016 the Housing Assistance 

Payment (HAP), which is a form of social housing support for people who have a long-term 

housing  need.  The  Netherlands  presented  a  package  to  control  rent  increases  and  to  overall 

improve  the  transition  from  social  housing  to  private  rentals  for  people  having  a  higher 

income than the threshold for social housing. 

Many  Member  States  have  also  taken  steps  to  upgrade  the  provision  of  affordable, 

accessible  and  quality  childcare.  Portugal  announced  that  it  will  put  in  place  in  2019  a 

guarantee  of  early  childhood  education  and  care  for  children  as  of  3  years  old.  Similarly, 

Czech  Republic  introduced  in  April  2015  a  compulsory  year  of  preschool  education. 

In September  2015  the  participation  in  Early  Childhood  Education  and  Care  was  made 

compulsory  in  Hungary  and, as  of 2016, pre-primary education will be obligatory for all  6-

year  old  children  in  Lithuania.  The  Childcare  Act  passed  in  March  2016  in  the  United 

Kingdom  will  provide  for  an  additional  15  hours  of  free  childcare  to  3-  and  4-year  old 

children of working parents in England, on top of the existing universal provision of 15 hours 

of free childcare. Romania passed a law to improve the access of children from disadvantaged 

families to pre-school education through the provision of social vouchers for kindergarten.  

Important  healthcare  reforms  to  encourage  the  provision  of  and  access  to  effective 

primary  health  care  services,  to  streamline  and  increase  the  sustainability  of  specialist 

and  hospital  care,  and  to  improve  the  access  to  affordable  medicines  used  in  a  cost-

effective way have been implemented in the EU Member States. Addressing fragmentation 

in  services  and  re-organisation  of  governance  arrangements  are  other  areas  of  important 

policy efforts to improve access to health services, next to ensuring an adequate workforce as 

a  pre-condition  for  a  well-performing  health  system.  Czech  Republic,  Lithuania  and  Latvia 

made efforts to improve the transparency of procedures and the availability of information, as 

well as to enhance the patients' rights and choice of health care providers and to reduce the 

waiting  time  for  health  care  services.  Bulgaria,  Germany,  Romania  and  Slovakia  are 

71 

 
 
implementig  reforms  in  hospital  care,  including  linking  hospital  financing  to  outcomes, 

developing  out-patient  care  and  reviewing  procurement  arrangements  so  as  to  ensure  better 

cost-effectiveness. Bulgaria, Czech Republic, Germany, Spain, and Portugal set up measures 

for  reducing  both  the  cost  of  drugs  and  of  medical  supplies  through  centralisation  of  their 

procurement  system  or  increasing  the  use  of  generic  drugs.  To  counteract  health  workforce 

shortages due to the ageing of the health workforce and the challenges to recruit or to retain 

workers,  Estonia  and  Latvia  adopted  measures  to  offer  wage  increases  and  support 

professional development and better working conditions in order to increase the appeal of the 

health care sector. 

Driven  by  the  ageing  of  their  population,  some  Member  States  are  taking  steps  to 

improve  the  efficiency,  quality  and  access  to  long-term  care  services,  while  keeping 

public  finances  sustainable.  A  focus  is  put  on  keeping  people  self-supported  as  long  as 

possible, in particular through community-based services, home care and prevention. Member 

States are also addressing the fragmentation of services and funding. For example, Slovenia is 

reinforcing  its  Long-term  care  Act  strengthening  care  integration  and  introducing  a  new 

method for the organisation and financing of long-term care. Germany passed a reform of the 

long-term care insurance which includes a fundamental change in the definition of “in need of 

care”  and  will  be  implemented  as  of  2017.  Luxembourg  has  proposed  a  new  reform  of  the 

long-term  care  insurance  which  should  simplify  procedures  and  guarantee  more  flexibility 

and  a  better  focus  on  individual  needs  through  a  new  list  of  dependency  and  support 

categories. Also measures aimed at enhancing support to informal carers, discussed above in 

section  2.2.2,  represent  an  additional  important  element  of  long-term  care  systems  reform 

efforts.  

The  pension  reforms  adopted  by  Member  States  in  2015-2016  reflect  a  growing 

recognition  of  the  need  to  accompany  sustainability-enhancing  reforms  with  flanking 

measures  to  safeguard  pension  adequacy.  The  main  thrust  of  reforms  since  the  financial 

crisis  has  focused  on  containing  the  costs  linked  to  population  ageing  through  higher 

pensionable  ages,  tighter  access  conditions  and  revised  benefit  calculation.  As  a  result,  in 

2015  expenditure  projections  predicted  for  the  first  time  a  long-term  decrease  of  pension 

spending  in  most  Member  States  (by  0.2  pps  of  GDP  on  average  between  2013  and  2060). 

One  can  also  observe  that  adequacy  is  increasingly  dependent  on  long  and  stable  careers 

leading to a full pension, or alternatively on supplementary savings and minimum guarantees.  

72 

 
 
In  this  context,  the  latest  reforms  adopted  by  Member  States  present  a  more  diverse 

picture, ranging from additional pension age increases in those countries where sustainability 

is still a challenge, to adequacy-supporting measures such as minimum guarantees and more 

favourable  indexation.  Belgium  adopted  a  comprehensive  reform  package,  including  an 

increase  in  the  pension  age,  longer  career  requirements  and  tightened  access  to  early 

retirement. In Finland a new pension system will come into force in 2017. The pension reform 

will  link  the  pension  age  to  life  expectancy  and  aims  to  encourage  longer  working  careers. 

More  Member  States  (Croatia,  Slovenia)  have  outlined  reform  packages  that  are  still  to  be 

finalised  and  legislated.  Flexible  retirement  rules  aimed  at  facilitating  longer  working  lives 

are  becoming  more  widespread,  having  been  adopted  in  the  Netherlands,  Austria  and 

Slovenia.  Several  Member  States  have  sought  to  improve  the  protection  of  low-income 

pensioners  through  introducing  or  raising  minimum  pensions  (Czech  Republic,  Slovakia) 

and/or  targeted  additional  benefits  (Czech  Republic,  Estonia,  Sweden).  Latvia  has  adjusted 

pension accrual rules to protect entitlements during economic downturn, while Lithuania has 

revised  indexation  rules  and  Portugal  has  restarted  indexing  low  and  medium  pensions.  By 

contrast, Greece has put in place a freeze on pensions in payment and revised calculation rules 

to  improve  pension  sustainability.  As  regards  supplementary  pensions,  Belgium  and  France 

have taken measures to improve the sustainability of supplementary pension schemes, while 

some Member States (Denmark, Netherlands, Poland, Slovenia) have outlined plans to reform 

supplementary  pension  provision,  though  these  are  yet  to  be  finalised  and  legislated.  Czech 

Republic has completed the rollback of the statutory funded pension pillar. 

As far as people with disabilities are concerned, several Member States took measures to 

increase  their  participation  in  the  labour  market.  Estonia  put  in  place  on  1  July  2016 

quotas  for  the  employment  in  the  public  administration  and  an  objective  to  employ  1000 

disabled people in the public sector by 2020. Ireland adopted a Comprehensive Employment 

Strategy for People with Disabilities 2015 – 2024 which sets i.a. that the employment target 

of 3%  for  persons  with  disabilities  in  the  public  sector  should  progressively  increase  to  6% 

by 2024. In addition the government started funding a peer-led employer support service and 

an helpline on disability. 

Member  States  have  also  put  in  place  targeted  measures  supporting  the  integration  of 

migrants  and  refugees  into  the  labour  market  and  the  society.  A  detailed  description  of 

these measures can be found in Section 2.2.2.  

73 

 
 
Annex 1 Scoreboard of key employment and social indicators with EU averages as reference points 

Source: Eurostat, EU LFS, National Accounts and EU-SILC (DG EMPL calculations). 

For  each  indicator  (except  for  real  growth  in  GDHI  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). 

74 

Y-Y change (S1.2015-S1.2016)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (S1.2015-S1.2016)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (2014-2015)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (2014-2015)Y-Y for MS to Y-Y for EUY-Y change (2014-2015)Distance to EU averageY-Y for MS to Y-Y for EUY-Y change (2014-2015)Distance to EU averageY-Y for MS to Y-Y for EUEU28 (weighted)-1.0~~-1.8~~-0.5~~2.3~0.1~~0.0~~EA19 (weighted)-0.9~~-1.4~~-0.4~~1.8~0.0~~0.0~~EU28 (unweighted)-1.0~~-2.3~~-0.5~~2.7~0.0~~0.1~~EA19 (unweighted)-0.91.10.1-1.52.80.2-0.5-0.50.02.0-0.30.0-1.0-0.10.0-0.20.0BE-0.4-0.40.6-0.61.81.20.20.20.7::-0.5-3.5-0.60.0-1.40.0BG-1.9-0.7-0.9-6.0-2.6-4.3-0.97.3-0.4::-0.90.8-1.00.31.90.3CZ-1.4-4.6-0.4-3.2-8.6-1.5-0.6-4.5-0.13.20.8-0.1-8.2-0.20.0-1.70.0DK-0.3-2.70.70.8-7.62.50.4-5.80.97.35.00.0-3.4-0.10.0-1.10.0DE-0.5-4.40.50.0-11.91.8-0.2-5.80.32.50.20.10.10.0-0.3-0.4-0.3EE0.0-2.11.01.7-4.83.5-0.9-1.2-0.4::-1.50.7-1.6-0.31.0-0.3IE-1.5-0.3-0.5-4.1-1.7-2.4-0.92.3-0.4::::::::EL-1.715.1-0.8-1.230.60.6-1.95.2-1.4::-1.05.3-1.10.01.30.0ES-2.611.6-1.6-4.026.8-2.2-1.53.6-1.02.1-0.3-0.15.6-0.20.11.70.1FR-0.41.40.6-0.15.61.70.60.01.11.7-0.70.2-3.80.10.0-0.90.0HR-2.75.1-1.8-12.012.4-10.2-0.86.5-0.3::0.00.7-0.10.10.00.1IT-0.72.90.3-4.218.5-2.5-0.79.4-0.20.8-1.50.12.60.00.00.60.0CY-2.94.1-2.0-5.99.0-4.2-1.73.3-1.2-0.8-3.22.5-1.32.4-0.20.0-0.2LV-0.21.00.82.0-1.53.7-1.5-1.5-1.04.82.50.21.40.10.01.30.0LT-1.0-0.40.0-3.0-4.3-1.3-0.7-2.8-0.22.80.51.92.31.81.42.31.4LU-0.1-2.40.9-0.2-1.61.6-0.1-5.80.4::-0.9-2.3-1.0-0.1-0.9-0.1HU-1.8-3.3-0.8-4.7-5.2-2.9-2.0-0.4-1.52.0-0.30.6-1.70.50.0-0.90.0MT-0.6-3.80.3-1.5-9.30.3-0.1-1.60.4::-0.1-4.1-0.20.2-1.00.2NL-0.6-2.30.40.1-7.81.9-0.8-7.3-0.33.20.90.7-4.10.60.0-1.40.0AT0.4-2.71.31.2-7.93.0-0.2-4.50.30.3-2.00.1-4.20.0-0.1-1.2-0.1PL-1.4-2.4-0.4-3.1-0.9-1.4-1.0-1.0-0.5::0.90.40.80.0-0.30.0PT-1.33.0-0.3-3.010.1-1.2-1.0-0.7-0.51.7-0.6-0.31.6-0.4-0.20.8-0.2RO-0.6-2.50.4:::1.16.11.65.83.5-0.46.1-0.51.13.11.1SI-1.2-0.5-0.2-1.4-3.60.40.1-2.50.62.1-0.2-0.1-3.6-0.2-0.1-1.6-0.1SK-1.81.4-0.8-3.73.9-1.90.91.71.44.01.7-0.7-5.6-0.8-0.4-1.7-0.4FI-0.20.30.8-0.92.20.80.4-1.40.91.0-1.30.2-4.50.10.0-1.60.0SE-0.7-1.80.2-2.2-0.1-0.4-0.5-5.30.02.50.2-0.9-3.4-1.0-0.1-1.4-0.1UK-0.6-3.80.4-2.2-5.6-0.4-0.8-0.9-0.33.31.00.1-1.50.00.10.00.1Unemployment rateYouth unemploymentReal growth in gross household disposable incomeAt-risk-of-poverty rate (18-64)Inequalities - S80/S20Youth URNEETs 
 
 
 
S1 stands for 1st semester and is based on quarterly seasonally adjusted data. Breaks in the NEET series for ES (2014), FR (2014), HU (2015) and LU (2015). Breaks in the 
AROP and S80S20 series for EE (2014) and UK (2015). AROP and S80S20 figures are provisional for NL. 

At 26th October 2016, flags for statistical significance of changes and difference to the EU average of AROP and S80/S20 indicators are not yet available.  

75 

 
 
 
 
Annex 2 Scoreboard of key employment and social indicators with Eurozone averages as reference points  

Source: Eurostat, EU LFS, National Accounts and EU-SILC (DG EMPL calculations). See Annex 1 for details. 

76 

Y-Y change (S1.2015-S1.2016)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (S1.2015-S1.2016)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (2014-2015)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (2014-2015)Y-Y for MS to Y-Y for EAY-Y change (2014-2015)Distance to EA averageY-Y for MS to Y-Y for EAY-Y change (2014-2015)Distance to EA averageY-Y for MS to Y-Y for EAEU28 (weighted)-1.0~~-1.8~~-0.5~~2.3~0.1~~0.0~~EA19 (weighted)-0.9~~-1.4~~-0.4~~1.8~0.0~~0.0~~EU28 (unweighted)-1.0-1.2-0.1-2.3-0.9-0.9-0.5-0.5-0.12.70.80.0-1.20.00.1-0.10.1EA19 (unweighted)-0.9~~-1.5~~-0.5~~2.0~0.0~~0.0~~BE-0.4-2.00.5-0.6-0.50.80.20.00.6::-0.5-3.7-0.50.0-1.40.0BG-1.9-2.2-0.9-6.0-4.9-4.7-0.97.1-0.5::-0.90.6-0.90.31.90.3CZ-1.4-6.1-0.4-3.2-10.8-1.9-0.6-4.7-0.23.21.3-0.1-8.4-0.10.0-1.70.0DK-0.3-4.20.70.8-9.82.10.4-6.00.87.35.50.0-3.60.00.0-1.10.0DE-0.5-5.90.50.0-14.11.4-0.2-6.00.22.50.70.1-0.10.1-0.3-0.4-0.3EE0.0-3.61.01.7-7.13.1-0.9-1.4-0.5::-1.50.5-1.5-0.31.0-0.3IE-1.5-1.9-0.5-4.1-3.9-2.8-0.92.1-0.5::::::::EL-1.713.6-0.8-1.228.40.2-1.95.0-1.5::-1.05.1-1.00.01.30.0ES-2.610.1-1.7-4.024.5-2.6-1.53.4-1.12.10.2-0.15.4-0.10.11.70.1FR-0.4-0.10.6-0.13.31.30.6-0.21.01.7-0.20.2-4.00.20.0-0.90.0HR-2.73.6-1.8-12.010.2-10.6-0.86.3-0.4::0.00.50.00.10.00.1IT-0.71.40.2-4.216.3-2.9-0.79.2-0.30.8-1.00.12.40.10.00.60.0CY-2.92.6-2.0-5.96.7-4.5-1.73.1-1.3-0.8-2.72.5-1.52.5-0.20.0-0.2LV-0.2-0.50.82.0-3.83.3-1.5-1.7-1.14.83.00.21.20.20.01.30.0LT-1.0-1.9-0.1-3.0-6.6-1.7-0.7-3.0-0.32.81.01.92.11.91.42.31.4LU-0.1-3.90.8-0.2-3.81.2-0.1-6.00.3::-0.9-2.5-0.9-0.1-0.9-0.1HU-1.8-4.8-0.9-4.7-7.4-3.3-2.0-0.6-1.62.00.20.6-1.90.60.0-0.90.0MT-0.6-5.30.3-1.5-11.5-0.1-0.1-1.80.3::-0.1-4.3-0.10.2-1.00.2NL-0.6-3.80.30.1-10.11.5-0.8-7.5-0.43.21.40.7-4.30.70.0-1.40.0AT0.4-4.21.31.2-10.22.6-0.2-4.70.20.3-1.60.1-4.40.1-0.1-1.2-0.1PL-1.4-3.9-0.5-3.1-3.2-1.8-1.0-1.2-0.6::0.90.20.90.0-0.30.0PT-1.31.5-0.4-3.07.8-1.6-1.0-0.9-0.61.7-0.1-0.31.4-0.3-0.20.8-0.2RO-0.6-4.00.3:::1.15.91.55.84.0-0.45.9-0.41.13.11.1SI-1.2-2.1-0.3-1.4-5.90.00.1-2.70.52.10.3-0.1-3.8-0.1-0.1-1.6-0.1SK-1.8-0.1-0.9-3.71.6-2.30.91.51.34.02.2-0.7-5.8-0.7-0.4-1.7-0.4FI-0.2-1.20.7-0.9-0.10.40.4-1.60.81.0-0.80.2-4.70.20.0-1.60.0SE-0.7-3.30.2-2.2-2.4-0.8-0.5-5.5-0.12.50.7-0.9-3.6-0.9-0.1-1.4-0.1UK-0.6-5.30.4-2.2-7.9-0.8-0.8-1.1-0.43.31.50.1-1.70.10.10.00.1Unemployment 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). See Annex 1 for details. 

77 

201420152016S1201420152016S1201320142015201320142015201320142015201320142015EU28 (weighted)10.29.48.722.220.319.013.012.512.00.01.02.316.417.117.25.05.25.2EA19 (weighted)11.610.910.223.822.421.312.912.612.2-0.50.71.816.817.417.45.05.25.2EU28 (unweighted)10.59.98.924.522.620.312.812.311.71.20.82.715.616.216.24.85.05.1EA19 (unweighted)11.310.79.825.223.321.812.412.011.5-0.40.32.015.716.216.24.85.05.0BE8.58.58.323.222.120.812.712.012.2-0.30.3:13.414.213.73.83.83.8BG11.49.28.023.821.616.421.620.219.35.2-7.1:17.118.918.06.66.87.1CZ6.15.14.115.912.610.59.18.17.5-0.72.93.28.69.19.03.43.53.5DK6.66.26.012.610.811.56.05.86.2-0.91.57.313.413.813.84.04.14.1DE5.04.64.37.77.27.26.36.46.20.71.42.516.917.217.34.65.14.8EE7.46.26.615.013.114.211.311.710.86.12.4:17.319.417.95.56.56.2IE11.39.48.423.920.917.416.115.214.3-2.11.1:14.016.1:4.54.8:EL26.524.923.852.449.849.620.419.117.2-6.4-1.3:24.123.522.56.66.56.5ES24.522.120.353.248.345.818.617.115.6-1.90.72.120.422.922.86.36.86.9FR10.310.410.124.324.724.611.211.412.0-0.30.71.713.713.213.44.54.34.3HR17.316.313.845.543.031.419.619.318.5-3.71.1:17.817.917.95.35.15.2IT12.711.911.642.740.337.522.222.121.4-0.80.30.819.119.719.85.85.85.8CY16.115.012.836.032.828.018.717.015.3-5.4-5.8-0.814.413.415.94.95.45.2LV10.89.99.719.616.317.513.012.010.54.41.34.818.818.418.66.36.56.5LT10.79.18.419.316.314.711.19.99.24.41.62.819.017.619.56.16.17.5LU6.06.46.322.316.617.55.06.36.2:::15.015.814.94.64.44.3HU7.76.85.520.417.313.915.513.611.61.83.82.015.214.915.54.34.34.3MT5.85.45.011.711.89.89.910.510.4:::13.613.213.14.14.04.2NL7.46.96.412.711.311.25.65.54.7-1.4-0.63.210.912.413.13.63.83.8AT5.65.76.110.310.611.17.37.77.5-1.70.00.312.912.913.04.14.14.0PL9.07.56.423.920.818.112.212.011.01.32.7:16.716.717.64.94.94.9PT14.112.611.734.732.029.114.112.311.3-1.0-0.51.718.419.118.86.06.26.0RO6.86.86.324.021.717.017.018.133.06.15.821.723.723.36.87.28.3SI9.79.08.220.216.315.49.29.49.5-1.71.82.113.013.713.63.63.73.6SK13.211.510.129.726.522.913.712.813.70.12.64.012.112.311.63.63.93.5FI8.79.49.020.522.421.29.310.210.60.4-0.81.011.312.512.73.63.63.6SE7.97.47.022.920.418.97.57.26.71.72.72.514.014.713.83.73.93.8UK6.15.35.017.014.613.413.211.911.1-0.11.53.314.715.615.74.65.15.2Unemployment rateYouth unemploymentReal growth in gross household disposable incomeAt-risk-of-poverty rate (18-64)Inequalities - S80/S20Youth URNEETs 
 
  
 
 
Annex 4 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  EU.  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 EU 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 Framework42.  

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 indicators43, 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, NEET and social exclusion indicators (with the exception of GDHI) the better the performance, it was agreed to consider44:   

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 performance45 

42 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. 
43 Both normality and T-shaped distribution tests were carried out resulting in the rejection of any distributional hypothesis. 
44 Different cut-off points settings were discussed internally to the working group. This proposal reflects the outcomes of such process. 
45 In case of normality, chosen cut-off points roughly corresponds to 15 %, 30%, 50%, 70% and 85% of cumulative distribution. 

78 

 
 
 
                     
 
                                                            
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 

79 

 
 
  
  
 
 
 
 
  
 
 
 
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 1, 14, 15, 27 and 28. 

Best performers   

scoring less than -1.0 levels and less than 1.0 in changes 

Better than average 

Good but to monitor 

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  less  than  -0.5  in  levels  and  more  than  1  in  changes,  and 
presenting a change higher than zero46 

On average / neutral 

Weak but improving 

scoring between -0.5 and 0.5 in levels and between -1.0 and 1.0 in 
changes 
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  better  or  much  better  than  the  EU 
average  but  with  the  situation  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  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 disposable household income (GDHI), which is only presented in changes, the following classification has been used (see Figure 26). 

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, and presenting a negative change 
in GDHI47 

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  

46 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. 
47 The latter condition prevents a Member State presenting increasing GDHI to be flagged as a "critical situation". 

80 

 
 
 
                                                            
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 4.4% 

less than 6.6% 

between 6.6% and 11.1% 

more than 11.1%  more than 13.4% 

Changes 

less than -1.9pp 

less than -1.4pp 

between -1.4pps and -0.6pps  

more than -0.6pps   more than -0.2 pps  

Levels 

less than 9.7% 

less than 15.0% 

between 15.0% and 25.6% 

more than 25.6%  more than 31.0% 

Changes 

less than -5.2pps  

less than -3.7pps  

between -3.7pps and -0.8pps 

more than -0.8pps  more than 0.7pps 

Levels 

less than 7.3% 

less than 9.5% 

between 9.5% and 13.9% 

more than 13.9%  more than 16.1% 

Changes 

less than -1.3pps 

less than -0.9pps 

between -0.9pps and -0.1pps 

more than -0.1pps  more than 0.3pps 

Changes 

less than 0.7% 

less than 1.7% 

between 1.7% and 3.6% 

more than 3.6% 

more than 4.6% 

Levels 

less than 12.6% 

less than 14.4% 

between 14.4% and 18.0% 

more than 18.0%  more than 19.8% 

Changes 

less than -0.8pps 

less than -0.4pps 

between -0.4pps and 0.4pps 

more than 0.4 pps  more than 0.8 pps 

Levels 

less than 3.7 

less than 4.4 

between 4.4% and 5.8 

more than 5.8 

more than 6.4 

Changes 

less than -0.3 

less than -0.1 

between -0.1 and 0.3 

more than 0.3 

more than 0.4 

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Annex 5: Summary overview of the ‘employment trends to watch’ and number of Member States with deterioration or improvement as  

identified by the Employment Performance Monitor 2016 (EPM); 2015-2014 change 

82 

 
 
 
 
 
Annex 6: Summary overview of the ‘social trends to watch’ and number of Member States with deterioration or improvement as  

identified by the Social Protection Performance Monitor 2016; 2014-2013 change 

Note: For EU-SILC based indicators the changes generally refer to 2012-2013 for income and household work intensity indicators, and to 2013-2014 for SMD and unmet 
need  for  medical  care.  Changes  in  gross  household  disposable  income  refer  to  2013-2014.  LFS-based  indicators  (LTU  rate,  early  school  leavers,  youth 
unemployment ratio, NEETS (15-24), ER (55-64)) refer to the more recent period 2014-2015. An update with more recent data will become available in the final 
version of the Joint Employment Report. 

83