Europaudvalget 2000-01
EUU Alm.del Bilag 431
Offentligt
1464104_0001.png
Modtaget via elektronisk post. Der tages forbehold for evt. fejl
Europaudvalget
(Alm. del - bilag 431)
Det Europæiske Råd
(Offentligt)
Medlemmerne af Folketingets
Europaudvalg og deres stedfortrædere
Bilag
1
Journalnummer
400.C.2-0
Kontor
EU-sekr.
5. december 2000
Til underretning for Folketingets Europaudvalg vedlægges i forbindelse med det ordinære møde i Det
Europæiske Råd i Nice den 7.-9. december 2000 Rådets rapport for 2000 vedrørende beskæftigelse, del II om
medlemslandene.
FORWARDING OF A TEXT
to :
Coreper/Council (Employment and Social Policy)
No. Cion doc.
11190/00 SOC 285 ECOFIN 231 + ADD 1
Subject :
Draft Joint Employment Report 2000
{{SPA}} Part II: the Member States
Delegations will find attached the draft text of the Joint Employment Report 2000, Part II: the Member States, as it appears
following its examination by the Employment Committee and the Economic Policy Committee.
"Part I: the European Union", together with the Executive Summary and the Statistical Annex, is to be found in 12909/00
SOC 402 ECOFIN 311.
__________________
PART II: THE MEMBER STATES
3
BELGIUM
4
DENMARK
12
GERMANY
19
GREECE
27
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SPAIN
35
FRANCE
43
IRELAND
50
ITALY
58
LUXEMBOURG
66
NETHERLANDS
72
AUSTRIA
79
PORTUGAL
86
FINLAND
93
SWEDEN
100
UNITED KINGDOM
108
JOINT EMPLOYMENT REPORT 2000
PART II
THE MEMBER STATES
BELGIUM
Conclusions
General appreciation
Despite an improvement in the Belgian labour market, its long-standing
challenges are only gradually being adjusted: high inflows into long-term unemployment, low
labour market participation of older persons, a large gender gap in employment, pronounced
regional differences and the job creation potential in the service sector.
Policy-mix
Belgium is responding to these challenges with a policy mix that acts on labour
demand and supply as well as on the redistribution of labour. The policy relies on wage
moderation, reduction of social security contributions and 'the active welfare state'. However
the evolution of the impact of preventive policies is, as yet, unsatisfactory: Belgium is still
confronted with high percentages of monthly inflow into long-term unemployment for young
people and adults.
Response to the 1999 Council Recommendations
Measures have been taken to reduce
unemployment traps: through a reduction of workers' social security contributions at the level
of minimum wages, the financial incentives for job-search have increased. As regards the
labour market participation of older persons, the minimum age for early pensions has not been
modified, but a series of measures have been taken to make remaining at work more attractive.
However, insufficient attention is paid to restrictive measures that would prevent workers
leaving their activity early. The well-developed service sector is undoubtedly the engine of
employment in Belgium. Reductions of employers' social security contributions have been
decided in order to support job creation in the health sector and social economy. Coordination
and coherence of policies of the different authorities have improved, as illustrated by several
cooperation agreements. But the proliferation of labour market measures has redu ced their
effectiveness and has clouded the perception by the players involved: regardless of the many
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aspects involved, greater simplification and increased homogeneity is urgently needed,
accompanied by a reduction of instruments.
Challenges ahead
Progress in reducing the rate of inflow into long-term unemployment has
been slow. For young people prevention has been recently reinforced, but intensified action for
adults is urgently required.
The tax burden on labour remains one of the highest in the EU, and has not yet started to fall,
despite the efforts undertaken to reduce social security contributions for certain groups.
Progressively, unfilled job vacancies become visible in parts of Belgium through the mismatch
between labour demand and supply. Increased mobility of the labour force and further
upgrading of skills through a comprehensive strategy on life-long learning will have to play a
key role in improving the Belgian labour market and to prevent labour shortages. Major
training efforts are undoubtedly necessary in the ICT-sector.
1. Economic and employment situation
Real GDP growth slowed down in 1999 to 2.3%, but is expected to accelerate again in 2000 (3.6%). Labour market
conditions are improving because of (i) higher GDP growth, (ii) the higher labour intensity of economic growth since 1996
and (iii) the trend from passive to more active labour market policies.
In 1999
employment
growth slowed down to 1.1%, which is lower than the EU-average. The employment rate increased from
56.3% in 1996 to 58.9% in 1999, which is still 3 percentage points below the EU-average. In the same period the
employment rate of women increased by almost 5 percentage points. The gender gap is shrinking and is now under the EU-
average. Calculated by age group, the employment rate is particularly low for the lower and higher age brackets, both being
more than 12 percentage points below the EU-average. For those older than 55, the employment rate (24.7%) is the lowest in
the EU.
The
unemployment
rate decreased in 1999 to 9.1% and is currently below the EU-average. Youth unemployment increased in
1999, but the unemployment ratio of young women diminished to 7.8 which is below EU-average. Total female
unemployment is lower than the EU-average, and the gap with male unemployment is diminishing. A particular problem is
long-term unemployment: LTU has diminished 0.6 percentage points between 1998 and 1999 but its share of total
unemployment (56%) is among th e highest in the EU.
There are considerable regional disparities (with local variations) in labour market performance: unemployment is especially
pronounced in Wallonia and Brussels, while qualitative labour shortages have emerged in parts of Flanders.
2. Overall employment strategy
The cornerstone of Belgium's employment policy is the reduction of wage costs through wage moderation and reductions of
social security contributions (both should arrive at the level of the three main neighbouring countries) in order to diminish
the productivity trap and to increase the
demand for labour.
labour
The second main element is the
redistribution of labour
Given the concern for hourly wage cost increases in the event of
labour.
generalised reductions of working time, a flexible policy on sectoral and enterprise level has been implemented. Social
partners can agree on working time reductions and will be partly compensated for new recruitment by reductions in payroll
taxes. The Belgian Labour Minister recently announced a comprehensive package for a reorganisation of working time.
The third building block of the Belgian employment policy is currently called "the active welfare state", referring (among
other things) to an increasing emphasis on active labour market policies, with particular attention being devoted to young
people. In addition there are special measures to tackle the unemployment traps and to integrate the long-term unemployed
on the labour market. The ultimate aim is to increase the
supply of labour
labour.
The challenge of this employment strategy is that the authorities have to balance the increased labour demand (by lowering
the total wage cost) with an equivalent increase of labour supply (by active labour market policies). An eventual mismatch
between labour demand and supply would aggravate the situation of unfilled job vacancies, which are starting to occur in
some sectors.
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3. Progress assessment
3.1. General appreciation
The NAP 2000 is a clear indication of the qualitative improvement of the Belgian NAP since 1998 and gives a good overall
view of how the different Belgian authorities define the policy mix in order to implement the European Employment
Strategy. Efforts to increase the coherence of the Belgian NAP are strengthened, but the total number of labour market
instruments is still very high.
The preventative approach, although reinforced by recent policy announcements, is still not fully implemented and the main
focus of the Belgian labour market policy is still on curative policies addressed to the long-term unemployed. As a result, the
non-compliance rates for the two first guidelines exceed 50%. Taking into account the high percentages of inflow into long-
term unemployment for young people (41%) and for adults (35%), intensified action is urgently required.
3.2. Implementation of the 1999 National Action Plan
On
employability
Belgium is continuing its efforts towards the preventative approach, especially for young people. For GL
1 the non-compliance rate declined from 57.6% in 1998 to 50.4% in 1999. This is an improvement but there is still a long
way to go until every young unemployed person is offered a new start before the 6th month of unemployment. Concerning
GL 2 the effort indicator for 1999 is even lower than in 1998. As a result non-compliance is st ill at 54.3%.
In 1999 80.8% of job seekers participated in active measures to reduce unemployment (GL 3), which is 16 percentage points
higher than in 1998. Training represents 12% of the beneficiaries of active measures.
With regard to the
entrepreneurship
pillar the federal and federated authorities implemented initiatives to reduce
administrative burdens for businesses, to facilitate the launch and growth phase of enterprises and to train and coach new
entrepreneurs. All these initiatives are mainly focusing on SMEs. The creation of jobs in the non-profit sector is encouraged.
Since 1 April 1999, and for a period of six years, additional reductions of social contributions are planned, through a lump
sum assigned for each worker on the one hand, and an additional reduction for workers with low salaries on the other. A
target is set to reduce social security contributions to the average of the main neighbouring countries within 6 years.
Concerning the
adaptability
pillar several initiatives were implemented, mainly focusing on the reorganisation of working
time. Firms that switched to the four-day week, benefit from reductions in their social contributions for the additional staff
they have to employ. However no indicators are available to evaluate the impact of this initiative. Training efforts were
increased and measures have been taken concerning career breaks, part-time work for the elderly and train ing during
working time. A law to encourage participation of staff in company profits was approved. On continuous training the Social
Partners committed themselves to increase resources in order to arrive within six years at the average of the three main
neighbouring countries. Therefore resources will be increased from 1.2% to 1.4% of the payroll before the end of 2000, with
the aim to arrive at 1.9% in 2004.
Equal opportunities
through mainstreaming are high on the political agenda, but it can be stated that more concrete actions
are awaited. The 1999-2000 inter-professional agreement commits the partners to the review of function classification
systems. Positive action is encouraged and equal opportunities for men and women are to be pursued in training.
The role of the
Social Partners
in the implementation of the NAP 1999 was important. The inter-professional agreement of
1999-2000 is the backbone of the various measures that the Social Partners have committed themselves to undertake for the
implementation of the NAP 1999. Social Partners have been consulted during the preparation of the NAP 2000.
During the 2000-2006 period the
ESF
will support the NAP-strategy through an increased focus on preventive labour
market measures, adapted to specific regional circumstances.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Belgium's employment policies
policies,
(1) Strengthen preventive policies, by taking early action based on individual needs, to stem the flow into long-term unemployment. In particular,
Belgium should comply fully with guidelines 1 and 2 and provide young and adult unemployed with effective employability measures before the 6-
and 12- month thresholds, respectively;
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(2) Examine in more detail disincentives within the tax and benefit system which may discourage labour market participation, particularly of
women and older workers. Belgium should, in particular reassess existing policies facilitating early retirement of workers, and consider the policy
choices most appropriate to avoid the early withdrawal of workers from the labour market and to promote employment of older persons;
(3) Adopt and implement coherent strategies, encompassing regulatory, fiscal and labour market measures, to exploit more fully the job creation
sector;
potential of the service sector;
(4) Reinforce the cooperation between the different authorities implementing the national employment action plan.
4.1. Initiatives taken in response to recommendations
Concerning the
strengthening of preventative policies,
the major innovation in the NAP 2000 is the 'starter job for young
people' (convention de premier emploi jeunes). According to this programme, both public and private sectors have to
increase their staffing level by hiring, from 1 April 2000, young short-term unemployed people. Companies have to offer jobs
equivalent to 3% of its workforce to young people within six months after leaving school. In addition, these companies
benefit from reductions in employers' social security contributions if recruits have low qualifications. The impact of this new
measure will be reinforced, in close collaboration with the regions, by offering integration pathways for young people after 3
months of unemployment. It is expected that 45,000 extra jobs will be created.
The NAP 2000 is weak on new specific measures in response to GL 2: the measures listed in the NAP more often refer to
the prevention of early retirement than to the prevention of long-term unemployment.
Concerning
disincentives within the tax and benefit system,
the reduction of social and fiscal charges is stepped up.
Since 1 April 2000, the government further reduced social security contributions. The total reduction of charges in the year
2000 is budgeted at {{X80}} 2.6 billion. Targeted reductions in workers' taxes and social security contributions are intended
to diminish the unemployment traps. However the average tax burden on labour has shown an increasing trend, and i of the
highest in the EU, which suggests that the measures taken have been insufficiently strong.
As regards the labour market participation of older persons, the minimum age for early pensions has not been modified.
Although the age of access to early retirement will not be modified, methods will be developed to reorganise working time in
function of age, as it already is the case for the non-profit sector, to encourage older workers to remain working. In addition,
recruitment of older
workers will be encouraged by a reduction of employers' social security contributions. However, insufficient attention is paid
to restrictive measures that would prevent workers leaving their activity early. Although the gender gap in employment is
significantly reduced in Belgium since 1997, further measures are taken to increase the participation of women, mainly
through the expansion of the possibilities for childcare. Measures aimed at reducing the tax burden on labour do not inclu de
any gender impact analysis.
Various initiatives have been taken to increase employment in the
service sector.
The Belgian authorities are also
encouraging the development of specific employment projects in the social economy through the activation of
unemployment benefits and minimum income.
The programmes of the federal, regional and community governments consider reinforced
cooperation
as very important.
Improved cooperation and coherence is already visible in the agreement on the 'starter jobs for young people' and on the
increased financing by the federal government of employment programmes of the federated authorities. Last but not least,
the ESF-NAP Impact Assessment Cell (ENIAC), set up under the new ESF programme, within which the five Belgian
authorities wil l work together, is a clear expression of the will to cooperate.
4.2. Other policy initiatives
Concerning the
new emphases
in the Guidelines for 2000 it is important to underline recent initiatives to decentralise
services to the unemployed. 'Lokale Werkwinkels' in Flanders, 'Plateformes locales de l'emploi' in Brussels and 'Maisons de
l'emploi' in Wallonia are supposed to reach out more easily to the unemployed, to provide integrated services (the 'one-stop-
shop' concept) and/or to promote local services.
However, major initiatives concerning training on ICT (GL 6) are not presented in the NAP 2000.
In the area of
employability
the commitment of the social partners to gradually increase investments in life-long learning of
employees is a big step forward. However, specific attention should be given to equity issues in the access to training. The
same remark holds for older workers: their present share in adult education is far below the average. One of the ambitions of
the 'Spring programme' is to reduce, within a period of five years, by 50% the number of beneficiaries of minimum
subsistence and social assistance, by employment programmes.
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Under
entrepreneurship
various types of initiatives are developed in the social economy to develop job opportunities
targeted at different groups of low-qualified, long-term unemployed job seekers. The cooperation agreement for the social
economy, concluded between the federal and
regional/community governments, has the ambition of doubling employment in this sector. However partnerships with
commercial enterprises, and similar integration measures in the regular labour market should also be developed. A reduced
VAT rate of 6% applies to sectors such as house repair particularly affected by undeclared work.
In order to increase
adaptability
various measures are introduced through commitments of the social partners: flexible
working hours, increased possibilities of career breaks, increased part-time employment, reduction of the working week for
those over 50, reduced working time over the life cycle.
With respect to
equal opportunities
various initiatives are presented: improvement of childcare, facilitation of career breaks,
the fight against vertical and horizontal segregation.
Belgium
Annual data
Employment
Indicators
1999
1998
1997
1996
EU
1999
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
EU
1996
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
58.9
67.5
50,2
25,5
76,4
24,7
54.5
68.4
40.4
57,3
67,0
47,5
26,0
74,4
22,5
53,5
66,4
40,7
57,0
67,1
46,7
25,2
74,6
22,0
53,4
66,6
40,4
56,3
66,8
45,6
26,1
73,9
21,8
53,0
66,6
39,5
Unemployment
Indicators
1999
1998
1997
1996
EU
1999
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
EU
1996
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term
Rate
Unemployment
Males
Females
9,1
7,8
10,7
8,5
9,1
7,8
5,1
4,4
5,9
9,5
7,8
11,8
7,8
7,7
7,8
5,7
4,5
7,4
9,4
7,4
12,1
7,6
6,9
8,3
5,7
4,4
7,5
9,7
7,6
12,7
7,8
7,1
8,6
5,9
4,5
8,0
Annual change
Employment
Indicators
1999
related
Economic
1998
1997
1996
EU
1999
EU
1996
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Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
1,1
2,3
1,2
-0,2
1,2
2,7
1,5
-0,9
0,8
3,5
2,7
-1,2
0,3
1,0
0,7
-0,6
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5
DENMARK
Conclusions
General appreciation
The labour market situation remains in a strong position, with the highest employment rate in the EU,
both for men and women. The unemployment rate remained stable, well below the EU average. The major challenges in
1999 were policies towards promoting labour supply and the upgrading of skills and qualifications of the labour force,
which included efforts to encourage employees to stay longer in working life and to reduce the numb er of persons of
working age on social benefit. Also the participation of women and men across sectors and occupations could be more
balanced.
Policy-mix
Denmark is responding to labour market challenges with an even stronger focus on the need to increase the
labour force and the necessity to maintain and develop their qualifications. Efforts have been made under all four pillars
but particular attention is being paid to employability.
Response to the 1999 Council Recommendations
The first recommendation to Denmark aiming at an increase in the
supply of labour has been addressed through changes in the tax system and better incentives for remaining in or
obtaining work. As the measures are being phased in or recently put into force, it is too early to assess whether they are
sufficient to reach the objective. For the second recommendation on promoting training and job opportunities for
unemployed women satisfactory results have been achieved so far. Different measures have been taken to tackle gender
segregation in the labour market. However, achieving less gender segregation seems to be a long-term project since it
depends, among other things, largely upon educational choice and preferences as regards occupational fields.
Challenges ahead
In view of the need to increase labour supply the reforms of the tax system, leave schemes and the
early retirement schemes should continue to be closely monitored and assessed to determine whether they are sufficient
to meet the objective. Also ways of further reducing the number of persons on unemployment benefits and social
benefits should be continued.
With an expected demographic development having a negative impact on the labour force together with a high
employment rate and a relatively low unemployment rate, policies towards promoting labour supply and upgrading of
skills and qualifications of the labour force as a means to overcome emerging bottlenecks should be continued.
1. Economic and employment situation
The Danish economy continued to develop in a balanced way and policies to strengthen employment while controlling
consumption have worked successfully so far. The GDP growth rate slowed down in 1999 to 1.7% compared to 2.5% in
the previous year. The growth during 1999 can be explained by both an employment growth of 1.1% and a more
efficient use of the resources in the economy, with 0.6%.
The employment rate at 76.5% in 1999 remained the highest in the EU and well above the future targets for both women
(at 71.6 %) and men (at 81.2 %) set for the EU as a whole in 2010 by the Lisbon European Council. There has been a
particularly favourable development in employment for the age group 55-64 year olds. The employment rate improved
by 3.8 percentage points from 50.4% in 1998 to 54.2% in 1999, in comparison to the EU-average of 36.9% in 1999.
The total unemployment rate remained stable at 5.2% between 1998 and 1999 but women have in 1999 benefited more
than men from the improvement of the labour market and the overall situation on the labour market is of increasing
equality. The unemployment rate for women fell from 6.6% in 1998 to 6.0% in 1999 whereas the unemployment rate for
men rose from 4.1% in 1998 to 4.5% in 1999 thereby bringing down the gender gap to 1.5 percentage points. The long-
term unemployment rate fell from 1 .4% in 1998 to 1.1% in 1999. This fall reflects a decrease in the long-term
unemployment rate of women, whereas the long-term unemployment rate of men has not changed since 1998. For the
first time in recent years the youth unemployment ratio did not fall but rose from 5.8% in 1998 to 7.2% in 1999.
2. Overall employment strategy
"Denmark 2005", the governmental multi-annual structural and welfare policy programme, forms the basis of the overall
economic policy strategy, including the employment strategy. Important objectives of the Danish employment policy up
to year 2005 are:
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• An increase in the labour force of about 80,000 persons from 1998 to 2005, equalling nearly 3 per cent.
• An unemployment rate at a level of about 5 per cent of the labour force according to national definition and a
moderation of development in wages.
• Reduction of the number of persons on transfer income with about 60,000 persons from 1998 to 2005.
• Reduction of the tax burden.
• Reduction of public debt.
The main challenge in the employment strategy lies in obtaining the necessary growth in the labour force. The
demographic development as such will lead to a fall in the labour force, the rate of unemployment is low and in the
beginning of 2000 collective agreements in some sectors were concluded whereby the number of holidays will be
increased.
Denmark intends to continue and further develop the structural policy which involves phasing in the reforms of the
labour market, the early retirement scheme and the tax system, strengthening labour market measures and a continued
development of the inclusive labour market.
3. Progress assessment
3.1. General appreciation
The NAP 2000 is built on the previous NAPs and it reflects very well the development and the progress made in
implementation. The Danish labour market policy is progressing well and has an even stronger focus on the need to
increase the labour force and the necessity to maintain and develop the qualifications of the labour force. Results are
achieved under all four pillars but especially satisfactory results are shown for the employability pillar.
In addition, monitoring and evaluation are seen to play an increasing role in the on-going policy process. The NAP
describes in a coherent way the mix of policy measures at both national and regional level, from legal measures to
campaigns aimed at changing attitudes and behaviour. Progress is visible concerning economic and statistical
information but improvements can still be made.
3.2. Implementation of the 1999 National Action Plan
On
employability,
the NAP states that the Community target for prevention of youth unemployment is fully phased in
and that the adult unemployment target will be met at the beginning of 2001. The indicators show for 1998 that 90 per
cent of the insured young unemployed persons and 96 per cent of the insured adult unemployed persons were out of
unemployment before reaching 6 and respectively 12 months of unemployment. On the other hand, for the small number
of insured persons (i.e . 10 and 4 per cent respectively) remaining unemployed after 6 respectively 12 months without
having been offered an action plan, the indicators for non compliance are 84 per cent and 76 per cent respectively.
Evidently this requires additional effort. The NAP states that the situation has changed for young persons from the end of
1999 and for the adults it will change from the beginning of 2001.
The activation rate for insured persons in 1999 (1
st
{{SPA}} 3
rd
quarter) was 44 per cent. In general indicators for non-
insured persons are not given (about 20 per cent of unemployed persons according to national definition).
Efforts continued in implementing policies to increase the incentives for older persons to stay in the labour market which
is also the aim of a new voluntary early retirement scheme for persons aged 60 and over started on 1
st
July 1999. The
initiatives to promote a labour market open to all were strengthened, including principles for a reform of the disability
pension scheme, a rise in the number of jobs on special terms and a further reduction of the number of persons on tran
sfer income in 1999.
Lifelong learning has high priority and partial targets are set, however the indicators should be further developed. An
ICT action plan is nearly fully implemented and ICT has become compulsory in all vocational training programmes.
As regards
entrepreneurship,
favourable framework conditions for creation of new enterprises remained among the
central priorities including reducing administrative burdens, counselling entrepreneurs before business start up and
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support to innovative business start ups. In relation to the target to utilise the employment potential of the service sector,
the use of the "Home service" scheme rose to 14.3 per cent in 1999 from 12 per cent in 1998 of the total number of
households.
On
adaptability
the "MOC" project (Management, Organisation and Competence) supporting adaptability of business to
competition conditions in a knowledge-based economy is running as planned. On training, an evaluation of a pool to
support planning of training activities has shown that about 50,000 employees have been covered and half of the
enterprises state that their project has focused on all employees. New collective agreements in fields regulated by the
Danish employer s' Confederation (DA) and the Confederation of Danish Trade Unions (LO) implied that a vast majority
of the relevant employees are now covered by a more flexible calculation of average working hours. Also, better access
to part time work has been incorporated into these agreements.
As regards
equal opportunities,
the commitment to integrate the gender mainstreaming approach into all guidelines
continued. A proposal for a new equal opportunities act has been tabled, including a proposal to set up a "Knowledge
Centre for equal opportunities". One of the tasks of the Centre will be to provide better conditions for monitoring
development seen from a gender perspective. Concerning family-friendly policies the degree of coverage for children in
day care faciliti es, school clubs and youth clubs (age groups 6 months - 17 years) rose to 55 per cent, an increase of 1
percentage point between 1998 and 1999.
The
social partners
are strongly involved in the implementation of the employment strategy. They are concerned in the
collective bargaining and also through partnership with government and authorities. The labour market reform is an
explicit example of the involvement of the social partners by means of partnership.
The
ESF
assistance for the new programming period 2000-2006 is based on Denmark's economic and employment
policy objectives up to year 2005, the European Employment Strategy and Denmark's employment priorities as set out in
the NAP 1999 but also the recommendations addressed to Denmark by the Council.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Denmark's employment policies
(1) Pursue reforms of the tax and benefit system so as to reduce the overall fiscal pressure on labour, in particular the tax
burden on low incomes, and to increase incentives to take up or remain in jobs. The reform of early retirement and leave
schemes should be completed and closely monitored in the light of the need to
increase labour supply;
(2) Promote training and job opportunities for
unemployed women,
and examine, in the context of a gender mainstreaming
approach, ways to reduce the current levels of
occupational and sectoral segregation
in the labour market.
4.1. Initiatives taken in response to recommendations
The first recommendation aiming at an
increase in labour supply
has been followed. As the measures are being phased
in or recently put into force, it is too early to assess whether they are sufficient to reach the objective. Particular attention
needs to be paid to the reduction of the overall
fiscal pressure on labour.
Changes in the tax system within the so-called "Whitsun package" are being phased in as planned including better
incentives for persons to obtain ordinary employment. The total tax burden for 1999 is expected to be 50.8 per cent of
GDP while the total tax burden for the years 2000 and 2001 is expected to fall to 50 per cent and 49.7 per cent
respectively. In the medium term projections the tax burden is scheduled to be reduced to 47.7 per cent of GDP by year
2005 (national definition). The recent important measures in the field of rules on availability for work, leave schemes
and early retirement schemes have strengthened the incentives to take up or remain in job. The reform of the leave
schemes has succeeded in decreasing the number of persons on leave with 10,600 or 28 per cent in 1999 whereas the
number of persons on early retirement continued to rise. As the reform of the voluntary early retirement scheme was not
put into force until July 1999, information for indicating the effect will be available at the earliest in summer 2000.
On the second recommendation, satisfactory results have been achieved on promoting training and job opportunities for
unemployed women. Different measures have been taken to tackle the current level of gender segregation in the labour
market. Efforts to implement a gender mainstreaming strategy continued along with the work to improve monitoring of
gender inequalities. In 1999 women benefited more than men from the improvement of the labour market resulting in a
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reduction of the unemployment spell to 1.5 percentage points. The activation rate for women continued to be higher with
52 per cent compared to 35 per cent for men. As part of the modernisation of the labour market systems, pilot projects
have been initiated in the field of gender neutral job placement. A proposal for a new "Act on equal opportunities for
women and men" including the mainstreaming approach has been put before the Danish parliament.
4.2. Other policy initiatives
On
employability
in order to ensure more effective integration of unemployed persons into the labour market the focus
is increasingly on the effects of active labour market measures. A new measure has been introduced, "Work practice",
meaning short-term (2-4 weeks) periods of work experience to find out if the person has the required qualifications or
needs further training. Lifelong learning will be reinforced through the so-called "VEU reform" and in the ICT field
93 per&n bsp;cent of pupils in the 7
th
-9
th
grades have access to computers and 85 per cent have access to the Internet.
The focus on the inclusive labour market is underpinned by new measures laid down in the Finance Act for 2000.
Moreover in cooperation with the social partners a general action plan has been prepared for improving the integration of
ethnic minorities on the labour market.
As regards
entrepreneurship,
new initiatives include "The Government's industrial strategy.dk.21". Under this plan, it is
planned to establish a guarantee scheme to secure loans to small enterprises.
On
adaptability
in 2000 new collective agreements in the private labour market are concluded for four years. In these
agreements aspects in the employment guidelines were negotiated such as work organisation, part-time work, life-long
learning and the terms for employment of persons with reduced working capacity.
Performance Indicators
Denmark
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
76,5
81,2
71,6
66,0
84,4
54,2
68,6
76,2
61,4
1998
75,3
80,2
70,3
66,4
83,4
50,4
66,9
74,9
59,3
1997
75,4
81,3
69,4
68,2
82,8
51,4
67,0
75,2
59,2
1996
74,0
80,5
67,4
66,0
82,2
47,5
66,1
75,1
57,6
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
5,2
4,5
6,0
7,2
7,0
7,3
1998
5,2
4,1
6,6
5,8
5,3
6,2
1997
5,6
4,6
6,8
6,2
5,4
7,2
1996
6,8
5,5
8,3
7,6
6,5
8,8
EU 1999 EU1996
9,2
7,9
10,8
8,5
8,5
8,5
10,8
9,6
12,4
10,2
10,3
10,1
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Long-Term Unemployment Rate
Males
Females
1,1
0,9
1,2
1,3
0,9
1,8
1,5
1,2
1,9
1,8
1,5
2,1
4,2
3,5
5,0
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
2,0
2,5
0,5
0,6
1997
1,0
3,1
2,1
-0,3
1996
0,7
2,5
1,9
-0,3
EU 1999 EU 1996
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
1,1
1,7
0,6
0,6
GERMANY
Conclusions
General appreciation:
While there has been some reduction in the unemployment rate, economic growth was not strong
enough to improve job creation and employment growth remained the lowest in the EU. The stock of adult long-term
unemployment, particularly for older workers, remained relatively high. There was no increase in the participation rate
of older workers. The lack of job creation in the East German Länder continues to be very worrying.
Policy mix:
The policy mix between the four pillars is more balanced than in previous NAPs. Notably actions under the
employability and entrepreneurship pillar have been strengthened.
Response to Recommendations:
Preventive actions to fight long-term unemployment have been increased by
broadening the integration pathway approach. Close monitoring is required for ensuring that such efforts are sufficient
for fully complying with guidelines 1 and 2 by 2002 and for reaching the targets set nationally in terms of inflows into
LTU.
Initiatives to create jobs in services, notably in the field of ICTs, and specific programmes for SMEs are being reinforced
and show encouraging results. Setting up new businesses is promoted in a variety of ways. However, in order to achieve
the strategic goals of the Lisbon European Council the potential for job growth in service activities should continue to be
increased.
While the adoption of the tax reform 2000 and the enterprise tax reform is a major step, by reducing certain disincentives
in the tax system to take up work and offer jobs, more action should be undertaken to continue this process. Little has
been done to modernise benefit systems, although for older workers the retirement age was raised.
The overall tax burden on labour has risen recently and is still one of the highest in the EU. The tax reform 2000 is
expected to start reversing this trend. Model projects to create jobs for low-paid workers are being initiated. These
policies need to be monitored closely with regard to their effective implementation and job creation impact.
Common policy indicators have been provided, but need to be further refined. The possibility of a quarterly Labour
Force Survey is being considered and test surveys are envisaged.
Challenges ahead:
Important employment problems continue to persist in parallel with certain skill gaps, notably in ICT
activities. Training actions need to be further stepped up and modernised, namely in the context of the results of the Josb
Alliance process. The development of a strategy for lifelong learning, including the setting of quantitative targets, may
help to underpin these efforts. A critical re-assessment of labour market policy in East Germany is needed to promote st
ronger employment growth. In the field of gender equality the data show that Germany faces a gender pay gap, notably
in the private sector, and that equal opportunities authorities and other relevant actors should pay attention to narrowing
this gap.
1. Economic and employment situation
Real GDP growth slowed down from 2.2% in 1998 to 1.5% in 1999. Real unit labour costs continue to decline although
to a lesser degree than in 1998. The number of employed persons increased, as in 1998, by an average of 0.3%, and the
employment rate increased by about one percentage point, more for women than men. The low employment growth is
partly due to the unification process. Employment rates for older workers remained stable. The rate of unemployment
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went down slightly in 1999, and joblessness among women continued to be higher than among men, although the
difference narrowed somewhat. The youth unemployment ratio went down in 1999 as did the long-term unemployment
rate, in both cases by more for women than for men. Germany continued to display a dual labour market. In the new
Länder overall registered unemployment remained roughly twice as high as in the Western part of the country. Women
continued to be especially hard hit by the serious situation in Eastern Germany. <>
2. Overall employment strategy and its main objectives
To reduce unemployment and create favourable conditions for better job growth the government has initiated major
fiscal reforms and started a programme to consolidate public finances. More generally the economic and social policy
agenda undertakes to link employment, education, training, research and innovation policies, in order to raise, in
particular, investment in R&D and human resources, to increase capital investment and to provide for the necessary
infrastructure. Attention i s given to opening over-regulated markets, fostering the diffusion of information and
communication technologies as well as to support programmes for start-ups and SMEs. The main issues for labour
market policies lie in prioritising active measures over passive income replacement payments and strengthening the
preventive approach. Efforts to modernise the dual system and increase continuing training have been stepped up.
Policies agreed by the social partners in the Jobs Alliance at the macro-economic le vel aim at employment-oriented
collective bargaining and improved working conditions and pay in accordance with the gains created by productivity
increases. In the area of equal opportunities improvements were launched in the framework of the programme "Women
and Work".
3. Progress assessment
3.1. General appreciation
In 1999 the strengthening of ALMP and its preventive thrust has been continued. Newly developed indicators have been
developed for monitoring compliance with guidelines 1 and 2. However, further efforts are needed both to combat the
high stock of the adult long-term unemployed and increase the input into continuing training. Activities supported by
specific programmes, notably with regard to SMEs and ICTs, are showing first positive results. The involvement of the
social partners in t he field of adaptability has been increased, though further action is needed. The issue of gender
mainstreaming is being actively supported.
The German authorities and social partners have made efforts to comply with the EES. Certain inroads have been made
in the field of increasing employability. The overall tax burden on labour has, however, increased. This situation requires
forceful implementation of the fiscal relief measures of 1999 and the tax reform of 2000 with a view to reducing the
overall tax burden in the coming years.
3.2. Implementation of the 1999 NAP
Employability:
In general ALMP tools have been oriented more towards prevention and an integrated pathway approach.
These efforts should be fully in place within the next two years.
All the efforts described in earlier NAPs concerning the fight against youth unemployment are continuing, including the
Immediate Action Programme. The German efforts traditionally focus on a broad approach towards prevention by way
of the dual training system which covers about 2/3 of the relevant age groups. The policy input and output indicators
show that 74.4% of those who became unemployed in the course of 1998 started a measure within a concrete action plan
before six months of unemployment. About 16% of those remaining jobless beyond six months have not started an
active policy measure (rate of non-compliance). Active measures were undertaken in the framework of the Immediate
Action Programme to combat youth unemployment and to offer training places to young people, in addition to regular
ALPM measures. With regard to long-term unemployment among adults, efforts have generally been stepped up through
the expansion of the individual pathway approach. In order to intervene earlier, certain thresholds for eligibility have
been more strongly implemented. The indicators show that 77% of all who entered unemployment in 1998 have started a
measure within a concrete action plan before 12 months. 21% of those who remained unemployed after 12 months had
not started a measure within an individual action plan. These figures suggest a trend towards the implementation of this
guideline in the near future.
Concerning guideline 3, in 1999 about 1.5 m persons (45.2% women) participated on average in active measures at
federal level, 240 000 more than in 1998. At Länder level, it is estimated that, as in 1998, 385 000 persons were
supported. Of the registered unemployed, 45.8% were in active measures, against 37.2% the previous year. In addition
the communes continued to bring social assistance recipients into work.
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Efforts to improve the participation rate of older workers have been intensified. Retirement age is being raised and
pensions paid before the statutory retirement age are being reduced. However, flexible exit procedures remain important
action parameters, as agreed in the Jobs Alliance process and in collective agreements.
Entrepreneurship:
The number of self-employed is generally on the increase. About 100 000 persons received the
bridging allowance for unemployed to start up their business. Access to finance is traditionally a priority: the successful
new "Stargeld" programme promotes small-scale start-ups. About 30% of the beneficiaries are women. Through a
specific programme (BTU-programme) the federal government made available in 1999 nearly 0.8b{{X80}} for venture
capital for small logy companies. Coaching, risk capital and training programmes for SMEs have been increased.
Measures to close the estimated gap of some 75 000 skilled persons in ICT activities continue to be stepped up. The
overall tax burden of the German economy and the effective tax rate on employed labour have been high and rising up to
1999. However, the various steps in the tax relief acts, which started in 1999, the impact of the eco-tax and the upcoming
reduction of the corporate tax rate are expected to creat e more employment opportunities in the near future.
Adaptability:
Action has been taken to improve partial retirement provisions for older workers, especially in SMEs, and
possibilities for persons working part-time. In the Jobs Alliance concertation discussions the social partners committed
themselves to modernise the organisation of work, to increase part-time work and make more use of "working-time
accounts". In many collective agreements the issue of initial and continuing vocational training has been prioritised.
Equal Opportunities:
The "women and jobs" programme, announced in the last NAP, has been put into action through a
variety of measures, e.g. by increasing the share of women in ICT training and computer science studies, as well as in
leading positions. The Federal Employment Agency continues to pursue a double-handed approach concerning gender
mainstreaming and specific measures for equal opportunities. Efforts to increase childcare facilities, notably in West
Germany, are bein g undertaken. The high gender pay gap identified in the ECHP needs to be narrowed. Provisions in
the tax and benefit system which may form a disincentive for an increased female participation on the labour market
should receive strong attention in the government report on the employment and income position of women foreseen for
2001.
Social Partners:
The Social Partners have drawn up the text on guideline 15 in the NAP. The Jobs Alliance process, in
which the federal government and the social partners participate through regular top-level concertation meetings, has
resulted in a number of joint statements, which notably concern employment-friendly working-time policies and the use
of partial retirement for older workers. Of particular importance are policies in respect of maintaining and creating initial
and continuing training facilities. In a number of important industries these intentions are underpinned by way of
stability- and employment-oriented collective agreements over the medium term. These collective agreements make an
essential contribution to good overall economic conditions. The Jobs Alliance concertation has also been extended and
deepened by similar employment and training alliances at Länder level.
ESF and the Structural Funds:
On average, over the years 1994-98, some 250 000 people per year were supported by
the ESF. The ESF contributes 3% to the Federal and 36% to the Länder ALMP measures. In 1994-99 some 7.4 b
{{X80}} were available through the ESF; in 2000-2006 this amount will rise to 11.5b{{X80}}. While supporting the
guidelines as a whole, particularly the preventive approach, 10% of the ESF allocation will be earmarked for specific
measures for women. ERDF an ncing in German Objective 1 areas (9.91 b{{X80}} between 1994-99) has contributed to
maintaining and creating about 480 000 jobs. In the 2000-2006 period the ERDF and EAGGF resources in Objective 1
areas will rise to 14.75b{{X80}}.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Germany's employment policies.
policies,
(1) Strengthen preventive policies, by taking early action based on individual needs to prevent people from becoming long-term unemployed.
Germany should increase the level of ambition of the present targets, to bring down the inflow into long-term unemployment to the levels reached by
the best performing Member States (less than 10% after 12 months);
sector,
(2) Adopt and implement a coherent strategy to exploit the employment potential of the services sector, encompassing regulatory, fiscal and other
measures to reduce the burden for setting up new undertakings;
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(3) Examine in more detail disincentives within the tax and benefit system which may discourage labour market participation of all groups,
workers.
especially of older workers. Germany should in particular reassess existing policies facilitating early retirement and consider the policy choices most
appropriate to avoid the early withdrawal of workers from the labour market and to promote employment of older workers;
(4) Pursue and monitor efforts to bring down gradually the fiscal pressure on labour, by reducing taxes and social secuirty contributions. In
labour,
scale,
particular, labour costs should be reduced further at the lowest end of the wage scale, while respecting the need for fiscal consolidation;
(5) Take appropriate measures to improve and adapt its statistical system so as to provide data compatible with the common policy indicators by
2000. Germany should consider introducing a quarterly Labour Force Survey in the light of the EC Council Regulation 577/98.
4.1. Initiatives taken in response to recommendations
In order to
strengthen preventive policies,
initiatives taken are expected to result in a full implementation of guidelines
1 and 2 by 2002 at the latest. The target for the inflows into long-term unemployment for both young people and all
groups of unemployed is to reduce this share to under 10% (from respectively 15% and 17% in 1999) over the same
period. As long-term unemployment, though decreasing, is still high, the implementation of the policies put in place in
this context will need close monitoring as to their real impact on labour market performance.
The
development of a coherent strategy to exploit the employment potential of the services sector
is reflected in a
panoply of measures under the entrepreneurship pillar and initiating and upgrading a set of programmes, notably for
SMEs. While an increase of employment in services has recently been registered the impact of all these policies will
only be felt gradually over time.
As to the
examination of disincentives
which may discourage the labour market participation of all groups,
especially
of older workers,
actions have been initiated by the gradual reduction of the overall fiscal and social security burden.
Although demographic changes point to a reduction of the labour supply and a natural easing of the unemployment
problem more positive action should be envisaged to increase the participation of older workers.
Despite certain income and corporate tax reliefs in 1999 and the introduction of the 'eco-tax', the effective
tax rate on
employed labour
rose until 1999 and remained at a high level. The tax reform 2000 will further reduce personal income
tax rates over the whole income tax range, raise basic and family allowances and lower the tax rate on corporate profits
from 40% to 25% in 2001. Together with the continued reduction of the social security contributions for retirement
pensions and increasing compensatory taxes on energy consumption (the "eco-tax") both the overall tax burden on
labour and the effective tax rate on employed labour are foreseen to decrease and it is expected to gradually create more
employment opportunities. Some model projects are being launched in the summer of 2000 to improve incentives for
labour market participation. They focus on giving more effective incentives to employers to offer, and workers to take
up, jobs
at the lower end of the wage scale.
All these policies need to be monitored closely with regard to their
effective implementation and job creation impact.
The
policy indicators
concerning guidelines 1 and 2 have been provided on the basis of a combination of a statistical
survey in representative labour market regions and register labour market flow data Gender disaggregation is, however,
missing, but is foreseen for 2001. The indicators for guideline 2 do not yet completely focus on adult unemployed only,
but comprise all age groups. The whole system should therefore be put on a firmer base. The question of whether a
labour force survey could be carried out on a sub-yearly basis is being examined and test surveys will probably be
conducted in the autumn of 2000.
4.2. Other initiatives
Employability:
It is expected that in 2000 about 1.6 m persons will be supported by Federal ALMP programmes.
Towards the end of 2000 the number of apprenticeship places in connection with the measures taken with regard to the
ICT, will be raised to 40 000. Lifelong learning is to be increased, notably in ICT activities for the employed and
unemployed. Companies have committed themselves to verifiably increase in-firm training for internet-rel evant
technologies. By the end of 2001 all educational establishments will be equipped with multi media PCs and internet
access. It is anticipated that the share of first year students in computer sciences will increase to 40% by 2005. A bill has
been adopted to bring about 50 000 severely disabled persons back into the labour market in the coming 2 to 3 years.
Entrepreneurship:The
Government has announced the establishment of an action plan, to be implemented by the end of
2001, for the reduction of bureaucratic obstacles to start-ups and SMEs. The efforts to both increase innnovation and
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promote the use of ICTs in SMEs will continue. It is expected that the gradual implementation of the tax reform 2000 as
well as the envisaged reduction of the share of social security contributions in gross pay from the present 42% to 40% in
the medi um term will further improve the business climate. The initiated model projects for workers at the lower end of
the wage scale and for long-term unemployed are also expected to show the first postive results.
Equal Opportunities:
The share of women in future-oriented jobs is targeted to increase to 40% in 2005. Legal
educational leave provisions will be revised in 2001 with a view to more flexibility and a better use of part-time work
opportunities. An overall report on the employment and income position of women will be submitted towards the end of
2001. Further new legal instruments for equal opportunities are being launched.
Performance
Indicators
Germany
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
64,8
72,4
57,1
46,2
78,3
37,8
58,0
70,4
45,6
1998
63,7
71,7
55,6
45,1
76,9
37,7
57,3
69,9
44,8
1997
63,6
71,8
55,2
44,4
76,6
38,2
57,6
70,2
45,0
1996
64,1
72,7
55,4
45,5
76,7
37,9
58,5
71,3
45,7
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term
Rate
Unemployment
Males
Females
8,8
8,3
9,3
4,7
5,4
4,0
4,5
4,1
4,9
1998
9,4
8,9
10,2
5,2
6,0
4,4
5,1
4,6
5,8
1997
10
9,3
10,8
5,7
6,6
4,7
5,1
4,5
5,8
1996
8,9
8,2
9,8
5,3
6,0
4,6
4,4
3,8
5,2
EU 1999
9,2
7,9
10,9
8,5
8,5
8,5
4,2
3,5
5,0
EU1996
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
0,4
2,2
1,8
-1,4
1997
-0,8
1,5
2,3
-1,6
1996
-0,8
0,8
1,5
-0,4
EU 1999 EU 1996
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
0,3
1,5
1,2
-0,3
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GREECE
Conclusions
General appreciation:
In 1999 the Greek economy grew by 3,5%, faster than the EU average for a fourth consecutive year.
By the end of 1999 Greece met all convergence criteria for joining the Economic and Monetary Union. Though total
employment growth rate for the period 1994-1999 at one percent per annum is higher than the European Union average,
unemployment is now well above the EU average reflecting structural deficiencies of the labour market. Yo uth, female
and long-term unemployment rates remain significantly higher than the corresponding EU averages. The gender gaps in
employment and unemployment rates are among the highest in the EU.
Policy mix:
The new policies being announced go in the right direction but their implementation needs to be accelerated.
More emphasis should be put on prevention. Efforts have to be more consistently applied if concrete results are to appear
in time.
Response to Recommendations:
Despite some progress, the reform of the Public Employment Services has been
delayed and it will have to be tackled as a matter of urgency. Greece is making efforts but has not met yet the prevention
and activation targets of the EES. The existing statistical monitoring system is still inadequate and data on prevention
and activation is not available.
A number of actions were introduced aimed to promote gender mainstreaming and to increase female participation in the
labour market, but more concerted action is necessary if the female employment rate is to move nearer the EU average.
A number of measures aimed to improve the quality of education and training were adopted or implemented but the
effort should continue. The social partners have been consulted more systematically, but there is still considerable room
for a more active participation, in particular with regard to modernisation of work organisation and flexibility in the
labour market.
In spite of the introduction of several new measures aiming to stimulate entrepreneurship, further action is needed
towards reducing the administrative burden for setting up new undertakings and exploiting the job potential of the
services sector.
Challenges ahead:
Structural deficiencies in the labour market persist. Therefore, Greece needs to continue and
intensify efforts to reform the Public Employment Services and implement preventative and activating policies according
to guidelines 1, 2 and 3; further encourage labour market participation, in particular of women, and promote gender
mainstreaming; further improve the quality of education and vocational training and
develop a comprehensive lifelong
learning strategy; further stimulate entrepreneurship, facilitate business start-ups and promote the job creation potential of
the services sector; encourage a more active participation of the social partners, in particular for the modernisation of work
organisation and take further measures to upgrade the statistical monitoring system.
1. Economic and employment situation
By the end of 1999 Greece met all convergence criteria for economic and monetary union. Macroeconomic performance has
improved considerably in recent years. Real output growth remained for a fourth consecutive year above the EU average.
Stimulated by the increased activity, labour supply has increased substantially in the last few years and so has employment but
at a lower pace. Following an increase by 3,4% in 1998, employment in 1999 declined by 0,7%, whereas employment in the
European Union increased by 1.4%. In 1999 the employment rate declined slightly to 55,4%, substantially lower than the EU
average of 61%. The difference in employment rates between Greece and the EU average is exclusively due to differences in
female employment rates, as male employment rates are almost identical.
In 1999 the unemployment rate increased to 11,7%, which is higher than the 1999 EU average. The rise in unemployment is
attributed mainly to the increase in the labour force - due to increased female participation and immigrant workers - and the
decline of employment in agriculture. The female unemployment rate was over twice as high as that for men and substantially
higher than the EU average. The youth unemployment rate was higher than the EU average and above the national
unemployme nt rate. The long-term unemployment rate rose to 6,9%, above the EU average. The female long-term
unemployment ratio is much higher than that for men.
Labour productivity rose by 4,1% in 1999, a substantial improvement in comparison with the 0,3% fall recorded in 1998, and
much above the EU average of 0,9%. Partly as a result of increases in labour productivity, real unit labour costs fell by 1,4%
in 1999, thereby reversing the upward movement experienced in 1997 and 1998.
2. Overall employment strategy
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Growth promotion, unemployment prevention and support for vulnerable groups are the main objectives of the new Greek
government. Structural reforms combined with flexibility and adaptation policies in the labour market should strengthen
competitiveness and contribute to sustainable growth within a framework of social cohesion. Combating regional inequality
in unemployment is also a priority for Greece. The new government is committed to continue its efforts to pass from passive
to acti ve employment policies and apply the individualised approach, in parallel with the modernisation and restructuring of
public employment services.
It is also striving to promote a knowledge society, with the goal of preparing a work force able to keep up with developments
in Greek and international labour markets. Equal opportunities for vulnerable groups and gender equality are being pursued
both in mainstream and through specific measures. In 2000 Greece aims to create 75.000 new jobs and 75.000 new training
posts. It also intends to extend the accreditation regulations for trainers, to make efforts to better use employment pos
sibilities in new areas such as new technologies and to intervene on the labour market if necessary (e.g. working time
arrangements) with a view to increasing the number of jobs available. The Greek government is striving to achieve the
greatest possible social consensus by strengthening the role of social partners in planning and implementing policies and
encouraging them to take positive initiatives. The significance of restructuring the social security system with a view to
ensuring social solidarity is emphasised. Greece will strengthen and implement its employment strategy and policies in the
period 2000-2006 by more efficient use of ESF credits and the Structural Funds more generally.
3. Progress assessment
3.1. General appreciation
The NAP 2000 is the continuation of the previous plan. Despite progress, a more strategic vision and a better balance of
policies among pillars are necessary. Employability continues to be the most important pillar. Some new measures have been
introduced. The absence of appropriate statistical data, including the flows into and out of unemployment, makes the
assessment of policies and measures difficult. The delay in Public Employment Services reform is hampering the
implementation o f other actions in the NAP. Despite some efforts, Greece has not yet adopted the preventative, activating
and individualised approaches and has not met the targets of the EES. A comprehensive lifelong learning strategy has to be
developed and targets to be set. A number of new measures have been introduced with the aim of supporting SMEs and
facilitating their access to the capital market. Some new measures promoting equal opportunities between women and men
provide a first response to dealing with the gender gap.
3.2. Implementation of the 1999 National Action Plan
Employability:
Despite some efforts to accelerate the reform of Public Employment Services, action remains well behind
schedule. 24 new Employment Promotion Centres are now in operation, estimated to double by the end of 2000. The
programmes "Young people into Active Life" and "Back to Work" remain the main actions for preventing youth and long-
term unemployment. Although no detailed evaluation of the programmes has been undertaken so far, the number of
participants under the "Back to Work" scheme exceeded the target set in 1999 and 60% of the new employment posts were
retained after the end of the programmes. No explicit information exists on
meeting the 20% activation target. A comprehensive strategy for lifelong learning has to be developed and targets to be set.
The Employment and Vocational Training Fund, with the active participation of the social partners, enhanced its activities,
financing a number of new initiatives. The establishment of new Vocational Orientation Centres and the operation of a
Special Centre for Continuous Vocational Training have been planned.
Entrepreneurship:
Measures for reducing overhead costs and administrative burdens for business have been implemented
albeit to a scale lower than expected. The modernisation of the tax system was accelerated in 1999. If this effort continues in
2000, it is estimated that it will have an overall positive impact, especially on self-employment. The reduction in non-wage
labour costs {{SPA}} which was one of the most important initiatives under this pillar in 1999 - was legislated for
ember 1999 and implementation started at the beginning of 2000. The implementation of measures under the Territorial
Employment Pacts started after long delay in September 1999. Although not ambitious, this is an encouraging development
for improving job opportunities at the local level. Some specific cultural employment programmes aimed at promoting the
employment potential of the services sector have been implemented, but similar initiatives in other sectors identified as
priority areas in 1999 (e .g. new technologies, environment) have not followed.
Adaptability:
1998 legislation - which provides for more flexible forms of work - is the main statutory measure addressing
directly the objective of this pillar. Some progress has been made in its implementation, especially with regard to setting up
private employment agencies, part-time work and the pilot application of flexible forms of work in the banking and
telecommunications sectors. Part-time work has been extended to the public sector. A consultation with the social partner s
is planned for this year with a view to further promoting flexible working arrangements. The Greek government believes that
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the privatisation programme is likely to have an indirect positive impact on adaptability and flexible working arrangements.
New skills have been experimentally explored. Various in-house training schemes have been implemented but to a lower
scale than envisaged in 1999. The social partners continued to play a major role in this area, but there is still room for
improvement.
Equal opportunities:
Steps have been taken to improve gender mainstreaming. Priority is to be given to ensuring that
women participate in all active labour market policies proportionally to their share in unemployment. The programmes
"Support Structures for Female Entrepreneurship" and "Strengthening Female Entrepreneurship" have been implemented,
although only a small part of the 1999 budget of the latter was spent. The establishment of childcare centres for 7.500
children has alm ost been completed, and 191 Social Welfare Centres for the care of the elderly were created. The demand
for such services is planned to be fully satisfied during the Structural Fund implementation period 2000-2006.
Social partners:
Efforts have been made to upgrade the role of the social partners, though there is still room for
improvement. The activities of the Employment and Vocational Training Fund {{SPA}} co-financed by the social partners
{{SPA}} in training actions in small enterprises were enhanced. A National Agency for Vocational Training was established
with the joint participation of the Ministries of Labour and Education, as well as the social partners. The tripartite couns ttees
in the Organisation for Vocational Education and Training are worth mentioning.
ESF and Structural Funds:
A very considerable proportion of the active labour market policies implemented {{SPA}}
mainly under the employability, adaptability and equal opportunities pillars {{SPA}} was co-funded by the Structural Funds,
in particular the ESF. Care has been taken that the CSF 2000-2006 and the relevant operational programmes are focused on
the objectives and priorities of the EES as implemented through the Greek NAP. The development of a complete and
reliable ncerning targets and evaluation indicators would reinforce the positive role of the ESF.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Greece's employment policies
(1) Take decisive, coherent and measurable action to prevent young and adult unemployed people from drifting into long-term unemployment. In
particular, strengthened efforts should be made to complete the reform of employment services, to implement preventive policies in compliance with
guidelines 1 and 2.
(2) Examine in more detail disincentives within the tax and benefit system which may discourage labour market participation, in particular of
women, so as to increase progressively the female employment rate towards the EU average of 50%, and reinforce gender mainstreaming by building
on progress already made in respect of entrepreneurship.
(3) Pursue efforts to further improve the quality of education and vocational training, and to strengthen support for continuous training, in
particular by involving social partners more actively.
(4) Adopt and implement coherent strategies, encompassing regulatory, fiscal and other measures, designed to reduce the administrative burden for
setting up a new company, in order to stimulate entrepreneurship and exploit the job creation potential of the service sector.
(5) Encourage a partnership approach and promote concrete commitments by the social partners at all appropriate levels on the modernisation of
work organisation, with the aim of making undertakings more productive and competitive while achieving the required balance between flexibility
and security.
(6) Take appropriate measures to upgrade the statistical monitoring system, so that policy indicators on prevention and activation will be provided
by 2000, with the agreed definitions and methods.
4.1. Initiatives taken in response to recommendations
Greece has not taken any particular additional action or initiative additional to the existing to prevent
young and adult
unemployed
people from drifting into long-term unemployment. Nevertheless, the completion of the restructuring of
OAED (Public Employment Service) is foreseen for the end of 2001.
The NAP 2000 provides no information regarding disincentives to
women's labour market participation
within the tax
and benefit system. Some care facilities for children and the elderly are being provided. Although several measures have been
gender mainstreamed
and some steps have been made towards increasing the female employment rate, a comprehensive
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strategy has to be developed and further steps are necessary to address the problem. Considerable sums will be allo cated for
the promotion of female participation in the next programming period of the Structural Funds.
Greece continued the implementation of the 1998
educational reform,
one of the main objectives of which is the
improvement of quality of education and training. Evaluation of the steps undertaken and social partners' involvement
should be built into the reform efforts. Action has been taken for the improvement of
continuous training,
in particular
through accreditation. Measures like the "Second Chance Schools" and the "Adult General Education" have not yet reached
their targets.
The continuing modernisation of the tax system is creating a positive environment for entrepreneurship. However, no new
measure directly targeted at the reduction of the
administrative burden
for setting up new undertakings is reported in the
NAP. Measures, designed to facilitate business access to capital, have been either taken or are under consideration. Although
they indicate a more coherent approach, the existence of more than one decision-making body is obstructing coordin ation in
certain cases, such as SMEs. An important planned statutory measure is the creation of the New Stock Exchange for
dynamic SMEs. Several actions included in the NAP 2000 are expected to improve the employment potential of the services
sector. The creation of a fund to support investments in new technologies is currently under study and is expected to
facilitate initiatives in the services sector. The preparation of a legislative framework for the operation of electronic
commerce is encouraging.
The
social partners
are involved in the planning and implementation of various policies and measures of the NAP.
Although efforts are being made to progressively upgrade their role no specific information is provided on their active
involvement or any commitments for the modernisation of work organisation. In this area the legal framework is defined by
1998 legislation on industrial relations, which has started to be implemented. The balance between flexibility and security in
w ork is a major concern of the Greek government.
Some steps have been taken for the improvement of the NAP
monitoring system.
The reform and computerisation of the
public employment services have not advanced sufficiently to allow for the calculation of the policy indicators for prevention
and activation. The lack of statistical data and indicators is a weakness of the Greek NAP.
4.2. Other policy initiatives
Employability:
Employability
Several new measures have been introduced, targeted at the improvement of education and the integration of
more vulnerable groups in the labour market. They seem an encouraging, but not sufficient effort towards a better quality of
education and vocational training. Greece will strive to comply with the Lisbon conclusions on information society by means
of an ambitious programme, co-funded by the Structural Funds in the 2000-2006 period.
Entrepreneurship:
Entrepreneurship
In a favourable macroeconomic environment, the imminent liberalisation of the telecommunications and
energy sectors and the planned privatisation programme, are expected to contribute to the further enhancement of
entrepreneurship. The improvement of the budgetary position has allowed the introduction of some fiscal measures such as
tax rate reductions and tax incentives for the creation of Venture Capital Companies. Moreover, the decline in interest rates is
r educing the cost of capital. Both developments are likely to promote investment and, hence, employment, although the
latter may also encourage the adoption of less labour intensive technologies.
Adaptability:
Adaptability
Pilot schemes concerning flexible forms of work organisation have been implemented in the
telecommunications and banking sectors. Their evaluation, which is underway, will constitute a basis for the introduction of
further flexibility in the labour market.
Equal Opportunities:
The establishment of a special inter-ministerial committee to coordinate the work on promoting equal
Opportunities
opportunities among all policies could be a first step to more concrete initiatives. New actions and sufficient credits have
been earmarked to promote gender in the new Structural Funds programmes.
Performance Indicators
Greece
Annual data
Employment Indicators
1999
1998
1997
1996
EU 1999
EU
1996
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Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
55,4
70,9
40,7
26,8
69,9
38,4
55,6
71,6
40,3
28,0
69,7
39,0
54,1
70,6
38,3
54,8
71,9
39,1
24,5
69,7
40,7
53,7
71,1
37,6
54,9
72,6
38,5
25,4
69,5
40,7
53,8
71,9
37,2
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term
Rate
Unemployment
Males
Females
11.7
7.5
17.8
12.5
9.5
15.3
6.9
4.0
11.1
1998
10,7
7,0
16,5
12,9
10
15,8
5,9
3,1
10,1
1997
9,6
6,2
14,9
11,5
9,0
13,7
5,3
2,8
9,2
1996
9,6
6,1
15,2
11,4
8,6
13,8
5,4
2,8
9,6
EU 1999 EU1996
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
1997
1996
EU 1999
EU
1996
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
-0,7
3,4
4,1
-1,4
3,4
3,7
0,3
0,6
-0,3
3,4
3,8
1,6
-0,4
2,4
2,8
-1,4
1,4
2,4
1,0
0,0
SPAIN
Conclusions
General appreciation
In 1999, Spain has continued experiencing a very positive trend of economic and employment growth
with a marked improvement in unemployment figures. Employment creation was significant and well above the EU average.
However, despite the positive trend, some of the pre-existing problems remain. The employment rate is still very low,
particularly for women. Long-term unemployment has decreased significantly although it is s till high. There was an
important increase in the number of stable jobs but the percentage of temporary employment, mostly of short duration, has
not significantly decreased, affecting particularly women and young people . Although their employment rate has increased,
women continue to have a disadvantaged situation in the labour market and they find it harder to leave unemployment and
find stable employment. Regional disparities remain striking.
Policy-mix
The Spanish employment strategy aims at the creation of stable employment. It relies both on a set of incentives
for permanent contracts and on a substantial development of active policies for the unemployed, presenting a better balance
with respect to passive support. This is complemented with legislative and administrative reforms to reduce firms fiscal and
administrative costs and to improve the efficiency of markets. The employment policy is carried out within a high ly
developed social dialogue.
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Response to the 1999 Council Recommendations
A serious effort is currently being made both at the central and regional
level to modernise the public employment system (PES), increase its coordination and improve its data management. The
effort to increase the efficiency of the actions at the beneficiary level is to be reinforced. Also, since 1997, the administrative
and fiscal burden on firms has been reduced with successful initiatives such as the 'one stop shop'. Measures to ensu re equal
opportunities involved guaranteeing proportional access to active measures, legislative initiatives and hiring incentives. Still,
more should be done to facilitate female labour force participation.
Challenges ahead
In 2000, efficient actions need to be further developed to address the problems of those facing more
employment market difficulties. The effort to coordinate PES and improve their efficiency should be continued. Also,
further measures should be taken to ensure the creation of stable and skilled jobs. Spain should intensify efforts to provide
the labour force with adequate skills in the framework of a comprehensive strategy of lifelong learning. A serious efforts s
hould be made to improve the quality of vocational education and training and to reduce the early school leaving rate.
1. Economic and employment situation
In 1999, the Spanish economy has continued to experience a very favourable evolution. Real GDP growth was 3,7% well
ahead of the EU average. The employment growth rate was 3,4% reaffirming the very positive trend that has existed since
1997. Only in 1999, 612.000 new jobs were created. Accordingly, the employment rate has increased from 48,2% in 1997 to
52,5% in 1999. Despite the increasing proportion of people at work, the employment rate is still below the EU average of
62,2%. The employment rate of women is particularly low (37,6% in 1999) although it has been improving. The increase in
employment has not yet absorbed the unemployed population and the unemployment rate is still high (15,9% in 1999)
although sharply falling. The long-term unemployment rate has been significantly reduced from 9,4% to 7,3%, although it is
still a serious problem mostly affecting women and older workers. The unemployment rate of women is more than double
that of men (23,0% and 11,2% respectively), w hich is aggravated by the increasing number of women entering the labor
force. Youth unemployment ratio has fallen from 14,5% to 12,5% in 1999 although their level of activity has also slightly
fallen.
Regional disparities are impressive with some regions having less unemployment than the EU average and others showing
unemployment rates above 25%. Geographical mobility has not been enough to reduce significantly the disparity in
unemployment. It may also have been hampered by a high temporality rate (32,6% of all workers work are on fixed term
contracts).
2. Overall Employment Strategy
The main objective of the Spanish employment policy as formulated in the Spanish National Action Plan is the creation of
stable employment and the improvement of the labour market mechanisms. It is a comprehensive policy that aims to
intervene in all fields: macroeconomic stabilisation, liberalisation of the markets for capital, goods and services and labour
market reforms. Labour market reforms are being undertaken in a context of social dialogue, with most measures being
negotiated wi th social partners. Most of the strategy is still built on the 1997 Agreement for Stable Employment agreed by
the social partners. Among other measures, this agreement promoted the reduction of the costs of permanent contracts
extended to women, young people and older workers. The other main action has involved an increase in the importance of
the active policies delivered by the public employment services and its collaborating entities. The financial resources
dedicated to active measures for employabi lity increased by or to 37% between 1997 and 2000.
Several legislative reforms have also been undertaken to improve working conditions in temporary work agencies, local
cooperatives, immigration and compatibility of working and family life. An important national initiative has been launched
aiming to increase the spread of information technology in society.
A new round of negotiations that will discuss labour market reform will start this year.
The employment policy is taking place in a dynamic context of institutional decentralisation, which will require persevering in
the effort to strengthen the coordination among intervening agents.
3. Progress Assessment
3.1. General Appreciation
Over the last two years, the Spanish employment policy has presented coherent National Action Plans, which while
addressing national specificity, prompted convergence towards the EES guidelines. Major efforts were made to develop
activation and prevention under the Employability Pillar and on diminishing fiscal and administrative costs for firms under
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Entrepreneurship Pillar. Progress on flexible work organisation or equal opportunities has been less dramatic. In addition, the
NAP does not adequately address the issue of regional disparities.
3.2. 1999 Implementation
In general, policies announced in the 1999 NAP were satisfactorily implemented. Financial resources dedicated to active
policies increased by 15% between 1998 and 1999, which allowed an increase in the number of actions provided. Still, despite
a satisfactory implementation effort, information on the effective impact of the different policies is scarce.
Regarding
employability,
1,8 million actions were implemented covering 1,1 million beneficiaries, much more than
predicted in last year's plan. Despite an increase in the preventive actions for adults, only 45% of the young people and 33%
of the adults that became unemployed benefited from activation before they reached long term unemployment. A greater
effort will be required to meet the Guidelines by the end of 2002. As regards GL 3, Spain met the common target in 1999.
There seem to be regional disparities in the coverage. Most of the increase went to guidance services, with 600,000 more such
actions carried out. There was much more difficulty in implementing aids to employment and particularly in setting up the
project to develop local initiatives. The individualised pathways approach has not yet been generalised but is currently limited
to experimental programs. There was nevertheless a substantial development of measures for people with disabilities.
Regarding the effi ciency and adequacy of actions, in depth individual interviews are systematically carried out to direct
unemployed to the most appropriate measure.
Attention should be paid so that the multiplication of intervening organisms does not affect the coordination and the
effectiveness of the policies. More generally, as expenditure on active labour market policy increases, increased efforts will be
required to ensure the efficiency of these measures and to monitor outcomes. The statistical system that integrates all public
employment services is still being developed. Improvements in education are not apparent and the early school leavi ng rate
is still worrying. Serious efforts have been made to reduce the tax burden on labour.
In the
entrepreneurship
pillar, regulatory changes and administrative simplifications have effectively decreased the burden
for new firms. The 'one stop shop' has been set up and is being spread to more regions. The project to develop the potential
of the local economy has not yet materialised but an effort was undertaken to set up a more comprehensive strategy that
addresses the specific problems faced by those initiatives.
Concerning
adaptability,
the temporality rate failed to decrease although 528.000 new stable jobs were created that
benefited from the social security reductions promoting permanent contracts. Complementary measures such as the reform
of the temporary work agencies were taken to promote stability and improve job quality. Also 261.287 new stable part time
contracts were signed in 1999 raising part time work from 7,7% of all employment in 1998 to 8,2% in 1999. A concrete
strategy on lifelong learning that would promote stability has still to be presented although actions in lifelong learning have
increased by 15%. There has been pressure from the government to diminish pre-retirement abuse and to encourage older
people to remain in the labour force.
In order to promote
gender equality,
the new legislation on the reconciliation of working and family life was implemented.
Special aids to employment targeted at women have been developed. Still, although women benefited to a large extent from
active policies, they are still under-represented in the more effective and intensive measures. Mainstreaming is understood as
guaranteeing a fair participation in all measures but no particular mechanisms to ensure it are described.
Social partners
have been consulted during the preparation phase of the NAP. The plan was nevertheless approved without
a consensus. The participation of both unions and employers association in the design of employment policies is established
and constructive. They also take an active part in the management of some of the policies such as the national lifelong
learning plan.
In 1999, the
ESF
provided financial support to active measures up to an amount of {{X80}} 1.771 million. Negotiations on
the use of the structural funds for the 2000-2006 period have agreed that the bulk of the {{X80}} 11.317 million ESF
contribution will be dedicated mainly to the development of active policies and to the support of lifelong learning. The ESF
will pay particular attention to the mainstreaming of equal opportunities. Through its intervention, the ESF constitutes rt to
the implementation of the measures announced in the NAP.
4. New Policy initiatives
The 1999 Council recommendations on the implementation of Spain's employment policies
Pursue the preventive policies initiated in 1998, moving beyond the identification of the unemployed persons' needs by
increasing the number and the efficiency of the individualised activation measures
so as to reduce significantly the
inflow of youths and adults into long-term unemployment;
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Adopt and implement coherent strategies, encompassing regulatory, fiscal and other measures, designed to
reduce the
administrative burden on companies,
in order to stimulate entrepreneurship and exploit the potential for more stable
employment in the service sector;
Intensify efforts to
mainstream equal opportunities
in employment policy beyond the preparatory measures already
announced in order to raise the female employment rate towards the average EU level;
Pursue efforts to
upgrade the statistical monitoring system,
so that policy indicators on prevention and activation will be
provided by 2000 in accordance with agreed definitions and methods. This is particularly important in the current framework
of decentralisation of active labour market policies.
4.1. Initiatives taken in response to the Recommendations
There has been an effort to increase the number of intensive
individualised activation measures,
mostly targeted at
unemployed facing more labour market difficulties. Preventative action is a substantial part of the activation effort and
particular progress has been made in the case of adults. The results of the detailed interviews will be used to improve the
adequacy of the measures offered by the public employment services although progress towards the generalisation of individ
ualised solutions is not documented. The focus on activation is well reflected in the budget, with active measures increasing a
further 32% in 2000. The system to improve the data management as well as the policy coordination of the regional systems
will be further developed but there is a danger of overlapping and loss of efficiency in the multiplication of intervening
agents.
To address the need
to reduce the administrative burden faced by companies,
the simplification of the administrative
procedures will continue. Particularly, the 'one stop shop' that started in a few provinces as an experimental project proved
satisfactory and will be extended. In addition, firms will be able to handle social security operations through the Internet. In
an effort to exploit the service sector potential, INFO XXI, a national initiative for the spread of the inform ation society,
has been launched. Involving {{X80}} 2.524 million, it aims at promoting internet use in households, schools and public
administration.
Regarding the
intensification of the mainstreaming of equal opportunities,
actions are foreseen that support
entrepreneurial projects among women and training in IT directed at women will intensify. There is a plan to develop a
system of childcare and services to dependants but it will rely on the development ofcooperation among local agents. A more
solid commitment may be called for in this area.
The existing Integrated System of Employment Services, which involves data collection and transmission, is being further
developed
to upgrade the statistical monitoring system of the prevention and activation policy
and is expected to be
functional during 2001. The project has become more ambitious in its monitoring and coordinating capabilities.
4.2. Other new initiatives
There are a number of other new initiatives in the NAP 2000. In the
employability
pillar, a new program is being created to
increase labour market participation of older workers responding to the new guideline that requires providing incentives to
join the labour force. This 'Active Integration Income' is an income support for adults over 45 involving a contract with the
employment services to take the necessary steps to re-enter the labour force. Regar ding the public employment service, there
seems to be a tendency to favour the development of hiring subsidies rather than that of direct employment aids to the
unemployed. This involves moving towards measures that are likely to be less targeted. Addressing the new guideline
requiring access to the information society in schools, the new INFO XXI initiative should equip all schools with computers
before the end of 2001. Also, a new quality control system is introduced at an experimental stage in some te chnical
education centres but no comprehensive plan is presented to solve the current problems of the educational system. In
particular, no initiative is taken to face the problem of early school leaving. The integration measures for handicapped people
as well as for immigrants continue to be developed and benefit from increased resources.
Regarding
adaptability,
agreements are being reached to extend the subjects included in collective bargaining to topics
related to flexible working arrangements. A new agreement on continuous training is to be negotiated this year. Also, a
comprehensive study is launched as a preliminary step for a national plan aiming at reducing the existing barriers to regional
mobility.
Most regions have produced their own employment plan that detail the measures in employment policy to be financed by the
regional authorities. The Spanish NAP would provide a more accurate picture of Spanish human resources strategy if it
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complemented the description of central administration measures with information regarding the additional regional
measures taken to implement the employment guidelines.
Performance
Indicators
Spain
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
52,5
67,9
37,6
29,8
65,6
34,9
50,0
66,8
33,8
1998
49,9
65,2
35,0
26,8
63,1
34,8
47,4
63,9
31,4
1997
48,2
63,0
33,6
25,2
61,6
33,5
45,8
61,7
30,3
1996
46,8
61,6
32,3
23,9
60,3
33,0
44,5
60,3
29,1
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
15,9
11,2
23,0
12,5
10,8
14,2
7,3
4,5
11,5
1998
18,8
13,8
26,6
14,5
13,0
16,1
9,4
6,1
14,5
1997
20,8
16,1
28,3
16,1
14,9
17,3
10,7
7,3
16,1
1996
22,2
17,6
29,5
17,3
16,2
18,4
11,7
8,1
17,5
EU 1999
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
EU1996
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment
Indicators
1999
related
Economic
1998
3,6
4,0
0,2
0,3
1997
2,8
3,8
1,1
-0,5
1996
1,3
2,3
1,1
-0,6
EU 1999 EU 1996
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
3,4
3,7
0,3
-1,1
FRANCE
Conclusions
General appreciation:
The economic growth that continued in 1999, accelerating strongly towards the end of the year, had a
positive influence on employment developments. In spite of the fact that the employment rate in France improved in 1999, it
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remains below the EU average, but is slightly higher in full-time equivalent terms. The fall in unemployment accelerated at
the end of 1999, but the unemployment rate is two percentage points above the European average. This fall mainly benefited
the long-term unemployed, young people and women. The gap between the employment and unemployment rates of men
and women narrowed.
Policy mix:
These results are in keeping with the French strategy, which is designed to achieve growth that is more
employment-intensive and benefits everyone. This strategy, which has had a positive effect on employment, has given
priority to measures to assist young people, women and the long-term unemployed. This is the backdrop to the "new
services, jobs for young people" programme, the agreements on the reduction of working time, the sets of measures
contained in the Combating of Exclusion Act and the measures under the "new start" towards employment for the
unemployed. More than half of the people seen by the public employment service in this context were women.
Response to recommendations:
There is a risk that the measures taken to encourage the oldest workers to continue to
work longer will not have a sufficiently dissuasive effect, given the magnitude of the problem.
In order to exploit the job creation potential of the services sector, new fiscal measures and venture capital support measures
have been adopted to complement the programme to employ young people in the services sector, but they do not appear to
go far enough to address the issues.
It has been decided to introduce a new system for reducing the non-wage labour costs of enterprises that have concluded
agreements on the reduction of working time, in order to lower the tax burden on labour, especially unskilled and low-paid
labour. The average rate of taxation of labour is still too high, however.
Negotiations on the reduction of working time have often led to agreements between the social partners, making it possible
to speed up the modernisation of work organisation.
Challenges ahead:
The efforts made so far in response to these recommendations must therefore be stepped up. Particular
attention should be paid to reducing the
tax burden
on work, which remains above the European average. With this in
mind, consideration should be given to revising the system of reductions in non-wage labour costs in connection with the
reduction of working time.
Furthermore, the priority given to the long-term unemployed under the "new start" measures should be supplemented by
strengthening the
preventive
measures offered to young people/adults who have been unemployed for 6/12 months, since
these measures did not achieve their objectives for 1999.
1. Employment situation
The 2.9% increase in GDP in 1999 had a positive influence on employment, which rose by 1.5%. Labour productivity grew
by 1.4%.
The employment rate rose from 59.9% in 1998 to 60.4% in 1999. It lies below the European average, but is slightly higher in
terms of full-time equivalence. This improvement mainly benefited young people (increase from 25.2% in 1998 to 26.5% in
1999) and women (increase from 52.9% in 1998 to 53.5% in 1999). On the other hand, the employment rate of people over
the age of 55 stabilised and remains very low (28.3%).
The unemployment rate fell from 11.7% in 1998 to 11.3% in 1999. However, it remains above the EU average. The fall in
unemployment benefited women more than men (the female unemployment rate dropping from 13.8% to 13.3%). The
difference between the female and male unemployment rates narrowed but remains high (3.7% higher for women). There
was a major fall in the youth unemployment ratio (from 9.1% to 8.2%). Girls benefited more than boys from the fall in
unemployment. The long-term unemployment rate fell from 4.9% to 4.4%.
2. Employment strategy
There are three focuses to the French employment strategy: stronger growth, more employment-intensive growth and
growth for all. This strategy aims to achieve full employment by the end of the decade.
The measures of the entrepreneurship and adaptability pillar, especially the reduction in working time, the reduction in non-
wage labour costs on low wages and the creation of new jobs linked to the new services are designed to make growth more
employment intensive. Lastly, the measures of the employability and equal opportunities pillars are designed to ensure that
everyone benefits from this growth. This is true, in particular, of the measures to prevent and combat exclusion, the "new
start" measures and the measures to combat early school leaving without qualifications.
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3. Progress assessment
3.1. General appreciation
The French NAP provides a precise diagnosis of the existing problems and establishes quantified objectives for most of the
guidelines. The occupational integration pillar and equal opportunities policy remain the most important. Nevertheless, the
most important medium-term implications may lie in the reorganisation of work in connection with the reduction in working
time.
The results obtained so far have generally matched the forecasts. And yet, the early treatment of the unemployment of young
people/adults before 6/12 months has not met expectations. However, considerable efforts have been made to promote the
occupational integration of women, the long-term unemployed and people threatened with exclusion.
3.2. Implementation of the 1999 National Action Plan
Employability:
The "new start" measures for young people/adults in the first 6/12 months of unemployment in 1999
(69 000 young people and 154 000 adults) did not achieve the objective established. The non-compliance rate was 77.8% for
young people and 74.8% for adults. Priority was given to the long-term unemployed and to persons threatened with
exclusion, who make up 73% of the total number of beneficiaries of the "new start" measures (841 000 p eople). The latter
have also benefited from the Trace programme (43 000 young people) and from all the measures under the Combating of
Exclusion Act. The activation rate rose from 20.3% in 1998 to 22.5% in 1999.
Since 1998, minimal allowance recipients may cumulate their work-based earnings with the allowance during the first 12
months after they find a job. The first results of this scheme, which aims at encouraging disadvantaged people to return to
the labour market, are positive (the number of minimum income recipients using this scheme has increased by 17% in 1999).
The establishment of relay classes in order to combat early school leaving without qualifications is continuing as planned.
Under the ambitious programme for introducing ICTs into teaching, by the end of 1999, an Internet connection had been
established in all general and technical upper secondary schools, 50% of vocational upper secondary schools, 60% of lower
secondary schools and 15% of primary schools.
Entrepreneurship:
The number of jobs created under the "New services, jobs for young people" programme rose from
160 000 in 1998 to 223 000 in 1999, slightly below the target announced in the 1999 NAP of 250 000 by the end of 1999.
There is, however, the question of the longevity of these jobs. In order to consolidate these jobs beyond the subsidised
period, priority is being given to the quality of the projects in relation to the relevance of the needs to be met.
Adaptability:
As part of the application of the Act of 13 June 1998, by the end of March 2000 28 400 enterprise-level
agreements on reducing working time had been concluded covering more than 3.1 million workers, and 132 sectoral
agreements covering more than 10 million workers. According to national estimates (as of March 2000), the negotiations on
the 35 hours working week will lead to the creation or maintenance of 182 000 jobs. This does not appear to be havi ng an
adverse effect on the competitiveness of enterprises. In 1999, unit labour costs rose by only 0.2%. This was achieved through
wage moderation, tax reductions and increases in productivity as a result of the new forms of work organisation. These
agreements have also helped to give impetus to the social dialogue.
Equal opportunities:
Equal opportunities policy was systematically incorporated into all pillars. The objectives laid down in
the 1999 NAP for the participation of women in the integration measures were achieved overall (56% in the measures of the
programme for combating long-term unemployment and exclusion and 54% in the "new start" scheme).
The role of the
social partners
was considerably enhanced. They were involved in drafting the NAP at a meeting chaired by
the Prime Minister and at five working meetings. They are also helping to implement the measures of the NAP, especially in
the areas of vocational training, adaptability and equal opportunities.
The contribution of the
ESF
mainly concerns the first pillar. The principal measures supported are the "new start"
preventive policy, the policies to promote integration and combat exclusion and the measures to facilitate the transition from
school to work. The rest of the ESF contribution concerns the adaptation of workers and equal opportunities. The ESF was
implemented using greater decentralisation, which should make it possible to strengthen territorial employment strategie s.
4. New policy initiatives
The 1999 Council recommendations on the implementation of France's employment policies
(1) Review existing benefit schemes, particularly those facilitating early retirement, in order to keep older workers longer in active life.
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(2) Adopt and implement coherent strategies, encompassing regulatory, fiscal and other measures, designed to reduce the administrative burden on
companies, in order to exploit the job creation potential of the service sector, inter alia building on recent efforts to create new job opportunities for
young people.
(3) Pursue and evaluate policy measures designed to reduce the fiscal pressure on labour, particularly those addressing unskilled and low-paid
workers.
(4) Strengthen social partnership with a view to developing a comprehensive approach to modernising work organisation.
4.1. Initiatives taken in response to recommendations
In order to
keep older workers longer in active life,
a series of measures was taken, including increasing the contribution
that enterprises must make for the dismissal of any worker over the age of 50 (which was doubled). However, there is a need
to examine whether these measures, on their own, are enough to reduce the number of early retirements.
The measures taken in order
to exploit the job creation potential of the service sector
("new services, new jobs"
programme, simplification of administrative formalities and support for venture capital) do not appear to go far enough to
tackle the issues, especially in the private sector. As far as the reduction in the VAT rate on highly labour-intensive services
that was adopted at the end of October 1999 is concerned, it is too early to assess its impact.
In order to
reduce the fiscal pressure on labour,
especially unskilled and low-paid labour, a further reduction in non-wage
labour costs for the lowest wages, which is reserved for enterprises that have concluded agreements on the 35-hour working
week, was introduced in 2000. The cost of labour is expected to fall by 18.5% for wages at the level of the statutory national
minimum wage. Until the effects of this measure are felt, it has to be said that the average rate of taxation on labour did not
fall in 1999 and remains too high (64.67% of gross wages). The same applies to the rate of taxation at minimum-wage level
(48.34%).
The State authorities have made a major effort to strengthen the
social partnership.
In spite of the positions adopted by the
employers' organisations in response to the Law on the 35-hour working week, the negotiations on the reduction of working
time have given a boost to the social dialogue in many enterprises and have often led to agreements between social partners
on the organisation of work.
4.2. Other policy initiatives
One of the most salient aspects of the 2000 NAP is the plan to make a special effort to strengthen the first two guidelines
and develop the local dimension of the programmes.
Employability:
The forecast of the number of beneficiaries of the "new start" measures for the year 2000 is 1 100 000
people, including 240 000 young people who have been unemployed for less than six months and 440 000 adults who have
been unemployed for less than 12 months, which is very ambitious in relation to what was achieved in 1999. Other measures
planned under this pillar mainly concern the validation of experience, the system of certification and the esta blishment of an
Internet connection in all secondary schools and 5 000 nursery and primary schools.
The local dimension will be enhanced in the measures to
develop entrepreneurship.
The public employment service and
the persons responsible for implementing the "new services, new jobs" programme will have to strengthen local partnership
and introduce genuine strategies for a given geographical area. Tax reductions are also planned for the new enterprises
created and for the transfer of the conveyance duty on business assets.
In the area of
adaptability,
mention must be made of the new provisions of the Act of 19 January 2000 on the reduction of
working time. This Act sets out the system governing overtime, opens up new possibilities for organising working time
(modulation, "time savings account", provisions for managers, part-time work) and introduces new reductions in employers'
social security contributions.
As far as
equal opportunities
are concerned, the focus in 2000 will be on mobilising the public employment service in order
to make it easier for women to enter the labour market. The condition of length of unemployment, which is required to
benefit from the "new start" system, no longer applies to women re-entering the labour market. Other specific measures are
the inclusion in the agreements signed by enterprises of measures to combat discrimination in recruitment as a conditio n for
benefiting from reduced social security contributions; the increase in the resources of the guarantee fund for the creation of
enterprises by women; lastly, the quantitative and qualitative improvement in child care.
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Performance Indicators
France
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
60,4
67,5
53,5
26,5
77,2
28,3
57,0
67,5
47,0
1998
59,9
67,2
52,9
25,2
77,0
28,3
56,7
67,3
46,4
1997
59,4
66,8
52,1
24,3
76,6
28,9
56,2
66,9
46,0
1996
59,7
67,3
52,3
25,5
77,1
29,1
56,4
67,0
46,3
EU 1999
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
EU 1996
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
11,3
9,6
13,3
8,2
8,4
8,1
4,4
3,6
5,3
1998
11,7
9,9
13,8
9,1
8,8
9,4
4,9
4,1
5,8
1997
12,4
10,7
14,4
10,1
9,8
10,4
5,0
4,2
5,9
1996
12,4
10,6
14,5
10,5
10,0
10,9
4,8
3,9
5,9
EU 1999
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
EU1996
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
1,2
3,1
2,1
-0,4
1997
0,3
1,9
1,8
-0,7
1996
0,3
1,1
1,3
-0,1
EU 1999
1,4
2,4
1,0
0,0
EU 1996
0,7
1,6
1,3
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
1,5
2,9
1,4
0,2
IRELAND
Conclusions
General appreciation:
As the economy in Ireland continued to grow exceptionally strongly
throughout 1999 rapid job growth pushed the employment rate ahead of the EU average for the
first time. With unemployment continuing to fall, labour and skills shortages now constitute one of
the major challenges for the imminent future. Coupled with the tightening labour market, inflation
has increased rapidly (in part due to exchange rate and energy price tre nds) and needs to be
managed in order to sustain competitiveness and economic growth.
Policy mix:
The policies introduced or planned in this year's NAP show a distinct move towards
labour mobilisation, with a clear focus on measures to tackle both skills and labour shortages, as
well as strong commitments on gender equality and social inclusion. The conclusion earlier this
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year of the new 3-year Partnership agreement 'Programme for Prosperity and Fairness' (PPF) has
meant that the Social Partners have had a strong influence on policy developments.
Response to recommendations:
Ireland is actively pursuing the recommendation to facilitate
and increase the
participation of women
in the labour market on a number of fronts, including
a
tax individualisation programme and the introduction of a broad range of childcare initiatives. It is a very promising
response, but it will also require a comprehensive follow-through, not least in the area of tax individualisation, if the
large employment gender gap is to be re duced.
There has been very rapid expansion in Irish service sector employment over the past 5 years (1994-1999). Service
sector jobs now account for 63% of all Irish employment. The policy of continuing cuts in corporation tax rates,
coupled with rapidly rising domestic real incomes, is considered as creating an appropriate environment for continuing
expansion of the sector.
The NAP announces a major new policy initiative in relation to in-company training, the introduction of a new
National Training Fund financed through an employer levy. The success of this initiative will depend on the degree to
which fund resources leverage increased investment in enterprise training and lifelong learning.
Challenges ahead: The transformation of the Irish labour market has required a decisive shift in policy. If future
labour force expansion requirements are to be met strategies will need to include efforts to further increase labour force
participation rates, especially amongst married women and older workers, and to facilitate inward migration aimed
at addressing skills shortages. These factors will help augment labour supply in the context of a slowdown in the
natural increase in t he labour force.
Sustaining productivity growth will require strategic efforts to continuously upgrade the skills and competencies of the
Irish workforce, especially in the enterprise sector. This will require an increased emphasis on in-company training
and lifelong learning, and the development of an operational framework for both.
Efforts in relation to the strengthening of mechanisms to promote gender mainstreaming must be sustained, and
continuing attention must be paid to the gender pay gap.
1. Economic and employment situation
The exceptional performance of the Irish economy continues, with 1999 being the 6
th
year of extremely strong economic
growth. Real GDP growth, at 9.8%, is four times the Union average. Real Unit labour costs continue to decline,
underpinning swift employment expansion - the numbers at work rose by 103,000 in the twelve months to the final quarter
of 1999. The service sector accounted for over 70% of the total job growth. The employment rate, at 62. 5%, edged ahead of
the EU average for the first time. While the female employment rate is rising more rapidly than its male counterpart, at
51.4% it remains below the average for the EU. The employment and pay gender gaps also remain wider than the EU
average. Employment rates in the younger and older cohorts of working age are significantly above the EU average levels,
however the employment rate in the prime working age cohort remains below the EU average, reflecting lower female labour
force participa tion rates.
Unemployment (ILO) continued its downward spiral, falling to 5.7% of the labour force in 1999, or less than two-thirds of
the EU average levels. Unemployment rates in all component groups {{SPA}} youth, long-term unemployed, men and
women {{SPA}} are signally below average EU levels. By 1999 the long-term unemployment rate stood at just 2.3%. Both
rates (unemployment and LTU) have continued to fall sharply in 2000.
Increased employment rates and sharply declining rates of unemployment are indicative of a further tightening of the labour
market, already evident last year. All indicators of potential labour supply are falling steeply.
2. Overall employment strategy
The NAP highlights the changing needs of the Irish economy, and the new emphasis on pursuing policies based on labour
mobilisation, rather than focusing solely on tackling unemployment. It identifies existing skills and labour shortages as
requiring differing policy responses. With new entrants to the labour market set to decline over coming years a new approach
to immigration is being developed to ensure that economic growth rates, as set out in the NDP, are a ttained. The NAP
recognises the considerable pressures on available supply resources, which are being reflected in higher wages and inflation,
and the possible consequences of loss in competitiveness and slower growth. It recognises too the need to reposition Irish
industry in terms of adaptability, to meet challenges of new technologies and skills and globalisation of markets, and reaffirms
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the strong commitment set out in the National Development Plan and the CSF to equal opportunities between women and
men.
The National Development Plan 2000-2006 (NDP) includes a Programme for Employment and Human Resource
Development, structured round the four pillars of the EES, which will account for expenditure of {{X80}} 14 billion over a
7-year period (25% of total planned expenditure).
3. Progress assessment
3.1. General appreciation
To date, the policy emphasis within the NAP has been concentrated on the Employability pillar, and in particular on
unemployment prevention. This NAP indicates that the preventive strategy will be rolled out to all groups even earlier than
originally envisaged. The new orientation in labour market approach is evident, coupled now with continuing efforts to re-
integrate the long-term unemployed. There is now a recognition that, within conditions of a very tight labour market, greater
efforts must be directed towards labour mobilisation. Tax and benefit reforms are aimed at improving the reward from work
and thereby enhancing labour supply. Within the present NAP greater weight has been afforded to the equal opportunities
pillar, particularly with respect to increasing women's participation in education, training and employment. The new National
Training Fund element of the Adaptability pillar is an interesting development, which will be elaborated in the conte xt of
legislation to be introduced in Autumn 2000. Whilst this year's NAP is consistent with the plans set out in the NDP and the
Programme for Prosperity and Fairness, 2000-2003 (PPF) the longer-term nature of these programmes means that it is
important that the review mechanisms in place ensure their timely implementation. The capacity of the Irish economy and its
research facilities to absorb effectively the very considerable research funding proposed under the Technology Foresight
Fund in a manner tha t will result in enhanced competitiveness will need to be monitored. Much of the future success of the
labour market is tied up with the stability and success of the Partnership agreement: how it addresses the strain of inflationary
pressures remains to be seen.
3.2. Implementation of the 1999 National Action Plan
Employability:
As provided for in the 1999 NAP, the preventative approach was extended to the 25-34 age group in May of
last year, and to the 35-54 age group in February 2000. The remaining group will be covered later this year, and the trigger
point will be brought forward to 9 months for all groups. A modest improvement in effort for the younger age group can be
seen, but figures for the adult unemployed cover only the last 6 months, so comparisons are not av ailable. However, the
inflow into long-term unemployment for this group is relatively low. For guideline 3 the Irish calculate participation in
ALMPs as 49.6% of the Live Register. Last year's NAP set a sub-target of 20% long-term unemployed on FÁS  training
programmes and this was exceeded (22%). The target
is increased to 25% for 2000. In promoting activation the low paid have been exempt from income tax, while the taxation of
working married couples has been lightened. The introduction of the new minimum wage from April 2000 should also
encourage higher levels of labour force participation. The Government has approved a restructuring of Community
Employment (40% of ALMP places) to further concentrate on long-term unemployed and disadvantaged groups, as well as
increasing the training co mponent.
Legislation to establish a National Qualifications Authority was enacted in July 1999; the structure is in course of being
established. Funding for adult literacy has been significantly increased (albeit from a very low base considering the scale of
the problem), and various new initiatives have been put in place. It is hoped that the upcoming White Paper on Adult
Education will outline a comprehensive strategy, but there remains a concern that existing resources may not be sufficient t o
address the problem. National certification was introduced for the first time for Youthreach (the early school-leavers
programme), improving the progression route and subsequent educational opportunities, but early school leaving is still a
concern, given the enhanced attractions of the labour market. The Education (Welfare) Bill published in 1999, which
provides for the registration of young people under 18 who leave school early, and that an employer may not employ such a
person without a certificate of registration, has now been enacted. A specific Post-Primary Retention Initiative, aimed at
schools, was established in June 1999. Targets of the 3-year
IT 2000
programme were met after two years, the National
Centre for Technology in Education has been established, and the
Scoilnet
website launched. In the area of High-Technology
an additional 5,400 places in universities and institutes of technology are provided for over the period 2000-2002 (in
accordance with recommendations of t he Expert Group on Future Skills Needs).
Entrepreneurship:
The graduated reduction in the standard Corporation Tax rate, as provided for in the 1999 NAP,
continued (down from 32% to 28%). The developing roles of Enterprise Ireland, County Enterprise Boards and local
development partnerships are clearly set out in the NAP. Ireland now ranks 7
th
overall in the international league of national
competitiveness (moved up between 11 and 15 places in various recent studies {{SPA}} OECD, World Economic Forum,
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Institute agement Development). A Social Economy Programme was approved by Government in July 1999, and the
operating framework and resources for 1999/2000 have been agreed.
Adaptability:
An initiative aimed at enhancing awareness of the significance and business implications of eCommerce and
eBusiness was launched by Enterprise Ireland in October 1999, as one element of a comprehensive Government strategy on
the Information Society. In relation to in-company training the NAP refers to a recently-published study by the Employers
Federation (IBEC) which suggests that enterprise training expenditure is now at 3% of payroll. Further work may be needed
to v alidate this information.
Equal opportunities:
Considerable progress is evident: an extremely strong commitment to gender mainstreaming is
contained in the NDP and the CSF, including structures for monitoring across all areas of the Plan, as well as various
initiatives, particularly in the area of childcare (grants, taxation allowances, training, and a childcare census and database). A
'Term-time' initiative is currently being piloted in a limited number of Government Departments (allowing parents to take lea
ve during the summer months).
Social partners:
Social Partnership has evolved substantially in Ireland over the past 15 years. The latest national partnership
agreement, the PPF, demonstrates the continuing shared understanding between Government and the social partners on the
need for collaborative effort to achieve shared social and economic goals. The PPF is particularly notable for its strongly-
developed social inclusion and equality dimensions. The Social Partners were formally consulted on the preparation of the
NAP.
ESF and the structural funds:
The NAP sets out in detail the future role of the ESF in delivering the EES through the new
Employment and Human Resources OP, structured around the four pillars of the European Employment Strategy.
However, in quantifying the expenditure the NAP omits the considerable funding devoted to childcare under the Regional
Operational Programmes ({{X80}} 317 million in total expenditure, representing the single biggest investment in pursuit of
equalit een women and men. The ESF contribution - {{X80}}115 million - represents 11% of the total planned ESF
expenditure in the period 2000-2006). The ERDF has also made a significant contribution in terms of global investment in
job creation, and will play a very strong role under the new CSF particularly in the areas of childcare and research and
technology investment.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Ireland's employment policies
(1) Adopt a comprehensive strategy to increase the
participation of women
in the labour market,
including the removal of tax-benefit disincentives, and putting in place measures which facilitate the
reconciliation of work and family life. In particular, a sustained effort to raise the standards of
care for
children
and other dependants and flexible leave schemes is called for;
(2) Pursue recently implemented policies, encompassing regulatory, educational and fiscal measures, in
order to further exploit the potential for job growth in the
service sector;
(3) Intensify policy efforts to expand and improve
in-house training
of employees.
4.1. Initiatives taken in response to recommendations
Ireland is actively pursuing the recommendation to facilitate and increase the
participation of women
in the labour market
on a number of fronts. Two principal instruments have been utilised. First, this year's Budget introduced the first stage of a
tax individualisation programme, which should increase the incentive to work, in particular for married women. Second,
Budget 2000 introduced a broad range of
childcare initiatives,
from capital grant s for the provision of childcare facilities to
supports for childcare training and the development of local childcare networks. In addition, the new social partnership
agreement undertakes that negotiations on an equitable strategy to support parents in meeting their childcare needs {{SPA}}
including proposals on direct payments per child {{SPA}} will be completed before the end of 2000 and will be
implemented during the term of the agreement. The establishment of a National Framework to support and devel iendly
policies at enterprise level has been agreed by both government and social partners.
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With employment in
services
exceeding 1 million for the first time in 1999 it would seem that recently implemented policies
are having a strong impact in this area. The expansion has been driven by rapidly rising domestic real incomes, an enhanced
performance by internationally-traded services and continuing cuts in corporation tax rates, scheduled for cumulative
reduction to 12.5% by end-2002.
The major new policy initiative in relation to
in-company training
was the announcement in Budget 2000 of the
introduction of a new National Training Fund, to be financed through an employer levy of 0.7%, with a corresponding
reduction in employers' social insurance contributions. The establishment of the Fund does not involve any additionality in
the year 2000 in terms of in-house training: resources will be used to finance existing training supports in and for
employment. Howev er it is expected that, over time, the growth in fund revenues will provide new resources for in-
company training and life-long learning programmes.
4.2. Other policy initiatives
Employability:
In an effort to increase the attractiveness of work, single people earning less than {{X80}} 140 per week
have been exempted from the income tax system from April 2000. Simultaneously, the standard and higher income tax rates
have each been cut by 2 percentage points to 22% and 44% respectively. A national minimum wage was introduced for the
first time, also in April 2000, at an hourly rate of {{X80}} 5.59. The role of the National Employment Service within
continues to be strengthened, with the integration of Local Employment Service (LES), and the transfer of
responsibility from the National Rehabilitation Board for the provision of employment and vocational training services for
people with disabilities. Annual spending on adult literacy is effectively scheduled to double in the years 2000 to 2002,
compared with a base provision of {{X80}} 7.24m in 1999, although absolute spending levels remain relatively low. A White
Paper on Adult Education is foreseen. Targets are set in relation to the further development of the Schools
IT 
nbsp;programme,
with the objective of ensuring that all pupils have access to ICT facilities.
nbsp;
Entrepreneurship:
Substantial new resources have been allocated for competitiveness-improving new technologies over the
period of the NDP. These include almost {{X80}} 2.5billion in research, technology and innovation programmes, of which
{{X80}} 1.5billion is targeted at industrial development-related Science and Technology schemes. In addition, the
Technology Foresight Fund intends to invest {{X80}} 711 million between 2000 and 2006 in researching niches within biot .
The capacity of the Irish economy and its research facilities to absorb effectively this research funding should be monitored.
The Government is also investing heavily in creating the research, legal and business conditions which will foster the
development of electronic commerce and digital industries (a Bill to give effect to electronic signatures and contracts,
published in March, has now been enacted). Budget 2000 cut the standard corporation tax rate from 28% to 24%.
Furthermore the 12.5% standar d rate of corporation tax, that will apply generally from 2003, has been brought forward to 1
January 2000 for SMEs with trading profits below {{X80}} 63,487. The dedicated Social Economy programme is allocated
{{X80}} 12.69m in 2000, and this figure is expected to rise to {{X80}} 52m when the programme is fully operational.
Adaptability:
A Task Force on lifelong learning has been established focusing on adaptability and upskilling, and the access
to learning opportunities necessary to meet these goals. In March 1999 a new working visa system was introduced to ease
skills and labour shortages in certain occupational categories where labour is in particularly short supply. Adaptation policy
also concentrates on developing and exploiting the Information society. The Social Partners have agreed a range of topics to
be taken up in partnerships at company level, such as better work organisation, personal development and family-friendly
working arrangements.
Equal Opportunities:
The strong commitment to gender mainstreaming in both the NDP and CSF is mirrored in the NAP.
Specific initiatives include the development of a databank of gender disaggregated statistics for all areas across the NDP, and
the implementation of a programme of positive action measures for women, with a budget of almost {{X80}} 30million. A
report on Male/Female wage differentials is to be published by the ESRI in September 2000, and a consultative group, whic
include the social partners, will develop policy proposals arising from the report's recommendations.
Performance Indicators
Ireland
Annual data
Employment
Indicators
1999
1998
1997
1996
EU 1999 EU 1996
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Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
62,5
73,6
51,4
46,5
73,3
43,8
58,3
72,9
43,5
59,7
71,0
48,2
43,0
70,6
41,6
55,4
69,7
41,0
56,4
68,0
44,7
38,3
67,5
40,3
52,8
66,3
39,2
54,9
66,8
42,8
35,6
66,5
40,5
51,1
64,6
37,8
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term
Rate
Unemployment
Males
Females
5,7
5,8
5,5
4,2
4,6
3,9
2,3
2,5
2,0
1998
7,8
8,0
7,6
5,5
6,1
4,8
3,2
3,5
2,8
1997
9,8
9,8
9,8
7,0
7,9
6,2
5,3
5,8
4,4
1996
11,6
11,5
11,8
8,0
9,0
7,0
6,9
7,4
6,0
EU 1999 EU1996
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
5,0
8,6
3,4
-2.8
1997
5,6
10,7
4,9
-3.5
1996
3,8
7,7
3,9
-2,8
EU 1999 EU 1996
1,4
2,4
1.0
0,0
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
5,1
9.8
4.5
-1.4
ITALY
Conclusions
appreciation:
General appreciation
labour market conditions improved in 1999, principally due to the adoption of fiscal
incentives and flexible work arrangements. Social dialogue favoured the introduction of these measures.
The structural problems of the Italian labour market require further actions: difficulty for youth and the
long term unemployed to (re)enter employment; unfavourable gender differentials; regional imbalances;
undeclared labour.
Policy mix:
policy improvements can be noticed. Progress was noteworthy in the Adaptability and
Entrepreneurship pillars. In addition, other steps were taken in the right direction, by completing the
reform of the education system, by continuing to shift tax and contributions burdens away from labour
and by increasing training and apprenticeship opportunities. Under Employability legislation has been
introduced, but the scope of the reform launched and administrative delays hindere d the practical
implementation of policies.
Response to recommendations:
full implementation of the preventative approach is proceeding
slowly. Restructuring and modernisation of the PES, when achieved, will represent a building block. The
devolution of the PES to the Regions was completed and the tasks for the new local employment
centres were set. The implementation delays meant that the data required for the monitoring of policy
developments was not collected according to the commonly agreed methodology.
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Measures further alleviating fiscal and administrative burdens on firms were introduced.
The reform of the unemployment benefit system was postponed to 2001.
Measures aimed at favouring equal opportunities were taken, but they need to be strengthened in order
to reduce the gender gaps significantly.
The challenges ahead:
last year's recommendations were partly met, but further and faster action is
required, especially in the fields of active policies aimed at preventing and/or reducing youth and long
term unemployment and gender gaps. The reform of the benefit system should not be postponed
further; the environment conducive to the development of employment in the service sector could be
improved; action needs to be taken on a strategy for lifelong learning; upgrading of the mon itoring and
evaluation system is essential.
1. Economic and Employment Situation
GDP growth, at 1.4%, was lower than the 1999 EU average. Employment grew by 1.0%. High elasticity of employment with
respect to the rate of growth of output is thus also an effect of a different distribution of work among the employed. The
employment rate rose to 52.5%, mainly due to the growth of the service sector. It remained below the EU average, mainly
due to the female component: the differential is 4.5 points for men, and 14.8 points for women. The fe male employment
rate grew more than male employment rate (1 and 0,5 percentage point respectively). Employment rates for the young and
older people did not grow.
The recovery of employment started to re-absorb the stock of persons searching for a job. The rate of unemployment fell to
11.3%; the female unemployment rate was 15.6%, almost twice that of males, at 8.7%. Youth unemployment decreased
slightly, even though the unemployment ratio for 15-24 year-olds was almost 4 percentage points above the EU average. The
long-term unemployment rate, which remained almost unchanged, or marginally worsened in Southern Italy, is still above the
EU average.
Regional differentials characterise Italian unemployment. Southern Italy accounted for 35% of the resident population, for
28.1% of employment and for 61.3% of the number of persons in search of employment. The unemployment rate was 6.5%
in the Centre-North and 22% in Southern Italy.
2. Overall Employment Strategy and its Main Objectives
The NAP foresees employment growth rates, expressed in terms of full-time equivalents, slightly below 1% between 2000
and 2003 and a fall in the average unemployment rate to 9.3% by 2003, with a higher speed of reduction in Northern than in
Southern Italy.
The employment strategy is split into three lines of actions. The first one aims at raising the rate of growth, especially in the
South. The instruments to be adopted are: incentives to competitiveness; increased public capital expenditure; a privately
financed expansion of public works and services; tax cuts; privatisation and liberalisation programs. The second line of action
operates on the supply side through: (i) reforms aiming at reducing the unemployment differential between you th and adults
(PES implementation, a new apprenticeship scheme, etc.); (ii) measures designed for adults (reform of social relief benefits,
new contracts for re-entering the labour market, lifelong learning); (iii) reforms of corporate law and public administration
simplifying firms' start-ups and localisation, enlargement of capital markets, etc. The third line is to set up actions for
Southern Italy. Two structural policies are emphasised: contribution-related measures for the "surfacing" of enterprises and
workers; reduction of tax and contribution burdens on labour.
3. Progress Assessment
3.1. General Appreciation
Some of the policies adopted in 1999 appear to have been effective, mainly in meeting the demand of enterprises for higher
flexibility of work arrangements. An effort was made to structure the policy mix in terms of pillars, but imbalances remain in
the way and in the speed at which actual policies are meeting the guidelines. Progress can be seen, in particular, in the
Adaptability and Entrepreneurship pillars. The reduction in both tax burdens on firms and in labour costs is continuing.
As for Employability, further steps were taken in the right direction, by increasing training and apprenticeship opportunities.
,
Social dialogue favoured these developments. Delays in reforming employment services are however hindering the
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implementation of active labour market policies fostering a preventive approach to long-term unemployment. Delays
occurred also in the completion of development projects in the South, even though budgetary commitments increased.
In the face of differentials in territorial unemployment rates, no policy supporting regional mobility of labour was proposed.
Measures related to Equal Opportunities appear mainly experimental and of limited impact.
3.2. Implementation of the 1999 National Action Plan
Employability:
Active measures increased in 1999. Measures for preventing young and adult long-term unemployment,
operated through the PES, are envisaged to become gradually operative and - to be fully implemented by 2003. With respect
to employment services, the wide-ranging initiatives set up in 1999 were partly activated. The process of devolution of the
PES to the Regions was completed although implementation is proceeding in some Regions only (234 Employm ent Centres
were activated in the Centre-North and 8 in the South). The deadline for the completion of the Employment Information
System, set for mid-2000, shifted to the end of the year. The general reform of the social benefit system and employment
incentives was also postponed to March 2001. More than 20% of the unemployed registered with PES were involved in
training programmes and/or subsidised work experience. Several measures for the employment of disadvantaged persons
were introduced.
The number of advanced training courses involving work experience in firms increased. The reform of the education system
was completed. Schools and Universities were given more autonomy and more effective actions were undertaken against
early school leaving in Southern Italy. Accreditation of training establishments and the development of a certification system
for vocational training is under way. 21.000 projects for the purchase of multimedia stations in schools were financed. 487
Permanent Training Centres were set up and 200.000 adults enrolled for adult education courses.
Entrepreneurship:
The main actions refer to labour cost: contribution burdens went down by 0,82%; total contribution
relief for firms in the South are still in place; the system of incentives and relief available to industrial firms was extended to
the non-profit sector. Measures favouring youth entrepreneurship and the set up of new business ventures obtained results.
"Planned Programming" led to an increase in budgetary commitments related to territorial pacts in areas of high une
mployment where social dialogue is particularly emphasised. Administrative simplification is being pursued through the
"single counter" for firms, though implementation is at the moment partial (45% in the North and 33% in the South). The
promotion of youth and female entrepreneurship and "Honour loans" are proceeding together with action programmes for
the diffusion of an enterprise culture in schools.
Adaptability:
Results were obtained mainly through a new regulation and incentives for part-time work (the target of
100.000 new jobs was overshot by 40.000) and through fixed-term contracts (apprenticeship, temporary work, etc.),
addressing mostly women and young workers. A non-discrimination principle and worker's consent were included in the
part-time regulation particularly to prevent an unfavourable impact on women. Social dialogue led to further spread and
regulation of labour flexibility. The legislative action relative to contracts exchanging work time for training activity and to
the regulation of coordinated and continuing cooperation schemes proceeded. The development of temporary work
concerned 200.000 persons.
Equal opportunities:
The initiatives to favour female entrepreneurship (enterprise creation in particular) were confirmed.
Maternity income support is to be provided to large families and to women without other social security coverage. A reform
of care services and nursery schools was started. The opportunities for parental and training leave were enlarged.
Social Partners:
The NAP expressed clearly the wide consultation of social partners on all important Government decisions.
The formalisation of social dialogue occurred through the 1998 Christmas Pact. Social partners agreed with the broad
strategy of the NAP. However they asked the Government to take more effective and rapid actions on PES implementation,
on further lowering the labour tax burden and on administrative simplification. They also asked for a renewal of the legi
slation on social benefits and on the regulation of part-time work. Controversial issues remain, particularly on flexibility
policies, on which further negotiation is proceeding.
The ESF and the Structural Funds:
Compared to 1998, ESF commitments supported a broader range of national policies.
More than 20% of the total funding was allocated to Pillar 3, i.e. continuing training, with special regard to the employability
of persons of working age. 1395 M {{X80}} (about 70% of the total) were committed to preventive measures, specifically
targeted on young people in search of their first job, adult unemployed, and disadvantaged persons. Significant support w en
to initiatives to enhance equal opportunities.
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The reform of the PES, the implementation of the preventive approach, and the development of the training system, will be
pursued through the 2000-2006 ESF programmes, as will other national and regional policies. 10% of total resources is
devoted to the improvement of equal opportunities, for both mainstreaming and specific actions.
4. New Policy Initiatives
The 1999 Council recommendations on the implementation of Italy's employment policies
(1) Take decisive, coherent and measurable action to prevent young and adult unemployed people from drifting
into long-term unemployment. In particular, strengthened efforts should be made to complete the reform of
employment services, to implement preventive policies in compliance with guidelines 1 and 2, and to improve the
quality of vocational training. Efforts to upgrade the statistical monitoring system should be pursued, so that
policy indicators on prevention and activation will be provided by 2000 in accordance with agreed definitions
and methods;
(2) Adopt and implement coherent strategies, encompassing regulatory, fiscal and other measures, designed to
alleviate the administrative burden on companies, to stimulate entrepreneurship and exploit the job creation
potential of the service sector;
(3) Continue current reform efforts designed to shift away the tax burden from labour to other tax bases;
(4) Continue the implementation of the reform of pension and other benefit systems in order to reduce the
outflow from the labour market into pensions and other schemes;
(5) Adopt comprehensive policies in order to address the wide gender gaps in employment and unemployment,
inter alia by building on existing specific initiatives. Gender policies should also be mainstreamed under all the
pillars of the National Employment Action Plan.
4.1. Initiatives Taken in Response to Recommendations
The reform of PES and the Employment Information System implementation continued, but was insufficient. Indicators
allowing for effective monitoring of preventive policies have not been supplied in accordance with the commonly agreed
methodology. The NAP 2000 sets tasks and minimum standards of operation for the new Employment Centers and
confirms that, while progress continues, the full implementation of the preventive measures for youth and long-term
unemployment and of PES will be op erational by 2003. Therefore, recommendation 1 was partially met.
The recommendation to alleviate administrative burdens on firms, to stimulate entrepreneurship and to foster services was
partly met. Firms' administrative procedures were simplified through the introduction of the single counter, which is however
far from reaching a complete territorial coverage. Measures were also taken to create jobs in the cultural and environmental
sectors.
The recommendation to lower the tax burden on labour was pursued by continuing the fiscal and contribution reductions
introduced in 1998-99, though to a lesser degree. The 2000 Finance Act sets small reductions for contribution charges on
wage costs (0,2% cut in maternity contributions and 0,5% cut in the National Insurance premium against work accidents).
Possibilities such as the extension of the Dual Income Tax to corporate firms and the revision of the regional tax on
economic activ ities in favour of smaller enterprises, were mentioned in the NAP without details. These positive actions
should be pursued.
The reform of the unemployment benefit system, which was to be completed in 1999, was postponed to 2001. A further
revision of the pension system is expected to be undertaken by 2001, in the meantime, reforms of pension schemes already
agreed continue to operate.
Actions in order to promote gender mainstreaming in all pillars were taken. However, the process of gender mainstreaming is
still in its preparatory phase. Female employment is expected to grow especially through the increasing use of part-time and
flexible contracts. Attention was paid to the extension of care, nursery and supplementary services and to the introduction of
parental leave. Further concrete steps are needed to fully address the wide gender gaps, as recognised by the NAP itself.
4.2. Other Initiatives
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New aspects of the GL 2000 were partly addressed. In line with the Lisbon conclusions, the Finance Act 2000 provides for
further financing of computers in schools and for young people, together with teachers' training programs. It also allocated
£. 330 billion in 2000-2002 for entrepreneurial initiatives related to ICT and e-commerce. A plan for the development of
scientific and technological research will be financed, with the target of increasing employment of new qualified research ers
by 30.000 units in three years. The actions taken will be part of a plan developing the Information Society and a knowledge
based economy. There was no action on incentives for (re)entering the labour market especially tailored to youth and the
long-term unemployed, nor easier access to risk capital markets.
Employability:
Funds for "Socially Useful Jobs" are to be re-allocated in favour of employers hiring workers under this
heading and of other actions for job placement by an agency of the Ministry of Labour. By 2002, all young persons aged 15-
18 who drop out of the school system will be involved in vocational training projects, or, if already hired under
apprenticeship contracts, they should be given at least 120 hours of off-the-job training enhancing general skills. Guidelines
for enlarging the adult education system were approved, but details on organisation and quantitative targets were postponed.
No particular actions were proposed on life-long learning.
Entrepreneurship:
Initiatives exist for "training for development", such as training of development capacity builders. Fiscal
measures were taken, such as reductions in VAT on private building renewal. ISTAT is taking the first census of the non-
profit sector. Appreciating the widespread diffusion of undeclared labour markets, "re-alignment" and "surfacing of
undeclared labour" contracts will be redrawn.
Adaptability:
The incentive for part-time working through reduction in contributions became operational. Contracts
allowing for temporary employment were extended to the building industry and the agricultural sector. Measures aiming at
regulating working time were financed and the legislation on the reduction of overtime was re-defined. The 2000 Finance Act
reduced contribution-related inequality between people working under different types of contracts.
Equal Opportunities:
A Female Employment Monitoring Unit was set up in order to measure the impact of policies and to
spread information. The Flexibility Monitoring Unit monitors the gender effects of flexible work arrangements. The activities
of the Female Equality Advisors were regulated by a decree. The law in favour of self-employed women was further
extended.
Performance Indicators
Italy
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
52,5
67,1
38,1
25,5
66,9
27,5
50,8
66,4
35,7
1998
51,8
66,7
37,1
25,4
66,2
27,7
50,3
66,0
35,0
1997
50,5
65,0
36,2
25,2
65,5
27,3
49,1
64,4
34,2
1996
50,6
65,3
36,1
25,4
65,5
27,3
49,3
64,8
34,3
EU 1999
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
EU 1996
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
11.3
8.7
15.6
1998
12,2
9,4
16,7
1997
12,1
9,3
16,6
1996
12
9,4
16,4
EU 1999
9,2
7,9
10,8
EU1996
10,8
9,6
12,4
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Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
12,4
12,3
12,5
6,9
5,3
9,3
12,9
12,8
13,0
7,1
5,6
9,6
11,9
11,6
12,2
7,6
5,9
10,4
12,1
11,9
12,3
7,7
5,9
10,6
8,5
8,5
8,5
4,2
3,5
5,0
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
0,6
1,5
0,4
-4,7
1997
0,1
1,8
1,5
0,2
1996
0,4
1,1
0,8
0,0
EU 1999
1,4
2,4
1.0
0,0
EU 1996
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
1,0
1,4
0,5
0,0
LUXEMBOURG
Conclusions
General appreciation:
Thanks to the dynamism of the economy in recent years, Luxembourg has
seen a strong increase in employment, and its domestic employment rate has reached the EU
average. In spite of this positive development, Luxembourg still has a very low employment rate
among workers over the age of 55 years and women, and a low level of participation in
continuing training. The "apparent" employment rate is extremely high, with the Luxembou rg
labour catchment area extending far beyond national administrative borders. Border workers
occupy more than one third of paid national employment, which explains the strong growth in
employment in the virtual absence of a pool of qualified labour in the country.
Policy mix:
The Luxembourg employment strategy focuses on strong and employment-
intensive growth and growth for all. This policy is based on strong activation measures, a highly
preventive approach to combating unemployment, the development of a favourable climate for
business creation and a strong social security net, resulting in a very low level of poverty.
Response to recommendations:
The social partners play a crucial role in Luxembourg. The
1998 and 1999 NAPs were always based on a tripartite agreement transposed into national
legislation. This explains the delay in the implementation of the planned reforms. Furthermore,
given the absence of a tripartite agreement, the Luxembourg Government was unable to
present a NAP for 2000 setting out the main reforms that it had planned, especially in response
to the Council recommendations. The document presented is therefore limited to an
implementation report for 1999, during which Luxembourg took measures to improve the
position of women on the Luxembourg labour market (parental leave, child care) and adopted a
framework law on continuing vocational training..
Challenges ahead:
Against the background of "full employment" in Luxembourg, and
building on the success of its preventive policy that already goes beyond Guidelines 1 and 2,
workers over the age of 55 should be encouraged to continue to work.
The recent framework law on continuing vocational training is a step towards the qualitative
adaptation of workers. Nevertheless, this remains one of the main issues of the future, and
attention will have to be paid to the implementation in order to ensure a significant increase in
the level of continuing training.
The widespread application of the principle of equal opportunities has begun to have an effect
on the position of women on the Luxembourg labour market. The introduction of positive
discrimination should further improve their chances of finding employment.
The difficulties encountered in the tripartite committee should encourage the partners to return
to the path of constructive dialogue, which is essential for the success of the commitments
made under the employment promotion plan.
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Lying at the center of an euroregion where there are about 500.000 jobless persons,
Luxembourg should pursue its efforts towards simplification of existing mechanisms in order to
reach a more favourable climate for development of entreprises and to exploit further the
potential for job creation made possible by its sound economic situation.
1. Employment situation
The Luxembourg economy has been growing strongly since 1985. GDP increased by 7.5% in 1999, which was faster than the
European average (2.4%). This growth led to net job creation of 4.9%, which was the second best result in the EU, and a
very low unemployment rate (2.3%).
The domestic employment rate (61.6%) is slightly below the EU average (62.2%), whereas the "apparent" employment rate is
91%, given the influence of border workers. This is because the Luxembourg labour catchment area extends far beyond
national administrative borders. Border workers account for 34% of paid national employment, which explains this strong
growth in total employment in the absence of strong wage tensions, in spite of the virtual lack of a pool of skilled labour in
the cou ntry. The employment rate of workers over the age of 55 (26%) is one of the lowest in the EU, and, in spite of a
recent rise in the employment rate of women, Luxembourg has a considerable male-female gap and a participation rate
(48.5%) that is below average for the Union.
In comparison with the other Member States, the situation remains very favourable: Luxembourg has very low rates of total
unemployment (2.3%, 5,351 people in 1999), long-term unemployment (0.8%) and youth unemployment (2.3%), which is
partly the result of an activation policy launched in 1995 and reinforced by the NAPs. Generally speaking, the main problem
in Luxembourg is not unemployment in the "traditional" sense (made up of job-seekers), but rather the early exclusion from
the labour market of a significant proportion of the population of working age, which is put into "store" in passive schemes.
This leads to non-employment in the broad sense, which is estimated to concern 13% of the labour force {{SPA}} i.e. more
than 25,000 people out of a domestic labour force of 183,000, and is made up of job seekers and beneficiaries of active
labour market measures and of passive schemes (early retirement, invalidity pensions).
2. Employment strategy
The Luxembourg employment strategy focuses on strong and employment-intensive growth and growth for all. It should be
noted, however, that border workers fill 75% of the new paid jobs created.
The increase in the domestic employment rate is the aim of the measures of the entrepreneurship and adaptability pillar, such
as the reform of continuing training, the reduction in administrative formalities to set up a company, parental leave, an
increase in the number of childcare places, and the encouragement of new jobs linked to local services. Lastly, the measures
of the employability and equal opportunities pillars are designed to ensure that everyone benefits from this growth. T his is
true, in particular, of the measures to prevent and combat exclusion, the "new start" measures and the measures to combat
early school leaving without qualifications.
The social partners play a pivotal and crucial role. They are directly involved in the implementation of the plan.
3. Progress assessment
3.1. General appreciation
Luxembourg has developed a comparatively dynamic employment policy, which was strengthened by the NAPs and which
can go some way towards explaining the low level of unemployment in this country. This policy is based on strong activation
measures (more than 2 200 people benefit from these measures, in comparison with the 5 351 people who are unemployed),
a preventive approach to combating unemployment, characterised by early identification of abilities and personalised support
f or job seekers, the development of a propitious climate for setting up businesses and a strong social security net, resulting in
a very low level of poverty.
The 1998 and 1999 NAPs were based on the tripartite agreement of 18 April 1998, which was transposed into legislation on
12 February 1999. This explains a delay in the implementation of the planned measures. Accordingly, a major law on
continuing training was adopted in June 1999 but did not enter into force until January 2000. These NAPs have broader
scope than a simple annual programme, and efforts should therefore be maintained. An evaluation of all the measures taken
und er the NAPs is planned for 2003.
3.2. Implementation of the 1999 National Action Plan
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Employability:
Luxembourg is consolidating its active policy of preventing and combating youth unemployment and long-
term unemployment (which fell in 1999). It will be recalled that Luxembourg decided to go further than the thresholds set
out in Guidelines 1 and 2 and set itself the ambitious objective of reaching all young people before they have been registered
for three months, and all adults before they have been registered for six months. Priority was given to young people ente ring
working life and to adults lacking work on a temporary basis. Mention should be made of an improvement over time, with
the rate of non-compliance falling from 29.9% in 1998 to 13.8% in 1999 for young people (out of a flow of 6 500/year),
while the same rate for adults has improved just as much {{SPA}} from 63.1% in 1998 to 41.4% in 1999 (out of a flow of
11 000 people in 1999). The total number of active measures on offer increased slightly (+2% in volume between 1998 and
1999), while the N posed efforts in the area of the training of residents, with limited results, precisely because of a fall in
unemployment and an increase in domestic employment.
Certain socio-economic studies explain the recruitment of border workers partly by their level of training, their flexibility,
their geographical mobility and their adaptability. Therefore, in order to raise the level of domestic employment (which
increased in 1999), the NAP proposed efforts to train resident workers and unemployed people. The recent framework law is
therefore a major step forward towards the creation of a genuine system of lifelong training.
As far as the combating of early school leaving is concerned, measures have recently been adopted in secondary education.
Access to apprenticeship will be made easier through a modular approach to training and financial assistance for apprentices.
Employers have substantially increased the number of apprenticeship places on offer, many of which are not taken up (350
places remain unfilled) because of the lack of resident applicants.
Given the high level of inactivity, especially of persons over the age of 50, awareness-raising campaigns have been conducted
in order to dissuade people from retiring on an invalidity pension or from taking early retirement. Measures design to
improve employment for less employable or disabled persons have also been introduced.
Entrepreneurship:
In order to encourage entrepreneurship, Luxembourg has introduced various measures designed to
facilitate access to employment, the creation of businesses and the development of venture capital markets, the coordination
needed to simplify administrative procedures for enterprises and the adaptation of legislation on business creation. One-stop
shops, coaching measures and measures for the allocation of development capital intended for SMEs (start-ups) have been
intr oduced. The indirect cost of labour has been made attractive in comparison with neighbouring countries. In the area of
taxation and VAT, the Luxembourg rules are also comparatively attractive. As far as policy to promote the setting up of
businesses is concerned, tangible results have been produced but it is not yet possible to quantify their impact.
Job creation (+/- 300) in third-sector enterprises or local services is increasing, especially as a result of the introduction of
care insurance (since January 1999), an earlier start to schooling (since the beginning of the 1998/99 school year) and
measures under the territorial employment pacts.
Adaptability:
Under this pillar, the social partners play a crucial role in Luxembourg. Accordingly, matters of working time
and the organisation of work are the responsibility of the social partners alone. They also play an important role in the
continuing training of workers or enterprise-based training courses for young people or adults.
The recent framework law on continuing vocational training (Law of 22 June 1999) is a major step towards the qualitative
adaptation of enterprises and workers. This law introduces tax reductions for enterprise-based training. It is not possible to
provide figures on the results because the framework law was introduced only recently.
Furthermore, a reform of the system of training leading to qualifications is already under way for nine occupations, and a
modular approach to learning will be available from the start of the 2000/01 academic year. Certain groups of apprentices
will receive an income equivalent to the social minimum wage. This reform is all the more important since many young
people leave education without qualifications, and the gap between the demands of the economy and the level of training of
reside nts continues to have a negative impact on the level of domestic employment.
Equal opportunities:
The widespread application of this principle is beginning to have a positive influence on the position
of women on the Luxembourg labour market (increase in the employment rate of 1% every year over the past two years), but
much still remains to be done. Measures such as parental leave or child care (+ 55% in number of childcare places in three
years) help mostly women to reconcile family and working life. These measures are of a structural nature, and create jo bs at
the same time. Parental leave has been a real success (1 443 beneficiaries). However, the objective of people rotating in the
post "freed up" in this way has yet to be fully achieved (65% of the posts are actually re-filled). The principle of introducing
positive discrimination has been accepted. The arrangements for introducing this discrimination provided for by law for the
sex underrepresented in a given sector of the economy are being worked out by the social partners and will certainly a lso
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help to increase the chances of labour market entry or re-entry for women, and thus to close the gap between men and
women.
ESF:
Under Objective 3, the European Social Fund will support the employment strategy, improve employability, contribute
to the prevention of unemployment and help to discourage the oldest workers from entering a passive scheme too early.
4. New policy initiatives (NAP 2000)
Given the lack of agreement on all the measures in the tripartite committee, the Luxembourg Government was unable to
submit its draft NAP for 2000 to the Commission. The document submitted is therefore simply an implementation report
for 1999.
Performance Indicators
Luxemburg
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
61,6
74,4
48,5
31,7
76,7
26,3
59,0
74,5
43,4
1998
60,2
74,6
45,6
33,1
74,7
25,0
57,9
74,8
41,1
1997
59,9
74,3
45,4
34,7
74,4
23,7
58,2
74,9
41,3
1996
59,1
74,4
43,6
36,9
73,2
22,6
57,3
74,5
39,9
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term
Rate
Unemployment
Males
Females
2,3
1,7
3,3
2,3
2,2
2,4
0,8
0,7
0,9
1998
2,8
2
4,2
2,5
2,7
2,3
0,9
0,7
1,1
1997
2,6
1,8
3,8
3,0
2,7
3,4
0,9
0,7
1,3
1996
3,0
2,2
4,3
3,4
3,5
3,2
0,8
0,7
1,1
EU 1999 EU1996
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
4,4
5,0
0,6
-1,2
1997
3,3
7,3
3,8
-3,9
1996
2,7
2,9
0,2
0,4
EU 1999 EU 1996
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
4,9
7,5
2,4
-1,0
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NETHERLANDS
Conclusions
1. General appreciation
The Dutch economy and labour market have been booming since the middle of the nineties. Nevertheless major challenges
remain that need to be overcome. The most pressing one is the still large unexploited supply of labour,probably best
exemplified by the more than 744.000 persons with invalidity benefits. The present economic climate offers a unique
opportunity to raise the employment rates of women and persons over 55. This will help to cope with the future ageing of
the population. Other important challenges are the increasing bottlenecks due to economic expansion and the need to
harmoniously integrate the many new citizens with a minority ethnic background.
2. Policy-mix
The Netherlands has in its employment and labour market policy mix achieved a reasonable balance between the four pillars
of the European Employment Strategy. The emphasis is on increasing effective labour supply through activation and
prevention and on measures to make the tax- and benefit system more employment friendly. At the same time the policy
continues to focus on wage moderation, flexible labour relations and the modernisation of the organisation of work.
3. Response to the 1999 Council Recommendations
The major tax reform is an important step in meeting the first Council recommendation of 1999, which asked the Dutch to
make their tax and benefit system more employment friendly. The tax reform contributes to a reduction in the poverty trap.
Concerning the second recommendation on monitoring the comprehensive approach, there seems to be some progress. A
new data processing system is set up, but verification of Guidelines 1, 2 and 3 remains difficult as long as the data of the
different operators have not been brought together in one database.
The Netherlands has taken the initiative to expand the comprehensive approach to the more difficult disadvantaged groups
who are at particularly distant from the labour market. It seems that the success of this strategy will depend critically on the
ability to transform the present rigid social security system into an integrated and well functioning, decentralised, Centre for
Work and Income.
4. Challenges ahead
The measures presented in the NAP to tackle the growing number of invalidity benefits may not be commensurate to the
magnitude of the problem and will have to be closely monitored. Greater efforts, particularly in the short run, are also
required to address the skill gaps and the many difficult to fill vacancies that have emerged.
1. Economic and employment situation
There are no signs yet of an economic slow down. Real GDP growth increased in 1999 by 3.6 % and is expected to grow at 4
% in 2000. Labour market conditions have constantly improved since 1990 apart from a dip in 1993. The Netherlands is
experiencing its longest period of continuous economic growth since WW II.
The employment rate in persons increased from 65.4 % in 1996 to 70.9 % in 1999 which is well above the EU-average. For
those older than 55, the employment rate of 35.3 % is slightly below the EU-average. The employment rate in full-time
equivalent (FTE) also increased to 56.3% in 1999. The less impressive rise in FTE is due to the widespread use of part-time
work. The male (FTE) employment rate is 3.5% point above the EU-average, whereas the FTE female rate is still almost 4.5
% point s below. The FTE gender gap in 1999 stands at 33.5 % points compared to an EU average of 25.5%.
The unemployment rate has continued its decrease in 1999 and is currently at 3.3%. The composition of unemployment is
characterised by high shares of low-skilled, older workers and by an over-representation of ethnic minorities. The
unemployment rate of ethnic minorities in 1998 was 16% compared to 4% for native Dutch persons. Youth unemployment
is below the EU-average at 4.8% in 1999. Total female unemployment at 4.7% is much lower than the EU-average, but it is
nevertheless twice as high as the male rate of 2.3%. Long-term unemployment is very low at only 1.3%. The very favourable
unemployment picture that emerges from the official statistics above must be qualified. Broad unemployment is still quite
high due to the fact that many benefit recipients are not actively looking or available for work. There is also considerable
hidden unemployment among the 744.000 persons receiving invalidity benefits.
.
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One of the major problems is the current mismatch on the labour market due to skill shortages. Apparently all sectors of the
economy are facing hard to fill vacancies. In 1996 there was one vacancy per hundred workers, now this figure has more than
doubled.
2. Overall employment strategy
Ever since the agreement of Wassenaar in 1982, wage moderation and measures to improve the functioning of the labour
market have been the cornerstones of the Dutch employment policy. This policy is achieved through nominal wage
moderation and through reductions in income taxes, and if possible employers' social security contributions. The Social
Partners, supported by government legislation, have over the years established many agreements relating to training a nd
labour market flexibility, starting with the promotion of part-time work and the wide spread use of temporary work agencies.
The Dutch 2000 NAP mentions three themes as the main policy focus for the coming years: i/ A general 'enabling' policy
aimed at macro-economic stability and structural reforms to make sure that the labour market keeps pace with economic
development, ii/ The stimulation of effective labour supply to keep wage cost under control and to meet present labour
shortages and iii/ The limiting of the present inflow into and the encouragement of the outflow from the invalidity benefit
schemes.
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3. Progress assessment
3.1. General appreciation
The 2000 NAP presents a concise but comprehensive presentation of how the Dutch policy mix is balanced between the
four pillars. The main emphasis is clearly on increasing and maintaining labour supply through activation and prevention. The
comprehensive approach
of the employability pillar appears to be making progress. The exact situation for GL 2 is difficult to
evaluate due to incomplete quantitative monitoring. It is questionable if the measures in the NAP are a sufficient short run
response to the recent rise in
labour shortages.
The announced reform of the
social security
system was long overdue. Its success
shortages
will depend crucially on the possibility to streamline the various implementing bodies, who each have their own objectives,
into one single well functioning Centre for Work and Income.
3.2. Implementation of the 1999 National Action Plan
Employability:
In 1999 the Council already acknowledged that the Netherlands complies with
GL 1.
By law the non-
compliance rate should be put at zero, although empirical evidence is not available in the NAP. In the case of
GL 2
the non-
compliance indicator rate is set at a surprisingly high 63%. This result is incomplete as it is based only on Employment
Service data registers, it does not contain data from the unemployment benefit agency (LISV) nor from t he municipalities.
The Dutch strive for compliance in full by the end of 2002. The activation effort indicator of
GL 3
in 1999 is estimated at
34%.
The government, together with the social partners, has formulated as a "lifelong-learning policy target to equal the performance
lifelong-learning"
lifelong-learning
of the top two MS's. The apprenticeship scheme is to be transformed into a
'training on the job'
system. Employability is further
promoted by a
quality award
for investing in people, by a
skills validation
system and by a pilot system of
individual learning
accounts
based on UK experience. Average class
size are
to b e reduced and a campaign has started to make the teaching
lass
profession more attractive.
Early school leaving
is attacked with the Regional Registration System Act, supported with a budget
of 27 million Euro.
Special reintegration efforts were made on behalf of 82.000 disabled persons, to date 10.700 have been placed in paid
employment. A taskforce will evaluate the new Act to Encourage Labour Force Participation of Ethnic Minorities (SAMEN).
The SMEs in association with the government and the Employment Service, have started a programme to place 20.000
persons with an ethnic background in paid jobs.
Entrepreneurship:
An external body is reviewing all current procedures and regulations with the aim to reduce by 15% in
2000 the administrative cost of running a business. The government intends to tackle obstacles to entrepreneurship by
revoking superfluous business requirements, by promoting risk capital for SMEs, by amending the Bankruptcy Act and by
introducing a business training programme for young people. Furthermore the highly successful Market Forces, Deregulation
and Legis lative Quality Project (MDW) will continue. Under the
new tax system
for the 21
st
century tax rates on labour are
reduced, i.e. ranging from 0.6 % points for the first bracket to 8 % points for the third and fourth bracket. There are special
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tax advantages for working parents and for environmental protection. The VLM/SPAK (wage-cost subsidy) scheme, which
was introduced a few years ago provides employers with a tax rebate if they hire long term unemployed people or employ
workers earni ng up to 115% of the minimum wage. The scheme is estimated to have generated almost 60.000 additional
private sector jobs. The average
wedge
for a minimum wage has been reduced from 29% in 1990 to 15% in 1999. Additionally
tax incentives of 4436 Euro are given to employers to promote the "on the job" training of LTU. The Netherlands has
started experiments with lower VAT rates in labour intensive sectors.
Adaptability:
The Adjustment of Working Hours Act, which will come into force in July, gives workers statutory rights so
that part-time workers can expand up to full-time or the reverse. The dual dismissal procedure is under review, the aim is to
accommodate employers without sacrificing individual worker rights.
Equal Opportunities:
In order to redress the gender gap, the Dutch want to raise the female employment rate to a level as
close as possible to 70% by 2010. An Equal Pay Monitor was launched in 1999 to better detect sex-based discrimination. The
government has prepared the new Work and Care Act which combines various leave schemes. The new act entitles both
parents to three weeks of paid maternity leave, and up to 10 days of care leave per year paid at 70%, half of the employer's co
st is reimbursed. The new Leave-Saving will make it possible to save up to 10% of one's income for a sabbatical period.
The number of childcare places has almost doubled. The 89,000 places that existed in 1998 are enhanced with an additional
71.000 places. The Government has made 68 million Euro available to expand childcare tax relief. A special childcare budget
of 56 million Euro is made available for single parents. So far 2700 new subsidised childcare jobs have been created. In 55%
of all collective wage agreements specific childcare provisions have been included. Childcare cost can be reimbursed as part
of a reintegration pathway.
The
Social Partners
have been consulted during the drafting of the NAP. The social partners have a first responsibility for
lifelong learning through the sector training funds and they are also directly involved in solving the sector bottlenecks that
arise due to skills shortages.
The
ESF contribution
for the new period is fully used to speed up the implementation of the NAP. A special effort is made
to reinforce GL 2 and the comprehensive approach.
4. New policy initiatives (NAP 2000)
The 1999 Council recommendations on the implementation of Dutch employment policies
(1) Continue efforts to
improve the tax benefit system
with a view to
removing disincentives
which may discourage
participation in employment, in particular of older workers and women. Resolute efforts are needed to reduce the high
number of persons who remain outside the labour market depending on passive income support;
(2) Pursue efforts to
upgrade the statistical monitoring system
so that policy indicator on prevention and activation will
be published by 2000 in accordance with agreed definitions and methods.
4.1. Initiatives taken in response to the recommendations
Concerning the efforts to
remove disincentives in the tax and benefit system,
the Dutch government is pursuing a four-
pronged tax reform policy, which represents a significant step forward to meet the first Council recommendation. The first is
the
tax reform
which among other things will reduce the poverty trap through tax credits which increase net income at the
lower end of the pay scale by 2-3%. At the same time the tax allowance of inac tive persons is abolished which
increases the difference between income and benefit by 540 Euro. Second, there is
social security
reform recently approved in
Parliament. The structure and implementation will be more integrated and transparent following the
one stop shop
approach.
.
Public funds are channelled to a separate private market for reintegration in order to improve effectiveness and efficiency.
The third is to
promote the
participation of older workers
by making working at an older age possible and attractive again. Compulsory early
retirement is to be avoided and replaced by voluntary retirement at the individuals own expense. The outflow from
employment is curbed by ending the present favourable tax treatment for early retirement schemes. The inflow is encouraged
through tax reductions, The government is considering an abolishment of the exemptions for older unemployed people to
app ly for a job. Fourth, the
participation of women
is supported by doubling the number of childcare places, through the Work
and Care act and the Working Hours (Adjustment) Act and via the tax reform. The government is also reviewing the
favourable treatment of breadwinners in the tax and social security system.
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Regarding the large number of persons receiving invalidity benefit it seems that the problem lies mainly in entry conditions
that are too lenient. Although the NAP announces various measures to limit this inflow their effectiveness can only be
evaluated in a few years time. Their success will depend critically on the possibility to impose more stringent conditions of
entry.
With respect to the second recommendation about the need to
improve the monitoring of the comprehensive approach,
an extra effort is needed to get harmonised information from the three different implementing bodies i.e. the municipalities,
the LISV and the Employment Service, responsible for supplying information on the inflow into unemployment and on the
outcomes of the reintegration pathways. So far only one, the Employment Service, has a monitoring system in place.
Moreover 5 00 municipalities were until now unable to provide information on this subject. At the moment the government
has started together with Association of Municipalities (VNG) a pilot with the 25 largest municipalities (G25) to arrive at a
common system. The first usable data should be available in the first quarter of 2002. For the unemployment benefit agency
(LISV) the first results are expected in the third quarter of 2001.
4.2. Other policy initiatives
Regarding the implementation of the GL's 2000, the parliament has now approved the Cooperation in the Implementation of
Work and Income Act (SUWI) concerning the
reform of the PES
The five existing benefit bodies are merged into one public
PES.
body responsible for implementing employee insurance schemes. Local Centres for Work and Income will take over the
advisory function of the Employment Service. Social Partners and local authorities are represe nted in a national Work and
Income Council. In the
employability
pillar, the main new initiative is the extension of the comprehensive approach to the
current stock of unemployed, without jeopardising the implementation of GL 2. Additional funds will be made available to
provide for as many pathways as needed. Practically all collective wage agreements now have special employability measures.
On the job training is offered to unemployed people and to subsidised workers. Experiments with the Unem ployment
Insurance Act allow for training without the loss of benefits. In April an Invalidity Benefit Action Plan was submitted to
Parliament to curb the increase in invalidity benefits. In line with the Lisbon summit, the government has pledged to connect
all schools to the internet by 2001, which is one year earlier than was announced in 1999. Under the
entrepreneurship
pillar
local development
is strengthened by giving the Employment Service a special budget for projects that reduce loc al mismatches.
The
adaptability
pillar is addressed by the ever increasing number of collective wage agreements that have provisions for the
training of workers.
Equal Opportunity
has received attention via the new Equal Rights Monitor. This monitor promotes
gender mainstreaming and pays also special attention to ethnic origin.
Performance Indicators
Netherlands
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
70,9
80,3
61,3
62,7
80,6
35,3
56,3
73,2
39,7
1998
69,4
79,6
58,9
60,3
79,3
33,0
55,2
72,4
38,1
1997
67,5
77,9
56,9
56,9
77,8
31,4
53,7
71,1
36,4
1996
65,4
75,7
54,8
54,1
75,8
30,0
51,8
69,2
34,4
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
3,3
2,3
1998
4,0
3,1
1997
5,2
3,9
1996
6,3
5
EU 1999
9,2
7,9
EU1996
10,8
9,6
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Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
4,7
4,8
3,3
6,3
1,3
0,9
1,7
5,3
5,3
5,2
5,4
1,9
1,6
2,4
7,0
6,1
5,3
6,8
2,6
2,0
3,4
8,1
7,3
7,0
7,7
3,1
2,7
3,8
10,8
8,5
8,5
8,5
4,2
3,5
5,4
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
2,5
3,6
0,9
0,8
1998
2,5
3,7
1,0
-0,4
1997
3,1
3,8
1,0
-0,9
1996
2,3
3,0
0,5
-0,2
EU 1999 EU 1996
1,4
241
1,0
0,0
0,7
1,6
1,0
-0,5
AUSTRIA
Conclusions
appreciation:
General appreciation
In comparison with most Member States, the Austrian labour market results are quite satisfying. The
situation improved during 1999. Both the favourable economic situation and ALMP contributed to the increase in
employment and the decrease in unemployment. But the key challenges in the labour market - low participation of older
workers in employment, the significant gender gap in employment and the higher-than-average tax share o n labour - remain
unchanged.
Policy Mix:
The medium-term strategy concentrating on employability continues to be implemented with some
modifications. Activation and prevention measures were extended significantly, the 'safety net' for apprenticeship-seekers
addressed the unemployment of disadvantaged youth with some success and the gender mainstreaming approach in the
employability pillar has now more transparent objectives.
Response to Recommendations:
There has been a limited response to the Council Recommendations. The measures put
in place to encourage older workers to stay longer in work have not had the desired results. Unemployment in the age group
55 years and over remains high. In order to reduce the gender gap and to reach the Lisbon targets of increasing the female
employment rate, more efforts are needed concerning the expansion of childcare facilities for children under 3 yea rs and of
the home services for elderly people. The problem of the high gender pay gap has to be addressed. The announced gradual
reduction in non-wage labour costs of about 0.4% of GDP in 2003 can be considered as a modest step forward to bring
down the high tax burden on labour.
Challenges ahead:
Future bottlenecks and skill gaps in the labour market need to be avoided by harnessing the potentials of
new technology. Life-long learning should be further promoted by concerted efforts from those responsible for research and
education and the social partners to anticipate demand. New ant-discrimination measures need to be promoted for migrant
workers. Incentives within the unemployment insurance system or flexible working time models could contribute to reduci
ng seasonal unemployment.
1. Economic and Employment Situation
In 1999, GDP growth in Austria amounted to 2.1%. After a phase of sluggish activity in the wake of the Asian crises, the
economy recovered and the cyclical upswing gained momentum in the course of the year. Productivity growth slowed down
to 0.7% percent.
The performance of the Austrian labour market improved in the last year. Employment grew by 1 % in 1999 and the
employment rate increased from 67.4 % in 1998 to 68.2 % in 1999. The full-time equivalent employment rate for men was
75.4 %, for women 50.8 %. Employment gains were translated into a decline of the unemployment rate, which was reduced
from 4.7 % in 1998 to 3.8 % in 1999. The register based unemployment rate in Vienna was one fifth above th e Austrian
average, and approximately half of all long-term unemployment was registered in Vienna. By contrast, Upper Austria and
Salzburg reached almost full employment.
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Besides the favourable economic situation (vacancies increased considerably), the significant expansion of the funds available
for ALMP contributed to this positive outcome. Although female unemployment was still above male unemployment (4.5 %
to 3.3 %), the gender gap in the unemployment rate was reduced slightly. With the exception of Luxembourg, Austria had the
lowest youth unemployment ratio (2.9 %), and the long-term unemployment rate (1.2 %) remained one of the lowe st in the
EU and was slightly decreasing. However, the recovery of the labour market for people over the age of 54 was well below
that for younger persons.
2. Overall Employment Strategy and Its Main Objectives
The positive economic situation has enabled Austria to reach, in 1999, the national targets originally set for 2002 of
increasing the proportion of people in ALMP measures to at least 20% and, in 2000, of creating 100.000 new jobs.. The
Austrian policy mix focuses on employability, on developing entrepreneurial potentials, on opening up innovative
employment resources and on equal opportunities for women and men. These objectives are to be realised through a co
mprehensive and coordinated strategy of employment policy. The mainstreaming of the concept of the Territorial
Employment Pacts into all Länder is improving the dissemination of good practice in job creation on regional and local level.
3. Progress Assessment
3.1. General Appreciation
In 1999, the NAP contributed significantly to the improvement of the Austrian labour market performance through a
balanced policy mix. In particular, the greater emphasis on active labour market policy has helped to reduce the number of
the unemployed as well as the inflow into LTU..
The fight against youth unemployment met with some success. The safety net for young people, providing opportunities for
disadvantaged youths to find apprenticeship training, was an important measure as it put emphasis on this group. Under the
1999 NAP, a policy package for older people was worked out that came into force on 1 January 2000 with the aim of
increasing the employment rate of older workers. Within the entrepreneurship pillar, there has been a certain progress in
initiating administrative reforms. The NAP process gave rise to a broad debate on a variety of obstacles to fostering
entrepreneurship. As in the last two years, the social partners did not make much progress on modernising the organisational
framework of work. Some efforts were put into strengthening equal opportunities for women and men by facilitating the
return to the labour market after a longer break.
3.2. Analysis by Pillar (NAP 1999)
Employability:
Austria is implementing
preventative and active policies
very satisfactorily. The flow into LTU is amongst
the lowest in the EU. The share of participants in active measures was increased significantly by 5.6 percentage points and as
a result Austria is complying for the first time with the 20% common target. Almost half of the increase was due to a
significant expansion of a training programme on job search training (due to be cut back i n 2000). The regional differences
in activation are still very high and range from only 15.9% in Vienna (despite the increase in activation in this region) to
33.1% in Upper Austria.
Older workers became the central target group of the PES. However, there are still no attractive measures that represent an
alternative for older (lower qualified) workers who have already reached early retirement age. A 62 M{{X80}} programme
co-financed jobs for more than 15.000 long-term unemployed people and older persons. For young people, the safety net
was quite successful as it reduced the strain on the apprenticeship market on a short-term basis.
Two innovative qualification measures concentrating on the ICT bottleneck were implemented in 1999. In total, 6.300
participants were trained, though first results show they had difficulties in integrating into the labour market. Consequently,
an improved version of this measure has been designed.
Concerning lifelong learning, early school leavers were offered some opportunities to complete compulsory education at a
later stage. In total, 600 persons participated in such courses (3.6 M{{X80}}). Efforts for the provision of a second chance
need to be increased to reach the medium-term national targets on the reduction of the share of low qualified young people.
The situation of disabled persons on the labour market improved in 1999, but this group did not profit from the economic
upswing to the same extent as other groups. Though expenses for ALMP for disabled persons have been increased
considerably during the last year, more efforts for an effective integration of the disability dimension in all ALMP have to be
undertaken.
For ethnic minorities and migrant workers, the NAP 1999 did not provide any additional measures.
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Entrepreneurship:
Austria has adopted a tax reform (Steuerreform 2000) which simplifies the taxation regime for small
businesses, facilitates business transfers and removes several administrative fees for businesses. The reform particularly
addresses SMEs and start-ups. It includes the introduction of special favourable conditions for new businesses, which profit
fromf a certain reduction fo non-wage labour costs. Apart from the innovative programme NEWSTART, a few initiatives
were taken to meet the target of creating new jobs in the social and health care sector.
Adaptability:
New working time models contributed to the decrease of seasonal unemployment in the construction industry,
but this problem has not yet been tackled either in the other seasonal branches such as tourism or in the regions concerned.
Take-up of other flexible working time models, such as the educational leave scheme (Bildungskarenz or the solidarity bonus
Bildungskarenz)
Bildungskarenz
model which links flexible working time with the recruitment of unemployed persons in 1999 was rather low.
Only limited progress was made on the dissemination of new occupational profiles and new certification regulations. For
instance, the Länder developed new occupational profiles and new training programmes for home help services for elderly
people, but the certificates are not recognised by the other Länder. Moreover, for this fast growing branch, specific collective
agreements still have to be reached in order to attain attractive working conditions and assure high quality sta ndards of the
services delivered.
Equal Opportunities:
In 1999, the targets of the guidelines 1-3 were changed into more equal opportunities specific
performance targets. 10.000 childcare places were created under a special programme that ends in spring 2000. This
represents a limited progress in providing more and better childcare facilities. Efforts to create more facilities better adapted
to the needs of working parents should be sustained. In 1999, the share of unemployed women with mobility restrictions
(most ly due to childcare) was, after a rise in 1998, back to the 1997 level. The concept of gender mainstreaming was well
implemented under pillar I, but there were no new initiatives under the other pillars.
Social Partners:
In contrast to previous years, the Social Partners' involvement has decreased. This year they were only
consulted on the draft NAP as were other federal and regional authorities.
ESF and the Structural Funds:
The NAP strategy was underpinned by the main objectives of the ESF programmes,
particularly as regards the guidelines 1-3, 6, 9, 12 and pillar IV. In 1999, 124 M{{X80}} ESF and 262 M{{X80}} of total
public funds were spent on measures of the ESF programme. In 1999, the priorities of the European Employment Strategy
coincided with the target groups of the Austrian ESF programmes: Specific groups needing assistance for their integration
into the labour ma young persons, older people, disabled and long-term unemployed persons are target groups in the NAP as
well as in the ESF. Within objective 4, skills training for workers is aimed at preventing unemployment. The data for the first
half of 1999 indicate that 48% of all participants were female. For the new programming period 2000-2006, the objectives of
the NAP and the ESF have also been harmonised. The ESF will concentrate on preventive measures to combat
unemployment of adults and youth and on policie s for disabled persons. A focus on lifelong learning has been introduced
under the new objective 3, and the gender mainstreaming approach will be pushed forward.
4. New Policy Initiatives
The 1999 Council recommendations on the implementation of Austria's employment policies. Austria should:
(1) Review early retirement incentives and develop flexible working time schemes, so as to keep older people longer in working life;
(2) Pursue a comprehensive strategy to narrow the gender gap in employment, inter alia by putting in place measures, which facilitate the
reconciliation of work and family life;
(3) Continue efforts to reduce the high tax burden on labour, in particular by focusing on problem groups in the labour market.
4.1. Initiatives Taken in Response to Recommendations
Regarding the recommendation on the participation of older workers in employment, a "policy package for older workers"
has been worked out focusing on flexible working models. This includes part-time work arrangements and unemployment
insurance contribution incentives. First results from the year 2000 indicate that the take-up of these part-time work models is
low. A higher participation of older workers in active employment is not foreseeable in the ne ar future. New initiatives need
to be taken to activate the older workers to stay in the labour market.
The recommendation on narrowing the gender gap in employment and facilitating the reconciliation of work and family has
been taken into consideration by a number of largely motivational and 'soft' measures. The provision of childcare facilities
for parents working unusual hours and for children under 3 and furthermore assistance for people with care obligations need
to be set as quantified targets.
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The recommendation on reducing the tax burden on labour with specific attention to the problem groups on the labour
market has been partially addressed by the 2000 tax reform, which brought measures supporting the employment of
apprentices, special assistance of young entrepreneurs and support of in-house training. The labour costs were lowered only
for apprentices. By 2003, it is planned to reduce the non-wage labour costs by 0.9 b{{X80}} (0.4% of GDP). In the light of
the cont high tax rate on employed labour, the impact of such reforms needs to be closely monitored.
4.2. Other Initiatives
Under employability, the government set the target of raising the proportion of low-skilled workers in skills training to the
level of participants with medium-level qualifications. However, no additional measures to attain this goal have been planned
for 2000. The option
to complete compulsory education later
was already mapped out in 1998 and extended in 1999 on a
small scale. With the help of the new ESF objective 3 programme, this important target w ill be reinforced for 2000, covering
approximately 850 participants. It is planned to provide all Austrian schools with an access to the World Wide Web by 2002.
However, due to current budget restrictions, the financial means for this initiative have not yet been allocated.
No new provisions under GL 9 have been made to improve the situation of
migrant workers,
who are among the most
disadvantaged groups on the Austrian labour market. Austria should promote training measures adapted to the needs of the
migrants, in particular for women and for the second or third generation.
In the NAP 2000, measures are planned to strengthen the venture capital sector, to reform the social security system and the
administrative system as well as to improve e-commerce vis-à-vis market requirements. Measures discussed for several years
(one-stop-shops, liberalisation of regulations) are also listed in the NAP 2000. The NAP 2000 mentions a new priority for the
creation of new jobs in the social and care sector, using territorial employment pacts and initiatives under t he new ESF
objective 3. No additional steps are planned for defining new outlines of professions, and the employment potential of the
Austrian care regulations were not fully exploited. Administrative obstacles, e.g. the validity of certifications across the
borders of the Länder demonstrate that many barriers still remain in these areas. In addition, collective agreements and a
further exploration of the employment potentials in the emerging new service sectors, especially the health care sector,
should be envisaged. These new challenges require an innovative approach from the social partners.
The NAP 2000 points to the importance of raising the labour market participation of women and reducing female
unemployment with a special focus on the reconciliation of work and family life. Simultaneously, the government is
discussing new policies that may even lead to a more traditional division of labour by implementing a longer parental leave
with higher childcare subsidies. In the long run, such policies may counteract the target of integrating more women into the
labour market.
Performance Indicators
Austria
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
68,2
76,7
59,7
54,9
81,3
29,2
63,0
75,4
50,8
1998
67,4
75,9
59,0
54,2
80,4
28,0
62,7
74,6
50,9
1997
67,2
75,9
58,5
54,0
79,9
28,5
62,8
74,7
50,9
1996
67,3
76,1
58,6
55,5
79,3
29,4
62,9
74,9
51,0
EU 1999
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
EU 1996
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
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1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
3,8
3,3
4,5
2,9
2,3
3,5
1,2
0,9
1,6
1998
4,5
3,8
546
3,9
3,2
4,5
1,4
1,1
1,8
1997
4,4
3,6
5,3
3,9
3,4
4,4
1,3
1,0
1,6
1996
4,3
3,6
5,3
3,7
3,2
4,2
1,2
0,9
1,5
EU 1999
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
EU1996
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
0,9
2,9
1,9
0,3
1997
0,5
1,2
0,7
-1,6
1996
-0,6
2,0
2,6
-2,7
EU 1999
1,4
2,4
1,0
0,0
EU 1996
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
1,4
2,1
0,7
0,6
PORTUGAL
Conclusions
General appreciation
In 1999, the Portuguese economy has continued to grow at a greater rate than the EU average. Both the
employment and the unemployment rates registered a better performance than the EU average, particularly for women and
long-term unemployed. However, the skills level of the workforce still suffers from high levels of drop out in secondary
education, low levels of formal education and low levels of participation in continuous train ing. This goes along with low
productivity levels and a need for modernisation of work organisation. The service sector is under-developed with a
significant potential for the creation and up-grading of jobs.
Policy-mix
The main challenge for Portugal is to make it compatible to continue structural changes and the modernisation
of the economy while maintaining the good employment performance. The national strategy for 2000 follows a path of
continuity with the 1999 NAP although stronger attention is now devoted to lifelong learning, which is consistent with the
need to increase the level of qualifications of the labour force.
Response to the 1999 Council Recommendations
The NAP addresses the 1999 recommendations but with a greater
emphasis on the education sector, the training system and the introduction of new technologies. The main weaknesses of the
education system are addressed but a comprehensive lifelong learning policy should be further developed. There is still no
clear strategy of development of the service sector. Faced with difficulties in social dialogue, the government and social
partners h ave agreed upon a new and pragmatic methodology for the partnership on adaptability.
Challenges ahead
Efforts should continue as part of a long-term strategy of structural reform with a strong focus on
improving the quality of both the supply and the demand of the labour force. This implies the development of livelong
learning and the improvement of the education sector in parallel with the evolution towards a more high-skilled productive
system.
1. Economic and employment situation
In 1999, the Portuguese economy continued to grow at a greater rate than the EU-average even if the pace was slower than
in 1999 (2.9% growth compared to 3.5% in 1998). The employment and unemployment situation has continued to improve.
The employment rate has globally improved (from 66.5% in 1998 to 67.4% in 1999) with a particularly strong increase for
women (from 57.9% to 59.4%) and temporary workers. The gender gap has diminished also in unemployment rates where
the positive performance (4.9% to 4.5%) is completely due to the better situation of women (6.1% to 5.2%). Long-term
unemployment has decreased (2.3% to 1.7%), which is a faster rate than total unemployment. The situation of all groups
except older men imp roved.
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Nevertheless, this good employment performance continues to hide structural weaknesses related to low participation in
education and training, low productivity levels and unbalanced employment distribution by sectors. Labour force
participation in the service sector has also increased mainly due to the growth of low-skilled jobs (particularly in commerce
and health, social and personal services) and, to a lesser extent, of high-skilled jobs.
2. Overall employment strategy
The national strategy is to stabilise and reinforce the effectiveness of the current employment policies. Therefore, the
strategic objectives follow a path of continuity with the 1999 NAP within the wider objective of maintaining the employment
rate over 70% and the unemployment rate under 5%. These objectives have to be seen in the light of national indicators,
which were 71.5% and 4.5% in 1999. The global strategy does not therefore aim at increasing the emp loyment rate but
rather at maintaining it while pursuing the modernisation of the economy.
All pillars are addressed and as in the previous NAP there is a clear focus on the first pillar. Under employability, the
priorities are prevention, early intervention and effective integration of those more exposed to the risk of long term
unemployment. Lifelong learning will be further promoted, particularly in the field of new technologies, which is consistent
with the need to increase the level of qualification of the labour force.
Entrepreneurship is to be fostered particularly in the service sector and at the local level. Equal opportunities are to be
ensured by the gender mainstreaming approach.
The overall strategy is to be assessed against a framework of difficult collective bargaining.
As compared to last year's budget, the NAP 2000 presents a consistent and considerable shift of resources from active
measures offered to unemployed (particularly GL 1) to lifelong learning (GL 6). Early intervention measures will be
developed at regional level.
3. Progress assessment
3.1. General appreciation
1999 has been a year of consolidation of the Portuguese employment strategy outlined in the 1998 NAP. Efforts have been
concentrated on Pillar I and particularly on measures aimed at the unemployed: the territorial coverage of the employment
networks has reached {{SPA}} as foreseen {{SPA}} 75% of the population. Most of the quantitative objectives have been
met or exceeded. There has been a noteworthy improvement of indicators. Given the positive economic and performance as
well as the quantitative success of the activation policies, efforts should now be focused on qualitative objectives.
Some weaker features appear though: the PES are confronted with a low level of turn-up of unemployed; inflow into LTU
remains high; the planned budget for 1999 has been under-spent (but the financial data is still provisional), no information is
given on fiscal measures and their effectiveness. Social dialogue has made little progress.
3.2. Implementation of the 1999 National Action Plan
On
employability,
the programmes dealing with young (INSERJOVEM - GL 1) and adult unemployed (REAGE {{SPA}}
GL 2) continue to produce significant results. The territorial coverage of both initiatives has been widened and 18,7% of
young and 21,2% of adults had not been offered an active measure before, respectively, 6 and 12 months of unemployment.
Assessment of these relatively low rates of non-compliance (one of the best performances among Member States l take into
account that many unemployed do not answer the PES call. Turn-up rates are indeed worryingly low: 52% of the young and
43% of the adults do not come to the interviews offered by the PES. A study on this problem is being carried out. There is
also a lack of information about the type of measures offered to ensure the most efficient integration. Globally, 18,8% of the
registered unemployed received an active measure in 1999 (GL 3). However, some measures seem to be under-evaluated.
The 20% o bjective is set to be reached by 2002.
A national agency for the education and training of adults has been created but is still at a very early stage. The number of
employed in continuous training under the Pessoa programme has increased by 60% as compared to 1998 (GL 6). The
number of apprentices (at 31%) has also greatly improved beyond expectations (GL 8).
As for
entrepreneurship,
it has been made easier to start business with an average delay of 14-26 days compared to 5-6
months as a result of the further development of the Network of Business Formalities Centres. However, these initiatives
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only partially cover the registering and licensing of a company. Measures have been taken to fight bogus self-employment
(workers disguised as sub-contractors) with a subsequent fall in the self-employment rate, and informal employment.
A legal effort has been carried out in order to foster
adaptability
with laws adopted in the fields of part-time employment,
temporary work and night work. The legal framework for employees (wages, dismissal) has been amended. In 1999, about
140,000 employees have benefited from training co-financed by the ESF.
Equal opportunities
are addressed through the mainstreaming approach. Indicators have been developed to monitor it but
they will be applied only in 2000. The coverage rate of pre-school education (3 to 5 years of age) has increased to 65% (from
62.6% in 1998) and reached 323,000 children.
Social partners
have participated in the assessment and revision of the NAP but there were considerable problems in the
collective bargaining process as a whole.
Most of the measures executed in the 1999 NAP were co-financed by the
ESF.
Guidelines 1, 2 and 6, representing more
than 90% of the planned budgetary effort (excluding fiscal rebates), were co-financed up to an average of 63%. This strong
link between the NAP and the ESF will be maintained in the 2000-2006 period. For 2000, the ESF is expected to co-finance
these three guidelines up to an average 73% of the public expense, with a special effort on continuous training.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Portugal's employment policies
(1) Pursue efforts to improve the quality of the education system, and to strengthen support for continuous training, in particular by involving social
partners more actively;
(2) Adopt and implement coherent strategies, encompassing regulatory, fiscal and other measures, in order to reduce the administrative burden on
companies, to stimulate entrepreneurship and to exploit the job creation potential of the service sector;
(3) Encourage a partnership approach and promote concrete commitments by the social partners at all appropriate levels on the modernisation of
work organisation, with the aim of making undertakings more productive and competitive while achieving the required balance between flexibility
and security.
4.1. Initiatives taken in response to recommendations
In order to improve the
quality of the education system,
the plan lays down several measures aimed at reducing early
school-leaving and at strengthening the content in new technologies. Notably, the special education action zones will be
developed, alternative curricula will be offered to pupils with learning difficulties, special combined education and training
courses will be made available to early school-leavers entering the labour market. The number of pupils in professional
training should increase by 10% compared to 1997. An increase of up to 40% of pupils in new technologies is also planned
with special attention to equal opportunities. It is also stated that the reform of the secondary education will be carried out by
2002. The efficiency of these measures will need to be closely monitored taking into account an early school-leaving rate of
45% in 1999.
The national target of reaching a 10% rate of participation of employees in
training
actions is being pursued untill 2002 and
it has been made more ambitious by adding a supplementary target according to which half of these actions should have new
ICT content. Further attention should be devoted to the adequacy and the anticipation of labour market needs. A medium
term agreement on Employment, Labour Market and Training is being negotiated with the social partners. This translat es
into a considerable budget increase for GL6.
This set of initiatives appears as a response to some of the main deficiencies of the system but should be presented in a
context of a long-term strategy for lifelong learning.
The initiatives aimed at reducing the
administrative burden on companies
will continue, particularly in the area of social
security. However, incomplete information is given on the present situation. The lack of information also hampers the
assessment of the financial support given to new enterprises (financial schemes, fiscal measures). A large number of
initiatives for the
service sector
(notably in the fields of new technologies, tourism and environment) are announced but
they don't allow for a clear picture of the strategy adopted.
To overcome the blocking of the
social dialogue,
the government proposed a new working approach to the social partners
with the objective of settling medium term agreements on sector themes such as training, work organisation, social
protection, working conditions. All partners were committed to this approach and reports should be issued this year.
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4.2. Other policy initiatives
Furthermore, other initiatives of the NAP 2000 show the willingness to increase efficiency of the overall employment
strategy by a stronger focus on lifelong learning and local development, as recommended by the Guidelines 2000. Particular
attention is devoted to new technologies in education and training, in line with the Lisbon Summit conclusions.
Under the
employability
pillar, the full territorial coverage of the Regional Employment Networks will be completed in
2000. Learning issues are further emphasised with new quantitative {{SPA}} but not qualitative -targets (GL 8).
Computer literacy will also be emphasised with new curricula and multimedia products. The programme Internet in Schools
will ensure that by 2002 all Portuguese schools (primary and secondary) are connected to the internet, with a strong support
of the structural funds. This will be done through the Science, Technology and Society Network that will link the schools
also to public libraries, teacher training centres and cultural associations.
In order to develop
entrepreneurship
at local level, territorial Pacts will be further extended and foster partnerships at local
level. The objective is to create 5000 jobs per year at local level thanks to micro-initiatives.
As for
equal opportunities,
Portugal has clearly identified its weaknesses in particular in the field of labour market
horizontal segregation. Nevertheless, few new positive actions are planned the most important being the development of the
pre-school network that will reach full coverage by 2006.
Performance Indicators
Portugal
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
67,4
75,8
59,4
43,7
80,8
50,7
64,6
74,2
55,5
1998
66,5
75,6
57,9
43,1
80,1
50,0
63,8
74,3
54,0
1997
63,5
71,8
55,7
38,0
78,5
47,5
61,4
71,2
52,5
1996
62,3
71,0
54,2
35,1
78,2
46,3
60,7
70,4
51,8
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
4,5
3,9
5,2
4,3
3,7
4,9
1,7
1,5
2,0
1998
4,9
3,9
6,1
5,1
4,3
5,9
2,3
1,8
3,0
1997
6,8
6
7,7
6,7
5,8
7,5
3,6
3,1
4,3
1996
7,3
6,5
8,3
7,2
6,8
7,6
3,9
3,4
4,6
EU 1999 EU1996
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,2
5,0
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
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Annual change
Employment related Economic Indicators
1999
1998
2,6
3,5
0,8
-1,1
1997
1,8
3,7
1,9
-1,2
1996
1,6
3,6
2,0
-0,4
EU 1999 EU 1996
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
1,8
2,9
1,1
1,0
FINLAND
Conclusions
General appreciation
The labour market situation is characterised simultaneously by a higher than EU-average economic
growth and employment rate. It also has a higher than average unemployment rate. Also the tax burden on labour is high in
Finland. Employment is higher than EU-average, but the participation of older age groups is low and the labour market is
strongly segregated. The structural unemployment has become a persistent problem threatening ageing LTU people with
exclusion.
Policy-mix
The aim of the national employment strategy is to raise the employment rate to 70% by 2003. This seems
realistic, provided that favourable economic development continues and that the social partner support is sustained.
Emphasis is put on ensuring the supply of labour and well-functioning labour markets by investing in skills development and
public employment services. Reinforcing entrepreneurship, improving the adaptability of organisations as well as alleviating
segreg ation are closely linked to the knowledge-based growth strategy. An effort is made to reduce taxes on labour.
Response to the 1999 Council Recommendations
Finland responded to the recommendations by introducing incentives
and disincentives for the employees and employers to keep the older workers longer in active life. Several measures have
been put in place to support active ageing, including raising the limit for early retirement pensions, but making it possible to
go earlier to a part-time pension. Finland has continued to reduce the tax burden on labour. Steps were taken in 1999, and f
urther steps announced for 2000 and 2001. However, further progress is still needed. Gender segregation in the labour
market is a difficult problem with important social and labour market implications. To desegregate the labour markets the
NAP introduces a major initiative "Equal Labour Markets", where the social partners play a key role.
Challenges ahead include
further efforts to reduce structural unemployment. In addition, Finland may, in a decade, face
serious problems in the availability of labour, not only in the IT-branches, but also in services at various skill levels, if no
strong measures are taken to secure the availability of skilled labour. There is a considerable pool of resources to be
mobilised in the LTU-reserve, bearing in mind that bottlenecks are experienced also in other than highly skilled jobs.
Attention should also be paid to develop wide partnerships on the ground including the private sector, the municipalities,
citizens' organisations, and the third sector. The regional and local actors have a major role to play in achieving concrete
results.
1. Economic and employment situation
Finland has maintained strong economic growth through the past five years. Even though there was a drop in the GDP
growth in 1999, the economic outlook is very favourable with fairly low inflation and interest rates combined with
considerable improvement in the export industry output.
In 1999 the total employment growth was 2.2%, the employment rate being 66.3% (69.1% for men and 63.4% for women),
varying though considerably according to age. Over 80% of the prime age groups (25-54) were employed compared to those
over 55 years out of whom only 38.8% were in employment.
The strong economic growth has led to rapid job creation, but due to a simultaneous increase of the labour supply, the total
unemployment rate stood at 10.2% in 1999 (10.7% for women and 9.8% for men), with wide regional disparities. The youth
unemployment ratio remained high in Finland (10.8%). Most new jobs are in the private sector, where recent labour
shortages have occurred, especially in sectors experiencing rapid growth. The demand is focusing on young people with good
qual ifications and IT skills, while at the same time job seekers that are over 50 years and with outdated skills tend to remain
unemployed.
2. Overall employment strategy
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The NAP 2000 reflects the strong will of the Finnish government to improve overall employment by investing in knowledge-
based growth. The government has set a target to reach an employment rate of close to 70% by 2003, which is in line with
the Lisbon Conclusions. The objective is to promote balanced economic growth through disciplined fiscal and other policies,
in order to prevent bottlenecks in the labour market. Emphasis is put on ensuring the supply of lab our and well-functioning
labour markets by investing in skills development and public employment services. To improve efficiency, the focus will shift
from targeting short-term unemployed to those in danger of shifting into long-term unemployment.
The employment policy in Finland is based on a thorough analysis of the needs and problems of the labour market. The
NAP 2000 provides a strategic approach, consolidating its actions into eight distinct action programmes, all multi-sectoral
with specific targets and timetables (i.e. improving skills within SMEs, the availability of skilled labour, New Start, preventing
exclusion, reinforcing the information society, entrepreneurship, modernising work organisation and adaptability in ent
erprises, an equal labour market).
3. Progress assessment
3.1. General appreciation
To achieve a long-term impacts in the labour market, Finland has evaluated and defined the policies of the past rounds. From
extensive use of labour market measures the focus has now been put on improving the quality of the actions. The individual
service process and close cooperation with the companies have been put to the foreground.
Progress in key areas has been achieved and the recommendations have been addressed properly. Although immediate results
cannot be expected, as most goals set out in the NAP 1999 were far reaching, positive steps have been taken especially in
improving employability. Under Entrepreneurship the NAP set targets for further tax reductions, especially for low-income
earners. These will now have to be translated into action in line with the Council recommendation. Achievements under
Adapta bility concern a comprehensive review of all aspects of work organisation and serious efforts could be also seen in
improving the equality policies.
3.2. Implementation of the 1999 National Action Plan
Employability:
The Finnish labour market policy reform aimed at providing all job seekers with an action plan to find work
in the open labour market. Although significant progress was made, the targets set for GLs 1 and 2 were not fully reached in
1999. Of all unemployed job seekers around 95% received an action plan before reaching the threshold. However, almost
half of those drifting into long-term unemployment (6/12 months) did not have an individual action plan. In spite of the
importance of the prevention effort, the output indicator is still high: around 10% of both young and adult job seekers
passed the threshold into long-term unemployment. The risk of long-term unemployment is very high for older job seekers
(32% for the age group 55-59 and 61% for the age group 60-64).
Active labour market measures covered 30% of the unemployed job seekers in 1999. The follow-up data shows that even if
nearly 30% found quickly work in the open labour market after subsidised work or labour market training, still 44% returned
to unemployment after 3 months. The efforts to improve the quality of the measures should therefore be strengthened,
especially when considering the problems of the most-difficult-to-place groups.
Lifelong learning has long been regarded as a generator of Finland's growth, competitiveness and employment strategies. In
addition to offering a vocational training place to all young people, the objective has been to equip the adult population with
the skills needed in the information society.
Adult education and labour market training have been expanded and developed, but as the NAP 1999 did not set concrete
targets for lifelong learning, it is unclear how fruitful the measures have been. To ease the transition from school to work,
most vocational training (70%) included practical training in 1999. Internet-links have been in place since early 1999 in 80-
90% of primary schools, in 90-95% of upper secondary schools and in all vocational institutions.
A great effort was made to prevent bottlenecks and to secure the availability of labour (a national guideline). Universities and
polytechnics, the regional and employment offices, together with the social partners, launched projects to anticipate changes
in the labour demand and provided for extensive training programmes, especially in the ICT sectors.
Entrepreneurship:
The creation of new companies was swift in the late 1990s; the number of SMEs has grown in all
sectors, mostly in the services. To improve the survival rate and to facilitate the links between higher technology and the
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businesses, the Government has further increased investments to RDT (3.1% of GDP in 1999, including both state and
private sector investment). The implementation of the planned actions under GLs 10-13 however had a slow start.
Adaptability:
Particular attention has been devoted to the development of work organisation both by legislation and new
ways of working. The Government, together with the social partners, has continued to develop labour legislation to
guarantee the safety of workers and the flexibility of enterprises. Finally, after four years of preparatory work, the
Employment Contract Act is being submitted to Parliament. It will bring about improvements in the job security in atypical
work, pro visions related to trial period, and benefits and obligations to offered work. The social partners were also involved
in launching the "Well-being at Work Programme" which has started during the first half of 2000.
Equal opportunities:
Mainstreaming equal opportunities in all government acts has taken a step forward, but a longer
"leap" will not be taken until in 2000 when the new Employment Contract Act will be assessed for its gender impact, and be
used as a pilot project in assessing other legislative bills for their gender impact. To desegregate the labour market, each
regional employment authority was obliged to draw up a programme for alleviating segregation. The NAP does not explain
wha t concrete steps have been taken to proceed in this difficult task. The social partners have been involved in developing
more equal wage systems and continued their project to develop an equal workplace.
Social partners:
As previously, the social partners have been involved in the implementation and monitoring of the NAP.
They have also taken an active role in the NAP 2000 and have committed themselves to carry out the planned initiatives. It is
a basic principle that the social partners in Finland participate in the preparation of legislative proposals and decision making
in the employment-related issues. The tripartite process facilitates cooperation and increases the commitment to the agreed
upon goals.
Structural Funds:
The role of the Structural Funds is not easy to trace in the 1999 progress report. During 2000-2006 the
ESF together with the other Structural Funds will contribute to the goal of the Finnish Government to increase the
employment rate, to keep the ageing workforce longer in work, and to support job-creation, thereby underpinning the
implementation of the European employment strategy. The ESF plays a positive role in terms of developing new methods of
implementing l abour market policies.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Finland's employment policies
1) Pursue the review of existing benefit schemes, particularly those facilitating early retirement, in order to keep older workers longer in active life;
2) Pursue recent policy orientations to reduce the tax burden on labour;
3) Examine, in the context of a gender mainstreaming approach, ways to reduce the current levels of occupational and sectoral segregation in the
labour market.
4.1. Initiatives taken in response to the recommendations
To pursue the review of existing
benefit schemes,
particularly those facilitating early retirement, in order to keep older
workers longer in active life, the Finnish Government and the social partners agreed on a package of measures to support
active ageing. The measures, initiated mostly at the beginning of 2000, include both incentives and disincentives for the
employees and employers, e.g. employers' share of pension costs was increased, the age limit for early retirement was raised,
but it was made possible to retire earlier on part-time pension. Preventive action is favoured through early rehabilitation plans
and improving working conditions. The average retirement age has already risen by one year, but the link between the
package of measures and this achievement is not clear.
To pursue recent policy orientations to reduce the
tax burden
on labour, the NAP 1999 announced that the government will
continue cutting the income tax and social security contributions, with an emphasis on low-income earners. The government
aims to gradually reduce taxes on labour by {{X80}} 1,8 billion (1.5% of GDP). The concrete decisions are taken yearly and
are based on economic trends and the state of public finances. In 1999 the cuts amounted to {{X80}} 350 million, h around
{{X80}} 260 million will go to wage earners. Significant further cuts have been announced for 2001. However, Finland still
remains above the EU-average as far as tax burden on labour is concerned.
To examine, in the context of a gender mainstreaming approach, ways of reducing the current levels of occupational and
sectoral
segregation
in the labour market, Finland has introduced a new initiative "Equal Labour Markets" to alleviate
segregation. The social partners will be in a key position to implement this project, to be started in 2000. The initiative
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includes a feasibility study aiming at identifying key success factors in dismantling segregation and identifying out best
practice. In addition, a regular monitoring of wage differences will be created. Whether concrete results will be achieved,
remains to be seen.
4.2. Other policy initiatives
The NAP 2000 puts strong emphasis on addressing the structural problems of the labour market, the most important being
the availability of labour, high level of unemployment, threat of exclusion and gender segregation.
The local employment initiatives are not treated as a separate issue. Instead there is a plan to regionalise the implementation
of the NAP implying that regional and local actors can adapt the plan to their own needs and circumstances. Because this is
the critical point of the NAP, the dialogue between the central and regional levels will be decisive. It is also crucial to ensure
that the implementation resources are sufficient.
Under
Employability
emphasis is given to long-term human resource development in SMEs as well as to skills-development
of the total population to prevent shortage of labour and to ensure that the labour supply responds to the needed
qualifications. To support regionally balanced development, action will be taken to create jobs also outside growth centres.
An initiative called "New Start" will be launched to prevent prolonged unemployment. The measures in the individual action
pl ans must be
started before
6/12 months, and the quality of the plans will be improved.
To reinforce the information society, ICT in enterprises will be promoted, including new business methods and networking.
To improve the quality of training, all educational institutions must draw up an ICT curriculum by 2002. This is to ensure
that the objective of enhancing the IT skills of the total population will be reached.
A special
Entrepreneurship
project will be implemented in 2000 and 2001, where several Government services are
cooperating to speed up actions to initiate new businesses and to improve their competitiveness. The focus will be on the
critical stages of the life cycle of SMEs. Emphasis is also put on staff participation in the planning of training, professional
development, and well-being of work-organisations. To improve
adaptability
the National Workplace Programme will be
renewed, covering the entire workforce and focusing on older workers and promotion of equal work communities. This new
programme is expected to cover 600 development projects and 85.000 employees (3.3% of the total workforce). Initiatives
under
Equal opportunities
concentrate mainly on GL 19 tackling the segregated labour market by introducing concrete
initiatives, e.g. to discover and eliminate the key factors maintaining segregation and to encourage girls and boys to choose an
at ypical occupation.
Performance Indicators
Finland
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
66,3
69,1
63,4
40,0
80,3
38,8
63,5
67,5
59,7
1998
64,0
67,2
60,8
34,3
78,7
36,3
60,0
64,1
55,9
1997
61,9
64,5
59,2
31,3
76,3
35,7
58,8
62,5
55,1
1996
60,5
62,4
58,4
27,7
75,1
34,3
57,0
59,7
54,0
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
1998
1997
1996
EU 1999 EU1996
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Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
10,2
9,8
10,7
10,8
10,9
10,8
2,9
3,1
2,7
11,4
10,8
12,0
11,1
11,1
11,1
3,2
3,6
2,8
13,1
12,6
13,7
11,5
11,5
11,4
3,8
4,0
3,5
15,3
14,9
15,8
12,0
12,2
11,7
5,1
5,6
4,5
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,2
5,0
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
1999
1998
2,1
5,5
3,3
-2,3
1997
3,3
6,3
2,9
-3,1
1996
1,4
4,0
2,6
0,4
EU 1999 EU 1996
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
2,2
4,0
1,8
-0,1
SWEDEN
Conclusions
1. General appreciation
The labour market improved substantially during 1999 and with an employment rate of 72.2%, Sweden reinforces its position
as one of the top performers in the EU. The main challenges in 1999 for the Swedish economy were to combat the high
unemployment rate, to reduce the gender-segregated labour market and to reduce the tax burden, especially for low-income
earners.
2. Policy-mix
The overall employment objective is to halve the unemployment rate by the end of this year reaching 4% (national definition)
and to increase the employment rate to 80% by the year 2004, for people of working age. These goals will also reduce the
numbers dependent on various benefits and grants. Activation and skills enhancement are fundamental to reach the goal of
increasing the employment level meaning that the labour market policy supports those who have most difficulties in
obtaining work on the one hand and underpin growth on the other hand.
3. Response to the 1999 Council recommendations
Some first steps have been taken to reduce the taxation on labour by raising the starting point for paying state tax and by
reducing the tax contribution for financing earning-related and supplementary pensions of low and medium wage earners.
These steps should be viewed as the start of a comprehensive tax reform.
The implementation and the effects of this comprehensive tax reform remain to be seen. Sweden intends to combat the
gender segregated labour market by confronting the problem at a much earlier stage at all levels of education, and by an
awareness campaign in the labour market to improve the situation of both sexes.
4. Challenges ahead
The main goal in the years to come should be to ensure an efficiently functioning labour market and to avoid bottlenecks in
the labour market, thereby avoiding inflationary wage increases, and lead to sustainable employment and overall GDP
growth. The tax burden on labour in Sweden is still the highest in the EU and efforts for reductions should continue. The
Swedish labour market should promote geographical and occupational mobility in order to tackle increased regional
disparities and also to satisfy regional skill shortages. Efforts to improve the integration on the Swedish labour market of
those having most difficulties, including migrant workers, should be further pursued.
1. Economic and employment situation
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The Swedish economy continued to perform well during 1999 with an overall GDP growth of 3.8%. This boost in the
economy has lead to a strong employment growth of 2.2%, which is the best for last 10 years. The employment growth
during 1999 was evenly spread between women and men, with an overall employment rate of 72.2%, (70.3% for women and
74.0% among men), thus already higher than the target set by the Lisbon European Council for the EU. The majority of the
employment growth has occurred in the private services sector.
The unemployment rate continued to fall during 1999 for both women and men and stands today at 7.1% for women and
7.2% for men. The youth unemployment ratio also declined to 6.2%. The unemployment for persons born outside Sweden
has improved during the last two years but is still more than double the figure for the population as whole.
The employment rate among older people is very high, 64% for the age group 55-64 years old, compared with other Member
States. The strongest growth during 1999 has, been for the young people, while the employment rate for the prime-age group
remained stable.
The regional disparities remain and have increased during recent years, with strong growth in the southern part of Sweden
and a less favourable development in Northern Sweden.
2. Overall employment strategy
The overall employment objective is to halve the unemployment rate by the end of this year reaching 4% (national definition)
and to increase the employment rate to 80% by the year 2004, for people of working age. These goals will also reduce the
numbers dependent on various benefits and grants. Activation and skills enhancement are fundamental to reach the goal of
increasing the employment level. This has meant that the labour market policy underpins growth on the one hand and
supports those who have most difficulties in obtaining work on the other hand. During recent years the number of
participants in various labour market schemes has been reduced; however, there is greater emphasis on labour market
training, as a tool to underpin growth.
Swedish entrepreneurship policy aims at fostering a good business climate in general and also to fully exploit the job potential
in the information society. To do so, the policy is directed, among other things, towards achieving broad IT skills throughout
society and removing obstacles that might exist to fully exploit the potential in this sector.
Sweden's employment policy focuses on a good collaboration between the government and the social partners in order to
create the conditions that will promote employability, flexibility and opportunities for lifelong learning. They intend to
produce these initiatives jointly.
Equal opportunities for women and men are a cornerstone of the government's policy in achieving a more even distribution
of growth and welfare. In obtaining this overall aim, well-developed childcare provision, care of elderly and the right to
parental leave, are important factors to achieve this objective. The individual based tax and benefit system is also important in
reaching equal opportunities between women and men.
3. Progress assessment
3.1. General appreciation
The NAP focuses strongly on upgrading skills among employed and unemployed people, both by using traditional labour
market policy measures and also new pioneering initiatives for lifelong learning. An Internet based information system is
been created in order to improve the information available to small and newly started enterprises. The equal opportunity
policy in Sweden is well developed and an additional initiative has been taken in the NAP aiming to reconc ile work and
family life.
The Swedish NAP is well in line with the European Employment Strategy with an ambitious employment policy and with
clear targets. The policy mix is to some extent biased with more emphasis put on employability and equal opportunities.
Although the adaptability pillar is rather weak on the implementation part, efforts have been made to reinforce it in this year's
NAP especially on competence development. Efforts are being made to improve the environment for entrepreneurs,
especially in reducing the administrative burden for enterprises.
3.2. Implementation of the 1999 National Action Plan
Employability:
The preventive approach has been successfully implemented for young people. Around 90% of all newly
unemployed young people commenced their individual plan before reaching the 6 months threshold. The output indicator
shows that only 3% of those who became unemployed drifted into long-term unemployment. For the adults, around 93%
had started an individual action plan before reaching the 12 months threshold, though the inflow rate (15%) into long- term
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unemployment is much higher than for youths, and this is a significant increase compared to 1998. This difference between
adults and young is explained by a clearer national target for young people, which stipulates that every young unemployed
person should have an individual plan before reaching 100 days of unemployment. In addition to what the Swedish regular
educational
system is contributing to employability in the longer term, policy has also switched from work schemes to training measures.
As the latter are more expensive, a smaller population will be reached with the same budget, which may in turn lead to an
increased risk of adults becoming long term unemployed. The Swedish activation rate exceeds the target set out for the EU,
amounting to 86%.
The measure "general recruitment incentive" has been successfully implemented and covered around 10 000 people per
month during 1999. Of these, 63% obtained a job. In October 1999 an "extended recruitment incentive", giving a higher tax
credit for employers who hire people who have been unemployed for more than 24 months, was introduced and had until
March 2000 covered around 2 600 people monthly. The initiative to offer teachers skills development in the IT area is being
imp lemented.
Entrepreneurship:
A number of measures have been taken to reduce the administrative burden for enterprises, the most
important being the National Tax Office and the Patent and Registration Office implementing measures on simpler company
registration. To improve the information available to small and newly started enterprises an Internet based information
system will be created. During 1999 each county has prepared a Regional growth plan emphasising the importance of
knowledge growth and promoting lifelong learning to underpin the regional and local needs.
Adaptability:
The Swedish labour legislation is largely optional and is complemented with collective agreements between the
social partners. This leads to large differences in working practices in the different sectors. Part-time employment is common
in Sweden, especially among women. However, approximately 1/3 of part-timers wants to increase their working time. The
progress under the Adaptability Pillar is however vague, which makes it difficult to assess the implementation of N AP 1999.
Equal opportunities:
The use of parental allowances for men has risen during 1999 and amounted to 33%. The
introduction of the "father's month" has clearly affected the share of parental allowance utilised by fathers. Around 70% of
the fathers of children born in 1995 and 1996 have used parental allowance during the child's first two years. This can be
compared with 60% for fathers of children born in 1993.
Social partners:
The dialogue between the government and the social partners has continued and been strengthened during
the preparation of the NAP. In particular in the areas concerning education, training and skills development in working life, a
tripartite agreement has been concluded. The partners have highlighted the need of a more differentiated and individual
oriented labour market policy. Consensus on a central level is an important criterion for a stable and sound economy, and
will make it easier to reach consensus on a local level.
ESF:
The importance of the ESF as a tool of implementing the employment strategy is more visible in this year's NAP.
ESF's main task during the programming period 2000-2006 will be to strengthen the skills development of both employed
and unemployed people.
4. New policy initiatives
The 1999 Council recommendations on the implementation of Sweden's employment policies
(1) Take measures to reduce the high tax burden on labour income, in particular for those with a low take-home pay from work;
(2) Examine, in the context of a gender mainstreaming approach, ways to reduce the current levels of occupational and sectoral segregation in the
labour market.
4.1. Initiatives taken in response to recommendations
Sweden should take measures to reduce the
high tax burden on labour income
with an emphasis on low take-home pay
from work. As a first step of a comprehensive tax reform, starting from 1 January 2000, the tax has been reduced for low and
medium wage earners. Some first steps have been taken to reduce the tax for low-income earners, by reducing their
individual tax contribution and by raising the starting point for paying state tax. Furthermore, the minimum income level for
paying state tax has been increased and the target is that no more than 15% of the taxpayers should pay state tax instead of
18% (19% in 1999) as it is today.
Sweden should examine, from an equal opportunities viewpoint, how
gender-segregation
in various sectors and
occupational categories can be reduced. The Swedish labour market is too highly gender-segregated. The plan, however, also
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points out the beneficial effects for female employment of the development of public services (such as child care etc). In
order to tackle segregation, some actions have been taken especially within the education system in order to affect pupils'
choic e of higher education. In addition to these specific measures, active labour market policies also contribute to affect the
choice of occupation for women and men. Although the results of these measures should be seen in a long-term perspective,
efforts should be continued in this direction.
4.2. Other policy initiatives
The regional growth agreements will be implemented during year 2000 to reinforce the collaboration between different actors
on a local and regional level and to find measures that will increase growth and employment. Most schools have access to
Internet, 85% of primary school pupils and 88% of secondary school pupils have access.
Under
employability
emphasis is put on reaching those who have most difficulties in obtaining a job by proposing that the
recruitment incentives should be strengthened. The length and tax reduction for the recruitment incentives will depend on
how long the unemployed has been registered, i.e. the more severe the problem is, the higher the tax reduction will be.
Furthermore, an "activity guarantee" will be introduced with the aim of breaking the vicious circle for those who have been
unemployed for more than 24 months, by giving them a stable and sustainable full-time activity until they find a full-time job.
This measure implies that none will be unemployed for more than two years. Furthermore, the unemployment insurance is
being reformed with the aim of reinforcing its role as adjustment insurance. The aim is to clarify the efforts that individuals
need to do while seeking work, together with reinforcing the requirements in terms of geographical and occupational
mobility. In order to stimulate the labour force participation for older workers the government will propose later this year
that it will be possible to continue to work until the age of 67 years.
Under
entrepreneurship
work has continued to reduce the administrative burden and simplify the rules both for those who
want to establish a new business and for existing businesses. The government intends to create a new authority for business
development by a merger of parts of existing authorities, which is expected to improve support services for entrepreneurs
and would-be entrepreneures. Furthermore, the government aims to reduce the tax for low and medium wage earners. Beyo
nd the recommendations, the Swedish government has taken further steps towards a green tax shift by raising diesel tax,
electricity tax and nuclear power tax. The revenue gained from this tax increase will be used for tax subsidies in conjunction
with individual skills development.
The
adaptability pillar
has been reinforced compared to previous NAPs. The government intends, on the request from the
Swedish parliament, to present a proposal during spring 2000 concerning the right for employers to make exemption for two
employees in each workplace from the priority rules of the Employment Protection Act. A goal has also been set to reduce
the number of "part-time unemployed people", i.e. people who want to increase their working time, a goal which, in an
agreement between the government and relevant social partners, aims to reduce that group from 30,000 people to 15,000
people. The Swedish government has allocated more than 117 Mio {{X80}} as a stimulus for individual savings towards
skills development. The stimulus will be provided in the form of a tax subsidy.
Under
equal opportunities
emphasis is put on measures to tackle the gender segregated labour market, and to continue the
work towards a gender mainstreaming approach into day-to-day activities within all policy areas on a central, regional and
local level. The family policy has been further strengthened. Among other things an additional "father's month" will be
introduced later this year aiming to provide incentives for men to utilise parental leave to a higher degree. Furthermo re, as a
first step in lifelong learning, general pre-school for 4 and 5 year-olds will be introduced from 1 January 2003 and a ceiling on
child-care fees are some actions that will be presented in a bill for the Parliament during spring 2000.
Performance Indicators
Sweden
Annual data
Employment Indicators
1999
Total Employment Rate
Males
Females
72,2
74,0
70,3
1998
70,6
72,1
68,9
1997
68,3
69,8
66,8
1996
69,7
70,6
68,7
EU 1999
62,2
71,6
52,9
EU 1996
59,9
69,7
50,0
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15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
40,7
82,3
64,5
63,1
68,4
58,0
35,4
81,9
64,6
61,7
67,5
56,0
32,1
80,4
61,6
61,2
66,4
56,1
33,8
81,4
64,1
62,2
67,2
57,4
39,0
75,6
36,9
56,8
69,7
44,2
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
7,2
7,2
7,1
6,2
6,2
6,3
2,1
2,4
1,7
1998
8,2
8,6
7,8
7,5
8,0
7,1
3,1
3,5
2,6
1997
9,9
10,2
9,5
9,3
9,7
8,8
3,4
3,7
3,1
1996
9,6
10,1
9,0
9,5
10,0
9,0
2,9
3,4
2,4
EU 1999
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
EU1996
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment
Indicators
1999
1998
1,3
3,0
1,7
0,3
related
Economic
1997
-0,6
2,0
2,6
-0,8
1996
-0,6
1,1
1,7
3,6
EU 1999
1,4
2,4
1,0
0,0
EU 1996
0,7
1,6
1,0
-0,5
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
2,2
3,8
1,5
-0,6
UNITED KINGDOM
Conclusions
General appreciation:
The UK's favourable employment growth continues, although some structural
challenges need tackling. The tightening labour market is showing signs of skill gaps in certain sectors,
particularly in IT. Although falling, much of the remaining long-term unemployment is concentrated
within workless households, amongst disadvantaged groups, and in a number of geographical areas,
presenting associated problems of social exclusion. T he UK has the lowest labour force participation
rates for lone parents in the EU.
Policy mix:
This years' NAP sets out a more ambitious goal of full employment. The mix has a better
balance between pillars, but with an emphasis on tackling social exclusion and bringing the inactive
into work.
Response to Recommendations:
The Minimum Wage is helping low paid women and closing one
of the largest gender pay gaps in the EU. 1999 UK figures indicate the gap for hourly full-time
earnings shrank by one percentage point to 19%. A wider range of policies to tackle occupational
gender stereotyping and segregation, could further encourage this reduction.
The contribution to the NAP of the UK's two main Social Partners reflects a closer relationship with
Government. There are clearer signs of specific actions at all levels in the economy, especially the
local level. Progress on national involvement could be built upon.
Current statistical monitoring systems have enabled the calculation of most policy indicators. On
activation, the UK provides two indicators, one applying the common definition, showing the UK
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falls well below the 20% target, and one using the UK's wider definition, including intensive
counselling and advice with job search. Under this definition the UK achieves 100%.
Reforms are addressing the deficiency of childcare provision. The number of publicly funded
childcare places has increased by 170,000 under current initiatives. This progress will contribute
towards a reduction of a gender gap in employment of over 3 million jobs.
Challenges ahead:
Certain labour market policy challenges face the UK. The main weakness in
providing active support to prevent adult long-term unemployment is the over reliance on intensive
job search through the Job Seekers Allowance regime (JSA). For most adults more intensive support
is not provided until the 24 month point when they move on to the New Deal. Flagship policies for
lifelong learning represent fundamental changes in policy but are still to be fully implemented. T here
is little detail on progress towards meeting national targets. In addition policies need to target those
with basic skill problems, and show how access and opportunity will be ensured for these groups.
This is a particular problem for older workers. Social Partners have an important role in promoting
workplace learning to tackle basic skill levels and helping address low labour productivity.
1. Economic and employment situation
1999 saw continued real GDP and employment growth, translating into a higher employment rate of 70.4%. The rate for
women increased whilst remaining relatively static for men. Most of this growth is due to increases in full-time employment.
There remains a large difference between the employment rate for women and the full-time equivalent although this indicator
is less relevant to the UK. Working patterns mean the distinction between part-time and full-time work is increasingly
blurred. The employment rate for 15-24 year olds fell due to increased participation in education. The employment rate for
older workers is above the EU average. The tightening labour market shows signs of skill gaps in certain sectors, particularly
IT. Labour productivity growth was slightly under the EU average in 1999 and levels remain below that of major
competitors.
Unemployment fell to 6.1% in 1999. Rates for women remain lower than for men. Male youth unemployment exceeds the
EU average. The long-term unemployment rate continues to fall and is less than half of the EU average. Unemployment and
inactivity are increasingly concentrated amongst male older workers, disadvantaged groups, and within a number of deprived
communities where the number of workless families is high. Regional unemployment disparities remain significant, although
large sub -regional variations in unemployment have also been highlighted as a problem.
2. Overall employment strategy
This NAP presents an ambitious strategy to deliver full employment by ensuring job opportunities for all. With
unemployment at its lowest level for 20 years, the UK problem is increasingly becoming the need to extend the workforce.
The employability pillar sets out the strategy of "making work pay". Tax and benefit reforms are designed to remove financial
disincentives of returning to work and tackle associated problems of social exclusion. The UK has set tar gets for 2002, to
increase participation in lifelong learning, raise skill levels, cut the numbers of early school leavers by one third and have all
schools online. Local employment creation initiatives are a central objective for the UK Government and the devolved
administrations in addressing problems of geographical variations in job creation and opportunities. The Adaptability pillar
concentrates on maintaining a flexible workforce, combined with measures to ensure a minimum standard of fairness. The re
are a range of initiatives aimed at improving the work/life balance and encouraging more women into the labour force.
3. Progress assessment
3.1. General appreciation
The NAP provides a well-developed presentation of how the UK policy mix is designed to tackle labour market issues.
However, by not distinguishing between existing and new policies, the style often renders the identification of new
developments difficult. A number of important new policies are not included, in particular in the area of social inclusion.
Despite this, the NAP presents a more balanced policy mix, especially between the first two pillars. The Em ployability pillar
remains most important but more emphasis is placed on entrepreneurship in this NAP. The Adaptability pillar reconfirms
moves towards a balance between flexibility and security, with the Social Partners confirming such a need, but there seems
little in the way of new initiatives. There is also little specific detail on how the UK will tackle low labour productivity.
The UK continues to move towards a more active and preventative labour market policy since the start of the EES. Further
moves towards compliance can be seen under the Employability, Entrepreneurship and Equal Opportunity pillars. There is
little visible change in Adaptability policy. Certain policies announced in previous NAPs, like the Minimum Wage and the
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New Deal initiatives are starting to tackling labour market issues, but in general the NAP could have provided more detail on
the impact policies are now having.
3.2. Implementation of the 1999 National Action Plan
Employability:
The NAP provides the full range of input and output indicators, although not broken down by gender. For
guidelines 1 and 2 the active nature of the JSA regime means that all claimant unemployed receive a new start before the 6 or
12 months. The 100% compliance rate is linked to strict benefit sanctions. The input indicator for guideline 3 is discussed
under section 4.1. The key policies of the active approach remain the New Deal initiatives. E valuation evidence is suggesting
that the New Deal for Young People is having an impact on the off-flows from unemployment. However, inflows into long-
term unemployment of both the young and adults (17% and 11% respectively) still exceed those of the best performing
Member States. Taxation reform towards in-work support for the low paid through the Working Families Tax Credit
(WFTC) is now benefiting 1.4 million workers. The Minimum Wage is paid to 1.5 million low paid workers, mostly women.
Combined wi th a lower starting rate of income tax, these measures are removing financial disincentives of returning to work.
The New Deal for 50 plus and the New Deal for Disabled People benefit the older inactive or unemployed.
UK policy aims to encourage lifelong learning to address low levels of basic skills. Ambitious national targets have been set.
The NAP illustrates the role of partnership in delivering the strategy but does not adequately reflect the priority the
Government places on this area. There is little indication of how flagship policies will target provision towards those with
basic skill problems, and how access will be ensured for groups on the wrong side of the "Learning Divide". This is a
particular problem for older workers. Flagship initiatives, announced three years ago, have yet to be fully implemented. The
University for Industry will not start until autumn 2000, and IT learning centres will not be delivered nationally until 2002.
Entrepreneurship:
The UK is one of the best performers in terms of employment in services. The UK has one of the
shortest lead-in times for starting a new business and the second lowest rate of non-wage labour costs in the EU. Taxation
reform is designed to remove barriers to setting up and running SMEs. Devolution of powers to Scotland, Wales, Northern
Ireland and the English regions is having an impact on this pillar. The English Regional Development Agencies and the
devolved ad ministrations have responsibility for developing strategies to increase skills and stimulate job creation. The work
of local agencies is key to stimulating enterprise and tackling social exclusion.
Adaptability:
Social Partners re-affirm the need for an appropriate balance between flexibility and security. This has been
helped by the 1999 Employment Relations Act. The NAP recognises the UK's persistently low levels of labour productivity
growth but there is no discussion of the early impact of the policies in this area. The NAP does begin to spell out steps taken
by the Government and Social Partners to promote workplace learning through initiatives like the Union Learning Fu nd and
the Partnership Fund. The important role of the National Skills Task Force under this pillar is not discussed.
Equal opportunities:
Childcare provision and policies to tackle the gender pay gap are discussed in section 4.1. The
introduction of in-work support through the WFTC is helping parents to move into work. The NAP reports on the New
Deal for Lone Parents (NDLP), which tries to encourage more lone parents into work. However take-up remains low. The
Women's Unit within Government is responsible for the monitoring of all new policy to ensure that gender issues are fully
considered. In addition the Government and the devolved administrations require all new legislative policy to contain a
statement on gender impact.
Social Partner
arrangements are discussed in section 4.1.
ESF and the structural funds:
The NAP sets out well the role that the Structural Funds have and will play in delivering the
EES. ESF and ERDF have already delivered contributions to the NAP objectives. There is also detail on how the Structural
Funds, in particular ESF will be used to underpin the NAP in the 2000-2006 programming round. ERDF will have a major
role to play in tackling variations in local job creation and in encouraging entrepreneurship and adaptability, and the ESF will
play an important role across all pillars, with particular emphasis on the Council Recommendations. This strategy will be
reinforced by the Government's commitment on match-funding arrangements for Structural Fund interventions, which will
help to deliver NAP objectives.
4. New policy initiatives
4.1. Initiatives taken in response to recommendations
The 1999 Council recommendations on the implementation of UK employment policies
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(1) Focus on the issue of gender pay gap and develop appropriate policies to address this, building inter alia on the positive effects to be expected from
the introduction of the minimum wage in 1998.
(2) Encourage a partnership approach and promote concrete commitments by the social partners at all appropriate levels on the modernisation of
work organisation, with the aim of making undertakings more productive and competitive while achieving the required balance between flexibility
and security.
(3) Upgrade the statistical monitoring system, so that policy indicators on prevention and activation will be provided by 2000 in accordance with
agreed definitions and methods.
(4) Pursue efforts to expand and improve the quality of child care provisions, in order to enable particularly women to participate more in part-time
as well as full-time work, according to their preferences.
The Minimum Wage has started to benefit women who are over represented amongst the lower paid. Although narrowing,
the UK still has one of the highest gender wage gaps in the EU. Further reductions would be helped by a wider range of
policies to tackle stereotyping by occupation. There is no mention under this recommendation of the Part-time Work
Directive, legislation which will ensure fairer pay and conditions for the UK's part-time workers, 80% of whom are women.
This NAP demonstrates a more transparent partnership approach. The two Social Partners have provided a joint text for
their section of the NAP. Partnership arrangements work differently in the UK and this NAP uses good practice examples to
illustrate how arrangements work at the local and company level, although this often makes the evaluation of progress
difficult. Local partners are key to tackling issues like social exclusion. At national level, involvement could be built up on.
The Social Partners welcome the establishment of the Partnership Fund, which aims to support projects in the workplace
which foster partnership, training and importantly given the UK's more dispersed partnership culture, the spread of good
practice. Consultation with the Devolved administrations and the English regions has improved compared with last year.
Current statistical monitoring systems have enabled the calculation of most policy indicators on prevention and activation.
For guideline 3, under the common definition of the indicator, 8.7% of the unemployed receive active training. Although this
has increased from the previous year it is significantly below the 20% target. The NAP argues that this figure by itself does
not represent an appropriate indication of the help available from active labour market policies relevant to guideline 3.
Applying the UK's wider definition of support, which includes counselling, and help with job search allows the inclusion of
the JSA regime and a range of other initiatives. Under this measurement the UK achieves 100%.
This year's NAP reinforces measures to boost the provision of childcare. There is a development of a clear strategy with a
frank admission that the UK has been slow to develop good quality, affordable and accessible childcare. Progress is being
.
made with the number of publicly funded childcare places increasing by 170,000 under current initiatives. The WFTC
contains a credit to assist towards childcare costs. The local delivery of the childcare strategy is designe d to match the
provision with the local demand. Progress needs to continue if the UK is to encourage more women into the workforce to
facilitate further employment growth. Despite high participation rates, further potential still exists, with a gender gap in
employment of over 3 million jobs.
4.2. Other policy initiatives
Employability:
The range of New Deal initiatives has been extended to offer support to a wider spectrum of the out of
work. Over 50 either inactive or unemployed may now join the New Deal 50 plus. From April 2001 adults' unemployed for
18 months will be eligible for a more intensive New Deal for 25 plus. Recent policy builds upon tax and benefit reform with
an impressive range of measures to remove financial disincentives and "make work pay". Chan ges to income support,
extended payments of housing benefit, and a Job Grant, are designed to smooth the transition into work. In 2003 an
employment tax credit will extend the principle of the WFTC to those without children. From 2001 the responsibilities of the
PES and much of the Benefits Agency will be merged. The Government is investing in IT initiatives to modernise the PES,
including a telephone match service, a call centre and a "Learning and Workbank" website providing on-line access to al l
PES and many other vacancies.
The network of Learning and Skills Councils begins in April 2001 and will play a major role in improving participation in
lifelong learning and ensuring flexibility in meeting local skill needs. There is no mention of some important new
developments under lifelong learning, for example the new Adult Basic Skills Strategy Unit introduced as part of the
Government's response to the Moser report. Raising education standards is a priority. By 2002 the Government aims to
reduce by one-third levels of truancy, irregular attendance and exclusion. The revised English National Curriculum aims to
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provide school leavers with the skills for a modern workforce. In 1999 62% of primary and 93% of secondary schools were
online, by 2002 the target is for all education establishments to have an internet connection.
Entrepreneurship:
The Government aims to make the UK the "best location in the world for e-commerce by 2002". The
growth strategy for IT employment concentrates on removing barriers to e-commerce and encouraging investment through
tax breaks. Budget 2000 introduced a 100% capital allowance for small firms buying ICT equipment. The range of local job
creation policies designed to tackle social exclusion are impressive, but not fully reflected in this NAP. Both the New Deal
for Comm unities and Employment Zones, which started in 15 new areas in April 2000, will be focused on areas with
pockets of high unemployment. However there is little or no discussion of a range of new policy initiatives like Employment
Action Teams and the job and skills focus of the National Strategy for Neighbourhood Renewal.
Adaptability:
In July 2000 the Part-time Work Directive will enhance existing legislation and ensure a fairer treatment for
the UK's significant number of part-time workers. The Regulatory Impact Unit ensures new regulations are transparent and
carefully targeted. Otherwise, the NAP presents little new policy on further developing both flexibility and security.
Equal Opportunities:
Recent initiatives concentrate on tackling gender gaps and improving the work/life balance to
encourage more women into the workforce. Special attention should be paid to lone parents. The UK has the lowest
participation rates for lone parents in the EU and the UK should build upon a number of important lessons and changes to
the NDLP to reinforce policies in this area. The coherence and consistency of gender mainstreaming in the NAP would be
improved by a bett er demonstration of the gender impact of policies.
Performance Indicators
United Kingdom
Annual data
Employment
Indicators
1999
Total Employment Rate
Males
Females
15-24
25-54
55-64
Full-time eq. Employment rate
Males
Females
70,4
76,9
63,7
55,0
79,6
49,4
60,6
73,2
48,7
1998
70,2
77,0
63,2
56,1
79,1
48,3
60,3
73,4
47,9
1997
69,7
76,3
63,0
55,7
78,4
48,5
59,8
72,6
47,7
1996
68,7
75,0
62,3
54,9
77,5
47,7
59,0
71,7
47,0
EU 1999 EU 1996
62,2
71,6
52,9
39,0
75,6
36,9
56,8
69,7
44,2
59,9
69,7
50,0
36,2
73,4
35,9
55,0
68,6
42,3
Unemployment
Indicators
1999
Total Unemployment Rate
Males
Females
Youth Unemployment Ratio
Males
Females
Long-Term Unemployment Rate
Males
Females
6,1
6,7
5,3
8,6
10,1
7,0
1,8
2,3
1,1
1998
6,3
7,0
5,5
9,1
10,7
7,3
2,1
2,7
1,3
1997
7,0
7,8
6
9,4
11,2
7,6
2,7
3,4
1,6
1996
8,2
9,5
6,5
10,2
12,5
7,7
3,3
4,4
1,8
EU 1999
9,2
7,9
10,8
8,5
8,5
8,5
4,2
3,5
5,0
EU1996
10,8
9,6
12,4
10,2
10,3
10,1
5,3
4,5
6,2
Annual change
Employment related Economic Indicators
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1999
Total Employment Growth
Real GDP Growth
Labour Productivity Growth
Real Unit Labour Costs
1,2
2,4
0,9
0,8
1998
1,2
2,7
1,0
1,1
1997
2.0
2,5
1,4
0,0
1996
2,6
1,6
-0,1
-1,3
EU 1999 EU 1996
1,4
2,4
1,0
0,0
0,7
1,6
1,0
-0,5