The European employment and social policies historical developments and current situation

1
The European employment and social
policieshistorical developments and current
situation

• Lecture 2
• MSc course Microeconomic policies of the EU
• Manos Matsaganis
• Athens University of Economics Business
• Department of European International Economic
  Studies

2
The origins of the debate(the 1960s)

• harmonization (equalization of the terms of
  access to social benefits across member states)
• Spaak Report (1956) differences in the level of
  social protection enjoyed by citizens of
  different member states of the Common Market may
  amount to distortion of fair competition
• harmonization still feasible significant
  similarities between the social protection
  systems of the (then 6) member states
• harmonization not chosen deemed unnecessary for
  the creation of a common market under the Rome
  Treaty
• coordination (transferability of social rights
  of citizens with a work record in two or more
  member states)
• easier to achieve in the case of contributory
  benefits than in the case of non-contributory
  benefits

3
Early difficulties(the 1970s)

• with each successive enlargement of the EEC/EU
• the variability of social protection systems
  among member states increased
• the prospects for harmonization became less
  realistic
• 1973 United Kingdom, Ireland, Denmark
• social protection a citizenship right (i.e.
  benefits awarded on basis of residence conditions
  rather than contributory record)
• concern about social tourism, i.e. moving from
  one member state to another chiefly for the
  purpose of obtaining social benefits (especially
  non-contributory ones)
• 1981 Greece / 1985 Spain, Portugal
• harmonization debate ended

4
Change of direction(the 1980s)

• harmonization came to be regarded as not only
  unfeasible, but unnecessary as well
• social contributions not necessarily correlated
  with level of social protection, nor with
  competitiveness (e.g. the case of Denmark)
• social contributions only one of the components
  of labour costs
• labour costs only one of the components of
  product costs
• product costs only one of the components of
  competitiveness
• two European Commission communications (1982,
  1986)
• (a) harmonization cannot be imposed upon member
  states
• (ß) the principle of free movement of workers can
  and must be combined with the principle of
  subsidiarity (i.e. acceptance of national
  government control over social protection)

5
The social dimension(the 1990s)

• Single European Act (1986), Internal Market
  (1992)
• European Commission (chaired by J. Delors) in
  search of a social dimension to offset the
  drive to complete the single market
• 1989 Charter of Fundamental Workers Rights
  approved
• although Britain opts out (J. Major you keep
  social Europe and well keep the jobs)
• European Commission convergence of objectives
• convergence of policies to meet commonly agreed
  objectives, while respecting the variability of
  member states systems
• Recommendation 92/442/EEC of 27 July 1992 on the
  convergence of social protection objectives and
  policies
• Recommendation 92/441/EEC of 24 June 1992 on
  common criteria concerning sufficient resources
  and social assistance in social protection systems

6
European Employment Strategya history

• main landmarks on the road to the EES
• 1993 White Paper on Growth, Competitiveness and
  Employment published by European Commission
• 1994 Essen Summit agrees common objectives for
  employment promotion and job creation
• 1996 a permanent Employment and Labour Market
  Committee created
• 1997 Amsterdam Treaty approved a whole Title,
  not merely a Chapter, dedicated to employment in
  the Treaty (Economic and Monetary Policy also a
  Title)

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European Employment Strategythe Amsterdam Treaty

• confirms commitment to a high level of
  employment key EU goal, equally important to
  the goals of growth and price stability
• elevates employment to an issue of common
  interest and commits member states to work
  together with the Commission on a coordinated
  strategy
• introduces mainstreaming impact on employment
  to be taken into account each time a common
  policy is discussed (article 127)
• provides a legal framework for monitoring
  national employment policies (article 128), for
  research and analysis, for the exchange of
  information and best practice (article 129),
  and for the creation of an Employment Committee
  (article 130)
• allows for the possibility of qualified majority
  voting, eliminating the threat of veto by a
  single member state

8
European Employment Strategythe Luxembourg
process

• Jobs Summit (November 1997)
• each year, the European Commission proposes and
  the Council of Ministers approves Integrated
  Employment Guidelines listing the priorities of
  employment policy in all member states
• following that, each member state elaborates and
  submits to the European Commission a National
  Reform Programme (formerly known as National
  Action Plan) describing the practical application
  of the common guidelines in the national context
• then, the European Commission and the Council of
  Ministers analyse National Reform Programmes and
  publish a Joint Employment Report
• moreover, upon a proposal by the European
  Commission, the Council of Ministers may decide -
  by qualified majority - to issue country-specific
  Recommendations
• finally, the Commission releases an EU annual
  progress report monitoring the actions under the
  Lisbon Programme and evaluating the
  implementation of national programmes

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European Employment Strategythe four pillars
of the strategy (1)

• employability
• supporting individuals so they can find and
  maintain a job
• reducing youth and long-term unemployment
• promoting lifelong training, preventive actions
  etc.
• eliminating tax-benefit disincentives to work
• entrepreneurship
• creating jobs through the elimination of barriers
  to starting a business
• making taxation more business-friendly
• focusing on services

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European Employment Strategythe four pillars
of the strategy (2)

• adaptability
• promoting flexible work practices to allow firms
  to respond to changing demand
• improving the quality of jobs and the work
  environment
• striking a better balance between flexibility and
  security
• equal opportunities
• promoting an inclusive labour market
• improving access to work and training for women
  (but also people with disabilities, members of
  ethnic or religious minorities etc.)
• fighting discrimination in the work place and
  ensuring equal treatment of workers by employers

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Open Method of Coordinationthe five key
principles (1)

• Subsidiarity. The method establishes an
  equilibrium between European Union level
  co-ordination in the definition of common
  objectives and outcomes, and Member States'
  responsibilities in deciding the detailed content
  of action. The definition of the means and
  conditions under which programmes and policies
  are implemented is left to a large extent to
  individual Member States, who are responsible for
  their employment policy under the EU Treaty.
• Convergence. The strategy strives to achieve
  commonly agreed employment outcomes through
  concerted action, where each Member State
  contributes towards raising the European average
  performance. This principle has been made more
  concrete by the Lisbon European Council and
  following Councils where full employment was
  confirmed as an overarching goal of the Union and
  tangible targets were set for the Union as a
  whole.

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Open Method of Coordinationthe five key
principles (2)

• Mutual learning. Exchanging good practice and
  experience is one of the core objectives of the
  open method of co-ordination of the EES. A Member
  State can learn from the experiences of other
  countries, which may have already found answers
  to similar challenges in the labour market.
  Through encouraging mutual learning at all levels
  within key areas of the EES, knowledge is built
  about the most effective policies and how these
  should be implemented.
• Integrated approach. The Employment Guidelines
  are by no means restricted to active labour
  market policies but extend to social,
  educational, tax, enterprise and regional
  policies. Structural reforms cannot be obtained
  through isolated and dispersed actions or
  measures, but require consistent and concerted
  action over a wide range of policies and
  measures. These measures need to be tailor made
  to address diverse needs and conditions. This
  means that the 'Luxembourg process' is not
  'owned' by the Ministries of Labour and
  Employment, but calls for comprehensive
  employment policies committing Governments as a
  whole, as well as a wide range of stakeholders.

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Open Method of Coordinationthe five key
principles (3)

• Management by objectives. The success of the
  strategy relies on the use of quantified
  measurements, targets and benchmarks, to allow
  for a proper monitoring and evaluation of
  progress. These objectives are based on shared
  values among the Member States and cover issues
  which are felt to be of common concern. Progress
  towards these objectives are defined either in
  terms of quantitative or qualitative indicators.
  Through the use of targets and indicators, the
  results of policies are made transparent and
  therefore open to public scrutiny.

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Open Method of Coordinationextension to other
policy areas (1)

• social inclusion
• Lisbon Summit (March 2000)
• biannual National Action Plans on policies to
  combat poverty and social exclusion (June 2001 /
  July 2003 / update 2005)
• pensions
• Laeken Summit (December 2001)
• National Strategy Reports (September 2002 / July
  2005)
• Joint Report by the Commission and the Council
  (March 2003)
• Synthesis Report by the Commission and the SPC
  (February 2006)
• aim adequate and sustainable pensions

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Open Method of Coordinationextension to other
policy areas (2)

• health and long-term care
• Göteborg Summit (June 2001)
• questionnaire to national authorities
• Joint Report by the Commission and the Council
  (Spring 2004)
• Preliminary National Policy Statements in 2005,
  National Action Plans from 2006 (?)
• aim high-quality, accessible and sustainable
  health care and long-term care
• making work pay (?)
• Brussels Summit (March 2003)
• Commission Report (Spring 2004)
• aim improving work incentives
• when an unemployed person finds a low-paid job,
  his/her net income only rises by 15 on average

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policy prospects in an enlarged Union(May 2004)

• limitations to the right of free movement for
  workers from the new member states
• long transition periods for 8 member states
• full participation in OMC since 2004
• employment National Reform Programmes
• social inclusion National Action Plans
• pensions National Strategy Reports
• Social Agenda (2005)
• achieving full employment
• social cohesion and equal opportunities for all
• social services of general interest

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guaranteed minimum incomesin the new member
states
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The new social protection and social inclusion
process (2006)

• three policy areas provide the framework for the
  new process
• eradicating poverty and social exclusion
• adequate and sustainable pensions
• accessible, high quality and sustainable health
  and long-term care
• revising the Open Method of Coordination process
• agreeing common objectives for the European Union
  
• establishing common indicators as a means of
  comparing best practice and measuring progress
• translating the EU objectives into
  national/regional policies on the basis of
  National Reports on Strategies for Social
  Protection and Social Inclusion
• publishing reports analysing and assessing the
  National Reports
• establishing a Community Action Programme to
  promote policy cooperation and transnational
  exchange of learning and good practice

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European Employment Strategythe Lisbon agenda

• European Summit Presidency Conclusions (March
  2000)
• The European Union has today set itself a new
  strategic goal for the next decade to become the
  most competitive and dynamic knowledge-based
  economy in the world, capable of sustainable
  economic growth with more and better jobs and
  greater social cohesion

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European Employment Strategythe Lisbon targets

• targets for 2010
• total employment rate 70
• female employment rate 60
• employment rate of workers aged 55-64 50
• performance in 2007 EU27 EU15
• total employment rate 65.4 66.9
• female employment rate 58.3 59.7
• employment rate of workers aged
  55-64 44.7 46.6

21
total employment rates
22
female employment rates
23
total unemployment ratesunemployed persons aged
20-64 as of economically active persons aged
20-64
24
female youth unemployment ratesunemployed women
aged 15-24 as of economically active women aged
15-24
25
female youth unemployment ratesunemployed women
aged 15-24 as of all women aged 15-24
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employment vs. unemployment (2007)
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critiques (1)

• EU social and employment policies lack
  legislative power
• member states retain exclusive competence
  (subsidiarity)
• setting common standards and the problem of the
  lower common denominator
• harmonization worked only where it did not
  matter, and did not work where it mattered
• soft instruments (e.g. OMC)
• increase transparency, improve mutual learning
  and help create epistemic communities but
  have no reform-triggering powers
• opaque and technocratic with negligible public
  awareness, media coverage and parliamentary
  oversight

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critiques (2)

• unemployment in Europe evolution of facts and
  ideas
• blamed on macroeconomic shocks (e.g. the 1970s
  oil shocks)
• or viewed as acceptable side-effect of
  desirable labour market institutions (e.g.
  employment protection legislation)
• effects of the Economic and Monetary Union
• has eliminated exchange rate realignments (or
  competitive devaluations)
• by fostering product market competition, has made
  it difficult for collective institutions and
  public policies to interfere with laissez faire
  labour market outcomes

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critiques (3)

• nevertheless, workers still demand protection
  from labour market shocks
• on the one hand, national systems of labour
  market regulation, of industrial relations, and
  of social protection no longer capable of
  delivering the necessary protection
• on the other hand, no effective system of
  supranational coordination in place to step in
  and address the problem
• subsidiarity is not appropriate for labour
  market policies (Bertola)