Since the European Employment Strategy was launched in 1997, the European Union has gained valuable experience in assessing and comparing employment statistics throughout the Union. It is important for us to share this experience with national audiences.
In my presentation today, I would like to focus on three points: what has been achieved so far, our ambitions for the future, and the significance of the report of the employment task force chaired by Wim Kok in this respect.
On what we have we achieved, since the 1997 Amsterdam treaty, employment is a core objective of the Union. The Luxembourg Job Summit 1997 strengthened the political focus on employment and, most importantly, established mechanisms for co-operation and support at EU level, the open method of co-ordination. In 2000, the Lisbon Summit gave us not only a commitment to more and better jobs, highly significant in itself, but also a commitment to quantitative targets for employment to achieve by the end of this decade.
An extensive evaluation of the first five years of the European employment strategy was carried out in 2002. It highlighted that progress had indeed been made in terms of policy co-ordination at EU level, convergence of national policies and of performances.
Let me begin with the institutional consequences of the EES since, in themselves, these have been a major breakthrough at EU level. In a nutshell, the employment strategy is made up of four elements: setting employment policy guidelines for the Union and member states with quantified targets where appropriate; translating these European guidelines into annual national action plans, with specific targets and measures, taking into account national and regional differences; an annual monitoring, evaluation and peer review at European level, naming and shaming member states in a joint Commission and Council employment report which is then tabled to the European Council; and there are specific recommendations on employment policy.
What the EES has brought in practice is a new way of working together on employment issues at EU level, keeping the momentum for reforms and supporting exchange of experiences. Its methodology has inspired a number of other processes developed at EU level within the framework of the Lisbon strategy and the EES is often referred to as a best practice when it comes to describing successful open methods of co-ordination.
The evaluation conducted in 2002 showed how the employment strategy helped reshape and refocus employment policies in many member states. It has triggered an overall policy shift away from simply trying to tackle unemployment towards the objective of increasing employment. This is not just semantics. The best cure for unemployment is an increase in employment. Employment policies in Europe have become more far-reaching, including a widening range of actors, with more emphasis on active and preventative policies, a greater endeavour to improve adaptability of labour markets and work organisation through flexible working arrangements, and to develop new securities for workers through lifelong learning and social partnerships. The EES has also steered a new monitoring and benchmarking culture by putting the emphasis on effective delivery of reforms and on improved governance.
Although the situation across member states varies greatly, overall performances have improved over the years. Unemployment and long-term unemployment were significantly reduced by 30% over the first five years of the employment strategy. Unemployment in the European Union dropped by 30% and long-term unemployment dropped by 40%. Employment increased by more than 11 million leading to a sharp rise in employment rates, from 60.5% in 1997 to 64% in 2002. Since 2001, European labour markets have shown remarkable resilience in the face of the economic slowdown in sharp contrast with the poor performance of the early 1990s.
The employment growth of the late 1990s and the resilience of employment in the recent period provide strong evidence that labour markets and employment policies have become more effective. This shows that labour market reforms are possible and that they have already made an important contribution to increasing employment and reducing unemployment in the EU. It demonstrates that we also succeed in the future.
To make further progress, it is important to look at the broad picture and reflect on the main economic and social challenges with which the EU is confronted. Looking beyond the current climate of economic uncertainty, I would like to stress the two main structural challenges facing Europe. The first relates to the accelerated pace of economic restructuring in the context of increased economic integration within the enlarged Union and worldwide. The economic transformation brought about by globalisation is changing the employment profile of the EU, the skills requirements of enterprises and traditional thinking about how, when and even where people should work. Economic change is affecting everybody but mostly those individuals, member states and regions who are the least equipped, be it in terms of knowledge or infrastructures, with a risk of widening social and geographical gaps.
The second main challenge relates to the ageing of Europe's population. While facing increased economic restructuring, Europe will have to cope with a shrinking workforce in just four or five years. This means that even if the EU meets its target of having an employment rate of 70% by 2010, the fall in the working age population during the subsequent 20 years will result in a sharp decline in employment. Unless that decline is compensated by higher productivity gains and/or immigration flows, the average growth of GDP per capita will slow down significantly between 2010 and 2030. To face up to these challenges, it is vital for Europe to accelerate both employment and productivity growth. Employment and productivity growth are the drivers of economic growth in the long term. While some progress has been achieved as regards employment, productivity growth in Europe remains particularly disappointing over the medium run. This certainly requires action on the labour market and at the workplace, but it also requires actions that go beyond the labour market such as reforms in products, services and financial markets.
These challenges have been fully integrated in the revision of European employment strategy carried out in 2003. The strategy was radically reviewed with a triple aim: to increase its effectiveness; to align it more closely to the broader Lisbon objectives and targets; and to prepare for enlargement. The renewed strategy is based on three over-arching objectives; full employment by 2010 - this means achieving an overall EU employment rate above 70% for the population of working age by 2010 as well as an employment rate of 60% for women and of 50% for older workers; and to improve quality and productivity at work. More jobs is not enough, we need better and more productive jobs. There are too many working poor in some member states and we need to reverse the decline in productivity growth; to strengthen cohesion and promote inclusive labour markets. In this regard, there are two aspects, social inequalities and regional disparities.
At the same time, the content, format and time-horizon of the guidelines have been revised. We have a stronger link with economic policy co-ordination; fewer and more focused guidelines; a medium-term perspective allowing for an increased emphasis on results and outcome; and greater focus on governance and implementation with a strengthened involvement of social partners, local authorities and other stakeholders.
The analysis of the 2003 national action plans shows that much work remains to be done to fulfil the employment objectives and targets set at Lisbon. To achieve the 70% employment rate target by 2010, the existing Union must create 15 million jobs. This would imply the creation of 22 million jobs by the enlarged Union. This, of course, requires higher employment rates for women and older workers. The employment rate of women has improved and remains on track for the employment target of 57% set for 2005, but gender gaps in a number of countries remain very significant.
As regards older workers, however, the EU still falls short of the target, both in terms of the employment rate and the average exit age, introduced in Barcelona to raise the exit age by five years. At the moment the average exit age from the labour market in Europe is 60 years. Despite improvements, stronger efforts are needed to make the necessary progress towards both targets, in particular the employment rate of women and of older workers.
Circumstances have not been very favourable over the past number of years for carrying out the necessary reforms. Economic growth has been sluggish in the EU where GDP growth reached an annual average of 1.25% in the past three years, less than half the rate we had some years ago.
With regard to the strengthening of conditions for higher levels of sustainable economic growth and employment, the report of the employment task force chaired by Wim Kok is a timely contribution to boost the momentum of reforms carried out within the European employment strategy. It clearly underlines that there is no quick fix or easy solutions and calls for a balanced but resolute set of actions on a number of fronts.
Mr. Kok will have the opportunity to present his report in greater detail tomorrow in a national forum with the social partners, which is organised by the Irish Presidency. I will restrict myself to recalling the main messages of the report.
The report of the task force confirms the validity of the European employment strategy and its assessments and policy messages are fully shared by the European Commission and Council. This is why this year's joint employment report integrates the messages of the task force report. The analysis of the 2003 national action plans and the report from the task force show that success in implementing the strategy will depend on progress in four key areas.
The first key requirement is to increase the adaptability of workers and enterprises. This requires promoting flexibility combined with security in the labour market by focusing on work organisation and the attractiveness for employees and employers of labour contracts with different arrangements.
In this respect, it is essential to avoid the emergence of two-tier labour markets. The concept of job security should be modernised and broadened with a view not only to covering employment protection but also to building on people's ability to remain and progress in work. It is also important to maximise job creation and boost productivity by reducing obstacles to setting up new business, spreading innovation and research and by promoting better anticipation and management of restructuring.
The second key requirement is to attract more people to enter and remain in the labour market and to make work a real option for all. The task force report highlights five lines of action in this respect. More should be done to make work pay, that is, to review the combination of financial and non-financial incentives to work. This should go hand in hand with a second line of action to strengthen active labour market policies. These policies are crucial to tap the potential of the labour force, all the more so in periods of downturn.
Europe must also remove the many obstacles that still hinder the participation of women, including inadequate provision of child care, inappropriate family based taxation and persistent gender pay gaps. All member states should implement comprehensive active ageing strategies. Such strategies should set appropriate legal and financial incentives for workers to remain in work and for employers to hire and keep older workers. Participation in training for all ages should be increased, especially for the low skilled and older workers. Working conditions and quality in work should also be improved. In order to increase labour supply member states should also strengthen their capacity to integrate migrants and prepare themselves to reap the full benefits from new immigration.
The third key requirement for Europe is to invest more effectively in human capital and lifelong learning. Member states have long paid lip service to these concepts but progress is too slow. A well educated, skilled and adaptable workforce able to embrace change is essential to accelerate both employment and productivity growth and Ireland provides a good demonstration of that. It is a key condition for achieving greater adaptability of workers and enterprises and for attracting more people into jobs.
Member states need to set ambitious policies for raising our levels of human capital. To achieve this, the costs and responsibilities must be made more transparent and incentives for investing in human resources in enterprises must be reviewed. The European level can be of help, through the European social fund in particular. It will be important to tap the potential for human resources investment in the next programming period of the EU budget and structural funds.
The fourth key requirement is the need to ensure effective implementation of reforms through better governance at national and EU level. To progress on reforms, we need to build up reform partnerships that mobilise the support and participation of the various stakeholders. These should be backed by clear national objectives and targets reflecting those set at EU level, as well as by efficient use of public funds.
The national action plans for employment are an obvious tool to bring together these different elements in the programming of reform, but their potential is not fully recognised by the member states. To have an impact, the national action plans, NAPs, need to have political legitimacy and the approach of several member states of involving their national parliaments in the preparation of their NAPs, and consulting the social partners and civil society should become the norm.
Europe can also help by strengthening the role of country specific recommendations, strengthening the link between the implementation of the employment guidelines and recommendations and EU funding, especially from the structural and social funds, and also by encouraging a strong commitment from the European social partners and developing a more effective system of mutual learning through exchange of experiences. We intend to launch a new and more ambitious programme for peer reviews of experiences and good practice as of this year.
Full employment, better jobs and greater social cohesion are central objectives of our strategy and the Union is firmly committed to providing continuing support to member states at national, regional and local levels. As I have highlighted, the strategy's direction is to define a more effective framework for action, which naturally calls for an increased emphasis on the use of targets measuring progress in delivering these results. It also calls for more forceful recommendations addressed to the member states. The next set of recommendations will be presented by the Commission this April. To succeed, we must by all means improve the delivery and effectiveness of reforms. The success of the Irish social partnership has inspired many member states and we should build on this experience to make progress Europe-wide.
I thank the committee for its attention.