European Semester 2014

June 2nd 2014 Package

Jeroen JUTTE

Employment, Social Affairs and Inclusion DG

Unit C1 European Employment Strategy and Governance

Labour Market Outlook

Unemployment in EU Member States (2013)

Source: Eurostat

Deep impact of crisis on unemployment rates in most Member States (2008-2013)

Source: Eurostat

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2008Q4

2013Q4

Long-term unemployment rates* across the EU in Q4 2008 and Q4 2013

* People unemployed for more than 12 months as a % of the active population

Long term unemployment increased significantly…

Source: Eurostat

Youth unemployment 2013

Source: Eurostat

8-15 %

15-25 %

25-35 %

35-45 %

> 45 %

Unemployment among young people twice as high

Source: Eurostat

Skill mismatches

Source: Eurostat

Overqualification. High skilled in medium or low skilled jobs (percentages of 2002 and 2012)

0

2

4

6

8

10

12

6

7

8

9

10

11

unemployment rate (Lhs) Labour shortage (Rhs)

Labour mismatches are a sign of wider problems

Evolution of unemployment rate and labour shortages in the EU-27

Source: European Commission

Increasing divergence across MS

Change in the number of jobs 2007-2013* (%)

Source: European Commission

* Commission 2013 Spring Economic Forecasts

124 million people (24.8%) are at risk of poverty or social exclusion

Population at risk of poverty or social exclusion, EU-28

At risk of poverty

85 Mio Jobless households

39 Mio

Severely materially deprived

50 Mio

Various facets of poverty and social exclusion

Source: Eurostat

22%

Bulgaria Risk of poverty or

Social exclusion 49%

Romania Risk of poverty or

Social exclusion 42%

Deprivation

prevails Relative poverty

prevails

44%

13%

23%

30%

7%

23%

14%

20%

Greece Risk of poverty or

Social exclusion 35%

The European Semester

Treaty-based Objectives

MS and the Union shall […] develop a coordinated strategy for employment:

• To promote a skilled, trained and adaptable workforce…

•…and labour markets responsive to economic change

• To achieve full employment, social progress, a high level of protection

(art. 3, TUE)

Competences – who does what?

• Full respect of national competences on employment policy;

• Member States define and implement their national policies…

• …and coordinate with each other within the Council at European level

• The Commission encourages cooperation of MS, supports their common action, and intervenes to complement their action if necessary

The Open Method of Coordination

Joint Employment Report

Employment Guidelines

Country specific recommendations

2. European Council's Conclusions approves JER

1. Commission drafts:

3. Council of Ministers of Employment

(EPSCO) issues:

4. Member States draw:

6. Commission evaluates NRPs and proposes recommendations

7. European Council issues:

National reform programmes

Scoreboard

• A new tool in the European Semester. This scoreboard of key employment and social indicators strengthens the social dimension of the economic governance.

• The Scoreboard is a useful tool in early identification of employment and social problems and detection of divergence between Member States.

• It has been proposed by the Commission last year and agreed by all Member States in March 2014.

The EU2020 targets in the light of the European Semester

• Employment rate should be at 75% (2013: 68,3%)

• Share of early school leavers should be under 10% (2013: 11.9%)

• Goal of 40% of younger generation having tertiary degree or diploma not met (2013: 36.8%)

• 20 million fewer people at risk of poverty or social exclusion (since 2010, the number of AROPE has risen by 6 million. 24.8% of the EU-28 population)

The Cycle of the European Semester

Strengthened governance framework in 2014

Box 1. Situation of Member States with regard to the Stability and Growth Pact,

as recommended by the Commission on 2 June 2014

No excessive deficit procedure BG, DE, EE, FI, HU, IT, LT, LU, LV, RO, SE

Abrogation of the excessive deficit procedure AT, BE, CZ, DK, SK, NL*

On-going excessive deficit procedures with

deadlines in:

2014

2015

2016

MT

IE, FR, PL, PT, SI, UK**

CY, EL, ES, HR

Country Specific Recommendations

Structure of the June 2nd package

1 Chapeau communication

26 CSR for 26 MS + for Euro area

28 SWD for 28 MS + for the Euro area

In March 2014, the Commission also published:

• 14 In-depth Reviews (IDR) of MIP (BE, BG, DE, IE, ES, FR, HR, IT, HU, NL, SI, FI, SE and UK.

• The Alert Mechanism Report was published in November 2013

• Background material: thematic fiches

2014 Making it happen: the European

Semester

Chapeau communication issued on …:

• First signs economic recovery, but unequal over Member States

• Reform is taking place, but impact takes time

• Challenge to keep reform drive on track

It gives the main strategic lines of the European Semester:

• pursuing differentiated, growth-friendly fiscal consolidation

• restoring normal lending to the economy

• promoting growth and competitiveness

• tackling unemployment and the social consequences of the crisis

• modernising public administration.

Employment relevant 2014 CSRs

1. Skills, education and training

2. Youth

3. Protection of the vulnerable

4. Extending working life

5. Female LM participation

6. Health care systems

7. Labour taxation and shadow economy

8. ALMPs

9. LM segmentation and EPL

10. Wages and competitiveness

1. Skills, education and training

2014 CSRs target mainly:

1. VET, apprenticeships/work based training BG, DK, EE, ES, FI, FR, HU, HR, IT, LT, LV, MT, PL, PT, RO, SI, SK

2. Reducing school drop-out rates: BE, ES, FR, HU, IT, MT, PT, RO

3. Access to education/E&T for vulnerable groups: BG, CZ, FR, HU, RO, SE, SK

4. Reform vocational and higher education: BG, CZ, FR, HU, HR, IE, IT, LT, LU, LV, MT, SI, SK

5. LM relevance of education (skills mismatch) BE, BG, CZ, EE, ES, FI, HR, LT, LU, MT, PL, PT, SI, UK

6. Educational outcomes: AT, CZ, DE, DK, FR, HR, IT, MT, PT, SK

7. Lifelong learning: BG, EE, LT, LU, PL, RO

2. Youth

2014 CSRs target mainly:

1.Youth Guarantee reference: BG, ES, HR, IE, IT, PL, PT, SK

2.Youth Guarantee related reforms BE, BG, CZ, ES, FR, HR, HU, IE, IT, LT, PL, PT, RO, SE, SI, SK

3.Reach out to NEETs: BG, ES, HU, HR,

IT, LV, PL, PT, RO, SE, SI, SK

-20 -10 0 10 20 30

NL

CZ

AT*

FI

SE

LU

DK

FR

DE

SI

SK

BE

MT

EE

UK

PT

PL

CY

ES

IE*

IT

HR

HU

LT

EL

LV

RO

BG

3. Protecting the vulnerable

People at risk of poverty or social exclusion (in %), 2012

Source: Eurostat EU SILC

2014 CSRs mainly target:

1. Employability of

vulnerable/disadvantaged groups: AT, BE, BG, DK, EE, FI, FR, IE, LT, LV, NL, PT, RO, SE, SI, SK

2. Adequacy and coverage of social assistance benefits: BG, ES, HR, IT, LT, LV, RO, UK

3. Access to quality social services/efficiency social assistance: BG, EE, ES, HR, IT, LT, LV, RO, UK

4. Childhood poverty, (in work) poverty: BG, HU, IT, IE, RO, UK

5. Migrants/Roma/disabled : AT, BE, DK, HU, RO, SE

4. Extending working lifes Duration of working life (years, 2012) and employment rate of older workers (%, 2013)

Source: Eurostat

2014 CSRs target mainly on:

1. Keeping people longer in labour market: AT, BE, BG, CZ, DE, FI, HR, LT, LU, MT, NL, PL, SI

2. Enhancing older workers' employability: AT, BE, BG, CZ, FI, FR, LT, LU, NL, PL, RO, SI

3. Sustainability/adequacy pension system: AT, CZ, DE, HR, PT

4. Harmonisation of retirement age men and women: AT, BG, HR, RO

5. Labour market participation of women

Gap between male and female fulltime equivalent employment rates (FTER) and

employment rate (ER) 2013

Source: European Commission

2014 CSRs target mainly:

1. Provision of available and affordable, full-time, care facilities: AT, CZ, DE, EE, IE, PL, RO, SK, UK

2. Social or family support services (incl. Childcare): EE, ES, IT

3. Reduce disincentives for second earners: DE, IT

6. Healthcare and long-term care

2014 CSRs focus mainly on:

1. Healthcare: AT, BG, CZ, DE, ES, FI, FR, HR, IE, LV, MT, PL, PT, SK

2. Long-term care: AT, BE, DE, LU, NL, SI

Source: Eurostat, OECD, WHO

Public healthcare expenditure as % of GDP, 2012

7. Taxes and undeclared work

2014 CSRs target mainly:

1. Tax burden, tax disincentives: AT, BE, CZ, DE, EE, ES, FR, HU, IT, LV, NL, PT, RO, UK

2. Undeclared work: BG, ES, HR, IT, RO

Tax wedge level for low-paid workers (2012, 2013)

Source: Eurostat

8. ALMP and employment services

Long-term unemployment (%, left scale, 2012) and activation support (LMP participants per 100 persons wanting to work, right scale, 2011)

Source: Eurostat, LMP database

2014 CSRs target mainly:

1. Enhance quality, coverage, targeting and effectiveness of ALMP: BG, DE, ES, FI, FR, HU, HR, IE, IT, LT, LU, LV, PL, PT, RO, SI, SK

2. PES performance: BE, BG, CZ, ES, HU, HR, IE, IT, PT, RO, SK

9. Employment protection and labour market segmentation

Source: European Commission

Share of temporary contracts (2013) and transition from temporary to permanent (2012)

2014 CSRs target mainly:

1. Labour market segmentation: DE, ES, FR, HR, IT, PL, PT, SI

2. Employment protection legislation: FR, HR, IT, LT, NL, PT

10. Wages and competitiveness

2014 CSRs target mainly:

1. Wage setting, development, indexation and flexibility: BE, ES, FR, HR, IT, LU, PT, SI

2. Minimum wages, incl. not detrimental to job creation: BG, DE, PT, RO, SI

Real effective exchange rate (REER) and employment growth 2001-2011

Source: European Commission, ESDE 2012

Recommendations for Euro area

Economic Policy coordination 2014-2015:

• Implement structural reforms

• Improve quality and sustainability of public finances – coherent and growth friendly

• Ensure the resilience of the banking system

• Deepen the Economic and Monetary Union by improving the economic surveillance framework

Thank You!

Questions?