MEMO/06/404
Brussels, 6th November 2006
Employment in Europe 2006 What is the overall employment rate in the EU?
The average employment rate for the EU rose by 0.5 of a percentage point in 2005 to 63.8%, similar to the increase recorded in 2004 and this despite a temporary deceleration in economic growth.
What factors caused the rise?
At EU level, the employment rate for women continued to rise faster than for men between 2004 and 2005 (the rate for women increased by 0.6 percentage points to 56.3%). However, there was an upturn in the employment rate for men aged 25-54 after several years of decline, partly redressing the balance. Other important developments are the ongoing positive trends in the employment rate for older workers (which rose 1.5 percentage points to 42.5%), and the rise in the share of part-time employment and fixed-term contracts.
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Has there been any progress on unemployment?
Yes. The EU unemployment rate fell to 8.7% in 2005 from 9.1% the year before. Reversing the trend since 2001, long-term unemployment also fell back to 3.9%, down from 4.1% the previous year. For the first time in several years, the average unemployment rate for young people (i.e. those aged 15-24) also fell – to 18.5% in 2005, down some 0.4 percentage points on 2004.
What is flexicurity?
Flexicurity is a comprehensive approach to labour market policy which combines sufficient flexibility in contractual arrangements – to allow firms and employees to cope with change - with the provision of security for workers to stay in their job or be able to find a new one quickly with the assurance of an adequate income in between jobs. This is possible through lifelong learning, active labour market policies and high levels of social protection.
Why are we talking about it?
In recent years the need for greater flexibility has been predominantly met by easing regulations on temporary workers. This has created flexible, but at the same time, precarious and insecure jobs. To confront the multiple challenges of a fast-evolving global economy and an ageing workforce, Europe needs to find new ways of making its labour markets more flexible while providing employment security at the same time. The debate on how to introduce Flexicurity more widely is part of the EU's response to meet these common challenges.
Labour market reforms seem difficult to achieve. Can the idea of flexicurity help in that respect?
It certainly can. Flexicurity can also be understood as an exchange between different social actors. For example, employees may accept higher flexibility provided that this goes together with new forms of 'change-security' other than a job for life – one example is making sure workers receive regular training at all stages in their career and income insurance to cope with unemployment spells. This puts the emphasis on employment security rather than job security, so people feel secure about their prospects of finding and staying in work, even if they change jobs more often.
What are active labour market policies?
These are targeted policies that aim to improve employment and income prospects of those looking for work, and who find it particularly difficult to succeed in the labour market. Examples of ALMPs include measures such as improving vocational training and ensuring effective Public Employment Services.
How much do Member States currently spend on such measures?
In 2004 spending on active measures, excluding public employment services, averaged 0.6% of GDP in the EU-15 (see Table). Denmark, the Netherlands and Sweden recorded the highest expenditure-to-GDP ratios of over 1%, with Germany, Belgium, Finland and France between 0.7% and 1%. Active spending was below ¼% of GDP in the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Slovakia and the UK.
But the level of resources channelled into active measures is not the only important thing – to achieve results, they also have to be accurately targeted to meet relevant needs.
Active spending, excluding public employment services (as % of GDP) 2004 AT 0.4 BE 0.9 CZ 0.1 DE 0.9 DK 1.5 EE 0.0 ES 0.6 FI 0.8 FR 0.7 EL 0.2 HU 0.2 IE 0.5 IT 0.5 LT 0.2 LV a) 0.1 NL 1.1 PT 0.6 SE 1.0 SK 0.1 UK 0.2 EU-15 0.6 Source: Eurostat's Labour Market Policy Database a) 2003 Does the EU workforce have the skills to cope with the challenges of a global economy, an ageing workforce and technological development?
No, not yet. The skills profile of the EU-25 working age population has risen over recent years. In 2005, the high skilled (i.e. those having completed tertiary education) represented close to 20% of the working age population, while the low skilled (those with education only at lower secondary level or below) represented just under 33%. This compares with shares of 17.6% and 36.2% respectively in 2000 and reflects ongoing improvements in the level of human capital in the EU.
However, despite this positive trend, the EU is far behind the US. If Europe wants to be at he forefront of technological development by 2010 - as set out by EU leaders at the Barcelona summit in 2002 - bold reforms and a breakthrough in investment in higher education and training is required: such as investing in the modernisation of higher education systems, creating better links with industry and investing in Research and Development.
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