DRAFT JOINT EMPLOYMENT REPORT FROM THE COMMISSION AND THE COUNCIL accompanying the Communication from the Commission on the Annual Growth Survey 2018
Date: 2017-11-22
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: EU employment policy, education policy, equal treatment, job creation, labour market, poverty, social change, social integration, social situation, unemployment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 22.11.2017  COM(2017) 674 final  DRAFT JOINT EMPLOYMENT REPORT  FROM THE COMMISSION AND THE COUNCIL   accompanying the Communication from the Commission on the  Annual Growth Survey 2018  
 
 
TABLE OF CONTENTS 

FOREWORD ............................................................................................................................. 2 

KEY MESSAGES ...................................................................................................................... 3 

1.  OVERVIEW OF LABOUR MARKET AND SOCIAL TRENDS AND CHALLENGES 
IN THE EUROPEAN UNION ................................................................................................. 11 

1.1 

1.2 

Labour market trends ............................................................................................. 11 

Social trends ........................................................................................................... 15 

2.  SNAPSHOTS FROM THE SOCIAL SCOREBOARD ................................................... 19 

2.1 

2.2 

The scoreboard explained ...................................................................................... 19 

Evidence from the social scoreboard ..................................................................... 21 

3.  
EMPLOYMENT AND SOCIAL REFORMS – MEMBER STATES PERFORMANCE 
AND ACTION ......................................................................................................................... 27 

3.1   Guideline 5: Boosting demand for labour ................................................................. 27 

3.1.1 

Key indicators .................................................................................................... 28 

3.1.2 

Policy response ................................................................................................... 38 

3.2   Guideline 6: Enhancing labour supply, skills and competences ............................... 43 

3.2.1 

Key indicators .................................................................................................... 43 

3.2.2 

Policy response ................................................................................................... 61 

3.3   Guideline 7: Enhancing the functioning of labour markets ....................................... 79 

3.3.1   Key indicators .................................................................................................... 79 

3.3.2  

Policy response ................................................................................................... 90 

3.4 Fostering social inclusion, combatting poverty and promoting equal opportunities ...... 99 

3.4.1 

Key indicators .................................................................................................... 99 

3.4.2 

Policy response ................................................................................................. 113 

ANNEXES ............................................................................................................................. 118 

1 

 
 
 
 
 
FOREWORD 

The  Joint  Employment  Report  (JER)  is  mandated  by  Article  148  of  the  Treaty  on  the 

Functioning of the European Union (TFEU). It is part of the Autumn package, which includes 

the  Annual  Growth  Survey  launching  the  European  Semester  cycle.  The  Joint  Employment 

Report 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  States1.  The  reporting  on  these  reforms  follows  the  structure  of  the 

Guidelines:  boosting  demand  for  labour  (Guideline  5),  enhancing  labour  supply,  skills  and 

competences  (Guideline  6),  enhancing  the  functioning  of  labour  markets  (Guideline  7),  and 

fostering  social 

inclusion,  combatting  poverty  and  promoting  equal  opportunities 

(Guideline 8).  

In  addition,  the  Joint  Employment  Report  2018  monitors  Member  States'  performance  in 

relation  to  the  European  Pillar  of  Social  Rights.  The  Pillar,  signed  as  an  inter-institutional 

Proclamation by the European Parliament, the Council and the Commission on 17 November 

2017,  identifies  principles  and  rights  in  three  areas:  i)  equal  opportunities  and  access  to  the 

labour market, ii) fair working conditions, and iii) social protection and inclusion. Monitoring 

of  progress  in  these  areas  is  underpinned,  in  particular,  by  a  detailed  analysis  of  the  Social 

Scoreboard accompanying the Pillar. 

The  Joint  Employment  Report  is  structured  as  follows:  an  introductory  chapter  (Chapter  1) 

reports  on  main  labour  market  and  social  trends  in  the  European  Union  to  set  the  scene. 

Chapter 2 presents the main results from the analysis of the social scoreboard associated to the 

European Pillar  of Social  Rights. Chapter 3 provides a detailed cross-country description of 

key  indicators  (including  from  the  social  scoreboard)  and policies  implemented  by  Member 

States to address the Guidelines for Employment Policies. 

1  Together  with  the  draft  Joint  Employment  Report  the  Commission  has  adopted  a  proposal  for  revised 
Employment Guidelines (COM(2017) 677). 

2 

 
 
 
 
                                                            
KEY MESSAGES 

The following key messages emerge from the analysis in the Report: 

The  economic  expansion,  which  now  has  reached  all  Member  States,  is  accompanied  by 

steady improvements in the labour market and social situation. On average for the EU, 11 

out  of  the  14  social  scoreboard  indicators,  monitoring  progress  on  the  European  Pillar  of 

Social  Rights,  recorded  an  improvement  over  the  last  year.  Of  the  remaining  three,  two 

remained broadly unchanged and only one (impact of social transfers on poverty reduction) 

slightly  deteriorated,  though  with  very  differentiated  patterns  at  country  level.  Overall,  this 

evidence points to ongoing progress with respect to the Pillar's three chapters, supported by 

the strong recovery and by recent reform efforts. Still, challenges on specific principles of the 

Pillar are identified for a majority of Member States, as highlighted in the body of the report. 

These will also be subject of an in-depth analysis in the European Semester Country Reports. 

Job  creation  has  picked  up  and  employment  continues  to  expand  at  a  firm  pace.  In  the 

second  quarter  of  2017  some  235.4  million  persons  were  in  employment  in  the  EU  (156 

million in the euro area), the highest level ever recorded. Employment exceeds its pre-crisis 

peak in 2008 by 1.7%. Compared to the lowest level in mid-2013, 11 million more people are 

now in employment in the EU. At the current pace, and with an employment rate of 72.2% in 

the second quarter of 2017, the Europe2020 target of 75% for the employment rate may be 

within reach.  

The main labour market indicators have strengthened across the board. The unemployment 

rate  has  continued  the  decline  observed  since  mid-2013.  In  August  2017,  it  decreased  to 

7.6 % in the EU (and 9.1% in the euro area), the lowest level in the EU since December 2008 

(February  2009  in  the  euro  area),  approaching  its  low  of  6.8  %  in  March  2008.  Youth 

unemployment  and  long-term  unemployment  also  continued  to  decline  at  a  steady  pace. 

Activity  rates,  which  never  fell  throughout  the  crisis,  keep increasing  in  almost  all  Member 

States.  

While all Member States show improvements, very substantial differences can be observed. 

The  unemployment  rate  ranges  from  3.1 %  in  the  Czech  Republic  and  3.8%  in  Germany  to 

17.3 % in Spain and 21.6 % in Greece (Q2-2017). The employment rate ranges from 57.7 % 

in Greece and 62.1 % in Italy to 79.3 % in Germany and 82 % in Sweden (Q2-2017). In many 

3 

 
 
Member  States,  employment  rates  have  still  some  way  to  go  to  recover  from  the  crisis  and 

notably also to attain the Europe 2020 national targets.  

Underutilisation of the labour force is falling but remains sizeable even in countries where 

unemployment is low. During the recovery the total number of hours worked has increased at 

a significantly slower rate than employment levels. Importantly, hours worked per employed 

person  are  holding  stable  about  3%  below  the  pre-crisis  level.  Furthermore,  (involuntary) 

part-time  remains  high,  though  full-time  employment  has  increased  in  2016.  While  the 

recovery is boosting the creation of both permanent and temporary jobs, the share of fixed-

term employees remains stable (at around 14%) in the EU. The combination of high shares of 

fixed-term contracts and low transition rates towards permanent jobs points to labour market 

segmentation in a number of Member States. Self-employment increased only marginally (by 

0.3%) in 2016, with a faster increase among self-employed without employees. 

Despite  the  improvements  in  the  labour  market,  wage  growth  remains  subdued  in  most 

countries. The overall modest wage dynamics can be explained by the remaining slack in the 

labour  market,  weak  productivity  growth  and  low  inflation  expectations.  In  addition,  in  the 

period  2014  to  2016,  real  wage  growth  lagged  behind  productivity  growth.  This  is  a  long-

term  trend:  in  the  EU,  from  2000  to  2016,  real  productivity  per  person  employed  grew  by 

14.3%, while real compensation per employee grew by 10.2%.  

Several  Member  States  have  taken  steps  to  enhance  the  predictability  of  the  wage  setting 

system,  with  the  involvement  of  social  partners.  They  have  made  changes  to  improve  the 

responsiveness  of  the  wage  setting  system  to  economic  conditions.  Also  the  processes 

governing  minimum  wage  developments  have  been  part  of  this  development.  It  is  important 

that wages are set in a predictable way providing for a decent standard of living, respecting 

the  autonomy  of  the  social  partners.  Minimum  wages,  in  particular,  should  be  adjusted 

through  a  transparent  system,  with  the  double  aim  of  preventing  in-work  poverty  whilst 

safeguarding access to employment and incentives to seek work. Medium-term responsiveness 

to productivity developments is important in this context. 

In  line  with  the  labour  market  upturn  there  is  a  general  improvement  in  the  financial 

situation of households. Household disposable income continued to rise at a steady pace. It 

has  now  reached  the  2009  peak  for  the  EU.  Higher  job  creation  and  resulting  increases  in 

4 

 
 
labour  incomes  were  the  main  contributors  to  the  observed  increase.  Improvements  can  be 

seen  in  nearly  all  Member  States.  However,  in  a  number  of  Member  States  household 

disposable income has not yet reached the pre-crisis levels.  

Increasing  labour  market  participation,  employment  rates,  and  productivity  is  an 

imperative  in  view  of  demographic  change.  Ongoing  ageing  of  our  societies  implies  more 

pressure  on  younger  generations  –  those  same  generations  who  experience  also  a  more 

difficult  access  to  stable,  quality  jobs  –  in  order  to  guarantee  sufficient  revenues  to  the 

pension  systems  and  ensure  their  sustainability.  At  the  same  time,  it  makes  longer  working 

lives a necessity and puts pressure on pension benefits in the future. In broader terms, it risks 

affecting the "social contract" across generations, potentially creating a generational divide 

and  putting 

intergenerational 

fairness 

into  question.  Increasing  employment  rates, 

participation  and  productivity  to  contain  these  impacts  is  therefore  vital  at  the  current 

juncture. 

Recent  gains in  employment have not been evenly distributed  among different population 

groups.  The gap in  employment  rates between low-skilled and  high-skilled workers is  large 

(31 pps), underlining the need to invest in skills to better respond to changing labour market 

needs. Significant differences remain in the returns on education and training across Member 

States,  showing  the  potential  benefits  of  further  reforms.  The  employment  rate  of  young 

people,  although  recovering,  is  almost  4  percentage  points  below  the  pre-crisis  level. 

Similarly, the employment rate of migrants (non-EU born) has been recovering more slowly 

than for other groups, and has not yet returned to pre-crisis level. In addition, people with a 

disability are less likely to be employed than those without disability, although their situation 

has  improved.  On  the  positive  side,  the  employment  rates  of  women  and  older  workers 

continue to increase, but significant challenges remain for both groups. 

While  the  employment  rate  of  women  reached  another  record  high,  they  continue  to  be 

underrepresented in the labour market and face a significant pay differential. Women tend 

to  outperform  men  in  terms  of  educational  attainment,  but  their  employment  rate  is  still 

11 pps below that of men, even if it has consistently increased. Again, this varies considerably 

across  the  EU.  The  employment  gap  is  especially  high  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  strong  albeit  narrowing  gender  gap  in  pay 

5 

 
 
persists  in  the  EU,  with  the  average  gross  hourly  earnings  of  male  employees  about  16  % 

higher  than  those  of  female  employees  in  2015.  This  gap  is  largely  due  to  an 

underrepresentation  of  women in  well-paid  sectors  and occupations,  including  management 

and  supervisory  positions,  reflecting  to  some  extent  discrimination  in  the  labour  market.  At 

the same time, women are more likely to take time off work to take care of dependent family 

members or relatives.  

In  addition,  more  part-time  work  combined  with  shorter  and  more  discontinuous  careers 

often  translates  into  lower  pensions  for  women.  This  indicates  that  a  comprehensive 

integration of work-life balance considerations into policy making is needed. Some Member 

States are taking further action to ensure access to affordable and quality childcare and other 

care  services,  leave  and  flexible  working  time  arrangements,  and  reduce  existing 

disincentives to work in tax and benefit systems (notably for second earners). These actions, 

jointly with the implementation of anti-discrimination practices, play a key role towards equal 

treatment of women. In turn, they support upward social mobility, foster equal opportunities 

and reduce inequality and poverty, with benefits extending across generations, in line with the 

objectives of the Social Pillar. 

Older workers are staying increasingly longer in the labour market. Their employment rate 

has  increased  after  the  crisis  for  all  age-groups  55+  (but  with  large  variations  across 

Member  States),  and  continues  rising.  The  last  wave  of  pension  reforms,  which  increased 

retirement  age  in  most  Member  States,  and  the  availability  of  more  flexible  working 

arrangements, are some of the drivers of this trend. However, the availability of appropriate 

work-life balance policies and the support to age management, including the modernisation 

of working environments, is crucial to accompany this process. In this respect, some countries 

are promoting longer working lives by allowing more flexible transitions into retirement and 

combining pension with income from work.  

Tackling youth and long-term  unemployment remains  a priority.  While  steadily declining, 

the youth unemployment rate is still 17 % (Q2-2017) and is a key challenge in a number of 

countries.  The  same  goes  for  the  share  of  those  not  in  employment,  education  or  training 

(NEET).  Long-term  unemployment  remains  very  high  in  some  Member  States  and  accounts 

for  almost  50%  of  total  unemployment.  A  high  duration  of  unemployment  implies  a 

depreciation  of  skills,  low  attachment  to  the  labour  market  and  ultimately  a  high  risk  of 

6 

 
 
poverty  and  social  exclusion.  Moreover,  it  risks  turning  cyclical  unemployment  into 

structural, with negative consequences on potential growth. Actions taken by Member States 

in  line with the Council Recommendation  of  February 2016 on the integration of long-term 

unemployment and with the Youth Guarantee can be key drivers for improvement.  

Guaranteeing  access  to  quality  and  inclusive  education,  and  improving  investment  in 

national  education  systems  and  skills  are  key  in  enabling  people  to  become  engaged  and 

active citizens, and in facilitating transitions into and within the labour market. If progress 

continues at the current pace, Europe is on track towards reaching the 2020 targets on both 

early  school  leaving  and  tertiary  education  attainment.  Member  States  are  taking  action  to 

modernise their  education systems, notably with a view to  prevent early school leaving  and 

tackle  low  proficiency  in  basic  skills,  especially  by  closing  the  educational  gap  of 

disadvantaged learners. Specific measures are being introduced, in some cases, to encourage 

the integration of migrants into education. Improving the labour market relevance of higher 

education is also high in the agendas. In line with the New Skills Agenda for Europe, National 

Coalitions  for  Digital  Skills  and  Jobs  have  been  launched  in  numerous  Member  States  in 

order to foster investment in digital skills. With frequent support of social partners and other 

stakeholders, Member States are improving the quality of vocational education and training, 

apprenticeships and mechanisms for validation of skills acquired outside the formal system. 

Good 

labour  market 

functioning, 

the  creation  of  quality 

jobs,  promotion  of 

entrepreneurship  and  higher  participation  in  the  labour  market  can  be  supported  by 

properly  combining  flexibility  and  security,  on  the  job  and  during  transitions.  Promoting 

job  creation  on  permanent  contracts,  ensuring  that  temporary  contracts  represent  stepping 

stones and not dead-ends, easing transitions across jobs and enabling entrepreneurs to scale 

up are key purposes. Member States are taking steps to achieve a balanced policy response in 

this  domain,  notably  by  making  the  legislative  framework  for  dismissals  clearer  and  more 

predictable,  and  by  recognizing  the  need  for  effective  social  protection  systems  adapted  to 

more diverse needs and circumstances, especially as a response to new forms of work. Still, 

the degree of coverage and adequacy of unemployment and other benefits and services differs 

considerably  across  Member  States.  In  this  context,  effective  active  labour  market  policies 

enabling  smooth  transitions  across  jobs  appear  very  important  for  dealing  with  the 

challenges posed by globalisation and digital change.  

7 

 
 
Along  with  the  economic  and  labour  market  recovery,  the  proportion  of  people  at-risk-of 

poverty  or  social  exclusion  continued  to  decrease  in  2016  and  has  reached  its  2008  level. 

The  reduction  is  mostly  due  to  a  fall  in  the  share  of  low  work  intensity  households  and  in 

lower material deprivation rates, while the (monetary) at-risk-of-poverty rate has stabilised. 

While declining, the total number of people at risk of poverty or social exclusion remains at a 

very high level – 118 million people or 23.5% of the total population in 2016, which is far off-

track in reaching the Europe 2020 poverty and social exclusion target.  

Income inequality has slightly decreased in the EU, after increasing in the aftermath of the 

crisis. The richest 20% of the population had a disposable income that was around five times 

higher than that of the poorest 20% in 2016, with large disparities across countries (and an 

increase in inequality in some). The persistence of relatively large income inequalities, often 

linked  to  inequal  opportunities  in  access  to  education,  training  and  social  protection,  and 

reflecting poor labour market outcomes, raises concerns in terms of fairness, social inclusion 

and sustainable growth.  

Member States continue to modernise social protection systems, by improving coverage and 

adequacy  of  benefits  and  services,  notably  for  non-standard  workers,  and  actively 

encourage  labour  market  participation.  In  line  with  the  European  Pillar  of  Social  Rights 

principles,  some  Member  States  extended  eligibility  for  social  security  schemes  (including 

parental leave, unemployment and sickness benefits) to self-employed and free-lance workers, 

previously not covered. Nationwide minimum income support measures were introduced for 

the first time in two countries, Greece and Italy. Actions are also being taken to strengthen 

the  activation  of  benefits  recipients,  for  instance  by  making  participation  into  active  labour 

market policies compulsory and/or by improving individualised services. In this regard, it is 

important  to  ensure  the  effective  access  of  all  workers  including  self-employed  to  social 

protection schemes,  and improve the coordination between employment and social services, 

including through the creation of one-stop-shops, in order better to target those in need and 

support, with quality services, their (re)integration in the labour market.  

Tax  and  benefit  systems  play  an  important  role  in  reducing  the  impact  on  poverty  and 

inequality, but the measured impact of social transfers (excluding pensions) on the risk of 

poverty was still slightly declining in 2016.  This  development, which does  not  yet take  into 

account latest reforms to enhance social safety, hides different developments at country level. 

8 

 
 
In particular, it may reflect changes in benefits adequacy and coverage, lack of indexation (in 

a  context  of  generally  increasing  incomes),  as  well  as  changes  in  the  composition  of 

households (and related characteristics of those at risk of poverty). To tackle inequalities and 

reduce poverty, including by breaking their transmission across generations, Member States 

can  take  further  action  in  different  areas,  including  by  improving  the  design  of  tax  and 

benefits  systems,  fostering  equal  opportunies  in  education  and  training,  ensuring  access  to 

quality healthcare, and promoting gender equality amongst others.  

Safeguarding  pension  adequacy,  whilst  ensuring  the  financial  sustainability  of  social 

security systems, remains a priority. Most recent reforms often feature measures to improve 

adequacy, notably of lower pensions. In particular, a number of countries took measures to 

raise minimum pensions or reduce the tax burden on lower pension incomes. Strengthening 

supplementary pensions and other forms of retirement savings could also play a positive role 

to improve adequacy in some Member States. In the context of demographic change, pension 

reforms  that  may  lead  to  earlier  exit  from  the  labour  market,  thus  endangering  the 

sustainability and adequacy of pensions, should be avoided. In this respect and in the light of 

the  persisting  pension  gap  between  men  and  women  and  the  increased  risk  of  poverty  for 

elderly women, measures to ensure the alignement of the retirement age for both genders are 

essential in some Member States.  

Equal  and  timely  access  to  quality  health  and  long  term  care,  as  well  as  effective  health 

promotion  and  disease  prevention,  are  key  to  foster  a  healthy  and  active  population  and 

achieve  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 enshrine promotion of good health and prevention of diseases in primary care; 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,  in  line  with  Member  States' 

competence. Some Member States are also taking steps to improve the efficiency and quality 

of  long-term  care  services.  This  should  promote  social  inclusion  and  reduce  obstacles  to 

labour market participation for family carers, especially women.  

A  well-functioning  social  dialogue  is  key  for  achieving  social  fairness  while  ensuring 

economic performance. Social dialogue plays a central role in reinforcing social rights and 

enhancing  sustainable  and  inclusive  growth.  The  degree  and  impact  of  social  partners' 

9 

 
 
involvement in the design and implementation of relevant reforms varies considerably among 

EU countries. This  is  largely due to a diversity of  practices and institutional settings in  the 

different  Member  States,  and  to  varying  social  partners'  capacities  and  contributions. 

Whereas  there  is  no  single  model  that  serves  as  a  reference,  it  is  important  that  social 

partners are actively involved at all stages of policy-making and implementation, in line with 

the European Pillar of Social Rights.  

10 

 
 
 
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,  providing  a  detailed  analytical  account  of  major  employment  and  social 

policy areas.  

1.1 

Labour market trends 

European Union labour market conditions significantly improved in 2016 and the first 

half  of  2017,  with  substantial  progress  towards  the  Europe  2020  strategy  employment 

rate target.  The employment rate (20-64) recorded the largest increase after the crisis, by 1 

percentage point to 71.1% in 2016. It continued rising in the first half of 2017, to 72.2% in 
Q2-20172, the highest level ever reached in the EU. At the same time, the number of people in 

employment  amounted  to  235.4  million  in  Q2-2017,  3.5  million  jobs  more  than  one  year 

before.  If  the  employment  rate  continues  increasing  at  the  current  pace,  the  Europe  2020 

strategy  employment  target  of  75%  would  be  broadly  within  reach.  The  situation  improved 

substantially  also  in  the  euro  area,  where  the  employment  rate  attained  its  highest  level  at 

70.9%  in  Q2-2017.  The  employment  recovery  is  supported  by  a  steady  increase  in  labour 

market participation, with the activity rate (15-64) having achieved a record level at 73.4% in 

Q2-2017 (73% in the euro area).  

The  continuous  increase  in  employment  translated  into  a  continuous  drop  in  the 

unemployment rate (15-74), which reached 7.7% in Q2-2017 (9.2% in the euro area), slowly 

approaching  the  pre-crisis  level.  This  is  all  the  more  positive  considering  that  more  people 

who  were  previously  inactive  joined  the  labour  market  and  increased  the  size  of  the  labour 

force (including more job-seekers).  

2 Seasonally adjusted quarterly figures [lfsi_emp_q] are used throughout this section. 

11 

 
 
 
 
 
 
 
                                                            
Youth  and  long-term  unemployment  have  been  decreasing  quickly.  While  still  high 

(particularly  so  in  some  Member  States),  the  youth  unemployment  rate  dropped  by  almost 

2 pps year-on-year, to 17% in Q2-2017 (19.1% in the euro area). It is now about 7 pps below 

the peak of 23.9% reached in Q1-2013. The long-term unemployment rate (i.e. unemployed 

for  more  than  12  months  as  a  share  of  the  active  population)  followed  a  similar  trend, 

declining by 0.6 pps year-on-year to 3.4% in Q2-2017 (4.7% in the euro area). The share of 

long-term  unemployment  among  total  unemployment  is  also  falling  but  remains  high  at 

45.6%  (49.7%  in  the  euro  area)  and  surpasses  50%  in  some  Member  States.  Moreover,  the 

very  long-term  unemployment  rate  (i.e.  considering  those  unemployed  for  more  than  24 

months) is only declining slowly, which increases the risk that it becomes entrenched.  

Figure 1: Unemployment and long-term unemployment rates and share in the EU  

Source: Eurostat, LFS. 

The  recovery  in  employment  and  the  decline  in  unemployment  have  been  surprisingly 
strong given the steady but moderate GDP growth3. This trend emerged clearly during the 

last two years, both in the EU and the euro area. However, subdued growth in hours worked 

3  For  details,  see  Employment  and  Social  Developments  in  Europe,  Annual  Review  2017  (p.  22)  and  Labour 
Market and Wage Developments in Europe, Annual Review 2017 (pp. 10 and 19). 

12 

 
 
 
 
 
                                                            
per  employed  person  points  to  some  remaining  slack  in  the  labour  market  as  they  remain 

about  3%  below  the  pre-crisis  level  in  the  EU  (Figure  2)  and  about  4%  in  the  euro  area. 

Increases  in  part-time  work  and,  to  a  smaller  extent,  reductions  in  the  hours  of  full-time 

workers have contributed to this development. Nonetheless, over 2016 full-time employment 

grew faster than part-time (as shown later in this section).  

Figure 2: Growth in real GDP, employment and hours worked per employed person in 
the EU (cumulative change – index 2008 = 100) 

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

Employment growth has been stronger among older workers. As shown in Figure 3, the 

largest  increase  in  employment  figures  in  the  EU,  by  4.6%  in  2016,  was  recorded  by  older 

workers (aged 55-64). This adds up to a continuously rising employment rate for this group in 

the post-crisis period, from 45.5% in 2008 to 55.3% in 2016, and a corresponding rise in the 

activity  rate  (to  59.1%  in  2016).  This  trend  reflects  ongoing  reforms  of  national  pension 

systems, with a view to improve their sustainability and increase labour supply in a context of 

demographic change (including increasing life expectancy). As in 2015, employment growth 

was  comparatively  lower  among  young  (15-24)  and  prime  age  (25-54)  workers,  though 

quicker for the former group (1.3% vs 0.8%). In view of a stable activity rate (at 41.5% both 

in  2015  and  2016),  steady  job  creation  among  young  people  contributed  to  the  decrease  in 

youth  unemployment.  Employment  growth  was  comparable  across  genders,  as  already  in 

2015.  Employment  of  both  men  and  women  increased  by 1.4%  over  2016.  This  means  that 

whereas  employment  rates  increased  for  both  groups  (by  1  pp  to  respectively  76.9%  and 

65.3%) the gender employment gap remained unaffected.  

13 

 
 
 
 
While rising across all education levels, employment increased the most among higher-

educated  workers.  Indeed,  the  number  of  people  with  higher  education  in  employment 

increased by 3.1% in 2016 (age group 25-64). Medium- (i.e. with upper secondary education) 

and low-skilled (with lower secondary education or below) workers recorded a comparatively 
lower  increase  by  0.4%  and  0.9%  respectively4.  Detailed  trends  by  Member  States  are 

provided in the following sections of the report. 

Figure 3: Employment rates and employment growth across different groups in the EU 

Source: Eurostat, LFS. 

The  recovery  is  boosting  both  permanent  and  temporary  jobs,  with  increasingly  full-

time  work  schedules.  In  absolute  terms,  the  increase  in  the  number  of  employees  on 

permanent contracts in 2016 exceeded that of employees on temporary contracts (2.7 million 

vs. 0.6 million), though in percentage terms the increase was larger for the latter. The share of 

temporary employees over total employees remained stable at 14.2% (more details in Section 

3.3.1). Self-employment increased only marginally (by 0.3%) in 2016, with a faster increase 

4 Nonetheless, the employment rate of low-skilled workers has increased more than proportionally (by 1.1 pps) 
in view of the decline of the population aged 25-64 with lower secondary education or below. 

14 

 
 
 
 
 
                                                            
among self-employed without employees (more details in Section 3.1.1). As mentioned earlier 

in  the  chapter,  since  the  onset  of  the  crisis  the  number  of  part-time  workers  has  increased 

substantially  (by  around  11%  compared  to  2008),  while  full-time  employment  has  dropped 

(by 2%). Nonetheless, this trend might be on the verge of changing, as in 2016 proportionally 

more full-time than part-time jobs were created (the same had occurred only once since 2008, 

in 2014). In addition, the share of involuntary part-time has decreased in 2016, from 29.1% to 

27.7%. In line with the trend of recent years, most job creation occurred in services (+1.7%). 

Industry  and  construction  also  showed  good  growth  (both  with  +1%).  In  construction, 

employment growth showed a positive sign for the first year since 2008 – though compared to 

that  year,  there  are  still  18%  fewer  people  employed  in  the  sector.  Jobs  in  agriculture 

continued to fall, following a long-term trend, by 4% in 2016. 

1.2 

Social trends  

Improved labour market conditions have brought general improvements in the financial 

situation  of  households.  The  real  Gross  Disposable  Household  Income  (GDHI),  which 

measures  household  market  income  adjusted  for  taxes  and  social  transfers,  increased  for  a 
third  consecutive  year  in  2016  and  has  reached  the  previous  peak  of  20095.  Quarterly  data 

indicate a stable increase of around 2% on yearly basis in 2016. Growth continued in the first 
quarter of 2017, though at a slower pace6. Recent growth is driven by higher incomes from 

work, with compensation of the self-employed and especially employees increasing at a firm 

pace.  This  mostly  reflects  higher  employment  rates,  and  to  a  lesser  extent  wage  increases. 

Increases  in  social  benefits  also  raised  the  disposable  income  of  households,  but  their 

contribution  to  overall  GDHI  growth  has  decreased  in  the  second  half  of  2016.  Property 

incomes and other income contributions have remained stable in the past years, while higher 

social contributions and taxes had a negative contribution to GDHI growth. 

5 Employment and Social Developments in Europe, Annual Review 2017, p. 39. 
6 For more details, see Employment and Social Developments in Europe, Quarterly Review - October 2017, pp. 
33-34. 

15 

 
 
 
 
                                                            
The improved income situation of households has reduced the number of people at risk 
of poverty or social exclusion (AROPE7). This indicator continued to improve for a fourth 

consecutive  year  in  2016,  dropping  to  23.5%  (from  23.8%  one  year  earlier),  and  is  now 

approaching its lowest level of 23.3% in 2009. Still, progress towards achieving the Europe 

2020 strategy headline target – of lifting at least 20 million people out of poverty compared to 

2008  –  remains  insufficient.    Around  118  million  people  were  at  risk  of  poverty  or  social 
exclusion in 2016, i.e. about 700,000 more than in 20088. The risk was more prevalent among 

certain  groups:  children  (aged  0-17,  26.4%),  young  people  (aged  18-24,  30.5%)  as  well  as 

people  with  at  most  lower  secondary  level  education  (34.9%)  and  people  with  disabilities 

(aged  16+,  29.9%).  Two-thirds  of  the  unemployed  were  also  at  risk  of  poverty  or  social 

exclusion  in  2016.    Non-EU  born  people  tend  to  face  higher  risks  of  poverty  or  social 

exclusion  (39.1%  in  2015).  Conversely,  elderly  people  (age  65+)  remain  relatively  better 

protected (with a slight deterioration, from 17.4% in 2015 to 18.3% in 2016).  

Figure 4:  Sub-indicators of ‘people at risk of poverty or social exclusion", 2005-2016  

Source: Eurostat, SILC. Note: EU27 in this graph equals EU minus Croatia (only available since 2010). 

7 Individuals who are at risk of poverty (AROP) and/or suffering from severe material deprivation and/or living 
in households with zero or very low work intensity. 
8  The  average  number  of  people  at  risk  of  poverty  or  social  exclusion  for  EU-28  in  2008  is  based  on  an 
estimation by Eurostat, as figures for Croatia are only available from 2010 on. 

16 

 
 
 
 
 
                                                            
Looking at sub-components of the AROPE, monetary poverty remains the most relevant 
challenge. The number of people at risk of poverty (AROP9) rose for several years following 

the crisis, driven by the weak economic and labour market situation until mid-2014, reaching 
a peak of 87 million in 201610. However, as a share of the population, the number of people at 

risk of poverty has stabilised in 2015 and 2016 (17.3% in both years), thanks to the recovery 

and improving labour market conditions. Still, it remains above the pre-crisis level of 16.4% 

in  2009.  Flash  estimates  for  income  year  2016  suggest  that  monetary  poverty  further 

stabilised in most Member States.  

The  number  of  people  suffering  from  severe  material  deprivation  (SMD11)  has  been 

declining since 2013, and in 2016 reached the lowest level ever recorded (37.8 million). 

This  figure  amounts  to  7.5%  of  the  EU  population  (from  8.1%  in  2015).  Its  decrease, 

reflecting a fall in absolute poverty, is the main driver behind the reduced number of people at 

risk of poverty or social exclusion. The improved labour market situation led to a decrease in 
the share of people living in (quasi) jobless households12. This share amounted to 10.4% (or 

38.8 million) in 2016, declining from the 2014 peak of 11.2%. However, over a longer time 

horizon, it remains elevated compared to 2008 (9.2%). 

In-work  poverty  risk  has  remained  on  an  increasing  trend  (started  with  the  crisis), 

affecting 9.6% of the working age population in 2016. This value remains above its lowest 

level of 8.3% in 2010, and correspnds to over 32 million workers at risk of poverty. Although 

crucial in bringing down the risk of poverty, employment alone is not always sufficient to lift 

people  out  of  poverty.  Increases  in  non-standard  forms  of  employment  and  employment 

polarisation may impact future results for this indicator. 

Income  inequality  started  slowly  declining  in  2016,  after  having  increased  in  the 

aftermath of the crisis. The income quintile share ratio (i.e. the ratio of total income received 

9 People are considered at-risk of poverty (AROP) if their equivalised disposable income is below 60% of the 
national equivalised median income. 
10  The  figure  is  computed  based  on  2015  incomes,  with  the  exception  of  United  Kingdom  (survey  year)  and 
Ireland (income of 12 months preceding the survey). NB: data for Ireland not available at 31 October 2017. 
11  Severe  Material  Deprivation  (SMD)  is  defined  as  the  enforced  inability  to  pay  for  at  least  four  of  the 
deprivation  items:  (1)  pay  rent/mortgage/  utility  bills  on  time;  (2)  keep  home  adequately  warm;  (3)  meet 
unexpected  expenses;  (4)  eat  meat,  fish  or  a  protein  equivalent  every  second  day;  (5)  one  week  holiday  away 
from home; (6) own a car; (7) a washing machine; (8) a colour TV; (9) a telephone.  
12 People aged 0-59 living in households where the adults (excluding dependent children) worked less than 20 % 
of their total work-time potential in the previous 12 months. 

17 

 
 
                                                            
 
by  the  20%  of  the  population  with  the  highest  income  to  that  received  by  the  20  %  of  the 

population  with  the  lowest  income)  slightly  receded  from  5.2  in  2015  to  5.1  in  2016,  after 

increasing  from  4.9  in  2009.  This  modest  development  reflects  the  improved  economic  and 

labour market conditions. Nonetheless, the average EU indicator on income inequality hides 

considerable variation across countries (see Section 3.4).  

18 

 
 
 
 
2. 

SNAPSHOTS FROM THE SOCIAL SCOREBOARD 

The  European  Pillar  of  Social  Rights,  signed  as  an  inter-institutional  Proclamation  by  the 

European  Parliament,  the  Council  and  the  Commission  on  17  November  2017,  sets  out  a 

number of key principles and rights to support fair and well-functioning labour markets and 

welfare  systems.  It  is  designed  as  a  compass  for  a  renewed  process  of  convergence  among 

Member States towards better working and living conditions. 

The European Pillar of Social Rights is accompanied by a new social scoreboard to monitor 
performances  and  track  trends  across  the  Member  States13.  This  edition  of  the  Joint 

Employment  Report  presents  the  results  from  the  social  scoreboard,  which  replaces  the 
scoreboard  of  key  employment  and  social  indicators  agreed  in  201314.  The  new  scoreboard 

provides a number of Headline Indicators to screen the employment and social performance 

of  Member  States  along  three  broad  dimensions,  identified  in  the  context  of  the  Pillar:  (i) 

equal  opportunities  and  access  to  the  labour  market,  (ii)  dynamic  labour  markets  and  fair 

working conditions, and (iii) public support / social protection and inclusion. This analysis is 

placed in the broader reform context presented in Chapter 3.  

2.1 

The scoreboard explained 

The social scoreboard will be a central tool for monitoring convergence towards better 

working  and  living  conditions.  It  notably  consists  of  the  following  14  headline  indicators 
that assess employment and social trends at large15 : 

-  Equal opportunities and access to the labour market: 

1.  Share of early leavers from education and training, age 18-24 

2.  Gender gap in employment rate, age 20-64 

13 SWD(2017) 200 final, accompanying the Communication COM(2017) 250 final of 26 April 2017. 
14 Headline indicators which were also included in the old scoreboard are marked with an asterisk in Annex 1. 
15 All but a few of these indicators are part of the existing assessment frameworks and tools jointly agreed with 
the Employment Committee  and the Social Protection Committee, i.e. the Joint Assessment Framework (JAF) 
and  the  dashboards  included  in  the  Employment  Performance  Monitor  (EPM)  and  the  Social  Protection 
Performance  Monitor  (SPPM).  The  Employment  Committee  and  the  Social  Protection  Committee  (and  their 
Indicator Sub-Groups) have discussed the practical implementation of the Scoreboard, following its adoption in 
April  2017.  In  this  context,  the  Committees  have  agreed  the  use  of  headline  indicators  in  the  2018  Joint 
Employment  Report,  and  to  assess  Member  States'  performance  through  the  commonly  agreed  methodology 
applied in previous Joint Employment Reports.  

19 

 
 
 
 
                                                            
3.  Income inequality measured as quintile share ratio - S80/S20 

4.  At-risk-of-poverty or social exclusion rate (AROPE) 

5.  Young people neither in employment nor in education or training (NEET rate), 

age 15-24 

-  Dynamic labour markets and fair working conditions16: 

6.  Employment rate, age 20-64 

7.  Unemployment rate, age 15-74 

8.  Participants in active labour market policies per 100 persons wanting to work 
9.  Gross disposable income of households in real terms, per capita17 

10. Compensation of employees per hour worked, in euro 

-  Public support / Social protection and inclusion: 

11. Impact of social transfers (other than pensions) on poverty reduction18 

12. Children aged less than 3 years in formal childcare 

13. Self-reported unmet need for medical care 

14. Share of population with basic overall digital skills or above. 

The  common  methodology  used  to  analyse  the  Scoreboard  has  been  agreed  by  the 

Employment Committee and the Social Protection Committee (see Annex 3 for details). It 

evaluates  the  situation  and  developments  in  Member  States  by  looking  at  levels  and  yearly 
changes19  of  each  of  the  headline  indicators  included  in  the  social  scoreboard.  Levels  and 

changes  are  classified  according  to  their  distance  from  the  respective  (unweighted)  EU 

averages. Member States' performances on levels and changes are then combined (by using a 

predefined matrix) so that each Member State is assigned to one out of seven categories ("best 

performers",  "better  than  average",  "good  but  to  monitor",  "on  average/neutral",  "weak  but 

improving", "to watch" and "critical situations"). On this basis, Table 1 provides a summary 

of the readings of the scoreboard according to the latest figures available for each indicator.  

16 As part of the discussions with the Employment Committee and the Social Protection Committee on the full 
Social Scoreboard, (a number of) Member States have expressed a preference for finding for indicators 8 and 10 
two alternative indicators. 
17 As demanded by the Committees, this indicator is measured using 'unadjusted income' (i.e. without including 
social transfers in kind) and dropping reference to the use of purchasing power standards (PPS) units. 
18 This is measured as the difference, among total population, between the share of people at risk of poverty rate 
before and after social transfers. 
19  With  the  exception  of  the  Gross  Disposable  Household  Income,  which  is  measured  as  an  index  number 
(2008=100, thus reflecting a change compared to pre-crisis) and changes in the latest year. 

20 

 
 
                                                            
A  careful  and  non-mechanical  reading  of  the  table  is  warranted.  To  this  purpose,  a 

detailed  analysis  of  the  fourteen  indicators,  including  longer-term  trends  and  additional 

indicators,  when  relevant,  is  presented  in  Chapter  3.  In  addition,  the  forthcoming  country 

reports  will  provide  an  in-depth  analysis  of  all  "critical  situations"  and  additional  socio-

economic  background  to  better  qualify  country-specific  challenges  in  the  context  of  the 

European  Semester.  This  will  provide  an  analytical  basis  for  the  subsequent  Commission 

proposals for Country Specific Recommendations where appropriate. 

2.2 

Evidence from the social scoreboard 

Action  is  required  to  achieve  convergence  in  'societal  progress'  along  the  dimensions 

identified  by  the  Social  Pillar.  The  analysis  of  headline  indicators  shows  for  17  Member 

States at least one "critical situation". Across the 14 domains assessed, 50 "critical situations" 

are identified, corresponding to almost 13% of the total number of assessments. Counting the 

three  more  problematic  classifications,  "critical  situation",  "to  watch"  and  "weak  but 

improving" brings the global count to 129 i.e. about one-third of all assessments.  

Looking  at the three  broad  dimensions  covered  by the scoreboard, problematic flags appear 

more  frequently  in  the  area  of  "public  support/social  protection  and  inclusion",  with  an 

average  of  11.8  cases  (of  which  4.5  "critical  situations")  per  indicator.  Impact  of  social 

transfers  in  poverty  reduction  appears  the  most  difficult  ,  with  indicators  flashing  for  13 

Member States (of which 5 in the bottom category).  

The dimensions of "Equal opportunities and access to the labour market" and "dynamic 

labour markets and fair working conditions" follow, with for both an average of about 9 

and  8.8  cases  flagging  per  indicator  (respectively  4  and  3  "critical  situations"  each).  In  the 

first  domain,  the  most  flagged  indicator  is  the  gender  employment  gap  (10  times).  In  the 

latter,  compensation  of  employees  per  hour  worked  appears  as  the  indicators  with  most 

numerous challenges (13 flags).  

The Scoreboard depicts an improving labour market and social situation for the EU as a 

whole. On average for the EU, 11 out of the 14 headline indicators recorded an improvement 

over the last available year (i.e. 2016 or 2015 depending on data availability), confiming the 

steady  improvement  in  labour  markets  and  social  situation  which  has  accompanied  the 

economic recovery. In particular, on the unemployment rate, 11 Member States can now be 

21 

 
 
categorised  as  best  perfomers  or  better  than  average,  and  only  one  country  is  in  a  critical 

situation. Twelve Member States also flag as best perfomers or better than average in terms of 

the employment rate and 12  Member States when considering the share of people at risk of 

poverty  of  social  exclusion.  Nevertheless,  two  indicators  (gender  employment  gap  and 

compensation of employees per hour worked) remained broadly unchanged and one of them 

(impact of social transfers on poverty reduction) slightly deteriorated.  

The situation of Member States remains scattered and the severity of challenges varies 

widely  across  Member  States.  Most  Member  States  are  flagged  at  least  once  with  a 

challenge  on  headline  indicators,  except  for  Denmark,  Germany,  France,  the  Netherlands, 

Sweden and the United Kingdom. Greece, Romania, Italy and Bulgaria report "critical", "to 

watch", or "weak but improving" situations on ten or more indicators. In that group, Greece 

and Romania  present by far the largest number of "critical situations" (i.e. indicators which 

are  much  worse  than  average,  and  either  not  improving  sufficiently  fast  or  deteriorating 

further). In the case of Greece, critical situations are spread across all the three areas (yet, a 

good  performance  is  recorded  on  early  school  leaving).  For  Romania,  they  are  mostly 

concentrated  in  the  "equal  opportunities  and  access  to  labour  market"  and  "public  support  / 

social protection and exclusion" areas. In terms of overall count, Cyprus (9 challenges), Spain 

and  Croatia  (8  challenges  each),  Latvia,  Lithuania  and  Portugal  (7  challenges  each)  follow. 

By contrast, Denmark is a best performer or better than average in all 14 headline indicators, 

followed  by  Sweden  (12  indicators),  Austria  (10  indicators)  and  the  Netherlands  (9 

indicators).  

When  looking  at  equal  opportunities  and  access  to  the  labour  market,  the  situation 

improved over the last year in terms of early leavers from education and training, the risk of 

poverty and social exclusion and NEETs in the EU. However, it remained broadly stable in 

terms of gender employment gap and income inequality (as measured by the income quintile 

share ratio). When looking by indicator: 

  Spain,  Malta,  Portugal  and  Romania  face  a  critical  situation  when  it  comes  to  early 

leavers  from  education  and  training  compared  to  Croatia,  Lithuania  and  Slovenia  as 

the best performers; 

  Greece,  Italy,  Malta  and  Romania  score  critical  on  the  gender  employment  gap, 

compared to Latvia, Lithuania and Sweden as best performers; 

22 

 
 
  Bulgaria,  Greece,  Spain  and  Lithuania  face  a  critical  situation  in  terms  of  income 

inequality  compared  to  the  good  performance  of  the  Czech  Republic,  Slovenia, 

Slovakia and Finland;  

  The situation as concerns the risk of poverty or social exclusion is critical in Bulgaria, 

Greece and Romania, compared to the Czech Republic, Denmark, the Netherlands and 

Finland as best performers;  

  Bulgaria, Greece, Croatia, Cyprus and Romania face a critical situation when looking 

at  NEETs  while  Denmark,  Luxembourg,  the  Netherlands  and  Sweden  perform  the 

best. 

Turning to dynamic labour markets and fair working conditions in the EU, the situation 

improved over the last year in terms of employment and unemployment rates, participation in 

active  labour  market policies (ALMPs)  and gross disposable household income (GDHI) per 

capita  growth,  while  it  was  fairly  stable  in  terms  of  compensation  per  employee.  When 

looking by indicator: 

  Greece,  Croatia  and  Italy  still  face  a  critical  situation  when  it  comes  to  their 

employment rate, compared to Denmark, Germany, the Netherlands, Sweden and the 

UK as the best performers; 

  Greece scores critical on the unemployment rate, compared to the Czech Republic and 

Germany as best performers; 

  Bulgaria, Estonia, Croatia, Romania and Slovenia face a critical situation in terms of 

participation to ALMPs, compared to the performance of Belgium, Denmark, France, 

Hungary and Sweden; 

  The  growth  in  per  capita  GDHI  is  seen  as  a  critical  situation  in  Greece  and  Cyprus, 

compared to Poland and Romania as best performers;  

  Bulgaria, Hungary and Poland face a critical situation when looking at compensation 

per  employee,  while  Belgium,  Denmark,  France,  Luxembourg  and  the  Netherlands 

perform the best. 

As regards public support and social protection and inclusion, the situation improved over 

the last year in terms of childcare availability, self-reported unmet need for medical care and 

digital skills but it worsened in terms of the impact of social transfers on poverty reduction. 

When looking by indicator: 

23 

 
 
  Bulgaria,  Greece,  Italy,  Lithuania  and  Romania  still  face  a  critical  situation  when  it 

comes  to  the  ability  of  their  social  transfers  to  reduce  poverty.  This  compares  to 

Denmark, Austria, Finland and Sweden as the best performers;  

  The Czech Republic, Poland and Slovakia score critical on the availability of formal 

childcare, compared to Belgium, Denmark, Luxembourg, Portugal and Sweden as best 

performers; 

  Estonia,  Greece,  Italy,  Poland  and  Romania  face  a  critical  situation  in  terms  of  self-

reported  unmet  need  for  medical  care  (no  "best  performers"  identified  through  the 

methodology); 

  Bulgaria and Romania face a critical situation when looking at levels of digital skills, 

while Denmark, Luxembourg, the Netherlands and Finland perform the best. 

24 

 
 
Table 1. Summary of the headline indicators in the social scoreboard  

Note: At 31 October 2017, participation in ALMPs not available for EL, IT, MT, UK (LU not reported for data verification issue); GDHI per capita growth not available for HR, LU and 
MT; income quintile ratio, at-risk-of-poverty or social exclusion rate, and impact of social transfers on poverty reduction not available for IE.  

25 

Early leavers from education and trainingGender employment gapIncome quintile ratioAt risk of poverty or social exclusionYouth NEETEmployment rateUnemployment rateParticipation in ALMPsGDHI per capita growthCompensation of employees per hour workedImpact of social transfers on poverty reductionChildren aged less than 3 years in formal childcareSelf-reported unmet need for medical careIndividuals' level of digital skillsYear20162016201620162016201620162015201520162016201520152016Best performersHR, LT, SILT, LV, SECZ, FI, SI, SKCZ, DK, FI, NLDK, LU, NL, SEDE, DK, NL, SE, UKCZ, DEBE, DK, FR, HU, SEPL, ROBE, DK, FR, LU, NLAT, DK, FI, SEBE, DK, LU, PT, SEDK, FI, LU, NLBetter than averageAT, CZ, DK, EL, IE, LU, PLAT, BG, DK, FR, PT, SIAT, BE, DK, EE, FR, HU, MT, NL, SEAT, DE, FR, HU, MT, SE, SI, SKBE, CZ, EE, MT, SIAT, CZ, EE, HU, LT, MT, SKDK, HU, LU, MT, NL, PL, RO, SK, UKBG, DK, EE, LV, LT, SEAT, DE, FI, IE, SEBE, CZ, FR, HU, SI, UKAT, ES, FR, NLAT, CY, CZ, DE, DK, ES, FR, LU, MT, NL, SE, SIAT, DE, HR, UKOn averageBE, DE, EE, FI, FR, LV, NL, SE, SK, UKDE, EE, ES, HR, IE, LU, NL, UKCY, DE, HR, PL, UKBE, EE, PL, PT, UKFI, FR, HU, IE, PL, PT, SK, UKCY, FI, FR, IE, LV, PL, PT, SIBE, BG, FI, FR, IE, LT, LV, SE, SIAT, CZ, DE, ES, FI, IE, NL, PL, PTBE, CZ, DE, IE, FR, HU, NL, SK, FI, UKCY, ES, IT, SICY, DE, MTDE, EE, FI, IE, IT, LV, SI, UKBE, BG, HR, HU, IE, LT, PT, SK, UKBE, ES, FR, HU, LT, LV, SI, SKGood but deterioratingFILUAT, DEATUKNLSEWeak but improvingROLVITESCY, ES, HRRO, LVEE, LVROLVPLTo watchBG, CY, HU, ITBE, CY, CZ, HU, PL, SKIT, LU, LV, PTCY, ES, HR, IT, LTES, LT, LVBE, BG, LU, ROEE, IT, PTCY, LT, SKES, IT, AT, PT, SICZ, EE, EL, HR, LT, MT, PT, SKES, HR, LU, PL, PT, SKBG, CY, EL, HR, HU, LT, MTFICY, CZ, EE, EL, IE, IT, MT, PTCritical situationsES, MT, PT, ROEL, IT, MT, ROBG, EL, ES, LTBG, EL, ROBG, CY, EL, HR, ROEL, HR, ITELBG, EE, HR, LV, RO, SIEL, CYBG, HU, PLBG, EL, IT, LT, ROCZ, PL, SKEE, EL, IT, PL, ROBG, ROEqual opportunities and access to the labour marketDynamic labour markets and fair working conditionsPublic support / Social protection and inclusion 
 
 
 
 
 
 
 
Box 1. Benchmarking - state of play  

The Communication of 26 April 2017 establishing a European Pillar of Social Rights20 notes 
that "benchmarking and exchange of best practices will be conducted for a number of areas, 
such as employment protection legislation, unemployment benefits, minimum wages, minimum 
income and skills". The Commission started in 2015, following the Five Presidents' Report21 
and  in  cooperation  with  Member  States,  benchmarking  exercises  in  some  of  the  areas 
mentioned  in  the  Social  Pillar  Communication.  The  purpose  of  benchmarking  is  to  support 
structural  reforms  and  upward  convergence  towards  best  performers.  In  comparison  with 
other cross-examination exercises, where the focus is mainly on comparing general outcomes, 
these  benchmarking  exercises  focus  notably  also  on  policy  levers  (i.e.  on  specific  policy 
parameters that can lead to better outcomes).  

The  Employment  Committee  (EMCO)  and  the  Social  Protection  Committee  (SPC)  have 
agreed  on  a  common  approach  relying  on  a  three-step  approach:  (1)  identification  of  key 
challenges  and  a  set  of  high  level  outcome  indicators  relevant  for  the  policy  area  under 
consideration; (2) performance indicators which allow for benchmarking the performance; (3) 
the  identification  of  policy  levers,  which  are  accompanied  by  general  principles  for  policy 
guidance  and,  when  available,  by  specific  indicators.  At  this  stage  the  aim  is  to  allow  for 
comparisons of Member States for each policy lever, rather than setting reference values.  

Discussions in the Employment Committee on a pilot on Unemployment Benefits and Active 
Labour  Market  Policies  started  in  2016  and  an  agreement  was  found  in  2017.  This  notably 
concerns three outcome indicators (unemployment rate, long-term unemployment and at-risk-
of-poverty rate of the unemployed), two performance indicators (share of people wanting to 
work  participating  in  regular  activation  measures  and  coverage  of  unemployed  with 
unemployment duration shorter than 12 months by unemployment benefits); and three policy 
lever indicators, notably in the domain of unemployment benefits (replacement rate, eligibility 
conditions and benefit duration). The analysis of unemployment benefits presented in Chapter 
3.3 draws on the results of the benchmarking exercise. Work is still ongoing as regards policy 
levers on activation policies.  

A benchmarking exercise for minimum income schemes is also being developed jointly with 
Member  States  in  the  Social  Protection  Committee.  The  state  of  play  of  this  exercise  is 
presented  in  Chapter  3.4.  Work  is  also  progressing  on  benchmarking  skills,  with  a  focus  as 
concerns policy levers on adult learning.  

Within the context of the European Pillar of Social Rights, the Commission intends to pursue 
a  further  reflection  on  benchmarking  together  with  Member  States.  It  aims  at  identifying 
Pillar principles for which benchmarking can provide a positive contribution towards mutual 
learning and upward convergence. 

20 COM(2017) 250 final. 
21 COM(2015) 600 final. 

26 

 
 
 
 
 
                                                            
3.  

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 201522. For each guideline, recent developments on a 

selection of key indicators are presented, as well as policy measures taken by Member States. 

As  concerns  the  latter,  the  section  draws  on  Member  States’  National  Reform  Programmes 
2017 and European Commission sources23. If not  specified otherwise, only  policy measures 

implemented after June 2016 are presented in the report. An in-depth analysis of recent labour 

market  developments  can  be  found  in  the  Labour  Market  and  Wage  Developments  2017 
report24 and the Employment and Social Developments in Europe Review 2017.25  

3.1   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  an  overview  of  unemployment  and  employment  rates  by  Member  State, 

complementing the analysis at EU level made in Chapter 1, so as to highlight the relevance of 

the job creation challenge across countries. It then looks at self-employment dynamics, as a 

proxy  for  entrepreneurship  and  as  a  source  of  employment  growth  per  se.  It  finally 

investigates  key  macroeconomic  determinants  of  hiring  decisions,  namely  wage  and  tax 

wedge  developments.  Section  3.1.2  reports  on  policy  measures  implemented  by  Member 

States in these areas to promote labour demand, including hiring subsidies.  

22 The guidelines have been fully reflected for the first time in the 2016 National Reform Programmes. 
23 Including LABREF database, available at http://ec.europa.eu/social/main.jsp?catId=1143&intPageId=3193.  
24  European  Commission  (2017).  Labour  Market  and  Wage  Developments  in  Europe.  Annual  review  2017. 
Luxembourg: Publications Office of the European Union. 
25  European  Commission  (2017).  Employment  and  Social  Developments  in  Europe.  Annual  Review  2017. 
Luxembourg: Publications Office of the European Union. 

27 

 
 
 
 
 
                                                            
3.1.1  Key indicators 

In  almost  half  of  the  Member  States  the  unemployment  rate  decreased  markedly  in 

2016,  by  more  than  1  percentage  point.  A  quicker-than-average  drop  occurred  notably  in 

some  Member  States  suffering  from  very  high  unemployment  rates  –  especially  Spain, 

Croatia  and  Cyprus  (by  2  pps  or  more)  but  also  Greece  and  Portugal  –  pointing  to  a 
convergence26  towards  lower  unemployment  levels.  However,  differences  remain  big.  As 

evident  from  Figure  5  (which  looks  jointly  at  levels  and  changes  according  to  the  agreed 
methodology  for  assessing  headline  indicators  of  the  social  scoreboard27),  the  dispersion  of 
unemployment rates remained sizeable in 201628, with values ranging from around 4% in the 

Czech  Republic  and  Germany  ("best  performers")  to  23.6%  in  Greece  ("critical  situation"). 

Although  the  unemployment  rate  decreased  by  1.3  pps  in  Greece,  the  overall  level  remains 

very  high.  Moreover,  unemployment  rates  also  remain  high  in  Italy,  with  no  significant 

improvements in 2016 (decreasing by only 0.2 pps). Among Member States with lower than 

average unemployment rates, Estonia and Austria recorded a slight increase in 2016. In spite 

of  the  steady  decrease  since  2013,  in  most  Member  States  the  unemployment  rate  was  still 

higher in 2016 than in 2008 (Figure 6). The only exceptions are Germany, Hungary, Malta, 

Poland, the United Kingdom and the Czech Republic.  

26 When looking at social scoreboard figures according to the common methodology, the report uses the concept 
of  convergence  in  levels,  or  "beta-convergence".  This  refers  to  the  situation  where  indicators  in  worse-
performing countries improve faster than in best performing ones. It can be assessed by looking at the slope of 
the regression line in the scatterplot of levels against changes. 
27 See Chapter 2 and Annex 2 for details. 
28  Analysis  in  the  Labour  Market  and  Wage  Developments  report  2017  (p.  11)  shows  that  dispersion  of 
unemployment rates is decreasing since 2014. 

28 

 
 
                                                            
Figure 5: Unemployment rate (15-74) and yearly change (Social Scoreboard headline 
indicator)   

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

Figure 6: Unemployment rate (15-74), multiannual comparison 

Source: Eurostat, LFS. 

29 

 
 
 
 
 
The  employment  rate  has  increased  in  27  out  of  28  Member  States,  though  significant 

disparities remain.  Only Luxembourg has recorded a slight decrease over the last year. As 

shown  in  Figure  7,  employment  rates  are  only  partially  converging.  This  is  reflected  in  the 

moderately negative slope of the regression line that links changes with levels in employment 

rates. This suggests that Member States characterised by lower employment rates are growing 

somewhat  faster  than  average,  and  vice  versa  –  but  the  situation  remains  scattered. 

Employment rates (age group 20-64) diverge widely, ranging from 56.2% in Greece to 81.2% 

in  Sweden.  At  the  lower  end,  the  employment  rate  remains  much  below  the  EU  average 

(below 65%) in Greece, Croatia, Italy (flagged as "critical situations"), and Spain (flagged as 

"weak  but  improving"  in  view  of  a  significant  improvement).  It  is  marginally  higher  in 

Romania,  Belgium  and  Bulgaria,  though  increasing  at  a  slower  than  average  pace. 

Conversely, the Netherlands, Denmark, United Kingdom, Germany and Sweden are flagged 

as "best performers" with employment rates of 77% or higher. An expansion of employment 

is,  according  to  the  European  Commission  Autumn  2017  economic  forecast,  expected  over 

2017 and 2018 in almost all Member States.  

30 

 
 
 
 
Figure 7: Employment rate (20-64) and yearly change (Social Scoreboard headline 
indicator)  

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

Average employment rates in the EU have been constantly rising since 2013 and are now 

above pre-crisis levels, but disparities are still high. In 2016 more than half of the Member 

States, 17 countries, are still below the 2008 levels (Figure 8). This is particularly evident in 

those countries more affected by the crisis  – notably  Greece (-10.1 pps), Cyprus (-7.7 pps), 

Spain  (-4.6  pps)  and  Croatia  (-3.5  pps).  Reassuringly,  the  recovery  has  contributed  to 

employment growth in almost all Member States compared to 2013. The largest increases in 

employment rates since 2008 took place in Hungary (+8.5 pps) and Lithuania (+5.3 pps). 

31 

 
 
 
 
 
Figure 8: Employment rate (20-64), multiannual comparison 

Source: Eurostat, LFS. 

In a context of sustained employment growth, trends in self-employment tend to be more 

stable. The average self-employment rate decreased in 2016 to 14.0%, the lowest rate since 

2008, as total employment grew faster (+1.5%) than self-employment (+0.3%). However, if 

the primary sector (agriculture, forestry and fishing), which is affected by a structural decline, 

is excluded, the number of self-employed grew almost as fast as total employment (by 1.3%). 

Self-employment by people with a migrant background continued its steady rise: the rate for 

people  with  a  non-EU  citizenship  rose  to  12.2%  in  2016,  from  11.9%  in  2015  (it  was  only 

10.0%  in  2010).  Moreover,  demographic  developments  have  led  to  a  strong  increase  in  the 

number of self-employed of 65 years and older. In 2016, their number amounted to 8% of the 

total number of self-employed (6% in 2006). 

In absolute terms, self-employment rose in 2016 in a majority of Member States. Sectoral 

developments  played  a  role,  with  decreases  mainly  concentrated  in  Member  States  with  an 

above-average  share  of  self-employed  in  the  primary  sector  (Croatia,  Romania,  Slovenia, 

Bulgaria, Portugal, Finland and Poland). Decreases were also recorded in Cyprus, Germany, 

Belgium, Sweden and Italy,  while self-employment went up in  all other Member States (by 

5% or more in Luxembourg, Slovakia and the United Kingdom). The male self-employment 

rate continued its steady decrease (to 17.5% in 2016; it stood above 18% up to 2014), while 

the female self-employment rate has remained constant at around 9.9% since 2012. 

32 

 
 
 
 
Self-employment  without  employees 

(so-called  own-account  workers)  remained 

widespread. In 2016, the number of own-account workers outside the primary sector rose by 

1.8%  (and  stood  9%  higher  than  in  2008),  while  the  number  of  employers  (self-employed 

with employees) outside the primary sector rose only by 0.3% (and stood 10% lower than in 

2008).  Self-employment  without employees  can  hide  situations  of  "bogus"  self-employment 

in  some circumstances; this  issue will be further discussed in Section  3.3 along with labour 

market segmentation. 

Wage growth remains subdued in the EU, despite continued improvements in the labour 

market.  Real  wages  adjusted  for  the  change  in  consumer  prices  increased  in  almost  all 
Member  States  and  grew  overall  by  1.3%  in  the  EU29.  Growth  was  lower  in  the  euro  area, 

where, in the low-inflation environment of 2015 and 2016, real wages grew by slightly less 

than 1% in both years. Modest wage growth, coupled with a slight slowdown in productivity 
growth30, translated into a  moderate pick-up in  unit labour cost  dynamics. Compensation of 

employees varies widely across Europe, ranging from EUR 4.6 per hour worked in Bulgaria 
to EUR 43.3 in Luxembourg. Moreover, Figure 931 shows that Europe is broadly split in two 

groups  of  low-wage  and  high-wage  countries,  with  only  Cyprus,  Slovenia,  Italy  and  Spain 

being close to EU average. On the low end, in particular Bulgaria, Poland and Hungary stand 

out,  as  well  as  Romania  which  recorded  a  large  increase  in  the  last  year.  Some  signs  of 

convergence can be identified, even if the correlation between the absolute level of wages and 

the change in compensations does not seem strong. 

29 Labour Market and Wage Developments report 2017 (p. 44). 
30 Labour productivity per hour worked grew by only 0.6% in 2016, both in the EU and in the euro area. 
31 The annual variation for the United Kingdom is strongly affected by the considerable changes in the EUR to 
GBP exchange rate. 

33 

 
 
 
                                                            
Figure 9: Compensation of employees per hour worked and yearly change (Social 
Scoreboard headline indicator)  

Source: Eurostat, National accounts. Period: 2016 levels and yearly changes with respect to 2015. Note: Axes are 
centred on the unweighted EU average. The legend is presented in the Annex.  

In the period 2011 to 2016, real wage growth lagged behind average productivity growth 

in  the  majority  of  Member  States  (18  out  of  28).  In  six  countries  (Belgium,  Cyprus, 

Finland,  Croatia,  Greece,  Portugal)  real  wage  growth  was  negative  over  the  period  2014-
201632.  Also  over  the  longer  term,  on  average  real  wage  developments  have  been  trailing 

behind productivity (see Figure 10).  

32 Labour Market and Wage Developments report 2017 (p. 45). 

34 

 
 
 
 
                                                            
Figure 10: Wage and productivity developments, 2000-2016 average % changes 

Source: Eurostat, National Accounts  (DG EMPL calculations). 

Cost competitiveness developments were supportive of rebalancing in the euro area, but 

progress has slowed down. In the euro area, following prolonged fiscal and wage restraint, 

by 2015 most Member States turned to a current account surplus position. In the context of 

the  subdued  wage  growth  in  the  euro  area,  nominal  unit  labour  costs  have  grown  slightly 

faster in countries characterised by large and persistent current account surpluses than in net 

debtor  countries.  However,  the  difference  narrowed  somewhat  in  2016,  slowing  down  the 
rebalancing33.  

In most Member States, wage growth in 2016 was slower or equal than predicted by the 

historical relationship with unemployment, notably with wages lagging behind the drop of 

unemployment.  Countries  where  wage  growth  remained  furthest  below  the  historical 

relationship include Belgium, Bulgaria, Finland, Slovakia and Sweden. The Phillips curve  – 

the (normally negative) relationship between wage growth and unemployment – confirms that 

wages have reacted slowly to the recovery, especially in the euro area. Figure 11 compares the 

33 Labour Market and Wage Developments report 2017 (p. 49). 

35 

 
 
 
 
                                                            
annual change in nominal compensation per employee with the so-called unemployment gap, 
i.e. the difference between the actual unemployment rate and its trend34. Since the start of the 

crisis, the curve has been flatter than previously, implying a weaker reaction of wages to falls 

in unemployment. Moreover, the growth rate of compensations has over the last three years 

been below the trend expected in the light of labour market improvement. 

The  modest  wage  dynamics  can  be  explained  by  weak  productivity  developments,  low 

inflation expectations, the effect of some labour market reforms and the remaining slack 

in  the  labour  market.  In  particular,  the  current  unemployment  rate  may  not  adequately 

capture  the  effective  state  of  resource  utilisation  in  the  labour  market.  In  addition  to  those 

effectively looking for a job (i.e. the unemployed), discouraged workers and underemployed 

part-time  workers  may  exert  additional  downward  pressures  on  wages.  The  decline  in 

inflation  expectations  and  the  productivity  slowdown  may  also  affect  wage  negotiations, 

keeping  wage  growth  down,  thus  undermining  the  sustainability  of  the  recovery.  The 

negotiated  wages  also  give  a  clear  picture  of  how  wage  pressures  have  not  materialised, 

especially in the euro area: the yearly percentage change in the first quarter of 2017 was 1.5%, 

about 0.5 pps lower than its pace at the early stage of the recovery. 

Figure 11: Phillips curve for the euro area 2000-2016 

Source: DG ECFIN AMECO database and Eurostat, LFS 

34 Labour Market and Wage Developments report 2017 (p. 16). 

36 

2013201401234791113Compensation per employee (annual growth)Unemployment rate2009Linear trend 2000-20082010-11201220152016 
 
 
 
 
                                                            
The  tax  burden  on  labour  is  broadly  stable  in  Europe,  but  with  significant  differences 
across Member States. In 2016, reductions in the tax wedge35 for single workers earning the 
average wage were most significant36 in Austria (-2.4 pps), Belgium (-1.4 pps) and Italy (-1.2 

pps), while it increased markedly in the Netherlands (1.3 pps), Greece (1.0 pps) and Poland 

(0.9 pps). As evident from Figure 12, the tax wedge ranges from less than 30% in Ireland and 

Malta  to  around  50%  in  Belgium,  Germany,  Hungary,  Italy,  France  and  Austria.  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 2013 and 2016 the non-weighted average tax wedge decreased by 0.5 pps (and 

by  0.8  pps  for  low  income  workers),  with  large  reductions  in  some  of  the  countries 

experiencing the highest rates (Belgium, Austria, as  well as Italy  and France, but limited  to 

low  income  workers),  and  also  in  Romania  and  Denmark.  On  the  contrary,  there  were 
significant increases in Luxembourg and, limited to low wages, Portugal37.  

35 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. For instance, in the case of France the impact of the CICE (Crédit d'impôt pour la 
compétitivité et l'emploi) is not accounted by the indicator. 
36 Tax and benefits database, European Commission/OECD. 
37 Detailed information on recent trends including on different income groups can be found in: Tax Policies in 
the European Union – 2017 Survey, European Commission, DG TAXUD. 

37 

 
 
 
                                                            
Figure 12: Tax wedge on labour, level in 2016 and change 2013/2016 

Source:  Tax  and  benefits  database,  European  Commission/OECD.  Note:  data  are  for  single  earner  households 
(no children). No recent data available for Cyprus. 

3.1.2  Policy response 

Member States continued to resort to employment subsidies to support labour demand 

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.) 

and  consist  of  financial  incentives  (or  tax/social  security  contribution  rebates)  to  employers 

for  hiring  targeted  workers.  Over  the  reference  period  (from  the  second  half  of  2016 

onwards), targeted hiring subsidies were introduced by several Member States (more details 

to  be  found  in  section  3.2).  A  few  countries  also  introduced  (or  plan  to  introduce)  hiring 

subsidies for a wider public, i.e. without or with looser eligibility conditions, usually with the 

aim of promoting open-ended employment. Italy introduced, limited to the Southern regions, 

a  reduction  of  social  security  contributions  for  employers  hiring  on  a  permanent  basis  (or 

through professional apprenticeship) people younger than 25 or unemployed from at least six 

months. France extended by six months (to the first semester 2017, now phasing out) the EUR 

38 

 
 
 
 
4 000 premium granted for the hire by a small or medium enterprise of an employee paid up 

to 1.3 times the minimum wage; close to 1.6 million workers benefitted from the premium. In 

Austria, the introduction of an employment bonus aimed at creating new jobs by reducing the 

wage costs for employers opening additional positions is currently under study. In other cases, 

hiring  subsidies  are  targeted  to  several  disadvantaged  groups.  For  instance,  Portugal  set  up 

financial incentives to permanent hiring, in the form of partial exemptions of social security 

contributions  for  certain  vulnerable  groups  (young  people,  long-term  unemployed,  older 

people). Moreover, a hiring support measure, targeted to the same groups, provides incentives 

to  convert  fixed-term  contracts  into  permanent  ones.  The  European  Social  Fund  (ESF) 

contributes to this measure, as well as to a recent initiative aimed at promoting the transition 

from  traineeships  into  permanent  contracts.  Cyprus  introduced  employment  subsidies  for 

hiring  people  who  belong  to  vulnerable  groups,  including  GMI  recipient  and  persons  with 

disabilities. In Hungary, the ESF contributes to enhancing the employment potential of social 

enterprises through incentives and subsidies for job creation.  

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

instance, Hungary is supporting young people under the age of 30 and registered job seekers 

over the age of 30 to become entrepreneurs in the frame of the Youth Guarantee Scheme. In 

Romania,  the  Start-up  nation  scheme,  supported  by  the  ESF,  aims  at  promoting  the 

development  of  new  SMEs.  In  Finland,  as  of  2018,  it  will  be  possible  to  receive  the 

unemployment  benefit  as  start-up  grants  and  while  working  as  a  part-time  entrepreneur. 

Moreover,  discussions  are  ongoing  on  how  to  make  easier  for  the  unemployed  to  set  up 

companies.  Steps  have  also  been  taken  in  many  Member  States  to  make  sure  that  self-

employed enjoy adequate social rights (see section 3.3 on labour market segmentation). 

Several  Member  States  reduced  labour  costs  by  cutting  the  tax  wedge,  often  targeting 

the  lowest  incomes.  In  recent  months,  the  tax  wedge  was  tackled  in  many  countries, 

especially  for  low  income  earners,  through  reforms  focused  on  personal  income  taxation, 

often  by  increasing  tax  allowances  (i.e.  the  tax-free  amount  of  income).  For  instance,  in 

Germany the Federal Government updated the income tax rate to reduce the fiscal drag and 

increase  the  Basic  Personal  Allowance,  Child  Tax  Credit,  Child  Benefit  and  Child 

Supplement. In Estonia, the Parliament adopted the new tax-reform plan entering into force in 

2018, which includes an increase in basic income tax allowance per month to EUR 500 per 

39 

 
 
month  (up  from  EUR  180  in  2017).  Lithuania  amended  the  Law  on  Personal  Income  Tax, 

increasing the basic and additional tax-exempt amount of income. Hungary increased family 

tax  allowances  for  earners  with  two  children.  The  United  Kingdom  increased  the  personal 
allowance to £11,500 (approximately EUR 13,10038) per year and the threshold for the higher 

rate from £43,000 to £45,000 (EUR 51,400). France further decreased income tax for lower 

and middle incomes. In Belgium, the second phase of the Brussels tax reform, with additional 

reductions in personal income tax and a shift from taxation on labour to real estate, entered 

into force on 1 January 2017. In Latvia, a major tax reform includes the replacement of a flat 

23%  personal  income  tax  rate  with  a  progressive  system.  Cyprus  abolished  the  “special 

contribution” – a progressive tax on the gross monthly incomes emoluments of all employees, 

self-employed and pensioners. Slovenia amended the Personal Income Tax Act to reduce the 

personal income tax burden.  

Many  Member  States  also  intervened  on  the  tax  wedge  through  reductions  in  social 

security  contributions. 

In  France,  employers'  contributions  were  cut,  partially 

counterbalanced by increases on the employees’ side. In other countries, reductions in social 

security  contributions  were  rather  aimed  at  supporting  the  employment  of  specific  target 

groups, such as the young and older workers (Belgium and Italy), the disabled (Malta), new 

hires  on  permanent  contracts  (Italy)  or  new  hires  by  the  self-employed  (Sweden).  Hungary 

decreased the social contribution tax, with an impact on tax wedge for low-wage earners. At 

the same time, several countries (Greece, Lithuania, Latvia, Croatia) introduced or increased 

social security contributions for the self-employed or for those employed under atypical work 

arrangements. Finally, as of 2018 Latvia will generally increase social contributions for both 

employers and employees to finance health care. 

Building  on  major  reforms  over  the  past  years,  some  Member  States  are  introducing 

further changes in their wage setting systems. Belgium completed, after consultation with 

social  partners,  the  revision  of  the  1996  Law  on  wage  setting,  establishing  an  automatic 

correction  mechanism,  introducing  a  safety  margin  and  strengthening  the  legal  basis  of  the 

wage  norm,  so  as  to  prevent  loss  of  cost  competitiveness.  The  federal  government  also 

announced in July 2017 its intention to simplify and promote the participation of employees 

in  the  benefits  of  their  enterprises.  Croatia  made  the  process  of  collective  bargaining  more 

effective  on  the  conclusion  of  collective  agreements  binding  for  the  government,  ensuring 

38 The average exchange rate for 2017 up to 31 October is used here and in similar cases throughout the report. 

40 

 
 
                                                            
equal  access  to  negotiating  committees,  enhancing  financial  management  of  funds  from  the 

state  budget  and  ensuring  the  sustainability  of  the  payroll  system.  Portugal  temporarily 

suspended the automatic expiry of collective agreements, for a period of 18 months until July 

2018, due to the low number of new signed collective agreements. Moreover, following the 

publication of the green paper on labour relations, and as part of the tripartite agreement with 

social  partners,  the  government  is  planning  measures  to  foster  collective  bargaining.  In 

Slovenia,  public  sector  trade  unions  and  the  government  continued  negotiations  on  how  to 

loosen  several  temporary  austerity  measures  enacted  by  the  Fiscal  Balance  Act  of  2012,  on 

issues such as remuneration for job performance linked to increased work load, wage increase 

for promotion, reimbursement for annual leave and termination of the employment contract of 

persons  fulfilling  pensionable  conditions.  In  France,  a  new  reform  of  the  Labour  Law  was 

adopted  following  consultation  with  social  partners,  further  expanding  the  perimeter  where 

company-level  agreements  prevail,  while  defining  where  branch-level  agreements  should 

remain decisive.  

Some  Member  States  adjusted  their  minimum  wages  or  took  steps  to  make  minimum 

wage  setting  frameworks  more  predictable,  with  the  involvement  of  social  partners.  In 

Bulgaria,  the  government  has  tabled  a  draft  minimum  wage  setting  mechanism  with  three 

scenarios and an impact analysis component, pending agreement with the social partners. The 

government plans to incrementally increase the minimum wage from its current level of EUR 

230 per month to EUR 305 in 2020. Romania has set the level of minimum wages until 2020 

in its government programme. The minimum wage has more than doubled since 2010 and is 

set  increase  from  EUR  315  per  month  to  EUR  380  in  2020.  In  Ireland,  the  minimum  wage 

was  increased  from  EUR  9.15  per  hour  in  2016  to  EUR  9.25  in  2017  based  on 

recommendations  from  the  Low  Pay  Commission,  which  also  assesses  the  social  impact  of 

minimum wage adjustments. The Irish Government recently announced a further increase of 

the  minimum  wage  up  to  EUR  9.55  per  hour  from  January  2018.  Latvia  established  a 

minimum  wage  increase  to  EUR  430  per  month,  up  from  EUR  380,  as  of  1  January  2018. 

Poland increased the monthly minimum wage to 2000 PLN and introduced minimum hourly 

remuneration for those working on civil law contract (13 PLN per hour, i.e. around EUR 3). 

In Portugal, following a tripartite agreement with social partners, the Government increased 

the  statutory  minimum  wage  on  1  January  2017  from  EUR  530  to  EUR  557  a  month.  The 

increase was accompanied by a temporary reduction in employer's social security contribution 

41 

 
 
for workers receiving the minimum wage. The UK government aims at increasing the national 

minimum wage for those over 25 up to 60% of median earnings by 2020 (around £9 per hour, 

approximately EUR 10.3). The annual uprating in April 2017 moved the national living wage 

to  £7.50  per  hour  (EUR  8.6)  and  the  national  minimum  wage  will  also  increase  for  young 

workers and apprentices. In Germany, the Federal Government followed the recommendation 

of the permanent Minimum Wage Commission of the social partners, increasing the general 

minimum wage from EUR 8.50 to 8.84 per hour as from 1 January 2017.  

42 

 
 
 
 
3.2   Guideline 6: Enhancing labour supply, skills and competences 

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

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

competences. It 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  underrepresented  in  the  labour  market  (e.g.  young 

people, older workers, people with a migrant background and women). Section 3.2.2 reports 

on  policy  measures  of  Member  States  in  these  areas  and  measures  targeted  at  those 

disadvantaged groups. 

3.2.1  Key indicators 

In  2016,  the  early  school  leaving  rate  (ESL)  further  decreased  in  the  EU.  It  stood  at 

10.7%,  down  0.3  pps  from  2015.  Seventeen  Member  States  recorded  rates  below  the  EU 

target value of 10%. At the same time, the rate was close to 20% in Malta, Spain and Romania 

(which together with Portugal are flagged as "critical situations"), while it was below 5% in 

Croatia, Lithuania and Slovenia ("best performers"). In the past year the ESL rate remained 

stable in the large majority of Member States (as shown in Figure 13),  decreased the most in 

Luxembourg (by 3.5 pps) and Greece (1.4 pps), but showed a substantial increase in Cyprus 

(by  2.8  pps,  although  for  the  level  is  still  below  the  EU  average).  There  is  no  evidence  of 

convergence across Member States in 2016, as evidenced by the almost horizontal regression 

line  which  relates  yearly  changes  to  levels  in  the  ESL  rate.  Compared  to  2008  (Figure  14), 

however,  the  ESL  rate  declined  across  almost  all  Member  States,  by  4  pps  on  average;  it 

dropped the most in Portugal, Spain, Greece and Luxemburg, while it went up in Hungary, the 

Czech  Republic,  Slovakia,  and  Romania.  The  difference  in  the  early  school  leaving  rate 

between  men  and  women  in  2016  has  shrunk  to  3  pps  from  3.9  pps  in  2008,  with  women 

being less likely to leave school early than men. 

43 

 
 
 
Figure 13: Early leavers from education and training (% of population aged 18-24) and 
yearly change (Social Scoreboard headline indicator)  

Source:  Eurostat.  Period:  2016  levels  and  yearly  changes with  respect  to  2015.  Note: Axes  are  centred  on  the 
unweighted EU average. The legend is presented in the Annex.  

Figure 14: Early leavers from education and training, 2008-2016  

Source: Eurostat (LFS). Online data code: edat_lfse_14. 

44 

 
 
 
 
 
The long-term decline of early school leaving in Europe is a positive trend that largely 

stems  from  structural  reforms  in  education  and  training  systems  and  targeted  policy 

measures. Yet, in the aftermath of the crisis, it may in part be related to the persistent difficult 

access  to  the  labour  market  of  countries  with  high  levels  of  youth  unemployment,  where 

young people have decided to remain longer in education. Moreover, early school leaving is 

strongly linked to social disadvantage and low education backgrounds of parents. Pupils with 
a  migrant  background,  particularly  foreign-born  pupils,  have  higher  drop-out  rates39.  Pupils 

with disabilities are also more disadvantaged with a 10.3 pps gap compared to pupils without 
disabilities in 201540. 

An  important  indicator  of  the  quality  of  initial  education  and  training  systems  is  the 

proficiency of students in basic competences such as reading, mathematics and science. 

The OECD's Programme for International Student Assessment (PISA) 2015 survey of basic 

competences gained in primary and lower-secondary education shows that 19.7% of European 

students,  at  the  age  of  15,  were  low  achievers  in  reading,  22.2%  in  maths  and  20.6%  in 

science. Compared with the previous survey of 2012, performance has deteriorated across all 

domains  on  average  in  the  EU  and  in  most  EU  countries,  although  a  large  variation  among 

Member  States  in  the  acquisition  of  basic  skills  persists.  This  means  that  EU  countries  are 

further  away  from  the  goal  to  reduce  underachievement  in  reading,  maths  and  science  to 

below 15% by 2020. 

A  disadvantaged  socio-economic  background  is  the  most  significant  factor  associated 

with low educational achievement. There is also an overlap between low achieving students 

and  students  with  special  educational  needs  and/or  with  a  migrant  background.  The  EU 

average proportion of low achievers in science within the bottom socio-economic quartile of 

the 2015 PISA student population is around 34%, 26 pps more than in the top socio-economic 

quartile  (Figure  15).  Member  States  with  substantial  shares  of  students  with  a  migrant 
background41 have generally higher-than-average shares of low-achievers in basic skills42, and 

39  In  particular,  non-EU  born  young  (18-24)  faced  in  2016  an  early  school  leaving  rate  around  19.4%,  almost 
double than the native-born (9.8%). 
40 Based on EU-SILC data. 
41  In  the PISA  survey,  students  are  considered  as  having  a  migrant background  if  they  are  either  foreign-born 
(first-generation) or natives whose parents are both foreign-born (second-generation). 
42 Education and Training Monitor 2017, p. 38, Figure 15. 

45 

 
 
 
                                                            
students'  performance  is  usually  strongly  correlated  with  their  socio-economic  status43. 

Additionally,  as  has  been  previously  discussed  in  the  2017  Joint  Employment  Report,  the 

recent migration surge into the EU has highlighted the role of education and training systems 

in helping many thousands of incoming young people to develop their full potential and foster 

their integration in European societies.  

Figure 15: Low achievers in science at the age of 15 by economic, social and cultural 
status (ESCS) in PISA 2015  

Bottom quarter of ESCS

Top quarter of ESCS

Average low achievement in science

70%

60%

50%

40%

30%

20%

10%

0%

BG CY RO SK EL MT HU LU FR LT IT CZ HR BE AT EU SE ES NL PT DE PL IE UK DK SI LV FI EE

Source: European Commission (2016), PISA 2015: EU performance and initial conclusions regarding education 
policies in Europe. 

The  EU  rate  of  tertiary  education  attainment  among  those  aged  30-34  has  been 

constantly  and  visibly  increasing  for  more  than  a  decade.  The  rate  currently  stands  at 

39.1%, up 0.4 pps in the past year alone. Eighteen Member States have attainment rates above 

the Europe 2020 headline target of 40%. Since 2008, the EU average tertiary attainment rate 

rose by 8 pps (Figure 16). Despite significant progress over the years, Member States lagging 

behind still have around half the attainment rate of the leading countries. 

Considerable differences in tertiary education attainment persist between genders, with 

women  performing  better  than  men  in  all  Member  States  but  Germany  and  an  EU  average 

43 According to 2015 PISA, the share of low performers in EU Member States was 39.1% among foreign-born 
pupils  and  29.5%  among  natives  with  foreign-born  parents,  much  higher  than  the  18.9%  recorded  for  pupils 
without a migrant background. 

46 

 
 
 
 
 
                                                            
difference  in  tertiary  attainment  between  men  and  women  of  nearly  10  pps.  Parental 

background still influences tertiary attainment with about 5 pps lower average attainment for 

people  born  abroad,  although  the  opposite  is  observed  in  Denmark,  Ireland,  Luxembourg, 

Latvia, and the United Kingdom. Furthermore, the young people who migrated in the middle 

or at the end of their compulsory school age face greater difficulties than those who migrated 

at  a  younger  age,  and  they  require  non-traditional  pathways  to  access  higher  education  that 

recognise  the  skills  they  might  have  picked  up  outside  traditional  upper  secondary 
education44.  People  with  disabilities  also  have  consistently  lower  tertiary  education 
attainment, with a gap of 13.6 pps in 201545. 

Figure 16: Tertiary education attainment among those aged 30-34, 2008-2016  

Source: Eurostat (LFS). Online data code edat_lfse_03.  

The  labour-market  relevance  of  education  is  a  crucial  determinant  of  young  people's 

ability  to  find  work  and  contribute  effectively  to  economic  growth.  On  average,  the 

employment rate of recent graduates from higher education (aged 20-34) is 82.8% in the EU, 

whereas  for  those  with  upper  secondary  education  the  employment  rate  is  72.6%  (reaching 

44 European Commission, Education and Training Monitor, available at: 
http://ec.europa.eu/education/policy/strategic-framework/et-monitor_en. 
45 Based on EU-SILC data. 

47 

 
 
 
 
 
                                                            
75%  for  those  with  vocational  pathway).  The  gap  is  greater  in  Member  States  with  lower 

overall youth employment rates.  

The  gap  in  employment  and/or  unemployment  rates  across  skills  levels  to  a  certain 

extent provides an indication of a skills mismatch, as an equivalent match of labour supply 

and demand by level of education would imply identic employment rates across skill groups. 

In  2016,  the  highest  dispersion  of  employment  rates  by  education  levels  (less  than  upper 

secondary,  upper  and  post-secondary,  and  tertiary  education)  was  observed  in  Bulgaria,  the 

Czech Republic, Croatia, Lithuania, Poland, Slovenia and Slovakia.  

Despite relatively good labour market outcomes of Vocational Education and Training 

(VET), the number of students enrolling in initial VET in the EU has in most countries 

been  steadily  falling  since  2013.  The  overall  number  of  initial  VET  students  at  the  upper-

secondary level in the EU dropped since 2013 by around 500 000 (4.7 %), to 10.3 million in 

2015.  The  United  Kingdom  registered  the  most  notable  fall  in  absolute  numbers  of  initial 

VET  student  population  –  by  almost  200 000.  At  the  same  time,  enrolment  in  general 

education stayed at the same level. Therefore, the share of VET students in the total  student 

population enrolled at upper secondary level has decreased from 48.9 % in 2013 to 47.3 % in 

2015.  

VET  students  who  enter  the  labour  market  directly  after  attaining  their  upper-

secondary level qualification enjoy in most countries relatively high employment rates. 

This  is  evident  in  countries  having  well-functioning  VET  systems,  including  strong 

permeability  and  school-to-work  transition  systems,  such  as  Malta,  the  United  Kingdom, 

Germany, the Netherlands, Sweden, Austria and Denmark (except for health and welfare VET 

graduates). However in other countries, VET graduates from some  fields  seem to  be under-

performing (particularly in the field of business, administration and law) as, for example, in 

Hungary,  Lithuania,  Slovenia,  Poland,  France,  Bulgaria  and  Romania.  In  Italy  and  Greece, 

within  the  generally  not  very  well  performing  labour  market,  there  are  particularly  large 

differences in employment rates depending on field of study. 

Besides  employability,  expected  wages  is  another  important  factor  indicating  the 

attractiveness  of  different  educational  pathways.  The  wage  premium  for  those  with  a 

medium-level  vocational  qualification  as  compared  to  those  with  medium  level  general 

qualification  varies  from  60%  in  Germany  to  a  wage  penalty  of  around  -25%  in  the  Czech 

48 

 
 
Republic (though it is a special case since the majority of VET graduates continue into higher 
education)46.  Overall  in  the  EU,  young  people  with  a  vocational  qualification  earn  around 

25% more than those with only a low level of education (ISCED 0-2), 17% more than those 

with a medium level qualification with a general orientation, and 40% less compared to those 
with a high level of education47. 

One of the key characteristics of VET systems that facilitate a smooth transition to and 

success  on  the  labour  market  is  the  integration  of  work-based  learning  in  VET 

programmes.  According  to  the  2016  Education  and  Training  Monitor,  in  2015,  there  were 

around 2.8 million students enrolled in combined work- and school-based programmes (who 

spend  at  least  25%  of  the  programme  duration  learning  in  a  real  work  environment  in  a 

company) in the EU. However, the availability of programmes with a substantial element of 

work-based learning is still limited in most EU countries and the situation is not improving. 

Between  2013  and  2015,  there  was  little  change  in  the  prevalence  of  combined  work-  and 

school-based programmes in the EU. In a number of countries the share of students attending 

such  programmes  fell  –  for  example  in  the  United  Kingdom,  Austria,  France,  Luxembourg 

and Finland. A noticeable increase was observed only in Slovakia and Hungary, in the latter 

case  potentially  due  to  changes  in  the  classification  of  certain  programmes  as  including  a 

sufficient amount of work-based learning. 

The overall rate of adult participation in learning in the EU has changed little since 2013 

(Figure 17). In all countries, the majority of adult learning is of a non-formal nature, usually 

work-related and provided as well as financed by employers or individuals themselves. Such 

learning often targets those employees who already have the highest levels of skills and are 

performing  the  most  complex  jobs,  while  for  the  rest  of  employees,  opportunities  to  access 

training  are  often  much  more  limited.  The  fact  that  most  learning  is  of  a  non-formal  nature 

also implies that it is often of only short duration and aims to develop company-specific skills. 

This results in a situation where most adult learning is not able to help adults develop skills 

46 Low level of education includes qualifications at ISCED levels 0-2; medium level at ISCED levels 3-4 and 
high level  at ISCED levels 5-8. 
47  Though,  in  some  countries  (such  as  in  Finland  and  Bulgaria)  those  with  VET  qualification  are  only  able  to 
secure salaries that are similar to people who even do not possess a medium-level qualification, while in others 
those  with  VET  qualification  receive  only  slightly  lower  wages  compared  to  those  who  graduate  from  higher 
education (such as in Denmark or Italy). 

49 

 
 
                                                            
that are more transferable across companies including the basic skills – literacy, numeracy or 

ICT. 

Figure 17: Participation in adult learning by different types of learning (2016) 

Source: Eurostat (EU-LFS, special extraction, 2016). Note: the indicator captures the participation rate in formal 
and non-formal education and training (last four weeks) of 25 to 64 year-olds. Data category “both” indicates the 
share of persons who participated during the reference period of 4 weeks in both formal and non-formal learning 
activities. Data in HR, HU and LV for those participating in “both” forms of learning is unreliable and in CY, 
LT, SK, BG and RO is unavailable.  

The  level  of  digital  skills  is  increasing,  although  very  slowly,  leaving  parts  of  the 

population  unable  to  benefit  from  the  digital  transformation.  This  has  an  impact  on 

innovation, productivity and eventually growth. In 2016, 44% of the EU population aged 16 

to 74 did not have the basic digital skills to meet current needs, while 19% had none at all (in 
2015, the figures stood at 45% and 21% respectively)48. The variation across Member States 

is substantial, with ten Member States (Portugal, Poland, Slovenia, Croatia, Lithuania, Italy, 

Greece, Cyprus, Bulgaria and Romania) where at least one quarter of the population had no 

digital  skills  in  2016.  The  level  is  particularly  low  in  Bulgaria  and  Romania  ("critical 

situations")  whilst 

in  Finland, 

the  Netherlands,  Denmark,  and  Luxembourg  ("best 

performers") it is much higher than average. There is evidence of divergence on this indicator 

48 The Digital Economy and Society Index, European Commission. 

50 

 
 
 
 
 
                                                            
across the EU – as the level of digital skills is improving comparatively faster, on average, in 

best performing countries. 

Figure 18: Share of population with basic overall digital skills or above and yearly 
change (Social Scoreboard headline indicator)  

Source:  Eurostat.  Period:  2016  levels  and  yearly  changes with  respect  to  2015.  Note: Axes  are  centred  on  the 
unweighted EU average. The legend is presented in the Annex.  

The  labour  market  situation  of  young  people  continues  to  improve,  in  line  with  the 

strengthening of the economy. In the EU, the youth unemployment rate decreased by 5 pps 

from a peak of 23.7% in 2013 to 18.7% in 2016, and further to 17% in Q2-2017. However, it 

is still 1.4 pps above the level observed in Q2-2008. The dispersion of youth unemployment is 

high, with some Member States recording levels close to or above 40% (Italy, Spain, Greece), 

but it is decreasing over time (see Figure 19). Young women experience lower unemployment 

rates  than  men  (17.9%  versus  19.4%  in  2016).  This  may  be  related  to  better  educational 

achievements, but also to lower activity rates. In spite of improving labour market prospects, 

young  people  are  more  often  employed  under  non-standard  and  atypical  forms  of 

employment, including temporary jobs, involuntary part-time work and lower wage jobs (in 

2016, 43.8% of young workers – and more than 70% in Slovenia, Spain and Poland – work 

51 

 
 
 
 
 
under a temporary contract, compared to 13.1% of workers aged 25-49); as shown in section 

3.4, these contracts not always evolve towards more stable patterns.  

Figure 19: Youth unemployment rate (15-24), multiannual comparison 

Source: Eurostat, LFS. 

In addition to those working or seeking a job, a considerable part of the young people 

aged  15-24  in  the  EU  are  economically  inactive.  In  total  in  the  EU,  in  2016  more  than  6 

million people aged  15-24 were  neither  in  employment, education or  training (NEET).  This 

amounts to 11.5% of population in that age class, down from a peak of 13.2% in 2012 but still 

above 2008 level (10.9%). This reduction was mainly due to unemployed NEETs moving into 

work. As shown in Figure 20, NEET rates above 15% are still recorded in several countries 

(Bulgaria, Romania, Croatia, Cyprus and Greece, all flagged as "critical situations") and Italy, 

where  the  level  dropped  by  1.5  pps  in  2016  ("weak  but  improving").  Conversely,  the 

Netherlands,  Luxembourg,  Denmark  and  Sweden  are  "best  performers".  The  number  of 

NEETs is increasing in Germany, Austria, Lithuania, Latvia and, more worryingly, in Cyprus 

(starting  from  an  already  high  rate).  Fast  reductions  can  be  observed  in  Belgium,  Malta, 

Estonia  and  Slovenia.  The  negative  slope  of  the  regression  line  relating  yearly  changes  to 

levels  suggests  ongoing  convergence  across  Member  States.  In  the  EU,  NEETs  are  equally 

divided  between  unemployed  and  inactive,  but  with  substantial  differences  among  Member 

52 

 
 
 
 
 
States  (with  the  highest  share  of inactive  in  Bulgaria  and  Romania  and the  highest share  of 

unemployed in Croatia and Spain). Having only a low-level education is the main risk factor 
for  being  NEET49.  Among  female  NEETs,  inactivity  is  more  frequent  than  unemployment, 

while the opposite holds for men. 

Figure 20: NEET rate (15-24) and yearly change (Social Scoreboard headline indicator)  

Source:  Eurostat.  Period:  2016  levels  and  yearly  changes with  respect  to  2015.  Note: Axes  are  centred  on  the 
unweighted EU average. The legend is presented in the Annex.  

The  employment  rate  of  older  workers  has  grown  substantially  over  the  last  decade. 

Older  workers  have  weathered  the  crisis  relatively  better  than  other  age  groups.  In  fact,  as 

already  shown  in  Chapter  1,  age  group  55-64  is  the  main  driver  of  the  overall  increase  in 

employment rate over the last ten years. In 2016, the employment rate of people aged 55-64 

was  55.3%,  2  pps  higher  than  in  the  previous  year,  and  the  steady  increase  is  projected  to 

continue against the background of demographic change. Employment rates of older workers 

49  Eurofound  (2016)  'Exploring  the  Diversity  of  NEETs',  Publications  Office  of  the  European  Union, 
Luxembourg. 

53 

 
 
 
 
 
                                                            
vary widely across Member States, ranging from 75.5% in Sweden to 36.3% in Greece. The 

employment rate of women aged 55-64 is also catching up, and stood at 48.9% in 2016. The 

gender  gap  in  the  duration  of  working  lives  is  declining  but  still  significant,  with  women 

participating in the labour market on average 4.9 years less than men (33.1 vs 38.0 years in 

2016). This average is the result of major variations across Member States and is driven by 

multiple factors, such as insufficient access to care services as well as lower pensionable ages 

for women in some Member States, reflecting into shorter duration of working life (see Figure 

21).  Finally,  older  workers  are  more  likely  to  have  part-time  contracts  than  prime  age 

workers, but they are less likely to work part-time than younger workers. Similarly, they are 

more likely to have permanent jobs (only 5.3 % of older workers aged 55-64 had temporary 

contracts). 

Figure 21: Average duration of working life, 2016 

Source, Eurostat, LFS. 

In  all  Member  States,  women  are  underrepresented  in  the  labour  market.  The  Social 

Scoreboard headline indicator in the area of gender equality in the labour market is the gender 

employment gap, which is the difference between the employment rates for men and women. 

In 2016, the gender employment gap amounted to 11.6 percentage points for the EU, with a 

54 

 
 
 
 
76.9%  employment rate for  men and 65.3%  for women (Figure  22).  The gap is  particularly 

high  for  non-EU  born  and  Roma  women.  Overall,  it  remained  stable  compared  to  2015,  as 

shown in Chapter 1. However, in a longer-term perspective, it is substantially lower than in 

2008,  when  the  gender  employment  gap  was  15.0  percentage  points.  This  long-term 

improvement was mainly driven by an increase in the female employment rate. Still, in 2016 

six  Member  States  had  a  female  employment  rate  below  60%,  together  with  a  high 

employment  gender  gap  (highest  values  recorded  for  Malta,  Italy,  Greece  and  Romania, 

flagged  as  "critical  situations").  The  gap  is  also  increasing  in  a  number  of  Member  States, 

significantly faster than average in Finland, Belgium, Cyprus and Greece (in these countries, 

employment rate increased for both genders, but faster for men than for women). Lithuania, 

Latvia and Sweden are assessed as "best performers". The positive slope of the regression line 

relating changes to levels of gender employment gap in Figure 22 suggests that, on average, 

Member States' performances are slightly diverging as regards this indicator. 

Figure 22: Gender employment gap and yearly change (Social Scoreboard headline 
indicator) 

Source: Eurostat, LFS. Period: 2016 levels and yearly changes with respect to 2015. Note: Axes are centred on 
the unweighted EU average. The legend is presented in the Annex.  

55 

 
 
 
 
 
 
Unequal  participation  in  the  labour  market  by  gender  is  also  reflected  by  the  large 

gender  gap  in  part-time  employment,  which  amounted  to  23.0  pps  in  2016  in  the  EU 

(slightly down from 23.2 pps in 2015). There is large variation between countries. While the 

gap  is  low  in  most  Central  and  Eastern  European  Member  States,  it  exceeds  30  percentage 

points  in  four  Member  States,  reaching  a  high  of  52.7  percentage  points  in  the  Netherlands 

(Figure 23). Moreover, 23.5% of female part-time employment was involuntary in 2016. 

Figure 23: Part-time rates and gender gap, 2016  

Source: Eurostat, LFS. 

Gender gaps in employment are particularly acute for those with caring responsibilities, 

with  women  still  more  likely  than  men  to  carry  these  responsibilities.  On  average,  the 

employment rate of women with at least one child under the age of 6 is 9 pps less than the 

employment rate of women without children (with a stronger effect for low-skilled mothers as 

well  as  single  parents),  and  in  some  countries  this  difference  is  over  30  pps  (Slovakia,  the 

Czech  Republic,  Hungary).  Conversely,  parenthood  has  the  opposite  effect  on  the 

employment rates of men, as fathers are more likely to be employed (Figure 24). Women are 

also  more  likely  than  men  to  assume  long-term  care  responsibilities.  More  than  19%  of  the 

EU  potential  female  workforce  in  2016  was  inactive  because  of  looking  after  children  or 

incapacitated  adults.  This  figure  exceeded  28%  in  the  Czech  Republic,  Estonia,  Ireland, 

Hungary, Slovakia, and the United Kingdom. Female employment rates appear to be higher 

56 

 
 
 
 
than  average  in  countries  with  well-designed  gender-balanced  work-life  balance  measures 

(notably Sweden and Denmark). 

Figure 24: Employment impact of parenthood for men and women (age 20-49) in 2016 

Source: Eurostat. Note: the employment impact of parenthood is measured as the difference of the employment 
rate of women (men) with at least one child under the age of 6 and the employment rate of women (men) with no 
children.  

The lack of available, accessible and quality formal care services, especially for children, 

is one of the factors hampering women's participation in the labour market. As shown 

by the Social Scoreboard headline indicator on participation in early childhood education and 

care, in 2015 only 30.5% of children aged 0-3 years old were cared for in formal education 

and care services, up from 28.5% in 2014 and 28.0% in 2008. There is a large variation across 

Member States: while in Denmark and Sweden more than 60% of the children were in formal 

childcare,  this  share  was  below  10%  in  Slovakia,  the  Czech  Republic  and  Poland  ("critical 

situations"),  as  well  as  in  Bulgaria,  Romania  and  Lithuania.  Along  with  Denmark  and 

Sweden, Luxembourg, Belgium and Portugal are assessed as "best performers". This variation 

is  to  some  extent  related  to  differences  in  family  leave  arrangements  across  countries. 

Member  States'  performances  on  this  indicator  are  actually  diverging,  as  shown  by  the 

positive  slope  of  the  regression  line  relating  yearly  changes  to  levels  –  best  performing 

countries are improving faster. 

57 

 
 
 
 
 
Figure 25: Children in formal childcare 0-3 and yearly change (Social Scoreboard 
headline indicator)  

Source: Eurostat, LFS. 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.  

Moreover,  the  sufficient  provision  of  formal  accessible,  high-quality  and  sustainable 

long-term  care  services  remains  a  challenge  in  several  Member  States.  Their 

underdevelopment can be a major impediment for women to stay in employment, as informal 

care is often the only option for many families. It is estimated that the number of dependent 
elderly will rise by 12 million (from 40 to 52 between 2013-2060)50.  

In  addition  to  lower  full-time  equivalent  employment  rates,  women  also  tend  to  suffer 

from  a  significant  pay  gap.  This  gap  stood  at  16.3%  in  2015  in  the  EU,  slowly  declining 
compared to 2014 (16.7%)51. There are, however, large variations across Member States, with 

50 Ageing Report 2015. 
51  The  reference  indicator  is  the  unadjusted  gender  pay  gap  (i.e.  not  adjusted  according  to  individual 
characteristics that may explain part of the earnings difference), which should give an overall picture of gender 
inequalities in terms of pay. Research shows that most of the gender pay gap persists even when differences in 

58 

 
 
 
 
 
                                                            
pay gaps ranging from 26.9% in Estonia to 5.5% in Italy and Luxemburg. Over the last two 

years with available data, the highest increase was registered in Portugal (+4.5 pps), while fast 

reductions were recorded in Hungary (-4.4 pps) and Estonia (-2.9 pps) and Spain (-2.9 pps). 

Potential reasons behind the gender pay gap include differences in work experience, working 

time, type of job or sector of employment, due to some extent to discrimination in the labour 

market.  This  also  risks  to  translate  into  a  gender  gap  in  pensions,  which  stood  at  38.3%  in 
201552.  

Figure 26: Unadjusted gender pay gap in 2013 and 2015  

Source: Eurostat.  
Note:  the  unadjusted  Gender  Pay  Gap  (GPG)  is  measured  as  the  difference  between  average  gross  hourly 
earnings of male paid employees and of female paid employees as a percentage of average gross hourly earnings 
of male paid employees. No data available for Greece. For Croatia, Malta and Ireland, 2014 figures instead of 
2015. 

The labour market potential of migrants is strongly underutilised. Whereas non-EU born 

people make up an increasing share of population in the EU (6.6% in 2014, 6.9% in 2016), 

they  are  less  likely  to  participate  in  the  labour  market  than  native  born.  The  integration 

challenge has increased with the impact of the economic crisis and with the recent increased 

educational  attainment,  occupational  choice,  working  hours  and  other  observable  attributes  are  taken  into 
account (e.g. http://ec.europa.eu/justice/gender-equality/files/gender_pay_gap/2016_factors_gpg_en.pdf). 
52 European Commission, 2017 Report on equality between women and men in the EU. 

59 

 
 
 
 
 
                                                                                                                                                                                          
inflows  of  refugees,  whose  labour  market  integration  is  more  difficult  than  other  groups53. 

While  in  2008  non-EU  born  people  experienced  activity  rates  and  employment  rates 

respectively 1.0 pps and 4.6 pps lower than native born, by 2016 these gaps had widened to 

4.8  pps  and  10.6  pps  (age  class  20-64).  In  seven  EU  countries  (Belgium,  Finland,  the 

Netherlands,  Sweden,  France,  Austria  and  Denmark)  the  employment  gaps  exceeds  15  pps. 

Inactivity  of  non-EU  born  women  is  particularly  high,  9.1  pps  below  that  of  native  born 

women.  

Figure 27: Employment rate by country of birth, age 20-64, 2016 

Source:  Eurostat  [lfsa_ergacob].  Note:  For  DE  there  is  no  breakdown  available  for  non-EU  born  (the  gap 
between host country nationals and third country nationals is 26.5 pps, the sixth highest in the EU).  

Labour market outcomes differ markedly by reason of migration. The employment rate 

of non-EU born people is higher for those arrived for study or employment reasons (71% in 

2014,  even  higher  than  for  natives)  and  lower  for  those  arrived  for  family  reasons  and  for 
refugees54. While the lower employment rates of migrants are partly driven by a higher share 
of  persons  with  low  level  of  education,  a  rising  level  of  education55  does  not  translate  into 

better  employment  outcomes  and  there  is  a  significant  under-use  of  migrants'  skills  and 

53 See Employment and Social Developments in Europe, Annual Review 2016, chapter 3. 
54  Migrants  for  family  reasons  are  the  biggest  share  among  non-EU  born  people  (52%  in  2014).  Their 
employment rate was 53% in 2014, even lower than refugees (56%). 
55  The  share  of  non-EU  born  (aged  25-54)  with  high  level  of  education  increased  from  25.4%  to  30.9%  from 
2010 to 2016, see [edat_lfs_9912]. 

60 

 
 
 
 
                                                            
qualifications56. Social challenges have a tendency of being passed over generations. This risk 

is  particularly  relevant  in  view  of  the  high  and  increasing  share  of  people  with  a  migrant 
background among young people57 in some Member States.  

As  labour  markets  recover,  persons  with  disabilities  risk  being  left  behind.  A  high  gap 
persists in the employment (and activity)58 rates between people with and without disabilities, 

amounting to 25.7 percentage points (47.4% versus 73.1%) in 2015. This gap is increasing (it 

was 22.9 pps in 2012), as those without disabilities have higher chances to return to work. In 

particular, in Ireland and Malta it was more than 40 pps and in 7 countries it was higher than 

30 pps. The lowest gaps were observed in Italy (13.8 pps) and Slovenia (16 pps).  

3.2.2  Policy response 

Policy  work  has  led  to  the  identification  of  key  aspects  to  improve  the  inclusiveness, 

relevance and quality of education, notably to tackle early school leaving. In May 2017, 
two Commission Communications59 outlined how EU action can support Member States and 

education providers in meeting these objectives. In addition, the 2015 Council Conclusions on 
reducing  early  school  leaving  and  promoting  success  in  school60  invited  Member  States  to 

develop  and  implement  comprehensive  strategies  against  early  school  leaving  (ESL),  along 

with a number of specific measures. Several Member States are taking action in this area. In 

2016, the Flemish community in Belgium approved a discussion paper on a policy related to 

56  The  gap  in  the  employment  rate among  non-EU  born  and native-born is the  most pronounced  among  those 
with tertiary education, highlighting that migrants face lower returns on their education compared to natives (see 
also Employment and Social Developments in Europe 2015). In 2016, 35% of non-EU born with high education 
worked  in  low-  or  medium-skilled  occupations  compared  to  21%  among  native-born.  The  rate  of  over-
qualification among non-EU born was higher than 50% in countries such as EL, IT, CY and ES. 
57 The share of people with a migrant background is about or somewhat above 20% in countries such as France 
and Germany, and above 30% among the children below 6 years. 
58  Figures  on  employment  of  people  with  disabilities  do  not  fully  show  how  limited  their  participation  in  the 
labour market is; they need to be looked at together with activity rates which are also disproportionately low. In 
2015,  the  activity gap  (20-64  age  group) between  people  with  and  without disabilities  in  the  EU  amounted  to 
22.4 pps (59.5% versus 81.9%). 
59 COM(2017) 247 final on "A renewed EU agenda for higher education" and COM(2017)248 final on "School 
development  and  excellent  teaching  for  a  great  start  in  life".  The  latter  identifies  three  main  school  policy 
challenges  which  virtually  all  Member  States  are  facing:  1)  weaknesses  in  reading,  mathematics  and  science 
skills; 2) the excessive impact of socio-economic background on educational achievement; 3) insufficient digital 
competences.  It  then  indicates  where  EU  and  Member  States'  action  is  needed:  to  develop  better  and  more 
inclusive  schools;  to  support  teachers  and  school  leaders;  and  to  make  the  governance  of  school  education 
systems more effective, equitable and efficient. 
60 http://data.consilium.europa.eu/doc/document/ST-14441-2015-INIT/en/pdf  

61 

 
 
 
                                                            
study entitlement, truancy and school drop-out that will replace the current action plans. In the 

French-speaking  community  in  Belgium,  reducing  ESL  is  a  major  element  of  the  ongoing 

school  reform  which  focuses  on  improving  equity,  effectiveness  and  efficiency.  Bulgaria  is 

implementing an inter-institutional cooperation mechanism to improve school enrolment and 

retention,  with  local  teams  deployed  on  the  ground  to  identify  out-of-school  children  or 

students at risk of dropout, improve  the information exchange between relevant institutions, 

and improve data collection.  In Estonia, career counselling and increasing the attractiveness 

of VET to tackle drop-out is being pursued. France has taken steps to ensure that young adults 

aged 16-25 who left school without a certificate or a qualification have the right to return to 

education or training. In November 2016, Hungary adopted an action plan to reduce ESL and 

introduced  mandatory  data  collection  on  pupils’  school  progress.  Romania  is  developing  an 

early warning mechanism and is planning ESF-funded second chance programmes and after-

school activities.  

Across  the  EU,  policies  to  effectively  tackle  low  proficiency  in  basic  skills  are 

increasingly  combined  with  efforts  to  promote  inclusive  education.  The  aim  is  reducing 

the impact of socio-economic status on students' performance, closing the educational gap of 

disadvantaged 

learners  and 

fostering  excellence 

in  education. 

In  Portugal, 

local 

administrations  and  school  clusters  cooperate  in  the  implementation  of  the  National  plan  to 

Promote Success in School, the Government’s flagship initiative to prevent school failure and 

reduce grade repetition. In 2017, Ireland set for the first time specific targets for literacy and 

numeracy  within  disadvantaged  schools;  it  also  set  a  relatively  ambitious  target  to  maintain 

the proportion of low-achievers below 10%, while increasing the proportion of top performers 

by  2025.  The  Czech  Republic  is  implementing  ESF-funded  projects,  which  focus  on 

supporting  nursery,  primary  and  secondary  schools  by  introducing  and  implementing 

individual inclusion. In Sweden, the government boosted resources to tackle inequalities and 

announced  a  long-term  investment  plan  (2017-2025)  to  support  municipalities  and 

independent school providers in offering high quality education to newly arrived students. In 

Germany,  the  federal  government  and  states  joined  forces  to  increase  the  quality  of  teacher 

training  as  well  as  to  raise  mobility  of  teacher  students  and  teachers.  Finally,  Bulgaria  is 

devoting  more  attention  to  inclusive  education  and  the  Netherlands  plan  additional 

investments to increase equity in education. 

62 

 
 
Roma  inclusion  in  education  is  a  challenge,  due  to  several  factors,  including  school 

segregation, non-inclusive teaching and barriers induced by severe poverty. Enforcement 

of  legislative  changes  remains  important.  Bulgaria  introduced  a  ban  on  the  formation  of 

separate  classes  based  on  ethnicity.  The  measures  currently  in  place  for  Roma  students 

include scholarships and extracurricular activities, additional Bulgarian language classes and 

activities  with  parents.  In  the  Czech  Republic,  a  new  reform  package  on  individual  support 

measures for children with special educational needs - including for socioeconomic reasons - 

entered  into  force  in  September  2016.  In  2017,  Hungary  amended  its  Equal  Treatment  and 

Public Education Act to ensure prohibition of segregation. Also, schools with a high drop-out 

rate  will  be  selected  in  2017  to  receive  training  and  development  support  to  implement 

differentiated  teaching  methods.  In  Romania,  segregation  in  pre-university  systems  was 

prohibited and projects targeting Roma students and communities were prioritised under ESF. 

In February 2017, Slovakia approved revised Action Plans in support of the implementation 

of  the  National  Strategy  for  Roma  Integration  up  to  2020,  with  the  goal  of  reducing  the 

differences  between  the  education  level  of  Roma  and  the  population  average,  by  improving 

education of children from marginalised communities. Greece launched a programme for the 

integration  and  education  of  Roma  children,  co-funded  by  EU  structural  and  investment 

funds. 

Member  States  are  developing  policies  to  encourage  the  integration  of  migrants  into 

education.  In  Belgium,  all  communities  have  increased  the  capacity  of  reception  classes, 

number of language teachers and support budgets for new migrant pupils. Denmark slightly 

increased the number of reception classes and increased the maximum number of refugees per 

class  from  12  to  15;  it  also  allowed  the  integration  of  foreign-born  young  people  into 

compulsory  schooling  up  to  the  age  of  25.  In  Finland  a  new  training  module  combining 

language  and  vocational  studies  was  created  in  mid-2017,  engaging  adult  education 

institutions and broadening the scope and reach of available training. In Sweden, a Tuition for 

Immigrants  course  is  offered  to  newly  arrived  adults  with  vocational  education  or  other 

studies. Greece has opened first reception structures for the education of children of asylum 

seekers  which  operate  in  after-school  hours,  but  aims  to  integrate  children  eventually  into 

mainstream  education.  Cyprus  is  rolling  out  an  action  plan  also  covering  the  teaching  of 

Greek  as  a  second  language,  measures  for  reception,  transition  and  inclusion  of  migrants, 

teacher training and anti-discrimination. In addition, to respond to the influx of refugees and 

63 

 
 
facilitate their integration (as well as for other third-country nationals in need), the European 

Commission  developed  the  EU  Skills  Profile  Tool  for  Third  Country  Nationals  in  2017  to 

help them make their skills and qualifications visible across different Member States. 

Policies to raise tertiary education attainment focus on access and participation, as well 

as  on  reducing  drop-out  rates.  As  underlined  in  the  Commission  Communication  on  a 
renewed EU agenda for higher education61, this can be achieved by providing students from 

disadvantaged  backgrounds  with  more  transparent  information  on  educational  opportunities 

and outcomes, tailored guidance and financial support. The Czech Republic increased grants 

to  students  in  need  as  well  as  the  number  of  profession-oriented  programmes  to  promote  a 

stronger  social  diversity  of  tertiary  education  students.  In  2017,  Estonia  revised  its  funding 

system  in  higher  education  to  incentivise  completion  of  studies  in  nominal  time.  Sweden 

launched  an  inquiry  into  the  governance  and  financing  of  higher  education,  in  view  of 

increasing the participation of students from disadvantaged backgrounds. Croatia is using ESF 

to provide support to students from disadvantaged backgrounds.  

Improving the relevance of higher education is also crucial. To achieve this purpose, key 

aspects  are  a  greater  variety  of  study  modes  (part-time,  distance,  etc.),  the  increased  use  of 

skills  projections  and  graduate  employment  data  in  strategic  planning,  the  involvement  of 

employers  in  curriculum  design,  and  further  developing  higher  vocational  education  and 

professional  higher  education.  Bulgaria  is  implementing  performance-based  funding  and 

focusing  efforts  on  increasing  participation  in  science,  technology,  engineering  and 

mathematics (STEM) related fields. In Malta, several initiatives aim to increase the number of 

graduates  in  science-related  subjects.  The  Flemish  community  in  Belgium  has  developed  a 

STEM  action  plan  involving  all  educational  levels  and  the  French-speaking  community  in 

Belgium  is  focusing  on  dual  learning  in  sectors  where  skill  shortages  are  identified  or 

expected. ESF-funded scholarships for students in STEM are provided in Croatia. Estonia set 

up a forecasting tool to anticipate labour market and skills needs, with recommendations for 

forward planning in education and training. In 2017, Poland introduced a national system of 

graduate  tracking  to  address  the  need  for  better  information  on  labour  market  outcomes. 

Cyprus,  Portugal,  Slovakia  and  Sweden  have  recently  taken  measures  to  strengthen  quality 

assurance in higher education. 

61 COM(2017)247 final. 

64 

 
 
                                                            
Member States continue to work towards more transparency of skills and qualifications. 

Twenty-four  Member  States  have  already  finalised  the  process  of  referencing  their  national 

qualifications 

levels 

to 

the  European  Qualifications  Framework  (EQF),  signalling 

commitment to its overall objective of transparency and comparability. Romania and Slovakia 

have  presented  their  initial  referencing  reports,  while  Finland  and  Spain  are  planning  to 

reference  in  2017-2018.  Another  milestone  –  i.e.  putting  EQF  levels  on  certificates  and 

diplomas  –  has  been  met  by  16  Member  States  (Belgium,  the  Czech  Republic,  Denmark, 

Germany, Estonia, France, Ireland, Italy, Latvia, Lithuania, Hungary, Malta, the Netherlands, 

Portugal, Slovenia and the United Kingdom) and a further increase is expected by the end of 

2017. 

The need to develop digital skills is increasingly high on Member States' agendas. In line 

with one of the key actions of the New Skills Agenda for Europe – the Digital Skills and Jobs 

Coalition  –  National  Coalitions  for  Digital  Skills  and  Jobs  seeking  to  facilitate  high-impact 

actions  at  local  level  have  been  launched  in  17  Member  States  and  more  are  under 

development. Concrete measures to boost digital skills planned / adopted by Member States 

include  the  introduction  of  basic  digital  training  from  primary  level  and  reinforcing  digital 

training  throughout  school  curricula  (Austria,  Germany),  stepping  up  training  on  coding 

(Poland,  Belgium,  Romania,  Sweden),  digital  skills  training  for  teachers  (Austria,  Bulgaria, 

Germany), the increase of STEM places in higher education (Austria, Poland), certification of 

European  Computer  Driving  Licence  (ECDL)  on  a  voluntary  basis  to  secondary  students 

(Cyprus), and one-off initiatives, such as the IT Academy in Slovakia. 

To  promote  the  responsiveness  of  vocational  education  and  training  programmes  to 

labour market needs the EU supports a wide range of policy initiatives. In October 2017 

the  Commission  adopted  a  proposal  for  a  Council  Recommendation  on  a  European 

Framework for Quality and Effective Apprenticeships. The Framework sets out 14 criteria to 

define  quality  and  effective  apprenticeships,  ensuring  both  the  development  of  job-related 

skills  and  the  personal  development  of  apprentices.  To  increase  the  numbers  of  vocational 

learners  benefitting  from  longer  work  placements  abroad,  the  ErasmusPro  activity  has  been 

introduced in Erasmus+ to  become  operational as  of October 2017. Towards supporting the 

work-based learning,  the  European  Alliance  for  Apprenticeships  was  launched  in  2013  as  a 

multi-stakeholder  platform  at  EU  level.   It  is  aimed  at  improving  the  quality,  supply  and 

65 

 
 
image  of  apprenticeships,  as  well  as  more  recently  also  mobility.   The  Commission  also 

supports  the  European  Pact  for  Youth  initiated  by  CSR  Europe  (the  European  Business 

Network  for  Corporate  Social  Responsibility),  bringing  together  business  and  their 

stakeholders 

to  work  for  employment  for  young  people 

through 

the  creation  of 

apprenticeships,  traineeships,  internships  and  entry-level  jobs.  The  attractiveness  and  labour 

market relevance of initial VET programmes could still be improved. In 2015, Member States 

agreed  to  further  strengthen  key  competences  in  VET  curricula  and  provide  more  effective 
opportunities to acquire or develop those skills62.  

Employment  challenges  of  low-skilled  adults  requires  policy  attention,  particularly  in 

the  context  of  evolving  skills  needs  linked  to  technological  change.  To  address  the 

persistent employment gap and low rates of participation in adult learning by low-skilled and 

low-qualified adults (who are also more likely to be older, live in rural areas and face other 

disadvantages),  the  European  Union  at  the  end  of  2016  adopted  a  recommendation  on 

Upskilling  Pathways:  New  Opportunities  for  Adults,  to  provide  the  low-skilled  and  low-

qualified  adults  with  support  in  enhancing  their  skills  and  progressing  towards  higher 

qualifications (see Box 2). 

62 Notably, in 2016, the European Commission launched a new initiative to showcase excellence and quality of 
VET in Europe as well as to raise awareness of opportunities vocational training provides for both young and 
adults. In  its  first  edition,  the  European Vocational  Skills Week was  able  to  mobilise  800 000  stakeholders  in 
Europe with the aim to improve the image and attractiveness of VET. 

66 

 
 
                                                            
Box 2. Upskilling Pathways: new opportunities for adults 

The "Upskilling Pathways Recommendation", adopted by the Council in December 201663, 
calls on Member States to  develop a linked series  of targeted interventions, establishing  a 
'pathway' of support to low skilled / low qualified adults, of which there were 63 million in 
the EU in 2016. 

It  aims  at  supporting  these  adults  to  enhance  their  literacy,  numeracy  and  digital  skills 
and/or to acquire a broader set of skills by progressing towards higher qualifications. Each 
beneficiary would be offered: 

  a skills assessment, to identify existing skills and upskilling needs 
  an offer of education / training designed around this assessment, and 
  opportunities to have the skills so acquired validated and recognised. 

These three steps will be accompanied by outreach, guidance and support measures. 

The overall policy objectives of the initiative are to: 

 

improve  the  employment  opportunities  and  overall  life  chances  of  adults  with  low   
levels of skills (e.g. adults without upper secondary education) in Europe; 

  contribute towards up- / re-skilling the whole workforce; and 
  enhance social inclusion and cohesion for adults struggling with basic skills. 

Implementation  by Member  States can be supported by funding from ESF,  Erasmus+ and 
other  sources. By  mid-2018, Member States  should  outline the  measures they will take to 
implement this Recommendation, including to which groups of low-skilled adults they will 
give priority. 

In  the  field  of  adult  education,  some  Member  states  undertook measures  to  encourage 

more  active  participation  in  adult  learning,  especially  towards  improving  basic  skills. 

Bulgaria introduced a measure for better providing of competences for basic educational level 

for  illiterate  or  poorly  literate  persons  over  16  years  old.  Croatia  has  announced  a  plan  to 

ensure that the educational activities contribute to better employability of unemployed persons 

in areas with the greatest shortage of skilled workers. Cyprus introduced changes in financial 

support  to  enterprises  that  invest  in  life-long  learning  to  encourage  more  participation  of 

adults  with  lower  educational  attainment  in  adult  education.  Portugal  has  presented  a 

comprehensive  programme  (the  'Qualifica'  programme)  aimed  at  providing  adults  with 

qualifications  based  on  skills  acquired  by  experience  and  complementing  them  with  further 

modular training. 

63 OJ C 484/1, 24.12.2016. 
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:JOC_2016_484_R_0001 

67 

 
 
 
 
 
 
 
 
 
                                                            
Member States have taken steps to facilitate social dialogue on the issues of vocational 

education and training. In Spain, the Government recently set up national discussion tables 

with the social partners to discuss a range of issues on employment, among which the quality 

of  vocational  training.  In  Greece,  pilot  tenders  will  be  launched  in  2017  for  a  series  of 

business community-led partnerships for vocational education and training, involving sectoral 

and  local  employer  representative  bodies  and  social  partners.  In  Latvia,  the  social  partners, 

especially  employers,  have  been  involved  in  many  aspects  of  the  VET  reforms.  In  2016, 

secondary legislation to create sectoral expert councils and procedures for updating curricula 

was  passed  amending  to  the  Vocational  Education  Law  adopted  in  2015.  Moreover,  in  the 

frame of the implementation plan 2016-2020 of the Adult Education Governance Model, the 

Adult  Education  Governing  Board  was  established  that  involves  ministries,  social  partners, 

municipalities,  adult  education  association  and  other  stakeholders.  The  Board,  taking  into 

account  the  labour  market  situation,  reviews  and  approves  priorities  for  the  adult  education 

and  ensures  regular  assessment  of  adult  education  results  (including  supply  and  demand  of 

education programmes). 

Validation  of  skills  acquired  outside  of  the  formal  education  and  training  system  is 

particularly relevant. It is particularly so for people with lower qualifications, unemployed 

or  at  risk  of  unemployment,  migrants,  and  for  those  seeking  to  change  their  career  paths. 

Although  national  approaches  vary,  validation  arrangements  are  planned  or  in  place  in  all 

Member States. National mechanisms to coordinate validation arrangements across sectors of 

education,  labour  market  and  the  third  sector  have  been  established  by  15  Member  States 

(Belgium,  Denmark,  France,  Greece,  Ireland,  Italy,  Latvia,  Malta,  the  Netherlands,  Poland, 

Portugal, Romania, Spain and Sweden). 

National Skills Strategies can play an important role in addressing the fragmentation of 

skills  polices  in  many  countries  and  providing  coherence  between  the  various  strands  of 

policy, the various financial resources supporting skills and all the actors concerned. They can 

provide a strategic assessment of a country's skills system, identify the main skills challenges 

and  lead  to  an  action  plan  to  address  these.  With  the  technical  help  of  the  OECD,  the 

Commission is supporting the development of skills strategies in Italy, Portugal, and Slovenia 

(and  previously  in  Spain).  The  Netherlands  and  Austria  also  embarked  on  National  Skills 

Strategy projects using national funding alone. 

68 

 
 
Knowing  what  skills  are  and  will  be  needed  in  future  can  help  Member  States  adjust 

their policies to better address any skills imbalances on their labour markets. The need 

to  align  skills  to  the  labour  market  needs  has  already  triggered  a  number  of  actions  across 

Member  States.  To  attract  more  ICT  workers  and  entrepreneurs,  Estonia  has  modified  the 

Aliens  Act  by  inter  alia  changing  the  requirement  of  permanent  residence  in  Estonia  and 

exempting  major  investors,  ICT  workers  and  start-up  entrepreneurs  from  the  immigration 

quota. France is opening 500 new specific training pathways in line with the identified future 

labour market needs (such as ICT, green economy) or in recruiting sectors (industry, security, 

catering,  etc.)  adjusted  to  local  /  regional  profiles.  Ireland  has  launched  the  National  Skills 

Council  and  nine  regional  skills  fora  to  help  anticipate and respond  to  the  rapidly  changing 

skills  needs  across  all  sectors.  In  Hungary  the  ESF  co-financed  projects  help  unemployed 

acquire  the  skills  and  work  experience  necessary  for  occupations  experiencing  labour 

shortages.  

Member  States  are  stepping  up  efforts  to  expand  and  develop  their  career  guidance 

services. In Cyprus free career counselling services are offered to young soldiers and a project 

financed by the European Social Fund and the Youth Employment Initiative is under way to 

expand the outreach of counselling services to those not in education, employment or training 

(NEETs). In Malta, starting from the academic year 2017-2018, career guidance programmes 

will be launched in all state colleges to encourage post-secondary education or employment. 

Young  people’s  labour  market  situation  has  improved  significantly,  also  thanks  to 

structural  reforms  supported  by  the  Youth  Guarantee.  Youth  Guarantee  schemes  are 

consolidating,  though  additional  efforts  are  needed  in  most  countries  to  increase  their 

coverage and impact, as well as ensure sustainable implementation. In 2015 alone, 5.5 million 

young  people  entered  Youth  Guarantee  schemes  and  3.5  million  took  up  an  offer  of 

employment,  apprenticeship,  traineeship  or  continued  education.  Almost  half  of  all  NEETs 

aged 15-24 were enrolled in the Youth Guarantee in 2015.  

Reaching  out  to  young  people,  encouraging  them  to  register  with  Public  Employment 

Services and receive adequate support is an important priority, in particular in Member 

States  with  high  rates  of  inactive  and  non-registered  NEETs.  In  Spain,  a  Royal  Decree-law 

was adopted in December 2016 that simplifies and promotes young job-seekers’ registration 

to  the  Youth  Guarantee  National  System.  Portugal  presented  in  June  2017  a  new  national 

69 

 
 
strategy  for  NEET  outreach  and  registration  which  aims  at  registering  at  least  30  000  more 

NEETs  and  enlarging  the  national  network  of  Youth  Guarantee  partners.  Romania  is 

launching  new  outreach  measures    to  increase  the  number  of  young  NEETs  registered  with 

the  PES  by  200  000  via  preventive  identification,  an  information  and  awareness  campaign, 

support networks, and intervention teams involving the PES, social assistants and education 

advisers.  The  Bulgarian  authorities  are  initiating  new  outreach  measures  targeting  the 

activation and integration into employment of unregistered NEETs under the age of 29.  

Better  supporting  young  people  facing  multiple  barriers  remains  a  challenge  in  this 

context.  In  France,  the  "Garantie  jeunes"  launched  in  October  2013  as  an  experiment  has 

been extended in 2017 to all NEETs aged between 16 and 25 at risk of social exclusion and 

with an income lower than the minimum income. It provides an intensified path to the labour 

market,  combining  intensive  counselling  measures  and  work  experience.  In  Slovakia,  the 

National  project  “Restart  for  young  jobseekers  -  Creation  of  jobs  for  young  long  term 

unemployed” launched in July 2017 aims at motivating young jobseekers to find employment 

through  30  hours  of  counselling  combined  with  a  financial  incentive  for  those  who  find 

employment.  

A smooth coordination among employment, education and youth policies is essential to 

better  support  young  people’s  transition  from  education  and  unemployment  to  work. 

New partnerships are being set up. In Cyprus, the Career Counselling and Education Services 

in  Secondary  Education  will  be  enhanced  to  offer  more  targeted  guidance  and  counselling 

services  to  young  people  aged  15  to  24.  In  addition,  the  Youth  Board  of  Cyprus’  Youth 

Information Centres offer specialised studying and career counselling services to students as 

well  as  young  NEETs.  In  Lithuania,  a  pilot  mentoring  programme  has  been  implemented 

nationwide  in  2016,  whereby  the  PES  cooperates  with  a  network  of  psychologists  and 

academic training institutions to better support youth (as well as long term unemployed and 

older workers). 

Member States are investing in re-skilling and up-skilling young people to enhance their 

employability.  In  Slovakia,  a  national  project  is  investing  EUR  30.9  million  to  support  the 

employability of young jobseekers through  retraining, strengthening of key competences, or 

training and education for the labour market on their own initiative. In Spain, since February 

2017  an  example  of  good  practice  is  represented  by  a  digital  skills  training  programme 

70 

 
 
offering  training  oriented  to  the  digital  industry  and  new  business  models.  In  Sweden,  the 

measure  'Start  Studying  Support'  (Studiestartsstödet)  adopted  in  July  2017  is  expected  to 

make  approx.  15,000-20,000  low-skilled  people  with  serious  educational  needs  (including 

newly  arrived  migrants  with  limited  education)  engage  in  studies  at  primary  and  secondary 

level each year.  

In  a  still  challenging  macro-economic  context,  a  large  number  of  Member  States  are 

supporting  labour  market  demand  for  young  people  through  wage  and  recruitment 

subsidies. They are often funded with support from the European Social Fund and the Youth 

Employment  Initiative. Such  schemes  are  usually  targeted at  young  people  further  from  the 

labour market (e.g. long-term unemployed, low qualified or without any work experience) to 

avoid deadweight and substitution effects. Besides, a strong training component and follow-

up of beneficiaries contribute to maximising their impact. In Belgium, the federal government 

announced  in  July  2017  a  reduction  of  employers'  social  security  contributions  for  the 

recruitment  of  young  people  from  18  to  21  years  old.  In  Cyprus,  the  Scheme  for  Job 

Placement  of  Young  Unemployed  Graduates  in  place  since  November  2016  supports  6 

months  job  placements  in  enterprises/organisations  to  young  unemployed  graduates  with 

limited work experience. 1 in 3 participants were employed 4 months after their participation. 

In June 2017, Estonia amended the “My First Job” scheme to broaden support to youth aged 

16-29, making conditions  more flexible and increasing possibilities for training.  Within this 

scheme, employers receive a compensation for work-related training to a value of up to 2,500 

euros. In Italy, the 2017 budget law introduced three new types of social security reductions 

for hiring young people under open ended contracts or through professional apprenticeships. 

In  Portugal,  a  combined  support  to  the  recruitment  of  a  young  person  and  older  worker 

("Contrato-Geracao")  is  being  developed  to  provide  support  to  companies  that  hire 

simultaneously a young unemployed person (or a young person looking for a first job) and a 

long-term unemployed older person. 

Member  States  continued  to  adapt  their  traineeship  legislation  to  the  Quality 
Framework for Traineeships64. These traineeship reforms have helped better prepare young 

people  for  labour  market  needs  and  build  relevant  skills,  but  have  also  helped  strengthen 

business  community  engagement.  In  Poland  social  partners  have  agreed  in  June  2017  on  a 

64 Council Recommendation of 10 March 2014 on a Quality Framework for Traineeships, 2014/C 88/01. 

71 

 
 
                                                            
national quality framework  for traineeships.  The  Romanian  authorities have  adopted in  July 

2017  an  update  to  the  apprenticeship  and  traineeship  law  to  make  it  more  attractive  for 

employers  (increasing  incentives  for  them  and  align  the  levels  of  the  subsidies  in  national 

budget with those from the ESF, thus better integrating the budgets). 

Box  3.  Making  full  use  of  the  European  Social  Fund  (ESF)  and  the  Youth  Employment 
Initiative 

instruments 

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). The operational programmes adopted in 2014 and 2015 have been 
designed  in  a  way  that  ensures  close  their  alignment  with  the  CSRs.  Moreover,  the 
Regulations provide for the possibility to re-programme to align with emerging challenges. 

to  address 

identified 

in 

A key policy priority for the ESF 2014-20 is youth employment, tackled through both the ESF 
own  resources  (6.3  billion  EUR)  and  the  Youth  Employment  Initiative  (3.2  billion  EUR  of 
YEI resources with a ESF matching allocation of 3.2 billion EUR).  The YEI has as targets 
young people who are not in employment, education or training (NEET) in the regions with 
the highest youth unemployment rates in 2012. The initiative is progressing well. By the end 
of 2016, about 8 million participants had benefitted from European funding supported projects 
–  notably  job  placements,  apprenticeships,  traineeships,  self-employment  measures  and 
continued education and training. 39% of beneficiaries are under 25 years old. 

In the majority of Member States the YEI is seen as a key tool for the coverage and design of 
the respective employment policies. In many Member States, the YEI funds the vast majority 
of Youth Guarantee measures.  

The EUR 1.2 billion budget increase of the YEI for 2017-2020 approved by the Council and 
European  Parliament  should  help  Member  States  continue  to  support  unemployed  and 
inactive young people. 

The ESF is also a tool for Member States to implement the European Pillar of Social Rights. 
Interventions under ESF that support the Pillar amount to EUR 27.5 billion for labour market 
access  and  EUR  21.2  billion  for  social  inclusion.  Each  year  some  15  million  European 
citizens benefit directly from participating in ESF co-funded projects. 

In  order  to  support  female  employment,  Member  States  adopted  gender-balanced 

policies supporting workers in reconciling their professional and caring responsibilities. 

Giving  both  parents  adequate  leave  entitlements  and  supporting  a  better  sharing  of  caring 

72 

 
 
 
 
responsibilities  between  women  and  men  can  enable  women  to  re-enter  employment  faster 

and limit the negative impacts of their caring burden on their career progressions. In 2017, the 

Czech Republic and Cyprus both introduced a new entitlement to paternity leave (respectively 

1 and 2 weeks) and Portugal extended the leave period from 20 to 25 days, 15 of which are 

mandatory  (previously  10).  Luxembourg  adopted  in  2016  a  reform  of  its  parental  leave 

system  to  make  it  more  flexible  and  better  compensated.  Germany  and  Austria  recently 

introduced  a  financial  bonus  in  case  both  parents  take  part  of  the  parental  leave.  In  2017, 

specific  measures  to  cover  self-employed  parents  were  introduced  in  Denmark  and  Italy. 

Spain expanded in January 2017 the right to paternity leave (for birth, adoption or foster care 

of a child) from two to  four weeks  for employed  fathers.  Croatia  has  recently increased the 

maximum allowance for the second half of the year-long maternity leave for both employed 

and unemployed parents. Slovakia increased the maternity benefit from 70 to 75% of the daily 

assessment  base  and  extended  the  list  of  social  services  to  include  childcare  facility  for 

children less than three years. In the Netherlands, the Flexible Working Act entered into force 

in  2016,  instating  the  right  for  employees  to  request  a  permanent  or  temporary  change  in 

working hours, a change in the scheduling of working hours, and a change in place of work. 

Women are also most often those caring for dependent and elderly relatives. Introducing 

or strengthening carers' leave entitlements, as the Czech Republic did in July 2017, can enable 

women to reconcile their caring and professional responsibilities. In addition to family-related 

leaves,  flexible  working  arrangements  have  strong  positive  impacts  female  employment.  In 

2016-2017  Belgium,  the  Czech  Republic  and  Italy  introduced  measures  to  facilitate  more 

flexibility  with  regard  to  the  organisation  of  work  and  Romania  has  launched  a  public 

consultation on a proposal on teleworking. Furthermore, several Member States improved the 

financial support for carers. In Romania, the government approved the financial centralization 

of the salary costs of personal assistants for severely disabled. In Malta, carers' pensions and 

carers'  allowances  were  reformed  and  increased.  The  amounts  were  raised  also  in  Hungary 

and the Czech Republic. Estonia plans to change the Gender Equality Act to give the Labour 

Inspectorate  the  task  of  monitoring  gender  equality  in  the  private  sector  more  closely, 

including  by  collecting  gender-disaggregated  wage  data,  by  offering  training  on  how  to 

address the gender pay gap and disseminating wage gap information. 

73 

 
 
Enhancing  access  to  formal  childcare  services  is  an  effective  tool  to  tackle  obstacles  to 

female  employment.  The  Czech  Republic  set  a  right  of  all  children  to  attend  pre-school 

preparatory classes, introducing a compulsory year of preschool education and subsequently 

guaranteeing  places  in  kindergartens  and  strengthening  support  for  children  with  special 

education needs. Moreover, an ESF-piloted project is ongoing for micro-nurseries for children 

from  6  months  to  4  years  of  age.  The  United  Kingdom  is  now  fully  implementing  the 

Childcare  Act  2016,  which  provided  for  an  additional  15  hours  of  free  childcare  for  certain 

working  parents  of  3  and  4  year  old  children  in  England,  on  top  of  the  existing  universal 

provision  of  15  hours  of  free  childcare  for  that  same  age  group.  Luxembourg  launched  an 

ambitious  reform  in  2016  to  improve  access  and  quality  in  early  childhood  education  and 

care.  In  Slovakia,  investments  in  infrastructures  are  planned  to  increase  the  capacity  of 

childcare. In April 2017, the Finnish government proposed to extend free/low-cost childcare 

to  a  wider  group  of  low  and  middle  income  families.  In  2017,  some  Member  States  also 

introduced measures to develop services for children in disadvantaged settlements (Hungary) 

and job-seekers' children (France). 

Some Member States also introduced targeted measures in order to encourage women to 

re-enter the labour market while their child is still very young. For instance, in June 2017 

Bulgaria adopted a measure to grant to mothers with children under 1 year of age who return 

to employment 50% of the childcare benefit on top of their salary. Similarly in Romania, the 

employment insertion stimulus for parents who benefited of a child raising leave increased in 

April  2017.  Other  Member  States  have  developed  schemes  targeted  to  women  who  have 

already taken lengthy career breaks. It is the case of the 'Returnships' scheme for which the 

United  Kingdom  Spring  2017  budget  allocated  £5  million  (around  EUR  5.6  million). 

Luxembourg passed a law to strengthen the principle of equal pay for women and men and 

supported  awareness  raising  campaigns  and  actions  to  eliminate  barriers  to  female 

employment. In order to tackle the negative consequences of women's underrepresentation in 

the labour market, Sweden is about to submit a proposal to promote more gender equality in 

pensions.  The  Estonian  Government  has  approved  a  draft  act  that  will  modify  the  parental 

leave and parental benefits scheme by introducing an additional month for fathers, extending 

the period during which parental benefit can be claimed and raising the employment-related 

income threshold during parental leave. In Malta, free childcare is provided when both parents 

are in employment or in education. 

74 

 
 
Several  Member  States  took  action  to  promote  labour  market  integration  of  older 

workers.  Germany  adopted  a  law  on  facilitating  the  transition  of  older  workers  into 

retirement  (‘Flexi-Rente’),  aiming  at  making  the  transition  into  retirement  more  flexible.  In 

particular,  the  reform  promotes  the  combination  of  early  retirement  and  part-time  work  by 

reducing  pension  deductions  in  the  event  of  extra  income.  It  also  incentivises  employment 

above  retirement  age  by  enabling  employees  to  acquire  additional  pension  entitlements  and 

releasing  employers  from  the  obligation  to  pay  unemployment  insurance  contributions. 

Greece launched in February 2017 two new programmes of hiring subsidies for the age group 

over  50.  Cyprus  established  a  scheme  providing  incentives  for  the  employment  of 

unemployed people over 50 years old, aiming at encouraging employers to hire unemployed 

people over 50 years old interested in full time employment. In the Netherlands, a draft bill, in 

the frame of the action plan 'Perspective for 50+'foresees, a compensation for employers (no-

risk  premium)  in  case  older  workers  (over  56  years  old)  which  have  been  unemployed  for 

more  than  1  year  and  receive  an  unemployment  benefit  fall  ill.  In  Austria,  the  employment 

campaign  "20.000"  aims  at  facilitating  the employment  of  older  people  and  to  reduce  long-

term unemployment. The full roll out for the project is planned for January 2018 and should 

lead, in the medium term, to 20.000 additional non-profit jobs. Moreover, the Social Security 

Amendment Act allows persons working beyond the pensionable age to accrue a higher old-

age pension. This measure concerns mainly female pensioners, which experience a higher risk 

of poverty than men. In Slovenia, the action plan "Older and the Labour Market in Slovenia" 

includes 49 measures to be deployed in 2017-18, including support for the employers in the 

implementation of promoting programmes health and safety at work, incentives for employer 

for  investments  in  human  capital  and  training  of  workers,  incentives  for  workers  to  stay 

longer in employment, increased activation of older workers through ALMPs. 

In  response  to  the  increased  number  of  asylum  seekers,  Member  States  are  adapting 

their  integration  policies  of  third  country  nationals.  Measures  focus  on  improving 

language  skills  and  participation  in  the  labour  market.  In  France  the  law  on  the  rights  of 

foreign  nationals  established  an  individualised  integration  pathway  based  on  personalised 

reception,  renewed  civic  training  and  reinforced  language  training.  In  Finland,  the  national 

Action  Plan  on  Integration  and  the  Government  Integration  Programme  aim  at  speeding  up 

access to training paths and employment. Moreover, a fast-track employment of immigrants' 

trial was launched applying the social impact bond model. The aim of the project is to try out 

75 

 
 
new  employment  and  training  models  for  accelerating  employment  of  immigrants  and 

combining  training  and  work  in  a  flexible  way.  In  Austria,  the  June  2017  integration  law 

makes  the  participation  of  beneficiaries  of  international  protection  in  language  and 

culture/value courses compulsory, with a duty to sign an integration declaration. Moreover, an 

obligatory labour market integration year is going to be implemented (managed by PES) for 

all  recognised  refugees  and  asylum  seekers  with  a  high  likelihood  of  being  granted  asylum 

and  who  are  unemployed.  In  the  Czech  Republic,  under  the  new  ’State  Integration 

Programme’  that  came  into  force  in  January  2016,  beneficiaries  of  international  protection 

receive  assistance  in  the  field  of  housing,  employment,  health  and  education  including 

enhancement  of  language  skills.  In  Germany,  since  the  introduction  of  the  new  Integration 

Law of 2016, participation in integration courses can be made compulsory for asylum seekers 

who  do  not  work.  Germany  also  introduced  a  new  type  of  job-oriented  language  course, 

following the successful completion of an integration course and catering to refugees who are 

already working or participating in labour market activation or vocational training measures. 

In Denmark, a Tripartite agreement focused on early intervention, individual skills assessment 

and  job-oriented  measures.  Asylum  seekers  are  screened  during  the  application  phase  and 

allocated  to  the  municipality  that  best  accommodates  their  individual  job  opportunities.  In 

addition, refugees are to acquire work experience within one month after arrival. 

Many measures adopted by Member States go beyond recently arrived refugees and also 

apply  to  other  migrants  or  people  with  a  migrant  background.  For  instance,  Finland  is 

preparing  for  a  more  efficient  identification  of  immigrants’  skills  and  guidance  to  an 

appropriate training and employment path. In  Austria, the Recognition and Assessment Act,  

entered into force as of 12 July 2016, promotes the labour market integration of individuals 

who have  acquired qualifications abroad and defines  special procedures for persons  granted 

asylum  or  subsidiary  protection  without  documentation  of  completed  education  or  training. 

Sweden  recently  made  significant  efforts  to  cater  to  the  growing  demand  for  evaluations  of 

foreign  qualifications,  also  by  increasing  funding  for  the  Swedish  Council  for  Higher 

Education, the public agency responsible for the recognition of foreign qualifications. Sweden 

also invested significant funds to increase the availability of bridging programmes that enable 

migrants  with  foreign  credentials  in  law,  medicine,  nursing,  dentistry,  teaching  and 

pharmaceuticals to complete the training required to practice their occupation.  Moreover, in 

the frame of the reform of the 'New Start Jobs' scheme, the subsidy was increased for newly 

76 

 
 
arrived  migrants  and  refugees.  Estonia  promoted  the  immigration  of  ICT  workers,  start-up 

entrepreneurs  and  major  entrepreneurs,  changing  the  requirements  for  their  permanent 

residence.  Malta  provides  courses  for  non-natives  speakers  with  literacy  needs,  aiming  at 

increasing  the  employability  of  migrants.  Slovenia  established  a  Government  Office  for  the 

Support and Integration of Migrants, which coordinates the work and tasks of other national 

authorities,  non-governmental  and  other  organisations.  The  Office’s  main  tasks  are  the 

accommodation of, and support to, different categories of migrants. 

Beyond measures aimed mostly at integrating the newly-arrived, several Member States 

have made efforts to tackle discrimination. In France, the Law for equality and citizenship 

promulgated  end  January  2017,  improves  the  overall  regime  of  protection  against 

discrimination and notably includes the right to French language training as part of continuous 

training.  In  Sweden,  the  amended  Swedish  Discrimination  Act,  which  entered  into  force  in 

January  2017,  provides  for  new  active  measures  on  non-discrimination  in  the  areas  of 

employment  and  education,  a  requirement  of  an  annual  salary  report  and  an  obligation  for 

employers to have guidelines and routines for the prevention of harassment (including sexual 

harassment)  and  retaliatory  measures.  Spain  established  several  working  groups  to  monitor 

activities related to awareness raising of racism, xenophobia and other forms of intolerance of 

different professional groups involved in the fight against discrimination (e.g. police, judges, 

prosecutors, other professionals of the administration, etc.). In Estonia, ‘sensitivity trainings’ 

on discrimination were piloted for law enforcement agencies, judges, prosecutors, and victim 

support  specialists.  Finland  launched  a  two-year  inter-ministerial  initiative  "TRUST  –  Good 

Relations  in  Finland"  in  early  2016  to  promote  non-discrimination  of  asylum  seekers  at 

regional  and  local  level. In  the  field  of  education,  Portugal  provided  schools  with  an 

intercultural school kit containing online educational material for teachers. 

Member  States  are  actively  seeking  to  support  the  integration  of  persons  with 

disabilities  into  the  labour  market.  In  Belgium,  the  Federal  government  has  put  in  place 

pathways to encourage labour market reintegration into suitable jobs for workers who can no 

longer  carry  out  the  agreed  work  and  regions  are  introducing  reductions  in  social  security 

contributions for employers employing persons with disabilities. The Brussels Capital Region 

introduced  the  quota  obligation  (2.5%)  for  hiring  people  with  disabilities  in  local 

administrations.  Germany  has  revised  the  assessment  basis  for  the  means-test  for  disabled 

benefits  and  increased  the  work  subsidy  for  disabled  workers,  to  benefit  some  300,000 

77 

 
 
severely  disabled  persons  in  sheltered  workplaces.  Bulgaria  is  working  on  reforming  the 

system for assessment of remaining working capacity of working age people with disabilities. 

Estonia adopted a Labour Market Programme for 2017-2020, which offers active measures to 

prevent  unemployment,  in  particular  for  people  with  health  concerns.  Cyprus  put  in  place 

employment  subsidies  for  vulnerable  groups,  including  people  with  disabilities  and  with 

chronic diseases. Latvia amended the Social Services and Social Assistance Law to improve 

the  provision  of  professional  rehabilitation  for  people  with  disabilities.  Hungary  is 

implementing  the  ESF  project  on  increasing  the  rehabilitation  potential  of  organisations 

employing people with disabilities. Austria has reduced the take up of disability pensions and 

increased the number of older workers by gradually increasing the disability retirement age to 

60 years, together with supporting measures such as a legal right to vocational rehabilitation. 

In Ireland, the Make Work Pay Interdepartmental Group identified key disincentives to work 

for  people  with  disabilities  and  issued  recommendations  to  the  Government,  which  should 

announce actions and potential legislation before the end of 2017. Portugal introduced a new 

social  benefit  for  the  inclusion  of  people  with  disabilities  to  encourage  them  to  continue 

working  or  to  look  for  a  job  (currently,  people  with  disabilities  are  not  entitled  to  receive 

disability benefits if they receive any form of remuneration). Moreover, a pilot project funded 

by the ESF will focus on supporting independent life for people with disabilities. 

78 

 
 
3.3   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,  including  by 

ensuring sustainable transitions from unemployment into employment and between jobs, and 

preventing labour market segmentation. It starts by shortly introducing key indicators pointing 

at  challenges  in  this  area,  notably  long-term  unemployment  and  segmentation  between 

permanent and temporary jobs. It then looks at relevant policies, notably at how proper labour  

legislation,  well-designed  unemployment  benefits  and  effective  activation  strategies  can 

improve  labour  market  functioning.  In  doing  so,  it  presents  results  from  a  benchmarking 

exercise on unemployment benefits and active labour market policies as agreed with Member 

States. It then illustrates the degree of coverage of public employment services and activation 

measures,  which  are  crucial  to  foster  labour  market  integration  of  the  unemployed  and  to 

improve  labour  market  matching.  Section  3.3.2  finally  reports  on  policy  measures  from 

Member States in these areas. 

3.3.1   Key indicators 

The  continuing 

labour  market  recovery  contributed 

to  reducing 

long-term 

unemployment  across  Member  States.  However,  not  all  of  them  have  benefitted  equally 

from  this  improvement.  As  shown  in  Figure  28,  the  long-term  unemployment  rate  in  2016 

was  higher  than  in  the  pre-crisis  period  (2008)  in  almost  all  Member  States,  with  a  few 

notable  exceptions  (e.g.  Sweden,  the  Czech  Republic,  Germany,  Malta  and  Hungary).  Over 

the  last  three  years  most  Member  States  have  improved  significantly,  with  a  drop  by  3 

percentage points or more in countries such as Croatia, Ireland, Portugal, Slovakia and Spain. 

However, some countries with a comparatively high long-term unemployment rate (i.e. higher 

than  the  EU  average)  did  not  experience  any  significant  improvement,  or  even  deteriorated 

over the period (Belgium, France, Cyprus and Italy). The long-term unemployment challenge 

still appears pressing in 2016 in Greece and Spain (the respective rates amounting to 17% and 

9.5%)  followed  by  Italy,  Croatia,  Portugal,  Slovakia  and  Cyprus  (hovering  around  6%).  By 

contrast, the lowest rates were  found in  Sweden, the United Kingdom  and Denmark (below 

79 

 
 
 
1.5% of the labour force). In 10 Member States the long-term unemployed account for more 

than 50% of total unemployment, with peaks of 72% in Greece and 60% in Slovakia. 

Figure 28: Long-term unemployment as a percentage of active population 

Source: Eurostat, LFS. 

Labour market segmentation remains stable over time, and continues to affect a number 

of Member States. Duality between permanent and atypical jobs, with limited possibilities to 

move  from  the  latter  to  the  former,  is  a  threat  against  well-functioning  and  fair  labour 

markets.  The  situation  in  this  respect  is  almost  unchanged  compared  to  the  2017  Joint 
Employment Report65, with countries such as Poland, Spain, Croatia and Portugal showing a 

percentage  of  temporary  contracts  (age  group  20-64)  close  or  above  20%  and  other  nine 

countries  between  10%  and  15%  (the  Netherlands,  Slovenia,  Cyprus,  France,  Sweden, 

Finland, Denmark, Italy and Germany). In Poland and Spain the picture is complemented by 

particularly low transition rates towards permanent contracts, a situation common to France, 

where  however  the  share  of  temporary  contracts  is  comparatively  lower  (but  still  above  the 

EU  average).  This  suggests  that  temporary  contracts  may  represent  "dead  ends"  rather  than 

"stepping  stones"  towards  permanent  jobs.  In  a  multiannual  perspective,  the  percentage  of 

temporary  contracts  changed  only  slightly  over  time  since  the  onset  of  the  crisis  (the  EU 

average  hovered  around  14%  since  2008),  remaining  also  stable  in  most  Member  States. 

65  Additional  detailed  analysis  on  labour  market  segmentation  and  its  determinants  can  be  found  in  Part  2  of 
European  Commission  (2017),  Labour  Market  and  Wage  Developments  in  Europe.  Annual  Review  2017. 
Luxembourg: Publications Office of the European Union, 2017. 

80 

 
 
 
                                                            
However  it  increased  significantly  in  Malta,  Luxembourg,  Slovakia,  Cyprus,  Denmark,  the 

Netherlands and Croatia. In Spain, it dropped significantly at the beginning of the crisis (due 

to  termination  of  fixed-term  contracts),  but  increased  subsequently  after,  along  with  the 

recovery. 

Figure 29: Share of temporary workers over total employees 20-64 (2016) and transition 
rate from temporary to permanent jobs (2015).  

Source: Eurostat, LFS, SILC. 

Countries  with  a  high  share  of  self-employment  may  also  be  more  exposed  to  labour 

market  segmentation.  This  can  occur  if  self-employment  masks  economically  dependent 

employment  relationships  (so-called  'bogus'  self-employment),  and/or  when  social  security 

systems are not adapted to adequately cover the self-employed. While the degree of autonomy 

of  self-employed  workers  cannot  be  measured  with  available  statistics,  a  part  of  self-

employment  without  employees  (as  a  share  of  total  employment)  may  be  associated  with 

potentially  unstable  jobs,  thus  signalling  the  need  for  further  assessment.  The  ranking 

according to this indicator in 2016 shows Greece (22.2%), Romania and Italy (15.4%) on top, 

while  Sweden,  Germany  and  Denmark  recorded  the  lowest  values  (close  or  below  5%). 

Looking  at  dynamics  over  time  since  2008,  the  share  of  own-account  workers  increased 

significantly in some countries, notably the Netherlands (by 3.1 pps), Latvia (by 2.2 pps) and 

the United Kingdom (by 2.0 pps). On the contrary, it decreased most in Portugal (by -4 pps) 

and Croatia (by -5.1 pps). 

81 

 
 
 
 
Figure 30: Self-employed without employees as percentage of total employment  

Source: Eurostat, LFS. 

Well-designed  unemployment  benefit  systems,  characterised  by  appropriate  levels  and 

broad  coverage  combined  with  effective  activation  strategies,  support  and  increase 

transitions back into employment.  The comparative analysis of specific design  features of 

unemployment benefit systems and their interplay with the provision of activation and support 

measures  can  provide  useful  insight  regarding  their  performance.  The  following  analysis 

draws  from  the  benchmarking  exercise  conducted  during  2016-17  in  the  Employment 

Committee,  following  the  approach  outlined  in  Chapter  2.  While  the  challenges  related  to 

high  unemployment  (notably,  long-term)  across  Member  States  have  been  identified  in 

previous sections of the report, this section will focus specifically on the performance of the 

unemployment benefits system and on specific policy levers, using agreed indicators.  

On  average,  around  one  third  of  short-term  unemployed66  are  covered  by 

unemployment  benefits  in  the  EU.  This  share  slightly  decreased  in  the  aftermath  of  the 

crisis (from 34.4% in 2008 to 32.4% in 2016), with significant differences across countries. 

These  differences  depend  on  policy  design  (notably  on  eligibility  conditions,  maximum 

duration and overlaps with other social protection schemes) as well as cyclical developments. 

66 Those who have been unemployed for less than one year. 

82 

 
 
 
 
 
                                                            
On the one hand, coverage has more than doubled in Italy (from 7.3% to 15.1%), and has also 

increased significantly (by more than 10 pps) in Latvia, Estonia and the Czech Republic. On 

the other hand, it fell in Hungary (-10 pps), Luxembourg (-10 pps), Cyprus (-9 pps) and the 

United Kingdom (-8 pps). Significant decreases were also recorded in Member States with the 

lowest  coverage,  notably  Romania,  Poland,  Malta  and  Croatia.  The  latter  four  countries  all 

present a coverage rate below 15% in 2016. On the opposite, in Finland, Belgium, Austria and 

Germany more than 50% of short-term unemployed were covered, with a peak of 66% in the 

latter.  

Figure 31: Coverage of unemployment benefits for the short-term unemployed 

Source: computation on Eurostat, LFS data. Note: IE and NL not available. 

In  all  Member  States,  entitlement  to  unemployment  insurance  benefits  depends  on 

previous  work  records  and/or  contributions  paid.  Stricter  eligibility  conditions  translate 

into fewer unemployed  people being entitled  to benefits, and thus  a lower coverage rate. In 

order  to  be  entitled,  unemployed  people  are  generally  required  to  have  a  minimum  work 

record over a given period of time and, as a consequence, individuals with short employment 

spells and less continuous work histories often enjoy a lower coverage or no coverage at all. 

Looking at Figure 32, the number of weeks required to access unemployment benefits varies 

between 20 or less in Malta (where at least 50 weekly contributions must have been paid since 

83 

 
 
 
 
 
the person first started work), France and Italy, to more than 100 in Slovakia, with one year 

(52  weeks)  being  the  most  common  value.  Another  key  parameter  is  the  ratio  between  the 

contribution period  and a longer 'reference' period, which in several countries allows taking 

into account periods of non-employment in the computation. The most frequent value across 

Member  States  is  0.5  (that  is,  beneficiaries  should  have  contributed  for  at  least  half  of  the 

reference period).  Shorter entitlement  periods allow easier access to  unemployment benefits 

for  workers  with  discontinuous  careers,  although  they  might  in  turn  promote  unnecessary 

turnover of workers (i.e. churning).  

Figure 32: Length of the required qualifying period, 2016 

Source: MISSOC database, and national legislation. Red diamonds indicate the ratio between contribution and 
reference period.  In  Malta,  at  least  50  weekly contributions  must have  been  paid  since  the  person  first started 
work; in Ireland, at least 104 weekly contributions must have been paid since the person first started work. 

The duration of unemployment benefits is generally lower than the contribution period, 

with some exceptions. Benefit duration can be either fixed or increasing with the length of 

the  contribution  record.  Moreover,  after  rights  to  unemployment  benefits  have  exhausted, 

many  EU  countries  have  alternative  second  tier  benefit.  Figure  33  shows  the  maximum 

duration of benefits after one year of contribution. While in most Member States the duration 

is shorter than the contribution period (with half period, i.e. 26 weeks, being the most frequent 

outcome),  in  four  cases  it  equals  the  contribution  period  (i.e.  in  France,  the  Netherlands, 

Greece and Luxembourg) and three cases it is higher (71 weeks in Finland, 104 in Denmark, 

84 

 
 
 
 
indefinite in Belgium, though the benefits decrease with time to a floor level). At the opposite 

side of the scale, benefits last three months or less in Slovenia, Croatia, Malta and Hungary. 

Figure 33: Maximum duration of benefits with a 1-year work record, 1st January 2017 

Source: MISSOC database (January 2017) and national legislation. Note: in BE there is no limit on the duration 
of  benefits.  For  Member  States  in  which  duration  also  depends  on  age,  the  chart  shows  the  duration  for  the 
youngest age group, corresponding to the shortest possible one. In SK, the duration shown (4 months) refers to 
people employed under a fixed-term contract (otherwise it is 6 months). In PL, duration varies depending on the 
level of the unemployment rate of the region relative to the national average. 

There  is  a  great  variation  in  the  level  and  adequacy  of  unemployment  benefits  across 

Member States. Net replacement rates provide an indication of the adequacy of the income 

replacement function of unemployment insurance benefits. Their level depends on a number 

of  factors,  including  the  previous  level  of  earnings  from  work,  seniority,  duration  of  the 

unemployment spell, age and household composition (in particular when the interaction with 

the tax system and with other benefits is taken into account). Looking at the case of a low-

wage worker with a short work history (1 year), the values of the net replacement rate, after 

one month of unemployment, range from 20% of previous (net) earnings to 90% (Figure 34). 

At  the  lower  end  there  are  Member  States  where  the  benefit  is  already  terminated  at  the 

second month of unemployment (Hungary) or where the individual with a work career of one 

year is  not eligible for unemployment insurance (Slovakia). These are followed by Member 

States providing a flat-rate benefit which is unrelated (or only weakly related) to the level of 

85 

 
 
 
 
 
previous earnings (Romania, Bulgaria, Greece, the United Kingdom, Malta). The comparison 
with the net replacement rates at the 12th month of the unemployment spell shows the effect of 

either  the  expiration  of  the  benefits  (with  individuals  falling  into  other  schemes,  such  as 

unemployment or social assistance), or the possible reduction in benefit generosity. 

Figure 34: Net replacement rate of unemployment benefits at 67% of the average wage, 
at the 2nd and 12th month of unemployment (January 2016) 

Source: European Commission based on OECD Tax-Benefit Models. 

Figure 35: Indicator of strictness of job-search and availability requirements, 2014 

5

4

3

2

1

0

CY HU CZ ES FI AT BG BE EL IT IE LT PL DE FR SK SE RO DK LV UK NL SI LU PT EE HRMT

Availability requirements

Job-search requirements

Sanctions

Source: OECD. 

Member States adopt different strategies to ensure activation of unemployment benefit 

recipients. Concretely, this amounts to making the continued receipt of benefits conditional 

86 

 
 
 
  
 
on a set of requirements of job search and availability to work, ensuring that people receiving 

unemployment  benefits  remain  engaged  and  do  not  become  inactive.  Figure  35  shows 

summary  indicators  of  job-search  and  availability  requirements  for  unemployment  benefits 
recipients,  as  calculated  by  OECD67,  in  the  domains  of:  i)  availability  for  work  also  during 

participation in ALMPs, and suitable work criteria (i.e. under what circumstances a job offer 

may be refused without sanctions); ii) monitoring of job-search activities (frequency of job-

search, documentation to be provided); iii) sanctions (for voluntary unemployment, refusal of 
job  offers,  failure  to  participate  in  counselling  sessions  or  AMLPs)68.  Estimated  job-search 

and availability conditions and related sanctions appear to  be the strictest  in Malta, Croatia, 

Estonia,  Portugal,  Luxembourg  and  Slovenia,  while  they  are  the  least  strict  in  Cyprus  and 

Hungary.  The  relative  importance  of  sub-components  varies  considerably  across  countries. 

Importantly, this indicator does not measure the level of enforcement. 

High unemployment duration increases the risk for jobless people to disengage from the 

labour market, gradually losing skills and employability. In order to prevent this situation 

from occurring, an early targeting of the unemployed through effective active labour market 

policies (ALMPs) may help their quick (re)integration in the labour market.  

67 See: Venn (2012), “Eligibility Criteria for Unemployment Benefits: Quantitative Indicators for OECD and EU 
Countries”, OECD Social, Employment and Migration Working Papers, No. 131, OECD Publishing, Paris, and 
Langenbucher,  K.  (2015),  “How  demanding  are  eligibility  criteria  for  unemployment  benefits,  quantitative 
indicators for OECD and EU countries”, OECD Social, Employment and Migration Working Papers, No. 166, 
OECD Publishing, Paris. 
68 The indicators are based on aggregation of a number of items, with score on a scale from 1 (least strict) to 5 
(most strict). 

87 

 
 
                                                            
Figure 36: Participants in ALMPs (per 100 persons wanting to work) and yearly change 
(Social Scoreboard headline indicator)  

Source: Eurostat, LMP database and  LFS. 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. No data available for EL, 
IT, MT, UK. LU excluded due to data verification issues. 

Participation in ALMPs follows very distinct patterns across Member States. On the one 

hand,  in  a  large  group  of  Member  States  (Bulgaria,  Romania,  Latvia,  Estonia,  Croatia, 

Slovenia  and  Cyprus)  the  participation  rate  per  100  persons  wanting  to  work  (i.e.  either 

unemployed  or  available  to  work  but  not  actively  seeking  for  it)  was  below  10%  in  2015, 

showing  only  a  modest  improvement  or  even  deterioration  over  the  latest  year.  With  the 

exception  of  Cyprus,  those  Member  States  are  flagged  as  "critical  situations".  On  the  other 

hand, another sizable group of countries recorded participation rates well above the average, 

and  in  all  cases  beyond  40%:  France,  Hungary,  Sweden,  Belgium  and  Denmark  ("best 

performers").  For  these  countries  the  participation  rate  has  increased  (to  a  different  degree) 

over  the  latest  year.  This  development  adds  up  to  a  picture  of  increasing  divergence  across 

countries, as highlighted by the positively sloped regression line which relates yearly changes 

to  levels.  In  any  case,  this  indicator  should  be  interpreted  with  caution,  as  it  only  measures 

participation  to  (and  not  effectiveness  of)  labour  market  policies,  and  for  a  number  of 

countries  it  presents  statistical  reliability  issues,  related  to  the  data  collection  process.  In  a 

88 

 
 
 
 
multiannual  perspective,  evidence  for  most  Member  States  shows  a  decline  of  the  indicator 

during the crisis (notably due to the cyclical increase of unemployment after 2008) followed 

by an improvement along with the recovery.  

Registration with Public Employment Services, in most cases, is a pre-requisite for the 

participation  into  ALMPs  schemes.  Registered  unemployed  may  have  access  to  profiling, 

counselling and individualised services, including job search support and referral to specific 

activation and/or training schemes. However, as shown in the Joint Employment Report 2017, 

there remain large discrepancies in registration rates across Member States. These differences 

depend on various factors such as the capacity of Public Employment Services, the quality of 

the  services  offered,  the  obligations  and  sanctioning  mechanisms  related  to  unemployment 

benefits and other income assistance schemes.  

Beyond  formal  registration  requirements,  Public  Employment  Services  are  a  key  tools 

for job search. Evidence shows also in this case a large variation. In Member States such as 

the  Czech  Republic,  Slovakia,  Lithuania,  Austria  and  Germany,  the  share  of  unemployed 

people who declare using Public Employment Services to search for a job approaches 80%. A 

share  of  30%  of  less  can  be  observed  instead  in  Romania,  Italy  and  Spain.  This  might  also 

reflect  different  quality  of  the  services  offered,  notably  as  concerns  job  matching  with 

employers. On average, since the onset of the crisis, less unemployed people have been using 

the services by PES in Europe. On the contrary, the use of private employment agencies and 

alternative job search methods, like direct applications to employers or publishing/replying to 

advertisements  (including  on  the  internet)  has  been  on  the  rise  (not  shown  in  the  graph). 

However, an opposite trend can be observed in a few Member States where the utilisation of 

Public  Employment  Services  has  actually  increased  in  recent  years,  notably  Latvia, Cyprus, 

Estonia, Greece, Slovenia and Lithuania. 

89 

 
 
Figure 37: Share of unemployed people using public employment services for job search 

Source: Eurostat, LFS. 

3.3.2   Policy response  

Reforms continue in the field of labour law, with a view to supporting dynamic labour 

markets  and  reducing  segmentation.  Recently  adopted  or  planned  measures  in  this  area 

often  aim  at  reducing  labour  market  segmentation  and  promoting  hiring  on  permanent 

contracts,  notably  by  setting  more  stringent  regulation  on  fixed-term  and  atypical  workers, 

and increasing flexibility as concerns hiring and firing of permanent workers. For instance, to 

encourage recruitment of new employees, Belgium announced making the notice period in the 

first  six  months  of  employment  more  progressive,  reducing  it  to  one  week  in  the  first  3 

months  and  increasing  it  to  5  weeks  as  of  the  sixth  month  (federal  measure).  The  Czech 

Republic  tightened  regulation  of  temporary  work  agencies,  by  introducing  more  stringent 

criteria  for  the  establishment  of  an  agency  and  higher  penalties  in  case  of  breach  of 

obligations.  Greece  has  replaced  the  system  of  ex-ante  administrative  approval  in  case  of 

collective  dismissals  (giving  the  minister  of  labour  a  veto  power)  with  a  notification 

procedure  to  guarantee  the  respect  of  the  information  and  consultation  requirements  of 
workers.  In  France,  the  law  of  9  August  201669,  specifying  circumstances  for  individual 

dismissals  for  economic  reasons  and  introducing  more  flexibility  in  working  conditions  at 

company level, entered progressively into force with most measures starting in January 2017. 

69 Also known as "El Khomri law". A detailed description of the law is provided in the 2017 JER. 

90 

 
 
 
 
                                                            
A further broad-ranging reform was adopted by the government in September 2017, notably 

introducing compulsory thresholds and ceilings for compensation of abusive dismissals, while 

increasing  severance  pay  in  case  of  economically  justified  dismissals.  In  addition,  it 

introduced  the  possibility  of  commonly  agreed  collective  resignation  procedures  (rupture 

conventionnelle collective) and further facilitated agreements on working conditions. In June 

2017, Lithuania introduced a broad reform to its Labour Code, touching upon several aspects 

of  employment  protection  legislation:  clarifying  reasons  for  termination  of  employment, 

reducing  the  notice  period,  setting  new  rules  for  defining  severance  payment  (the  standard 

now  being  2  months),  reducing  the  maximum  duration  of  fixed-term  contracts  from  5  to  2 

years (with exceptions), and introducing flexible working hours. It also introduced a number 

of  atypical  contracts,  including  temporary  work  agency  and  project  work  contracts,  whose 

impact  on  labour  market  segmentation  would  need  to  be  monitored.  The  legislation  was 

extensively  discussed  with  the  social  partners.  Poland  is  also  planning  to  replace  its  current 

labour  code,  highly  complex,  many  time  modified  and  not  reflecting  fully  the  current  

economic  model  (it  dates  back  1974),  with  the  aim  to  promote  more  employment  on 

permanent contracts. Social partners are actually involved in drafting. Austria has repealed the 

exceptional rule according to which employees older than 50 cannot be dismissed after having 

been working 2 years in the same company. The aim is to increase the employment of older 

workers by eliminating this barrier. 

Few Member States have taken action to promote a swift resolution of labour disputes. 

This  is  aimed  to  improve  the  predictability  of  the  outcomes  and  reduce  associated  costs  for 

both employers and employees. In particular, Estonia adopted a legislative act regulating the 

activity of individual Labour Disputes Commissions (introduced in 1996). The new Act aims 

at  strengthening  the  position  of  these  commissions,  by  making  their  work  more  flexible, 

allowing  for  written  procedures  including  approval  compromise  positions  to  solve  labour 

disputes. In France, gradual measures were taken to reform the rules applied to litigation on 

individual dismissals (prud'hommes) to strengthen concertation and speed up procedures, also 

by reducing uncertainties on the compensation of employees in case of unlawful dismissals. 

In  November  2016,  two  decrees  introduced  an  indicative  seniority-based  benchmark  and  in 

September  2017  new  compulsory  ceilings  and  thresholds  were  introduced,  facilitating  the 

resolution of litigation at the conciliation stage, hence speeding up procedures.  

91 

 
 
Improving  the  working  conditions  of  self-employed  workers,  ensuring  they  enjoy 

adequate social rights, and preventing the exploitation of atypical forms of work is high 

on the agenda of several Member States. Denmark amended the rules for childbirth leave 

for self-employed business owners, so that they may work in their business for up to 25% of 

normal working hours and simultaneously receive childbirth benefits corresponding to 75%, 

thus  keeping  their  business  running.  Italy  adopted  in  May  2017  a  "Jobs  Act  on  non-

entrepreneurial self-employment and smart working", extending protection for self-employed, 

notably as concerns maternity leave, parental leave, illness, unemployment benefits, and the 

deduction  from  taxable  labour  income  of  expenditures  linked  to  vocational  training.  In 

France, the law of 9 August 2016 introduced, starting from 1st January 2018, the principle of 

social  liability  of  collaborative  platforms  towards  independent  workers  using  them  as 

intermediary. Platforms will participate in work accidents insurance coverage and finance the 

contribution to vocational training, while workers will enjoy full rights to demonstrate, set up 

or  participate  to  trade  unions.  In  Latvia,  taxi  drivers  and  persons  working  for  start-ups 

receiving  state  subsidies  are  now  considered  as  employees  and  thus  enjoy  stronger  social 

rights  and  stricter  requirements  for  social  security  contributions.  Portugal  has  amended  its 

labour  procedural law extending  special  actions for recognising the existence of bogus self-

employment  ("falsos  recibos  verdes")  to  other  typologies  such  as  bogus  traineeships, 

volunteer  work  and  other  types  of  undeclared  work.  In  Spain  a  reform  of  the  Law  on 

Autonomous Workers was adopted in summer 2017, with new measures aiming at improving 

the  situation  of  self-employed  (for  instance  by  reducing  their  social  security  contributions, 

making  pension  payments  compatible  with  developing  a  freelance  work,  and  promoting 

access to training opportunities). Slovenia adopted measures to prevent work on the basis of 

civil law contracts in cases when standard employee contracts should be concluded, notably 

strengthening inspectorates' powers and related sanctions. It also proposed to shift the burden 

of  proof  to  the  employer  in  the  event  of  a  dispute  on  the  reasons  for  a  short  term  contract, 

introducing  higher  fines  for  violations  (including  for  workers).  Finland  has  drafted  a  law 

proposal to limit the use of zero-hours contracts to situations where the employer can justify 

that the demand for labour varies.  

In some Member States, reducing the high incidence of temporary workers in the public 

sector could contribute to tackling overall labour market segmentation. Spain, following 

recommendations by an ad-hoc expert group, is taking measures in this area. In particular, in 

92 

 
 
April 2017 an agreement with the social partners was reached to run recruitment competitions 

for 250,000 permanent public sector posts over three years. Similar measures have also been 

announced  by  Portugal.  In  Cyprus,  a  new  law  on  fixed-term  contracts  in  the  public  service 

was  adopted  in  2016,  establishing  limits  to  the  duration  of  contracts  (as  a  rule  it  must  not 

exceed 12 months, but the term is renewable) and specifying cases when administrations are 

allowed to use fixed-term contracts. 

At  the  same  time,  several  Member  States  are  taking  measures  to  increase  internal 

flexibility,  notably  by  increasing  the  adaptability  of  working  hours  and  working 

conditions.  In  March  2017,  Belgium  adopted  a  law  on  flexible  work  aiming  to  facilitate 

flexibility  for  employers  and  employees  alike  and  simplify  the  combination  of  work  and 

private life. Working time  can  now be  set  on an annual basis, the use of overtime has  been 

relaxed,  the  formalities  for  part-time  work  have  been  simplified  and  a  legal  framework  for 

occasional telework has also been created. Moreover, social partners now have the option of 

further  adapting  working  hours  at  sectoral  level.  The  Czech  Republic  has  introduced 

amendments to the Labour Code to increase the flexibility of working arrangements, notably 

by  introducing  more  flexibility  in  scheduling/entitlements  to  working  hours  and  leaves, 

changing  'teleworking'-related  provisions  and  strengthening  reconciliation  tools  such  as 

'homeworking'.  Lithuania,  in  the  context  of  the  Labour  code  reform  mentioned  above,  has 

introduced  the  possibility  of  flexible  working  schedules  and  teleworking.  In  Romania,  the 

Ministry of Labour has published for consultation a proposal on teleworking, aiming to make 

working arrangements more flexible and to regulate a previously not used form of work. The 

consultation is open until the end of July. Finland drafted a law proposal to make its working 

time  legislation  more  specific  as  concerns  flexi-time  and  worked  hours  bank,  and  to  extend 

the amount of overtime allowed.  

In  Italy,  the  above  mentioned  "Jobs  Act  on  non-entrepreneurial  self-employment  and  smart 

working"  aims  at  promoting  a  more  flexible  arrangement  of  subordinate  work  in  order  to 

increase  productivity  and  facilitate  work-life  balance  (e.g.  by  regulating  the  possibility  to 

work  outside  firms'  premises,  using  IT  tools,  with  the  right  to  the  same  pay  of  employees 

working within firms' premises and doing the same job).  

Some  Member  States  are  reinforcing  labour  inspectorates  and  taking  additional 

measures  to  tackle  undeclared  work.  For  instance,  in  Greece,  a  three-year  (2017-2019) 

93 

 
 
action  plan  to  tackle  undeclared  work  is  being  implemented,  envisaging  a  wide  range  of 

measures  including,  among  others,  a  review  of  fines,  new  risk-analysis  rules  for  targeted 

inspections, upgraded design of inspections and training of inspectors, and public awareness 

campaigns.  In  Cyprus,  modifications  to  the  Social  Insurance  Law  have  been  recently 

submitted to the parliament for adoption, including the increase of the amount of fines and the 

introduction  of  an  electronic  declaration  of  commencement  of  employment.  Moreover,  a 

review  of  the  system  of  labour  inspections  will  be  promoted.  Labour  inspectorates  are  also 

being  strengthened  in  Portugal,  notably  by  recruiting  additional  staff  and  reinforcing 

procedures  for  better  coordination  and  sharing  of  data  between  labour  inspection  authority, 

tax authority and social security services. Romania has modified its legislation on undeclared 

work, broadened the definition of undeclared work and introduced more measures that bring 

to light the disguised employment. 

Public  Employment  Services  (PES)  are  further  strengthening  their  efforts  in  terms  of 

institutional  reform  and  performance  improvement.  These  efforts  are  also  supported  by 
the  "Benchlearning"  method70  introduced  in  2015  in  the  European  Network  of  Public 

Employment Services (PES Network). Recent reforms are reflected in the decreasing numbers 

of jobseekers and the increasing number of vacancies notified to Public Employment Services 

(also  linked,  to  some  extent,  to  improved  macroeconomic  conditions).  As  shown  in  Section 

3.3.1,  as  the  unemployment  rates  fell,  most  PES  have  seen  the  number  of  registered  job-

seeking  clients  decrease.  The  improvement  of  the  labour  market  conditions  has  however 

neither led to a corresponding  reduction in  PES expenditure nor  to a significant decrease in 

human  resources.  At  the  same  time  more  PES  seem  to  be  using  specialised  counsellors  to 

work with specific sub-groups of jobseekers (young people, LTU and older workers). Cyprus 

is  currently  preparing  for  additional  recruitment  of  PES  counsellors  to  be  better  able  to 

address more effectively and efficiently the implementation of the Youth Guarantee and the 

recommendation  on  the  long  term  unemployed.  Public  Employment  Services  are  also 

investing in better service delivery. In Greece, under the project of re-engineering the Greek 

70 The first 2-year-cycle of the Benchlearning exercise, which consists of a self-assessment as well as an external 
peer and expert review of each PES, was finished in 2016. Each PES received customised recommendations on 
how  to  improve  their  organisational  capacity  as  well  as  their  service  provision.  Based  on  these,  PES  initiated 
change  processes  on  which  they  reported  back  to  the  network  one  year  after  the  assessment  had  taken  place. 
Furthermore the assessment results are used to develop and steer the network’s mutual learning programme. In 
2017 the second cycle of benchlearning was launched. This cycle will focus on how the PES are implementing 
and managing their change processes.   

94 

 
 
                                                            
PES,  a  new  profiling  methodology  for  jobseekers  was  adopted  and  the  introduction  of  a 

performance management system is planned in the near future.  

Public  Employment  Services  continue  to  strengthen  cooperation  with  employers  based 

on a deeper understanding of the labour market, a more labour demand oriented service 

package  and  qualitative  assistance  of  employers.  Even  if  comprehensive  employer 

engagement  strategies  are  still  rare,  different  approaches  as  to  employer  segmentation  and 

organisation of employer services have been developed. Most PES have a central coordination 

level of employer services as well as they do provide services for employers at regional and 

local level. Employers can be segmented by different categories, for example by sector, size, 

regional/national importance and those which are considered to need more help such as start-

up companies or businesses that are facing difficulties.  Furthermore, some PES conclude co-

operation  agreements  with  specific  employers.  Better  employer  services  will  also  require 

awareness  of  specialised  human  resources  needs  as  competence  requirements  of  employer 

advisors  differ  from  those  of  traditional  PES  advisors.  This  necessitates  new  approaches  to 

staff training. 

The  level  of  support  provided  to  long-term  unemployed  still  varies  greatly  among 

Member States. In some Member States such as Finland, Denmark and Austria the assistance 

to the long-term unemployed builds on the experience of many years and social partners are 

closely involved. However, in most other Member States more integrated types of services in 

the  form  of  single  points  of  contact  as  well  as  more  personalised  services  are  still  far  from 

being in place while the involvement of employers is also rather weak. However, in 2017 both 

Italy  and  Cyprus  initiated  deep  reforms  of  policies,  practices  and  infrastructure  in  order  to 

improve the level of support to the long-term unemployed. 

Various  types  of  incentives  and  subsidies  are  being  used  to  promote  recruitment  and 

activation  of  the  long-term  unemployed.  Since  2017  targeted  hiring  incentives  have  been 

introduced in Belgium (Flanders)  and Bulgaria. In  Sweden the employment subsidies levels 

have  been  reviewed  to  make  the  scheme  more  effective.  To  activate  the  long-term 

unemployed,  Belgium  (Brussels  region)  adopted  a  scheme  called  ‘Activa  générique’  i.e.  a 

scheme offering an allowance to long-term unemployed while in Slovakia similar schemes are 

being  piloted.  In  Denmark  temporary  work  incentives  for  long-term  unemployed  have  been 

95 

 
 
introduced based on a tax-free "job premium". In Romania, employment subsidies have been 

extended to long term unemployed. 

Other types of activation incentives are being put in place through measures supporting 

internal  geographic  mobility.  For instance,  in  Romania  new  subsidies are  offered  to  those 

who  take  a  new  job  50  km  away  from  their  place  of  residence.  In  Bulgaria  funding  for 

childcare, rental and internet subscription will be provided to unemployed people who start a 

job more than 50 km away from their  place of residence (up to 400 unemployed people are 

targeted). In the Czech Republic, support to regional mobility is granted by the Labour Office 

to  the  job  seekers  registered  for  more  than  5  months,  which  covers  commuting  costs  and 

removal to a new job outside of the job seeker's region. Finland is also planning to improve 

collaboration between regions and authorities to facilitate movement of labour to high growth 

areas. 

Emphasis  on  provision  of  more  individualised  services  is  increasing.  In  Spain,  a  large 

programme  (Programa  de  Acción  Conjunta  para  la  Mejora  de  la  Atención  de  Personas 

Parados  de  Larga  Duración)  has  been  put  in  place  to  strengthen  the  capacity  of  the  Public 

Employment  Services  in  providing  individualised  support  to  the  long-term  unemployed. 

Portugal  has  amended  legislation  to  cater  for  more  personalised  services,  and  is  developing 

one-stop  shops  for  employment  ("Balcão  Único  do  Emprego"),  bringing  together  services 

provided  by  public  employment  services  and  social  services  (expected  by  beginning  2018).   

In the Netherlands the budget has been substantially increased to allow for more personalised 

job search support while in Finland extra funding has been provided to increase frequency of 

the support. Whereas in Belgium (Wallonia) more personalised services are now offered via 

the  newly  introduced  "insertion  contract",  Italy  is  experimenting  with  vouchers  for 

unemployed that can be used to obtain more tailored and intensive job search support. Finally, 

to  offer  more  integrated  services  via  single  points  of  contact  8  new  centres  have  been 

established in Bulgaria in 2017 bringing the total number to 73.   

Training  programmes  targeting  the  unemployed  are  gaining  momentum.  In  2017, 

Croatia started rolling out trainings targeting almost 10 000 unemployed persons with special 

focus  on  long-term  unemployed  and  France  extended  the  massive  2016  training  plan  for 

unemployed to 2017. It also expanded it with 200 000 additional places on top of the 500 000 

added  in  2016,  while  a  new  Investment  plan  of  EUR14  bn  aims  at  training  1  million  low-

96 

 
 
qualified  jobseekers  and  1  million  early  school-leavers  between  2018  and  2020.    Lithuania 

and Hungary re-designed their ALMPs to reduce the use of public works in favour of work-

based  learning  and  practice.  Finally,  Greece  launched  a  programme  of  training  and 

certification for 23 000 unemployed in sectors with growth potential and included an optional 

training component in the new generation of its public works scheme.  

Strengthening the activation of benefit recipients is a priority in several Member States. 

This  concerns  both  unemployment  and  social  assistance  benefits,  such  as  minimum  income 

schemes. In Finland, a major reform of the unemployment benefit system took place with the 

aim  to  accelerate  reintegration  into  employment.  As  of  2017,  participation  in  active  labour 

market  policies  is  a  condition  for  receiving  unemployment  benefits,  and  jobseekers  face 

stricter  conditions  about  rejection  of  job  offers.  Moreover,  the  basic  (non-earnings  related) 

unemployment  benefit  can  be  used  as  mobility  and  wage  subsidies  to  activate  jobseekers. 

There are also plans as of 2018 to introduce further financial sanctions for jobseekers failing 

to  demonstrate  their  job-search  or  participation  in  activation  measures.  In  Belgium,  since 

September  2016  every  new  beneficiary  of  the  social  insertion  income  is  obliged  to  sign  a 

personalised  social  integration  project  with  the  social  welfare  centres  (e.g.  the  scheme 

"impulsion  insertion"  in  Wallonia).  The  "project"  defines  the  rights  and  obligation  of  both 

parties,  with  the  aim  to  stimulate  sustainable  professional  integration.  In  Cyprus,  the 

implementation of activation measures targeted at Guaranteed Minimum Income beneficiaries 

(e.g.  training  and  development,  participation  in  public  benefit  programmes)  started  in  2016 

and will be further developed in 2017. In Slovenia a draft act (to be adopted by parliament) 

will  introduce  the  obligation  for  a  dismissed  worker  to  report  to  the  Employment  Service 

already  during  the  notice  period  (with  some  exceptions),  to  avoid  a  cut  in  unemployment 

benefits in the first three months of unemployment.  

Recent  reforms  in  the  field  of  unemployment  benefits  systems  aimed  at  their 

rationalisation  and  sustainability,  often  the  introduction  of  stricter  eligibility  conditions 

and/or  lower  benefit  levels.  However,  some  Member  States  are  also  taking  (or  planning) 

action  to  increase  benefits  amount  and  duration.  In  the  context  of  the  above-mentioned 

reform, Finland reduced the duration of the earnings-related unemployment benefit from 500 

to 400 days (or 400 to 300 days in the case of a career shorter than 3 years), except for older 

long-term  unemployed  people.  In  France,  a  new  3-year  Convention  on  Unemployment 

97 

 
 
Benefits (2017-2020) was adopted in May 2017, in agreement with social partners, aiming at 

tackling  the  system  deficit  and  reducing  incentives  to  hire  on  very  short-term  contracts 

(notably  through  a  new  method  to  calculate  rights,  removing  calculation  bias  favourable  to 

short-term contracts). A further reform is planned, aiming at granting access to independent 

workers and increasing checks on job search. Latvia has increased its minimum contribution 

period for being eligible from 9 months (out of 12) to 12 (out of 16). In Lithuania, the new 

version of the Law on Unemployment Social Insurance (part of the package together with the 

labour  code)  expands  the  coverage  and  adequacy  of  unemployment  benefits,  notably  by 

increasing  the  period  of  payment  from  6  to  9  months  (not  depending  on  the  tenure).  In 

Denmark, the comprehensive reform adopted in 2015 came into force in 2017. Among other 

measures, it involves a simplification of the system, further digitalisation and higher benefits 

to  newly  graduates  with  children.  A  main  element  in  the  reform  is  the  possibility  of 

prolonging  the  unemployment  benefit  period  from  two  years  up  to  three  years  if  taking  on 

short-term work. 

Well-functioning  social  dialogue  is  crucial  in  promoting  a  social  market  economy  that 

balances economic performance with social fairness. It plays a central role in reinforcing 

social rights and enhancing sustainable and inclusive growth, as highlighted by the European 

Pillar  of  Social  Rights.  Listening  to  social  partners'  advice  and  involving  them  in  reform 

discussions  early  on,  can  significantly  facilitate  implementation  in  later  stages.  The  degree 

and  impact  of  social  partners'  involvement  in  the  design  and  implementation  of  relevant 

reforms varies considerably among EU countries. This is largely due to a diversity of social 

dialogue  practices  and  institutional  settings  in  the  different  Member  States  and  to  varying 

social  partner's  capacities  and  contributions.  Whereas  there  is  no  single  existing  national 

social dialogue system that serves as the standard reference, an effective and well-functioning 

social  dialogue  should  be  fostered  in  order  to  promote  welfare  in  the  EU.  This  can  only  be 

achieved  by  promoting  social  partners'  capacity  by  respecting  their  autonomy  and 

strengthening  their  roles  in  the  design  and  implementation  of  reforms  and  policies  and  by 

actively involving social partners at all stages of policy-making and implementation. Positive 

examples of social partners' involvement in the design and implementation of policies can be 

found across  this  report, notably  in  Chapter 3.1 (concerning wage setting systems),  Chapter 

3.2 (concerning vocational training systems) and Chapter 3.3 (labour law reforms).  

98 

 
 
 
3.4 Fostering social inclusion, combatting poverty and promoting equal opportunities 

This  section  looks  at  the  implementation  of  the  employment  guideline  no.  8,  which 

recommends  to  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 3.4.2 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. 

3.4.1  Key indicators 

In  2015,  gross  disposable  household  income  (GDHI)  per  capita71  increased  in  a  large 

majority of Member States. Still, in several Member States its level has not recovered from 

the  crisis:  this  is  evident  in  particular  in  Greece  and  Cyprus  ("critical  situations"),  where 

disposable  income  per  capita  was  respectively  about  32%  and  23%  lower  in  2015  than  in 

2008, followed by Italy, Spain,  Portugal,  Slovenia, and  – to  a  lesser  extent  – Austria. In  all 

these countries, the growth rate in 2015 lagged behind the EU average or was even negative. 

On the contrary, in a number of Central and Eastern European Countries GDHI per capita was 

higher  in  2015  than  in  2008  (Romania,  by  32.9%;  Poland,  by  17.0%;  Bulgaria,  by  12.0%; 

Lithuania,  by  7.0%).  In  all  these  countries  (plus  Estonia  and  Latvia)  disposable  income  per 

capita continued increasing faster than the EU average, reflecting their ongoing convergence 

with the rest of the EU. In particular, Romania and Poland are flagged as "best performers". 

71  GDHI  is  measured  using  'unadjusted  income'  (i.e.  without  including  social  transfers  in  kind),  in  real  terms. 
Data not available for HR, LU and MT. At 31st October 2017, data for 2016 were only available for 18 Member 
States. 

99 

 
 
 
                                                            
Figure  38:    Real  GDHI  per  capita,  index  2008  =  100  and  yearly  change  (Social 
Scoreboard headline indicator)  

Source: Eurostat, National Accounts [nasq_10_nf_tr and namq_10_gdp], DG EMPL calculations. 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. Data for 2016 only available for 18 MS at 31 October 2017. 

Income  inequality  started  falling  on  average,  but  in  several  Member  States  the  post-

crisis increases have not been reversed. In 2016 for the EU as a whole, the richest 20% of 

households received an income share that was 5.1 times that of the poorest 20% (Figure 39). 

However, the average value masks considerable variation across countries, with ratios of 6.5 

or above for Bulgaria, Lithuania, Greece and Spain ("critical situations") and Romania ("weak 

but improving"), almost twice as high as values for the Czech Republic, Slovakia, Finland and 

Slovenia ("best performers"). Inequality intensified most in Bulgaria and Luxembourg, while 

the most  significant declines  were  registered in Romania, Lithuania and Estonia. In 2016, a 

moderate convergent pattern in income inequality across Member States appeared, with faster 

decreases being more likely to be seen, on average, in countries with higher levels. In a longer 

100 

 
 
 
 
term perspective,  the income quintile share ratio remains significantly higher than in 200972 

for more than a third of Member States. This is true in particular for Bulgaria, Greece, Italy, 

Hungary,  Luxembourg,  Romania,  Spain,  Lithuania  and  Estonia.  Significant  decreases  have 

however been observed in Latvia (where inequality still remains high) and in Denmark.  

Figure 39: Income quintile share ratio and yearly change (Social Scoreboard headline 
indicator)   

Source: Eurostat, SILC. Period: 2016 levels and yearly changes with respect to 2015. Note: Axes are centred on 
the unweighted EU average. The legend is presented in the Annex.  

The  share  of  people  at  risk  of  poverty  or  social  exclusion73  has  decreased  in  most 

Member  States  in  2016.  There  are  however,  considerable  differences  in  the  proportion  of 

population at risk of poverty or social exclusion across Member States (Figure 40). More than 

72 In this chapter, for SILC-based indicators, 2009 is used as a reference year for pre-crisis – as it encompasses 
2008 incomes. 
73 See Chapter 1.2 for definitions of at-risk-of-poverty or social exclusion and its sub-components. 

101 

 
 
 
 
 
                                                            
one  third  of  the  population  in  Bulgaria,  Romania  and  Greece  ("critical  situations")  was 

considered  at  risk,  with  a  marked  increase  in  2016  for  Romania.  This  share  was  also 

significantly  higher  than  the  EU  average  in  Italy,  Lithuania,  Latvia,  Spain,  Croatia  and 

Cyprus.  In  the  first  two  countries  further  increases  were  recorded  in  2016;  on  the  contrary, 

Latvia experienced the strongest decrease (by around 2.5 percentage points). On the other end 

of the scale, the Czech Republic, Finland, Denmark and the Netherlands ("best performers") 

had  the  lowest  proportion  of  their  population  at  risk  of  poverty  or  social  exclusion,  below 

17%. Among countries with low risk of poverty or social exclusion, a significant increase was 

recorded  in  Luxembourg.  In  a  longer  term  perspective,  a  noticeable  decrease  compared  to 

2009 is observed in Latvia, Poland, Bulgaria and Romania, while in Greece, Italy, Cyprus and 

Spain, the risk of poverty or social exclusion is visibly higher. 

Figure 40: At-risk-of-poverty or social exclusion rate (AROPE) and yearly change 
(Social Scoreboard headline indicator) 

Source: Eurostat, SILC. Period: 2016 levels and yearly changes with respect to 2015. Note: Axes are centred on 
the unweighted EU average. The legend is presented in the Annex.  

102 

 
 
 
 
 
 
After  increasing  in  previous  years,  the  proportion  of  the  EU  population  at  risk  of 

monetary  poverty  has  stabilized  in  2015  and  2016.  At  Member  State  level,  the  ratio 

decreased  or  remained  stable  in  17  Member  States  (Figure  41).  Among  the  remaining 

countries, the biggest increases (by around 1 pp or more) were observed in Luxembourg, the 

Netherlands (both still with comparatively low poverty risks), Italy and Bulgaria. Looking at 

levels,  the  Member  States  with  the  highest  proportion  of  population  at  risk  are  Romania, 

Bulgaria  and  Spain  (22%  or  more).  Conversely,  the  Czech  Republic,  Finland  and  Denmark 

reported  the  lowest  rates  (below  12%).  Compared  to  2009,  the  risk  of  monetary  poverty  in 

2016  was  still  higher  in  21  Member  States,  with  lower  levels  observed  only  in  Latvia, 

Finland, the United Kingdom, Denmark and Austria. Croatia in 2016 also had a lower risk of 

monetary poverty compared to the situation in 2010. 

Figure 41: Sub-indicators of ‘people at risk of poverty or social exclusion' 

Note: Indicators are ranked by AROPE in 2016. IE not available for 2016. EU27 values used for 2009 
(data for HR not available). 

103 

 
 
 
 
 
In  2016,  severe  material  deprivation  declined  for  a  fourth  consecutive  year,  indicating 

improving  living  standards  in  the  majority  of  the  Member  States.  The  situation  has 

improved  or  remained  stable  for  all  but  four  Member  States  (Romania,  Italy,  Estonia  and 

Greece).  Still,  around  one  third  of  the  population  in  Bulgaria,  and  more  than  a  fifth  of  the 

population in Romania and Greece suffered from severe material deprivation.  In contrast, this 

share  was  less  than  3%  for  six  countries  (Sweden,  Luxembourg,  Finland,  the  Netherlands, 

Denmark  and  Austria).  Compared  to  the  situation  before  the  crisis,  changes  since  2009  in 

severe  material  deprivation  show  that  by  2016  the  situation  has  improved  in  17  Member 

States. However, in Greece the indicator stands 11.4 pps higher, and in Cyprus and Italy it is 

more than 4 pps higher. 

The  labour  market  recovery  has  also  contributed  to  reducing  or  levelling  out  the 

number  of  people  living  in  (quasi-jobless)  households  in  most  Member  States.  In  2016, 

the share of people living in low work intensity households decreased or remained stable in 19 

Member  States.  The  biggest  decreases  (by  1  percentage  point  or  more)  were  observed  in 

Malta,  Portugal,  Croatia,  Hungary  and  Denmark.  The  rate  of  (quasi)  joblessness  remains 
particularly high74 in Greece (17.2%), Spain (14.9%), Belgium (14.6%) and Croatia (13.0%); 

with  the  exception  of  Belgium,  these  Member  States  also  present  higher  than  average 

unemployment rates. By comparison, the data for Estonia, Poland, Slovakia and Luxembourg 

shows the lowest rates in the EU. In a long-term perspective, most Member States still present 

higher values than in 2009, sign that the impact of the crisis has not been completely reversed. 

Notable exceptions are Germany, Poland, Malta, Hungary and the United Kingdom. 

The risk of poverty or social exclusion remains particularly high for children. In 2016, 

the risk for children (age 0-17) stood at 26.4%, down from 27.1% in 2015.  This is notably 

higher than for working age individuals (age 18-64, at 24.2% in 2016 compared to 24.7% in 

2015). Child poverty risk is particular high in Romania (49.2%), Bulgaria (45.6%) and Greece 

(37.5%), while Finland and Denmark report the lowest levels, below 15%. In contrast to the 

situation  with  children,  the  risk  of  poverty  or  social  exclusion  among  the  elderly  (65+) 

remains  low,  although  increasing  in  2016  (18.3%  compared  to  17.3%  one  year  before). 

Overall,  this  group  has  been  relatively  sheltered  from  the  negative  impact  of  the  crisis  (it 

74 In addition, Ireland presented a high share of people living in low-work intensity households (19.2%) in 2015. 

104 

 
 
 
                                                            
remains largely below the 2009 level of 21.8%). Again, significant variations can be observed 

across  the  Member  States,  with  at  risk  rates  among  the  elderly  varying  from  9.2%  (in 

Denmark) to 45.9% (in Bulgaria).  

At the European level, people with disabilities have a considerably higher risk of poverty 

or social  exclusion.  The  relative gap was 10.1 pps in  2016 (29.9% versus 19.8%), up from 

9.4  in  2015.  The  biggest  gaps  were  in  Lithuania  (20.9  pps),  Latvia  (20.8  pps)  and  Estonia 

(20.4  pps).  On  the  contrary,  an  almost  null  gap  was  registered  in  Greece,  while  4  countries 

had  a  gap  below  6  pps  (France,  Spain,  Romania  and  Slovakia).  The  degree  of  disability 
(severe versus moderate) increases significantly the risk of poverty or social exclusion75. 

Box 4. Benchmarking Minimum Income  

Upon initiative of the Commission, the Social Protection Committee has started an exercise 
on benchmarking minimum incomes, focusing on the working age  population with working 
abilities  not  in  employment  and  not  eligible  or  having  exhausted  entitlements  to  social 
insurance benefits. The approach follows the three-step approach presented in Box 1.  

It starts with the identification of key outcome indicators, namely the relative median poverty 
risk  gap,  the  material  and  social  deprivation  rate  and  the  at-risk-of-poverty  rate  of  the 
population living in (quasi-) jobless households. Performance relates to the impact of social 
transfers  (excluding  pensions)  on  poverty,  the  persistent  at  risk  of  poverty  rate  and  the 
coverage  rate  of  social  benefits  (excluding  pensions)  for  those  at-risk  of  poverty  in  (quasi-) 
jobless households. 

These  outcome  and  performance  indicators  have  been  linked  to  policy  levers  (and  related 
general  principles  agreed)  of:  1)  the  adequacy  of  benefits,  2)  eligibility  criteria  ensuring 
coverage of benefits and 3) the activation elements to incentivise take up of work. A twofold 
policy lever indicator was identified for the adequacy of minimum income benefits: it relates 
to  both  the  income  of  a  minimum  income  beneficiary  as  a  share  of  the  poverty  threshold 
(smoothed over three years) and as a share of the income of a low wage earner (the latter also 
providing an indication of the activation dimension of minimum income benefits).  

These  policy  lever  indicators  are  strongly  correlated  to  the  outcome  and  performance 
indicators, and in particular with the relative median poverty risk gap and with material and 
social deprivation. The adequacy indicator related to the poverty threshold generally lies in a 
range from around 50% and 80% and the one related to the income of a low wage earner from 

75 Based on EU-SILC 2015 data, 36.1% of people with severe disabilities (aged 16+) were at risk of poverty or 
social  exclusion  (compared  to  27.4%  of  people  with  moderate  disabilities)  in  the  EU.  The  situation  did  not 
change significantly over the last years. Bulgaria had the highest risk of poverty or social exclusion for people 
with severe disabilities (59.9%), followed by Latvia (53.3%) and Lithuania (51.3%). 

105 

 
 
 
                                                            
around 40 % and 70 % (Figure 42).  

When  considering  this  framework  it  is  important  to  take  into  account  the  specificities  of 
national  contexts  including  complementarities  between  different  policy  areas  (e.g.  in  kind 
services  and  other  benefits,  taxation,  public  services  and  public  administration,  territorial 
dimension, the activation elements of the existing schemes and the role of social partners). In 
addition, further work is needed as regards the dimensions of eligibility and activation, as well 
as  to  explore  the  possibilities  to  further  take  into  account  the  impact  of  in  kind  benefits,  as 
appropriate indicators are still lacking in this respect.  

Figure 42. Net income of minimum income recipients as % of poverty line (smoothed over three 
years) and as a percentage of the income of a low wage earner (2014) 

Note: income refers to one person households; EU unweighted average for covered countries (excluding Cyprus); the poverty 
line  refers  to  the  at-risk  of  poverty  concept  and  is  set  at  60%  of  the  national  median  equivalised  disposable  income  (with 
reference year being income reference year rather than EU-SILC survey wave year of 2015). Low wage earner defined as 
50%  of  the  average  wage.  Source:  OECD  tax-benefit  indicators  and  EUROSTAT  EU-SILC  data.  Assumption  of  housing 
costs of 11.3% of the average wage (estimated from EU-SILC). 

In spite of an overall improving income situation of households, the depth of poverty of 

the  active  age  population  continued  to  increase  in  a  number  of  Member  States.  The 
relative  median  poverty  gap76  increased  for  the  EU  28  Member  States  over  the  last  years, 

reaching  24.8%  in  2015  and  stabilising  in  2016.  It  ranges  from  close  to  15%  (in  Malta, 

76 The relative median at-risk-of-poverty gap is calculated as the difference between the median equivalised total 
net income of persons below the at-risk-of-poverty threshold and the at-risk-of-poverty threshold, expressed as a 
percentage of the at-risk-of-poverty threshold (cut-off point: 60% of median equivalised income). 

106 

 
 
 
 
 
 
 
 
 
 
                                                            
France,  the  Netherlands,  and  Cyprus)  to  30%  or  more  (in  Bulgaria,  Greece,  Spain  and 

Romania). The poverty gap is also often higher in thee Member States that have higher at risk 

of poverty and social exclusion rates.  

The  trend  towards  an  increase  of  in-work  poverty  did  not  reverse,  though  recent 

changes were fairly mixed across the Member States. The in-work at-risk-of-poverty rate 

varied  greatly  across  the EU:  the  lowest  values  were  recorded  in  Finland  (3.1%)  and  the 

Czech Republic (3.8%), while the highest ones in Spain (13.1%), Greece (14%) and Romania 

(18.6%).  This  variation  reflects  different  labour  market  features,  including  different 

prevalence  of  part-time  and/or  temporary  workers,  wage  levels,  and  work  intensity  in  the 

households (reflecting overall labour market conditions). It increased notably in Bulgaria (by 

3.8 pps), France, the Netherlands and Austria (by 0.5 pps). On the other hand, the strongest 

reduction was in Lithuania (-1.5pps), Latvia (-0.9 pps) and Cyprus (by 0.8 pps).  

Those  who  earn  their  living  from  non-standard  employment  or  self-employment  are 

exposed  to  significantly  higher  poverty  risk  in  most  EU  countries.  In  2015,  the  self-

employed in the EU faced a poverty risk on average three times higher than that of salaried 

workers and even six times higher in Slovakia, Finland and Romania. On average, in the EU 

around 16% of temporary and part-time workers were income poor in 2016, compared to only 

6% of employees with a permanent contract.  

Self-employed  and  non-standard  workers  also  endure  greater  economic  uncertainty 
with  limited  access  to  social  protection77.  The  self-employed  do  not  have  access  to 

unemployment protection in ten countries, mandatory sickness protection in eight countries, 

and  protection  against  accidents  at  work  and  occupational  injury  in  thirteen  countries.  This 

translates  into  more  than  half  of  self-employed  without  potential  access  to  unemployment 

benefits  and  more  than  a  third  without  potential  access  to  sickness  benefits.  Non-standard 

workers  usually  have  the  same  statutory  access  to  most  social  benefit  schemes  as  those  on 

standard  contracts,  though  often  this  does  not  hold  for  certain  categories  of  workers  (e.g. 

casual and seasonal workers, on-call workers, and those on temporary agency contracts, civil 

law contracts or zero-hour contracts). Moreover, due to discontinuous contribution periods or 

insufficient  number  of  working  hours,  non-standard  workers  often  encounter  difficulties  in 

77 This topic is partly addressed also in Section 3.3. 

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fulfilling the eligibility conditions for receiving benefits from insurance-based schemes.78 As 

a  result,  more  than  a  third  of  temporary  workers  do  not  have  potential  access  to 

unemployment  benefits.  Despite  major  changes  in  the  labour  market,  social  protection 

systems are still largely based on the notion of "standard employment", assuming a long-term, 

full-time relationship between a worker and a single employer. The rise of new forms of work 

can pose further challenges to social protection systems.  

Access  to  affordable,  high-quality  accommodation  has  been  improving  since  2008  in  a 

large majority of the Member States. In Slovakia, the Czech Republic, Finland or Romania, 

less than 10% of the population lived in households that faced housing deprivation in 2016. In 

ten other Member States the rate was below 15% (the EU average stood at 15.5% in 2016). 

Still, housing deprivation remains a significant challenge in several Member States. Around 

25% of the population or above in Portugal and Cyprus or Slovenia reported problems related 

to housing.  

Housing-related  expenditure  accounted  for  a  significant  share  of  household  disposable 
income in a number of Member States. The housing cost overburden rate79 was the highest 

in  Greece with 40.5%  of the population living  in a household  where the total  housing costs 

(net  of  housing  allowances)  represent  more  than  40%  of  the  total  disposable  household 

income.  This  was  considerably  higher  than  in  any  other  EU  Member  States,  as  Bulgaria  at 

around 20% and Romania, Germany and Denmark at around 15% had the next-highest ratios.  

By  contrast,  less  than  5%  of  the  population  in  Finland,  Estonia,  Ireland,  Cyprus  and  Malta 

were  living  in  a  household  with  a  housing  cost  overburden.  In  most  countries,  the  housing 

cost  overburden  was  significantly  higher  for  tenants  paying  a  market  rent  (27.9%  EU 

average), than for owners with a mortgage or loan (5.4% EU average). 

The  poverty  reducing  impact  of  social  transfers  has  slightly  weakened.  The  impact  of 

social  transfers  on  monetary  poverty  ranges  from  a  reduction  of  below  20%  in  Romania, 

Bulgaria or Greece ("critical situations" together with Italy and Lithuania) to levels close or 

higher than 50% in Finland, Denmark, Austria and Sweden ("best performers"). Overall, the 

78  European  Social  Policy  Network  (2017),  Access  to  social  protection  for  people  working  on  non-standard 
contracts  and  as  self-employed  in  Europe  –  a  study  of  national  policies,  report  prepared  for  the  European 
Commission. 
79  Percentage  of  the  population  living  in  a  household  where  total  housing  costs  (net  of  housing  allowances) 
represent more than 40% of the total disposable household income (net of housing allowances). 

108 

 
 
                                                            
indicator  has  slightly  deteriorated  in  the  EU,  from  33.7%  in  2015  to  33%  in  2016. 

Nonetheless, this decrease masks a substantial variation among Member States. The impact of 

social transfers weakened by more than 4 percentage points in some Members States with low 

or  average  performance  (Bulgaria,  Croatia,  Slovakia  and  Luxembourg),  but  also  in  the 

Netherlands, where the overall impact remains significantly above average. On the contrary, it 

has improved by 2 percentage points or above in Latvia, Estonia and Finland. The weakening 

of the poverty reducing effects of social transfers is a part of a longer term trend (since 2008) 

in  Slovakia,  the  Czech  Republic,  Hungary,  Sweden,  the  Netherlands  and  France.  However, 

the  situation  has  visibly  improved  in  the  last  ten  years  in  the  United  Kingdom  and  Cyprus. 

These  variations  may  reflect  different  patterns  at  country  level,  notably  changes  in  benefits 

adequacy and coverage, lack of indexation (in a context of generally increasing incomes and, 

consequently, rising poverty thresholds), as well as changes in the composition of households 

(notably  in  terms  of  work  intensity)  and  related  characteristics  of  those  at  risk  of  poverty. 

Observed  figures  (which  refer  to  2015  incomes)  do  not  reflect  the  effects  of  recent  reforms 

enhancing social safety nets in a number of Member States. 

109 

 
 
 
Figure 43: Impact of social transfers (other than pensions) on poverty reduction and 
yearly change (Social Scoreboard headline indicator)  

Source: Eurostat, SILC. Period: 2016 levels and yearly changes with respect to 2015. Note: Axes are centred on 
the unweighted EU average. The legend is presented in the Annex.  

Expenditure  on  social  protection  conceals  considerable  variation  across  the  Member 

States.  In  2014,  social  protection expenditure  as  a  percentage  of  GDP  was  30%  or  more  in 

France (32.2%), Denmark (31.6%) and Finland (31.1%), and below 20% in Estonia (14.9%), 

Lithuania, Romania (both at 14.4), and Latvia (14.3%). These variations reflect differences in 

the  living  standards,  but  are  also  are  indicative  of  the  variety  of  national  social  protection 

systems and of the social, economic and institutional arrangements in each Member State. As 

a percentage of GDP social protection expenditure slightly declined on average in 2014, while 

expenditure level growth was mostly driven by spending on old-age pensions and on health.   

The aggregate replacement ratio of pensions continued its recent improvement in 201680. 

It reached 0.58 in the EU, reflecting the overall resilience of current pension incomes in most 

Member  States.  Significant  differences  between  Member  States  remain,  though,  as  the  ratio 

80 Ratio of the median individual gross pensions of 65-74 relative to the median individual gross earnings of 50-
59. 

110 

 
 
 
 
                                                            
ranged  from  80%  in  Luxembourg  and  more  than  65%  in  France,  Italy,  Spain,  Hungary  and  

Romania to 45% or less in Croatia, Ireland, Latvia, Estonia, Lithuania or Cyprus.  

In  some  Member  States,  costs  and  waiting  time  remain  important  barriers  for  the 

accessibility  of  healthcare.  Nonetheless,  the  proportion  of  the  EU  population  facing  self-
reported unmet needs81 for medical care due to either too high costs, too long waiting time or 

travelling  distance,  on  average  decreased  in  2015,  according  to  the  corresponding  survey-

based  indicator  (Figure  44).  The  share  of  the  population  impacted  still  exceeded  6%  in 

Greece, Romania, Italy (mostly due to cost), Estonia and Poland (mostly due to waiting time) 

and Latvia. While the indicator in Latvia is high yet improving, a "critical situation" is flagged 

in  the  other  above-mentioned  countries,  as  the  share  of  people  reporting  unmet  healthcare 

needs is not decreasing. This share exhibited notable increases in Estonia (specialist medical 

care), Greece and Italy. The situation of Finland is to be watched, as this share is increasing 

more than on average. While a number of "better than average" countries are flagged, no "best 

performers" are identified through the methodology for this indicator. There are some signs of 

divergence  in  the  share  of  the  population  reporting  unmet  needs  for  healthcare,  as  it  is 

increasing  in  some  countries  where  it  was  already  high  and  decreasing  in  some  countries 

where it was relatively low (see Figure 44, where the regression line shows a weak positive 

correlation between level and changes of unmet needs). In many countries the average values 

of  unmet  needs  for  medical  care  remain  stable.  Comparing  to  the  situation  in  2008  similar 

divergent patterns are observed. There is a substantial improvement observed in Bulgaria and 

Lithuania,  with  in  addition  positive  changes  in  Romania,  Latvia,  Cyprus,  Sweden  and 

Germany. At the same time, this share increased over the long term in a number of Member 
States, such as: Estonia, Greece82 (both to a rather high level), Finland, Portugal, the United 

Kingdom, and Belgium (although within rather low levels). 

81 Self-reported unmet needs for medical care concern a person's own assessment of whether he or she needed 
examination or treatment for a specific type of health care, but did not have it or did not seek it because of the 
following  three  reasons:  ‘Financial  reasons’,  ‘Waiting  list’  and  ‘Too  far  to  travel’.  The  problems  that  people 
report in obtaining care when they are ill often reflect significant barriers to care. 
82  With  specific  reference  to  Greece,  the  dramatic  reduction  of  salaries  and  the  surge  in  unemployment  in  a 
fragmented  health  insurance  system  with  weak  redistribution  caused  a  considerable  drop  in  coverage  and 
eligibility  for  public  healthcare.  While  there  is  evidence  of  overconsumption  of  healthcare  services  before  the 
crisis in Greece (as reflected by the high level of out-of-pocket payments), this became no longer affordable with 
the crisis. Universal coverage was introduced by subsequent reforms in 2014 and in 2016. The impact of these 
reforms on unmet needs is not yet captured by available data. 

111 

 
 
                                                            
Figure 44: Self-reported unmet needs for medical care (Social Scoreboard headline 
indicator)  

Source: Eurostat, SILC. 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.  

The unmet healthcare needs specifically affect low income households. On average in the 

EU, 5.5% of people in the bottom income quintile reported an unmet need for medical care in 

2015, against 1.4% in top quintile. This share is particularly high in Greece, Italy and Latvia 

(above 15%), although Latvia reduced this share by one third compared to the previous year. 

The income quintile gap has shrunk, on average in the EU, in 2015. 

Healthcare is financed through different schemes, while the relative importance of each 
scheme  varies  among  Member  States.  In  2014,  out-of-pocket  payments83,  i.e.  household 

expenditure  for  health  (including  medical  goods)  not  reimbursed  by  any  scheme  or  paid  as 

cost-sharing with an organised scheme, measured as a share of current health expenditure is 

above 30% in Bulgaria, Cyprus, Latvia, Greece and Lithuania (Figure 45). 

83 Out-of-pocket spending refers to direct payments for goods and services from the household primary income 
or  savings,  where  the  payment  is  made  by  the  user  at  the  time  of  the  purchased  of  goods  or  the  use  of  the 
services either without any reimbursement or as cost-sharing with an organised scheme. 

112 

 
 
 
 
 
                                                            
 
Figure 45: Healthcare expenditure by financing source, 2014  

Source: Eurostat [hlth_sha11_hf]. Notes: Data are collected according to Commission Regulation (EC) 2015/359 
as regards statistics on healthcare expenditure and financing (System of Health Accounts 2011 manual). Data for 
2015 not available for all MS at 31 October 2017. 

3.4.2  Policy response 

Modernisation of systems goes hand in hand with improvements in the coverage, design 

and adequacy of benefits.  Romania adopted in 2016 a reform aiming at substantial increase 

in  the  adequacy  and  coverage  of  benefits,  as  well  as  activation  for  Guaranteed  Minimum 

Income beneficiaries (to enter into force in April 2018). In Greece, a nationwide Guaranteed 

Minimum  Income  scheme  was  launched,  providing  for  eligible  people/families  financial 

assistance,  improved  access  to  social  services  and  goods,  and  activation  measures.  The 
scheme is expected to cover around 7% of the Greek population84. In Slovenia, following the 

assessment  of  the  previous  reform  (that  increased  minimum  income,  introduced  one-stop-

shops,  enhanced  simplification  and  shifted  focus  towards  employment  activation),  a  new 

project  was  prepared  for  2017-2022  in  view  of  providing  a  wider  range  of  tailor-made 

services  and  additional  linkages  between  social  and  employment  programmes.  In  Italy,  the 

enabling law adopted in March 2017 introduces for the first time a structural income support 

measure  (Reddito  di  inclusione)  with  stable  funding  addressed  to  people  in  poverty.  The 

84 The access to social services and activation measures are supported by the European Social Fund (ESF). 

113 

 
 
 
 
                                                            
measure  combines  income  support  with  activation  measures  and  with  a  reinforcement  of 

services.  In  France,  while  the  former  reform  (Revenue  de  solidarité  active)  had  addressed 

potential  welfare  inactivity  traps,  a  new  reform  (Prime  d'activité)  aimed  in  2016  at  better 

coordination and simplification of the existing benefits and enhanced access in particularly for 

young  people.  Measures  in  the  field  of  unemployment  benefits  and  extension  of  social 

protection schemes to self-employed and atypical workers are discussed in Section 3.3. 

Reforms  to  the  delivery  of  social  services  aim  at  improving  access  and  quality,  and 

respond to the increase in the complexity of clients' needs. In 2016, Slovakia adopted an 

ambitious  action  plan  on  long-term  unemployment  to  provide  tailor-made  services,  while 

Romania has put together integrated social teams to work with the most excluded groups. In 

Estonia, the implementation of the Social Welfare Act and measures of the Action Plan 2016-

2020  to  the  Welfare  Development  Plan  2016-2023,  aiming  at  ensuring  the  provision  and 

accessibility  of  high-quality  social  services,  is  ongoing.  Greece  is  rolling  out  a  network  of 

local community centres serving as one-stop-shops for social services. 

A number of Member States have undertaken reforms in the field of access to housing. 

Romania adopted a national strategy aimed at addressing barriers for persons with disabilities 

and  targeting  the  protection  and  promotion  of  rights  of  these  persons.  Ireland  adopted  an 

integrated system for housing support which allows, on the one hand, all social housing to be 

accessed  through  local  authorities  and,  on  the  other  hand,  recipients  to  take  up  full-time 

employment  while  retaining  the  housing  support  they  receive.  Malta  adopted  a  new  rent 

subsidy  measure  allowing  the  Housing  Authority  to  extend  the  criteria  that  is  expected  to 

double the number of families eligible. Sweden increased the income limit for disadvantaged 

households receiving housing allowance for families with children. The Czech Republic and 

Lithuania plan the adoption of new measures to provide access to adequate social housing for 

vulnerable people. Greece is preparing a new means-tested housing benefit system. 

Substantial  measures  aimed  at  increasing  access  to  health  services,  whilst  maintaining 

the quality and sustainability of the system, have been introduced and implemented. The 

efforts to shift the focus of care to primary healthcare, ensuring coordinated operations with 

other  parts  of  the  health  system,  are  taking  place  in  almost  all  Member  States,  and  in 

particular  in  Malta,  Bulgaria,  Poland,  Estonia  and  Austria.  In  addition  to  primary  care 

development,  increased  funding  has  been  allocated  to  raise  the  accessibility  of  certain 

114 

 
 
healthcare  services  in  Sweden.  Waiting  times  have  been  reduced  in  Latvia  and  Malta,  and 

some parts of the ambulatory care system in Romania were reorganised. Promotion of good 

health  is  increasingly  recognised  as  a  means  to  prevent  avoidable  diseases  and  related 

treatment,  to  reduce  health  inequalities  caused  by  social  determinants,  and  to  enhance  the 

sustainability  of  health  systems.  Several  Member  States  are  taking  action  in  this  area:  for 

instance,  Romania  is  investing  in  cancer  screening,  France  plans  to  increase  the  number  of 

obligatory  vaccinations  and  the  price  of  tobacco,  and  Lithuania  will  ban  as  of  2018  the 

advertising  of  alcohol  products,  increase  the  legal  age  for  alcohol  consumption  to  20  years 

and restrict sales hours. Furthermore, some steps have been taken to reinforce the provision of 

outpatient  care  in  Bulgaria  where  the  low  public  coverage  of  outpatient  medical  services 

makes  it  difficult  for  some  people  to  access  to  healthcare.  In  Cyprus,  a  major  reform  was 

adopted in June 2017 to entitle until 2020 universal access to healthcare, reduce out-of-pocket 

payments, and to ensure hospital autonomy under a national hospitals agency. The Portuguese 

health system has undergone significant reforms during 2016 and 2017 that have strengthened 
its  capacity  to  keep  on  ensuring  universal  health  coverage.  In  Austria,  a  new  system85  of 

payment  for  the  hospital  ambulatory  area  has  been  introduced  in  order  to  relieve  pressure 

from  the  stationary  care  and  foster  day  clinic  and  ambulatory  services  within  hospitals. 

Reforms  to  combat  the  insufficient  availability  of  healthcare  workforce  are  underway  in 

Poland and Latvia. Romania and Hungary have made steps in increasing wages for health care 

workers. In addition, support measures aimed at attracting medical practitioners and nurses to 

work in peri-urban or rural areas are to be launched in Latvia, Poland, Portugal and Romania. 

Measures  have  been  introduced  to  reduce  waiting  times  for  healthcare  services  through  the 

development  of  an  IT  system  in  Italy,  Portugal,  Slovenia  and  Malta.  In  addition,  reforms 

aimed  at  reducing  the  pharmaceutical  expenditure  and  ensure  accessibility  and  the  cost- 

effective  use  of  medicines,  such  as  centralization  of  procurement,  uptake  of  generics  and 

development of Health Technology Assessment bodies are underway in Portugal, Spain, Italy 

and  Slovakia.  Finally,  plans  to  enhance  accountability  and  transparency  mechanisms  the 

health system have started in Romania and Latvia. 

Ensuring  access  to  affordable  and  good  quality  long-term  care  is  essential  to  address 

ageing  and  subsequent  increases  in  the  number  of  dependent  elderly  people  and  long-

term care needs. Reforms in Member States mainly focus on improving the long-term care 

85 Diagnosis-related group based payment system. 

115 

 
 
                                                            
systems' organisation, integration, financing and quality. Luxembourg is preparing a reform of 

long-term  care  insurance  which  revises  the  procedures  and  tools  for  assessing  and 

determining  dependency,  and  establishes  transparent  and  efficient  quality  control  policy. 

Slovenia continues to prepare a reinforcement of care integration, organisation and financing. 

Likewise,  Latvia  is  planning  to  improve  social  services  support  system  by  improving  their 

financing,  defining  staff  qualifications  and  establishing  levels  of  assistance.  After  numerous 

cutbacks  in  this  area  in  previous  years,  more  investment  in  support  to  local  authorities  is 

planned  in  the  United  Kingdom  to  spend  on  adult  social  care  services.  In  Germany,  a  new 

definition of needs was followed by the introduction of a new assessment tool in 2017. Some 

reforms  aim  at  improving  the  situation  of  informal  carers,  including  enhanced  financial 

support. In Romania, the government approved the financial centralization of the salary costs 

of personal assistants for severely disabled. In Malta, carers' pensions and carers' allowances 

were  reformed  and  increased.  The  amounts  were  raised  also  in  the  Czech  Republic.  In 

Austria, the clawback of nursing costs of people in long-term care was abolished, which could 

be a step towards more universal and affordable provision of services. 

The recent wave of pension reforms often features measures to safeguard the adequacy 

of pensions. They complement the former reform steps focusing on later retirement and the 

sustainability of pension systems. In particular, a number of countries have adopted measures 

aimed to safeguard lower pensions. Latvia and Austria have introduced additional safeguards 

for  pensioners  with  long  careers,  while  Bulgaria,  Malta,  Romania  and  Slovenia  (for 

pensioners who fulfil the full retirement conditions) have raised minimum pensions. Latvia, 

Malta  and  Romania  have  raised  the  threshold  under  which  tax  is  not  paid,  which  should  in 

particular  benefit  recipients  of  lower  pensions.  Lithuania  has  introduced  a  more  favourable 

indexation  mechanism.  Several  countries  have  also  adopted  measures  focused  on  the 

retirement  age.  Germany  and  Austria  have  sought  to  promote  longer  working  lives  by 

allowing  more  flexible  transition  into  retirement  and  combining  pension  with  income  from 

work.  In  other  Member  States  some  reforms,  however,  go  in  the  opposite  direction.  Most 

notably, Poland has reversed earlier reforms by reintroducing lower pensionable ages for men 

and  women  (65  and  60  years  respectively),  in  spite  of  the  considerable  impact  which  (the 

projected)  demographic  ageing  is  likely  to  have,  while  Finland  has  introduced  a  one-off 

measure of easier access to early retirement for the very long-term unemployed over the age 

of 60. 

116 

 
 
Reforms  to  disability  benefits  and  caring  provisions  complement  employment  policies 

for  persons  with  disabilities.  Estonia  has  increased  the  provision  of  childcare  for  children 

with  disabilities  from 57-80 hours to 270 hours per year.  Malta has  reformed and increased 

disability  pensions  by  introducing  a  three-tier  payment  system  linked  to  the  degree  of 

disability.  It  also  put  in  place  the  reform  of  the  Carers'  Pension  and  the  Carers'  Allowance, 

thus increasing allowances to carers and making carers' pension payable without the need for 

means-testing.  In  Romania  there  was  a  financial  centralisation  of  salaries  for  caregivers  for 

people with severe disabilities to provide them from the central level instead of the local ones 

as the local budgets were often not able to cover them. Bulgaria has increased the allowance 

for children with disabilities. 

117 

 
 
 
ANNEXES 

Annex 1. Social scoreboard headline indicators, levels 

Source: Eurostat. 
* indicates indicators previously included in the scoreboard of key employment and social indicators. 
Note: EUnw and EAnw refer to the non-weighted averages for EU and the euro area. 
Flags – b: break in time series; e: estimated; p: provisional; u: low reliability. 

118 

Year201420152016201420152016201420152016201420152016201420152016EU2811.2 b11.010.711.511.611.65.25.25.124.423.823.5 e12.512.011.6EA1911.911.611.111.211.211.25.25.25.123.523.123.1 e12.612.211.7EUnw9.79.49.39.69.79.54.74.84.723.222.521.911.211.110.4EAnw10.210.19.510.510.510.55.05.05.024.123.623.112.011.510.8BE9.810.18.88.78.39.33.83.83.821.221.120.7 b12.012.29.9BG12.913.413.86.16.67.36.87.17.9 b40.1b41.340.4b20.219.318.2CZ5.56.26.617.516.616.03.53.53.514.814.013.38.17.57.0DK7.87.87.2 b7.37.66.7 b4.14.14.117.917.716.75.86.25.8 bDE9.510.110.39.18.78.25.14.84.620.620.019.76.46.26.7EE12.012.210.97.77.98.26.56.25.626.0b24.224.411.710.89.1IE6.96.96.311.812.512.34.94.5:27.726.0:15.214.313.0EL9.07.96.218.318.019.06.56.56.636.035.735.619.117.215.8ES21.920.019.010.211.211.56.86.96.629.228.627.917.1 b15.614.6FR9.09.28.87.67.27.54.34.34.318.517.718.211.4 b12.011.9HR2.82.8 u2.8 u10.09.59.65.15.25.029.329.127.919.318.116.9IT15.014.713.819.420.020.15.85.86.1 p28.328.729.9 p22.121.419.9CY6.85.27.67.78.39.75.45.24.927.428.927.717.015.316.0LV8.59.910.04.64.12.96.56.56.232.730.928.512.010.511.2LT5.95.54.82.52.41.96.17.57.127.329.330.19.99.29.4LU6.19.35.512.911.7 b11.04.44.35.0 b19.018.519.7 b6.36.2 b5.4HU11.411.612.413.313.714.04.34.34.331.828.226.313.611.6 b11.0MT20.319.819.728.427.827.74.04.24.223.822.420.110.510.48.5NL8.78.28.011.411.111.03.83.83.9 b16.516.416.75.54.74.6AT7.07.36.98.28.27.84.14.04.119.218.318.07.77.57.7PL5.45.35.214.213.814.24.94.94.824.723.421.912.011.010.5PT17.413.714.07.16.76.86.26.05.927.526.625.112.311.310.6RO18.119.118.516.717.517.67.28.37.2 p40.337.438.8 p17.018.117.4SI4.45.04.98.08.66.63.73.63.620.419.218.49.49.58.0SK6.76.97.414.614.714.23.93.53.618.418.418.112.813.712.3FI9.59.27.91.92.13.33.63.63.617.316.816.610.210.69.9SE6.77.07.44.64.23.83.94.14.3 b16.918.6b18.37.26.76.5UK11.810.811.211.311.211.05.15.25.124.123.522.211.911.110.9Equal opportunities and access to the labour marketEarly leavers from education and training (% of poulation aged 18-24)Gender employment gap(pps)Income quintile ratio* (S80/S20)At risk of poverty or social exclusion (in %)Youth NEET* (% of total population aged 15-24) 
 
 
 
 
 
 
 
Annex 1 (continued). Social scoreboard headline indicators, levels 

Source: Eurostat. 
* indicates indicators previously included in the scoreboard of key employment and social indicators. 
Note: EUnw and EAnw refer to the non-weighted averages for EU and the euro area. Real GDHI per capita is 
measured using 'unadjusted income' (i.e. without including social transfers in kind) and without correction for 
purchasing power standards. 
Flags – b: break in time series; e: estimated; p: provisional; u: low reliability. 

119 

Year201420152016201420152016201320142015201320142015201420152016EU2869.270.171.110.29.48.6:::100.0101.4103.022.222.922.8EA1968.269.070.011.610.910.0:::93.893.994.225.826.026.5EUnw70.871.672.69.08.47.519.020.420.5101.7103.4106.317.518.119.5EAnw68.569.470.411.310.59.621.423.422.292.793.795.420.921.222.7BE67.367.267.78.58.57.841.9 u45.049.696.396.196.237.837.937.8BG65.167.167.711.49.27.67.13.22.7108.6108.5112.04.2 p4.5 p4.6 pCZ73.574.876.76.15.14.010.8 u18 u21.8 u97.9100.5103.68.48.89.2DK75.976.577.4 b6.66.26.245.8 b45.4 b54.5 b104.0104.8107.237.638.338.9DE77.778.078.65.04.64.130.831.130.3103.1104.1105.829.830.531.3EE74.376.576.67.46.26.84.74.25.093.499.9104.68.89.39.8IE67.068.770.311.39.47.922.6 u25.8 u29.9 u91.393.397.327.628.229.0EL53.354.956.226.524.923.6:::68.969.968.211.5 p11.3 p11.3 pES59.962.063.924.522.119.623.325.128.389.290.192.019.3 p19.3 p19.4 pFR69.369.570.010.310.410.140.7 u40.5 u41.2 u99.5100.1100.532.032.2 p33.7 pHR59.260.661.417.216.113.44.84.56.5:::8.1 b8.4 b8.5 bIT59.960.561.612.711.911.716.715.1:88.488.489.022.522.622.6CY67.667.968.716.115.013.05.68.69.2 u80.877.076.914.314.2 p14.1 pLV70.772.573.210.89.99.66.86.84.388.090.095.56.77.47.9LT71.873.375.210.79.17.98.711.313.4100.6103.1107.06.97.27.4LU72.170.9 b70.76.06.56.355.5 u61 u40 u:::42.443.043.3HU66.768.971.57.76.85.137.035.240.797.0101.0103.36.66.77.0MT66.467.869.65.85.44.75.416.0::::11.912.312.2NL75.476.477.17.46.96.028.7 b27.6 b28.6 b96.196.997.633.433.4 p33.7 pAT74.274.374.85.65.76.025.223.821.296.595.895.127.828.729.2PL66.567.869.39.07.56.215.5 u17.3 u20.8 u110.2113.2117.06.26.3:PT67.669.170.614.112.611.216.5 u24.6 u28.5 u92.092.093.910.810.8 b11.1 bRO65.766.066.36.86.85.93.12.93.1115.8123.4132.94.44.4 p4.9 pSI67.769.170.19.79.08.010.510.67.890.692.194.015.115.215.7SK65.967.769.813.211.59.713.514.513.699.3101.8105.89.09.39.5FI73.172.973.48.79.48.828.429.026.8102.6101.4102.529.329.730.0SE80.080.581.27.97.46.939.540.642.1109.3111.1112.828.728.929.0UK76.276.877.56.15.34.8:::99.499.9102.425.829.226.4Unemployment rate* (% population aged 15-74)Participation in activation labour market policies (per 100 persons wanting to work)Real GDHI per capita (2008 = 100)Compensation of employees per hour worked (EUR)Employment rate (% population aged 20-64)Dynamic labour markets and fair working conditions 
 
 
 
 
Annex 1 (continued). Social scoreboard headline indicators, levels 

Source: Eurostat. 
* indicates indicators previously included in the scoreboard of key employment and social indicators. 
Note: EUnw and EAnw refer to the non-weighted averages for EU and the euro area. 
Flags – b: break in time series; e: estimated; p: provisional; u: low reliability. 

120 

Year201420152016201320142015201320142015201420152016EU2834.1033.7232.95 e28.028.430.33.63.63.2:55.056.0EA1933.7233.0732.03 e31.032.333.9::::::EUnw36.9036.5036.6024.625.727.73.63.33.4:55.255.6EAnw35.9035.0033.1027.729.229.43.63.83.4:56.757.0BE43.6444.1941.0646.048.850.11.92.42.4:60.061.0BG20.1522.5417.92 b11.011.29.08.9 u5.6 u4.7 u:31.026.0CZ43.6042.2640.492.04.42.91.01.10.8:57.054.0DK55.0252.7152.2165.069.677.31.31.41.3:75.078.0DE33.2033.4734.7827.027.525.91.61.60.5:67.068.0EE23.24b22.3024.9120.019.521.58.411.312.7:65.060.0IE55.8054.97:28.027.430.63.33.72.8:44.044.0EL15.0016.0815.8714.012.811.49.010.912.3:44.046.0ES28.6226.5824.4136.037.039.70.80.60.6:54.053.0FR44.5843.1042.3739.039.541.82.72.81.2:57.056.0HR35.1235.4828.5711.017.111.83.33.31.9:51.055.0IT21.4621.6520.31 p21.022.927.37.17.07.2:43.044.0CY41.4636.2235.6024.025.520.84.44.71.5:43.043.0LV21.4817.5821.5823.021.622.813.812.58.4 b:49.050.0 bLT30.5522.3821.5110.022.99.73.23.72.9:51.052.0LU40.5843.7539.34 b46.049.051.90.90.80.9:86.086.0HU43.6142.0243.8010.014.315.32.42.52.6:50.051.0MT33.1931.2230.6721.018.217.90.91.10.8:52.049.0NL45.5447.9842.5346.044.646.30.40.50.1:72.077.0AT44.4945.7046.3917.016.022.20.40.10.1:64.065.0PL26.4123.1424.455.05.65.48.87.87.3:40.044.0PT26.9726.1424.0037.044.947.23.03.53.0:48.048.0RO12.8513.3114.24 p6.02.69.410.49.39.4:26.028.0SI42.2342.3442.8039.037.337.40.00.20.2:51.053.0SK35.7135.2630.983.06.51.11.92.12.1:53.055.0FI53.6253.7357.0429.033.232.64.33.34.3 b:74.073.0SE47.0245.3b45.8255.056.764.01.91.51.0:72.069.0 bUK42.8643.3443.4230.028.930.41.62.12.8:67.069.0Self-reported unmet need for medical care by sex (%)Individuals who have basic or above basic overall digital skills (% of population aged 16-74)Public support / Social protection and inclusionImpact of social transfers (other than pensions) on poverty reduction (%)Children aged less than 3 years in formal childcare (%) 
 
 
 
 
Annex 2. Social scoreboard headline indicators, changes and distance to EU 

Source: Eurostat. 
* indicates indicators previously included in the scoreboard of key employment and social indicators. 
Note:  EUnw  and  EAnw  refer  to  the  non-weighted  averages  for  EU  and  the  euro  area.  At  31th  October  2017, 
statistical significance estimates for changes and differences to the EU average of SILC-based indicators are not 
yet available. 
Flags – b: break in time series; e: estimated; p: provisional; u: low reliability. 

121 

YearY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUEU28-0.31.20.00.00.90.0-0.10.1-0.1-0.3-0.20.3-0.40.60.3EA19-0.51.6-0.20.00.50.0-0.10.1-0.10.0-0.60.6-0.50.70.2EUnw-0.30.00.00.00.00.00.00.00.0-0.60.00.0-0.70.00.0EAnw-0.50.0-0.20.0-0.20.00.00.00.0-0.5-0.70.1-0.7-0.30.0BE-1.3-0.7-1.01.0-1.41.00.0-1.20.0-0.4-3.00.2-2.3-1.1-1.6BG0.44.30.70.7-3.40.70.82.90.8 b-0.9 b16.7-0.3-1.17.2-0.4CZ0.4-2.90.7-0.65.3-0.60.0-1.50.0-0.7-10.4-0.1-0.5-4.00.2DK-0.6 b-2.3-0.3-0.9 b-4.0-0.90 b-0.90.0-1.0-7.0-0.4-0.4 b-5.20.3DE0.20.80.5-0.5-2.5-0.5-0.2-0.4-0.2-0.3-4.00.30.5-4.31.2EE-1.31.4-1.00.3-2.50.3-0.60.6-0.60.20.70.8-1.7-1.9-1.0IE-0.6-3.2-0.3-0.21.6-0.2::::::-1.32.0-0.6EL-1.7-3.3-1.41.08.31.00.11.60.1-0.111.90.5-1.44.8-0.7ES-1.09.5-0.70.30.80.3-0.31.6-0.3-0.74.2-0.1-1.03.6-0.3FR-0.4-0.7-0.10.3-3.20.30.0-0.70.00.5-5.51.1-0.10.90.6HR0.0-6.70.3 u0.1-1.10.1-0.20.0-0.2-1.24.2-0.6-1.25.9-0.5IT-0.94.3-0.60.19.40.10.3 p1.10.31.2 p6.21.8-1.58.9-0.8CY2.4-1.92.71.4-1.01.4-0.3-0.1-0.3-1.24.0-0.60.75.01.4LV0.10.50.4-1.2-7.8-1.2-0.31.2-0.3-2.44.8-1.80.70.21.4LT-0.7-4.7-0.4-0.5-8.8-0.5-0.42.1-0.40.86.41.40.2-1.60.9LU-3.8-4.0-3.5-0.7 b0.3-0.70.7 b0.00.71.2 b-4.01.8-0.8 b-5.6-0.1HU0.82.91.10.33.30.30.0-0.70.0-1.92.6-1.3-0.6 b0.00.1MT-0.110.20.2-0.117.0-0.10.0-0.80.0-2.3-3.6-1.7-1.9-2.5-1.2NL-0.2-1.50.1-0.10.3-0.10.1 b-1.10.10.3-7.00.9-0.1-6.40.6AT-0.4-2.6-0.1-0.4-2.9-0.40.1-0.90.1-0.3-5.70.30.2-3.30.9PL-0.1-4.30.20.43.50.4-0.1-0.2-0.1-1.5-1.8-0.9-0.5-0.50.2PT0.34.50.60.1-3.90.1-0.10.9-0.1-1.51.4-0.9-0.7-0.40.0RO-0.69.0-0.30.16.90.1-1.1 p2.2-1.11.4 p15.12.0-0.76.40.0SI-0.1-4.60.2-2.0-4.1-2.00.0-1.40.0-0.8-5.3-0.2-1.5-3.0-0.8SK0.5-2.10.8-0.53.5-0.50.1-1.40.1-0.3-5.60.3-1.41.3-0.7FI-1.3-1.6-1.01.2-7.41.20.0-1.40.0-0.2-7.10.4-0.7-1.10.0SE0.4-2.10.7-0.4-6.9-0.40.2 b-0.70.2-0.3-5.40.3-0.2-4.50.5UK0.41.70.7-0.20.3-0.2-0.10.1-0.1-1.3-1.5-0.7-0.2-0.10.5Equal opportunities and access to the labour marketGender employment gap(pps)Income quintile ratio* (S80/S20)At risk of poverty or social exclusion (in %)Youth NEET* (% of total population aged 15-24)20162016201620162016Early leavers from education and training (% of poulation aged 18-24) 
 
 
 
 
 
Annex 2 (continued). Social scoreboard headline indicators, changes and distance to EU 

Source: Eurostat. 
* indicates indicators previously included in the scoreboard of key employment and social indicators. 
Flags – b: break in time series; e: estimated; p: provisional; u: low reliability. 
Note: real GDHI per capita is measured using 'unadjusted income' (i.e. without including social transfers in kind) 
and without correction for purchasing power standards. 
Note:  EUnw  and  EAnw  refer  to  the  non-weighted  averages  for  EU  and  the  euro  area.  At  31th  October  2017, 
statistical significance estimates for changes and differences to the EU average of SILC-based indicators are not 
yet available. 

122 

YearY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUEU281.00.10.0-0.8-0.10.1:::1.6-3.3-1.1-0.12.9-0.8EA191.0-1.00.0-0.91.30.0:::0.3-12.1-2.40.56.6-0.2EUnw1.00.00.0-0.90.00.01.10.00.02.70.00.00.70.00.0EAnw1.0-0.50.0-0.90.90.1-1.1-0.6-2.21.9-10.9-0.90.31.6-0.4BE0.5-3.3-0.5-0.7-0.90.24.6 u25.93.50.1-10.1-2.6-0.117.9-0.8BG0.6-3.3-0.4-1.6-1.1-0.7-0.5-21.1-1.63.25.70.40.1 p-15.3-0.6CZ1.95.70.9-1.1-4.7-0.23.8 u-2.02.73.0-2.70.30.4-10.7-0.3DK0.9 b6.4-0.10.0-2.50.99.1 b30.88.02.30.9-0.50.619.0-0.1DE0.67.6-0.4-0.5-4.60.4-0.86.6-1.91.6-0.5-1.10.811.40.1EE0.15.6-0.90.6-1.91.50.8-18.8-0.34.7-1.62.00.5-10.1-0.2IE1.6-0.70.6-1.5-0.8-0.64.1 u6.23.04.3-8.91.60.89.10.1EL1.3-14.80.3-1.314.9-0.4:::-2.4-38.1-5.20.0p-8.6-0.7ES1.9-7.10.9-2.510.9-1.63.24.62.12.1-14.3-0.70.1 p-0.5-0.6FR0.5-1.0-0.5-0.31.40.60.717.5-0.40.4-5.7-2.41.5 p13.80.8HR0.8-9.6-0.2-2.74.7-1.82.0-17.30.9:::0.1 b-11.4-0.6IT1.1-9.40.1-0.23.00.7:::0.7-17.2-2.00 p2.7-0.7CY0.8-2.3-0.2-2.04.3-1.10.6-14.6-0.5-0.1-29.4-2.9-0.1-5.8-0.8LV0.72.2-0.3-0.30.90.6-2.5-19.5-3.66.1-10.83.40.5-12.0-0.2LT1.94.20.9-1.2-0.8-0.32.1-10.41.03.80.71.10.2-12.5-0.5LU-0.2 b-0.3-1.2-0.2-2.40.7-21 u16.3-22.1:::0.323.4-0.4HU2.60.51.6-1.7-3.6-0.85.517.04.42.3-2.9-0.50.3-12.9-0.4MT1.8-1.40.8-0.7-4.00.2::::::-0.1-7.7-0.8NL0.76.1-0.3-0.9-2.70.01.0 b4.9-0.10.7-8.6-2.00.3 p13.8-0.4AT0.53.8-0.50.3-2.71.2-2.6-2.6-3.7-0.8-11.1-3.50.59.3-0.2PL1.5-1.70.5-1.3-2.5-0.43.5 u-3.02.43.410.80.7:::PT1.5-0.40.5-1.42.5-0.53.94.82.82.0-12.4-0.70.3 b-8.8-0.4RO0.3-4.7-0.7-0.9-2.80.00.2 u-20.7-0.97.726.65.00.5 p-15.0-0.2SI1.0-0.90.0-1.0-0.7-0.1-2.8-16.0-3.92.0-12.3-0.70.5-4.2-0.2SK2.1-1.21.1-1.81.0-0.9-0.9-10.2-2.04.0-0.41.20.2-10.4-0.5FI0.52.4-0.5-0.60.10.3-2.23.1-3.31.0-3.8-1.70.310.1-0.4SE0.710.2-0.3-0.5-1.80.41.518.40.41.56.5-1.30.19.1-0.6UK0.76.5-0.3-0.5-3.90.4:::2.5-3.8-0.2-2.86.5-3.520152016201620162015Unemployment rate* (% population aged 15-74)Participation in activation labour market policies (per 100 persons wanting to work)Real GDHI per capita (2008 = 100)Compensation of employees per hour worked (EUR)Employment rate (% population aged 20-64)Dynamic labour markets and fair working conditions 
 
 
 
 
 
 
Annex 2 (continued). Social scoreboard headline indicators, changes and distance to EU 

Source: Eurostat. 
* indicates indicators previously included in the scoreboard of key employment and social indicators. 
Flags – b: break in time series; e: estimated; p: provisional; u: low reliability 
Note:  EUnw  and  EAnw  refer  to  the  non-weighted  averages  for  EU  and  the  euro  area.  At  31th  October  2017, 
statistical significance estimates for changes and differences to the EU average of SILC-based indicators are not 
yet available. 

123 

YearY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUY-Y changeDistance to EU averageY-Y for MS to Y-Y for EUEU28-0.8 b-0.60.81.92.31.3:-0.20.41.00.40.6EA19-1.0 b-1.60.51.65.91.0:-3.40.4:::EUnw-1.60.00.00.60.00.0-0.40.00.00.40.00.0EAnw-1.9-0.5-0.30.21.4-0.5-0.5-0.10.00.31.4-0.1BE-3.17.5-1.61.322.10.70.0-1.00.41.05.40.6BG-4.6 b-15.7-3.0-2.2-19.0-2.8-0.91.3-0.5-5.0-29.6-5.4CZ-1.86.9-0.2-1.5-25.1-2.2-0.3 u-2.60.1-3.0-1.6-3.4DK-0.518.61.17.749.37.1-0.1-2.10.33.022.42.6DE1.31.22.9-1.6-2.1-2.3-1.1-2.9-0.71.012.40.6EE2.6-8.74.22.0-6.51.41.49.31.8-5.04.4-5.4IE:::3.22.62.6-0.9-0.6-0.50.0-11.6-0.4EL-0.2-17.71.4-1.4-16.6-2.11.48.91.82.0-9.61.6ES-2.2-9.2-0.62.711.72.10.0-2.80.4-1.0-2.6-1.4FR-0.78.80.82.313.81.7-1.6-2.2-1.2-1.00.4-1.4HR-6.9-5.0-5.3-5.3-16.2-6.0-1.4-1.5-1.04.0-0.63.6IT-1.3 p-13.30.24.4-0.73.80.23.80.61.0-11.60.6CY-0.62.01.0-4.7-7.2-5.3-3.2-1.9-2.80.0-12.6-0.4LV4.0-12.05.61.2-5.20.6-4.1 b5.0-3.71.0 b-5.60.6LT-0.9-12.10.7-13.2-18.3-13.9-0.8-0.5-0.41.0-3.60.6LU-4.4 b5.7-2.82.923.92.30.1-2.50.50.030.4-0.4HU1.810.23.41.0-12.70.40.1-0.80.51.0-4.60.6MT-0.5-2.91.0-0.3-10.1-0.9-0.3-2.60.1-3.0-6.6-3.4NL-5.58.9-3.91.718.31.1-0.4-3.30.05.021.44.6AT0.712.82.36.2-5.85.60.0-3.30.41.09.40.6PL1.3-9.12.9-0.2-22.6-0.8-0.53.9-0.14.0-11.63.6PT-2.1-9.6-0.62.319.21.7-0.5-0.4-0.10.0-7.6-0.4RO0.9 p-19.42.56.8-18.66.20.16.00.52.0-27.61.6SI0.59.22.00.19.4-0.50.0-3.20.42.0-2.61.6SK-4.3-2.6-2.7-5.4-26.9-6.10.0-1.30.42.0-0.61.6FI3.323.44.9-0.64.6-1.31.0 b0.91.4-1.017.4-1.4SE0.512.22.17.336.06.7-0.5-2.4-0.1-3.0 b13.4-3.4UK0.19.81.71.52.40.90.7-0.61.12.013.41.62016201520152016Self-reported unmet need for medical care by sex (%)Individuals who have basic or above basic overall digital skills (% of population aged 16-74)Impact of social transfers (other than pensions) on poverty reduction (%)Children aged less than 3 years in formal childcare (%)Public support / Social protection and inclusion 
 
 
 
 
 
Annex 3. Methodological note on the identification of trends and levels in the scoreboard  

In  mid-2015  the  European  Commission,  the  Employment  Committee  and  the  Social  Protection  Committee 
agreed on a methodology for assessing Member States' performance on the scoreboard of key employment and 
social indicators. As part of the agreement, the methodology aimed at providing, for each indicator, a measure of 
the  relative  standing  of  each  MS  within  the  distribution  of  the  indicator  values  (scores)  of  the  EU.  The 
methodology is applied jointly to year-levels (levels) as well as to one-year changes (changes), thus enabling a 
holistic assessment of MS performance.  

For the 2018 Joint Employment Report, the Commission in agreement with Member States, has decided to apply 
the methodology to the new social scoreboard accompanying the European Pillar of Social Rights. 

In detail, for each indicator, levels and changes are converted to standard scores (also known as z-scores), which 
allow to apply the same metric to all the indicators. This is achieved by standardising raw values of both levels 
and changes according to the formula: 

𝑧 − 𝑠𝑐𝑜𝑟𝑒 𝑓𝑜𝑟 𝑀𝑆𝑋 =  

[𝑀𝑆𝑋 𝑖𝑛𝑑𝑖𝑐𝑎𝑡𝑜𝑟  − 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 (𝑀𝑆 𝑖𝑛𝑑𝑖𝑐𝑎𝑡𝑜𝑟)]
𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 (𝑀𝑆 𝑖𝑛𝑑𝑖𝑐𝑎𝑡𝑜𝑟)

Then  the  distributions  of  scores  (separately  for  levels  and  changes)  are  analised,  and  the  observations  that 
significantly deviate from the average level/change are detected. 

This approach enables expressing for each Member State its raw indicator value in terms of how many standard 
deviations  it  deviates  from  the  (unweighted)  average.    Then  the  performance  of  each    MS  is  assessed  and 
classified on the basis of the resulting z-scores against a set of pre-defined thresholds, set as standard deviation 
multiples.  

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 indicators86, 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, it was agreed to consider:   

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 performance87 

Table 2: 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 

86 Both normality and T-shaped distribution tests were carried out resulting in the rejection of any distributional 
hypothesis. 
87 In case of normality, chosen cut-off points roughly corresponds to 15 %, 30%, 50%, 70% and 85% of 
cumulative distribution. 

124 

 
 
 
 
  
  
 
 
 
 
  
                                                            
By combining the evaluation of levels and changes it is then 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 the respective figures in the body of the report.  

The  tables  below  provide  the  classification  based  on  z-scores  for  those  indicators  for  which  a  low  value  is 
assessed as a good performance (e.g. unemployment rate, AROPE, etc).  

Best performers   

scoring  less  than  -1.0  in  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 zero88 

On average / 
neutral 

scoring between -0.5 and 0.5 in levels and 
between -1.0 and 1.0 in changes 

Weak but 
improving 

scoring  more  than  0.5  in  levels  and  less 
than -1.0 in changes 

To watch 

scoring between 0.5 and 1.0 in levels and 
more  than  -1.0  in  changes  or  scoring 
between    -0.5  and  0.5  in  levels  and  more 
than 1.0 in changes 

Critical situations 

scoring  more  than  1.0  in  levels  and  more 
than -1.0 in changes 

the 

the  situation  not 

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 
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 
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 
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 

the 

88  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. 

125 

Much lower than averageLower than averageOn averageHigher than averageMuch higher than averageVery lowLowOn averageHighVery highLevel Change 
 
 
 
 
                                                            
The  tables  below  provide  the  classification  based  on  z-scores  for  those  indicators  for  which  a  high  value  is 
assessed as a good performance (e.g. employment rate, participation into childcare, etc).  

Best performers   

scoring  more  than  1.0  in  levels  and  more 
than -1.0 in changes 

Better than average 

Good but to 
monitor 

scoring between 1.0 and 0.5 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 
scoring  more  than  0.5  in  levels  and  less 
than  -1.0  in  changes,  and  presenting  a 
change lower than zero89 

On average / 
neutral 

scoring between -0.5 and 0.5 in levels and 
between -1.0 and 1.0 in changes 

Weak but 
improving 

scoring  less  than  -0.5  in  levels  and  more 
than 1.0 in changes 

To watch 

scoring  between  -0.5  and  -1.0  in  levels 
and  less  than  1.0  in  changes  or  scoring 
between    -0.5  and  0.5  in  levels  and  less 
than -1.0 in changes 

Critical situations 

scoring  less  than  1.0  in  levels  and  less 
than 1.0 in changes 

the 

the  situation  not 

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 
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 
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 
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 

the 

89  The  latter  condition  prevents  a  Member  State  presenting  "high"  or  "very  high"  level  to  be  flagged  as 
"deteriorating" when showing a change "much lower than average", but still increasing. 

126 

Much higher than averageHigher than averageOn averageLower than averageMuch lower than averageVery highHighOn averageLowVery lowLevelChange 
 
 
 
 
                                                            
Cut-off points summary table 

Very low 

Low 

On average 

High 

Very high 

Early leavers from education and training  
(% of poulation aged 18-24) 

Levels 

less than 5.1% 

less than 7.3% 

between 7.3% and 11.7% 

more than 11.7% 

more than 13.9% 

Changes 

less than -1.4pps 

less than -0.9pps 

between -0.9pps and 0.2pps 

more than 0.2pps 

more than 0.7pps 

Gender employment gap (pps) 

Income quintile ratio (S80/S20) 

At risk of poverty or social exclusion (%) 

Youth NEET (% of total population aged 15-24) 

Employment rate (% population aged 20-64)  

Unemployment rate (% population aged 15-74)  

Levels 

less than 4.9pps 

less than 7.8pps 

between 7.8pps and 13.6pps 

more than 13.6pps 

more than 16.4pps 

Changes 

less than -0.8pps 

less than -0.4pps 

between -0.4pps and 0.3pps 

more than 0.3pps 

more than 0.7pps 

Levels 

less than 3.8 

less than 4.4 

between 4.4 and 5.7 

Changes 

less than -0.4 

less than -0.2 

between -0.2 and 0.1 

more than 5.7 

more than 0.1 

more than 6.3 

more than 0.3 

Levels 

less than 16.7% 

less than 20.2% 

between 20.2% and 27.3% 

more than 27.3% 

more than 30.8% 

Changes 

less than -1.5pps 

less than -1.0pps 

between -1.0pps and 0.0pps 

more than 0.0pps 

more than 0.5pps 

Levels 

less than 6.9% 

less than 9.0% 

between 9.0% and 13.1% 

more than 13.1% 

more than 15.2% 

Changes 

less than -1.5pps 

less than -1.1pps 

between -1.1pps and -0.3pps 

more than -0.3pps 

more than 0.1pps 

Levels 

less than 65.2% 

less than 68.1% 

between 68.1% and 73.8% 

more than 73.8% 

more than 76.7% 

Changes 

less than 0.4pps 

less than 0.7pps 

between 0.7pps and 1.4pps 

more than 1.4pps 

more than 1.7pps 

Levels 

less than 4.2% 

less than 6.4% 

between 6.4% and 10.9% 

more than 10.9% 

more than 13.1% 

Changes 

less than -1.7pps 

less than -1.3pps 

between -1.3pps and -0.6pps 

more than -0.6pps 

more than -0.2pps 

Participation in activation labour market policies 
(per 100 persons wanting to work) 

Levels 

less than 8.2% 

less than 16.0% 

between 16.0% and 31.5% 

more than 31.5% 

more than 39.3% 

Changes 

less than -4.9pps 

less than -2.2pps 

between -2.2pps and 3.3pps 

more than 3.3pps 

more than 6.pps 

Real GDHI per capita (2008 = 100) 

Compensation of employees per hour worked (EUR) 

Impact of social transfers (other than pensions) on 
poverty reduction (%) 

Children aged less than 3 years in formal childcare 
(%) 

Self-reported unmet need for medical care (%) 

Levels 

less than 94.8 

less than 98.5 

between 98.5% and 105.9 

more than 105.9 

more than 109.5 

Changes 

less than 0.8pps 

less than 1.1pps 

between 1.1pps and 1.8pps 

more than 1.8pps 

more than 2.1pps 

Levels 

less than 7.8 € 

less than 13.9 € 

between 13.9 € and 25.9 € 

more than 25.9 € 

more than 32.0 € 

Changes 

less than -0.5pps 

less than -0.1pps 

between -0.1pps and 0.6pps 

more than 0.6pps 

more than 0.9pps 

Levels 

less than 21.9% 

less than 27.7% 

between 27.7% and 39.5% 

more than 39.5% 

more than 45.3% 

Changes 

less than -3.5pps 

less than -2.2pps 

between -2.2pps and .5pps 

more than 0.5pps 

more than 1.8pps 

Levels 

less than 8.9% 

less than 18.5% 

between 18.5% and 37.5% 

more than 37.5% 

more than 47.0% 

Changes 

less than -3.7pps 

less than -1.5pps 

between -1.5pps and 2.8pps 

more than 2.8pps 

more than 5.0pps 

Levels 

less than 0.2% 

less than 1.6% 

between 1.6% and 4.4% 

more than 4.4% 

more than 5.8% 

Changes 

less than -2.pps 

less than -1.5pps 

between -1.5pps and -0.4pps 

more than -0.4pps 

more than 0.2pps 

Individuals who have basic or above basic overall 
digital skills (% of population aged 16-74) 

Levels 

less than 41.6% 

less than 48.6% 

between 48.6% and 62.6% 

more than 62.6% 

more than 69.6% 

Changes 

less than -2.1pps 

less than -0.9pps 

between -0.9pps and 1.6pps 

more than 1.6pps 

more than 2.9pps 

127 

 
 
 
 
 
Annex  4:  Summary  overview  of  the  ‘employment  trends  to  watch’  and  number  of 
Member  States  with  deterioration  or  improvement  as  identified  by  the  Employment 
Performance Monitor 2017 (EPM), endorsed by the EPSCO Council in October 2017. 

Note: 2015-2016 changes, except 2014-2015 for at-risk-of poverty rate of unemployed, unemployment trap and 
gender pay gap. 

128 

 
 
 
 
 
Annex  5:  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 2017, endorsed by the EPSCO Council in October 2017. 

Note: for EU-SILC based indicators the changes generally actually refer to 2013-2014 for income and household 
work  intensity  indicators,  and  to  2014-2015  for  unmet  need  for  medical  care.  Changes  in  gross  household 
disposable  income  refer  to  2014-2015.  LFS-based  indicators  (LTU  rate,  early  school  leavers,  youth 
unemployment ratio, NEETS (15-24), ER (55-64)) and SMD figures (not yet final for 2016 for several MS) refer 
to the period 2015-2016. 

129