DIREC
CTORAT
TE GENE
ERAL FOR INTER
RNAL PO
OLICIES
S
PO
OLICY DE
EPARTME
ENT A: E
ECONOM
MIC AND SCIENT
TIFIC PO
OLICY
Ma
ainstream
ming Employm
ment
and Sociall Indicato
ors in
nto
Ma
acroe
econo
omic Surv
veilla
ance
STUDY
Y
A
Abstract
T
The Committee on Em
mploymentt and Socia
al Affairs of
o the Euro
opean Parliament
commissioned this study to obtaiin an up-to
o-date assessment of how emplo
oyment
a
and social issues are addresssed in th
he Europe
ean Semesster governance
m
mechanisms
s and of the
t
contrib
bution of the employment and social indicators
a
applied in the
t
macro surveillancce exercises
s since 201
13, as welll as the ro
ole and
p
perceptions of the main stakehold
ders in this
s respect.
T
The study findings
f
sh
how a Euro
opean Sem
mester curre
ently unde
ergoing imp
portant
d
developmen
nts under the
t
pressu re of chan
nging econo
omic and ssocial cond
ditions,
w
with the increasing visibility of th
he structura
al employment and so
ocial effects
s of the
crisis.
T
These deve
elopments underline the need for revising the EU governanc
ce and
coordination
n system in
n order to address th
he social and employ
yment imba
alances
b
besides the macroeconomic one s to suppo
ort greater and more inclusive growth
g
p
prospects in
n the long run and to
o develop a more com
mprehensiv
ve assessm
ment of
social and employmen
e
nt condition
ns at the co
ountry leve
el. The ultim
mate goals of the
E
EU2020 strrategy shou
uld be tak
ken as the
e basis of the Semesster coordination
e
efforts.
IP/A
A/EMPL/
/2014-18
PE 5
569.985
February
y 2016
EN
This document was requested by the Committee on Employment and Social Affairs of
the European Parliament (EMPL).
AUTHORS
Istituto per la Ricerca Sociale (IRS)
Project Leader
Operative coordinator
Quality manager
Scientific Consultant
Research Team
Manuela Samek Lodovici
Chiara Crepaldi
Flavia Pesce
Prof. Sonja Bekker (Tilburg University)
Prof. Claudio Lucifora (Università Cattolica del Sacro Cuore)
Istituto per la Ricerca Sociale: Davide Barbieri, Chiara
Crepaldi, Serena Marianna Drufuca, Flavia Pesce , Cristina
Vasilescu, Irene Zancanaro
Country experts:
Greece and UK:
Kari Hadjivassiliou
Finland:
Mika Vidlund
Spain:
Elvira Gonzales
France, Italy, Germany and Romania:
IRS team of experts
Poland:
Iga Magda
The report was prepared on the basis of information available up to November 2015.
RESPONSIBLE ADMINISTRATOR
Dr. Marion SCHMID-DRÜNER
EDITORIAL ASSISTANT
Eva ASPLUND
LINGUISTIC VERSIONS
Original: EN
ABOUT THE EDITOR
Policy departments provide in-house and external expertise to support EP committees
and other parliamentary bodies in shaping legislation and exercising democratic
scrutiny over EU internal policies. To contact the Policy Department or to subscribe to
its monthly newsletter please write to:
Policy Department A: Economic and Scientific Policy
European Parliament
B-1047 Brussels
E-mail: Poldep-Economy-Science@ep.europa.eu
Manuscript completed in February 2016
© European Union, 2016
This document and annex 1-6 and annex 7 are available on the Internet at:
www.europarl.europa.eu/supporting-analyses
Annex 1-6: http://www.europarl.europa.eu/RegData/etudes/STUD/2016/569985/IPOL
_STU(2016)569985(ANN01)_EN.pdf
Annex 7: http://www.europarl.europa.eu/RegData/etudes/STUD/2016/569985/IPOL
_STU(2016)569985(ANN02)_EN.pdf
DISCLAIMER
The opinions expressed in this document are the sole responsibility of the authors and
do not necessarily represent the official position of the European Parliament.
Reproduction and translation for non-commercial purposes are authorised, provided
the source is acknowledged and the publisher is given prior notice and sent a copy.
Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
CONTENTS
LIST OF BOX
5
LIST OF FIGURES
5
LIST OF TABLES
6
LIST OF ABBREVIATIONS
7
EXECUTIVE SUMMARY
9
INTRODUCTION
1. EU
GOVERNANCE
SEMESTER
14
MECHANISMS
AND
THE
EUROPEAN
16
1.1
EU governance mechanisms for macroeconomic, employment and
social policies: history and legal bases
17
1.2
The European Semester coordination process and its recent evolution
25
1.2.1
The European Semester meta-coordination role
25
1.2.2
The European Semester process
30
1.2.3
The role of the main institutional stakeholders
33
1.2.4
Evolution of the European Semester since 2013
35
2. THE DEBATE OVER
EUROPEAN SEMESTER
2.1
SOCIAL
DIMENSION
OF
THE
The perceptions and proposals of the main European Semester
stakeholders
2.1.1
2.2
THE
Proposals for improving the balance between macroeconomic and
social issues according to the stakeholders
Evidence from the literature
41
42
46
49
2.2.1
The need to address employment and social imbalances to improve
growth prospects
49
2.2.2
Effects of coordination mechanisms on the balancing of economic and
social issues
53
3. THE ROLE OF EMPLOYMENT AND SOCIAL ISSUES IN THE CSR
PROCESS
55
3.1
3.2
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CSR content analysis
56
3.1.1
Importance of social and employment issues in the CSRs: In-depth
analysis by items addressed
57
3.1.2
Relevance of social and employment issues in the CSRs: in-depth
analysis of target groups addressed
70
The consistency of Employment and Social CSRs in relation to the
countries’ performance in these fields
76
3.2.1
The results of cluster analysis
76
3.2.2
The evidence from the case studies
83
3
Policy Department A: Economic and Scientific Policy
3.3
How much do the economic measures proposed level out the social
measures? The evidence from the survey and the case studies
88
4. THE ROLE OF EMPLOYMENT AND SOCIAL INDICATORS AND
THEIR
MAINSTREAMING
INTO
MACROECONOMIC
SURVEILLANCE
92
4.1
The scoreboard and auxiliary indicators and their role in the European
Semester
4.2
The indicators’ strengths and weaknesses
101
4.2.1
Conceptual limitation
101
4.2.2
Suitability and effectiveness of social employment indicators in
European Semester monitoring exercises
103
4.2.3
Use of social and employment indicators in CSR and additional
indicators by addressed item
105
4.3
Suggested additional indicators
92
120
5. CONCLUSIONS AND RECOMMENDATIONS
125
5.1
Main findings
126
5.2
Policy implications
131
REFERENCES
135
4
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
LIST OF BOX
Box 1.1:
The role of the European Parliament within the European Semester
34
Box 1.2:
The Social Impact Assessment
Programme for Greece
38
Box 3.1:
Poland: Female Labour Market Participation
64
Box 3.2:
France : Labour Costs
65
Box 3.3:
Spain: Unemployment and ALMP
66
Box 3.4:
Germany: non-standard contracts (mini-jobs)
69
Box 3.5:
UK: Childcare
69
Box 3.6:
Italy: Youth labour market participation and educational outcomes
73
Box 3.7:
Finland: Ageing population and employment of older workers
75
Box 3.8:
Romania: Poverty and Social Exclusion
75
Box 4.1:
MIP Scoreboard
94
Box 4.2:
JER scoreboard of key and auxiliary employment and social indicators
95
Box 4.3:
SPC Social Indicators: Overarching Portfolio
96
of
the
New
Stability
Support
LIST OF FIGURES
Figure 1.1: The European Semester in 2015-2016
31
Figure 3.1: Employment and social policy recommendations (number) by item,
EU-28, years 2012, 2013, 2014, 2015
61
Figure 3.2: Employment and social policy recommendations (number) by Item,
EU-28, total of years 2012, 2013, 2014, 2015
62
Figure 3.3: Employment and social policy recommendations (number) per Item
of HEALTH, EDUCATION, PENSIONS, EU-28, years 2012, 2013,
2014, 2015
63
Figure 3.4: Employment and social policy recommendations (number) per Item
of EMPLOYMENT POLICIES, EU-28, years 2012, 2013, 2014, 2015
65
Figure 3.5: Employment and social policy recommendations (number) per Item
of SOCIAL POLICIES, EU-28, years 2012, 2013, 2014, 2015
67
Figure 3.6: Employment and social policy recommendations by target groups
(number), EU-28, total for years 2012, 2013, 2014, 2015
70
Figure 3.7: Employment and social policy recommendation target groups
(number) - YOUNG PEOPLE, EU-28, years 2012, 2013, 2014, 2015
71
Figure 3.8: Employment and social policy recommendation of target groups
other than young people (number), EU-28, years 2012, 2013, 2014,
2015
72
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5
Policy Department A: Economic and Scientific Policy
LIST OF TABLES
Table 1.1: Legal basis and evolution of the coordination mechanisms for
Macroeconomic Surveillance process and the Employment and
Social inclusion processes since the Maastricht Treaty
20
Table 3.1: CSRs in 2012 - 2015
58
Table 3.2: Employment and social policy recommendations (number and
percentage over total recommendations), per Member States and
EU-28, years 2012, 2013, 2014, 2015
59
Table 3.3: Employment and social policy recommendations (total number and
percentage per item), Member States and EU-28, total for years
2012, 2013, 2014, 2015
68
Table 3.4: Employment and social policy recommendation target groups (total
number and percentage of target group), Member States and EU28, total for years 2012, 2013, 2014, 2015
74
Table 3.5: List of indicators used for the cluster analysis (average 2010-2012)
77
Table 3.6: Cluster analysis results – Non-weighted average of indicators by
cluster
78
Table 3.7: Non-weighted average of % of items in CSRs by cluster
81
Table 3.8: Non-weighted average of % of targets in CSRs by cluster
82
Table 4.1: Comparison between the JER and MIP social and employment
indicators
106
Table 4.2: Macro-surveillance indicators and additional indicators for the CSRs
- Health
107
Table 4.3: Macro-surveillance indicators and additional indicators per CSRs –
Education and training
110
Table 4.4: Macro-surveillance indicators and additional indicators per CSRs –
Pension reforms
111
Table 4.5: Macro-surveillance indicators and additional indicators per CSRs –
Soft employment policies
114
Table 4.6: Macro-surveillance indicators and additional indicators per CSRs –
Hard employment policies
115
Table 4.7: Macro-surveillance indicators and additional indicators per CSRs –
Social Policies
119
Table 4.8: Overview of the current scoreboard and auxiliary MIP and JER
indicators with additional possible indicators
120
6
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
LIST OF ABBREVIATIONS
AGS Annual Growth Survey
ALMPs Active Labour Market Policies
AMR Alert Mechanism Report
BEPG Broad Economic Policy Guidelines
CoR Committee of Regions
COREPER Committee of Permanent Representatives (Council)
CSR Country-Specific Recommendation
DG Directorate-General
EAC Education and Culture (DG)
EAP Economic Adjustment Programme
EAPN European Anti-Poverty Network
EaSI Employment and Social Innovation Programme (DG EMPL)
EC European Commission
ECB European Central Bank
DG Directorate General
ECFIN Economic and Financial Affairs (DG)
ECOFIN Economic and Financial Affairs (Council)
ECON Committee on Economic and Monetary Affairs (EP)
EDP Excessive Deficit Procedure
EES European Employment Strategy
EFC Economic and Financial Affairs (Council)
EIP Excessive Imbalance Procedure
EMCO Employment Committee
DG EMPL Employment, Social Affairs and Inclusion (DG)
EMPL Committee on Employment and Social Affairs (EP)
EMU Economic and Monetary Union
EP European Parliament
EPAP European Platform Against Poverty
EPC Economic Policy Committee
EPL Employment Protection Legislation
EPM Employment Performance Monitor
EPRS European Parliamentary Research Service
EPSCO Employment, Social Policy, Health and Consumer Affairs
(Council)
ES European Semester
ESF European Social Fund
ESFS European System of Financial Supervision
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7
Policy Department A: Economic and Scientific Policy
ESM European Stability Mechanism
ESRB European Systemic Risk Board
ETUI European Trade Union Institute
ETUC European Trade Union Confederation
EU European Union
GDP Gross domestic product
IA Impact Assessment
IDR In-Depth Review
ISG Indicators Sub-Group (SPC)
JAF Joint Assessment Framework
IMF International Monetary Fund
JER Joint Employment Report
LAF Lisbon Assessment Framework
LIME Lisbon Methodology Group (EPC)
LMP Labour Market Policy
MEP Member of the European Parliament
MIP Macroeconomic Imbalances Procedure
MoU Memorandum of Understanding
MS Member State
NEET Not in Employment, Education or Training
NHS National Health Service
NMW National Minimum Wage
NRP National Reform Programme
NSR National Social Report
OMC Open Method of Coordination
PESs Public Employment Services
RQMV Reverse qualified majority voting
SCP Stability or Convergence Programme
SEA Single European Act
SGP Stability and Growth Pact
SIA Social Impact Assessment
SMEs Small and Medium-sized Enterprises
SPC Social Protection Committee
SPPM Social Protection Performance Monitor
SWD Commission Staff Working Document
TFEU Treaty on the Functioning of the European Union
TFGR Commission's Task Force for Greece
VET Vocational Education and Training
WHO World Health Organisation
8
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
EXECUTIVE SUMMARY
The Committee on Employment and Social Affairs of the European Parliament (EMPL)
commissioned this study to obtain an up-to-date assessment of recent developments
in attention to employment and social issues in the European Semester governance
mechanisms and of the contribution of the employment and social indicators applied in
the macro surveillance exercises since 2014, as well as the role and perceptions of the
main stakeholders in this respect.
The study is based on:

A desk analysis and review of the EU and national documents and academic
debate on the evolution of social dimension in the EU governance mechanisms.

An online survey addressed to a wide range of stakeholders at the EU level.

A number of face-to-face and telephone interviews with European and national
stakeholders.

In-depth assessment of eight country case studies representative of the variety
of socio-economic conditions present in the EU.
The evolution of the EU governance mechanisms since the original Treaties
analysed in sections 1.1 and 1.2 shows that two distinct main processes of governance
have been developed in relation to macroeconomic and social-employment
coordination mechanisms. Since Spring 2011, the European Semester has enabled EU
institutions to combine these governance mechanisms within a single annual policy
coordination cycle, which is the core of the current European governance architecture.
However, the macroeconomic, social and employment policy coordination mechanisms
are still grounded on very different regulatory frameworks which affect their
stringency and effectiveness in addressing the EU Member States’ socio-economic
policies. While the macro-economic surveillance mechanisms combine a soft
preventative arm with a hard corrective arm (including the option to impose sanctions
on non-complying Eurozone countries), the employment and social domains are
largely based on 'soft' coordination mechanisms, e.g. the Open Method of
Coordination, characterised by exchange between the EU and the Member States that
leaves Member States ample scope to develop their own policy-routes towards
meeting the EU-level goal, as well as the normative framework of Fundamental Rights
and the policy goals defined by the Europe 2020 strategy.
The effects of crisis and of the austerity measures implemented since 2013 have led to
a progressive ‘socialisation’ of the European Semester. Several recent developments in
the European Semester process have heightened attention to social and employments
dimensions, namely: the greater involvement of the EU social and employment policy
actors (EP and Council Committees and Commission’s DGs) in the European Semester;
the introduction of a specific Social Impact Assessment Procedure for Programme
countries; the greater room provided by the streamlined European Semester since
2015 for the involvement of the social partners and other civil society organizations in
discussion of the AGS and the CSRs; and the European Commission’s proposal to
increase the number of employment and social indicators within the MIP headline
scoreboard indicators.
These developments reflect the need to address the social and employment
imbalances besides the macroeconomic ones to support greater and more inclusive
PE 569.985
9
Policy Department A: Economic and Scientific Policy
growth prospects in the long run and to develop a more comprehensive assessment of
social and employment conditions at the country level. Recent developments in
macroeconomic research reported in section 2.2 highlight the fact that focusing debate
excessively on fiscal discipline and budgetary austerity risks aggravating the recession
spiral, since inequalities and social exclusion have been shown to hinder growth and
aggravate macroeconomic imbalances. Excessive focus on macro-financial targets,
such as fiscal consolidation, may lead to underestimating the recessive impact and the
harmful social consequences of the adjustment process. In addition, neglecting the
social implications of the adjustment process may distort government actions in the
direction of easy-to-implement income and welfare cuts (public sector wages, health
and pension expenditures), rather than engaging in more needed product market
reforms (product market deregulation, length of judicial procedures, etc.) and social
investments.
However, the ‘socialisation’ of the Semester process has proved only partial, as shown
by the in-depth analysis of the Country Specific Recommendations and the
interviews, as well as the assessment of eight country case studies presented in
chapter 3.
Even though the incidence of CSRs on social and employment issues has slightly
increased from 40.2% to 42.2 between 2013 and 2015 and the number of items
addressed by the employment and social CSRs had been increasing up to 2014, the
CSRs are still dominated by macroeconomic policy recommendations.
The majority of the CSRs addressing social and employment issues focus on labour
market policies (53.5%), followed by education and training (15.6%), and social
policies (15.2%). Pensions are addressed by 9.6% of the CSRs, and Health by 6.2%.
In the CSRs employment issues outnumber social topics, even in Member States
characterised by high levels of poverty and social disadvantage, as employment is
considered the main tool to fight poverty. Young people (especially the unemployed
and disadvantaged youth) are the target group addressed by most CSRs, followed by
elderly workers. While some consistency emerges overall between the CSRs and the
Member States’ employment and social challenges, the country case studies show that
not all the major emerging challenges are tackled by the CSRs and that labour market
and social aspects are treated with greater consideration for cost-effectiveness and
economic sustainability, rather than poverty reduction, with little attention to their
possible long-term social and economic impacts. In addition, consideration for specific
vulnerable groups (be they migrants, elderly workers, women, poor children, etc.)
remains inadequate, even though renewed attention to the social and employment
impacts of the crisis has emerged in the 2014 and 2015 exercises.
Another aspect emerging from the interviews is that the European Semester and the
Macroeconomic Surveillance process are increasing in importance and visibility in the
EU policy agenda, while the EU2020 Strategy, more focused on a balanced medium
term growth addressing both economic and social dimensions, appears to be losing
ground, also as a consequence of the negative effects of the crisis on its target
objectives. The need to relaunch the Europe 2020 Strategy is thus another issue
that emerged from the interviews.
Civil society organisations call for greater engagement in the process in order to
keep national governments accountable for their policies and support the EU2020
Strategy.
10
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
According to the representatives of trade unions and civil society interviewed,
systematic involvement and consultation with the social partners and civil society
organisations could enhance the European Semester process by: i) endorsing the
CSRs at the national level and promoting a greater involvement and consideration on
the part of Member States through public discussion; ii) supporting the preparation of
NRPs; proposing own reporting systems to counterbalance economic viewpoints; iii)
supporting social impact assessments at the national and European level. At both the
EU and national level there are, however, insufficient opportunities for their
organisations to influence the process. The European Semester and CSRs are
considered to have low visibility at the national level, with scant political and
public debate. There is thus a democracy gap and a crisis of confidence in EU
institutions according to the representatives of employment and social organisations
interviewed, which is leading to some organisations opting out of the Semester
consultation process and the Member States ignoring the CSRs. To overcome this
problem, employment and social organisations stress the need to create a forum for
open debate on macroeconomic and labour/social policies with a stronger role
for the European Parliament in stimulating and hosting open public debate on these
issues, although this means extending the time-frame of the European Semester.
How to support a greater involvement of the social partners and of the EU
and national parliaments in the European Semester process, without increasing the
complexity of the process and its timing remains, however, a controversial issue. EC
and national officers underline the need to simplify the consultation process and
find smoother and less time-consuming ways to collect the opinions of the social
partners and of the EU and national Parliaments. In this respect the time-frame of
the process was identified as a critical point by the representatives of social and
employment stakeholders. In practice, proper consultation of the social partners has
not always been possible. Simplification and re-modulation of the entire process would
be beneficial for discussion and implementation, as well as for the public debate.
Several NGOs also underline the need to consider the EU Charter of Fundamental
Right in the European Semester in order to mainstream and improve the EU
internal mechanisms for the protection of fundamental rights.
While the need to strengthen the social dimension of the European Semester is
generally shared among the stakeholders, contrasting views emerged with respect to
the role of social/employment indicators and the possibility to include new
indicators in the MIP Scoreboard.
As described in chapter 4, for the majority of respondents the role of social and
employment indicators in contributing to evidence-based CSRs is relevant
and the indicators adopted are suitable and effective for the purpose of
integrating social and employment issues within the macroeconomic surveillance
process. However, the variety and complexity of the social and employment issues
addressed by the CSRs calls for additional indicators besides those currently in
use, as well as disaggregation at least by sex, age and education. In particular,
additional indicators should be envisaged to cover many issues that are not currently
covered by macro-surveillance indicators, like pensions, health care and long-term
care systems; education and training; and, finally, poverty for specific groups (child,
old-age, working poor).
PE 569.985
11
Policy Department A: Economic and Scientific Policy
In this respect, in September 2015 the Commission proposed to include three
additional labour market indicators in the MIP headline scoreboard indicators
(the activity rate, the long-term unemployment rate and the youth unemployment
rate). Inclusion of these indicators in the European Semester is expected to increase
the emphasis on social objectives in the EU’s priorities and CSRs as well as
intensifying social monitoring. This proposal is, however, opposed by most of the
Member States, given that this would mean an extension of more stringent EU
surveillance on employment and social dimensions under Member States
competences. Beside this main political argument, some technical arguments are also
being advanced regarding: the risk of watering down the MIP procedure if too many
indicators are included and thus the need to maintain the two scoreboards separate,
even if more closely coordinated than in the past; and the need to improve the
timeliness and robustness of social indicators (poverty risks, income inequalities,
material deprivation).
A series of new indicators is illustrated in section 4.3. They provide additional insight
into the employment and social issues addressed by CSRs and monitor the emerging
risks of social and labour market imbalances, also in policy areas not currently covered
by the indicators included in the MIP and JER scoreboard.
The proposed indicators have been selected on the basis of a number of criteria
related to economic relevance, statistical quality and ease of implementation. Each
indicator is derived from a consolidated statistical source (EUROSTAT) and available at
EU-28 level. For the sake of maintaining a workable number of indicators in the MIP
scoreboard, only two additional employment and social indicators are proposed to the
list of “key” headline indicators with the identification of thresholds, while nine
additional indicators are proposed for the set of auxiliary indicators. The two proposed
headline indicators are the long-term unemployment share and the people at risk
of poverty after social transfers (percentage of total population). These
indicators could fruitfully be added to the MIP scoreboard for a better understanding of
macroeconomic imbalances and the implications for the recommendations addressed
to Member States concerning the adjustment process.
The long-term unemployment indicator can provide information on several
important dimensions of unemployment with implications for the (future)
employability of workers and patterns in public expenditures (unemployment benefits
and other benefits).
The poverty risk after social transfer indicator has been shown to be a good
predictor of the extent of overall poverty and social exclusion. It is also useful to guide
policy efforts to support the most vulnerable groups, and improve the effectiveness of
income support services for people at risk of poverty and social exclusion. Timeliness
may be a critical issue in the case of this indicator, since data are usually available
with a time lag, but we nevertheless consider it necessary to have a poverty indicator
in the MIP headline scoreboard, besides the labour market ones.
Appropriate investments should support the development of timeliness and sound
social indicators. This implies also providing a clear mandate to Eurostat to
strengthen the EU-SILC survey and improve social indicators.
The study conclusions and policy recommendations presented in chapter 5 focus
on the need for revising the EU governance and coordination system. In particular, the
ultimate goals of the EU2020 strategy should again be taken as the basis of the
12
PE 569.985
Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
European Semester coordination efforts in order to guarantee greater attention to
those policy fields which have long-term effects, like education and
employment/social policies. In this respect, the CSRs should extend their
perspective over a longer time-span to support structural reforms which take time to
display their full effects. Social inclusion should be considered as an opportunity for
smart and inclusive growth rather than only as a problem of financial coverage, taking
into account its capacity to support growth. As for labour policies, a closer focus on
the quality of jobs is necessary.
There is also a need to simplify the governance of EU policies. Simplification is
expected to improve the transparency and ownership of EU policy-making among
European citizens. This implies that: i) EU intervention should focus on those policies
that have spillover effects and are relevant at the EU level, according to the
subsidiarity principle; ii) rationalisation of the assessment framework is needed, to
make the system clearer and more transparent. In this last respect, data and
monitoring results should be better communicated using benchmarking
exercises and implementation assessments and opening up debate with the
involvement of civil society organisations and parliaments at both the EU and
national level.
Adoption of an extended version of the OMC approach could be beneficial to
improve the transparency of the European Semester process as well as its flexibility.
This is particularly important for the purpose of supporting a greater involvement of
the relevant EU and national stakeholders in the process and in creating shared
political and public debate regarding the European Semester.
The European Parliament could have a very important role to play in providing
political support for the development of a more even balance between economic and
social objectives, heightening attention to the effects of CSRs on employment and
social conditions and promoting a greater involvement of the relevant EU and national
stakeholders in the European semester. It could also support the development and use
of social indicators in the headline scoreboards and the use of SIAs for major policy
reforms, as well as monitor how the Semester reform proposals are implemented.
PE 569.985
13
Policy Department A: Economic and Scientific Policy
INTRODUCTION
The Committee on Employment and Social Affairs of the European Parliament (EMPL)
has commissioned this study in to obtain an up-to-date assessment of recent
developments in the attention paid to employment and social issues in the European
Semester governance mechanisms. Also to be evaluated are the contribution of the
employment and social indicators applied in the macro surveillance exercises since
2014, as well as the role and perceptions of the main stakeholders in this respect.
The study is based on:
•
A desk analysis and review of the EU and national documents and academic
debate on the evolution of the social dimension in the EU governance
mechanisms.
•
A survey addressed to a wide range of stakeholders at the EU level to piece
together a balanced picture of the range of views on the issue.
•
A number of face-to-face and telephone interviews to European and national
stakeholders. 1
•
In-depth assessment of eight country case studies representative of the variety
of socio-economic conditions present in the EU.
This report presents the main findings resulting from the research activities:
•
Chapter 1 illustrates the evolution and legal bases of the current EU
governance mechanisms for macroeconomic, employment and social policies;
and the main features of and recent changes in the European Semester process
with the focus on the balancing between macroeconomic and social measures.
•
Chapter 2 focuses on the debate on the European Semester, presenting the
perceptions of the main stakeholders involved in the Semester and the main
issues addressed in the debate over the social dimension of the EMU.
•
Chapter 3 provides an assessment of the CSRs implemented in the 2012-2015
European semester coordination cycles, with particular attention to
employment and social issues.
•
Chapter 4 discusses the scoreboard social and employment indicators currently
adopted in the Macroeconomic Imbalance Procedure and Joint Employment
Report, assessing their main strengths and weaknesses and suggesting
additional indicators that could be considered, also on the basis of the
indications provided by the stakeholders interviewed.
•
The final chapter presents the main conclusions and recommendations
emerging from the study results.
Seven annexes complete this report: Annex 1 presents the methodology and research
tools adopted for the study, including the list of European and National stakeholders
interviewed, and a description of data collection and responses from the on-line
survey; Annex 2 describes the role of the main European and National stakeholders
involved in the European Semester; Annex 3 provides summary tables illustrating the
employment and social items addressed in all the CSRs adopted since 2012; Annex 4
1
The research team would like to thank all the interviewed European and national stakeholders for their
availability and very helpful indications and comments on the European Semester and its evolution in
recent years.
14
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sets out the indicator fiches; Annex 5 provides additional tables reporting the answers
to the on-line questionnaire; Annex 6 presents a comparative table of the country case
studies and summarises the main opinions expressed by National stakeholders; Annex
7 contains the eight country case studies and the Greece overview.
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Policy Department A: Economic and Scientific Policy
1. EU
GOVERNANCE
MECHANISMS
EUROPEAN SEMESTER
AND
THE
KEY FINDINGS
•
While EU priorities initially focused mainly on economic concerns, in recent years
the EU common policy has extended in scope to other dimensions, in line with the
concept of sustainable and inclusive growth enhanced by the Europe 2020
Strategy.
•
Since Spring 2011, the European Semester has combined within a single annual
policy coordination cycle two distinct governance and coordination mechanisms:
the macroeconomic surveillance process; and the employment and social policy
coordination processes bundled under the Europe 2020 Strategy and the
Integrated Economic and Employment Policy Guidelines. The aim is to increase
the EU coordination role in policy areas in which EU institutions lack legislative
powers.
•
The two processes are however grounded on very different regulatory frameworks
and are based on different methods of coordination: the macroeconomic
coordination mechanism is largely grounded on hard treaty-based regulations;
while the employment policy coordination mechanism is based on a soft
coordination mechanism, known as the “Open Method of Coordination”, as well as
the Europe 2020 strategy framework.
•
In recent years the crisis and austerity measures brought out the need for greater
focus on the social and employment consequences of macroeconomic surveillance
measures. In order to address the criticalities of the European Semester process,
the Commission has very recently proposed greater emphasis on social objectives
and targets in the EU’s priorities as well as enhanced role for social and
employment policy actors. Debate on these proposals is still ongoing.
The core of the current European governance architecture lies in the ‘European
Semester’ of policy coordination, which combines governance mechanisms in the field
of both economic and social regulation within a single annual policy coordination cycle.
This process has enabled EU institutions to take on a more important role than
hitherto in analysing and providing indications and recommendations on national
economic, fiscal, and social policies. There are, however, certain key areas for
improvement, involving the transparency and complexity of the rules-based
framework, the balance between the economic and the employment and social
governance mechanisms, and the impact of the current governance framework on
economic growth and social imbalances.
In this chapter we present the main developments in the EU governance mechanisms
for macroeconomic, employment and social policies, with focus on the European
semester and the recent debate on how to reach a better balance between economic
and social goals.
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1.1
EU governance mechanisms for macroeconomic, employment and
social policies: history and legal bases
Since the original Treaties came into effect two main issues have been observable in
the European integration process: one concerning the division of competences
between the EU and Member States and the other concerning the balance between
economic and employment/social policies.
While EU priorities initially focused mainly on economic concerns, e.g. developing a
competitive internal market, in recent years the EU common policy has extended in
scope to other dimensions, in line with the concept of sustainable and inclusive
growth. There have also been new developments in the approach adopted and in the
employment and social issues addressed by European policymaking, from focusing on
workers and the harmonisation of national legal and administrative regulations on
working conditions and anti-discrimination to adopting a soft coordination mechanism
(the so-called Open Method of Coordination) addressing social exclusion and groups at
risk of poverty, often with the support of EU funds and programmes.
In the original Treaties 2 the social and employment objectives were subordinated to
the economic ones and the EU maintained a coordination role to support market
opening and facilitate the free movement of workers. Some attempts at harmonisation
with the introduction of binding supranational rules underpinned by legal enforcements
powers in the labour market and social protection policy fields were not effective,
given the wide diversity of national welfare and employment systems and
regulations. 3
It is only with the second half of the 1990s and the creation of the EMU that the
approach gradually changed, with the use of binding EU legislation on fundamental
rights (including non-discrimination) combined with soft coordination mechanisms,
first applied in the area of employment policies (since 1997) and then extended to
social inclusion policies (since year 2000).
In the 1970s, concerns on structural imbalances and uneven growth across the
Member States 4 prompted more pro-active initiatives on social policy, like the first
Social Action Programme 5 adopted by the Council in 1974. It is however with the
2
3
4
5
The Treaty of Paris establishing the European Coal and Steel Community, Apr. 18, 1951, 261 U.N.T.S.
140 [hereinafter ECSC Treaty] in 1952. Despite the fact that the ECSC was designed with the economic
objective of creating a common market in coal and steel, reference to social policy objective can be also
found. Article 2 of the ECSC Treaty included among its objectives the need to develop employment and to
improve standards of living of the Member States; while Article 3 stated that the Community should
“promote improved working conditions and an improved standard of living for the workers in each of the
industries under its jurisdiction, so as to make possible the equalization of such conditions in an upward
direction”. The Treaty of Rome in 1957 establishing the European Economic Community, Mar. 25, 1957,
298 U.N.T.S. 11 introduced the first important provisions on social and employment protection and equal
pay for men and women. A specific Title on ‘Social Policy’ (Title III of Part III) was included in the Treaty
and the European Social Fund (ESF) was created to improve employment opportunities for workers and
to contribute to the raising of their standard of living, so as to enable their harmonisation (Art. 117). In
particular, Art. 118 called for promotion of cooperation between Member States in the social field
(employment; labour law and working conditions; basic and advanced vocational training; social security;
prevention of occupational accidents, and diseases; occupational hygiene; the right of association, and
collective bargaining between employers and workers), recalling the relevant article of the ECSC Treaty.
See European Parliament (2015), Social and Employment Policy: General Principles, Fact Sheets on the
European Union http://www.europarl.europa.eu/ftu/pdf/en/FTU_5.10.1.pdf
European Parliament (2015), Social and Employment Policy: General Principles, Fact Sheets on the
European Union, p. 1. http://www.europarl.europa.eu/ftu/pdf/en/FTU_5.10.1.pdf
Council Resolution of 21 January 1974 concerning a social action programme, Official Journal C 013.
PE 569.985
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Policy Department A: Economic and Scientific Policy
80s, characterised by low growth rates, rising unemployment, income inequality and
social exclusion issues, that EU competences increased both with respect to social and
employment issues as well as economic policies. In 1986 the Single European Act
(SEA) 6, amending the previous Treaties, contributed to further broadening of EU
competence to legislate in the social and employment policy fields and explicitly stated
that « social objectives should be a constant concern of all Community policies » and
thus opening the debate about the place of social objectives in the European project.
Another important step was the adoption by all Member States, except the UK, of a
Community Charter of the Fundamental Rights of Workers (Community Social
Charter) at the Strasbourg Summit in December 1989. The Charter recognised as
fundamental social rights of workers: freedom of movement; employment and
remuneration; improvement of living and working conditions; social protection;
freedom of association and collective bargaining; vocational training; equal
treatment for men and women; information and consultation and participation for
workers; health protection and safety at the workplace; protection of children and
adolescents; rights of elderly persons; the rights of disabled persons. It also stated
general guidelines for Member States and was accompanied by a Social Action
Programme proposing a range of measures to implement the Charter. These
fundamental social rights were to be further developed in the Charter of
Fundamental Rights of the European Union that became legally binding only with
the ratification of the Treaty of Lisbon on 1 December 2009. 7
With the Maastricht Treaty (Treaty on European Union) of 1992 8 and the creation of
the Economic and Monetary Union (EMU) a radical change occurred in the balance of
EU and national competences, especially in the macroeconomic policy area, with a
greater coordination role for EU institutions based on both hard (applying in particular
to the Eurozone countries) and soft mechanisms. This was necessary to overcome an
intrinsic weakness of the EMU, which centralised only monetary policy at the EU level,
leaving competences on fiscal and economic policy at the national level, and to
guarantee stability and responsibility in the Eurozone 9 (de Streel, 2013).
Moreover, with the Maastricht Treaty the promotion of employment and social
protection was addressed in a Social Policy Agreement and Social Policy Protocol
6
7
8
9
Single European Act, 1987 O.J. L 169/1. The SEA also gave formal recognition to the European Council,
created a Court of First Instance and attributed a stronger role to the European Parliament with the
introduction of a new decision-making procedure, the ‘co-operation procedure’. According to this
procedure the Council has to take into account on second reading amendments by Parliament that had
been adopted by an absolute majority and taken over by the Commission («The European Parliament:
Powers» Fact Sheets on the European Union 2015
http://www.europarl.europa.eu/ftu/pdf/en/FTU_1.3.2.pdf).
Charter of Fundamental Rights of the European Union, 2010 O.J. C 83/02 [hereinafter Charter of Rights].
Treaty on European Union (Maastricht text), July 29, 1992, 1992 O.J. C 191/1 [hereinafter Maastricht
Treaty].
Thresholds to fiscal deficits were set at 3% of GDP and to public debt at 60% of GDP. These thresholds
are, however, defined in secondary law, thus making them relatively easier to adjust compared to
Treaty-based standards. The Treaty also established a governance model based on: (i) the coordination
of the economic policy with soft law instruments in order to support economic convergence (Article 121
TFEU); (ii) the prohibition of financial solidarity among Member States (Article 125 TFEU, the no-bailout
clause) except in very exceptional circumstances beyond the control of the States (Article 122 TFEU), and
prohibition of monetary financing by the ECB and national central banks (Article 123 TFEU) to give
sufficient incentives to Member States to maintain sustainable fiscal policies, and to markets to
discriminate between countries according to their financial risks; (iii) limits to government deficit and
debt with sanctions decided by the Council in order to force sustainable fiscal policies (Article 126 TFEU)
18
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(the ‘Social Chapter’ 10) annexed to the Treaty and signed by 11 Member States 11.
The Social Chapter reaffirmed the principles stated in the 1989 Charter and gave
greater competences to the EU to act in wide areas of employment and industrial
relations (Art. 1 and 2). Moreover, it called for increasing involvement of the social
partners in social policy legislation and implementation. (Art. 3 and 4).
The Maastricht Treaty also increased the legislative power of the European Parliament
with the introduction of the ‘co-decision procedure’, giving the same weight to the
European Parliament and the Council of the European Union over a wide range of
areas. 12
Following the Maastricht Treaty, the macroeconomic and the employment and social
coordination mechanisms proceeded on separate ways with incremental adjustments,
until 2011, when the European Semester process was established to improve
coordination of the two separate processes. The surveillance of macroeconomic
(especially fiscal) policies was based on the Stability and Growth Pact through
market discipline, while in the social and employment field, a new approach
gradually emerged, adding to binding legislation a strategy of “soft” institutional
instruments (common guidelines, peer reviews, joint evaluation reports,
recommendations, etc.) with the aim of facilitating coordination. 13
Table 1.1 summarises the main developments and legal basis of the coordination
mechanisms put in place at EU level for macroeconomic and employment/social
policies since the Maastricht Treaty.
10
11
12
13
Protocol No 14 on Social Policy.
Except the UK.
Later amended and with the Treaty of Lisbon renamed as “ordinary legislative procedure” (Article 294
TFEU). It is the general rule for adopting legislation at European Union level. It gives the same rights
and obligations to the EP and the Council as two co-legislators.
http://www.europarl.europa.eu/aboutparliament/en/20150201PVL00004/Legislative-powers
Ferrera et al. (2002).
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Policy Department A: Economic and Scientific Policy
Table 1.1:
Legal basis and evolution of the coordination mechanisms for Macroeconomic Surveillance process and the
Employment and Social inclusion processes since the Maastricht Treaty
Macroeconomic coordination mechanisms
Legal basis
(Treaty)
Main
developments
•
Article 3 of the Treaty on European Union (TEU)
•
Articles 119, 121, 126 and 136 of the Treaty on the Functioning of the
European Union TFEU
•
Protocols annexed to the TFEU: Protocol No 12 on the excessive deficit
procedure, Protocol No 13 on the convergence criteria and Protocol No 14
on the Eurogroup
1992 Maastricht
procedures
Treaty:
fiscal
rules
and
surveillance
and
coordination
1997 Stability and Growth Pact: preventive phase (surveillance) and corrective
phase (correction)
2005 Review of the Stability and Growth: revision of fiscal rules introducing a
country-specific Medium Term Objective for the structural deficit and stricter
correction procedures;
2009 Lisbon Treaty: enhanced cooperation within the EMU and possibility for
the EC to address warnings directly to MSs;
2010 Financial Solidarity: framework agreement for the European Financial
Stabilisation Mechanism (EFSM) and temporary establishment of the European
financial Stability Facility (EFSF)
2011 Six Pack Regulations and European Semester: strengthened surveillance
and correction procedures (especially for Eurozone countries). Establishment of
a macroeconomic surveillance procedure (MIP) extending the surveillance
mechanism to other macroeconomic policy areas.
2012 Treaty on Stability, Coordination and Governance (TSCG, title III ‘Fiscal
Compact’) international treaty outside the legal framework of the EU signed by
25 EU Member States, except for UK and Czech Republic to reinforce fiscal
surveillance with an Excessive Deficit Procedure.
2012 Treaty establishing the European Stability Mechanisms (ESM) concluded
by the EURO area MSs for financial assistance
2013 Two Pack: enhanced EC and Council surveillance and negotiation
framework for conditionality, especially for Eurozone countries
20
•
•
•
•
Employment and social policies coordination
mechanisms
Article 3 of the Treaty on European Union (TEU),
Articles 9, 10, 19, 45-48, 145-150 and 151-161 of the
Treaty on the Functioning of the European Union (TFEU)
EU Charter of Fundamental Rights (Art. 27 – 38)
Anti-discrimination Directives
1992 Maastricht Treaty: coordination of employment and
social policies; Social Policy Agreement and Social Policy
Protocol annexed to the Treaty; introduction of the co-decision
procedure
1997 Amsterdam Treaty and Luxemburg (EES) process:
Employment Title added to the Treaty and adoption of the
Open Method of coordination for employment policies
2000 Lisbon Strategy: streamlining and formalisation of the
OMC to support sustainable growth with more and better jobs
and greater social cohesion. For the first time explicit
reference to the coordination of economic, employment and
social policies.
2005 Lisbon strategy: midterm review of the Lisbon Strategy
2007 Lisbon Treaty: horizontal social clause introduced into
the TFEU and Charter of Fundamental Rights incorporated into
primary law of the EU
2010 Europe 2020 Strategy: defining for the first time a social
inclusion
target
together
with
employment
and
education&training targets. Adoption by the Council of 10
integrated policy guidelines, composed by 4 Employment
guidelines
2011 European Semester established to coordinate and
synchronise
fiscal
and
macroeconomic
surveillance
mechanisms with the economic, employment and social
policies coordination mechanisms
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2013 The Four Presidents’ Report: a roadmap for the completion of the
Economic and Monetary Union, strengthening and implementing the EU
economic governance.
2015 The Five Presidents’ Report to consolidate the Economic and Monetary
Union by 2025
2011 Europlus Pact (adopted by 23 MSs)
2012 TSCG (title IV ‘Economic Policy Coordination And
Convergence’) and Compact for growth and Jobs (adopted by
all MSs) provide for national and EU measures to stimulate
growth and jobs.
2015 Review of the Six-Pack and Two-Pack rules: calling for improvements in
transparency and simplicity.
2015 Commission’s package of measures to revise the European semester and
start implementing the Five Presidents’ Report: introduction of national
Competitiveness Boards and an advisory European Fiscal Board; a more unified
representation of the euro area in international financial institutions, especially
the IMF; and steps to complete the Banking Union.
2015 Establishment of the European Fund for Strategic Investments
Source: de Streel, 2013; European Commission
http://ec.europa.eu/economy_finance/economic_governance/timeline/index_en.htm; European Parliament (2015), Social and Employment Policy: general principles,
Fact Sheets of the European Union
http://www.europarl.europa.eu/atyourservice/en/displayFtu.html?ftuId=FTU_5.10.1.html; European Parliament (2015), Macroeconomic Surveillance, Fact Sheets of the
European Union,
http://www.europarl.europa.eu/atyourservice/en/displayFtu.html?ftuId=FTU_4.2.2.html
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Policy Department A: Economic and Scientific Policy
While the Maastricht Treaty was a crucial step for EU competences on macroeconomic
policies, the Treaty of Amsterdam, which was signed in 1997 and entered into force
in 1999, 14 was particularly important for EU competences in the employment and
social policy area, as the fight against social exclusion first found explicit mention in
the Treaties and a new specific coordination mechanism was promoted.
In the employment field, an Employment Title was added to the Treaty 15
promoting a high level of employment among the EU objectives and enabling the EU
to adopt guidelines and make recommendations to Member States, within a
framework of a ‘coordinated-strategy’. 16 The Treaty included among the objectives of
the European Union (Art. 117) the promotion of employment and the enhancement of
working and living conditions and prescribed coordination at European level and social
dialogue (art.118a and 118b). The following European Employment Strategy
(EES), launched in 1997 at the Luxembourg Jobs Summit, 17 became the cornerstone
of the EU’s employment policy and launched a new approach to the EU coordination
mechanism: the Open Method of Coordination (OMC). 18 The EES (Articles 145150 TFEU) OMC aimed at developing “a new iterative process of benchmarking
national progress towards common European objectives, supported by organized
mutual learning“ (Zeitlin 2007). This new approach involves cooperation between EU
and Member States on the basis of common policy guidelines and targets set at the EU
level and their translation into national and regional policies. The method is completed
with the establishment of a periodic monitoring, evaluation and peer review process to
support mutual learning. As detailed in section 2.2, according to most commentators
the OMC may be considered more powerful than the adoption of binding rules to
harmonise national legislations, especially in the employment and social policy areas
and “extremely useful in bridging the gap between negative and positive integration”
(Ferrera et al., 2002; Scharpf, 2001).
For the first time in the history of European integration, the Treaty of Amsterdam also
explicitly mentions the fight against social exclusion (Art. 136, 137, 140) 19. This
‘new’ chapter on Social Policy (within Title XI) was created integrating existing Articles
in the EC Treaty with the provisions of the Agreement on Social Policy based on the
1989 Social Charter (Articles 151-161 TFEU) 20. According to article 137 the
Community “shall support and complement” the activities of the Member States for
the integration of persons excluded from the labour market. To this end, the Council
with the co-decision procedure (e.g. under qualified majority voting) “may adopt
measures designed to encourage cooperation between Member States through
initiatives aimed at improving knowledge, developing exchanges of information and
best practices, promoting innovative approaches and evaluating experiences in order
to combat social exclusion” (art.137). The process towards the adoption of an OMC
also in the field of social protection policies continued in 1999, with a Resolution of the
14
15
16
17
18
19
20
Treaty of Amsterdam amending the Treaty on European Union, the Treaties Establishing the European
Communities and Certain Related Acts, 1997 O.J. C 340/1 [hereinafter Treaty of Amsterdam].
Title VIII in the consolidated version of the Treaty (ex Title VIa)
European Parliament (2015), Social and Employment Policy: General Principles, Fact Sheets on the
European Union http://www.europarl.europa.eu/ftu/pdf/en/FTU_5.10.1.pdf
Luxembourg Jobs Summit in November 1997.
http://ec.europa.eu/social/main.jsp?catId=101
For a detailed overview of the Treaty see
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=URISERV:a14000.
A change in the UK government led to the ratification by the UK and made it possible to include the
Agreement in the Treaty.
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European Parliament 21, a Commission Recommendation for modernising social
protection 22 and the creation by the Council of a High-level Working Party on Social
Protection in January 2000, replaced a year later by the Social Protection Committee
(SPC).
The Lisbon Strategy, launched in March 2000 and a further step forward in the
recognition of the relevance of employment and social issues for EU growth and
competitiveness and in the extension of the OMC to other policy areas. 23 The Lisbon
Strategy recognised that for the EU to become a competitive and dynamic knowledgebased economy, capable of sustainable economic growth, more and better jobs and
greater social cohesion had to be reached by 2010.
The main instruments to reach this goal were indicated in the extension of the Open
Method of Coordination to a wide range of policy areas– also encompassing pensions,
health and care – known as the “social OMC”; and in an enhanced steering and
coordinating role of the European Council (Ferrera et al., 2002) 24, even though
proposals to extend the use of the co-decision procedures and to introduce
quantitative targets for social inclusion were rejected.
A further step forward was taken with the agreement signed in 2001 and included in
the Nice Treaty (Article 144), 25 giving formal status to the Social Protection
Committee (SPC). The role of the SPC has been particularly important since its
creation in supporting the autonomy of social protection from budget policies and the
attention to the overall balance between economic and social policies.
In the same year, at the Nice Summit the European Social Policy Agenda up to
2005 and the Charter of Fundamental Rights of the EU were adopted, 26 even if a
revised version of the Charter became legally binding only with the Lisbon
Treaty. 27 The EU Charter represents the core of the fundamental rights normative
framework. In particular, Title IV concerns the issue of ‘Solidarity’ with 12 articles
(Art. 27-38) focusing mainly on workers’ rights. 28 The fundamental rights approach is
particularly relevant since the ‘rights perspective’ positions Member States as ‘duty
bearers’ responsible for ensuring the fulfilment of the rights of ‘rights holders’.
At the beginning of 2005, the European Commission made a proposal to revamp the
Lisbon Strategy 29 to focus on delivering stronger, lasting growth, and more and
better jobs. This included a complete revision of the EES to maximise the synergies
21
22
23
24
25
26
27
28
29
Ferrera et al. 2002, p. 5.
Communication from the Commission “A Concerted Strategy For Modernising Social Protection”,
COM(1999) 347, 14.07.1999 http://eur-lex.europa.eu/legal-content/IT/TXT/?uri=URISERV:c10618
Commission’s Communication “Building an Inclusive Europe” , COM(2000)79 final, 1.03.2000
http://eur-lex.europa.eu/legal-content/FI/TXT/?uri=celex:52000DC0079
Communication from the Commission ‘European Governance : A White Paper », COM(2001) 428 final,
25.07.2001 http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=URISERV:l10109&from=EN
Treaty of Nice amending the Treaty on the European Union, the Treaties Establishing the European
Communities and Certain Related Acts, 2001 O.J. C 80/1 [hereinafter Treaty of Nice].
For a complete description of the takeoff – within the Nice Summit - of the social inclusion process, see
Ferrera et al. 2002.
Charter of Fundamental Rights of the European Union, 2010 O.J. C 83/02 [hereinafter Charter of Rights].
Title IX (Employment) and Title X (Solidarity) of TFEU which present strong links with the articles in the
EU Charter on the theme of Solidarity.
European Commission (2005). Working Together for Growth and Jobs: A New Start for the Lisbon
Strategy. Communication to the Spring European Council from President Barroso in agreement with
Vice-President Verheugen, COM(2005) 24, Brussels, 2 February http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=celex:52005DC0024
PE 569.985
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Policy Department A: Economic and Scientific Policy
between the national and the Community actions and to increase overall efficiency.
The relaunch of Lisbon strategy was supported by the adoption of a New Social
Agenda for 2006-2010. 30
The Treaty of Lisbon, signed on December 3 2007, introduced important changes in
the Union’s social and employment objectives (Art. 3 TFEU). In particular the Lisbon
Treaty mainstreamed the social dimension in EU policy making by introducing an
‘horizontal’ social clause stressing that «in defining and implementing its policies and
activities, the Union shall take into account requirements linked to the promotion of a
high level of employment, the guarantee of adequate social protection, the fight
against social exclusion, and a high level of education, training and protection of
human health » (Article 5a Lisbon Treaty). 31
As mentioned above, the Lisbon Treaty also incorporated the Charter of Fundamental
Rights into the primary law of the EU. The Charter recognises ‘solidarity rights’, such
as workers’ right to information and consultation, as well as the rights to collective
bargaining, fair and just working conditions, social security and social assistance.
The horizontal and vertical institutional balance of the macroeconomic surveillance
mechanism since the Maastricht and Lisbon Treaty changed markedly with the
emergence of the European Parliament as an important actor in EU
policymaking, as well as a new legal basis for the euro area (art. 136). The
involvement of the European Parliament in particular enhanced the attention paid to
the labour market and social aspects and supported a greater role for social and
employment policy actors in the EU surveillance mechanisms.
The world financial crisis of 2008 and the subsequent dramatic recession highlighted
the major macroeconomic imbalances and divergences in competitiveness across the
EU Member States, as well as divergences in social and employment conditions and
the challenges posed to social rights and entitlements.
This situation prompted the implementation of a new surveillance and enforcement
procedure for early identification of macroeconomic imbalances and corrective
measures, and called for a greater attention to the social and employment effects of
macroeconomic measures and a stronger coordination of macroeconomic and
employment and social policies.
The Europe 2020 Strategy, launched on March 2010 to ensure (better) follow-up of
the Lisbon Strategy, brings greater attention to bear on employment and social
policies, bringing in for the first time an ‘inclusive growth’ objective together with
renewed commitment to ambitious employment objectives on an equal standing with
the smart and sustainable objectives. Three of the five headline targets of the
Strategy for 2020 relate to employment and social investments and goals 32:
employment (75% of the 20-64 year-olds to be employed); education (reducing the
30
31
32
European Commission (2005), Communication from the Commission on the Social Agenda, COM(2005)
33 final, Brussels, 9.2.2005.
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52005DC0033&from=EN.
See as reference the Opinion of the European Economic and Social Committee on “Strengthening EU
cohesion and EU social policy coordination through the new horizontal social clause in Article 9 TFEU”
(own-initiative opinion) 2012/C 24/06
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52011IE1591.
The other two are: research and development (3% of the EU's GDP to be invested in R&D) and
climate/energy (greenhouse gas emissions 20% (or 30%, if the conditions are right) lower than 1990;
20% of energy from renewables; 20% increase in energy efficiency).
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rates of early school leaving below 10% at least 40% of 30-34–year-olds completing
third level education); and fighting poverty and social exclusion (at least 20 million
fewer people in or at risk of poverty and social exclusion).
In addition, the strategy supported the creation of a European Platform against
Poverty (EPAP) as one of the Strategy’s seven flagship initiatives 33, and the
promotion of social inclusion and the reduction of poverty were incorporated among
the ten integrated guidelines for growth and jobs, with the focus on the importance of
pensions, healthcare and public services for social cohesion. The Strategy also calls for
involvement of all the relevant stakeholders in the preparation, implementation and
communication of NRPs. The headline employment and social targets of the Europe
2020 strategy have served as goals for the benchmarking of the European
Employment Strategy, which is one of the coordination pillars of the European
Semester.
The European Semester was institutionalised in 2011 with the aim of improving the
coordination and monitoring of the economic, employment and social policies of EU
Member States in order to achieve the Europe 2020 targets. 34 The European
Commission was given a mandate to verify whether the Member States took action on
the various reform commitments they entered upon at EU level.
1.2
The European Semester coordination process and its recent evolution
Since Spring 2011, the European Semester has combined the two interrelated but
distinct governance and coordination mechanisms within a single annual policy
coordination cycle: the macroeconomic surveillance process at one end; and the
employment and social policy coordination processes bundled under the Europe
2020 Strategy and the Integrated Economic and Employment Policy Guidelines, at
the other. The aim is to increase the EU coordination role in policy areas in which EU
institutions lack legislative powers.
1.2.1
The European Semester meta-coordination role
As described in the previous section, the macroeconomic and social and employment
policy areas are grounded on very different regulatory frameworks which affect their
stringency and effectiveness in addressing the EU-Member States socio-economic
policies.
While the macro-economic surveillance mechanisms combine a soft
preventative arm with a hard corrective arm (including the option for placing
sanctions on non-complying Eurozone countries), the employment and social
domains are largely based on 'soft' coordination mechanisms, e.g. the Open
33
34
With the objective of boosting growth and jobs, 3 areas of intervention have been identified (smart
growth, sustainable growth and inclusive growth) and addressed by 7 flagship initiatives (digital agenda
for Europe ; innovation Union ; Youth on the move ; resource efficient Europe ; an industrial policy for
the globalisation era ; an agenda for new skills and jobs ; European platform against poverty). Both the
EU and national authorities have to coordinate within each of them. Most of these initiatives were
presented by the Commission in 2010
http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/flagship-initiatives/index_en.htm.
See Regulation (EU) No. 1174/2011 on enforcement measures to correct excessive macroeconomic
imbalances in the euro area; Regulation (EU) No. 1175/2011 amending the surveillance procedures of
budgetary positions; and Regulation (EU) No. 1176/2011 on the prevention and correction of
macroeconomic imbalances.
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Policy Department A: Economic and Scientific Policy
Method of Coordination, characterised by an exchange between the EU and the
Member States, which leaves Member States ample scope to develop their own policyroutes towards meeting the EU-level goals (Bekker, 2015 ; Zeitlin and Vanhercke,
2014; Zeitlin et al., 2005; Trubek and Trubek, 2005; Goetschy, 2001). However, since
these distinct coordination mechanisms interact with one another in the European
Semester, the economic surveillance mechanisms also have an effect on employment
and social policy coordination (Bekker, 2015), introducing additional complexities in
the governance architecture of the European Semester.
The macroeconomic coordination mechanism, is governed by the ECOFIN Council
and DG ECFIN and is largely grounded on hard Treaty-based regulations with strong
differentiation between the euro area member States and the others:
•
the Treaty of Maastricht which defines limits to fiscal deficits to 3% of GDP and
public debt to 60% of GDP 35;
•
the Stability and Growth Pact (SGP), designed to ensure that EU countries
pursue sound public finances and coordinate their fiscal policies, as amended in
2005, in 2011 with the Six-Pack and in 2013 with the Two-Pack. The Six Pack
Regulations include Reg. 1176/2011, which lays down the surveillance procedure
and covers all EU MSs; and Reg. 1174/011 on enforcement and the possibility of
sanctions and covering the Euro area Member States. As shown in Table 1.1, the
Two Pack also introduced a new cycle of monitoring for the euro area 36;
•
the Treaty on Stability, Coordination and Governance (TSCG), or Fiscal
Compact, an intergovernmental treaty established by the Euro zone Member
States and other 8 EU Member States as a stricter version of the Stability and
Growth Pact) 37.
In particular, since December 2011 EU macroeconomic governance has been
strengthened with the Macroeconomic Imbalance Procedure (MIP) designed to
lead Member States to better compliance with EU fiscal and economic targets and as a
tool to prevent and correct macroeconomic imbalances before they create dangerous
spillover effects in the EU. The MIP is part of the 'six-pack' of legislative acts 38 which
35
The 3% and the 60% thresholds are, however, defined in secondary law. This should make these
thresholds relatively easier to adjust than Treaty-based standards.
36
See European Commission (2013), The Two-Pack on economic governance: Establishing an EU framework
for dealing with threats to financial stability in euro area member states, European Economy: Occasional
Paper 147.
37
The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union was signed in
March 2012 by the leaders of all euro area members and eight other EU Member States and entered into
force on 1 January 2013. It aims to strengthen fiscal discipline in the euro area through a balanced
budget rule and an automatic correction mechanism. The Treaty applies in full to the countries that have
ratified it and have the euro as currency. There are different rules for the non-euro countries. The Treaty
deals with 3 main issues: Fiscal stability, i.e. rules on the levels of government deficit and government
debt (the fiscal rules in the Treaty are sometimes described as the “Fiscal Compact”); Economic coordination in the EU; How the euro area is governed. There are already detailed EU rules on these
issues, and in particular on fiscal stability. The Treaty reiterates some of these rules, reinforces some and
introduces some new rules. The Treaty requires that the rules on government deficits and debts be
incorporated into national law by the end of 2013 and that there be a national body with responsibility for
monitoring their implementation. http://europa.eu/rapid/press-release_DOC-12-2_en.htm
38
The Six Pack comprises a set of European legislative measures to reform the Stability and Growth Pact
and introduces greater macroeconomic surveillance, reinforcing the procedures to reduce public deficits
and address macroeconomic imbalances. The Six Pack came into force on 13 December 2011, after a
year’s negotiations, to reinforce the Stability and Growth Pact together with the Two Pack (which became
26
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strengthens the monitoring and surveillance of macroeconomic policies in the
EU and the euro area. It is based on Article 121.6 of the Treaty and relies on the
following main elements 39:
o An early-warning system based on a scoreboard of eleven indicators
covering the major sources of macroeconomic imbalances. The scoreboard is
published in the Alert Mechanism Report (AMR), which marks the starting point
of the annual cycle of the MIP. For each indicator, alert thresholds have been
defined to detect potential imbalances. The scoreboard and the thresholds are not
applied mechanically, as the scoreboard is complemented with an economic
reading. The composition of the scoreboard indicators may evolve over time. The
aim of the scoreboard is to identify countries that warrant in-depth reviews
(IDR) in order to determine whether the potential imbalances detected with the
early-warning system are indeed problematic. The Commission can organise
missions in Member States, with the ECB (European Central Bank) if appropriate.
The in-depth reviews are made public.
o Preventive and corrective action: The MIP allows the Commission and the
Council to adopt preventive recommendations under article 121.2 of the Treaty.
These recommendations are embedded in the package of Country-Specific
Recommendations (CSRs) which the Commission puts forward in May/June in
the context of the European Semester. The MIP corrective actions apply in more
severe cases, when an Excessive Imbalance Procedure (EIP) 40 may be
opened for a Member State found to show excessive imbalances. The Member
State concerned will have to submit a corrective action plan with a clear roadmap
and deadlines for implementing corrective action. Surveillance will be stepped up
by the Commission on the basis of regular progress reports submitted by the
Member State concerned. Another enforcement regime, the Excessive Deficit
Procedure (EDP), is applied to Member States which run excessive budget
deficits above 3% of GDP, or which fail to reduce their excessive debts (above
60% of GDP) at a sufficient pace. For euro area Member States under the EDP,
financial penalties kick in earlier and can be gradually stepped up. Fines apply
only as a last resort and are levied for repeated failure to take action, not on the
imbalances themselves 41. With the Six-Pack, decisions on most sanctions under
39
40
41
law in May 2013), and the Treaty on Stability, Coordination and Governance (became law in January
2013 in its 25 signatory countries).
See: http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm
Under the Excessive Imbalance Procedure, Member States with excessive imbalances have to submit
corrective action plans with a clear roadmap and deadlines. Euro area Member States can also be fined
0.1% of GDP for failing to address serious macroeconomic imbalances, such as extreme, persistent trade
deficits or surpluses, if these are determined to be harmful and a threat to other Member States. The
decision to fine a Member State is proposed by the Commission and can only be blocked if a large
majority of governments oppose the measure. In particular, the Excessive Deficit Procedure (EDP) is
the EU's procedure for correcting excessive deficit or debt levels in order to enforce compliance with
budgetary discipline and ensure Member States take corrective actions in a timely and durable manner.
Under the EDP, Member States commit to targets to bring their excessive deficits (more than 3% of GDP)
or debts (over 60% of GDP) back to safe levels. They also face the possibility of warnings and ultimately
sanctions, such as fines that can reach 0.2% of their GDP, if they persistently fail to take adequate action
to address their deficits or debts. Regional subsidies from the EU’s ‘cohesion fund’ may also be withheld.
Recommendations to national governments can be made by the EU whenever they are warranted by the
circumstances.
Failure to reduce the deficit can result in fines of up to 0.2% of GDP. These can rise to a maximum of
0.5% if statistical fraud is detected. Penalties can include suspension of the European Structural and
Investment Funds (even for non-Euro area countries, except the United Kingdom).
PE 569.985
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Policy Department A: Economic and Scientific Policy
the Excessive Deficit Procedure are taken by Reverse Qualified Majority Voting
(RQMV), which means that fines are deemed to be approved by the EU Council of
Ministers unless a qualified majority of Member States overturns them. 42
The employment policy coordination mechanism is based on the European
Employment Strategy (EES). The EES now constitutes part of the Europe 2020
growth strategy and it is implemented through the European Semester process, by
promoting close policy coordination among EU Member States and EU Institutions. It is
governed by DG EMPL with advisory support from the Employment Committee
(EMCO) 43. Its implementation involves the following four steps within the European
Semester (see fig. 1.1):
1. Common employment guidelines are part of the guidance and monitoring in the
context of the European Semester as they frame the scope and direction for
Member States’ policy coordination. The NRP are based on the guidelines and
they also serve as a reference for the Country Specific Recommendations. They
are proposed by the Commission, discussed by the European Parliament,
agreed by national governments and adopted by Council. The employment
guidelines were first adopted with the broad economic policy guidelines in an
integrated guideline package in 2005 and reformed in 2010 in the light of the
Europe 2020 Strategy. On 2 March 2015, the Commission submitted the
package of Integrated Guidelines, including a proposal for a Council Decision on
guidelines for the employment policies of the Member States to support the
objective of Europe 2020. 44
2. The Commission produces the Joint Employment Report (JER) 45 based on: (a)
assessment of the employment situation in Europe; (b) implementation of the
Employment Guidelines; and (c) assessment of the Scoreboard of key
employment and social indicators. The JER is published by the Commission and
adopted by Council. The JER is now part of the Annual growth Survey (AGS).
3. National Reform Programmes (NRPs) are submitted by national governments
and analysed by the Commission for compliance with Europe 2020.
4. A series of Country reports 46 are published by the Commission, based on the
NRPs’ assessment, analysing Member States' socio-economic policies and
issues related to Country-Specific Recommendations.
42
43
44
45
46
The 25 Member States that signed the Treaty on Stability, Coordination and Governance have agreed to
apply the RQMV mechanism earlier in the process as well, for example, when deciding whether to place a
Member State under the Excessive Deficit Procedure http://europa.eu/rapid/press-release_MEMO-142180_en.htm
EMCO is an advisory committee for Employment and Social Affairs Ministers in the Employment and
Social Affairs Council (EPSCO). Most of the EMCO's work now centres around advising Ministers on the
main products emerging from the European Semester.
http://ec.europa.eu/europe2020/pdf/europe2020_guidelines_part2_en.pdf
The draft Joint Employment Report (JER), mandated by Article 148 TFEU, is part of the Annual Growth
Survey (AGS) package to launch the European Semester every year. As key input to strengthen
economic guidance, the JER underpins the key employment messages contained in the AGS. The analysis
it contains is based upon employment and social developments in Europe; implementation of the
Employment Guidelines1; examination of the National Reform Programmes (NRP) that led to the Country
Specific Recommendations (CSRs) adopted by the Council on 8 July 2014 and on assessment of their
implementation so far.
Before 2015, Country Reports took the form of staff working documents (SWD) submitted by the
Commission in May or June with the draft Country-Specific Recommendations
28
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
A scoreboard of social and employment indicators has been adopted to monitor the
social and employment developments to be reported in the JER as included in the
AGS.
The JER scoreboard highlights key employment and social challenges in the context of
the 'European Semester' of economic policy coordination and feeding into debates on
the institutional level. Reading of the JER scoreboard is supplemented by the
additional information derived from the Employment Performance Monitor (EPM) and
the Social Protection Performance Monitor (SPPM) as well as assessment of policy
measures undertaken by the Member States 47.
The social coordination mechanism (or «Social Open Method of Coordination») was
modelled on the employment coordination mechanism. It was initially applied to
poverty issues and then extended to pensions, healthcare and long-term care issues.
The OMC on Social Protection and Social Inclusion is now based on cyclical reporting
and monitoring within the Employment and Social Policy, Health and Consumer
affairs Council (EPSCO) supported by the Social Protection Committee (SPC)
on the basis of a list of social indicators.
Crucial stimulus to coordinate economic and social policies came from the activation of
social policy actors through the EPSCO Council and the SPC to support the formulation
of an OMC process for pension policies in 2011 and health and long-term care in 2014
“in order to ensure that the social objectives of these policies were not eclipsed by the
financial and budgetary focus of EU economic policy coordination” (Zeitlin and
Vanhercke, 2014; pg.15).
While policy goals are defined by the Europe 2020 strategy, the normative framework
is that of Fundamental Rights, and particularly the theme of “Solidarity” as defined in
the EU Charter and the TFEU 48.
With regard to implementation of the Europe 2020 Strategy, common EU objectives
on social protection and social inclusion have been jointly agreed by Member States
and the Commission. Progress towards the Social OMC objectives is assessed in the
annual report of the SPC, allowing the EPSCO Council to transmit social policy
messages to the Spring European Council. 49
These commonly agreed objectives include overarching objectives of the OMC to
promote:
47
48
49
•
social cohesion, equality, social protection systems and social inclusion policies;
•
effective and mutual interaction between the Europe 2020 objectives, taking
full account of the relevant social provisions of the Lisbon Treaty;
•
good governance, transparency and involvement of stakeholders.
Alert Mechanism Report 2015, http://ec.europa.eu/europe2020/pdf/2015/amr2015_en.pdf
Title IV ‘Solidarity’ of the EU Charter of Fundamental Rights and Title IX ‘Employment’ of TFEU are mainly
related to the labour market - both from a workers’ rights and occupational objective point of views while Title X ‘Solidarity’ of the TFEU (art. 151) requires that the Union and the Member States “shall have
as their objectives the promotion of employment, improved living and working conditions, so as to make
possible their harmonisation while the improvement is being maintained, proper social protection,
dialogue between management and labour, the development of human resources with a view to lasting
high employment and the combating of exclusion”
See the SPC opinion on Reinvigorating the Social OMC in the Context of the Europe 2020 Strategy,
endorsed by the Council of the European Union on 23.05.2011
http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%2010405%202011%20INIT
PE 569.985
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Policy Department A: Economic and Scientific Policy
In addition, specific objectives apply to each policy area: social inclusion and poverty
eradication; adequate and sustainable pensions; accessible, high quality and
sustainable healthcare and long-term care. 50
1.2.2
The European Semester process
The European Semester is structured in various steps involving both European
Institutions and National governments and social partners. Over the years, the
process has been continuously improved to overcome timeframe problems and to
guarantee a better involvement of the European Parliament and Member States. In
particular, attention to social and employment issues has been increasing since 2014,
and in 2015 the European Semester has been streamlined, with a reduction in the
number of recommendations and the introduction of an early timing to create more
space for dialogue. Further improvements have been proposed in the perspective of
“revamping the European Semester”, as stressed in the Commission Communication
(2015) 51. Figure 1.1 provides an overview of the proposed 2016 European Semester.
The Semester begins in November each year with the publication of two key economic
reports by the European Commission: the Annual Growth Survey (AGS) and the
Alert Mechanism Report (AMR).
The AGS sets out general economic priorities for the EU, analyses the progress that
the EU has made towards its long-term, strategic priorities, and provides Member
States with policy guidance for the following year.
The AMR is an early-warning report to detect and address economic trends or
imbalances that could prove harmful to individual Member States or Europe’s
Economic and Monetary Union, and underpins the Macroeconomic Imbalances
Procedure. Based on a scoreboard of indicators, the AMR identifies the Member States
that require further analysis, in the form of in-depth reviews, in order to detect
potential imbalances and ascertain their nature.
50
51
Reinvigorating the Social OMC in the Context of the Europe 2020 Strategy
http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%2010405%202011%20INIT
European Commission (2015), On steps towards Completing Economic and Monetary Union, COM(2015)
600 final
http://ec.europa.eu/priorities/economic-monetary-union/docs/single-market-strategy/communicationemu-steps_en.pdf
30
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
Figure 1.1:
The European Semester in 2015-2016
NOVEMBER
DECEMBER
JANUARY
Fact-finding
missions to
Member
States
Recommendati
ons for the
euro area
European
Commission
Council’s
opinions on
draft
budgetary
plans (euro
and
European
Council
area)
European
Parliament
APRIL
Bilateral
meetings
with
Member
States
Reports
MAY
JULY
AUG
UST
SEPTEMBER
OCTOBER
CSRs
proposal
CSRs
discussion
by the
Council
Member States’
presentation of
NRPs and SCPs
Final CSRs
adoption
by the
Council
Final CSRs
endorsement by
European Council
Dialogue
on the
CSRs’
proposal
Debate/
Resolution
on the AGS
Member
States’
budgets
adoption
(euro area)
JUNE
Spring Economic Forecasts
Economic
priorities
(based on
AGS)
adopted
by
European
Council
Adoption of
recommendati
ons (euro
area) and
conclusions on
AGS and AMR
Dialogue
on the
AGS
Member
States
Source:
Country
Bilateral
meetings
with
Member
States
Opinion on
draft budgetary
plans (euro
area)
Council
MARCH
Winter Economic Forecasts
Autumn Economic Forecasts
AGS and related
documents
(AMR and JER)
FEBRUARY
Debate/
Resolution
on the EU
Semester
and the
CSRs
Dialogue
on the
AGS
Member States‘
draft budgetary
plans
presentation
(euro area)
Own elaboration based on European Commission Communication, On steps towards Completing Economic and Monetary Union, Brussels, 21.10.2015
COM(2015) 600 final http://ec.europa.eu/priorities/economic-monetary-union/docs/single-market-strategy/communication-emu-steps_en.pdf
PE 569.985
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Policy Department A: Economic and Scientific Policy
In November the Commission also issues an opinion on Member States’ draft
budgetary plans submitted in October for the following year 52. The Commission
assesses whether the draft budgetary plans comply with the requirements under the
Stability and Growth Pact. The Commission publishes its opinion on draft budget plans
(for all euro area countries) and its assessment of the Economic Partnership
Programmes (for euro area countries with excessive budget deficits). The budget plans
are also discussed by the euro area finance ministers.
The Commission’s opinion on the Member States’ draft budgetary plans is discussed in
the Council and in December they are discussed in bilateral meetings with the
Member States.
In February the Commission publishes single analytical economic assessments for
each Member State (the so called In-Depth Reviews) analysing their economic
situation, their reform agendas and possible imbalances faced by the Member State,
whenever deemed relevant on the basis of the Alert Mechanism Report. The in-depth
review confirms or refutes the existence of imbalances and whether they are excessive
or not. Member States are requested to take the findings of the in-depth review into
account in their reform plans for the following year. Any follow-up is integrated into
the advice the Commission gives to each Member State in the country-specific
recommendations at the end of May.
In March, the European Parliament adopts its resolution on the AGS based on
discussion occurring since November, also in the presence of the relevant
Commissioners. In March the Commission publishes its Winter Economic Forecast,
while the European Council in the Spring meeting ascertains the overall
macroeconomic situation and provides policy orientations covering fiscal,
macroeconomic and structural reforms.
In April, Member States present their plans for sound public finances (Stability or
Convergence Programme) and their National Reform Programme with measures in
areas such as employment, education, research, innovation, energy or social inclusion.
These documents should be in line with all previous EU recommendations. Eurostat
publishes verified debt and deficit data from the previous year, which is important to
verify whether Member States are meeting their fiscal targets.
In May, the Commission proposes Country-Specific Recommendations (CSRs)
providing tailor-made policy advice to Member States in areas deemed priority for the
following 12-18 months, according to the AGS and information from the plans received
in April. The CSRs (adopted on the basis of Articles 121 and 148 TFEU) relate to four
broad policy areas:
• public finances - namely, sound public finances, pension and health-care
systems, the fiscal framework and taxation. Some recommendations may refer
to the Stability and Growth Pact (Article 5(2) of Council Regulation (EC)
1466/97);
• the financial sector - namely, banking and access to finance, and the housing
market;
52
To ensure coordination of fiscal policies among EURO area Member States and because economic policy is
recognised by the EU Treaty as 'a matter of common concern', governments are required by European
economic governance rules to submit their draft budgetary plans for the following year to the
Commission by October 15.
32
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• structural reforms - namely, network industries, competition in the service
sector, public administration and smart regulation, research and development,
and innovation and resource efficiency; and
• employment and social policies - namely, labour-market participation,
active labour-market policies, wage-setting mechanisms, labour-market
segmentation, education, poverty and social exclusion.
In May, the Commission also publishes its Spring Economic Forecast.
In June these policy recommendations are discussed between Member States'
Ministers and in Parliament in an exchange of views with the relevant
Commissioners 53.
In June, within the adoption process, the Council discuss the Country-Specific
Recommendations and by end of June or in early July the European Council
endorses them.
Finally, in July the Council formally adopts the Country-Specific Recommendations.
Where recommendations are not acted on within the given time-frame, policy
warnings can be issued. There is also the option of enforcement through incentives
and sanctions in the case of excessive macroeconomic and budgetary
imbalances previously described 54.
To implement the required policies and to ensure wide ownership, close cooperation is
foreseen with the European Parliament, EU advisory bodies (Committee of the
Regions and European Economic and Social Committee), the European Social
Partners, and the Member States, by organising fact-finding missions and
bilateral meetings between the national authorities and the Commission and with
the involvement of national parliaments, social partners, regions and other
stakeholders in both discussion of the CSRs and preparation of the NRPs. Indeed,
according to the Six Pack regulations, the national Parliaments should be involved
in the preparation of the Stability/Convergence Programmes (SCPs) and the National
Reform Programmes (NRPs) in order to increase the transparency, ownership and
accountability of the European Semester. Each Member State should outline in its
annual SCP the national procedure the programme went through and the form of
involvement of the parliament. The relevant regulation does not lay down the same
reporting requirement in terms of NRPs.
1.2.3
The role of the main institutional stakeholders
As described in the previous section, a large number of European and national
stakeholders are involved in the European semester process. The European Semester
coordination process is mainly governed by the European Council and the
Commission. The European Council sets coordinated political priorities and issues
guidelines at the highest level and adopts recommendations and decisions, on
proposals by the Commission. The European Commission is in charge of drafting
recommendations and decisions and assessing their implementation. While the
predominance of the economic Committees of the European Council and of DG ECFIN
in the European Semester Process is still an issue, in the most recent exercises the
53
54
See resolution to be adopted in autumn on the implementation of the relevant year's priorities.
See footnote 39.
PE 569.985
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Policy Department A: Economic and Scientific Policy
growing attention to employment and social imbalances has promoted a greater
involvement of DG EMPL and of the Council’s social and employment Committees. In
particular, since 2014 DG EMPL has had a greater role in the preparation of the AGS
and the country reports, as well as in developing social and employment indicators.
The European Parliament has a mainly indirect role in the Semester as a watchdog,
providing annual monitoring of the EC mandate within the framework of the Economic
Dialogue (see Box 1.1), as well as organising hearings on different issues related to
the European Semester 55. Meetings with national parliaments on the implementation
of the European Semester are also organised on a regular basis. As described in Box
1.1, steps have recently been taken to strengthen the role of the European Parliament
in the Semester.
Box 1.1:
The Role of the European Parliament within the European
Semester
Since the Maastricht Treaty, the role of the European Parliament has moved from being pure
consultative to co-decisional (Article 121(6) TFEU) 56. With the entry into force of the Lisbon
Treaty, the EP became a co-legislator as regards the setting of rules for multilateral surveillance
(Article 121(6) TFEU).
Under the European Semester, Parliament expresses its opinion on the draft AGS in specific
resolutions, also taking into account the contributions gathered in a Parliamentary Week
meeting on the European Semester with national parliaments, held at the beginning of the year.
In late autumn, Parliament expresses its opinion on the ongoing European Semester cycle
(including the CSRs as adopted by the Council), also taking into account the outcomes of a joint
meeting with the chairs of the national parliaments’ competent committees.
The EP is asking for a more active role and closer integration in the economic policy
coordination, with the objective of making the European Semester more democratically
accountable. In a press release of January 2014 57, the EP stressed that “tighter economic
governance needs to be supported by tighter democratic control”. The need to ensure effective
democratic legitimacy, ownership and accountability of the European Semester has been
recognised as a priority also by the Commission 58 and first steps have taken place in the last
European Semester rounds. With the new rules on economic governance, the European
Parliament can establish an Economic Dialogue with the Council and the Commission. This
means that MEPs can scrutinise and request answers from the two institutions on their
proposals and decisions at any time during the process. This makes the process more
transparent and the Council and Commission more accountable.
Another important stakeholder at the EU level for matters concerning the European
Monetary Union (EMU) is the Eurogroup (comprising the finance ministers of the
Member States that have introduced the euro). The European central Bank (ECB)
participates in the Eurogroup’s deliberations in matters pertaining to monetary or
exchange rate policy. The Economic and Financial Committee (EFC) delivers
opinions and prepares the work of the Council, as do the Economic Policy
Committee (EPC) and the Eurogroup Working Group, which also contribute to the
Commission’s work.
55
56
57
58
See:
http://www.europarl.europa.eu/RegData/etudes/divers/join/2014/528738/IPOL-ECON_DV(2014)
528738_EN.pdf
The co-decision procedure introduced by the Maastricht Tretay establishes the principle of parity,
meaning that neither the European Parliament nor the Council may adopt legislation without the other's
assent.
http://www.europarl.europa.eu/news/en/news-room/content/20121019BKG54051/html/EuropeanSemester-why-it-matters
See COM(2015) 600 final http://ec.europa.eu/priorities/economic-monetary-union/docs/single-marketstrategy/communication-emu-steps_en.pdf
34
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The Committee of Regions (CoR) and the EU social partners and civil society
organisations have a consultative role, while Eurostat is charged with the
development of data and indicators.
At the country level, the Member States are in charge of national reporting (on
budget plans, NRPs and SCPs), information exchanges and implementation of the
recommendations and decisions adopted by the Council. In line with the legal and
political arrangements of each Member State, national parliaments should also be
involved in the European Semester and in the preparation of SCPs programmes and
NRPs, in order to increase transparency, as well as and ownership of and
accountability on the decisions taken 59.
National civil society organisations have a consultative role. As shown by the case
studies, the involvement of the social partners and civil society organisations in the
process is highly differentiated across Member States, reflecting the national
institutional setting and the government approach.
1.2.4
Evolution of the European Semester since 2013
The European Semester surveillance process described above is the result of many
changes that have occurred since its introduction. In particular, a partial but
progressive ”socialisation” of the European Semester 60 has emerged since its
launch, and especially since 2013.
This process involved an «increasing emphasis on social objectives and targets in the
EU’s priorities and Country-Specific Recommendations, an intensification of social
monitoring and an enhanced role for social and employment actors, especially the EU
Employment and Social Protection Committees» (Zeitlin and Vanhercke 2014).
Two documents published in November 2012 started the revision process: the
European Commission Communication ‘Blueprint for a genuine Economic and
Monetary Union’ 61, outlining the necessary steps towards a full banking, economic,
fiscal and political union and recognising among the ingredients for an improved
monetary union architecture; and the European Parliament Resolution "Towards
a genuine Economic and Monetary Union" 62, outlining the Parliament’s
preferences for a more thoroughly integrated EMU.
59
60
61
62
For an overview of involvement of national parliaments in the preparations of the National Reform
Programmes and Stability or Convergence Programmes, see the European Parliament in-depth analysis
“Involvement of the National Parliaments in SCPs and NRPs – 2014 and 2015”, 2.09.2015
http://www.europarl.europa.eu/RegData/etudes/note/join/2014/497743/IPOLECON_NT(2014)497743_EN.pdf
For example, Costamagna, in a 2013 paper, shows that, while in its early cycles the European Semester
tended to prioritise economic objectives, such as budgetary discipline, over competing social ones, there
are signs of a progressive reorientation of the strategy adopted at the supranational level. Indeed, the
recommendations adopted since the 2013 cycle of the European Semester pay greater attention to social
objectives, while the Commission has recently launched some initiatives that should contribute to finding
a better balance between the ‘economic’ and the ‘social’ within the EMU. F. Costamagna (2013), The
European Semester in action: strengthening economic policy coordination while weakening the social
dimension?, lpf-wel working paper no. 5. See also J. Zeitlin and B. Vanhercke, Socializing the European
Semester? Economic Governance and Social Policy Coordination in Europe 2020, Report No. 7 December
2014, published by the Swedish Institute for European Policy Studies (SIEPS).
http://ec.europa.eu/archives/commission_20102014/president/news/archives/2012/11/pdf/blueprint_en.pdf
European Parliament resolution of 20 November 2012 with recommendations to the Commission on the
report of the Presidents of the European Council, the European Commission, the European Central Bank
PE 569.985
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Policy Department A: Economic and Scientific Policy
In December 2012, the Commission Blueprint was followed by the Four Presidents
Report 63. Both the Commission Blueprint and the Four Presidents’ Report recognised
that an EMU-wide shock absorption function is an essential component of a sustainable
monetary union. In particular, the Commission Blueprint proposed an EMU level shock
stabilisation scheme, supportive of structural reforms but subject to strict political
conditionality in order to avoid moral hazard and long-term transfers. Payments from
the scheme could be earmarked for a defined purpose, such as unemployment
benefits, if considered appropriate.
Following this Communication, in June 2013 the European Council recalled the need to
strengthen the social dimension with better monitoring and taking account of the
social and labour market situation in the EMU. The European Commission in its
Communication on the strengthening of the social dimension of EMU (COM(2013) 690)
called for a greater coordination and surveillance of employment and social policies
within EMU governance, identifying five key scoreboard indicators to detect major
employment and social challenges in the EU, to be analysed in the draft Joint
Employment Report 64.
The need to ‘develop concrete mechanisms for stronger economic policy coordination,
convergence and solidarity’ and ‘to prepare next steps on better economic governance
in the euro area’ was also pointed out by the Euro Summit of October 2014 65, and on
5 June 2014, the Council emphasised its own responsibility for the effective and
systematic application of the Charter to promote a consistent human rights policy in
the Union framework. 66
In 2015 the Five-president report 67 underlined the need to boost convergence, jobs
and growth, also through a stronger Macroeconomic Imbalance Procedure and a
sharper focus on employment and social performance. In this respect, the report
suggests that the MIP should be used not only to detect and prevent macroeconomic
imbalances, but also to “encourage structural reforms through the European
Semester” and to ‘monitor reform implementation’. In addition the report calls for: a
stronger focus on MS and EU employment and social performance; a simplification and
strengthening of the European Semester through a stronger focus on top priority
areas of actions at the EU and Member State levels (on the basis of a long-term view);
and more time for discussion and greater accountability and engagement of European
63
64
65
66
67
and the Eurogroup ‘Towards a genuine Economic and Monetary Union’ (2012/2151(INI))
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-20120430+0+DOC+XML+V0//EN
Van Rompuy, H., Barroso, J., Juncker, J. and Draghi, M. (2012), Toward a Genuine Economic and
Monetary Union, December 5.
http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ec/134069.pdf
The five key indicators have since 2014 been included in the scoreboard of indicators adopted in the
framework of the employment and social coordination mechanisms (Joint Assessment Framework).
http://www.consilium.europa.eu/en/press/press-releases/2014/10/pdf/euro-summit-statement-24october-2014/
Council of the European Union (2014), Conclusions on the Commission 2013 report on the application of
the EU Charter of Fundamental Rights and the consistency between internal and external aspects of
human rights’ protection and promotion in the European Union, Justice and Home Affairs Council
meeting, Luxembourg, 5-6 June, 2014
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/jha/143099.pdf
Junker, J., Tusk, D., Dijsselbloem, J., Draghi M. and Schulz, M. (2015), Completing Europe’s Economic
and
Monetary
Union
http://ec.europa.eu/priorities/economic-monetary-union/docs/5-presidentsreport_en.pdf
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and national institutions and social partners to increase ownership at the national level
and with the social partners and stakeholders.
In order to comply with these indications, the Commission has made a number of
changes to the running of the 2015 so-called streamlined European Semester process
providing for:
68
•
Greater focus on the key priority issues in the Annual Growth Survey.
•
Advancing by three months publication of the Commission's countryspecific and euro area analysis (Country Reports) from May/June to
February in order to enable discussion of the key issues in advance of the
conclusions to be drawn from the analysis and allowing the Member States to
use their National Reform Programmes as means to respond to the Commission
analysis. For those Member States where the macroeconomic imbalance
procedure required in-depth review, this is integrated into a single Country
Report.
•
More intensive outreach at the political level and deeper discussion
between the Commission, national authorities and social partners on
implementation of past recommendations and potential areas for future
recommendations. Increasing political ownership and accountability should
support better implementation of the CSRs and advance the reforms. To this
end, the Commission is also working on the mid-term review of Europe 2020
Strategy, and intends to present it by the end of 2015.
•
Greater attention to employment and social aspects. To this end the EC
President Juncker committed himself with the EP to introduce a Social Impact
Assessment (SIA) of the redistributive effects of the support measures
adopted for programme countries 68. The first application of this tool was
made in August 2015 for Greece and carried out by DG EMPL (see Box 1.2 for a
summary of the main aspects considered in the Greece SIA exercise).
•
Greater role of DG EMPL in the European Semester and of EMCO and the
SPC in adoption and review of the implementation of the CSRs.
J.C. Juncker (2014), A new start for Europe: My agenda for Jobs, Growth, Fairness and Democratic Change,
Strasbourg, Candidate EC President speech at the EP Plenary session, 15 July
http://europa.eu/rapid/press-release_SPEECH-14-546_en.htm
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Policy Department A: Economic and Scientific Policy
Box 1.2:
The Social Impact Assessment of the New Stability Support
Programme for Greece 69
The employment and social effects of policy measures have usually been taken into account in
the Impact Assessment (IA) of Commission initiatives. According to the Commission Guidelines
IAs must compare the policy options according to their economic, social and environmental
impacts 70. In general, almost all the Final IA reports considered from 2013 to 2015 include an
assessment of the social impacts 71. However, given the broad meaning of “social impact”, the
way these assessments are addressed may vary from one IA exercise to another, according to
the field of application 72. Social impacts are usually considered in the IA reports concerning
policies closely related to employment, social affairs and inclusion, including Health and
Consumer Policy, Education, Justice, Fundamental Rights and Citizenship, Humanitarian Aid and
Civil Protection. In these exercises the following aspects are considered: employment impacts
(in particular job creation and income); access to services; respect for fundamental rights; and
public health and safety. In the other cases, social impacts are usually not fully addressed and
the focus is often on economic impacts. When social impacts are included, they concern
essentially the impact on job creation and vulnerable groups of consumers 73.
The case of Greece was the first SIA applied within the MIP to a Programme country to assess
the redistributive effects of the Stability Support Programme.
On 19 August, the European Commission signed a Memorandum of Understanding (MoU) 74 with
Greece following approval by the ESM Board of Governors for further stability support
accompanied by a third economic adjustment programme. The MoU was included as part of the
documentation supporting the ESM programme, detailing the economic reform measures and
commitments associated with the financial assistance package. Within this framework, the
Commission prepared a "Social Impact Assessment" of the MoU, to show how the programme
has taken social factors into account and to guide its implementation. The document aimed
mainly at:
- sharing the social considerations made with a wider readership;
- describing how social considerations have guided the decisions made on the stability support
programme;
- anticipating the distributive impact of the programme.
The assessment explores the employment and social aspects of the main reforms, looking at the
context of the reform process, the rationale underpinning the main measures and the expected
impact. It also provides data for core social and labour market indicators, as well as a record of
the EU funding available to Greece. According to the analysis, the main issues to be considered
are: the fairness of the Stability Support Programme and the reform measures with a potential
positive direct impact on the social situation (efficiency and equity of the tax system, job
69
70
71
72
73
74
European Commission (2015) , Assessment of the Social Impact of the new Stability Support Programme for
Greece, SWD(2015) 162 final, Brussels
19.8.2015http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/pdf/assessment_soci
al_impact_en.pdf
The final reports must include: a description of the environmental, social and economic impacts and
indication if they are not considered significant; a description of who will be affected and how; impacts on
SMEs; impacts on competitiveness; and a description of the consultation strategy
http://ec.europa.eu/smart-regulation/guidelines/ug_chap3_en.htm
http://ec.europa.eu/smart-regulation/impact/ia_carried_out/cia_2015_en.htm
In 2010 the Commission published a study on social impact assessment, comparing and analysing the
different ways in which SIA was carried out in the EU Member States.
http://ec.europa.eu/social/main.jsp?catId=89&furtherNews=yes&langId=en&newsId=935
Examples of impact assessments relating to employment, social affairs and inclusion are available in
http://ec.europa.eu/social/main.jsp?catId=760
See: http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/pdf/01_mou_20150811
_en.pdf
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creation, supporting purchasing power and living standards, effectiveness of social protection
and health systems, etc.) that could help to mitigate social hardships.
The fairness of the programme is addressed by inquiring the distributive effects of fiscal
adjustments and changes in social protection systems, with the focus on the impact on the most
vulnerable people.
According to the analysis provided in the document, full implementation of the recent structural
reforms and measures envisaged under the new ESM stability support programme will help
Greece to recover sustainable and inclusive growth by strengthening potential GDP growth,
reducing the prices of goods and services for consumers and businesses, fostering
competitiveness, and creating employment opportunities. In this perspective, measures
addressing fiscal sustainability - in terms of more efficient functioning of both the tax and
pension systems – are particularly relevant.
At the same time, enhancing the effectiveness and coverage of social protection is an important
part of the programme. Crucial aspects to be addressed are conducting a comprehensive social
welfare review, the creation of a guaranteed minimum income scheme and the implementation
of a universal and cost-effective health system.
Following these indications, in 2015 the number of CSRs has been reduced
significantly in order to focus on the key priority issues of macro-economic and social
relevance that require action by Member States. The Commission has also clarified the
margin of interpretation of how to use the flexibility that exists in the Stability
and Growth Pact on three specific policy dimensions related to: (i) investments, in
particular in relation to the establishment of a new European Fund for Strategic
Investments as part of the Investment Plan for Europe; (ii) structural reforms; and
(iii) cyclical conditions. These guidelines are applied in the 2015 assessment of
Member States’ compliance with the Stability and Growth Pact for the first time.
The Commission, with a Communication released in October 2015, 75 launched the first
stage (“Deepening by doing”) set out by the five-president report for the process of
completing the EMU. This stage is based on a policy package to improve economic
governance tools and to include greater emphasis on social aspects. Among other
things, the policy package includes measures for a ‘Revamped European Semester’
to improve implementation quality of CSRs. Starting with the 2016 European
Semester a greater use of benchmarking and cross-examining performances in
the EU area should support convergence towards best practices and benchmarks in
the employment and social policy field. The Commission has also proposed adding
three labour market indicators to the existing headline indicators of the MIP procedure
(activity rate, youth unemployment and long-term unemployment). 76 The details of
this proposal and the debate it led to are described in section 4.1.
In the same communication, the Commission has proposed a new timeline for the
European Semester 2016 (described in Figure 1.1), anticipating the discussion and
the recommendations for the euro area as a whole (November) with respect to
country-specific recommendations (Country Reports in February and CSRs proposals in
75
76
European Commission (2015), On Steps towards completing EMU, COM(2015) 600 final
http://ec.europa.eu/priorities/economic-monetary-union/docs/single-market-strategy/communicationemu-steps_en.pdf
European Commission, Adding Employment Indicators to the Scoreboard of the Macroeconomic
Imbalance Procedure to better capture employment and social developments, Brussels, September 2015.
http://www.emeeting.europarl.europa.eu/committees/agenda/201510/EMPL/EMPL%282015%291012_1P
/sitt-1233686
PE 569.985
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Policy Department A: Economic and Scientific Policy
May), in order to ‘revamp’ the coordination process embedded in the European
Semester and address common challenges coherently.
In addition, the Commission envisages greater attention to the consequences of
economic adjustments on employment and social performance, in line with
steps already taken with the 2015 Country Reports. In addition to a stronger emphasis
on social aspects in the Macroeconomic Imbalances Procedure, this also includes
greater involvement of the social partners in the Semester process at both the
national (in the elaboration of the NRPs) and European (for instance through a
renewed Tripartite Social Summit and Macroeconomic Dialogue) levels, and more
attention to social fairness as part of new macroeconomic adjustment programmes
(with the use of SIAs for Member States subject to a bail-out programme, as in the
Greece case)
The Commission will also continue its work on deepening Economic and Monetary
Union and, in order to prepare the transition to the second stage 2 five-president
report ("Completing EMU”); it will present a White Paper in spring 2017 outlining the
next steps needed, drawn up with the Presidents of the other EU institutions.
Finally, in mid-2016 the Commission will establish an Expert Group to explore the
legal, economic and political preconditions of long-term proposals. 77
It would be important to keep monitoring how such ambitions are met in practice and
the European Parliament could have an important role in this respect.
77
European Commission - Press release Brussels, 21 October 2015 http://europa.eu/rapid/pressrelease_IP-15-5874_en.htm
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2. THE DEBATE OVER THE SOCIAL DIMENSION OF THE
EUROPEAN SEMESTER
KEY FINDINGS
•
•
•
•
•
The debate over the current development of the European Semester both among
key stakeholders and academics underlines key areas for improvement, involving
the transparency and complexity of the rules-based framework, the balance
between the economic and the employment and social governance mechanisms,
and the impact of the current governance framework on economic growth and
social imbalances.
The stakeholders’ proposals to promote a stronger focus on employment and
social issues in the European Semester include: the need for a more coordinated
and streamlined process with greater attention to those policy fields which have
long-term effects (education and employment/social policies); a strengthened role
of the European Parliament; a greater involvement of civil society organisations;
and a greater consideration of the EU Charter of Fundamental Right in the
Semester.
The interviews have also underlined that while the European Semester and the
Macroeconomic Surveillance process are increasing in importance and visibility in
the EU policy agenda, the EU2020 Strategy, more focused on a balanced medium
term growth addressing both economic and social dimensions, appears to be
losing ground.
As also emerges in new developments in economic theory and empirical research,
greater attention to labour market and social issues in the surveillance process
would lead to more comprehensive assessment of country conditions, with
attention to the potential employment and social impacts of fiscal consolidation
measures and the positive long-term growth effects of investments in human
capital and social development.
Coordination mechanisms may affect the balancing of economic and social issues.
According to the literature and empirical evidence, soft coordination may produce
better results than hard legislation, especially in the case of labour market and
social policies, because it allows for fuller consideration of the complex sets of
factors and institutions affecting country-specific social and labour market
conditions. Moreover, softer governance mechanisms allow for a greater degree of
flexibility in adjusting to changing national conditions and greater participation of
other stakeholders in the policy decision-making and implementation process.
This section focusses on the recent debate over the social dimension of the European
Semester. In Section 2.1 the perceptions and the proposals of the main stakeholders
involved in the Semester are presented through a review of the most recent EU
documents, the result of the online survey and the face-to-face and telephone
interviews with European and national stakeholders. Section 2.2 summarises the
evidence resulting from the literature on the need to address employment and social
imbalances to improve growth prospects and on the effects of coordination
mechanisms on the balancing of economic and social issues.
PE 569.985
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Policy Department A: Economic and Scientific Policy
2.1
The perceptions and proposals of the main European Semester
stakeholders
The changes proposed for 2016 by the Commission are meant to improve the balance
between macroeconomic and social issues and the role and involvement of the social
stakeholders in the process and they have been largely welcomed by the semester
stakeholders, even though from different perspectives.
Member States support the proposal of a stronger focus on a limited number of
priorities and challenges and appreciate the early presentation of an integrated
country analysis and the opportunity to engage in fuller dialogue on the Commission's
findings.
The Council held a policy debate 78 on the 2015 European Semester, as part of
EPSCO's contribution to the European Council on the employment/social policy aspects
of the CSRs. The Ministers acknowledged that, despite an improving economic
situation, serious challenges remain, in particular in the areas of employment and
social policy.
The social dimension of EMU needs enhancing; employment and social considerations
must be treated as priorities to guarantee the stability of the Eurozone. CSRs
concerning employment and social issues must however be maintained within the
EPSCO remit and should not systematically become a part of the MIP process.
Ministers also gave a positive evaluation of the streamlining of the Semester, in
particular the extended timelines, which allowed for a broader analysis and more
extensive consultations with all stakeholders, as well as increased relevance and focus
of the CSRs. 79
The European Parliament, among the promoters of a stronger focus on employment
and social issues, shared the new Commission's focus on investment, structural
reforms, fiscal responsibility, and improving employment policy. Moreover, it
recognised the importance of a better economic governance, as shown in the three
own-initiative reports on the European Semester adopted in 2015 80. In particular, the
EP ECON report of October 20 2015 (Rosati) 81 on implementation of the 2015
priorities recognises the importance of a better economic governance, welcoming the
Five Presidents' Report's roadmap towards 'A More Integrated European Semester'.
However, despite the Commission’s efforts in streamlining the European Semester, the
report notes a ‘generally poor implementation’ of the CSRs, with different degrees of
78
79
80
81
18 June 2015 http://data.consilium.europa.eu/doc/document/ST-9304-2015-INIT/en/pdf
Council of the European Union (2015), Outcome of the Council Meeting (3398th): Employment, Social
Policy, Health and Consumer Affair, 10088/15.
http://www.consilium.europa.eu/en/meetings/epsco/2015/06/st10088_en15_pdf/
These include an ECON report on the Annual Growth Survey 2015 (Rosati), an EMPL report on the
employment and social aspects in the annual growth survey 2015 (Gutiérrez Prieto) and an IMCO report
on Single Market Governance within the Semester. European Parliament resolution of 11 March 2015 on
the European Semester for economic policy coordination: Annual Growth Survey 2015
(P8_TA(2015)0067); European Parliament resolution of 11 March 2015 on European Semester for
economic policy coordination: Employment and Social Aspects in the Annual Growth Survey 2015 (
P8_TA(2015)0068); and European Parliament resolution of 11 March 2015 on Single Market governance
within the European Semester 2015 (P8_TA(2015)0069).
Committee on Economic and Monetary Affairs, Report on European Semester for economic policy
coordination: implementation of 2015 priorities, A8-0307/2015, 20.10.2015.
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A8-20150307+0+DOC+PDF+V0//EN
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
commitment across Member States. With the objective of improving the
implementation of CSRs, the EP advocates the introduction of a mechanism
encouraging Member States to address the recommendations, also on an ex-post
basis, as it already had in a resolution of 24 June 2015 82. It also asks the Commission
to publish a comprehensive assessment of the state of implementation of CSRs in
every Member State. The report also stresses how CSRs suffer from a lack of
ownership at the national level and calls for an increased role for national
parliaments and local and regional authorities, as well as representatives of civil
society, in the preparation NRPs. According to the MEPs, “an increased ownership,
higher transparency and democratic accountability are crucial factors for the approval
and successful implementation of the CSRs and of the Europe 2020 strategy”. Finally,
in accordance with proposal of the Commission, the report underlines the role of
social and employment indicators in the European Semesters and asks that the
related analysis on the implementation SGP and the MIP be made public. In this
perspective, the need for an independent and transparent analysis of the relevant data
becomes fundamental and the report urges further development of the Commission’s
Chief Economic Analyst Unit.
The social partners and civil society associations discussed the Member States'
economic situation contained in the country reports in a Tripartite Social Summit 83
held on 9 March 2015, focusing on jobs, growth and investment for Europe and the
preparation of the further steps in the European Semester and national programmes.
First reactions has been published in relation to the new AGS 2016.
The employers associations 84 welcome the social partners’ consultation before the
publication of the AGS, but call for improved coordination of the consultations,
especially at the national level, following a similar pattern in all Member States. They
also encourage the Commission to maintain the focus on growth friendly fiscal
consolidation, structural reforms and investments. They ask for wage setting to be
maintained under the competence and autonomy of national social partners and for
competitiveness not to be considered only in terms of wages. They stress the fact that
jobs are not the only route out of poverty, even though the best one, and that poverty
cannot be defined only in terms of income.
The representatives of trade unions and civil society associations (anti-poverty
associations) are more critical of recent developments. While some improvements
are acknowledged, CSRs are still dominated by macroeconomic policy
recommendations, labour market and social aspects still being treated in an
“ambiguous” way. The involvement of employment and social organisations in the
semester is considered still very limited: more than half of the 40 social and
employment stakeholders answering the online survey 85 state that they have not been
82
83
84
85
European Parliament, “The review of the economic governance framework: stocktaking and challenges”,
resolution of 24 June 2015, text adopted P8_TA(2015)0238.
The Tripartite Social Summit is a forum for dialogue between the EU institutions and the European social
partners that should take place twice a year, ahead of the spring and autumn European Councils. The
summit is co-chaired by the President of the European Council, the President of the European
Commission and the Head of State or Government of the rotating presidency. Employers are represented
by Business Europe and trade unions by the European Trade Union Confederation (ETUC).
UEAPME, Business Europe, CEEP (2015), Annual Growth Survey 2016. European Social Partners
Consultation- Employers View, 7 October, 2015,
https://www.businesseurope.eu/sites/buseur/files/media/position_papers/2015-10-07_businesseuropeceep-ueapme_-_annual_growth_survey_2015.pdf
57.1% of the social stakeholders and 52.6% of the employment stakeholders.
PE 569.985
43
Policy Department A: Economic and Scientific Policy
adequately involved in the process. As underlined by ETUC “A proper assessment of
the outcomes of the structural reforms pursued so far shows that they have
significantly contributed to undermining the European social model, and with it,
citizens’ faith in the European project”. 86
Among the positive developments underlined by the EAPN representative are:
−
greater involvement of civil society associations in some MSs in the
preparation of the NRPs. In some countries civil society organisations and
trade unions have enhanced their involvement in the preparation of the NRPs.
This has been, for example, the case of Poland and Belgium (which developed
an anti-poverty strategy), Spain (greater involvement of NGOs) France, Malta,
Belgium, Ireland (greater stakeholder involvement) and Portugal.
−
greater attention to social and employment issues in the Commission
(ECFIN), their improved communication strategy and greater involvement
of civil society representatives and third sector organisations in bilateral
meetings at both the EU and national level, like the ECFIN meeting on
economic and fiscal policies.
−
institution of national Semester offices with the mandate to involve the
main policy stakeholders in the CSRs process. For example, EAPN coordinates
the European Semester Alliance of social and green NGOs and the trade unions,
which was previously receiving funds from the Commission 87.
Also ETUC declares itself encouraged by the increased attention being given to the
social dimension of economic governance by the Commission majority of Member
States. In particular, it welcomes the Luxembourg Presidency’s decision to focus on
this issue at the Informal EPSCO in July 2015. However it calls for concrete steps be
taken to ensure that social issues are integrated into the EU’s governance
framework 88.
While these developments are considered important, the representatives of civil
society interviewed at European and national level underline the lack of
transparency in the European Semester process, with the CSRs defined at the
beginning of the European Semester rather than formulated after consultations.
In addition, according to the EAPN, the new Commission 2015 CSRs are still too
focused on macroeconomic austerity measures, with little attention to social
objectives and social investments, as pointed out in a recent EAPN Report 89. In
86
87
88
89
ETUC position on the Annual Growth Survey 2016 – for a Europe that works for workers and citizens,
October
2015.
https://www.etuc.org/documents/etuc-position-annual-growth-survey-2016-europeworks-workers-and-citizens#.VlVx7U9_MYl
European Antipoverty Network (2015), Toolkit on engaging with Europe 2020 and the European
Semester, March 2015.
http://www.eapn.eu/images/stories/docs/EAPN-position-papers-and-reports/2015-eapn-toolkitstakeholder-involvement.pdf
ETUC position on the Annual Growth Survey 2016 – for a Europe that works for workers and citizens,
October
2015.
https://www.etuc.org/documents/etuc-position-annual-growth-survey-2016-europeworks-workers-and-citizens#.VlVx7U9_MYl
EAPN (2015), Can the Semester deliver on poverty and participation? EAPN Assessment of the National
Reform
Programmes
2015,
http://www.eapn.eu/images/stories/docs/EAPN-position-papers-andreports/2015-EAPN-NRP-Report-web.pdf these issues have also been raised by the EAPN during the EAPN
2015 Annual Conference held on October 2015.
"http://www.eapn.eu/en/news-and-publications/news/eapn-news/eapn-2015-annual-policy-conferencecan-the-semester-deliver-on-poverty-and-participation
44
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
this respect the Alliance for a Democratic, Social and Sustainable European
Semester 90 highlights the fact that the EU has failed to deliver an inclusive recovery
strategy and that immediate action is needed to bring the Europe 2020 back on track
with all its initial goals. In addition, according to the ETUI representative, the
announcement of revitalisation of the Social Dialogue led nowhere and the ETUI is not
involved in the Semester, apart from providing some opinions.
The national civil society representatives interviewed confirm that the European
Semester is often perceived as a closed discussion between national
governments and the European Commission with insufficient opportunities for
their organisations to influence the process. In almost all the cases considered the
European Semester and CSRs appear to have low visibility at the national level,
with scant political and public debate. For example, in Italy the process is
considered as governed entirely by the Ministry of Finance, with little involvement of
the social partners. Similarly, for Poland, the trade unions advocate more engagement
of stakeholders in the European Semester procedure, and the malfunctioning social
dialogue impedes the expression of stakeholders’ opinions. Consulted stakeholders
from the UK government welcome their engagement with the CSRs, but underline that
in many cases reforms would probably have happened regardless of European
Commission influence. There is thus a democracy gap and a crisis of confidence
in EU institutions, according to the representatives of employment and social
organisations interviewed, which is leading to some organisations opting out of the
Semester consultation process and the Member States ignoring the CSRs. To
overcome this problem civil society organisations ask for an open debate on
macroeconomic and labour/social policies with a stronger role for the European
Parliament in stimulating and hosting public debate on these issues, although this
means extending the time-frame of the European Semester.
The EC representatives interviewed, on the other hand, underline the progress made
since 2014, with greater involvement of the European social partners in the process
with a consultative role and greater consideration of social and employment issues in
the European Semester. In addition, bilateral thematic meetings between the
Commission and national stakeholders have been promoted to improve the
Commission’s understanding of national challenges and problems. The solutions
envisaged by recent developments (and especially the 2015 reform) are considered
important, especially regarding:
90

The greater role of DG EMPL in the European Semester. To this end, in
November 2014 a new dedicated unit was set up in DG EMPL which participates
with DG ECFIN in the preparation of the AGS and the country reports for the
employment and social assessment part. Before Nov 2014 the preparation of
the AGS was owned by the Commission SECGEN and ECFIN, with EMPL only
providing comments.

The greater consideration of social and employment indicators, the
strengthening of data collection and the development of reliable social and
employment indicators on the basis of the EUROSTAT EU-SILC survey and
other data sources.
Established in the Spring of 2014 by a group of environmental, social and equality NGOs and trade
unions and coordinated by the European Anti-Poverty Network. The “Alliance for a Democratic, Social and
Sustainable European Semester” publishes its own independent assessment of the European Semester,
the CSRs and NRPs. http://semesteralliance.net/
PE 569.985
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Policy Department A: Economic and Scientific Policy

The adoption of a Social Impact Assessment approach for Programme
countries.

A greater involvement of the social partners in the consultation
process, starting before the preparation of the AGS and CSRs, within the
framework of the Macroeconomic Dialogue and involving both the political and
technical levels.
2.1.1
Proposals for improving the balance between macroeconomic and social issues
according to the stakeholders
Overall, both at the EU and national level there is a general perception that the
macro-economic surveillance had failed to tackle the social challenges,
tending to respond mainly to macroeconomic issues.
However, it is acknowledged that in the most recent exercise, social and
employment issues have gained more attention within the European
Semester following the rising social and political discontent among European citizens.
The Commission’s fact finding and recommendations were found more comprehensive
in 2015 than in the previous rounds, despite the reduced number of CSRs.
Regarding the question as to how the European Semester could be made more socially
balanced while at the same time enhancing its public acceptance and democratic
legitimacy, almost all the stakeholders interviewed stress the need to introduce a
more coordinated governance of the process between ECOFIN and EPSCO and
by making it more ‘contextually sensitive’. Some stakeholders also suggest
attributing greater weight to EPSCO when dealing with employment, social and
economic policies and/or merging EMCO and SPC, while others support the creation of
a "social pillar” within the Semester to be linked with one of the binding surveillance
procedures, with the introduction of sanctions for violating social benchmarks.
In order to increase attention to social and employment objectives, several NGOs
underline that the EU Charter of Fundamental Right could be used in the
European Semester to mainstream and improve EU mechanisms for the protection
of fundamental rights.
While an EU human rights’ strategy has been adopted 91 for external relations, no such
comprehensive strategy exists for the internal protection of the rights of EU citizens.
Hence, several NGOs have called for an EU internal comprehensive strategy, and for
Member States to respect the Charter of Fundamental Rights when implementing the
CSRs, to avoid regressions on social rights and further discrimination. 92
In this respect, in 2014 the Social Platform and the Human Rights and Democracy
Network discussed a joint approach towards an EU internal Human Rights framework,
91
92
European Council (2012), EU Strategic Framework and Action Plan on Human Rights and Democracy,
11855/12, 25.06.2012
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/131181.pdf
First Vice-President Timmermans met on 9 July 2015 a small delegation of Social Platform members to
discuss the impact of the European Semester on fundamental rights. See:
http://www.socialplatform.org/blog/vice-president-timmermans-commits-to-more-consistent-coherenteuropean-semester/
46
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which would address violations within the EU and would improve coherence between
the internal and external action of the Union. 93
In 2015 the Social Platform published a focus study 94 on the internal strategic
framework for fundamental rights and on how to improve the protection of
fundamental rights within EU Member States and the Union.
Also, the AGE Platform asked the European Commission to re-orientate the European
Semester and promote solidarity and equality provisions of the fundamental rights.
According to AGE “the Charter of Fundamental Rights should be clearly reflected in the
European Semester process, clarifying the EU's commitment to ensure that Members
States respect all fundamental including social rights when pursuing economic
reforms” 95. In the assessment of the 2015 National Reform Programmes and the
Commission’s Country-Specific Recommendations 96, AGE asked Member States to
respect Articles 1 and 25 of the European Charter of Fundamental Rights on human
dignity and the rights of older people when implementing their CSRs in the field of
pensions and health and long-term care reform, fearing that the pressure on public
budgets may increase the risk of human rights violations.
All the interviewees underline the need to further strengthen the role of the European
Parliament in order legitimise the Semester process democratically and enable
greater attention to employment and social issues. According to a former MEP involved
in the EP discussion over the European Semester, a stronger role of the EP in the
European Semester requires: keeping the European Semester working group in the
European Parliament in order to communicate a single clear message so as to have
some influence; giving the EP some co-legislative role in order to be enabled to have a
formulating impact on the European Semester documents; and for civil society and
national parliaments to receive the main messages and react.
The need to relaunch the Europe 2020 Strategy is another issue that emerged
from the interviews. The representatives of civil society interviewed stress that CSRs
do not address all the goals of the EU 2020 strategy, which has disappeared from the
frontline and political debate. The dramatic effects of the crisis on Member States
macroeconomic imbalances de facto put the European Semester and the MIP
procedure at the centre of (political) debate, obscuring the EU2020 strategy, penalised
by the fragmentation of its regulative basis. At the same time, the crisis and austerity
measures also brought out the need for greater focus on their social and employment
consequences.
In this framework, recommendations on macroeconomic imbalances are more
stringent and MIP is a potent tool to direct the attention of policy-makers to the
macroeconomic imbalances addressed in the CSRs. However, according to some of the
93
94
95
96
http://www.socialplatform.org/news/european-ngos-discuss-a-joint-approach-towards-an-eu-internal-hrframework/
FRA (2015) An EU internal strategic framework for fundamental rights: joining forces to achieve better
results
http://fra.europa.eu/sites/default/files/fra-2015-internal-strategic-framework-for-fundamentalrights_en.pdf. This publication originally came out in 2014 as part of the FRA Annual report: Fundamental
rights: challenges and achievements in 2013 http://fra.europa.eu/en/publication/2015/eu-internalstrategic-framework-fundamental-rights-joining-forces-achieve-better
http://www.age-platform.eu/age-communication-to-the-media-press-releases-en-gb-6/2677-europeansemester-s-country-specific-recommendations
http://www.ageplatform.eu/images/stories/Publications/papers/AGE_Platform_Europe_assessment_of_the_2015_Nation
al_Reform_Programmes_and_the_Commission_FINAL.pdf
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stakeholders interviewed, maintaining the two monitoring systems separate
(MIP on one hand and the other policy fields of the EU2020 strategy on the other)
could avoid the risk of confusion about the role of the two procedures, make the
process more focussed and simplified, and keep ownership of the assessment to the
competent body.
Civil society organisations ask for a greater engagement of civil society
organisations in the process, considered necessary to keep national governments
accountable for their policies and support the EU2020 Strategy. According to the
representatives of trade unions and civil society interviewed, systematic involvement
and consultation with the social partners and civil society organisations could enhance
the European Semester process by: i) endorsing the CSRs at the national level and
promoting a greater involvement and consideration on the part of Member States
through public discussion; ii) supporting the preparation of NRPs; proposing own
reporting system to counterbalance economic viewpoints; iii) supporting the social
impact assessment at the national and European level.
Thus, greater attention of the Commission to national stakeholders could
foster a domestic political debate about the recommendations and facilitate
their implementation. As stressed by the German stakeholders interviewed, major
active involvement of social partners and other key stakeholders also at grassroots
level would benefit the process and the tailored answers to the CSRs. Proposals to
support a greater involvement of civil society include: introducing the monitoring of
country recommendations in the Social Dialogue procedures; asking for comments
(from national representatives) in the formulation of CSRs; and organising specific
sessions inviting periodical contributions. The stakeholders to be included in the design
and implementation of new tools within the European Semester monitoring exercises
should involve, besides all the social and economic partners and the representative
organisations of civil society, also health stakeholders.
How to support a greater involvement of the social partners and of the EU
and national parliaments in the European Semester process, without increasing the
complexity of the process and its timing, remains however a controversial issue. EC
and national officers underline the need to simplify the consultation process and
find smoother and less time-consuming ways to collect the opinions of the social
partners and of the EU and national Parliaments, which usually employ long
procedures for the preparation of their opinions in contrast with the need to adopt
rapid preventive recommendations in the European Semester. In this respect the
time-frame of the process was identified as a critical point by the
representatives of social and employment stakeholders. In practice, proper
consultation of social partners has not always been possible. Simplification and remodulation of the entire process would be desirable and beneficial for discussion and
implementation, and indeed for public debate.
The EC officers interviewed underline additional issues to be considered in reforming
the European Semester and coordination mechanisms:
o Recovery from the crisis calls for greater attention to those policy fields
which have long-term effects, like education and employment/social
policies. In this respect, the CSRs should extend their perspective over a longer
time-span (e.g. three years) in order to support structural reforms which take
time to display their full effects. As indicated in the 2015 Social Investment
Package, social inclusion should thus be considered an opportunity for smart and
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inclusive growth rather than merely a problem of financial coverage. Social
policies should not be considered only in terms of their adequacy and costs, but
also in terms of their capacity to support growth. In relation to labour policies,
closer focus on the quality of jobs is necessary, besides their quantity.
o There is a need to simplify the governance of EU policies. Simplification is
also expected to improve the transparency and ownership of EU policy-making
among European citizens. This implies that: i) EU intervention should only focus
on those policies that have spillover effects and are relevant at the EU level,
according to the subsidiarity principle; ii) rationalisation of the assessment
framework is needed, to make the system clearer and more transparent.
o
Appropriate investments should support the development of timeliness and
sound social indicators and of social impact assessments. This implies also
providing a clear mandate to Eurostat to strengthen the EU-SILC survey and
improve social indicators.
o Data and monitoring results should be better communicated using
benchmarking exercises and implementation assessments based on cluster
concepts rather than simple averages that are meaningless when the MSs social
and economic conditions are so divergent.
2.2
Evidence from the literature
To conclude this overview of the evolution of the European Governance mechanisms
for economic, social and employment policies and the European Semester it is useful
to summarise the evidence resulting from the literature on two issues of particular
interest in this respect 97:
•
whether greater attention to the social and employment consequences
of macroeconomic policies could improve growth prospects for the EU
Member States;
•
whether the different coordination mechanisms behind the EU economic
governance system (based on hard law governance) and the employment and
social coordination mechanisms (based on soft law governance, e.g. the OMC)
allow for a greater balance in the pursuit of economic and social goals
or whether this approach results in the subordination of social and employment
objectives to economic objectives of fiscal discipline, budgetary austerity, and
welfare retrenchment.
2.2.1
The need to address employment and social imbalances to improve growth
prospects
The gravity of the crisis has heightened attention to the need to address the social and
employment imbalances besides the macro-economic ones, given that social and
economic goals influence each other.
The current debate on macroeconomic policies is increasingly bringing out the need to
assess the (potential) social costs and benefits of fiscal consolidation
97
An in-depth literature review and discussion of the social dimension of the European Union is in Zeitlin
and Vahercke, Socializing the European Semester? Economic Governance and Social Policy Coordination
in Europe 2020, Report No. 7 December 2014, Published by the Swedish Institute for European Policy
Studies (SIEPS).
PE 569.985
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Policy Department A: Economic and Scientific Policy
measures, with the focus on the long-term risks and costs resulting from lack of
attention to employment and social issues and the social feasibility of some reforms in
recession periods. The financial sustainability of the public debt in the long run
depends not only on the dimension of the debt, but also the growth rate. Especially in
recession periods, focussing solely on the need to reduce the debt with austerity
measures by increasing taxation and cutting public expenditure risks aggravating the
recession spiral. An excessive focus on macro-financial targets, such as fiscal
consolidation, may under estimate the recessive impact and the harmful social
consequences of the adjustment process. In addition neglecting the social implications
of the adjustment process may distort government actions towards easy to implement
income and welfare cuts (public sector wages, health and pension expenditures),
rather than engaging in more needed product market reforms (product market
deregulation, easy-of-doing business, length of judicial procedures) where the power
of lobbies is stronger but the long-term gain to improve competitiveness and increase
consumer welfare much larger.
This is all the more so when public investments with long-run returns in terms of
growth and social equity, and social shock absorbers, helping to contain the negative
income and consumption impacts of recessions, are not excluded from budget cuts.
Greater attention to labour market and social issues in the surveillance process would
lead to more comprehensive assessment of country conditions, with attention to the
potential employment and social impacts of fiscal consolidation measures and the
positive long-term growth and fiscal effects of investments in human capital and social
development.
Developments in economic theory are also calling into question the idea that
redistributive policies hamper growth (J. Pontusson, 2005; Berg and Ostry, 2011;
Ostry et al., 2014) 98. The empirical evidence generally supports the view that
inequality hampers growth over the medium term. For example, Berg et al. (2014)
find that longer growth spells are closely associated with greater equality in income
distribution. In their econometric estimation based on cross-country data, inequality
turns out to be among the variables with the strongest effects on both the pace of
medium-term growth and the duration of growth spells. Too much inequality may
reduce growth because it can amplify the potential for financial crisis, provoking
political instability, and thus discouraging investments while reducing investment in
education and entrepreneurial activities, leading to low human capital accumulation,
among the key drivers of economic growth. Thus not only points of equity but also of
efficiency bring out the need for more equality in income distribution.
Attention to distributive issues is particularly necessary in economic and
monetary unions like the EU28, and particularly the EURO area. As discussed in the
ESDE 2013 report, 99 the crisis has shown that negative social and employment
shocks are likely to have spill over effects beyond national borders in an
economic monetary union, given the degree of economic interdependence between
Member States, with the main channels being intra-euro-area trade, competitiveness
98
99
J. Pontusson (2005), Inequality and Prosperity. Social Europe vs. Liberal America, Cornell University
Press; A.G. Berg and J.D. Ostry (2011), Inequality and Sustainable Growth: Two Sides of the Same
Coin?, IMF Staff Discussion Note, April 2011 SDN/11/08; J.D. Ostry, A. Berg and C.G. Tsangarides,
Redistribution, Inequality and Growth, IMF Staff Discussion Note14/02, February 2014
European Commission (2014), Employment and Social Developments in Europe 2013 (ESDE),
Luxembourg: Publications Office of the European Union
http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7684
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and eroded confidence. Increases in unemployment or reductions in household
incomes reduce national internal demand and spill over to other euro-area Member
States through intra-euro-area trade. Higher unemployment, NEET or poverty rates
also erode skills and discourage labour market participation, thereby undermining the
long-term productivity paths and growth potential of other euro-area Member States.
Increasing unemployment and social imbalances may also weaken public support and
the capacity of governments to apply sound policies, necessary to maintain confidence
in the common currency. It is thus in the interest of all the countries belonging to a
monetary union to ensure that unemployment, youth inactivity, poverty or inequalities
do not spiral out of control in any Member State by strengthening the coordination of
employment and social policies in the monetary union, thereby promptly identifying
and addressing the major challenges. For these reasons, enhanced surveillance is
necessarily based on a scoreboard monitoring a limited number of key indicators
enabling early identification of major employment and social problems.
The socio-economic empirical literature offers various examples of the long-run
benefits resulting from education and social investment. Social and education
measures are increasingly considered as investments with positive long-run returns in
terms of the capacity to adjust to change and prevent social risks resulting from
market and/or policy failures. Empirical comparative analysis shows that there is no
negative correlation between social spending and economic performance. European
«social market economies» with high levels of social spending, like the Nordic
countries, Germany and the Netherlands, are placed at the top of the Global
Competitiveness Index of the World Economic Forum (Vandenbroucke and Vanhercke,
2014) 100.
Conversely, an example of the long-term risks and social costs associated with myopic
fiscal consolidation measures is to be seen in the recent Eurofound study on the
economic losses associated with the increase in youth disengagement from the
labour market resulting from the long duration of the crisis. The overall cost of
Young People not in Education, Employment or Training (NEETs) was estimated in a
2012 Eurofound study 101 at EUR 153 billion, equivalent to 1.2% of EU GDP and
resulting from the productivity loss associated with low youth employment and the
social and welfare costs of the increasing share of people with no work experience,
living on welfare. The effects of a problematic transition from education and training
into work are likely to be associated with a general reduction in long-term life
opportunities, the so-called “scarring effect” (Brunello, 2010; Quintini and Manfredi,
2009; Scarpetta et al., 2010). The economic crisis and labour market reforms
enhancing flexibility have increased labour market uncertainty for young people, as
indicated by the increase in youth unemployment, inactivity and precarious jobs,
especially in the Southern and some Eastern European countries. In the absence of
expansionary policies, the prolonged duration and severity of the crisis is likely to
generate a permanent “scarring effect” on the current young generation largely
employed in temporary jobs and experiencing frequent unemployment and/or
inactivity spells. The poverty risks for this generation are likely to be exacerbated by
the recent pension and welfare reforms adopted to improve the financial sustainability
100
101
Vandenbroucke and B. Vanhercke, A European Social Union: 10 though nuts to crack, Background
Report to the Friends of Europe High Level group on Social Union, Spring 2014
Eurofound (2012), NEETs – Young people not in employment, education or training: Characteristics,
costs and policy responses in Europe, Publications Office of the European Union, Luxembourg,
http://www.eurofound.europa.eu/sites/default/files/ef_files/pubdocs/2012/54/en/1/EF1254EN.pdf
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Policy Department A: Economic and Scientific Policy
of public budgets, which are increasingly linking (pension) benefits to lifelong
contributions. Besides the costs to individuals, the diffusion of precarious jobs and of
long spells of unemployment/inactivity among young people represents a social cost,
as the waste of young, highly educated human resources reduces growth prospects
while extending the poverty risks and income inequalities within and between
generations, entailing high budget costs associated with low fiscal revenues and
growing social expenditures.
Another example in this respect can be seen in pension reforms. In the MIP process
pension systems are treated as an important contributor to the financial sustainability
of public budgets, especially in recent years characterised by ageing trends and fiscal
consolidation pressures. For these reasons, improvements in the financial
sustainability of pension systems have been called for in several country-specific
recommendations related to the Stability and Growth Pact, and in the Excessive Deficit
Procedure (see section 3.1). Recent trends in pension reforms have improved the
sustainability of public pension schemes by reinforcing the link between contributions
paid and benefits received and increasing the role of private occupational and
individual pension schemes, but at the cost of reduced replacement rates, growing
individual risks and complexity in pension systems.
New pension benefits are increasingly related to developments in the labour and
financial markets and to economic growth, with the consequence that the adequacy of
future pensions is jeopardised (especially for the younger generations and women)
when the labour market is unable to guarantee lifelong continuous employment, the
financial markets are unable to deliver the expected returns on investments in
occupational or individual pension funds, and public spending is constrained by
increasing deficit and debt, lower growth prospects and fiscal consolidation 102. The
gravity and duration of the crisis is thus highlighting the risks associated with reduced
welfare and pension provisions in terms of both increased poverty risks in old age and
social conflicts.
Greater attention must therefore be paid to the employment and social consequences
of fiscal consolidation measures and to improving the adequacy and effectiveness of
social protection systems. Social and employment indicators may have a greater role
in this respect in the European Semester process. As underlined in the EP resolution of
February 25, 2015, “it is necessary to continue with growth friendly and differentiated
fiscal consolidation in order to guarantee the sustainability of the welfare state and
public finances in the long term”. 103
102
103
On the ways pension systems have been addressed in CSRs see Bekker (2015). On the evolution of
pension reforms in the EU, see a recent publication by the European Commission – DG EMPL (2015), The
2015 Pension Adequacy Report: current and future income adequacy in old age in the EU, Brussels
http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=2339&furtherNews=yes.
For
an
assessment of the different effects of pension reforms for women and men see Samek Lodovici M. et al.
(2011), The socio-economic impact of pension systems on the respective situations of women and men
and the effects of recent trends in pension reforms. Report prepared by the EGGSI network for the
European Commission http://ec.europa.eu/justice/gender-equality/document/index_en.htm Bettio, F. et
al. (2013), The gender gap in pensions in the UE, report prepared for the European Commission- DG
Justice http://ec.europa.eu/justice/gender-equality/files/documents/130530_pensions_en.pdf
European Parliament resolution of 25 February 2014 on the European Semester for economic policy
coordination: Employment and Social Aspects in the Annual Growth Survey 2014 (2013/2158(INI)).
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-20140129+0+DOC+XML+V0//EN
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To conclude, greater attention to the social dimension and to the balance
between economic and social issues in the EU governance approach and
mechanisms, particularly for the EURO area countries, is necessary for various
reasons (Vandenbroucke and Vanhercke, 2014):
 Economic reasons: According to economic theory, a monetary union functions
and is effective only when initial national socio-economic conditions are not too
divergent and budget transfers are possible to reduce the negative effects of
asymmetric shocks. Monetary unification, as in the case of the EMU, involving
countries with very different initial socio-economic conditions and based on
complex decision-making processes regarding budget transfers, requires
particularly close attention to the potential social and employment consequences
of macro-economic policies and asymmetric external shocks.
 Social reasons: Excessive social imbalances threaten to undermine the
monetary union, especially when they result from an investment deficit in human
capital and welfare policies and lead to a low road equilibrium based on severe
social inequalities, poverty and low skilled, low paid work 104.
 Political reasons: Increasing social divergences within the EU threaten to
undermine the credibility of the European Union project, as the current Greek
crisis is dramatically showing.
2.2.2
Effects of coordination mechanisms on the balancing of economic and social
issues
Once the need for a greater balance between economic and social issues in the EU
governance approach and mechanisms is recognised, it is necessary to assess which
coordination mechanism is more suitable for this balancing and the implications of the
EU stricter economic coordination mechanism on social aspects.
The literature on these aspects highlights the fact that the European semester and the
MIP represent a fundamental shift in the EU governance structures, having a
significant potential impact in the social domain (Amtenbrink, 2012; Pochet, 2010).
As shown by Bekker (2014), when coordinating mechanisms are separate and not
designed to strengthen one another, rivalry may occur in prevailing goals and the
hierarchy in coordination mechanisms may prevail, with hard law mechanisms setting
the goals without considering the social risks that recommended reforms may entail,
and indeed their (future) social and economic costs.
The new EU economic and fiscal governance has also had an impact on
national employment and social policies, as shown in the country case studies as
well as the available literature (Clauwaert and Schömann, 2012; Costamagna, 2012;
Degryse et al., 2013; Doherty, 2014). However, on the “weight” and nature of this
impact scholars do not always agree. The stricter requirements to meet the public
deficit and debt targets have often resulted in reduction of public expenditure in the
social domain. In particular, the closer monitoring of the existing deficit criterion and
the pressure for rapid repayment of government debts are behind the demand for
104
The high road/low road terminology is borrowed from Gordon (1996). This distinction is common in the
industrial relations literature. Soskice (1990) distinguishes the strategies of “cost cutting” and “value
added”, Visser (1996) contrasts the “quality scenario” and the “efficiency scenario”, and Harrison (1994)
refers to the low road as the “low-level equilibrium trap.”
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Policy Department A: Economic and Scientific Policy
greater labour market flexibility and for pension and welfare reforms designed to
maintain financial sustainability rather than adequacy in tackling social exclusion and
poverty risks. This impact is especially evident in the Programme Countries, which
benefit from bail-out loans under strict conditionality (Costamagna, 2012; Doherty,
2014; Kilpatrick and de Witte, 2014). However, also for various other countries
meeting fiscal targets has at times meant lowering social security entitlements or
reducing the protection of workers.
In addition, as underlined by Bekker (Bekker, 2015 forthcoming 105), the measures
introducing stricter economic governance mechanisms have been presented in a topdown way, in order to make Member States comply better with EU level fiscal
requirements 106. This method is in contrast with the traditions of 'soft' social and
employment policy coordination, characterised by exchange between the EU
institutions and the Member States, with ample scope for Member States to develop
their own policy-routes towards meeting the EU-level goals (Bekker, 2015; Sabel and
Zeitlin, 2008; Trubek and Trubek, 2007).
According to many scholars, soft coordination may instead produce better
results than hard legislation, especially in the case of labour market and social
policies, because it allows for fuller consideration of the complex sets of factors and
institutions affecting country-specific social and labour market conditions (Lenoble,
2005; Scott and Trubek, 2002); moreover, softer governance mechanisms allow for a
greater degree of flexibility in adjusting to changing national conditions and greater
participation of other stakeholders in the policy decision-making and implementation
process, (Eberlein and Kerwer, 2004; Mosher and Trubek, 2003). As underlined by
Boeri (2000) 107, by imposing the same pattern of reforms on the different European
social policy models there is a high risk of jeopardising reform efforts altogether (as
dramatically shown by the recent Greek developments, presented in Annex 7).
Furthermore, social policy reforms need to be comprehensive and hence should
necessarily work on country-specific institutional clusters.
Conversely, the inclusion of the employment and social coordination
mechanisms in the framework of the European Semester has increased the
attention of EU institutions to a wide range of social and employment policy
issues. For example, the AGSs have been pointing to reduction of unemployment as
one of the main goals of each European Semester since 2011. The European Semester
might be more multi-dimensional than expected, and increasingly involving some soft
governance mechanisms, like negotiations and cooperation, especially concerning the
preventative stages of coordination mechanisms (Bekker, 2015).
105
106
107
Sonja Bekker (2015, forthcoming), Is there flexibility in the European Semester process? Exploring
interactions between the EU and member states within post-crisis socio-economic governance, SIEPS
paper”.
This issue is correlated to another important issue emerging in the current debate, which is not
considered in this study, i.e. the democratic deficit underlying the MIP. According to some scholars,
MEPs106 and civil society representatives, as well as the reforms of the economic governance framework
undertaken under the emergency raised by the financial crisis have reduced the democratic
underpinning of the governance mechanisms. This issue is not, however, among those to be considered
T. Boeri (2000), Social Europe: Dramatic Visions and Real Complexity,
www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2371
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3. THE ROLE OF EMPLOYMENT AND SOCIAL ISSUES IN
THE CSR PROCESS
KEY FINDINGS
•
Even though the incidence of CSRs on social and employment issues has slightly
increased from 40.2% to 42.2 between 2013 and 2015 and the number of items
addressed by the employment and social CSRs have been growing until 2014, the
CSRs are still dominated by macroeconomic policy recommendations.
•
The majority of the CSRs are on employment issues (53.5%), followed by
education and training (15.6%) and social policies (15.2%). Pension system are
addressed by 9.6% of the CSRs, and Health by 6.2%. In the CSRs employment
issues outnumber social topics, even in Member States characterised by high
levels of poverty and social disadvantage, as employment is considered the main
tool to fight poverty.
•
Young people (especially the unemployed and disadvantaged youth) are the target
group addressed by most CSRs, followed by elderly workers.
•
Some consistency emerges overall between the CSRs and the countries
employment and social challenges. The CSRs focussing on social issues mainly
address Member States where regional disparities and/or poverty and social
exclusion risks for certain population groups are particularly critical. The presence
of targets with serious (multidimensional) disadvantages (disabilities, ethnicity) is
also associated with a high level of social policy recommendations.
Recommendations on pension and social protection reforms are also relevant in
those countries where the (working) population is getting older, and where the
sustainability of the pension system is becoming a major issue, and a constraint
on the public budget.
•
The country case studies show however that not all the major emerging
challenges are tackled by the CSRs and that labour market and social aspects are
treated with greater consideration for cost-effectiveness and economic
sustainability, rather than poverty reduction, with little attention to their possible
long-term social and economic impacts. In addition, consideration for specific
vulnerable groups (be they migrants, elderly workers, women, poor children, etc.)
remains inadequate, even though renewed attention to the social and employment
impacts of the crisis has emerged in the 2014 and 2015 exercises.
•
In addition the CSRs tackling employment and social issues: show a scant
consideration for specific vulnerable groups (be they migrants, elderly workers,
women, poor children, etc.) as well as of sub-national and territorial challenges
and differences; address social protection or health reforms only from the
perspective of efficiency, cost-effectiveness and economic sustainability, rather
than adequacy and poverty reduction and with little attention to their possible
long-term social and economic impacts; where social inclusion policies are
considered, they are always addressed in terms of active inclusion, in line with the
2008 Recommendation on Active Inclusion.
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Policy Department A: Economic and Scientific Policy
3.1
CSR content analysis
As described in the previous chapter, the European Semester Country-Specific
Recommendations for national policy reforms have also addressed employment and
social challenges and changed from being solely recommendations to having mixed
legal bases. This has influenced the process through which recommendations are
considered and then applied. According to Thillaye (Thillaye, 2013), from 2011
onwards, non-binding employment and social policy recommendations have been
placed on one list with recommendations stemming from economic and fiscal
coordination mechanisms that impose more obligations on Eurozone countries to
comply with the EU targets, in the sense that the regulations make it possible to apply
sanctions to Eurozone countries that regularly fail to meet the demands. A degree of
leeway, however, remains for countries to deviate from EU-level recommendations
(Bekker, 2013; Zeitlin and Vanhercke, 2014), as stricter rules do not necessarily mean
automatic changes in national policy responses.
In order to analyse how the social and labour dimensions have been addressed by the
CSRs within the European Semester since 2012, all the CSRs provided for each
single Member State for the years 2012 to 2015 have been considered and
summary tables have been drafted (see Annex 3), providing for each country
information on: i) the item(s) addressing employment or social policies; ii) the specific
socially-oriented measures recommended; iii) the specific (vulnerable) target groups
addressed.
The items addressing employment and social policies may include issues related to the
pension and wage systems, unemployment, labour market segmentation, education
reform, poverty and social exclusion; while target groups may cover the unemployed
and the long-term unemployed, older workers, low-income families, people with
migrant backgrounds, women (primarily those with care responsibilities), other
disadvantaged population groups. Some measures may take the form of active labour
market policies, addressing unemployment and low wages through changes such as
decreasing the tax on labour. Others focus more on education and training, directly
assisting target groups such as unemployed youth in finding jobs and transitioning
from training and education to the labour market, while also helping employers find
workers with skills that meet their specific needs.
As regards implementation of the CSRs, the available information shows that
recommendations concerning social and labour market reforms find more limited
implementation than those concerning the financial sector and public deficits. This is
also due to the fact that reforms that may have an impact only in the medium-to-long
term, like labour market and education reforms, are more complex to implement and
monitor.
For example, the assessment of the implementation of the 2013 CSRs carried out by
the European Council Oversight Unit within the European Parliamentary Research
Service (EPRS)108 shows that implementation of the CSRs by EU Member States
108
EPRS | European Parliamentary Research Service - Directorate for Impact Assessment and European
Added Value - European Council Oversight Unit. Country-Specific Recommendations: Scorecard for
2013. How far are EU Member States meeting their European Council commitments? Author: Stanislas
de Finance PE 547.558- May 2015. The assessment considers three categories of implementation (full
implementation, 'good progress underway, but more efforts required', no implementation) and gives
equal weight to each CSR sub-section regardless of its nature or its actual or potential impact. This
implies some degree of simplification as a few CSRs and national policy actions are of a more qualitative
56
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declined significantly in 2013. Only 11% of the CSRs were fully addressed, compared
to an average of 18% in 2011-2012. Conversely, the 'no implementation' rate rose to
55% in 2013, from 43% in 2011-2012. The highest implementation rates concern the
financial sector recommendations (with 33% CSR fully implemented). Only 15% of the
recommendations on public finances were implemented, notwithstanding the stronger
enforcement powers of EU institutions in these fields. Conversely, the 'no
implementation' rate of the CSRs on employment, social policies, and structural
reforms was higher than 50%.
The Commission’s assessment of the 2013 CSRs reported in a recent ECFIN Economic
Brief 109 based on the 2014 European Semester Staff Working Document is consistent
with the above-mentioned EPRS results, even if the criteria adopted are slightly
different 110. The highest implementation rates pertain to the financial and public
finances recommendations, while the lowest implementation records relate to tax
reforms, due to their political sensitivity and distributional implications. Education,
poverty reduction and social inclusion, health and long-term care also show relatively
low implementation records.
It is to be noted, however, that it is particularly difficult to assess in quantitative terms
the state of implementation of reforms that may have an impact only in the mediumto-long term; labour market and education reforms are likely to fall into this category.
For example, education reforms aimed at increasing the interactions between higher
education and the labour market are likely to take many years to yield visible results
in terms of improved labour market outcomes. While in principle CSR implementation
is assessed on the basis of action taken (rather than observed outcomes), it can be
difficult to judge – in an annual assessment process, where typically no more than 610 months have elapsed since the introduction of a reform – whether such measures
“go a long way in addressing the CSR” (Deroose and Griesse, 2014).
3.1.1
Importance of social and employment issues in the CSRs: In-depth analysis
by items addressed
This section presents the main results of the CSR analysis in relation to the issues
addressed as well as an overview at the EU-28 and Member States level,
complemented by examples at Member State level exemplifying the CSRs focus and
country response.
Tables 3.1 and 3.2 provide an initial overview of the number of CSRs issued in the
period between 2012 and 2015, indicating the total number of CSRs and the number
of CSRs related to employment and social policies by year (Table 3.1) and by Member
State (Table 3.2).
109
110
implies some degree of simplification as a few CSRs and national policy actions are of a more qualitative
nature and it is therefore difficult to measure and/or quantify them. At the same time, some measures
introduced by national authorities may have an impact only in the medium-to-long term. National
authorities may also have opted for alternative measures to achieve the same goals.
ECFIN Economic Brief, Implementing economic reforms – are EU Member States responding to European
Semester recommendations? By Servaas Deroose and Jörn Griesse Issue 37/October 2014 based on the
2014 European Semester Staff Working Document.
In the 2014 European Semester staff working document (SWD) for each Member State, one of the
following five categories have been assigned to each recommendation: “no progress”, “limited progress”,
“some progress”, “substantial progress” or “fully implemented”. The vast majority of CSRs (136 out of
141 CSRs – as assessed in the 2014 SWDs) fall into one of the middle three categories.
PE 569.985
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Policy Department A: Economic and Scientific Policy
As shown in Table 3.1, we observe quite a large increase in the total number of CSRs
from 2012 to 2014 (138 in 2012, 141 in 2013 and 157 in 2014) followed by a sharp
drop from 2014 to 2015 (from 157 to 102 in 2015) resulting from the revision of the
European Semester occurred in 2015 and the decision to reduce the number of CSRs
and to focus them on key priorities (see §1.2).
Table 3.1:
CSRs in 2012 - 2015
Year
Number
CSRs
Item(s)
%
Countries not subject to the monitoring
of
addressing
via CSRs*
countries
labour market
with
and social
CSRs
issues
2012
23
138
65
47.1
Greece, Ireland, Portugal, Romania
2013
23
141
57
40.4
Cyprus, Greece, Ireland, Portugal
2014
26
157
64
40.8
Cyprus, Greece
2015
27
102
43
42.2
Cyprus, Greece
* The COM does not propose CSRs to these countries to avoid duplication with measures set out in their
respective Economic Adjustment Programmes.
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
The CSRs are dominated by macroeconomic policy recommendations over the period
considered, however the incidence of CSRs on social and employment issues has
slightly increased from 40.2% to 42.2 between 2013 and 2015 and the number of
items addressed by the employment and social CSRs have been growing until 2014.
There is some cross-country variation in the number of CSRs and the percentage of
employment and social policy recommendations. Some countries, such as SE and DK,
tend to have very few CSRs (in SE: 4 CSRs in 2012-2014 and only 1 in 2015; in DK, 5
in 2012, 3 in 2013 and 2014 and 2 in 2015). Others, such as ES, RO and SI, on the
other hand, have quite high numbers of CSRs (ES showing the highest overall: 8 in
2012 and 2014, 9 in 2013 and 4 in 2015). The percentage of employment and social
policy recommendations out of the total considerably varies from country to country,
the majority being between 20% and 70%. The highest percentages tend to be in
2015 (the highest being 75% in MT and SK). However, 2015 also exhibits some of the
lowest percentages of employment and social policy recommendations (with the only
0% in SE). While some countries maintain a relatively high percentage over the period
(such as CZ, between 50% and 67%), others remain distinctly low (such as SI and SE,
SE with 25% in 2012, 2013, and 2014 and 0% in 2015). SI and SE, however, provide
an interesting point of comparison because, while both exhibit decidedly low
percentages of employment and social policy CSRs, SE is one of the countries with the
lowest number of total CSRs, while SI is among the countries with the highest.
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Table 3.2:
Employment and social policy recommendations (number and percentage over total recommendations), per
Member States and EU-28, years 2012, 2013, 2014, 2015
2012
MS
N. of total
recommend
ations (A)
AT
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
HR
IT
CY
LV
LT
LU
HU
MT
NL
PL
PT
RO
SI
SK
FI
SE
UK
Total
7
7
7
6
5
4
5
8
5
6
7
7
6
5
7
6
5
6
7
7
5
4
6
138
Source:
N. of
Empl and
social
policy
recomm.
(B)
4
3
3
4
2
2
2
5
3
2
3
4
3
3
3
3
2
2
4
4
1
1
2
65
2013
N. of total
recommen
dations (A)
7
7
7
7
3
4
5
9
6
6
7
6
6
7
5
4
7
8
9
6
5
4
6
141
N. of
Empl and
social
policy
recomm.
(B)
4
4
3
4
1
1
2
3
3
2
3
3
3
2
2
2
2
4
2
2
2
1
2
57
2014
N. of total
recommendations (A)
5
6
6
7
3
4
5
7
8
7
8
8
5
6
5
7
5
4
6
8
8
8
6
5
4
6
157
2015
N. of
Empl and
social
policy
recomm.
(B)
2
4
3
4
1
1
2
3
3
4
3
2
2
3
2
3
2
2
2
3
4
2
2
2
1
2
64
N. of total
recommendations
(A)
N. of Empl and
social policy
recomm. (B)
4
4
5
4
2
3
3
4
4
6
6
6
4
3
3
5
4
3
4
5
4
4
4
4
1
3
102
1
2
2
2
1
2
2
1
2
2
1
3
2
1
3
3
1
2
2
1
1
3
2
1
43
2012
2013
57.1%
42.9%
42.9%
66.7%
40.0%
50.0%
40.0%
62.5%
60.0%
33.3%
42.9%
57.1%
50.0%
60.0%
42.9%
50.0%
40.0%
33.3%
57.1%
57.1%
20.0%
25.0%
33.3%
47.1%
57.1%
57.1%
42.9%
57.1%
33.3%
25.0%
40.0%
33.3%
50.0%
33.3%
42.9%
50.0%
50.0%
28.6%
40.0%
50.0%
28.6%
50.0%
22.2%
33.3%
40.0%
25.0%
33.3%
40.4%
2014
40.0%
66.7%
50.0%
57.1%
33.3%
25.0%
40.0%
42.9%
37.5%
57.1%
37.5%
25.0%
40.0%
50.0%
40.0%
42.9%
40.0%
50.0%
33.3%
37.5%
50.0%
25.0%
33.3%
40.0%
25.0%
33.3%
40.8%
Own elaboration on Country-Specific Recommendations (CSR) 2012-2015. No CSRs have been submitted to: IE,EL, HR, PT and RO in 2012; IE, EL, HR, CY
and PT in 2013; EL and CY in 2014 and 2015. DK and SE did not receive any employment and/or social recommendation in 2015.
PE 569.985
59
2015
25.0%
50.0%
40.0%
50.0%
33.3%
66.7%
50.0%
25.0%
33.3%
33.3%
16.7%
75.0%
66.7%
33.3%
60.0%
75.0%
33.3%
50.0%
40.0%
25.0%
25.0%
75.0%
50.0%
33.3%
42.2%
Policy Department A: Economic and Scientific Policy
Before moving on, we must point out that while in Table 3.1 and Table 3.2 we
consider the formal CSR, in the analysis that follows the term
recommendation(s) refers not to the formal CSRs, but rather to the
recommendation(s) addressing a single item within the CSRs. This is necessary
because each CSR may contain one or more recommendations in connection with each
item, and some CSRs may include multiple recommendations addressing different
issues.
For example, CSR n.4 for CY in 2012 includes only one recommendation addressing
solely the issue of healthcare, advising that the country “complete and implement the
national healthcare system without delay, on the basis of a roadmap, which should
ensure its financial sustainability while providing universal coverage” (CSR n.4,
Cyprus, 2012). On the contrary, CSR n.2 for EE in the same year includes different
recommendations addressing a variety of issues (e.g. working with disabilities, longterm unemployment, youth unemployment and work-life balance), recommending the
country to “Improve incentives to work by streamlining the social benefits system and
increasing flexibility in the allocation of disability, unemployment and parental
benefits, while ensuring adequate social protection. Improve delivery of social
services, while better targeting family and parental benefits and removing
distortionary income tax exemptions related to children. Increase the participation of
the young and the long-term unemployed in the labour market” (CSR n.2, Estonia,
2012).
The items considered in the analysis are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Healthcare system.
Education and training system.
Pension system (retirement age, pension reform).
Employment policies (Taxation and social security).
Employment
policies
(wage
bargaining,
indexation
and
contract
agreements).
Employment policies (unemployment benefits and other benefits system).
Employment policies (labour protection and legislation).
Employment policies (Gender gaps).
Employment policies (active policies).
Employment policies (Matching among education, training and labour
policies).
Employment policies (public employment services reform).
Employment policies (youth employment initiatives).
Employment policies (subsidies schemes).
Employment (access to finance for enterprise).
Social policies (Poverty: social transfers and social assistance schemes).
Social policies (Social services organisation and access).
Social policies (Childcare facilities).
Employment policies are also classified into two groups:
Soft employment policies: policies not related to fiscal systems and not subject to
hard regulation (MIP). These items include: Employment policies (Gender gaps),
Employment policies (active policies), Employment policies (Matching between
education, training and labour policies), Employment policies (public employment
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
service reform), Employment policies (youth employment initiatives), Employment
policies (subsidy schemes) and Employment (access to finance for enterprises).
Hard employment policies: policies related to fiscal systems, e.g. taxation and
social security, wage bargaining, indexation and contract agreements, unemployment
benefits and other benefits system, labour protection and legislation.
Figure 3.1 shows the change in the total number of employment and social policy
recommendations by item within the CSRs across all Member States from 2012 to
2015. We observe a gradual increase from 2012 to 2014, followed by a sharp
decrease from 172 in 2014 to 84 in 2015 due to decision to streamline the European
Semester and reduce the number of CSRs (see § 1.2).
Figure 3.1:
Employment and social policy recommendations (number) by
item, EU-28, years 2012, 2013, 2014, 2015
200
172
180
160
140
120
128
117
100
84
80
60
40
20
0
2012
2013
2014
2015
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
The employment and social policy recommendations cover many different categories
of items, such as healthcare, education and training, employment, and pensions.
Figure 3.2 illustrates the variation in the number of recommendations by item.
There are 268 recommendations addressing the overall Employment policies
category, which covers various areas of intervention, 76 recommendations
addressing Social policies, and 78 addressing Education and training.
Education and training is by far the single item with the largest number of
recommendations throughout the entire period. Some examples of these
recommendations are to “take measures to reduce drop-outs from higher education”
(CSR n.5, Austria, 2012) as well as to “speed up the reform of relevant legal acts on
schools and higher education and of accompanying measures by focusing on
modernising curricula, improving teacher training, and ensuring effective access to
education for disadvantaged groups” (CSR n.4, Bulgaria, 2012).
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Policy Department A: Economic and Scientific Policy
The pension system and employment policies (matching among education,
training and labour policies) are also two items with a relatively high number of
recommendations (48 and 47 respectively). Most CSRs regarding the pension system
often recommend that countries “take measures to increase the effective retirement
age taking into account the improved life expectancy” (CSR n.3, Finland, 2012), while
some address gender disparities in pension systems, recommending that countries
“bring forward the harmonisation of the statutory retirement age between men and
women” (CSR n.3, Austria, 2012).
As for the Employment policy category, it is the policies related to subsidy
schemes and access to finance for enterprise that show the lowest number of
recommendations (both with only one over the entire period). There are, however, 11
items within the broader Employment policies category (examples include policies that
address taxation and social security, gender gaps, active policies, etc.) and 3 items
within the larger Social policies category (poverty, social services and childcare).
Figure 3.2:
Employment and social policy recommendations (number) by
Item, EU-28, total of years 2012, 2013, 2014, 2015
90
78
80
70
60
48
50
47
39
40
34
31
34
30
30
29
28
20
30
29
15
14
13
10
1
1
0
1
2
3
4
1
5
2
3
6
4
5
7
6
8
7
8
9
9
10
10
11
11
12
13
12
14
13
15
14
16
15
16
17
17
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
Legend
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Healthcare system
Education and training system
Pension system (retirement age, pension reform)
Employment policies (Taxation and social security)
Employment policies (wage bargaining, indexation and contract agreements)
Employment policies (unemployment benefits and other benefits system)
Employment policies (labour protection and legislation)
Employment policies (Gender gaps)
Employment policies (active policies)
Employment policies (Matching among education, training and labour policies)
Employment policies (public employment services reform)
Employment policies (youth employment initiatives)
Employment policies (subsidised schemes)
Employment (access to finance for enterprise)
Social policies (Poverty: social transfers and social assistance schemes)
Social policies (Social services organisation and access)
Social policies (Childcare facilities)
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Figures 3.3 - 3.5 illustrate the change over time in the number of recommendations by
item. We observe some appreciable variations in the pattern that each item exhibits
over time. For both the Healthcare and Education and training items (Figure 3.3), the
number of recommendations increases up to 2014 and then drops in 2015, with
Education and Training exhibiting consistently higher numbers of recommendations
(27 in 2014 vs. 14 in the same year for the Healthcare item). For the Pension item, on
the other hand, the trend is quite different, with the number of recommendations
gradually decreasing from year to year (from 14 in 2012 to 9 in 2015).
Figure 3.3:
Employment and social policy recommendations (number) per
Item of HEALTH, EDUCATION, PENSIONS, EU-28, years 2012,
2013, 2014, 2015
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
Legend
1
2
3
Healthcare system
Education and training system
Pension system (retirement age, pension reform)
Figure 3.4 illustrates the trends of items within the overarching category of
Employment policies. Item 10, the education, training and labour policy matching
item, exhibits the highest number of recommendations amongst the employment
policy items (47 over all the years) as well as the most drastic changes from year to
year, with an increase of 14 recommendations from 2013 to 2014, reaching 22
recommendations (the highest number overall), and a drastic drop by 16
recommendations from 2014 to 2015. An example of a recommendation addressing
this item states that the country should “Continue efforts to reduce youth
unemployment by reinforcing stakeholders' involvement, and by strengthening
training and education measures, in particular for those with low education levels, with
the aim of better matching young people's skills and qualifications to labour demand”
(CSR n.4, Luxembourg, 2012). While items 5, 6, 7 and 9 (wage bargaining, indexation
and contract agreements; unemployment benefits and other benefits system; labour
protection and legislation; active policies; education, training and labour policy
matching) see an increase in the number of recommendations from 2013 to 2014, the
same items (5, 6, 7, 9) plus items 11 and 12 (public employment services reform; and
youth employment initiatives) all see a drop in number of recommendations from
PE 569.985
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Policy Department A: Economic and Scientific Policy
2014 to 2015, some more drastic than others. The taxation and social security (item
4) and gender gaps (item 8) items, on the other hand, present rather anomalous
trends (taxation and social security with the number of recommendations gradually
increasing throughout the time period, gender gaps with a decrease between 2012
and 2013 and an increase between 2014 and 2015). The subsidies schemes (item 13)
and the access to finance for enterprise (item 14) items, as mentioned above, have
only one recommendation each throughout the entire period (the former in 2012, the
latter in 2014).
An example of CSR and national responses on employment policies is offered by
Poland, as summarized in the box below.
Box 3.1:
Poland: Female Labour Market Participation
Poland is characterised by participation rates below the EU average, especially for women.
Moreover, despite the fact that the female employment rate has improved, 55.2% in 2014
compared to 50.6% in 2007, it is still far below the male employment rate, 68.2% in 2014. The
labour market segmentation for women also translates into a wide gender gap in pension
treatments, given women’s shorter working life (29.6 years). This issue is particularly relevant
from a social protection point of view, and among the old-age pensioners, older women are at
much higher risk of poverty and social exclusion than men.
Female labour market participation is constrained by an insufficient supply of care facilities for
children and elderly people. Moreover, the use of flexible working arrangements for women is
also low and fails to promote reconciliation between work and family-care. Finally, the low
female participation in the labour market is also related to education. As remarked by the
Poland Country Report 2015, the education system underperforms in matching skill supply and
demand and in enhancing the skills serving the employability of older workers, in particular
older women.
Poland has since 2012 received recommendations to increase female labour market
participation, in particular by taking further steps to increase the availability of affordable
quality childcare. However, Poland has recently made some progress in supporting female
labour market participation (statutory obligation on municipalities to participate in providing
childcare services and pre-school education and activation benefits for unemployed parents).
Hence, no recommendation referred to this issue in 2015.
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Figure 3.4:
Employment and social policy recommendations (number) per
Item of EMPLOYMENT POLICIES, EU-28, years 2012, 2013, 2014,
2015
25
22
20
15
15
13
11
11
11
11
11
10
10
1010
9
8 8
8
8
9
8
7
6
6
6
5
5
5
5
4
3
5
4
4
3 3
3
2
1
0
4
5
6
1
7
8
2012
9
2013
10
2014
11
12
1
1
13
14
2015
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
Legend
4
5
6
7
8
9
10
11
12
13
14
Employment
Employment
Employment
Employment
Employment
Employment
Employment
Employment
Employment
Employment
Employment
policies (Taxation and social security)
policies (wage bargaining, indexation and contract agreements)
policies (unemployment benefits and other benefits system)
policies (labour protection and legislation)
policies (Gender gaps)
policies (active policies)
policies (Matching among education, training and labour policies)
policies (public employment services reform)
policies (youth employment initiatives)
policies (subsidised schemes)
(access to finance for enterprise)
Examples of CSRs and national responses on labour costs and unemployment are
offered by France and Spain, as summarised in the box below.
Box 3.2:
France: Labour Costs
France’s cost of labour is among the highest, due in particular to the heavy tax burden on
labour and substantial social contributions combined with a relatively high minimum wage
compared to other Member States. In particular, the CSRs recommend that efforts be made to
reduce the cost of labour for vulnerable groups.
Since 2011 recommendations have stressed the fact that the heavy tax and social security
burdens on labour hinder employment and competitiveness: measures were required to shift
the tax burden from labour to environmental taxation or consumption and to reduce employer
social security contributions. As a consequence a number of initiatives were launched in 2012
and in 2014 to reduce the cost of labour for low wages (namely the tax credit for
competitiveness and employment and the Responsibility and Solidarity Pact).
In the 2013 and 2014 CSRs the minimum wage issue has been addressed directly, calling for a
minimum wage supportive of competitiveness and job creation. As a consequence in 2013 and
2014 the government did not increase the minimum wage beyond the minimum level set by
law.
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Policy Department A: Economic and Scientific Policy
Box 3.3:
Spain: Unemployment and ALMP
Spain has come under strong EU pressure to implement reforms and follow instructions with a
social focus, because of its high unemployment rate (25.1% in 2014), long-term unemployment
(12.9%) and youth unemployment (53.2%), as well as the impact of the crisis on poverty and
social exclusion, calling for greater efforts.
In the European Semester exercise, serious worries were expressed about the level of
unemployment and marked segmentation in the labour market, affecting specific vulnerable
groups such as young people, the low-skilled and those on temporary contracts.
Hence, Spain received several recommendations requiring improvement in the effectiveness and
coverage of ALMPs (CSRs 2012-2015), particularly for categories experiencing the greatest
difficulties in accessing employment. The 2014 CSRs are basically a repetition of the 2013 CSRs,
with more detailed recommendations, showing thorough knowledge of the evolution, and the
strong and weaker points of the reforms adopted since 2012. In general terms, they insist on
stepping up implementation of the reforms and strategies adopted (ALMP reform, the 20132016 Youth Entrepreneurship and Employment Strategy).
In the 2015 CSRs some progress was made in strengthening the job-search requirement for
eligibility to unemployment benefits (the 2014-2016 Activation Strategy) and in enhancing the
effectiveness and targeting of ALMPs (with the adoption of a new temporary programme of
activation and support for the long-term unemployed) 111. However, many important issues
(such as labour market segmentation, long-term unemployment, etc.) that were present in the
2014 CSRs have not been addressed.
The social policy items (poverty: social transfers and social assistance schemes;
social services organisation and access; childcare facilities) all exhibit quite similar
trends over time. An example of a CSR addressing social policy items is CSR n.7 to
Spain in 2012, which states that the country should “Improve the employability of
vulnerable groups, combined with effective child and family support services in order
to improve the situation of people at risk of poverty and/or social exclusion, and
consequently to achieve the well-being of children” (CSR n.7, Spain, 2012). These
items exhibit an equal or slightly increased number of recommendations from 2012 to
2013, an increase from 2013 to 2014, and a drop from 2014 to 2015 (Figure 3.5).
Both the poverty and the childcare items reach 11 recommendations in 2014, though
the poverty item presents the most drastic drop in number of recommendations, from
11 in 2014 to 4 in 2015. The social services item, in comparison, has fewer
recommendations throughout the entire period (3 in 2012 and 2013, 6 in 2014 and 1
in 2015).
111
Commission Staff Working Document - Country Report Spain 2015 Including an In-Depth Review on the
prevention and correction of macroeconomic imbalances
http://ec.europa.eu/europe2020/pdf/csr2015/cr2015_spain_en.pdf
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Figure 3.5:
Employment and social policy recommendations (number) per
Item of SOCIAL POLICIES, EU-28, years 2012, 2013, 2014, 2015
12
11
11
10
8
8
8
8
7
6
6
6
4
4
3
3
2
1
0
15
16
2012
2013
2014
17
2015
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
Legend
15
16
17
Social policies (Poverty: social transfers and social assistance schemes)
Social policies (Social services organisation and access)
Social policies (Childcare facilities)
Table 3.3 presents the cross-country variation in the distribution of recommendations
of employment and social policy per item. SK is the country with the highest number
of recommendations (31), followed closely by ES, FR and IT (28, 27 and 26). CY, DK
and SE, on the other hand, have only 3, 6 and 9 recommendations in total over all the
years.
On average, across all the countries, the percentage of recommendations addressing
items in the employment policies category is the highest (53.5%). The percentages
of recommendations addressing Education and training and the percentage
addressing items in the Social policies category are similar, at about 15% (the next
highest percentages).
The countries with the highest percentage of recommendations addressing items in
the Employment policies category are, from highest to lowest, SE, FR and PT (88.9%,
85.2% and 81.8% respectively). Conversely, these countries tend to have a low
percentage of recommendations addressing items in the Social policies category (0%,
0% and 9.1%). The countries with the lowest percentage of recommendations in the
Employment policies category are the UK (29.4%) and FI (21.4%). Conversely, the UK
is the country with the highest percentage of recommendations in the Social policies
category (47.1%). DK, on the other hand, is the country with the highest percentage
of recommendations addressing Education and training (50%), with the rest of the
recommendations addressing Employment policy items (50%).
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Table 3.3:
Employment and social policy recommendations (total number and percentage per item), Member States and
EU-28, total for years 2012, 2013, 2014, 2015
MS
1
2
3
AT
BE
BG
CY
CZ
DE
DK
EE
ES
FI
FR
HR
HU
IE
EL
IT
LT
LU
LV
MT
NL
PL
PT
RO
SE
SI
SK
UK
Tot
18.2
8.7
8.0
0.0
10.5
0.0
0.0
0.0
0.0
14.3
0.0
14.3
0.0
20.0
27.3
8.7
16.0
33.3
21.1
13.3
50.0
22.2
10.7
21.4
11.1
7.1
25.0
10.0
13.6
13.0
12.0
33.3
15.8
6.7
0.0
5.6
3.6
28.6
3.7
14.3
0.0
0.0
-
0.0
4.5
12.5
8.7
10.0
14.3
0.0
0.0
12.0
0.0
10.5
3.2
0.0
6.2
-
15.4
4.5
12.5
26.1
15.0
0.0
15.0
9.1
20.0
11.1
0.0
16.1
23.5
15.6
-
0.0
18.2
25.0
4.3
20.0
28.6
15.0
0.0
4.0
0.0
15.8
3.2
0.0
9.6
Employment
Policies (total)
31.8
69.6
48.0
33.3
31.6
53.3
50.0
50.0
57.1
21.4
85.2
57.1
58.3
30.0
61.5
59.1
50.0
47.8
45.0
57.1
55.0
81.8
36.0
88.9
68.4
61.3
29.4
53.5
4
5
6
7
8
9
9.1
13.0
8.0
0.0
15.8
20.0
0.0
0.0
3.6
0.0
25.9
14.3
8.3
0.0
3.8
4.5
0.0
4.3
0.0
7.1
0.0
0.0
0.0
0.0
0.0
3.2
0.0
6.0
4.5
17.4
4.0
0.0
0.0
0.0
0.0
0.0
7.1
0.0
11.1
7.1
0.0
0.0
15.4
4.5
12.5
0.0
5.0
7.1
0.0
27.3
8.0
22.2
21.1
6.5
0.0
6.8
0.0
4.3
4.0
0.0
0.0
20.0
0.0
16.7
3.6
0.0
11.1
7.1
12.5
0.0
3.8
9.1
0.0
8.7
0.0
21.4
5.0
9.1
0.0
0.0
0.0
6.5
0.0
5.6
0.0
0.0
0.0
0.0
0.0
6.7
0.0
0.0
0.0
0.0
7.4
7.1
0.0
0.0
0.0
9.1
0.0
0.0
10.0
7.1
10.0
0.0
0.0
0.0
15.8
0.0
0.0
2.8
13.6
0.0
0.0
0.0
0.0
0.0
0.0
5.6
0.0
0.0
0.0
0.0
4.2
0.0
11.5
0.0
0.0
0.0
10.0
0.0
15.0
0.0
0.0
0.0
0.0
6.5
0.0
3.0
4.5
8.7
8.0
0.0
0.0
6.7
16.7
0.0
10.7
7.1
7.4
0.0
12.5
10.0
3.8
18.2
12.5
13.0
0.0
7.1
0.0
9.1
8.0
22.2
10.5
12.9
0.0
7.8
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
10
0.0
17.4
0.0
0.0
0.0
0.0
16.7
22.2
7.1
7.1
7.4
7.1
12.5
10.0
11.5
9.1
18.8
17.4
15.0
0.0
10.0
9.1
4.0
33.3
15.8
3.2
11.8
9.4
11
0.0
8.7
12.0
0.0
15.8
0.0
0.0
0.0
14.3
0.0
7.4
7.1
4.2
10.0
3.8
4.5
0.0
0.0
0.0
0.0
0.0
18.2
12.0
0.0
5.3
12.9
0.0
5.8
12
13
0.0
0.0
12.0
33.3
0.0
0.0
0.0
5.6
10.7
7.1
7.4
7.1
4.2
0.0
7.7
0.0
6.3
4.3
0.0
7.1
15.0
9.1
4.0
11.1
0.0
9.7
17.6
6.0
0.0
0.0
0.0
0.0
0.0
0.0
16.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.2
14
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
5.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.2
Social
policies
(total)
9.1
0.0
16.0
0.0
21.1
26.7
0.0
22.2
28.6
14.3
0.0
7.1
16.7
40.0
23.1
13.6
0.0
13.0
10.0
0.0
15.0
9.1
28.0
0.0
5.3
16.1
47.1
15.2
15
0.0
0.0
12.0
0.0
0.0
6.7
0.0
0.0
14.3
0.0
0.0
7.1
8.3
20.0
7.7
13.6
0.0
13.0
0.0
0.0
0.0
9.1
8.0
0.0
5.3
3.2
17.6
5.8
16
0.0
0.0
4.0
0.0
0.0
0.0
0.0
11.1
10.7
14.3
0.0
0.0
0.0
0.0
3.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.0
0.0
0.0
0.0
5.9
2.6
17
9.1
0.0
0.0
0.0
21.1
20.0
0.0
11.1
3.6
0.0
0.0
0.0
8.3
20.0
11.5
0.0
0.0
0.0
10.0
0.0
15.0
0.0
8.0
0.0
0.0
12.9
23.5
6.8
T (%)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
T (n)
22
23
25
3
19
15
6
18
28
14
27
14
24
10
26
22
16
23
20
14
20
11
25
9
19
31
17
501
Legend
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Healthcare system
Education and training system
Pension system (retirement age, pension reform)
Employment policies (Taxation and social security)
Employment policies (wage bargaining, indexation and contract agreements)
Employment policies (unemployment benefits and other benefits system)
Employment policies (labour protection and legislation)
Employment policies (Gender gaps)
Employment policies (active policies)
Employment policies (Matching among education, training and labour policies)
Employment policies (public employment services reform)
Employment policies (youth employment initiatives)
Employment policies (subsidised schemes)
Employment (access to finance for enterprise)
Social policies (Poverty: social transfers and social assistance schemes)
Social policies (Social services organisation and access)
Social policies (Childcare facilities)
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Of the Employment policy items, wage bargaining, indexation and contract
agreements (item 5) present the highest frequency in some countries (27.3% in PT,
22.2% in SE and 21.1% in SI). In SE, on the other hand, education, training and
labour policy matching (Item 10) is the highest (33.3%). Subsidy schemes (Item 13),
labour protection and legislation (Item 7) and access to finance for enterprise (Item
14) are the items addressed least frequently in this category in almost all the
countries.
The case of Germany is indicative of the treatment of non-standard contracts.
Box 3.4:
Germany: non-standard contracts (mini-jobs)
Despite the overall good labour market performance of Germany, there are still some causes for
concern.
One of the main issues is the widespread use of non-standard contracts, which has made the
German labour market more flexible, but, at the same time, has increased inequality among
workers, especially among low-wage-earners. A particularly striking example is the case of minijobs causing low acquired pension rights.
Mini-jobs are widespread in Germany with around 7.5 million people working on such contracts,
constituting the sole employment for nearly 5 million people. Women account for two thirds of
this group.
Workers in mini-jobs tend not to benefit from in-work training opportunities. Moreover, their
transition rate into employment subject to full mandatory social security contributions is low due
to the beneficial fiscal treatment they entail (exemption of mini-jobs from personal income tax
and in many cases from all employee social contributions).
The widespread use of mini jobs is seen to cause marked imbalances, creating a group of
workers with low wages and social security contributions. The CSRs have repeatedly addressed
this issue, recommending Germany to facilitate transition from mini-jobs to forms of
employment subject to full mandatory social security contributions (CSRs 2013, 2014, 2015).
However, as stressed in the Commission’s in-depth review, Germany has made limited progress
in addressing these recommendations and has not adopted any measures to facilitate transition
from non-standard employment such as mini-jobs to more sustainable forms of employment
(Country Report 2015).
Within the Social policies category, childcare is the item addressed with the highest
frequency in most countries (23.5% in UK, 21.1% in CZ and 20% in DE and IE), with
the social services organisation and access item addressed only slightly less
frequently. In IE, poverty is addressed at the same rate as childcare (20%), the
highest of all the countries. Finally, the country that addresses the social service
organisation and access item most consistently is FI (14.3%).
An example of CSRs and country response on childcare policies is offered by the UK.
Box 3.5:
UK: Childcare
The lack of adequate and affordable childcare provision is a major challenge in the UK and has
been stressed in successive country-specific recommendations (CSRs 2012-2015).
Moreover, insofar as the cost and availability of childcare results in women taking involuntary
part-time employment, there is a risk that the narrowing of the gender pay gap may be
reversed and the gender gap in pensions widened (European Commission, 2014).
The UK’s national reform programme (submitted under the previous Conservative-Liberal
Democrat Coalition Government) states that free childcare is expected to increase from 15 to 30
hours per week.
It is worth adding here that although successive CSRs have urged the UK to make much more
substantial progress in ensuring adequate and affordable childcare provision, this recently
announced policy has little to do with the CSRs. It is, rather, a national policy emanating from
the 2015 Conservative party manifesto. Moreover, the cut in the child tax credit, which will in
the future be limited to two children, may not be conducive to a reduction in child poverty
PE 569.985
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Policy Department A: Economic and Scientific Policy
3.1.2
Relevance of social and employment issues in the CSRs: in-depth analysis of
target groups addressed
Additional information can be gleaned on observing the major target groups to
which recommendations were addressed.
The following Figures consider the target groups addressed by the recommendations,
looking specifically at the frequency with which recommendations are directed towards
each target (over time, 2012-2015, and across countries). As in the case of policy
items, recommendations may be addressed to one or more targets. As such, the
figures refer to all the targets considered in the recommendations as a whole.
Figure 3.6 reveals that Elderly workers constitute the target identified with the
greatest frequency throughout the CSR analysis (59 cases), followed closely by
Unemployed young people (56). Young workers, people with disabilities, families, lowskilled workers, disadvantaged unemployed, NEETS and SMEs are amongst the targets
identified with the lowest frequency, all below 10. On the other hand, women, lowincome workers, drop-outs, disadvantaged young people, people with migrant
backgrounds, the long-term unemployed, Roma people and the poor stand in the
middle, with the number of cases ranging from 12 (people with migrant backgrounds)
to 36 (disadvantaged young people).
Figure 3.6:
Employment and social policy recommendations by target groups
(number), EU-28, total for years 2012, 2013, 2014, 2015
70
59
60
56
50
40
36
30
28
27
24
20
21
20
17
12
10
10
1
0
1
2
3
4
5
1
2
6
3
4
7
5
6
8
7
8
9
9
10
10
11
12
11
13
12
14
15
2
13
16
7
5
4
3
14
15
16
17
17
Source: Own elaboration Country-Specific Recommendations (CSR) 2012-2015
Legend
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Drop-outs
Disadvantaged young people
Unemployed young people
Young workers
Neets
Elderly workers
Women
Low-income workers
People with migrant background
(long-term) unemployed people
Roma people
Poor people/people at risk of poverty and social exclusion
People with disabilities
Families
Low-skilled workers
Disadvantaged unemployed
SMEs
There are various targets included in the larger category of young people. These are:
dropouts, disadvantaged young people, unemployed young people, young workers and
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NEETS (Not in Education, Employment, or Training). Figure 3.7 illustrates the change
over time in the number of cases in which young people, in particular, are the targets
of recommendations. Within this category, unemployed young people are by far the
most frequent targets, in particular between 2012 and 2014. Dropouts, disadvantaged
young people and unemployed young people exhibit similar trends over time, with the
highest number of cases in 2014 (7, 14 and 21 respectively) and a drop from 2014 to
2015 (to 3, 6 and 6 respectively). Young workers and NEETs have received less
consideration in CSRs, without much change over the period.
Figure 3.7:
Employment and social policy recommendation target groups
(number) - YOUNG PEOPLE, EU-28, years 2012, 2013, 2014,
2015
25
21
20
15
15
14
14
10
8
8
7
6
5
6
6
4
3
1
0
1
2
3
2012
2013
1
4
2014
1
1
5
2015
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
Legend
1
2
3
4
5
Drop-outs
Disadvantaged young people
Unemployed young people
Young workers
Neets
Figure 3.8 illustrates the change over time in the frequency with which CSRs address
target groups other than youth.
The Older workers target, which is the most addressed overall, exhibits the most
drastic changes over time, in particular from 2014 to 2015 when the number of cases
in which recommendations target this group drop from 16 to 7.
The frequency with which recommendations target poor people/people at risk of
poverty and social exclusion also varies a great deal throughout the period (4, 10,
11 and 3 in 2012, 2013, 2014 and 2015).
The targets women, low-income workers, people with a migrant background
and Roma people all exhibit some slight variation over the period, but the number of
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Policy Department A: Economic and Scientific Policy
cases in which they are identified tends to remain between 3 and 9. On the other
hand, people with disabilities, families, low-skilled workers, disadvantaged
unemployed and SMEs are targets identified very infrequently in the CSRs – 5 or fewer
cases each throughout the entire period.
Figure 3.8:
20
18
16
Employment and social policy recommendation of target groups
other than young people (number), EU-28, years 2012, 2013,
2014, 2015
19
17
16
14
12
11
10
10
9
8
8
8
7
7
7
6
6
6
5
5
5
444
4
3
5
4
5
4
4
5
4
3
3
3
3
2
2
2
1
1
13
14
2
2
11
0
6
7
8
9
10
2012
11
2013
12
2014
15
165
17
2015
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
Legend
6
7
8
9
10
11
12
13
14
15
16
17
Elderly workers
Women
Low-income workers
People with migrant background
(long-term) unemployed people
Roma people
Poor people/people at risk of poverty and social exclusion
People with disabilities
Families
Low-skilled workers
Disadvantaged unemployed
SMEs
As shown in Table 3.4, there is a great deal of cross-country variation in the
frequency with which CSRs address certain targets.
At EU-28 level, the recommendations targeting young people amount to 34.9%. In
many countries, the percentage of cases with the target in the overall category of
young people (including dropouts, disadvantaged young people, unemployed young
people, young workers and Neets) is very high, in particular in PT, SE, UK and LU,
where the percentage comes to 75%, 62.5%, 60% and 58.3% respectively.
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Within the youth category Unemployed young people (target 3) are those most
addressed in the CSR (50% for CY, HR and PT and between 30% and 40% for UK, FR,
IT, LV, PL and SE). Dropouts (target 1) and disadvantaged young people (target 2)
are also addressed with some frequency. The highest percentage of CSRs targeting
disadvantaged young people is in DK (30%), and dropouts in PT (25%).
Italy offers an example of the way recommendations on youth labour market
conditions have been dealt with.
Box 3.6:
Italy: Youth
outcomes
labour
market
participation
and
educational
In Italy unemployment is particularly severe among young people (42.7% in 2014) and is well
above the EU average rate (22.2%). Moreover, the share of young people not in employment,
education or training has remained very high (22.1% compared to 12.4% for EU28).
The CSRs constantly (2012-2014) addressed the issue of the high unemployment and inactivity
of young people, with particular focus on the difficult transition from education to work. As
described in the Italy Country Report 2015 “persistently high rates of youth unemployment and
of NEET young people point again to the risk of discouragement from entering the labour
market. This may have potentially severe consequences on Italy’s human capital”. In this
perspective, one of the priorities for Italy is full implementation of the Youth Guarantee, as
recommended in the CSRs 2014. However, the government responded to the repeated
recommendations with limited results, and youth labour participation remains a worrying issue.
An issue related to youth labour market participation is the structural weakness in the education
system, which is characterised by high early school leaving rates. As stressed by the
recommendations (CSRs 2012, 2013 and 2015), the underperformance of the education - and
especially the tertiary – system often translates into a mismatch between skills acquired and
those needed in the labour market.
In particular, the CSRs 2014 gave priority to improving school-to-work transition, promotion of
work-based learning and VET, and ensuring wide recognition of skills. Some progress was made
in implementing the National System for Evaluation of schools and compulsory nationallystandardised annual tests (INVALSI) were introduced. A public consultation on reform of the
education system (“La Buona Scuola” reform) was concluded in November 2014, and the Bill
was recently approved by the Parliament 112, although severely criticised by the teachers’
unions, opposition parties and a minority within the government party.
112
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Table 3.4:
MS
AT
BE
BG
CY
CZ
DE
DK
EE
ES
FI
FR
HR
HU
IE
EL
IT
LT
LU
LV
MT
NL
PL
PT
RO
SE
SI
SK
UK
Total
-
Total
28.6
40.0
32.0
50.0
36.4
10.0
40.0
15.4
40.0
30.8
50.0
50.0
37.0
25.0
46.7
21.1
58.3
37.5
33.3
11.1
37.5
75.0
38.9
62.5
7.7
33.3
60.0
34.9
Employment and social policy recommendation target groups (total number and percentage of target group),
Member States and EU-28, total for years 2012, 2013, 2014, 2015
YOUNG PEOPLE
2
3
4
9.5
19.0
0.0
0.0
13.3
13.3
13.3
0.0
0.0
12.0
12.0
0.0
0.0
0.0
50.0
0.0
0.0
18.2
9.1
9.1
0.0
10.0
0.0
0.0
10.0
30.0
0.0
0.0
0.0
0.0
15.4
0.0
20.0
0.0
20.0
0.0
0.0
0.0
30.8
0.0
10.0
10.0
30.0
0.0
0.0
0.0
50.0
0.0
11.1
18.5
7.4
0.0
0.0
0.0
25.0
0.0
13.3
0.0
33.3
0.0
0.0
5.3
15.8
0.0
16.7
25.0
16.7
0.0
0.0
0.0
37.5
0.0
11.1
11.1
11.1
0.0
0.0
11.1
0.0
0.0
0.0
0.0
37.5
0.0
25.0
0.0
50.0
0.0
11.1
11.1
16.7
0.0
0.0
25.0
37.5
0.0
0.0
0.0
7.7
0.0
0.0
14.3
19.0
0.0
0.0
20.0
30.0
0.0
6.0
10.8
16.9
0.3
1
-
5
-
0.0
0.0
8.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
10.0
0.9
Total
9.5
20.0
28.0
0.0
36.4
0.0
40.0
15.4
20.0
0.0
0.0
0.0
33.3
50.0
13.3
15.8
8.3
25.0
0.0
33.3
0.0
25.0
50.0
25.0
0.0
14.3
30.0
19.6
DISADVANTAGED PEOPLE
9
11
12
9.5
0.0
0.0
20.0
0.0
0.0
0.0
16.0
12.0
0.0
0.0
0.0
0.0
27.3
9.1
0.0
0.0
0.0
30.0
0.0
0.0
0.0
0.0
0.0
0.0
6.7
13.3
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
22.2
11.1
0.0
0.0
50.0
0.0
0.0
13.3
0.0
0.0
15.8
8.3
0.0
0.0
0.0
0.0
25.0
0.0
0.0
0.0
11.1
0.0
11.1
0.0
0.0
0.0
0.0
0.0
25.0
0.0
22.2
27.8
25.0
0.0
0.0
0.0
0.0
0.0
0.0
14.3
0.0
0.0
0.0
30.0
3.6
6.3
8.4
13
0.0
0.0
0.0
0.0
0.0
0.0
10.0
15.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
11.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.2
WORKERS AND UNEMPLOYED PEOPLE
Total
8
10
15
16
14.3
14.3
0.0
0.0
0.0
6.7
0.0
6.7
0.0
0.0
8.0
0.0
4.0
4.0
0.0
0.0
0.0
0.0
0.0
0.0
9.1
9.1
0.0
0.0
0.0
60.0
20.0
30.0
10.0
0.0
20.0
10.0
0.0
0.0
10.0
38.5
15.4
7.7
15.4
0.0
20.0
0.0
6.7
6.7
6.7
30.8
0.0
30.8
0.0
0.0
20.0
0.0
20.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
22.2
11.1
3.7
0.0
7.4
0.0
0.0
0.0
0.0
0.0
13.3
6.7
6.7
0.0
0.0
42.1
5.3
21.1
10.5
5.3
0.0
0.0
0.0
0.0
0.0
25.0
0.0
25.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
5.6
0.0
5.6
0.0
0.0
12.5
0.0
0.0
0.0
12.5
46.2
15.4
7.7
23.1
0.0
23.8
4.8
19.0
0.0
0.0
10.0
0.0
0.0
0.0
10.0
18.4
5.1
8.1
3.0
2.1
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015Legenda
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
-
REMAINING TARGETS
6
7
14
17
28.6
19.0
0.0
0.0
33.3
0.0
0.0
0.0
24.0
4.0
0.0
4.0
50.0
0.0
0.0
0.0
18.2
0.0
0.0
0.0
0.0
30.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
7.7
23.1
0.0
13.3
0.0
6.7
0.0
38.5
0.0
0.0
0.0
30.0
0.0
0.0
0.0
50.0
0.0
0.0
0.0
0.0
7.4
0.0
0.0
0.0
25.0
0.0
0.0
6.7
13.3
6.7
0.0
21.1
0.0
0.0
0.0
33.3
0.0
0.0
0.0
12.5
0.0
0.0
0.0
44.4
11.1
0.0
11.1
44.4
11.1
0.0
0.0
25.0
37.5
0.0
0.0
0.0
0.0
0.0
0.0
5.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
38.5
7.7
0.0
0.0
9.5
19.0
0.0
0.0
0.0
0.0
0.0
0.0
17.8
7.2
1.5
0.6
Total
(%)
(N)
100
21
100
15
100
25
100
2
100
11
100
10
100
10
100
13
100
15
100
13
100
10
100
2
100
27
100
4
100
15
100
19
100
12
100
8
100
9
100
9
100
8
100
4
100
18
100
8
100
13
100
21
100
10
100
332
Drop-outs
Disadvantaged young people
Unemployed young people
Young workers
Neets
Elderly workers
Women
Low-income workers
People with migrant background
(long-term) unemployed people
Roma people
Poor people/people at risk of poverty and social exclusion
People with disabilities
Families
Low-skilled workers
Disadvantaged unemployed
SMEs
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The percentage of cases in which the target identified throughout the CSR analysis
was Elderly workers (target 6) across the EU-28 comes to 17.8%, the highest
among all individual targets. This percentage is highest in CY and HR (50% each),
followed closely by MT and NL (44.4%). On the other hand, the target was not
identified in any of the recommendations for DE, DK, EE, HU, IE, PT, SE or UK.
The box below shows how CSRs on older workers have been addressed in Finland.
Box 3.7:
Finland: Ageing population and employment of older workers
In Finland the population is ageing rapidly. The number of people leaving the labour force each
year exceeds the number of people entering it.
Economic downturn and fiscal consolidation have made the social security challenges more
formidable and resulted in diminishing opportunities in the labour market. Indeed, the rapidly
deteriorating dependency ratio caused by population ageing, in Finland more rapid and abrupt
than in many other EU states, challenges the sustainability of social protection.
The overall trend of the employment rate has, in recent years, been affected by the ageing of
the population as the post-war baby boom generations moved to the 65-to-74 age group, while
the population in the 15-to-64 age group has diminished. The growth in unemployment was
particularly marked among the older workers.
Finland has received several CSRs (2012-2015) addressing the issue of ageing population. The
recommendations mainly concern the employability of older workers and the efficiency or costeffectiveness of health service provision, as well as the sustainability of the social security
systems.
Finland is to adopt a pension reform in 2017 very much in line with the pension CSRs issued,
linking retirement age to life expectancy and taking it into national evaluation.
Disadvantaged people constitute another overarching category including various
targets: people with a migrant background, Roma people, the poor /people at risk of
poverty and social exclusion, and people with disabilities.
These targets were identified with a frequency ranging from 0%, in countries such as
CY, DE, FI, FR and HR, to 50% in IE and RO, with an overall EU-28 level of 19.6%.
Within this category, depending on the country, people with a migrant background
(target 9), Roma people (target 11) and poor people (target 12) are the targets
identified with the highest frequency. In particular, poor people (target 12) are
targeted in 50% of the CSRs for IE, 30% in UK and 27.8% in RO.
The Roma people (target 11) have been identified in 27.3% of cases in CZ and 22.2%
respectively in HU and RO, and the people with a migrant background target 9 is
identified in 30% of the cases in DK.
The way Romania has dealt with CSRs addressing disadvantaged people is interesting
in this respect.
Box 3.8:
Romania: Poverty and Social Exclusion
From a social point of view, Romania has registered more limited progress in the last few years.
A major issue for Romania is reduction of poverty and social exclusion.
The risk of poverty or social exclusion continues to affect a large proportion of the population.
The rate of people at risk of poverty or social exclusion remains high – 40 % in 2013 – far
above the EU average, in particular as far as the Roma population are concerned. Children's
rights often fail to find effective enforcement.
Healthcare reforms have been stepped up, but healthcare outcomes, accessibility and efficient
use of resources remain challenging issues, in particular in rural areas.
The lack of adequate social services and reduced investments in social economy are also due to
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a severe problem of coordination between the national and local levels.
All these issues have been addressed by the CSRs since 2013. However, according to the
European Commission document accompanying the recommendations, Romania has made
limited progress in addressing CSR n.6 (2014) concerning poverty and social exclusion. In
particular, limited progress has been made in integrating the Roma population. An improved
strategy for Roma integration was adopted in January 2015, however its effects are still to be
deployed.
Some progress has been made in increasing the efficiency and effectiveness of social transfers,
particularly for children, and reform of social assistance, strengthening its links with activation
measures.
The last overarching category is that of workers and unemployed people. This
category includes low-income workers, long-term unemployed people, low-skilled
workers, and disadvantaged unemployed. In DE, 60% of the targets identified fall into
this category, the highest of all the countries. In SI and LT, this number falls to 46.2%
and 42.1% respectively. However, looking more closely into the category of workers
and unemployed people: the long-term unemployed people (target 10) are identified
with the most frequency. In DE, 30% of targets are long-term unemployed people and
20% are low-income workers (target 8). In fact, in very few countries are the lowskilled workers and disadvantaged unemployed targets (target 16) identified with high
frequency, except for SI, where low-skilled workers are identified in 23.1% of the
cases. The last remaining targets, Families and SMEs (targets 14 and 17), are
identified with zero to very low frequency throughout the analysis, except for EE,
where the percentage of cases in which ‘Families’ is identified as a target comes to
23.1% and in MT, where the percentage of cases in which ‘SMEs’ is identified as a
target reaches 11.1%.
3.2
The consistency of Employment and Social CSRs in relation to the countries’
performance in these fields
In this section we assess the consistency between the employment and social items
addressed by the CSRs and the Member States’ employment and social conditions. In
subsection 3.2.1 the cluster analysis enables us to identify homogenous groups of
Member States in terms of employment and social conditions and to assess whether
the items addressed by CSRs to these country clusters were consistent with their
conditions. This analysis is complemented by the evidence emerging from the country
case studies in subsection 3.2.2. The country case studies also provide some
indications regarding the countries’ policy responses to the CSRs.
3.2.1
The results of cluster analysis
Cluster analysis helps to identify groups of homogeneous countries in relation to their
social and employment conditions, on the basis of the indicators adopted in the MIP
and JER scoreboards (see chapter 4).
The following table presents the list of the indicators used for the cluster analysis. To
cluster EU countries we considered the countries’ baseline employment and social
conditions in the 2010-2012 period, before the 2013-2015 CSRs.
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Table 3.5:
N
1
2
3
4
5
6
7
8
9
10
11
12
List of indicators used for the cluster analysis (average 20102012)
Indicators
Unemployment rate - 3 year average
Employment growth - Annual percentage change in total employed population
Activity rates 15-64 (%)
Long-term unemployment 15-74 in % of active population
Youth unemployment rates 15-24 (%)
Young people neither in employment nor in education and training by sex, age and educational
attainment level (NEET rates) 15-24
People at risk of poverty or social exclusion (Percentage of total population)
At-risk-of-poverty rate (after social transfer) (percentage of total population)
Severe material deprivation Percentage of total population
People living in households with very low work intensity aged under 60, Percentage of total
population aged under 60
Real growth in gross household disposable income
S80/S20 income quintile share ratio
Table 3.6 describes the resulting five country clusters with the non-weighted average
of the indicators considered in each cluster.
The cluster procedure is a technique that performs aggregation on a basis of
combinations of several indicators. For this reason, the countries included in each
cluster are grouped according to similar characteristics in terms of all the indicators
considered. As such, within each cluster countries may differ in one or more indicators
(particularly in groups with many countries), but the differences with countries
included in other clusters (on average) are much larger and more significant.
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Table 3.6:
CLUSTER
Cluster analysis results – Non-weighted average of indicators by cluster
MS
1
AT CZ DE
DK FI LU MT
NL SE SI
2
EL ES
3
BG RO
4
5
Activity
Unemployment Employment
rate
rate 15-74
growth
15-64
Longterm
Youth
un.
unemp
1515-24
74
People in
Real
Inequality
People
NEET
Severe
household growth in
in the
at-risk15AROPE
material
with low household distribution
of
24
deprivation
work
disposable of income
poverty
intensity
income
S80/S20
6.6
0.6
73.6
2.2
15.2
7.3
17.9
13.4
3.9
8.3
0.0
3.9
20.2
-4.2
70.7
9.4
45.6
17.9
28.9
21.1
10.3
12.1
-7.5
6.2
9.2
-2.5
65.6
4.4
24.2
19.4
45.2
21.7
37.3
8.8
-3.1
6.2
HR HU LT LV
14.3
-1.6
67.9
7.4
31.9
14.5
33.7
18.3
21.6
12.8
-0.4
5.5
BE CY EE FR
IE IT PL PT
SK UK
10.8
-0.4
70.2
5.2
26.1
14.1
24.1
16.0
9.1
10.8
-1.9
4.8
EU-28
10.4
-0.6
70.8
4.7
24.3
12.4
25.1
16.1
11.1
10.1
-1.5
4.8
Source: Own analysis
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Cluster 1 – Positive social and employment situation
This cluster comprises 10 countries (AT CZ DE DK FI LU MT NL SE SI). They are
characterised by good overall employment and unemployment conditions. In
particular, they show a low level of unemployment (6.6%) and long-term
unemployment (2.2%), and the highest activity rate level (73.6%). Moreover, the
situation for youth is better than the EU-28 average (youth unemployment at 15.2%,
NEETS at 7.3%). Finally, they are characterised by a relatively high level of
employment growth (+0.6) with respect to the other clusters. As for the social
situation, the indicators show a better situation with respect to the other clusters, with
only 17.9% of people at-risk-of poverty and social exclusion and with an index of
severe material deprivation below the EU-28 average.
Cluster 2 – Severe unemployment and employment criticalities
This cluster includes only ES and EL. These countries present the highest total
unemployment (20.2%), long-term unemployment (9.4%) and youth unemployment
(45.6%) levels in the EU28, associated with a marked decline in employment (-4.2%).
Moreover, the social situation is critical, with 28.9% of people at risk of poverty and
social exclusion, indication of a severe material deprivation around the EU-28 average
(10.3%) and an index of inequality above the EU-28 average (6.2%).
Cluster 3 – Severe poverty and social exclusion criticalities
This cluster includes only BG and RO. These countries are characterised by a rather
better unemployment situation than the previous cluster. The general level of
unemployment is slightly below the EU-28 average (9.2%), and in line with the EU-28
in terms of youth unemployment (24.2%). The decline in employment is also lower
with respect the previous cluster (-2.5%). On the contrary, these countries are
characterised by a low level of activity rate (65.6%). BG and RO, in particular, show
severe problems of risk of poverty and social exclusion, material deprivation and
distribution of income. The percentage of people at risk of poverty and social exclusion
comes to 45.2% (in the EU-28 the figure is 25.1%), and the index of severe material
deprivation reaches 37.3% (the EU-28 average is 11.1%).
Cluster 4 – Intense unemployment, employment decline, poverty and social
exclusion criticalities
This cluster includes 4 countries (HR, HU, LT, LV). They are characterised by higher
unemployment and youth unemployment levels than the previous cluster, as well as a
decline in employment (-1.6%), but lower levels of poverty and social exclusion,
deprivation and inequality income distribution issues. They show high levels of
unemployment (14.3%) and youth unemployment (31.9%) with respect to the EU-28
average, as well as at-risk-of-poverty rate (33.7%), severe material deprivation
(21.6%) and inequality income distribution (5.5), but are significantly better
positioned than the countries in clusters 2 and 3.
Cluster 5 – EU-28 average countries
This cluster comprises 10 countries (BE CY EE FR IE IT PL PT SK UK) with average
figures for each indicator close to the EU-28 average. The cluster is strongly
representative of the EU-28 situation, in terms of both unemployment/employment
growth and poverty and social exclusion/deprivation/inequality income distribution
issues. The total unemployment rate is 10.8% (EU-28 10.4%), the youth
unemployment rate is 26.1% (EU-28 24.3%), the activity rate is 70.2% (EU-28
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Policy Department A: Economic and Scientific Policy
70.8%), and the at-risk-of-poverty and social exclusion rate is 24.1% (EU-28 25.1%),
etc.
As stated above, with cluster analysis we were able to identify groups of homogeneous
Member States on the basis of all the indicators included in the analysis. Member
States in each cluster are characterised by similar performance in the indicators
considered, and can thus be considered to be faced with similar problems. As such the
clusters could therefore provide useful reference when determining recommendations
and target groups to be addressed. In order to assess whether the CSRs on
employment and social issues by item and target groups are consistent with the
country clusters, for each cluster the type of recommendations (items) and target
group, as defined in section 3.1 were analysed.
Tables 3.7 and 3.8 show the items and targets included in the CSRs for each cluster.
Cluster 1 (Positive social and employment situation), including countries with
better performance than the others in terms of economic, poverty and social inclusion
levels, presents a majority of CSRs on items included in soft 113 employment policy
items
(29.2%),
followed
by
hard
employment
policy
items
(20.5%).
Recommendations devoted to the pension system account for 15.4% of the total,
while those devoted to education and training come to 17.2%. Recommendations on
social policies are limited to 8.7%.
As for targets, cluster 1 shows a relatively large proportion of CSRs devoted to young
people (including unemployed and NEET people – 31.9%), and elderly workers
(24.6%). Additionally, the CSRs devoted to workers and unemployed people come to
19.3%.
These recommendations are coherent with the characteristics of the cluster, consisting
of EU Member States whose employment/unemployment and social issues are not so
serious as in the other Member States. Thus, the emphasis given to employment
policies (both soft and hard) reflects the need to maintain and/or improve the labour
market conditions.
Cluster 2 (Severe unemployment and employment criticalities) is represented
by EL and ES. However, no specific recommendations for EL were included in the
analysis, as previously specified. Hence cluster 2 is represented by ES alone. ES is
characterised by a very high level of employment recommendations (soft, 42.8%,
hard 14.3%), and social policies (28.6%). This is also coherent with the characteristics
of the cluster identified, showing severe unemployment and growth employment
criticalities and, to a lesser extent, poverty and social exclusion issues.
As for targets, coherently with the high level of youth unemployment, 40% of the
CSRs addressed to ES refer to young people. Workers and unemployed people are
addressed by 20% of the CSRs.
113
As mentioned in the previous section, Soft employment policies are those not related to taxation and
hard regulation in the MIP. These items include: Employment policies (Gender gaps), Employment
policies (active policies), Employment policies (Matching among education, training and labour policies),
Employment policies (public employment service reform), Employment policies (youth employment
initiatives), Employment policies (subsidy schemes) and Employment (access to finance for enterprises).
Hard employment policies include taxation and social security, wage bargaining, indexation and
contract agreements, unemployment benefits and other benefit systems, labour protection and
legislation.
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Cluster 3 (Severe poverty and social exclusion criticalities), represented by BG
and RO, is characterised by high levels of soft employment (30%) and social (22%)
policy recommendations, but also recommendations on education issues (18%). BG
and RO are also characterised by 10% of the CSRs on the health system.
As for targets, disadvantaged people receive particular attention in the CSR
recommendations. More specifically, RO received recommendations on social and
educational policies regarding the Roma people, who represent a relatively large
proportion of the country’s population.
The recommendations on policies and the targets addressed thus appear consistent
with the characteristics of the cluster.
Cluster 4, composed by countries with intense unemployment and criticalities in
employment growth, poverty and social exclusion, shows a prevalence of CSRs on
employment (soft, 31.4%, hard 24.2%), and minor CSRs on social policy issues
(12.6%), but a relatively high proportion of CSRs regarding education (15.7%).
The targets addressed by the CSRs are also coherent with the items addressed, the
highest proportion being devoted to young people (36.4%), workers/unemployed
people (22.4%) and elderly workers (20.9%).
Cluster 5 (EU-28 average countries), composed by 10 Member States with an
overall average similar to the EU-28 presents CSRs in employment (mostly soft,
36%), social policies (17.2%), and education (3.2%). For these countries, youth
unemployment is a relevant issue, and the recommendations mainly concern young
people (43.3%). Significant figures are also observed for disadvantaged people
(16.8%) and women (10.3%).
Table 3.7:
Non-weighted average of % of items in CSRs by cluster
CLUSTER
MS
Health
(1)
Education
(2)
Pensions
(3)
Employment
HARD
(4-7)
Employment
SOFT
(8-14)
AT CZ DE DK
FI LU MT NL
9.0
17.2
15.4
20.5
SE SI
2
ES (EL)
0.0
10.7
3.6
14.3
3
BG RO
10.0
18.0
8.0
12.0
4
HR HU LT LV
6.9
15.7
9.2
24.2
BE CY EE FR
5
IE IT PL PT
3.2
16.4
7.4
19.8
SK UK
EU-28
6.3
16.5
10.5
19.9
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
1
Legend
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Healthcare system
Education and training system
Pension system (retirement age, pension reform)
Employment policies (Taxation and social security)
Employment policies (wage bargaining, indexation and contract agreements)
Employment policies (unemployment benefits and other benefits system)
Employment policies (labour protection and legislation)
Employment policies (Gender gaps)
Employment policies (active policies)
Employment policies (Matching among education, training and labour policies)
Employment policies (public employment services reform)
Employment policies (youth employment initiatives)
Employment policies (subsidised schemes)
Employment (access to finance for enterprise)
Social policies (Poverty: social transfers and social assistance schemes)
Social policies (Social services organisation and access)
Social policies (Childcare facilities)
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Social
Policies
(15-17)
29.2
8.7
42.8
30.0
31.4
28.6
22.0
12.6
36.0
17.2
32.6
14.1
Policy Department A: Economic and Scientific Policy
Table 3.8:
CLUSTE
R
Non-weighted average of % of targets in CSRs by cluster
MS
Young
people
(1-5)
Elderly
(6)
Women
(7)
Disadva
ntaged
people
(9, 11,
12, 13)
Workers
/Unempl
oyed
(8, 10,
15, 16)
Families
(14)
SMEs
(17)
1
AT CZ DE DK
FI LU MT NL
SE SI
31.9
24.6
7.9
15.3
19.3
0.0
1.1
2
ES (EL)
40.0
13.3
0.0
20.0
20.1
6.7
0.0
3
BG RO
35.5
14.8
2.0
39.0
6.8
0.0
2.0
4
HR HU LT LV
36.4
20.9
1.9
18.5
22.4
0.0
0.0
5
BE CY EE FR IE
IT PL PT SK UK
43.3
15.5
10.3
16.8
11.2
3.0
0.0
EU-28
37.3
19.5
7.1
18.2
15.9
Source: Own elaboration on Country-Specific Recommendations (CSR) 2012-2015
1.4
0.6
Legend
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Drop-outs
Disadvantaged young people
Unemployed young people
Young workers
Neets
Elderly workers
Women
Low-income workers
People with migrant background
(long-term) unemployed people
Roma people
Poor people/people at risk of poverty and social exclusion
People with disabilities
Families
Low-skilled workers
Disadvantaged unemployed
SMEs
The following conclusions emerge from the cluster analysis:
•
Overall, the analysis shows a consistency between the employment and
social items and target groups addressed by the CSRs and the main
employment and social conditions of countries belonging to the clusters;
•
Attention to young people (as main CSRs target) is very high in all
clusters (albeit with some differences). This shows that independently of the
“real situation” of Member States, youth unemployment is considered a severe
issue on which to concentrate Member States’ efforts;
•
Employment items outnumber social items even in those Member
States included in clusters that characterised by high levels of poverty
and social disadvantages. This shows that employment (both reforms and
policies) is considered a priority and seen as the main tool to fight poverty;
•
However, social policies are the objects of recommendations in
countries where risks of poverty and social exclusions are particularly
critical. Accordingly, the presence of targets with severe (multidimensional)
disadvantages (disabilities, ethnicity), as in RO and BG, led to a high level of
social policies recommendations;
•
At the same time, in countries showing marked regional disparities and/or
poverty and social exclusion risks for population groups (Eastern and Southern
countries), the recommendations on reform and measures on social issues are
numerous;
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•
Recommendations on pension measures and reforms are present in those
countries where the (working) population is getting older, and where the
sustainability of the pension system is becoming a major issue, and indeed a
constraint on the public budget;
•
Attention to elderly workers is relevant in many Member States,
particularly where (as in the Northern countries) the level of total
unemployment is lower and hits the older workers more than young people. In
these Member States, policies and measures for active ageing are considered
particularly relevant;
•
Women in particular are addressed by CSRs in the Southern countries (where
unemployment rates are high and women and families are particularly at risk of
poverty) and/or in countries with older working forces and with pension system
sustainability problems (Northern countries).
3.2.2
The evidence from the case studies
The evidence from the case studies and the survey show a more complex picture in
relation both to the consistency between the CSRs and the country socio-economic
challenges, and to the countries’ policy responses to the CSRs.
In all the country reports, analysis of the CSRs issued since 2012 shows that
the major challenges emerging have been tackled only partially by the CSRs,
with a greater coherence in the case of the employment situation compared to the
social situation. An improvement is acknowledged with the 2014 and 2015 CSRs,
which have been far more comprehensive than those issued in the previous years.
In addition, according to 28% of the survey respondents, the policy responses
introduced in their country to improve the employment and social situation are not
congruent with the CSRs presented in the 2014 and 2015 European Semester
exercises.
In France some of the most serious challenges for the country are not considered by
the CSRs: this is in particular the case of the weaker role of women and of migrants in
the labour market. The most evident shortcoming lies in the lack of attention to the
needs of specific vulnerable targets of population. Limited progress has also
been made in addressing labour-market rigidity, while some progress has occurred
in active labour-market policies to strengthen support for jobseekers furthest away
from the labour market, including the long-term unemployed and low-qualified.
Limited progress has been made in the case of the older workers (but the
government has announced a ‘Plan senior’ to address unemployment in this category).
Some progress has been made in modernising vocational education and training and
reform of compulsory education, introducing measures targeting educational
inequalities and early school leaving. More recently, none of the priority actions
in the social area evidenced in the Country Report France 2015 appear among
the recommendations: this is particularly true for the area of poverty, where
revision of the current schemes is called for.
In Finland policy responses introduced to improve the employment and social
situation appear to be congruent with the CSRs presented in the 2014 and
2015 European Semester exercises. Reforms are being carried out in line with the
recommendations, even though the reform process may take some time. For example,
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Finland is to adopt a pension reform in 2017 very much in line with the pension CSRs
issued over several years, right from the beginning of the process. As a representative
of the MoF puts it, “The idea of linking the retirement age to life-expectancy and
taking it into a national evaluation and as a subject of further analysis has its origin in
the CSR.” The recommendation on linking retirement age to life expectancy was an
exceptional new policy measure. Otherwise, the CSRs have actually cited much of the
government’s already initiated reforms instead of proposing new measures or
initiatives. Thus, the recommendations can be seen as continuation of the ongoing
policy rather than influencing new policy measures and reform negotiations.
At the same time, according to some stakeholders financial and economic
sustainability remain the dominant issue also in CSRs tackling social inclusion
issues. According to the Ministry of Social Affairs and Health (MSAH), social issues
have gained increased attention in CSRs, but closer scrutiny reveals that the
recommendations are mostly about the efficiency or cost-effectiveness of
health service provision as well as the sustainability of the social security
systems rather than the availability of services or adequacy of benefits (pensions) in
combating poverty and social exclusion. According to the stakeholders interviewed,
health, for example, should not be examined only from the point of view of costs; it is
also important to recognise the significance of health as an important element of
sustainability in the public economy and economic growth. Reducing inequalities in
health also has a positive effect on the national economy.
In Germany, even in a positive socio-economic context some social and employment
issues deserve attention and, at least in part, they seem to have been adequately
tackled by CSRs: a) gender gaps in terms of full-time labour market participation, pay
and pension entitlements; b) the labour market potential of people with a migrant
background is underutilised, with gaps between employment rates of nationals and
non-EU nationals. Women are particularly affected; c) old-age-poverty has increased
in recent years and is expected to rise further.
Existing geographical and socio-economic disparities (for example, NEET rates
disproportionally high among East German residents and young migrants across
Germany) have not been directly addressed. More in general, the number of
recommendations has been quite low since 2012, the first round of the of the
procedure implementation. The CSRs show no great changes between the 2012-2013
and 2014-2015 periods. In both periods, in fact, attention focused mainly on
reducing the high tax wedge in a budget-neutral way, in particular for low-wage
earners, and maintaining appropriate activation and integration measures, in
particular for the long-term unemployed. At the same time, it was considered
necessary to create conditions for wages to grow in line with productivity. While in the
period 2012-2013 this attention was strictly focused on the role of education as a
means to enhance the qualifications of disadvantaged groups, in particular by ensuring
equal opportunities in the education and training system and more efficient growthenhancing spending on education and research at all levels of government, during the
period 2014-2015 attention turned more to the labour market and pension system.
In Spain the CSRs appear quite in line with specific country challenges, but
due to the evolving context the balance between economic and
social/employment CSRs has changed over time – not so much in the 2014 and
2015 exercises, but rather between 2011 and 2012. The evolution of CSRs and
Country reports since 2012 shows a change in terms of sensitivity to
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employment/social issues. A break seems to have come about in the 2015 CSR. In
2011, of seven CSRs, three (43%) can be considered to have social/employment
content; in 2012, 4 out of a total of 8 (50%) had such content.
However, the difference between the two years is more qualitative, the specific
issues addressed in the 2011 CSR being more economic in nature: pension
reform, with the aim of guaranteeing sustainability, not adequacy to reduce poverty
(CSR2); reform of the collective bargaining system to align wage developments with
productivity and adjust labour conditions to the changes in the economic environment
(CSR5); assessment of the 2011 labour market reform and improvement in
employment opportunities for young people. In turn, the 4 social/employment 2012
CSRs seem more sensitive to the interlinks between the economy and
social/employment issues, in a context of extreme pressure caused by the public
debt crisis: the CSR 2 on pensions recognises that, once the reform had been
approved, the poor performance of the economy might imply the need to speed up its
implementation (however, this recommendation disappeared in 2013); the CSR5 on
labour market reform is more detailed and oriented to improving ALMP effectiveness;
the CSR4 advises reviewing spending priorities and reallocating funds to support
access to finance for SMEs, research, innovation and young people (implementing the
Youth Action Plan); for the first time, a recommendation on poverty is issued to Spain,
focused on child support and improving employability for vulnerable groups (CSR7).
The 2013 Country report largely approves the country’s response to the
social/employment CSR, but also makes the criticism that “the 2012 labour market
reform presented a set of general measures tending to promote employability, but
failed to take a specific approach to support the active inclusion in the labour market
of those furthest away”, thus highlighting the limits of the lauded labour market
reform. It also assesses the progress in tackling child poverty and improving the
efficiency of family support services as limited.
The one (out of four) employment/social CSR3 issued in 2015 for Spain interrupts
the trend of the previous three years, since it leaves out many social/employment
important recommendations, such as labour market segmentation, long-term
unemployment, improvement of the capacity to outreach non-registered young
unemployed and good quality offers within the Youth Guarantee, or ensuring
progressivity and effectiveness of social transfers, as in the previous CSR in 2014. It
recommends alignment of wages and productivity; improvement in the
quality and effectiveness of job search assistance and counselling, including
youth; streamlining of minimum income and family support schemes; and
regional mobility.
The focus in the UK’s CSRs has shifted slightly in recent years, with youth
unemployment and poverty being superseded by a focus on active labour
market policies (ALMPs) in the most recent CSR exercise which is reflected in the
latest (2015) recommendations. The issues surrounding youth unemployment and the
recommendations therein have been addressed through policy responses at the
national level: as one stakeholder noted, uptake of the Youth Guarantee has been
rather slow and non-committal. The repeated recommendations in relation to
youth unemployment are a key theme that has been addressed by the
government, with mixed results. This, along with the lack of implementation of a
Youth Guarantee, demonstrates a tendency in the UK to rather ignore the CSRs,
broadly failing to take them into account. However, adoption of the CSRs to remedy
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the problems raised seems to have been largely successful in the case of increased
provision and prestige of apprenticeships. The final recommendation is to
enhance the basic skill level of the UK population. This has not loomed large in
debate, although the recent raising of the participation age from 16 to 18 may prove a
positive step in this direction. On this evidence, it is fair to say that there has been a
greater consideration of social factors in these policies, taking into account
vulnerability and diversifying pathways for young people. However, the early
termination of the Youth Contract demonstrates there is still some way to go towards
implementing an effective programme to comply with the CSRs.
In Romania over the period 2013-2015, the number of CSRs regarding labour market
and social protection decreased from 4 in 2013 to 1 in 2015. Their content has
undergone the following changes:
•
elimination in 2014 of the CSR regarding the equalization of women’s and
men’s age, following a 2013 law proposal to equalise retirement age for
women and men, as anticipated by the 2010 law. In 2014, it was passed in
the Senate;
•
introduction, only in 2014, of a specific CSR on reducing the poverty level and
the number of people at risk of social exclusion. In the 2013, such measures
were included in the labour market participation CSR, while in 2015 some of
them are encompassed in the general CSR;
•
elimination, in 2014, of the specification on expediting transition from
institutional to alternative care for children deprived of parental care,
following the adoption of a series of measures to speed up the process;
•
introduction of a specific provision in 2015 regarding adoption of the minimum
insertion income.
When it comes to the adequacy of CSRs to the Romanian situation, as underlined
above these are generally in line with the main critical social and labour
market characteristics of the Romanian labour market and social policy; they
urge the Romanian authorities to continue implementation of the law
proposals/adopted reforms agreed with the EC and IMF bodies. Nevertheless, there
are some crucial issues for the Romanian labour market and social conditions that
the CSRs over the period analysed fail to consider:
•
better social inclusion and increased healthcare coverage of people occupied
in subsistence farming;
•
increased inclusion and the labour market of women, and in particular young
women;
•
improvement in the productivity level;
•
reduction in in-work poverty;
•
decentralisation of labour market services, also to remedy the current
deficiencies in coordination between the central labour market services and
the local social services;
•
greater involvement of civil society organisations and/or social partners in the
CSR process;
•
development of the social economy.
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In Italy the main social and labour market issues have been addressed only
partially by the CSRs and the macroeconomic perspective clearly dominates the
process. After the sovereign debt crisis of 2010, implementation of stricter economic
governance has affected social policy domains and austerity measures were
recommended to stabilise public expenditure. However, the need to tackle the social
impact of the crisis has recently started to emerge. Policy priorities shifted towards the
need to support job creation and reduce market rigidities. In particular, the focus of
the recommendations has shifted from youth unemployment and poverty to
active labour market policies (ALMPs), and from the tax burden on labour to
wage-setting and wage-bargaining. While the quality of education provision
has remained a major issue, particular emphasis has been placed on
apprenticeship, traineeship and development of skills.
In 2014 three CSRs (CSRs 2, 5 and 6) dealt specifically with labour/social issues while
for the period 2015-2016 only one (CSR 6) addressed these issues. The general aim of
these recommendations is to enhance monitoring of reforms’ implementation
(pensions, labour market and education) and evaluating the effectiveness of
recent policy measures.
Given Italy’s low rate of educational attainment (in particular tertiary) and skill
mismatches in the labour market, the CSRs attach importance to fighting early
school leaving and enhancing the supply of education (professional development
for teachers, generalised school evaluation and allocation of public funding on the
basis of merit). In particular, CSR6 attributes priority to improving school-towork transition, and promoting work-based learning and VET (in upper
secondary as well as in tertiary education), as well as ensuring wide recognition of
skills. Little attention has been paid to addressing the issue of poverty and
social exclusion for the most vulnerable groups. In particular, nothing was said
about the conditions of the immigrant population, although it has loomed
large in national and European debate. In all cases CSRs do not focus on gender
inequality and regional differences, among the main shortcomings of the
Italian socio-economic context.
In Poland the stakeholders judged that the country report drawn up by the
European Commission and following country specific recommendations
appropriately identified the country’s major socioeconomic challenges.
However, the stakeholders were concerned that in both the EC documents and the
proposed NRP, too little attention is paid to fighting social exclusion and
poverty, especially given the limited progress made in this field. The Committee on
Europe 2020 negatively assessed the fact that the European Commission failed to
include any recommendation on poverty reduction in recent CSRs. Moreover, the
stakeholders found that the problem of intergenerational transmission of
poverty, including child poverty, is neglected in analysis and is not
satisfactorily addressed in the NRP.
In particular, the trade unions criticised the European Commission for focusing too
much on fiscal consolidation, which led to stagnation of wages in the public sector
and decline in social protection. The unions argued that in order to improve the
situation of public finances at the national level, the European Commission should,
rather, exert pressure on Member States that dump tax rates and thus become tax
havens. The social partners also noted limited coverage of social issues in the Annual
Growth Survey 2015.
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Summing up, it can be said that across the countries analysed, presenting different
socio-economic conditions and welfare systems, a few common features can be seen:
•
the weak consideration for specific vulnerable groups (be they migrants,
elderly workers, women, poor children, etc.);
•
where social protection or health reforms are concerned, this generally happens
from the perspective of efficiency, cost-effectiveness and economic
sustainability, rather than from the perspective of adequacy to reduce
poverty or their social and economic impact on the long term considering their
possible effects on economic growth;
•
sub-national and territorial challenges and differences are rarely
considered.
However, positive developments have been appreciated in almost all the cases
in particular in the case of labour market issues. The same cannot be said in the case
of poverty and social exclusion, in particular of migrants and children: these specific
vulnerable groups still continue to be rarely considered within CSRs tackling social
inclusion. In addition within labour market and employment recommendations the
issue of tackling in-work poverty still does not represent a priority even where present
in the national context.
3.3
How much do the economic measures proposed level out the social
measures? The evidence from the survey and the case studies
Only a minority of the interviewees responding to the questionnaire deem
consideration of the social and employment objectives sufficient (15.1%),
while 39.4 % judge it to be insufficient. As an interviewee puts it “Progress exists but
it is inadequate to challenges”; a member of a health organisation considers that
“Since the Semester is a fiscal exercise and its mandate only covers the financial
aspects of health systems, broader indicators and improvement of health are not
adequately considered. However, the recommendations and policy which result from
the Semester continue to have a negative effect on health and well-being in some
countries.”
In this respect in the last few years according to 18.2% of the respondents there has
been some progress, while 36.4 % of the stakeholders judged the progress scant.
Some of the interviewees consider that progress has been in particular made
since 2013, (“Some progress could be felt since approximately 2013, particularly as
regards the high unemployment, maybe because of its impact on unemployment
benefits and fiscal deficit”) but a certain scepticism emerges: “At the very beginning
social and employment objectives were non-existent; they are a bit more present
now, but still, for the southern countries with more economic and social difficulties,
economic balance prevails”, or “The inclusion of social indicators in the Macroeconomic
Imbalances Procedures represents one of the main achievements in this regard,
although not wholly satisfactory”.
In the 2014 and 2015 exercises the stakeholders saw renewed attention to
the social and employment impacts to be attained together with fiscal
consolidation targets, more on the labour market side than in the social field. In fact,
while 27.6% of the respondents agree that increased attention has been paid to
labour market impacts, this is true only for 18.7% when considering increased
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attention to social impacts. The social stakeholders perceived a larger increase in the
case of labour market impacts (average of 3.1 out of a maximum of 5) in comparison
to their colleagues working in economic (2.4) and employment areas (3.0). The same
attitude, but with lower scores, is to be seen when considering social impacts.
According to 76.7% of the respondents to the survey, the main reason for renewed
attention to social and employment impacts has to do with the aggravation of
the economic crisis with increasing social criticalities and for 53.3% it is also (or
alternatively) due to social and political discontent. Additional reasons provided reflect
an increasing awareness of the social dimension and the reality of social conditions in
Europe, but also reduced political support and credibility in the EU project. As one
interviewee puts it “there is some will to monitor and address the social impacts of the
crisis but the process is hampered by the narrow, financial focus of the Semester”.
Country experts confirm the same assessment:
•
In Finland stakeholders found that over the last few years both social and
employment issues have gained renewed attention within the European
Semester, due largely to economic crisis together with rising social and political
discontent among European citizens. Employment is stressed more than
social issues but the Commission has also issued several
recommendations concerning the social sector. However, the
macroeconomic perspective is clearly seen to dominate the process and
thus no radical changes can be seen to have taken place since the European
Semester exercises in 2014 and 2015, nor in comparison to earlier years.
•
In France macro-economic surveillance seems to fail to tackle the real
issues and challenges the country is facing, tending to respond only to
economic needs. Social Europe seems ‘subordinate’ to Economic
Europe. This perspective clashes with the initial value of the ‘Social Europe’.
Social policies are still a national responsibility, but the EU has developed a set
of instruments in the social field to be seen as a safeguard against the potential
negative impact of economic challenges.
•
Across Europe during the last few years social and employment issues have
gained renewed attention within the European Semester, due largely to
economic crisis together with rising social and political discontent among
European citizens, and this has led to greater stress on employment issues
rather than social ones. In the case of Germany, the employment issues
included in the CSRs are strictly connected to broader social themes
such as the integration of migrants and /or the role of women within
the economy and the exploitation of their full potentialities to boost
the labour market.
•
From analysis of the CSRs and CRs for Spain since 2012, a change emerges
in terms of sensitivity to employment/social issues, which has since
persisted. A newly elected government presented the 2012 NRP, with fiscal
consolidation as the major priority and commitment to maximum correction of
budgetary imbalances in the shortest possible period of time. From this
moment on, the content of the subsequent NRPs is structured around the
detailed response of the country to the CSR of the previous year. According to
the official interviewees (from the Ministry for Employment and the Ministry for
Health, Social Services and Equality), all the CSRs have been accepted and the
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analysis is shared with the EU. In their opinion, there is no conflict between
economic and employment/social goals; the labour market reform, the
most important measure adopted this term, had been analysed by the
employment and economy authorities and there was total agreement
on the need for such reform in consideration of the fact that the best way to
lift people out of poverty is, according to the government, to set the framework
for job creation. This is completely in line with EC views. At the same time, in
the view of the representative of the Ministry for Health and Social Services
(and the member of the EPSCO), the contradiction exists, even within the
European Institutions, so that the social/employment CSRs are not
relevant in ECOFIN, whereas economic CSRs do have great relevance in
EPSCO. The EC seems rather more sensitive to the employment/social impact
of the reforms than the countries. An interviewee acknowledges and welcomes
the fact that for the first time joint meetings are being held by the three
Committees (ECOFIN, EMCO, EPSCO).
•
In the UK there is scepticism about the incorporation of social policies
into European Semester exercises, with more positive views on the
employment indicators. Stakeholders suggest that a stronger focus on job
indicators and growth could be beneficial, such as disaggregating job statistics
by age, but social issues are seen as somewhat secondary to these and the
economic indicators. There seems to be a consensus that all the EU
pillars should be equal, but in practice this is not the case, which could
cause oversight towards some of the social indicators. However, as
suggested by one stakeholder, some of these should be vital in ensuring
growth and prosperity in the EU, with emphasis on poverty and
inequality. The recommendations themselves tend to be seen as fair, one
stakeholder praising their relatively narrow focus as a strength in that they can
be tackled.
•
In Romania the agreements with the IMF and the European
Commission country specific recommendations have guided the labour
market, healthcare and social reforms in Romania in the last few years.
Stakeholders note that one major reason for delays and continuous
changes consists in the weak political commitment to reforms and
strategies agreed with international organisations. It is important to note
that many of the Romanian national strategies for the labour market and social
policies are drafted by World Bank consultants. It is also worth recalling
that the CSR process in Romania is coordinated by the Ministry of External
Affairs, which interacts with other ministries (e.g. Ministry of Labour, Social
Affairs and Family) within three inter-ministerial working groups. However, the
stakeholders’ interviews reveal that coordination is still rather weak, and they
call for a stronger role on the part of the Ministry for Social Affairs, Labour
Market and Family in the CSR process. Moreover, these working groups include
no stakeholders in the social and labour market field. In addition, it is worth
noting that recently the Romanian Government has created the National
Macroeconomic Surveillance Committee with the aim to prevent
macroeconomic imbalances. It is made up exclusively of representatives of
banks and financial public bodies. While its creation represents a significant
step in preventing crises such as occurred in 2009, it should be accompanied
by the consolidation of the Economic and Social Committee that should
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be in charge of monitoring social imbalances in the Romanian society and
ensuring a good balance between the macroeconomic and social equilibrium.
•
In Italy, without attention to social policies, the political debate at the
national level risks focusing excessively on fiscal discipline and
budgetary austerity with welfare retrenchment and cuts in social
inclusion policies, which may further reduce aggregate demand. Also, due to
the reduced social opposition and scant lobbying/bargaining power of the poor
and excluded groups, the composition of public expenditure and consolidation
efforts (e.g. the Italian spending review) risk focussing exclusively on welfare
and social policies instead of cutting unproductive expenditure, red-tape
inefficiencies, costs of the political system, etc. Hence, the inclusion of
inequality and social indicators among the main objectives can help better
orientate Member States’ fiscal discipline and budgetary cuts to other
domains (and constrain them), cutting rents rather than reducing
welfare support for disadvantaged groups and those in need.
•
In Poland according to the stakeholders interviewed still too little attention
is being paid to fighting social exclusion and poverty, especially given
the limited progress made in this field. Recent CSRs do not include
recommendations on poverty reduction. Criticism has been expressed to the
European Commission for focusing excessively on fiscal consolidation. At the
same time, the stakeholders argued that the social situation indicators adopted
are insufficient to monitor the situation of the most vulnerable social groups.
More attention should be paid to monitoring income and non-income
inequalities, which is crucial in effectively fighting poverty and social exclusion.
They also complained that educational inequalities are not receiving sufficient
attention.
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4. THE
ROLE
OF
EMPLOYMENT
AND
SOCIAL
INDICATORS AND THEIR MAINSTREAMING INTO
MACROECONOMIC SURVEILLANCE
KEY FINDINGS
•
The MIP and JER indicators show good statistical quality. They are reliable, being
based on consolidated EUROSTAT statistical sources at EU-28 level, which enable
collection of data and indicators with the necessary disaggregation/breakdown
(sex, age, educational level, social and economic conditions); comparable across
countries; and timely.
•
Another strength is their limited number (a positive feature when asking Member
States to monitor them), and the fact that they are among the relevant indicators
already in use for several years at EU-28 and Member State level (and therefore
already well-known).
•
However, employment and, in particular, social issues addressed by the CSRs
(such as education, pensions, health care and long-term care, social policies) are
not covered by MIP and JER indicators. The importance and magnitude of these
issues calls for specific additional indicators to be included in the scoreboard, as
also underlined by most of the stakeholders interviewed. A large number of
indicators could be considered in this respect, thanks to the recent improvements
in statistical sources.
•
Debate between EU institutions and Member States is currently underway over a
recent Commission’s proposal to include additional labour market indicators
(activity rate, long-term unemployment rate and youth unemployment rate)
among the headline indicators in the MIP scoreboard. This proposal aims to raise
the status of labour market developments in the economic analysis, and to
address the possible negative employment and social consequences of austerity
measures and the importance of social investments for long-term growth.
•
We propose to add two indicators to the headline MIP scoreboard (at-risk-ofpoverty after social transfers and the long-term unemployment share) and nine
additional indicators among the auxiliary ones. This would also incentivise more
investments in the development of adequate social indicators at the EU and
Member State level.
•
The EP could provide political support urging the need for greater investments in
the development of social indicators.
4.1
The scoreboard and auxiliary indicators and their role in the European
Semester
The European Union governance mechanisms are increasingly relying on timely, highquality socio-economic and financial data and indicators. In particular, each
coordination mechanism involved in the European Semester is based on a specific set
of scoreboard and auxiliary indicators which are merged together in the headline and
auxiliary indicators considered in the AMR and the AGS. Since the publication of the
first Statistical Annex in 2012, significant progress has been achieved towards
enhancing the standards and methods used for the compilation of underlying data as
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well as enhancing the quality and reliability of the indicators. Below we provide a
description of the main features of the indicators included in the MIP scoreboard, the
Joint Employment Report (JER) and the Social Protection Performance Monitor (SPPM),
as well as recent developments in the debate on the integration of new sociooccupational indicators among the MIP headline indicators.
As shown in Box 4.1 the MIP Scoreboard consists of a set of key (or headline) and
auxiliary indicators on economic, employment and social trends that can severely
undermine economic growth, employment, social cohesion and human capital. The
indicators used in the MIP are based mainly on data collected under European
legislation and are mostly compiled by Eurostat.
The MIP Scoreboard now consists of 11 headline indicators. The choice of indicators
in the scoreboard is based on their relevance for early identification of macroeconomic
imbalances and competitiveness losses, with particular focus on the smooth
functioning of the euro area. The MIP scoreboard indicators are accompanied by
indicative thresholds (used in the AMR) to enable early detection of potential
imbalances, while no thresholds are applied to the auxiliary indicators.
The only key indicator relating to the labour market and, indirectly, to social
issues is change in the unemployment rate, which is considered as a contextual
variable signalling possible adjustment issues, to be considered together with the
other scoreboard indicators 114. For this reason, the threshold indicated for the
unemployment indicator is used only to provide indications on the adjustment process.
The economic reading of the scoreboard indicators implies that there is no
automaticity involved and that any other relevant information could be taken into
account. For example, the fact that one or more indicative thresholds have been
crossed does not necessarily imply that macroeconomic imbalances are emerging 115.
The auxiliary indicators complement the information base for an understanding of
potential imbalances, as well as the adjustment capacity of the economy. There are,
however, no thresholds attached to these indicators, which are mainly used to support
the assessment of the economic, social and employment conditions of those Member
States selected for In-Depth Review and the potential employment and social
consequences of the corrective measures proposed.
Currently, ten employment and social indicators are included in a list of 28
auxiliary indicators. These indicators were added to the MIP auxiliary indicators
following the 2013 Communication “Strengthening the Social Dimension of the
EMU” 116.
The definition of MIP indicators and thresholds and adjustments to the scoreboard are
the responsibility of the European Commission, in cooperation with the European
Parliament and the Council as required by the legislation 117, while taking into account
114
115
116
117
The other labour market indicator, the percentage change in nominal unit labour cost, has more to do
with competitiveness issues than matters of earnings adequacy.
http://ec.europa.eu/eurostat/documents/16624/0/FAQ_v3/465e9cc8-97ae-4fb7-ace9-3a9450b937d6
Communication from the Commission, Strengthening the Social Dimension of EMU, Brussels, 2.10.2013,
COM(2013) 690 final
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0690:FIN:EN:PDF
Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on
the prevention and correction of macroeconomic imbalances http://eur-lex.europa.eu/legalcontent/EN/ALL/?uri=CELEX:32011R1176
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the views of the ESRB 118, Member States and the ECB in the context of LIME, a
working group of the Economic Policy Committee. In line with the MIP regulation, 119
the scoreboard is continuously monitored by the Commission.
Box 4.1:
MIP Scoreboard 120
Headline indicators and indicative thresholds:
1.
3-year backward moving average of the current account balance as percent of GDP, with
thresholds of +6% and -4% ;
2. net international investment position as percent of GDP, with a threshold of -35%;
3. 5-year percentage change of export market shares measured in values, with a threshold of
-6%;
4. 3-year percentage change in nominal unit labour cost, with thresholds of +9% for euro
area countries and +12% for non-euro area countries;
5. 3-year percentage change of the real effective exchange rates based on HICP/CPI deflators,
relative to 41 other industrial countries, with thresholds of -/+5% for euro area countries
and -/+11% for non-euro area countries;
6. private sector debt (consolidated) in percentage of GDP with a threshold of 133%;
7. private sector credit flow in percentage of GDP with a threshold of 15%;
8. year-by-year changes in housing prices relative to a Eurostat consumption deflator, with a
threshold of 6%;
9. general government sector debt in % of GDP with a threshold of 60%;
10. 3-year backward moving average of unemployment rate, with a threshold of
10%;
11. year-by-year changes in total financial sector liabilities, with a threshold of 16.5%.
Auxiliary indicators 121
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
118
119
120
121
Real GDP % change (1 year)
Gross Fixed Capital Formation % of GDP
Gross Domestic Expenditure on R&D % of GDP
Net Lending/Borrowing % of GDP
Net External Debt % of GDP
Inward FDI Flows % of GDP
Inward FDI Stocks % of GDP
Net Trade Balance of Energy Products % of GDP
Real Effective Exchange Rates - EA trading Partners % change (3years)
Share of OECD exports % change (5 years)
Terms of Trade % change (5 years)
Export Market Shares - in volume % change (1 year)
Labour Productivity % change (1 year)
Nominal unit labour cost % change (10 years)
Unit labour cost performance related to EA % change (10 years)
Nominal house price index % change (3 years)
Residential Construction % of GDP Eurostat NA
Private Debt, non-consolidated % of GDP
Financial Sector Leverage (debt to equity) %
Employment % year-by-year change
Activity Rate (15-64 years) %
Long-term Unemployment Rate (% of active population in the same age group)
Youth Unemployment Rate (% of active population in the same age group)
The ESRB is part of the European System of Financial Supervision (ESFS), with the aim to ensure
supervision of the Union’s financial system
https://www.esrb.europa.eu/about/background/html/index.en.html
Article 4(7) of Regulation EU No. 1176/2011
Source: Eurostat, MIP Task Force, Macroeconomic Imbalances Procedure – FAQ.
http://ec.europa.eu/eurostat/documents/16624/6180184/FAQ+-+MIP+-+04-02-2015/67e680af-e8ea4531-a16b-95a9e1eb713d
As stipulated in Article 4.4 of Regulation (EU) No 1176/2011 and outlined in the Alert Mechanism Report.
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24.
25.
26.
27.
28.
Young People not in Education, Employment or Training - NEET (% of total
population)
People at Risk of Poverty or Social Exclusion – AROPE (% of total population)
At-risk–of-poverty after social transfers rate (% total population)
Severely materially deprived people (% total population)
People living in households with very low work intensity (% total population)
The employment and social indicators included in the auxiliary MIP indicators are
drawn from the scoreboard of key and auxiliary indicators developed by the
Commission for the Joint Employment Report (JER) and the social OMC 122 and
integrated into the working of the 2014 European Semester in accordance with a
decision of the December 2013 European Council, in order to strengthen the social
dimension of the EMU and follow key employment and social developments of
relevance for its sound functioning.
The inclusion of these labour market and social indicators in the European Semester
has been taken as a means to increase the emphasis on social objectives in the EU’s
priorities and Country-Specific Recommendations, as well as intensification of social
monitoring, multilateral surveillance, and peer review. In this way, some of the
indicators already adopted in the employment policy coordination mechanisms receive
greater political prominence in the European Semester and are directly related to the
economic policy coordination mechanism.
The JER scoreboard of employment and social indicators is presented in Box 4.2
and was used for the first time in the 2014 European Semester. The set of JER
indicators includes five key indicators of employment and social trends that can, in
negative cases, severely undermine employment, social cohesion and human capital
and thus jeopardise the stability and good functioning of the EU and the EMU. This list
has been supplemented with a list of Auxiliary indicators presented in the Social
Scoreboard of the Joint Employment Report, as annexed to the Annual Growth Report.
Box 4.2:
JER scoreboard of key and auxiliary employment and social
indicators
KEY INDICATORS
1. Unemployment rate (% of active population)
2. NEET (%) and Youth unemployment rate (% of population aged 18-24)
3. Change in real gross disposable income of Households (on total population)
4. At-risk-of-poverty rate (% on working age population 18-64)
5. Inequality in the distribution of income ($80/$20 ratio)
AUXILIARY INDICATORS
1. % change of Employment rate
2. Activity rate 15-64 year
3. Long-term unemployment rate (% active population)
4. People at risk of poverty or social exclusion (% of total population)
5. At-risk-of-poverty rate (% of total population)
6. Severely Materially deprived people (% of total population)
7. People living in households with very low work intensity (% of population aged 0-59).
122
As proposed by the Commission in the above-mentioned communication on “Strengthening the Social
Dimension of EMU”
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In addition, the Social Protection Performance Monitor (SPPM) provides a dashboard
of 20 social indicators, including those adopted in the EU2020 strategy 123. The
dashboard is based extensively on the work on social indicators developed by the SPC
and its Indicators' Sub-group. The key purpose of these indicators is to monitor
progress towards a set of EU objectives for social protection and social inclusion.
Currently, EU social indicators are used in:
•
monitoring the Europe 2020 target on poverty and social exclusion;
•
preparing the European Semester and providing evidence through the Joint
Assessment Framework;
•
identifying the key social
Performance Monitor;
•
reporting on social policies in the NRPs, NSRs and country-specific/thematic
surveys;
•
preparing the Social Protection Committee's annual report;
•
thematic reports on relevant topics and for EU-level analytical work in
the field of social policy.
trends
through
the Social
Protection
The SPC has recently published a report updating the portfolio of EU social indicators
and monitoring progress towards the EU objectives for social protection and social
inclusion. 124 The document also identifies areas where further development is needed,
and proposed additional indicators to be included in the list.
The document includes a list of overarching indicators and four portfolios of indicators
covering specific objectives (social inclusion; pensions; healthcare and long-term care;
child poverty and wellbeing). The overarching indicators are listed in Box 4.3.
Box 4.3:
SPC Social Indicators: Overarching Portfolio
As discussed in section 1.2.1, common EU objectives of Social Protection and Social Inclusion
are agreed by Member States and the Commission.
On the basis of these objectives, the ISG has defined a set of indicators to monitor their
progress. 125 The list of social indicators has been continuously improved following the
evolution of the objectives over time and the improvements in data availability. The following
table presents the set of overarching indicators. 126
123
124
125
126
http://ec.europa.eu/social/BlobServlet?docId=13912&langId=en
SPC (2015), Portfolio of EU social indicators for the monitoring of progress towards the EU objectives for
social protection and social Inclusion, Indicator Sub-group, Luxembourg: Publications Office of the
European Union, December, 2015
http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7855&type=2&furtherPubs=no
The first objectives were limited to social inclusion and were agreed in 2001. They led to the adoption of
a preliminary set of 18 EU social indicators in the fields of poverty and social exclusion (the « Laeken
indicators »). In 2001/2, they were complemented with objectives on pensions; and in 2004 with
objectives on healthcare and long-term care. See
http://ec.europa.eu/social/BlobServlet?docId=13912&langId=en
For more details, including indictor definition, breakdowns and comments see SPC (2015), Portfolio of EU
social indicators for the monitoring of progress towards the EU objectives for social protection and social
Inclusion, Indicator Sub-group, Luxembourg: Publications Office of the European Union, December,
2015 http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7855&type=2&furtherPubs=no
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Commonly Agreed Indicator
At risk of poverty
exclusion rate
or
social
Key Dimension
Data Source
Code
Europe 2020 headline indicator –
AROPE
Eurostat – EU-SILC
t2020_50
Eurostat – EU-SILC
t2020_52
Risk of poverty or social exclusion
At-risk-of poverty rate
(AROPE Component)
+ illustrative threshold values
Risk of poverty
Population living in (quasi-)jobless
households
(AROPE Component)
Severe material deprivation rate
(AROPE Component)
ilc_li01
Eurostat – EU-SILC
t2020_51
Eurostat – EU-SILC
t2020_53
(Quasi-)jobless households
Severe material deprivation
Relative median poverty risk gap
Intensity of poverty risk
Eurostat – EU-SILC
tessi030
Income quintile ratio (S80/S20 )
Income inequalities
Eurostat – EU-SILC
tessi180
Healthy life expectancy (e.g. at
birth)
Health inequalities
Eurostat – there are
two components to
the calculations mortality statistics
(Eurostat's
demographic
database) and data
on
self-perceived
disability Eurostat –
EU-SILC)
tsdph100
Early school leavers
Educational outcome
capital formation
Projected
total
expenditures
public
social
Financial sustainability
protection systems
and
of
human
social
Eurostat – LFS
tsdsc410
EPC/AWG
Median relative income of elderly
people
Pension adequacy
Eurostat – EU-SILC
Aggregate replacement ratio
Pension adequacy
Eurostat – EU-SILC
Inequalities in access to health care
Eurostat – EU-SILC
Growth rate
in real gross
household
disposable
income
(GHDI (unadjusted))
Household income (aggregate for the
household sector, providing a link
between
macro-economic
developments and household income
developments)
Eurostat – National
accounts
At-risk-of-poverty rate anchored
at a fixed moment in time (2008)
Improved standards of living resulting
from economic growth
Eurostat – EU-SILC
ilc_li22b
Employment rate of older workers
Employment of older workers
Eurostat – LFS
tsdde100
In-work at-risk-of-poverty rate
In-work poverty
Eurostat – EU-SILC
tesov110
Activity rate
Participation in the labour market
Eurostat – LFS
lfsi_act_a
Regional disparities – coefficient of
variation of employment rates
Regional cohesion
Eurostat – LFS
tsdec440
Self-reported
medical care
unmet
need
for
tespn020
tsdde310
tsdph270
Care utilisation
(Possibly
replaced
supplemented in future)
Source:
or
SPC (2015), Portfolio of EU social indicators for the monitoring of progress towards the EU
objectives for social protection and social Inclusion, Indicator Sub-group, Luxembourg:
Publications Office of the European Union, December, 2015
http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7855&type=2&furtherPubs=
no
In the context of the revision of the European Semester activated in 2015 and the
upcoming mid-term review of the EU2020 strategy, attention to these indicators
and the debate on the integration of new socio-occupational indicators
among the MIP headline indicators has gained momentum.
Debate is currently in progress between the Commission and the Council on the pros
and cons of upgrading three auxiliary employment indicators (activity rate, longterm unemployment rate and youth unemployment rate) to the MIP headline
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Policy Department A: Economic and Scientific Policy
scoreboard indicators, as proposed by the Commission in a note presented to the
European Parliament in September 2015 127. According to the Commission « opinions
on the proposal were delivered already by the Economic Policy Committee of the
ECOFIN Council and the Employment Committee of the EPSCO Council. After full
consultation of the Council and the Parliament, the objective is to have a revised MIP
scoreboard operational for the 2016 Alert Mechanism Report».
The aim of the Commission proposal is to raise the status of labour market
developments in the economic analysis, in order to address the possible negative
employment and social consequences of austerity measures and the importance of
social investments for long-term growth. The proposal is to include these as indicators
of social distress rather than imbalances, with no legal implications and without
triggering macroeconomic imbalance procedures. The three indicators proposed
respond to the usual criteria of economic relevance, statistical quality and parsimony
and simplicity.
They are also considered to have strong implications for social exclusion and poverty.
The Commission proposes to include them in the headline indicators as changes over
three years rather than levels in order to capture new developments, and to define
thresholds according to the same criteria used for existing scoreboard variables 128.
According to the Commission’s note, the activity rate indicator helps to assess the
changes in labour supply with their possible impacts on potential output, labour
market exclusion and discouragement, as well as retirement pathways; the longterm unemployment rate is an indicator of deterioration in social conditions and
risks of increase in the long-term equilibrium rate of unemployment 129; the youth
unemployment rate helps to signal the worsening of labour market conditions at an
early stage, as well as potential negative effects in the future in terms of social
marginalisation and productive capacity.
The choice not to include a poverty indicator among the headline MIP indicators is
motivated by their low timeliness 130 and differences in data availability across Member
States, as well the fact that poverty indicators are in any case included among the
auxiliary indicators.
Indications of the different positions among the main Semester Stakeholder have
emerged from the interviews.
127
128
129
130
See European Commission, Adding employment indicators to the scoreboard of the MIP to better capture
employment and social developments, Brussels, September 2015
http://www.emeeting.europarl.europa.eu/committees/agenda/201510/EMPL/EMPL%282015%291012_1
P/sitt-1233686. This proposal has been previously discussed also in SPC
http://www.eu2015lu.eu/en/agenda/2015/09/17-18-comite-protection-sociale/SPC-informal-meeting17-18-September-2015-agenda.pdf.
Thresholds have been defined via a statistical approach based on the distribution of the indicators'
values, and thresholds identified as the lower and/or upper quartiles of the distributions. Activity rate
threshold: -0.2% (computed as the lower quartile of the distribution of the change over three years of
the activity rate across the whole sample over the period 1995-2007). Long-term unemployment
threshold: 0.5% (computed as the upper quartile of the distribution of the change over three years of
the long-term unemployment rate across the whole sample over the period 1995-2007). Youth
unemployment threshold: 2% (computed as the upper quartile of the distribution of the change over
three years of the youth unemployment rate across the whole sample over the period 1995-2007).
The so-called hysteresis effects, referring to the possibility that periods of high unemployment tend to
increase the natural rate of unemployment below which inflation begins to accelerate (NAIRU).
Hysteresis may occur due to discouragement, stigma, skill obsolescence
Timeliness indicates the degree of coverage of updated data and information.
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While the European Parliament has on several occasions stressed that employment
and social indicators should play a greater role in the European Semester process 131,
inclusion of additional labour market indicators among the MIP headline indicators is
contested by some Member States due to the risk of extending the area of
competence of EU institutions to policy areas of national responsibility, losing
ownership of these policies 132.
On the other hand, the representatives of civil society stress the need to consider an
inequality/poverty indicator among the MIP headlines in order to address poverty and
social exclusion directly, and incentivise more contextualisation through research and
data collection in this field. ETUC, on its die, underlines the need to improve the
adopted labour market indicators. In its action programme 2015-2019 133 ETUC
underlines the necessity to correct the EU2020 employment rate target for full-time
equivalents, and to include differentiated targets for women and men. In addition, it
calls for a definition of ‘quality work’, encompassing agreed quality-of-work indicators.
The issue of extending the role of employment and social indicators in the Alert
Mechanisms Report Scoreboard was also discussed in the February 2015 draft
Council Conclusions 134, jointly prepared by EMCO and SPC. The document
underlines “...the need to carefully preserve the nature of the Macroeconomic
Imbalances Procedure (MIP), maintaining transparency and consistency among all
existing indicators. The use of employment and social indicators in the MIP should
remain limited to allowing for a broader understanding of employment and social
developments linked to the adjustment of macroeconomic imbalances and be
preceded by a careful analysis and full consideration given to the Scoreboard of Key
Employment and Social indicators. The EMCO and the SPC should be involved in the
use of employment and social indicators within the MIP. Corrective action plans shall
take into account the social impact of the policy actions and shall be consistent with
the broad economic policy guidelines and the employment guidelines” (23, p.8)
131
132
133
134
See in particular the report of the European Parliament on the European Semester for economic policy
coordination: implementation of 2014 priorities (de Backer) of 15.10.2014 and the EP Resolutions of 25
February 2014 and of 22 October 2014 in which the EP criticised the limited role of the employment and
social indicators included in the scoreboard and called for “... social indicators to be made binding, and
indicators to be extended, to ensure comprehensive coverage of Member States’ employment and social
situations, e.g. for child poverty and decent work. According to the former MEP interviewed, in 2013
discussion in the EP turned to the role of social indicators, with debate between the EMPL and the ECFIN
Commissioners on the availability of appropriate social indicators based on timely statistical data. The EP
called for a single, more binding scoreboard. The issue was also perceived as somewhat sensitive among
countries that would not score very well on social indicators. There was also the issue of measuring
poverty: relative or absolute poverty. Eventually it was agreed to have a separate scoreboard on
employment and social indicators, with some employment and social auxiliary indicators in the MIP.
The EU’s current competences are limited, as regards employment, to incentive measures designed to
encourage cooperation between Member States and support their action, excluding any harmonisation
(see Article 149 TFEU). As regards social security and social protection, its competence is limited to
adopting directives setting minimum requirements for Member States’ systems whose fundamental
principles and financial equilibrium are set by Member States (see Article 153 TFEU). Moreover, if these
indicators are included in the MIP scoreboard they will be dealt by EPC and DG ECFIN, who have
ownership of the MIP procedure.
ETUC Action Programme 2015-2019, https://www.etuc.org/sites/www.etuc.org/files/other/files/
20151007_action_programme_en-consolidated_0.pdf
Council of the European Union, Draft Council Conclusions : The 2015 Annual Growth Survey and Joint
Employment Report: Political guidance on employment and social policies, 6147/15, Brussels, 24
February 2015 http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%206147%202015%20INIT
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These draft Council conclusions also call upon the Employment Committee and the
Social Protection Committee “To work on improving the Scoreboard of Key
Employment and Social Indicators to broaden the understanding of the employment
and social developments and reinforce its coherence with the Employment
Performance Monitor and the SPPM, while strengthening, where feasible, synergies
between the two instruments, and to assess the social impact of major structural
reforms.” (31, p.9). They also urge them “To work closer with the Economic Policy
Committee (EPC) in areas of joint competence in the context of the MIP” (32, p.9),
and indeed “To present to the Council their views on any Commission proposals on the
role of employment and social indicators in the MIP” (33, p.10).
To this end, the Indicators Sub-Group (ISG) work programme for 2015 135
includes improvement of key employment and social scoreboard indicators in
cooperation with the EMCO Indicators group and the Commission, and monitoring
possible extensions to social indicators of the MIP procedure scoreboard. The ISG will
also explore the possibility to develop indicators on the at-risk-of-poverty rate for
different types of households (including those in which income comes mainly from
social benefits); and to further develop indicators on the income situation at
different income thresholds, and of social policy performance. The indicators to
be further explored will focus on crucial social dimensions: material deprivation;
pensions; health and long-term care; income support and in-kind services; housing
exclusion and homelessness, and housing conditions. In close collaboration with
Eurostat the ISG also intends to contribute to the work of the Task Force on revision
of the EU-SILC legal basis, as well as exploring ways to ensure timelier data on social
developments and the development of new indicators such as an early-warning
indicator based on the curtailment of material deprivation items. The development of
dynamic indicators on transitions, persistence and recurrence based on the
longitudinal component of EU-SILC is also on the agenda.
An additional issue under debate is whether to take thresholds or benchmarks into
consideration in the analysis of scoreboard indicators. Thresholds and benchmarks
involve two different concepts of monitoring. Benchmarks usually concern policy
measures and objectives and are considered as a reference for institutional learning.
Thresholds are linked to early warning systems and are more used in surveillance
processes to detect and address trends that may adversely affect the proper
functioning of a Member State, the euro area, or the EU, and to screen for potential
imbalances that policymakers should address. 136
Currently, the MIP scoreboard includes thresholds only for the headline indicators,
while both key and auxiliary indicators in the JER scoreboard do not take into
consideration benchmarks or warning thresholds. However, in 2015 the European
Commission and Member States discussed how to improve analysis of the scoreboard
of key employment and social indicators, in particular, by developing a methodology
for assessing Member States’ performance. This new methodology is presented in
Annex 5 of the new version of the JER 137 and provides, for each indicator, a measure
of the relative standing of each Member State, within the distribution of the indicator
135
136
137
Social Protection Committee - Indicators Sub-Group, 2015 ISG Work Programme.
http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm
European Commission (2015) Draft Joint Employment Report from the Commission and the Council
accompanying the Communication from the Commission on the Annual Growth Survey 2016, COM(2015)
700 final Brussels, 26.11.2015
http://ec.europa.eu/europe2020/pdf/2016/ags2016_draft_joint_employment_report_en.pdf
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values of the EU28. This involves analysing, for each indicator, the distribution of
levels and changes, respectively, and detecting the Member States that significantly
deviate from the EU28 trend. In addition, a proposal has been made to set cut-off
points and selecting thresholds. 138
By contrast, as previously described, the OMC relies more on benchmarking as far as
indicators in the areas of social inclusion and social protection are concerned. 139
Introducing benchmarks or warning thresholds in the social scoreboard could be of
use, according to the majority of respondents to the online survey (57.9% and 68.2%
respectively). However, “Benchmarks are sometimes not very understandable”, and
“warning thresholds need to be treated with care (dependent on pre-existing
situation)”.
4.2
The indicators’ strengths and weaknesses
4.2.1
Conceptual limitation
Indicators are used to measure the extent to which a specified policy objective or
outcome has been achieved, to assess performance and to evaluate progress over
time in achievements. They can also be helpful in making cross-country comparisons.
Ideally, indicators should provide a direct measure of the specified objective.
For instance, if the policy objective is a healthy population, the indicator should
provide information on the change over time in the number or proportion of people
suffering from sickness. However, it is often difficult to give a precise meaning to a
general objective. Often indirect measures may have to be used, due to lack of
information.
There is rarely one single measure of the desired outcome, and a combination
of several indicators may give a more accurate measure of progress on a specified
objective. Thus, for example, the degree to which gender discrimination in
employment has been reduced may be captured by wage differentials, opportunities
for training, horizontal and vertical segregation, prospects for promotion and allocation
of work responsibilities.
Moreover, indicators may be either quantitative or qualitative: for instance,
quantitative social security indicators may relate to the proportion of people receiving
different types of benefits, while qualitative indicators concern the quality and
effectiveness of services. Thus, in order to obtain an accurate picture it may be
necessary to combine several indicators.
Indicators on economic and social issues may however suffer from substantial
limitations.
For example, no complete list of factors affecting quality of life can be created,
and the way people weight these factors differs. Furthermore, it is often not
clear which set of measures best reflects desirable states in various policy
138
139
See European Commission (2015) Draft Joint Employment Report from the Commission and the Council
accompanying the Communication from the Commission on the Annual Growth Survey 2016, COM(2015)
700 final Brussels, 26.11.2015, p. 53
http://ec.europa.eu/europe2020/pdf/2016/ags2016_draft_joint_employment_report_en.pdf
The list of indicators is continuously being improved. See, as statistical sources, Social Protection
Committee Indicators Sub-Group (ISG); EU statistics on income and living conditions (EU-SILC); and EU
labour force survey (EU-LFS).
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areas. For example, there is disagreement about which forms of goods and services
need to be counted to measure gross domestic product (GDP) (e.g. whether
housework should be part of GDP); and whether GDP is the best measure of socioeconomic development and well-being, or other measures should be considered, also
based on complementary subjective measures of well-being in areas such as health,
education, work and social relationships. In particular, there often seems to be a
difference between the statistical measurement of socio-economic aspects like
economic growth, inflation, unemployment, etc. and citizens’ perception of the same
aspects. This gap may be due to: i) imperfect measurement process; ii) inappropriate
definitions and use of different concepts; iii) inaccurate assessment of the economic
and social situation by aggregate measures when there are appreciable changes in
inequality; iv) the incapacity of commonly used statistics to capture new phenomena
that are having increasing impacts on citizens; v) the way in which statistical figures
are reported or used, possibly conveying a distorted view of trends.
Indicators of social aspects play a growing role in determining citizens' wellbeing and are increasingly being used to supplement economic measures. For
example, health, education and social relationships play major roles in determining
citizens' well-being. Subjective evaluations of well-being can also be used as a
measure of progress 140.
Because of the shortcomings of economic and social indicators, additional information
is usually required for policymaking.
In this regard the indicators structure developed by the Office of the United
Nations High Commissioner for Human Rights (OHCHR) 141 and adopted by the
Agency for Fundamental Rights (FRA) 142 could be a useful source of inspiration
in developing a methodology for social indicators in the EU area 143. In response to the
need for appropriate statistical indicators to monitor human rights, OHCHR has
developed a common conceptual and methodological framework concerning political,
economic, social and cultural rights. These indicators have been developed also to help
individual countries implement human rights and to illustrate how far the national
public authorities fulfil their obligations by using structural, process and outcome
indicators. In addition, they aim to provide the instruments for civil society to monitor
progress and ensure accountability. With this methodological framework, a number of
key points for monitoring progress in employment and social policy fields can be
established, responding to the need to:
• Focus on structural, process and outcome indicators.
140
141
142
143
On the limitations of existing economic indicators and the role of social indicators, see: Ed Diener,
Richard Lucas, Ulrich Schimmack, and John Helliwell (2010), Well-Being for Public Policy , Oxford
Scholarship http://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780195334074.001.0001/ac
prof-9780195334074; EPRS “Measuring well-being and progress Looking beyond GDP”
http://www.europarl.europa.eu/EPRS/140738REV1-Measuring-well-being-and-progress-FINAL.pdf;
Stiglitz, Sen and Fitoussi (2009) “Report by the Commission on the Measurement of Economic
Performance and Social Progress” http://www.insee.fr/fr/publications-et-services/dossiers_web/stiglitz/
doc-commission/RAPPORT_anglais.pdf
OHCHR has published a manual called «Human Rights Indicators: A Guide to Measurement and
Implementation» http://www.ohchr.org/EN/Issues/Indicators/Pages/documents.aspx
http://fra.europa.eu/en/project/2011/fundamental-rights-indicators
Specific reference was made to FRA in the context of Council Recommendation of December 2013 on
Roma integration http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/lsa/139979.pdf
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• Ensure policy relevance. Monitoring progress towards
measurements before the intervention (a baseline) and after.
targets
requires
• Use contextually-relevant and feasible indicators.
• Keep the indicators simple and on an objective and transparent methodology.
• Measure trends.
• Use quantifiable indicators.
• Where possible, disaggregate indicators.
4.2.2
Suitability and effectiveness of social employment indicators in European
Semester monitoring exercises
The social and employment indicators adopted with the MIP undoubtedly show some
specific strengths (see Annex 4 for the specific strengths and weaknesses of each
indicator):
•
Presence of consolidated statistical sources at EU-28 level and possibility
to collect data and indicators with necessary disaggregation/breakdown (sex,
age, educational level, labour condition, social and economic conditions).
•
Availability of several homogeneous and comparable indicators for the
EU-28 and Member States level for all items and items derived from European
surveys and databases (EUROSTAT in particular).
In addition, the indicators in place are limited in number (a positive feature when
asking Member States to monitor them) and are among the relevant indicators
already in use for several years at the level of EU-28 and Member State
programming policy intervention (and therefore already well-known).
However, given the complexity of the social and employment issues, additional
indicators need to be considered. In particular, there is a need for indicators able to
capture the complexity of the socio-economic issues addressed by CSRs and
presented with various types of disaggregation (at least by age, sex, educational
level).
At the moment:
144
•
Disaggregation by level of education is not covered (it could at least be
grouped by low/high level of education).
•
Age is not always covered, and thus there is the need to disaggregate
indicators by age range.
•
Gender issues are not covered at all; neither with specific gender indicators
(such as those able to monitor the gender employment gaps) nor with
disaggregation by sex 144.
•
Many issues covered by the CSRs (such as pension reform or issues related to
health care and long term care systems) are not covered by macro-surveillance
With the purpose of introducing a gender disaggregation of data, it is worth considering the European
Parliament 2012 study «Data for the Evaluation of the European Semester Process from a Gender
Equality Perspective ». The study sets out 83 indicators for the inclusion of the gender perspective in the
evaluation of the Europe 2020 Strategy during the European Semester process. The study is available
at: http://www.europarl.europa.eu/document/activities/cont/201204/20120424ATT43811/20120424ATT43811EN.pdf
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indicators. These are major issues, and specific additional indicators should
therefore be included.
These strengths and weaknesses correspond to those also indicated by the relevant
stakeholders interviewed for the study.
Most of the respondents (43.8%) consider that the social and employment indicators
included in the scoreboard of key and auxiliary indicators are suitable and effective for
integrating social and employment issues within the macroeconomic surveillance
process, but some critical aspects were pointed out:
•
The lack of a geographical dimension.
•
The lack of disaggregation by sex.
•
The lack of indicators on child, old-age and working poverty.
•
The unsuitability of the AROPE ratio to measure poverty and social difficulties
properly.
•
The lack of indicators addressing housing and health problems.
•
The lack of indicators on the effectiveness of policies.
Most of the stakeholders interviewed agree that the current indicators are able to
provide a clear contextualisation of the socioeconomic specificity of each
country for which CSRs are issued. The majority (69.6%) of the survey respondents
agree on the use of key and auxiliary indicators as an early warning system
comparable to the economic and fiscal indicators in the MIP for signalling ‘serious
employment and social imbalances that could threaten the stability of the EMU’.
However, the lacking health and pension dimensions constitute a criticality, and there
is concern about the fact that “The set of 14 indicators give a too superficial picture of
what is happening in a country. Additionally, no information about the policies -which
may be hampering or helping- is provided. As a result, the CSRs can be completely
inadequate (as they have proved in some cases)”, or provide brief, summary
contextualisation lacking clarity and comprehensiveness. Moreover, they are not able
to take into consideration decentralised and tailor-made services and policies. Thus
further elaboration would be needed to advance in this direction.
According to other respondents, on the contrary, the use of social and
employment indicators as an early warning system should be avoided, since
the nature of employment and social indicators is suitable for identifying trends rather
than ominous threshold situations. One should also take into account the timeliness
aspect (social and employment indicators refer to a different year and there is a lag in
the emergence of social impacts). Furthermore, the debate should not only focus on
the choice of indicators but also on the type and scope of analysis to be carried out.
Every Member State has its own system as well as a unique social and employment
situation. Thus benchmarks and thresholds do not explain much and do not provide
practical tools to improve outcomes. Qualitative sharing of knowledge and good
practices could be more useful.
For the majority of respondents the role of social and employment indicators
in contributing to evidence based CSRs is considered relevant, 18.8%
considering these indicators ‘very relevant’, in particular for the social and economic
stakeholders. Some of the interviewees comment that they are not sufficient: “At
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present social and employment indicators have only a descriptive function. We should
build the Social MIP” “The set of 14 indicators is clearly insufficient to produce
evidence-based CSRs. More information is required to be able to suggest sound
strategies through the CSR, otherwise, there is a serious risk that only superficial
assessments are made.” “They are relevant but not conclusive for evidence based
analysis. These indicators contribute to a more complete indication of the situation but
for CSRs to be evidence-based, the institutional structure and available measures
need to be taken into account too.”
Half of the respondents consider these indicators able to identify social
imbalances threatening EMU stability, with a higher score attributed by economic
stakeholders. Most of the considerations that emerged focused on the fact that
poverty is measured mainly through the AROPE indicator, which presents several
critical aspects, being unable to measure poverty or social exclusion properly.
Moreover, there is the need to introduce in-depth analysis of the pension systems and
reforms, health care reforms and reform of unemployment benefit systems. Some
respondents argue that these indicators serve for the assigned objective but are far
less able to offer a clear picture of the social situation per se and in any case there is
the need to take the institutional structure into greater consideration as it is key in
forming a more complete picture.
4.2.3
Use of social and employment indicators in CSR and additional indicators by
addressed item
Moving from the analysis on the CSRs carried out in chapter 3, we compare the MIP
and JER sets of indicators and consider the relationship between social and
employment indicators and country-specific recommendations in highlighting social
and employment issues.
As stated above and shown in Table 4.1, some of the JER key and auxiliary indicators
are included among the MIP indicators (headline and auxiliary). The indicators show
certain differences with regard to the way indicators are measured, thresholds and
age range. For example, the unemployment rate (included in MIP headline indicators)
in JER is considered with reference to level and not as a 3-year backward moving
average (as in MIP). The JER scoreboard also includes two indicators (change in real
gross disposable income in households and Inequality distribution of income) not
present among the MIP auxiliary indicators.
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Table 4.1:
Comparison between the JER and MIP social and employment
indicators
MIP Scoreboard
Headline indicator
3-year backward moving average of unemployment
rate, with a threshold of 10%;
Auxiliary indicators
Employment % change (1 year)
Activity Rate (15-64 years) %
Long-term Unemployment Rate (% of active
population in the same age group)
Youth Unemployment Rate (% of active population
in the same age group)
Young People not in Education, Employment or
Training - NEET (% of total population)
People at Risk of Poverty or Social Exclusion (% of
total population)
At-risk-of-poverty after social transfers rate (% total
population)
Severely materially deprived people (% total
population)
People living in households with very low work
intensity (% total population)
JER scoreboard of key and auxiliary
employment and social indicators
Key indicator
Unemployment rate (% on active population)
NEET (%)
Youth unemployment rate (% of population aged
18-24)
Change in real gross disposable income of
Households (on total population)
At-risk-of-poverty rate (% on working age
population 18-64)
Inequality in the distribution of income ($80/$20
ratio)
Auxiliary indicators
% change of Employment rate
Activity rate 15-64
Long term unemployment rate (% active population)
People at risk of poverty or social exclusion (% of
total population)
Severely Materially deprived people (% of total
population)
People living in households with very low work
intensity (% of population aged 0-59).
The analysis that follows focuses on the entire period 2012-2015 and seeks to
determine which employment and social indicators (scoreboard and auxiliary
indicators) are related to which specific set of recommendations. This allows for
a better understanding of whether the adoption of employment and social indicators
has brought about a greater balance between social and labour market and economic
issues, introducing appropriate indicators in social and employment macrosurveillance. Moreover, additional indicators which could enhance the social and
employment macro-surveillance process are proposed in order to better capturing the
multidimensionality of social and employment challenges (for example additional
indicators disaggregated by sex or by specific target groups). The analysis focusses on
the indicators of the MIP scoreboard, and takes into consideration the JER and social
OMC indicators.
For each CSR item, we present the employment and social indicators already adopted,
discuss their appropriateness and indicate additional available indicators, and illustrate
the assessment provided by the stakeholders interviewed through the online survey in
terms of relevance (e.g. capacity to add value to macroeconomic surveillance),
statistical quality (reliability and robustness), comprehensibility.
As explained in section 3.1, the CSRs items are classified in the following policy
categories:
1) health,
2) education and training,
3) pension reforms,
4) soft employment policies,
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5) hard employment policies and
6) social policies.
The main criteria adopted to identify new indicators are: relevance to the item
addressed; statistical quality, e.g. comparability across Member States and at the EU28 level; reliability and robustness (being based on the EUROSTAT database and
drawn mainly from EU-LFS and EU-SILC surveys administered in an homogeneous way
in all the Member States since several years).
Most of the indicators are included among the sets of indicators used at EU-28 for
monitoring EU policies, to which EUROSTAT dedicates a specific section of its database
(Table on EU policy). Their reliability and usability are thus guaranteed.
Some of these indicators are also among those included in the Portfolio of EU Social
Indicators developed by the SPC’s Indicators Sub-group for “Monitoring of Progress
Towards the EU Objectives for Social Protection and Social Inclusion 2015” 145.
CRS item 1: Health
As previously seen, 6.2% of the total of all the CSRs analysed for the 2012-2015
period in EU-28 Member States concern health issues. As can be seen in Table 4.2, at
present no indicators are included in MIP scoreboard for monitoring progress on
health issues after policy reform and intervention by Member States. However, this is
a very important issue that will probably see an increase in the CSRs given the
demographic changes occurring in all the Member States.
Considering the characteristics of the CSRs on this topic, which were mainly devoted
to improvement of National Health Systems and in particular to services for long-term
care with specific attention to elderly people, we hold additional indicators to be
crucial.
Three additional indicators could be considered in this respect:
•
Share of individuals covered by NHS and access to healthcare.
•
Self-reported unmet needs for medical examination, by sex, age, detailed
reason and income quintile.
•
Life expectancy at birth, to be calculated in breakdown form – at least by
gender – as a general indication of the quality of health status of the
population.
Table 4.2 summarises the possible additional indicators for the CSRs – health policy
items.
Table 4.2:
CSRs
Healthcare
system
145
Macro-surveillance indicators and additional indicators for the
CSRs - Health
MIP Headline
indicators
none
MIP
Auxiliary indicators
Additional proposed indicators
none
Share of individuals covered by
NHS and access to healthcare
Self-reported unmet needs for
medical examination by sex, age,
detailed reason and income
quintile
Life expectancy by age and sex
See: http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7855&type=2&furtherPubs=no
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These indicators are included among the social indicators proposed by the Indicators
Sub-Group of the Social Protection Committee. The life expectancy indicator is
included in the overarching portfolio; the self-reported unmet needs indicator is
included in the social protection portfolio includes; and the share of individuals
covered by NHS and access to healthcare are among the 36 indicators included in the
health and long-term care portfolio. 146
CSR Item 2: Education and training
Education and training issues represent 15.6% of the total items considered in the
CSRs analysed for the 2012-2015 period. The CSRs deal mainly with reducing early
school leaving and dropping out, but also higher education as well as education and
training reforms, focusing on modernising curricula and improving lifelong learning for
all. For some countries, other CSRs specifically deal with target groups of
disadvantaged people (e.g. Roma people) with the aim of enhancing their integration
into the education and training system.
The set of macro-surveillance indicators which are in place at the moment do not
include indicators specifically concerning education and training systems. However,
of the indicators in place, two concentrate on youth unemployment in the EU-28
which, ultimately, is strictly connected to the education and training system and its
capacity to support the transition of young people from education to the labour
market. These two indicators are:
•
The NEET ratio (percentage of young 15- 24-year-olds Not in Employment,
Education and Training out of the same age population). Inclusion in this
category depends on two conditions: 1) they are not employed (i.e.
unemployed
or
inactive
according
to
the International
Labour
Organisation definition) and 2) they have not received any education or
training in the four weeks preceding the survey which ascertained their
presence.
•
The Youth unemployment rate (age 15-24).
Both indicators constitute the main information basis for EU-28 and Member States
initiatives on young people, such as the Youth Guarantee. However, for both of them
some criticalities have been detected. For example, in many European Southern
countries there is the need to include also young people aged 25-29 years.
Moreover, the youth unemployment rate presents several critical aspects: it fails to
consider the transition period between finishing education and entering the labour
market and it is significantly influenced by inactivity due to education and training,
which reduces the denominator; moreover, it lacks disaggregation by sex and
education level.
These indicators have also been assessed by stakeholders interviewed.
•
146
According to survey respondents, the Youth unemployment rate presents
several critical aspects: it fails to consider the transition period between
finishing education and entering the labour market and it is significantly
influenced by inactivity due to education and training; moreover, it lacks
disaggregation by sex and education level. It is very sensitive to changes in
active population and to seasonality and it needs to be contextualised (by level
See: http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7855&type=2&furtherPubs=no
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and type of education, etc.). Structural and cyclical determinants should also
be considered according to some of the respondents.
•
The Youth NEET ratio is considered by some respondents (particularly
stakeholders belonging to the employment policy area) a better indicator than
youth unemployment, even though it also needs to be contextualised. Other
respondents see it as possibly misleading as it takes in very different
situations: highly qualified young unemployed actively seeking jobs and low
qualified inactive young people. It is also difficult to comprehend for the wider
public, and here again other indicators are considered preferable. Moreover, it
is not considered particularly robust.
Among the additional indicators that could be considered to address all the issues
covered by the CSRs, particularly relevant are the indicators on education provided
by EUROSTAT and included in the EU2020 targets:
•
Early leavers from education and training, age group 18-24 referring to people
showing the following two conditions: 1) the highest level of education or
training attained is ISCED 0, 1, 2 or 3c short, and 2) not having received any
education or training in the four weeks preceding the survey. The indicator is
particularly used at the EU level as it is included into the Employment
performance indicator under the Table on EU policy section of the EUROSTAT
database. The indicator shows the incidence of early school leaving in the age
range 18-24. Thus, it could be used as information complementary to the NEET
rate, as school leavers in 18-24 affect the percentage of people not in
education and training.
•
Percentage of the population with tertiary educational attainment level (at least
disaggregated by sex and, possibly, by age groups) could be included, possibly
considering also the share of adult population with upper secondary or tertiary
education, age group 25-64, to maintain surveillance of the labour force level
of education. These indicators should be considered to monitor the
improvement of the educational level of the population, particularly in
connection with the development of higher education systems.
Another indicator much used in monitoring employment performance at the EU level is
the Percentage of adult population aged 25-64 participating in education and training.
•
The Percentage of adult population aged 25-64 participating in education and
training is the most relevant indicator for monitoring participation in lifelong
learning activities on the part of the working force in each Member States. The
indicator covers participation in formal and non-formal education and training.
Lifelong learning encompasses all learning activities undertaken throughout life
(after the end of initial education) with the aim of improving knowledge, skills
and competences, within personal, civic, social or employment-related
perspectives. The “learning objective” is the critical point that distinguishes
these activities from non-learning activities, such as cultural or sporting
activities.
Particularly relevant for some Member States is the state of integration of ethnic
minorities, and above all Roma people. The Roma people are Europe’s largest ethnic
minority (estimated at 10-12 million in the whole of Europe, and around 6 million
living in the EU). The EU has long stressed the need for better Roma integration, and
the European institutions and every EU country have a joint responsibility to tackle
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this issue. However, homogeneous and comparable systems of data and statistics on
the Roma situation (including socio-economic conditions, such as educational level,
participation in school, labour conditions, etc.) are not available at the EU-28 level,
but only in some cases at the country level.
Table 4.3 summarises the macro-surveillance indicators adopted and the possible
additional indicators for the CSRs – Education and training items.
Table 4.3:
CSRs
Macro-surveillance indicators and additional indicators per CSRs
– Education and training
MIP headline
indicators
MIP Auxiliary indicators
Additional indicators proposed
Disaggregation by sex and age
(25-29, 15-29)
NEET 15-24 (%)
Education and
training system
none
Youth unemployment rate
15-24
Early leavers from education and
training, age group 18-24
Population with tertiary
educational attainment level by
sex and age
Share of adult population with
upper secondary or tertiary
education, age group 25-64
Lifelong learning – Percentage of
adult population aged 25-64
participating in education and
training
ROMA/disadvantaged young
people integration – COUNTRY
DATA
The early school leavers indicator is included among the social indicators identified by
the ISG in the overarching portfolio and among the primary indicators for social
inclusion. In addition, on education issues the ISG considers the NEET and Youth
unemployment rate indicators disaggregated by sex and age 147.
CSR item 3: Pension reforms
Pension reform issues account for 9.6% of the total CSRs in the 2012-2015 period.
However, no specific macro-surveillance indicators are in place for monitoring
and evaluating the effects of policy reforms and intervention on national pension
systems. Due to the great importance of this issue in all Member States, in view of an
ageing population and the increase in life expectancy, specific indicators for
monitoring pension system sustainability could be included.
•
In particular, the effective and official retirement age constitute data to monitor
the trend toward pension reforms. Specifically, the gap between the two figures
should consider also disaggregation by sex.
Moreover, indicators designed to keep track of the income level and at-risk-of poverty
conditions of elderly people could be considered. EU-SILC provides several indicators
for this purpose, with particular reference to older people. Two examples are:
147
In the social protection portfolio: persons with low educational attainment; low reading literacy
performance of pupils; in the thematic portfolio “investing in children”: early school education;
proficiency in reading, maths and science; young people not in employment, education or training
(NEET)
rate
(15-19).
See:
http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=
7855&type=2&furtherPubs=no.
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•
The At-risk-of-poverty rate of older people (possibly disaggregated by sex).
The indicator is defined as the share of persons +60 with an equivalised
disposable income below the risk-of-poverty threshold, which is set at 60% of
the national median equivalised disposable income (after social transfers).
•
The Gender differences in the relative income of elderly people (65+). The
indicator is defined as the absolute difference between men and women in the
relative income of elderly people (65 plus) for single-person households.
Finally, a relevant indicator for monitoring the sustainability of the pension and welfare
system is the Old age dependency ratio.
•
The Old age dependency ratio is the ratio between the number of persons aged
65 and over (when they are generally economically inactive) and the number of
persons aged between 15 and 64. A high dependency ratio can have severe
consequences for a country due to the low number of working age population
having to support schools, retirement pensions, and other assistance to the
youngest and oldest members of a population.
Table 4.4:
CSRs
Pension system
(retirement age,
pension reform)
Macro-surveillance indicators and additional indicators per CSRs
– Pension reforms
MIP Headline
indicators
none
MIP Auxiliary
indicators
Additional indicators proposed
none
Effective retirement age by sex
Official retirement age by sex
Gap effective/official retirement age by sex
Gender differences in the relative income of elderly
people (65+)
At-risk-of-poverty rate of older people by sex
Old age dependency ratio: ratio of individuals +65
over 15-64
The indicator on gender differences in the relative income of elderly people and the atrisk-of-poverty rate of older people are included among the social indicators identified
by the ISG of the Social Protection Committee in the pension portfolio of indicators,
while the old age dependency ratio is included in the context information of the
overarching portfolio. 148
CSR item 4: Soft Employment policies
Soft employment policies are those policies which are not related to taxation or
subject to hard regulation, as classified in section 3.1. These items include:
Employment policies aimed at reducing the Gender gap, Active Labour Market policies
supporting the matching between labour supply and demand, public employment
service reforms, Youth Employment initiatives, Subsidy schemes and Access to finance
for enterprises. These items represent 32.3% of the total CSRs for the 2012-2015
period.
The macro-surveillance indicators in some way connected with these items are the
employment, unemployment and activity rates, as well as all the indicators related to
the youth situation. Nevertheless, they are not sufficient to monitor certain
aspects of the various Member States’ Labour market policies, and present
some criticalities. Firstly, they all lack disaggregation by sex, age and educational
148
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Policy Department A: Economic and Scientific Policy
level. Moreover, each indicator shows certain specific weaknesses, necessitating
additional information for better monitoring of labour market performance.
The Stakeholders interviewed provide specific assessments of each of these
indicators.
•
The Unemployment rate is considered relevant, reliable, understandable and
robust by most of the stakeholders, in particular those in the employment
policy field. However, some respondents point out that this indicator fails to
distinguish the unemployed that are effectively seeking jobs from those that
are not, lacks disaggregation by sex and education level and is to some extent
dependent on the economic cycle.
•
The Long-term unemployment rate is also considered relevant, reliable and
understandable by most of the stakeholders but less robust, even if it is seen
as the indicator able to provide the most valuable added value to
macroeconomic surveillance. Among its limitations stakeholders underline the
lack of disaggregation by sex and education level, and the need to complement
it with information on the share of long-term unemployed having exhausted
unemployment benefits.
•
Activity rate 15-64. Of the labour market indicators it is considered the least
relevant, reliable, and understandable. It lacks disaggregation by sex and
education and is defined in different ways across Member States. Inactivity is
more relevant, if crossed with the reasons for the inactivity.
•
Percentage change of Employment rate. It is considered understandable,
reliable and robust but less relevant or able to provide added value to
macroeconomic surveillance than those specifically referring to unemployment
rates. It does not reflect demographic changes, e.g. significant reduction of
working age population in younger cohorts. It needs to be contextualised. It
lacks disaggregation by sex and it does not measure the quality of jobs, failing
to consider the differences between part-time, temporary and low-wage
employment.
Of the indicators that could be added to those already included, the following are
particularly relevant:
•
Employment rate 15-64, as the proportion of the working age population that is
in employment, is considered a key indicator for analytical purposes when
studying developments and performance within labour markets. Particularly
important is disaggregation by age when considering policy measures for
specific targets, such as young people and older people, using the usual ranges
of age for young people (15-29) and older people (+45 and/or 55-64).
•
Employment rate of low skilled persons could be included to take into
consideration the effects of policy measures designed to reduce the risk of
unemployment and low working intensity of people with low skills.
•
Specifically devoted to monitor gender differences, the Gender employment
gap indicator provided by EUROSTAT is defined as the difference between the
employment rates of men and women aged 20-64, and it is very useful to
understand gender differences in the labour market.
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As indicated by the stakeholders interviewed, employment indicators still pay little
attention to the measurement of the quality of jobs, and particularly the type of
employment (temporary, part-time, self-employment, etc.) and conditions (for
example, low wages). To this end, at least the following indicator could be included in
the MIP and JER scoreboards:
•
Temporary employment as percentage of total dependent employment, which
provides information on how many employees are hired under specific working
conditions that could be influenced by policy measures, such as people on
seasonal employment; people engaged by an agency or employment exchange
and hired to a third party to perform a specific task (unless there is a written
work contract of unlimited duration); and persons with specific training
contracts.
Particularly relevant for monitoring employment performance of the labour market in
Member States, also because addressed by specific policy measures, is the amount of
working hours.
•
The indicator Part-time employment rate represents employees who work parttime as a percentage of total employment. The indicator is particularly relevant
when considering gender differences in employment conditions.
•
The Full Time Equivalent (FTE) employment rate could also be taken into
consideration. The FTE is calculated as the ratio between the number of
employed workers converted into full-time equivalent and the total population
aged 15 to 64. A full-time worker is counted as one FTE, while a part-time
worker is counted less than one in proportion to the hours she or he works. The
FTE employment rate is preferred to the standard headcount employment rate
because it takes into consideration the heterogeneity among employed people’s
working hours, particularly relevant when addressing gender gaps in
employment. The indicator has to be calculated with microdata that could be
provided by EUROSTAT on request, and could be integrated into the official
indicator on employment performance monitoring.
•
Finally, the self-employment dimension could also be considered, using the
Self-employed workers as a percentage of total employed people. Selfemployed persons are those who work in their own business, farm or
professional practice. This indicator, by including disaggregation by sex, could
be very useful for understanding gender differences in self-employment.
An inequality indicator relevant for measuring gender differences in the labour market
is the Gender Pay Gap.
•
The unadjusted gender pay pap (GPG) is an important indicator used within the
European Employment Strategy (EES) to monitor imbalances in wages between
men and women, and could be added among the auxiliary indicators. It is
defined as the difference between the average gross hourly earnings of men
and women expressed as a percentage of the average gross hourly earnings of
men.
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Table 4.5:
Macro-surveillance indicators and additional indicators per CSRs
– Soft employment policies
MIP Headline
indicators
CSRs
Employment
(Gender gaps)
MIP Auxiliary
indicators
policies
Employment
policies
(active policies)
Employment
policies
(Matching
among
education, training and
3-year
backward
labour policies)
moving average of
unemployment
Employment
policies
rate
(public
employment
(Unemployment
services reform)
rate 15-74 in JER)
Employment
policies
(youth
employment
initiatives)
Employment
policies
(subsidies schemes)
Activity rate 15-64
Long-term
unemployment rate
Employment growth (
Annual
percentage
change in total employed
population)
Youth
unemployment
rate 15-24
NEET rate 15-24
Additional indicators proposed
Sex disaggregation and gender
gap
Gender pay gap in unadjusted
form
Employment rate 15-64, by sex
and age
Part-time employment rate percentage of the total
employment
FTE (Full-time equivalent) 15-64,
by sex
Gender employment gap
Employment rate of low skilled
persons, age group 20-64
Temporary employment as % of
total employment
Self-employed workers as a
percentage of total employed
people
Employment (access to
finance for enterprise)
The employment rate disaggregated by sex and age disaggregation is included among
social indicators identified by the ISG of the Social Protection Committee in the
pension portfolio (sustainable pensions), while the overarching portfolio includes the
employment rate of older workers. Concerning temporary and part-time employment,
the SPC social indicators do not include the part-time employment rate, but the
thematic portfolio of children considers as context information an indicator on part
time employment due to care responsibilities. Social indicators do not include
measures of gender pay gap apart from an indicator on gender differences in the
relative income of older people in the pension portfolio. 149
CSR item 5: Hard Employment policies
Hard employment policies (including Taxation and social security, wage bargaining,
indexation and contract agreements, unemployment benefits and other benefits
system, labour protection and legislation) account for 21.3% of the total CSRs for the
2012-2015 period. Besides measures regulating employment contracts and wage
bargaining, income support schemes are often used, such as unemployment benefits
and minimum wages. MIP indicators specifically devised to monitor the issues
included in this category are not in place.
Among the indicators that could be considered in relation to these policy areas, some
have been already indicated for the soft employment policies category:
149
•
Indicators relating to the type of employment contract: Part-time employment
rate; temporary workers as a percentage of total employees.
•
Indicators on the gender pay gap.
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National differences in income support systems could be addressed drawing on the
EUROSTAT statistics under the Social Protection domain of the Table on EU policy
database. One possible indicator to be considered in this domain could be the
Expenditure on Social benefits by function, which provides information on expenditure
on benefits for each function expressed as a percentage of total expenditure on social
benefits and can limit selection to benefits in this policy area, like unemployment
benefits:
•
Expenditure on benefits for each function expressed as a percentage of total
expenditure on social benefits. Social protection benefits are classified
according to eight social protection functions (which correspond to a set of risks
or needs):

sickness / healthcare benefits — including paid sick leave, medical care
and the provision of pharmaceutical products;

disability benefits — including disability pensions and the provision of
goods and services (other than medical care) to the disabled;

old age benefits — including old age pensions and the provision of goods
and services (other than medical care) to the elderly;

survivors’ benefits — including income maintenance and support in the
event of the death of a family member, such as a survivors’ pensions;

family / children benefits — including support (except healthcare) in
connection with the costs of pregnancy, childbirth, childbearing and caring
for other family members;

unemployment benefits — including vocational training financed by public
agencies;

housing benefits — including interventions by public authorities to help
households meet the cost of housing;

social exclusion benefits not elsewhere classified — including income
support, rehabilitation of alcohol and drug abusers and other
miscellaneous benefits (except healthcare).
Table 4.6:
Macro-surveillance indicators and additional indicators per CSRs
– Hard employment policies
CSRs
MIP Headline
indicators
Employment policies
(Taxation and social
security)
Employment policies
(wage bargaining,
indexation and
contract
agreements)
Employment policies
(unemployment
benefits and other
benefits system)
Employment policies
(labour protection
and legislation)
PE 569.985
3-year backward moving
average of
unemployment rate
(Unemployment rate 1574 in JER)
MIP Auxiliary
indicators
Additional indicators proposed
Activity rate 15-64
Temporary employment as % of
total employment
Long-term
unemployment rate
Part-time employment rate as %
of the total employment
Employment growth Annual percentage
change in total
employed population
Youth unemployment
rate 15-24
NEET rate 15-24
115
Gender pay gap
Expenditure on benefits by
function (unemployment,
disability, child, income support
schemes) out of total social
benefit
Policy Department A: Economic and Scientific Policy
The indicator on Social protection expenditures by function (current, gross and net) is
included among the social indicators identified by the ISG of the Social Protection
Committee, as context information of the overarching portfolio. Primary indicators on
health expenditure are included in the health and long-term care portfolio, while an
indicator of change in projected public pension expenditure is included in the pension
portfolio. 150
CSR item 6: Social Policies
Social policies include social transfers and social assistance schemes, social service
organisation and access and childcare facilities, covering measures for combating
poverty and social exclusion in different areas and for specific target populations, not
necessarily related to joblessness – for example, minimum income schemes usually
aiming to ensure a minimum standard of living for individuals and their dependents
when they have no other means of financial support. These account for 15.2% of the
total CSRs in the 2012-2015 period.
The MIP and JER indicators already include the most used indicators at the EU28 and Member States level for monitoring poverty and social conditions. While in the
MIP scoreboard these indicators are all included among the auxiliary ones, in the JER
scoreboard some of them are listed among the key indicators.
The JER scoreboard key indicators include:
•
The at-risk-of-poverty rate 18-64 (AROP) is included among the auxiliary
indicators as one of the most relevant indicators for monitoring poverty. The
indicator is defined as the share of persons with an equivalised disposable
income below the risk-of-poverty threshold, which is set at 60% of the national
median equivalised disposable income (after social transfers). As previously
stated for other indicators, and indeed as ascertained through the survey, this
indicator needs to be integrated with more specific indicators such as
children’s, elderly people's and workers' poverty in order to monitor the
situation of specific targets affected by social and poverty problems and often
recipients of policy measures. Among the MIP auxiliary indicators, the at-riskof-poverty rate (after social transfer) in percentage of total population is also
considered.
•
The Change in real growth in gross household disposable income is as very
generally income-based measure and can be considered a good resilience
measure.
•
Inequality in the distribution of income (s80/s20) is also considered a good
indicator for measuring the inequality of income distribution. It is calculated as
the ratio of total income received by the 20% of the population with the
highest income (top quintile) to that received by the 20% of the population
with the lowest income (lowest quintile). Income is to be understood as
equivalised disposable income.
The following indicators are, however, included among the MIP and JER auxiliary
indicators:
•
150
People at risk of poverty or social exclusion. The indicator corresponds to the
sum of persons who are: at risk of poverty or severely materially deprived or
See: http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7855&type=2&furtherPubs=no
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living in households with very low work intensity. Persons are only counted
once even if they are present in several sub-indicators. At risk-of-poverty are
persons with an equivalised disposable income below the risk-of-poverty
threshold, which is set at 60 % of the national median equivalised disposable
income (after social transfers) (AROPE).
•
The severe material deprivation rate, broken down by gender, age group and
household type, is the main indicator for material poverty at the EU-28 level.
This indicator measures the proportion of people whose living conditions are
severely affected by a lack of resources. The severe material deprivation rate
represents the proportion of people living in households that cannot afford at
least four of the following nine items: 1) mortgage or rent payments, utility
bills, hire purchase instalments or other loan payments; 2) one week’s holiday
away from home; 3) a meal with meat, chicken, fish or vegetarian equivalent
every second day; 4) unexpected financial expenses; 5) a telephone (including
mobile telephone); 6) a colour TV; 7) a washing machine; 9) a car; and 10)
heating to keep the home sufficiently warm.
•
To take into consideration the risk of poverty of people in households with low
income from work, the indicator People living in households with very low work
intensity is included among macro-surveillance indicators. People living in
households with very low work intensity are understood as those aged 0-59
living in households where the adults (aged 18-59) work less than 20% of their
total work potential during the past year. Students are excluded. The indicator
enables geographical and temporal comparisons of the monetary and nonmonetary elements of the indicator that describes poverty and social exclusion
in the EU-28. Also for this indicator, disaggregation by sex and age should be
considered, at least for children (up to 16) and elderly people (+65).
The stakeholders interviewed provided the following assessment of the social
indicators:
•
The indicator Change in real gross disposable income of households is
considered the most relevant of the social indicators together with the AROPE
indicator. Even though it is a very general income-based measure, it can be
considered a good resilience measure. Proposals to improve this indicator
include: a) the need to set an "absolute poverty threshold" (not a relative one,
like the poverty rate), to determine whether a household is above or below the
threshold; b) the need to take into account private and public expenditures on
basic social services (education, health). The expenditure side should be
monitored, since Member States show considerable differences as regards e.g.
education, health or care expenditure (public or private); c) it should be taken
within the context of the size, makeup, etc. of the households; d) this indicator
may give contradictory results in countries with high levels of tax evasion; e) it
is composed of variables difficult to collect; the EU-SILC survey has certain
limits. Moreover, the data sources present some problems (as is the case with
all the other social indicators).
•
Inequality in the distribution of income is considered a good indicator (an issue
for taxation which governments can adjust), but in many Member States data
are not available and in any case are not always robust; it provides subjective
information within a vague definition. It could provide more useful information
if it indicated whether the situation is getting better/worse.
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Policy Department A: Economic and Scientific Policy
•
•
At-risk-of-poverty rate (percentage of 18- 64-year-olds). This indicator, too, is
considered a resilience measure but comes in for the following criticisms: a)
the data are not always robust (volatility), and it presents a significant time
lag; b) it should be integrated with more specific indicators such as: children’s,
elderly people's and workers' poverty; c) a shortcoming of at-risk-of-poverty
rates according to one stakeholder is the connection between the EU-SILC
poverty threshold and national poverty standards. There is a need for more
research to capture the diverse realities of poverty: overall national and
European data on relative income poverty (the at-risk-of-poverty threshold) do
not identify those population groups at very high risk, such as people living in
institutions, homeless people and other groups difficult to reach.
AROPE People at risk of poverty or social exclusion. According to the
respondents, the data are not always robust, the indicator has a significant
time delay and provides subjective information. It brings together a
combination of measures, which makes it difficult to comprehend and not an
efficient measure of poverty and social distress. The definition of poverty
remains difficult. A single poverty measure could suffice in the first instance
and in-depth review could address more perspectives.
•
At-risk-of-poverty rate (% of total population). It should describe changes over
time and it comes in for several criticisms: it is not always robust (volatility)
and it is a relative measure of poverty. An absolute value would be more
adequate. In addition it presents a significant time lag.
•
Severely materially deprived people (% of total population).As mentioned for
many other indicators some change over time is needed and the data are not
always robust. In this particular case respondents observe that some aspects of
material deprivation should be revised (for example computer, mobile phone
and internet connections could be considered): the range of items at present
included is too limited. In some countries this indicator fails to show social
distress. A problem with relative deprivation indicators at the European level is
that what are considered basic necessities varies from country to country
depending on the overall level of wealth. A serious problem according to one
interviewee is that the sources of information vary from one State to another.
•
People living in households with very low work intensity (percentage of 0- 59year-olds). It is seen as a good indicator, in particular by stakeholders in the
employment and economic policy field, as it can rely on the accuracy of an
employment-based measure, even though the data are not always robust. The
age bracket should be revised as in many countries the retirement age is now
higher than 60; further, it does not exclude students.
Some additional indicators have been mentioned by the stakeholders interviewed in
relation to social issues, including:
•
an absolute poverty threshold (a basket of goods and services) differentiated
by country, taking into account the (absence of) public provision of services
(e.g. public/ private health, education, care services, support offered to the
disabled);
•
access to social services;
•
change in the social expenditure rate by function, e.g. pensions, health,
labour market, pensions, etc.;
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
•
replacement rates in times of unemployment;
•
median relative income rate and composition of income by source;
•
in-work-poverty;
•
health;
•
social participation in relation to GHDI- to indicate the degree to which people
can participate in society.
In order to monitor issues related to social policies, the previously mentioned indicator
measuring Expenditure in Social benefits by function could also be considered,
together with the following additional indicators:
•
the In-work at-risk-of-poverty rate, for monitoring the risk of poverty of people
and families with low work intensity. The indicator is based on the share of
persons who are at work and have an equivalised disposable income below the
risk-of-poverty threshold, which is set at 60% of the national median
equivalised disposable income (after social transfers). The indicator is strictly
related to in-work poverty and registers the interconnection between low pay
and low work intensity at the household level;
•
for the purpose of approaching policies for reconciliation of working and family
life in a gender perspective, the extent to which children (<3, 3-6) are involved
in formal childcare could be included.
Table 4.7:
CSRs
Macro-surveillance indicators and additional indicators per CSRs
– Social Policies
MIP
headline
indicators
MIP Auxiliary
indicators
JER indicators
People at risk of poverty
or social exclusion
Social policies
(Poverty: social
transfers and
social
assistance
schemes)
Social policies
(Social services
organisation
and access)
Social policies
(Childcare
facilities)
Disaggregation by sex,
age, working conditions
At-risk-of-poverty rate
(after social transfer)
(percentage of total
population)
Severe material
deprivation Percentage
of total population
People living in
households with very
low work intensity less
than 60, Percentage of
total population aged
less than 60
At-risk-of-poverty rate
18-64
Additional indicators
proposed
Change in real
growth in gross
household disposable
income
Inequality in the
distribution of
income (s80/s20)
Expenditure on benefits
by function
(unemployment,
disability, child, income
support schemes)
Children in formal
childcare (<3, 3-6)
In-work at-risk-ofpoverty rate
The AROPE indicator disaggregated by sex and age is included among the SPC list of
overarching social indicators, together with the in-work at-risk-of-poverty rate. The
indicator children in formal childcare, is included in the thematic portfolio ‘investing in
children’. 151
151
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Policy Department A: Economic and Scientific Policy
4.3
Suggested additional indicators
Table 4.8 below recaps the scoreboard and auxiliary indicators as well as the
additional possible indicators presented above.
Table 4.8:
Overview of the current scoreboard and auxiliary MIP and JER
indicators with additional possible indicators
MIP and JER indicators
3-year backward moving average of unemployment
rate (MIP Headline)
Unemployment rate 15-74 (JER key)
NEET 15-24 (%) (MIP auxiliary and JER key)
Youth unemployment rate 15-24 (MIP auxiliary)
At-risk-of-poverty rate 18-64 (JER key)
Activity rate 15-64 (MIP and JER auxiliary)
Long-term unemployment rate (MIP and JER auxiliary)
Employment growth - Annual percentage change in
total employed population (MIP and JER auxiliary)
People at risk of poverty or social exclusion (MIP and
JER auxiliary)
At-risk-of-poverty
rate
(after
social
transfer)
(percentage of total population) (MIP and JER
auxiliary)
Severe material deprivation Percentage of total
population (MIP and JER auxiliary)
People living in households with very low work
intensity less than 60, Percentage of total population
aged less than 60 (MIP and JER auxiliary)
Change in real growth in gross household disposable
income (JER key)
Inequality in the distribution of income (s80/s20) (JER
key)
Additional proposed indicators for MIP
Health
Share of individuals covered by NHS and access to
healthcare
Self-reported unmet needs for medical examination by
sex, age, detailed reason and income quintile
Life expectancy
Education and training system
Early leavers from education and training, age group
18-24
Population with tertiary educational attainment level
Share of adult population with upper secondary or
tertiary education, age group 25-64
Lifelong learning – Percentage of adult population
aged 25-64 participating in education and training
Pension
Effective and Official retirement age - Gap
effective/official retirement age
Gender differences in the relative income of elderly
people (65+)
At-risk-of-poverty rate of older people
Old age dependency ratio: ratio of individuals +65
over 15-64
Soft employment policies
Gender pay gap in unadjusted form
Inactivity rate by sex and age
Employment rate 15-64,
Activity rate
Part-time employment rate - percentage of the total
120
Disaggregation by sex and age
Disaggregation
Disaggregation
Disaggregation
Disaggregation
Disaggregation
Disaggregation
by
by
by
by
by
by
sex
sex
sex
sex
sex
sex
and age (25-29, 15-29)
and age (25-29, 15-29)
and age
and age
and age
Disaggregation by sex
Disaggregation by sex
Disaggregation by sex
Disaggregation by sex and age
Disaggregation by sex
Disaggregation by sex
Disaggregation by sex and age
Disaggregation by sex and age
Disaggregation by sex and age
PE 569.985
Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
employment
FTE (Full-time equivalent) 15-64
Gender employment gap
Employment rate of low skilled persons, age group
20-64
Temporary employment as % of total employment
Self-employed workers as a percentage of total
employed people
Hard employment policies
Gender pay gap in unadjusted form
Disaggregation by sex
Disaggregation by sex and age
Disaggregation by sex and age
Temporary employment as % of total employment
Disaggregation by sex and age
Self-employed workers as a percentage of total
employed people
Expenditure on benefits by function (unemployment,
disability, child, income support schemes)
Social policies
Expenditure on benefits by function (unemployment,
disability, child, income support schemes)
Children in formal childcare (<3, 3-6)
In-work at-risk-of-poverty rate
Disaggregation by sex and age
All considered, we propose a number of new indicators that could provide additional
insights into social and employment imbalances and which comply with two main
criteria:
• they are already computed by Eurostat (feasibility); and
• are sufficiently timely, reliable and robust.
In order to comply with the requirement to maintain a workable number of indicators
in the scoreboard, we propose considering the following additional criteria,
recommending to:
• Add only a few employment and social indicators to the list of “key” headline
indicators with the identification of thresholds; selecting those useful to monitor the
emerging risks of social and labour market imbalances.
• Add more indicators to the existing list of auxiliary indicators.
• Consider some more dynamic indicators (flows in-out of un/employment; job
creation/job destruction, in-out of poverty).
• Consider indicators that allow for a preventive approach rather than only a curative
one, addressing long-standing problems. To this end it is suggested that indicators
measuring the human and social capital investment and the potential capacity of a
country to deal with economic shocks also be included, some examples being
educational level, access to training and lifelong learning, coverage and
replacement rates of unemployment benefit systems, etc. (Bekker, 2013).
On the basis of these criteria, we propose to add two new “Sentinel indicators” to
the headline MIP scoreboard indicators, capable of anticipating social imbalances:
The first proposed headline indicator is the long-term unemployment share,
defined as the share of the unemployed persons since 12 months or more in the total
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Policy Department A: Economic and Scientific Policy
number of unemployed 152. The long-term unemployment share can provide
information on several important dimensions of unemployment with implications for
the (future) employability of workers and patterns in public expenditure
(unemployment benefits and other benefits). The main dimension concerns the length
and intensity of the job search for unemployed people. A longer duration of
unemployment is an indicator of poor performance on the part of Employment
Agencies, and the longer the spell the lower are the prospects of re-employment for
workers involved. Empirical studies have found evidence of “state dependence” in
unemployment, indicating that the probability of outflow from unemployment into
employment is likely to decrease as the spell is prolonged due to discouragement and
scarring effects. Moreover, a long-term unemployment is also likely to determine a
progressive deterioration of workers’ skills and obsolescence of their human capital. At
the macro level, long-term unemployment, combined with the institutional features of
the wage determination process (EPL, union density and un-coordinated collective
bargaining), has also been shown to determine “hysteresis” effects, slowing down the
adjustment process and weakening the wage moderating effect of unemployment. The
long-term unemployment rate is also highly relevant to monitoring public expenditure
as many passive (entitlements to unemployment benefits) and active measures
(ALMP, and re-training programmes) target the long-term unemployed. Finally, longterm unemployment is an important indicator for social developments in terms of
household poverty and social inclusion. Empirical studies show that long-term
unemployment is the main determinant of poverty within households. Since this
indicator is measured as a share with respect to total unemployment, what matters is
the level. In this context, this indicator should be measured as a 3-year backward
moving average, with a threshold equivalent to the latest three years EU28 average
(47% for the 2012-2014 period).
The second headline indicator, proposed to be moved from auxiliary to headline
indicator, is the at-risk-of-poverty after social transfers rate defined as the share
of persons with an equivalised disposable income below the risk-of-poverty threshold,
which is set at 60% of the national median equivalised disposable income (after social
transfers) 153. Since the variable is recorded as a ratio with respect to total population,
what matters is the level and not the change since the latter is likely to vary very little
over time (unless in period of deep recession). This indicator should thus be measured
as a 3-year backward moving average, with a threshold equivalent to the latest three
years EU28 average (16.9% for the 2012-2014 period). The share of “people at-riskof-poverty after social transfer (as percentage of total population)” is an important
indicator for monitoring poverty and social exclusion and, as such already included in
the scoreboard among the list of “auxiliary” indicators, jointly with the “people at-riskof-poverty rate (18-64)”. With respect to the broader indicator measuring the “people
at-risk-of-poverty rate (18-64)” (which is already used in the EU Semester), it has the
advantage of explicitly taking into account the effectiveness of redistributive policies
for income support in place in each Member State, and to assess whether social
policies are capable of reducing income inequalities. While this indicator should be
accompanied by other poverty indicators targeting specific disadvantage groups (for
152
153
The duration of unemployment is defined as the duration of a search for a job or as the period of time
since the last job was held (if this period is shorter than the duration of the search for a job).
http://ec.europa.eu/eurostat/web/gdp-and-beyond/quality-of-life/long-term-unemploymentratehttp://ec.europa.eu/eurostat/web/gdp-and-beyond/quality-of-life/long-term-unemployment-rate
http://ec.europa.eu/eurostat/tgm/refreshTableAction.do;jsessionid=Eek-0NH5MD5m_5bcd2NzOwnNPP78e75xt32ihKyIp32lQh7PH3s!759708135?tab=table&plugin=1&pcode=tps00184&language=en
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example children and the elderly), as “auxiliary indicators”, in empirical studies it has
been shown to be a good predictor of the extent of overall poverty and social
exclusion. It is also useful to guide policy efforts to support the most vulnerable
groups, and improve the effectiveness of income support services for people at risk of
poverty and social exclusion, as well as people with disabilities. Examples of social
transfer and income support schemes taken into account in the indicator include:
unemployment benefits, family and child benefits, pensions, disability benefits, lodging
and mobility benefits, as well as various schemes of (means-tested) minimum income
support. All the above measures are part of the policy menus of member states to
fight poverty and reduce inequalities. The main weakness of this indicator is the time
lag. However, its inclusion among the headline indicators will support investments to
improve its timeliness and robustness.
Inclusion of these indicators in the MIP scoreboard should not change the focus of the
MIP surveillance procedure; on the contrary, it should fruitfully complement the
analysis of the macroeconomic imbalances and shed light on the social and economic
risks implied by policy measures. These indicators could be useful for a better
understanding of macroeconomic imbalances and the implications for the
recommendations addressed to member states in the reform process with regard to
the adjustment process. In this respect, the proposed thresholds should not be
considered in isolation but jointly with the other relevant main and auxiliary indicators.
We suggest that the other two new indicators proposed the European Commission in
its September 2015 note should be considered (or maintained) among the “auxiliary”
indicators, rather than included in the MIP scoreboard.
The activity rate is an important indicator of the employment potential and of the
attachment of individuals to the labour market. It mainly measures flows from labour
market participation to non- participation (or inactivity) including prolonged education,
early retirement as well as "discouraged/ added worker” effects. It mainly tracks longrun changes in demographics, life expectancy and cultural attitudes of selected groups
in labour market participation (e.g. longer education, (early) retirement, female/youth
attitude towards work, etc.). Thus it is largely driven by long-term trends and unlikely
to capture sudden (labour market) imbalances that are better captured by other
indicators.
The youth unemployment rate (15-24) focuses on a selected group of individuals that
empirical studies have shown to be very sensitive to business cycle conditions. The
youth unemployment rate is unlikely to be a reliable indicator of overall economic and
social imbalances, while it is very useful to assess the fragility of jobs in some
segments of the labour market. Another important limitation of this indicator is that
the share of young people still in education or training in this age group is very high,
so that fluctuations in the rate may be excessively volatile and very heterogeneous
across EU Member States. In order to assess the employment potential of young
individuals, the percentage of NEET (people Not in Employment, Education and
Training) has been increasingly considered in policy analysis and should be monitored
among the “auxiliary indicators”.
We also propose to add new indicators of “economic frailty” and resilience to
economic shocks to the auxiliary scoreboard indicators disaggregated by age
and sex whenever possible:
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•
Employment rate disaggregated by sex (3-year average).
•
Share of “Working Poor” among the employed population (3-year
average).
•
Share of temporary/fixed-term contracts in total employment (3year average).
•
Expenditure on benefits by function (e.g. unemployment, disability,
child allowances, income support schemes, etc.) as a percentage of total
expenditure on social benefits.
•
Unadjusted gender pay pap (GPG).
•
Full-time
average).
•
Skill gap: share of individuals with tertiary education (3-year
average).
•
Share of individuals covered by NHS and access to healthcare (1
year, computed on EU-SILC data).
•
Old age dependency ratios: ratio of individuals +65 over those 1564 (3-year average).
equivalent
Female-Male
employment
ratio
(3-year
As also suggested by the European Commission in its September 2015 note, these
indicators should be used to anticipate and provide valuable indications on
emerging social and employment imbalances, rather than to impose sanctions
that would be beyond EU competence. Assessment of these indicators should be
conducted by EU bodies in charge of employment and social policies, in close
coordination with those in charge of economic policies, strengthening the current
move toward a closer coordination and balance between economic and social policy
making in the European Semester.
Other indicators, even if important, are more difficult to calculate given the lack of
data and robust indicators. This is the case of some of the indicators proposed by the
stakeholders interviewed: e.g. access to social services (LTC, childcare), homelessness
rate; decent work index (difficult to compute and monitor, even if the Eurofound
European Working Conditions Survey could provide interesting and useful data, but
only every 5 years).
Whatever the choice of indicators, it is however necessary to provide data
disaggregated at least by gender, age, educational level and nationality, in
order to improve the monitoring of high risks groups. In addition, there is a need to
improve the reliability and robustness of employment and, especially, social
indicators, supporting Eurostat with sufficient resources for data gathering and
indicator improvements. In particular, the main sources of longitudinal data for
social and employment indicators, the EU-SILC database, should be enhanced.
Another data source that could be useful to assess the performance of labour policies
and which needs amplification is the Labour Market Policy (LMP) database based
on administrative data. The European Parliament could have an important role to play
in supporting these developments.
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5. CONCLUSIONS AND RECOMMENDATIONS
KEY FINDINGS
•
The findings of this study provide a coherent picture of a European
macroeconomic
surveillance
process
currently
undergoing
important
developments under the pressure of changing economic and social conditions,
with the increasing visibility of the structural employment and social effects of the
crisis as well as the massive immigration and refugee flows.
•
A greater balance between employment/social and macroeconomic/fiscal
objectives is expected to produce positive effects on the long-term growth
potential of EU, as also emerges in new developments in economic theory and
empirical research.
•
The need for a greater “socialisation” of the European Semester is now
acknowledged at both the EU and national level, but how to reach it remains
controversial. The debate regards not only the role of social and employment
indicators, but also the necessary improvements in the governance and
coordination mechanisms and the involvement of the employment and social
stakeholders.
•
There are some important criticalities concerning the fact that the European
Semester and the CRSs still focus mainly on macroeconomic imbalances, while
social and labour market reforms are usually addressed only from the perspective
of efficiency and cost-effectiveness, finding more limited implementation.
•
Other issues of concern regard the transparency of the rules-based framework,
the balance between the economic and the employment and social governance
mechanisms, and the impact of the current governance framework on economic
growth and social imbalances.
•
The existing social and employment indicators show both strengths and
weaknesses: on the one hand, robustness, reliability, comparability, parsimony
and comprehensibility; on the other, lack of disaggregation able to capture the
complexity of the social and employment issues, and the limited number of issues
covered.
•
We propose two additional headline indicators and nine auxiliary indicators to be
added to the MIP scoreboard that could provide additional insight into social and
employment imbalances. The proposed indicators comply with the main criteria of
feasibility, timeliness, reliability and robustness.
•
Data disaggregated at least by gender, age, educational level and nationality are
needed in order to improve the monitoring of high risks groups and the
robustness of the social indicators. Data gathering and indicator improvements
should be supported with sufficient resources.
•
Overall, the issues tackled in this study clearly indicate the need for revision of the
EU governance and coordination system in the direction of a more balanced
European Semester as well as the need to restore the ultimate goals of the
EU2020 strategy. Improvements in the flexibility and transparency of the process,
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and the participation of civil society organisations, the social partners and
parliaments at both the EU and national levels are also envisaged.
•
Adoption of an extended version of the OMC approach could be beneficial to
improve the transparency of the European Semester process as well as its
flexibility. This is particularly important for the purpose of supporting a greater
involvement of the relevant EU and national stakeholders in the process and in
creating shared political and public debate regarding the European Semester.
•
The European Parliament could have a very important role to play in supporting
these changes and in supporting constant monitoring on how the Semester reform
proposals are implemented as well as supporting with sufficient resources the
main sources of longitudinal data (Eurostat, EU-SILC database and LMP database)
in order to enhances data gathering and indicator improvements.
This conclusive chapter summarises the main findings and provides some policy
indications in relation to the research issues addressed in the study.
5.1
Main findings
Why is a greater balance needed between social and macroeconomic
governance in the European Semester?
Social and employment targets are part of the EU2020 Strategy, which is focused on
long-term growth. A balance between employment and social objectives and
macroeconomic and fiscal objectives can produce positive effects on the long-term
growth potential of the EU. This is not only an issue of equality of opportunities or
need to implement redistributive policies, but there are also reasons regarding
efficiency, since inequalities and social exclusion have been shown to hinder
growth and aggravate macroeconomic imbalances, with spillover effects
across Member States. An excessive focus on macro-financial targets, such as fiscal
consolidation, may under estimate the recessive impact and the harmful social
consequences of the adjustment process. In addition neglecting the social implications
of the adjustment process may distort government actions towards easy to implement
income and welfare cuts (public sector wages, health and pension expenditures),
rather than engaging in more needed product market reforms (product market
deregulation, easy-of-doing business, length of judicial procedures) where the power
of lobbies is stronger but the long-term gain to improve competitiveness and increase
consumer welfare is much larger.
Developments in economic theory and empirical research are supporting the
view that longer growth spells are closely associated with greater equality in
income distribution. Too much inequality may reduce growth because it can amplify
the potential for financial crisis, and may bring political instability, thus discouraging
investments in education and entrepreneurial activities, leading to low human capital
accumulation – one of the key drivers of economic growth.
Attention to distributive issues is particularly necessary in economic and monetary
unions like the EU28, and particularly the EURO area. The crisis has shown that
negative social and employment shocks are likely to have spillover effects
beyond national borders, given the high degree of economic interdependence
between Member States. It is thus in the interest of the countries belonging to an
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economic and monetary union to ensure that employment and social imbalances do
not spiral out of control in any country.
Greater attention to labour market and social issues in the surveillance process would
also lead to a more comprehensive assessment of a country's conditions, with
consideration of the potential employment and social impacts of fiscal
consolidation measures and the positive long-term growth effects of
investments in human capital and social development. Otherwise, policy debate
at the European and national level risks focusing excessively on fiscal discipline and
budgetary austerity, often leading to welfare retrenchment, which may further reduce
aggregate demand. Indeed, it emerges forcefully from the academic debate reviewed
in section 2.2 that, especially in recession periods, focusing solely on the need to
reduce the public debt with austerity measures risks aggravating the recession spiral.
How has attention to social and employment aspects evolved in the European
governance mechanisms and the European semester?
As described in section 1.1, since the original Treaties came into effect two main
issues have been observable in the European integration process: one concerning the
division of competences between the EU and Member States and the other concerning
the balance between economic and employment/social policies.
While initially EU priorities focused mainly on economic concerns (e.g. developing a
competitive internal market), in recent years, and particularly since the Amsterdam
Treaty, the EU common policy has extended in scope to other dimensions in line with
the concept of sustainable and inclusive growth enhanced by the Europe 2020
Strategy, launched in 2010.
There have also been new developments in the approach adopted and in the
employment and social issues addressed by European policy making, from focusing on
the harmonisation of national legal and administrative regulations on working
conditions and anti-discrimination with hard legislation (directives), to adopting a soft
coordination mechanism (the so-called Open Method of Coordination) addressing
social exclusion and groups at risk of poverty
Within this framework, the European Semester was institutionalised in 2011, with
the aim of improving the coordination and monitoring of the economic, employment
and social policies of EU Member States in order to achieve the Europe 2020
targets. 154
This process has enabled EU institutions to take on a more important role than
hitherto in analysing and providing indications and recommendations on national
economic, fiscal, and social policies.
However, the macroeconomic and social and employment policy areas are still
grounded on very different regulatory frameworks which affect their stringency and
effectiveness in addressing the EU-Member States socio-economic policies. While the
macro-economic surveillance mechanisms combine a soft preventative arm
with a hard corrective arm (including the option for placing sanctions on noncomplying Eurozone countries), the employment and social domains are largely
154
See Regulation (EU) No. 1174/2011 on enforcement measures to correct excessive macroeconomic
imbalances in the euro area; Regulation (EU) No. 1175/2011 amending the surveillance procedures of
budgetary positions; and Regulation (EU) No. 1176/2011 on the prevention and correction of
macroeconomic imbalances.
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based on 'soft' coordination mechanisms, e.g. the Open Method of Coordination,
characterised by an exchange between the EU and the Member States that leaves
Member States ample scope to develop their own policy-routes towards meeting the
EU-level goal.
Although there is not a shared view in the literature on the effects of different
coordinating mechanisms, the empirical literature presented in section 2.2 points out
that since 2011 there has been a partial ‘socialisation’ of the European
Semester. There are signs of a progressive reorientation of the strategy adopted at
the supranational level, and the Country Specific Recommendations since the 2012
cycle of the European Semester pay greater attention to employment and social
objectives, as shown by the increasing number of items addressed by employment
and social CSRs.
There are, however, key critical areas involving the transparency of the rules-based
framework, the balance between the economic and the employment and social
governance mechanisms, and the impact of the current governance framework on
economic growth and social imbalances.
The European Semester and the CRSs still focus mainly on macroeconomic
imbalances, and the CSRs still show limited consideration for specific
vulnerable groups (be they migrants, elderly workers, women, poor children, etc.),
and often social protection or health reforms are addressed only from the
perspective of efficiency, cost-effectiveness and economic sustainability, rather
than adequacy and poverty reduction, with little attention to their possible long term
social and economic impacts.
Recommendations concerning social and labour market reforms find more
limited implementation than those concerning the financial sector and public
deficits. This may also be due to the fact that implementation of reforms that may
have an impact only in the medium-to-long term, like labour market and education
reforms, are more complex to implement and monitor. While in principle CSR
implementation is assessed on the basis of actions taken (rather than observed
outcomes), it can be difficult to judge – in an annual assessment process, where
typically no more than 6-10 months have elapsed since the introduction of a reform –
whether such measures are going to have the expected effects.
Another aspect emerging from the interviews is that the European Semester and
the Macroeconomic Surveillance process are increasing in political
importance and visibility in the EU policy agenda, while the EU2020 Strategy,
more focused on balanced medium term growth addressing both economic and social
dimensions, appears to be losing ground, also as a consequence of the negative
effects of the crisis on its target objectives.
To address these issues, the European Commission has recently launched some
initiatives that should contribute to finding a better balance between the ‘economic’
and the ‘social’ dimensions in the European Semester:
•
the enhanced role for DG EMPL in the preparation of the Commission’s
reports and in the definition of CSRs with ownership of the analysis of the
social and employment indicators;
•
in parallel the greater role of EMCO and the SPC in monitoring, reviewing
and amending the CSRs, providing inputs on the assessment of national
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performances and on the indicators to be considered in the European Semester
process;
•
the recent introduction of a Social Impact Assessment Procedure for
Programme countries (also managed by DG EMPL and first implemented in
August 2015 for Greece);
•
the renewed involvement of the social partners and other civil society
organizations in discussion of the CSRs in the framework of the European
Social Dialogue.
The actual implementation and effects of these changes will have to be monitored, and
the European Parliament could have an important role to play in this respect.
What role has been played by the employment and social indicators in
informing and moulding the 2014 and 2015 European Semester and the
Member States’ responses?
The inclusion of employment and social indicators among the main headline
scoreboard indicators may further increase the political visibility of social and
employment issues and the attention of policy makers to the social implications of
budgetary policies in the macroeconomic surveillance mechanisms. It may also further
improve the medium-run effectiveness of such policies by helping the policy-makers to
orientate (and constrain) Member States’ fiscal discipline and budgetary cuts in the
direction of cutting rents or unproductive expenditures rather than lowering welfare
support for disadvantaged groups and those in need.
The analysis of the evolution and main features of the European Semester in chapters
1 and 2 and the assessment of the CSRs enacted since the 2013 exercises in chapter
3, as well as the perceptions of the majority of the interviewed stakeholders, provide
some indirect evidence that employment and social indicators included among the MIP
scoreboard auxiliary indicators may have had a role in informing and moulding
the 2014 and 2015 European Semester exercises. The inclusion of employment
and social indicators has increased political attention to the social and employment
dimensions, introducing a greater balance in the analysis provided in the AGS and the
number of social and employment items addressed in the CSRs issued by the
European Institutions has increased.
As for future developments, debate between EU institutions and Member States is
currently underway over the inclusion of additional social and employment
indicators among the headline indicators in the MIP scoreboard. A Commission
proposal to include additional labour market indicators is, however, opposed by most
Member States, given that this would mean an extension of more stringent EU
surveillance on employment and social dimensions under Member States’
competences. Beside this main political argument, some technical arguments are
being advanced regarding: the risk of watering down the MIP procedure if too many
indicators are included and thus the need to maintain the two scoreboards separate,
albeit better coordinated than in the past; and the need to improve the timeliness and
robustness of social indicators (poverty risks, income inequalities, material
deprivation).
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How suitable and effective are the auxiliary indicators already included in the
scoreboard to monitor employment and social imbalances?
According to the detailed analysis of the indicators conducted in chapter 4 as well as
the majority of the stakeholders consulted, the existing social and employment
indicators have had an important role in contributing to evidence-based CSRs.
The indicators already included in the scoreboards show the following strengths:
•
Robustness and Reliability, thanks to the use of consolidated statistical sources
at EU-28 level;
•
Comparability, due to the availability of homogeneous and comparable data at
EU-28 and Member State level for all items and derived from European surveys
and databases (EUROSTAT in particular);
•
Parsimony and comprehensibility: they are limited in number (a positive
feature when asking Member States to monitor them) and are already wellknown to policy makers at both the EU and national level.
However, these indicators also present a number of weaknesses:
•
The lack of disaggregation able to capture the complexity of the social and
employment issues covered by the CSRs, e.g. disaggregation by age, sex and
level of education.
•
The lack of indicators on other potential social and labour market imbalances,
which could affect long-term growth, including many issues covered by the
CSRs (like pension reforms or issues related to health care and education and
training). The importance and magnitude of these issues call for specific
additional indicators to be included.
The stakeholders’ interviews and the case studies show a general perception of the
existing indicators as a good basis for integrating social and employment issues in the
macroeconomic surveillance process, which however needs to be improved. The
stakeholders interviewed stress not only the need for greater disaggregation by sex,
age and education and for indicators on health and long term care, but also the need
to consider the wide regional disparities in the EU and for indicators addressing child,
old-age and in-work poverty, as well as housing problems. In addition, many
stakeholders stress the fact that the lack of contextualisation of the institutional
structure and of the level of services provided in each country leaves the picture
incomplete. Qualitative / contextualised research is thus needed to support the use of
quantitative indicators.
How have social and employment stakeholders been involved
macroeconomic surveillance process?
in the
Even if recent developments have increased the involvement of social and
employment stakeholders in the macroeconomic surveillance process, there is still a
wide margin for improvement at both the European and national level. According to
the stakeholders interviewed at the EU and national level, involvement of the social
partners and civil society organisations is still inadequate and insufficiently
institutionalised in the European Semester, as well as being highly differentiated
among the Member States. Many suggestions have been advanced to enhance the role
of these stakeholders:
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•
•
•
•
5.2
Parliamentary/public debates on these issues should be institutionalised at both
the EU and national level, with specific discussion sessions and calling for
periodical contributions in the formulation of CSRs and of the NRPs. The EESC
should be involved in the EP debate, to bring the social partners back in the
process;
There is a need for better communication and coordination between ECOFIN
and EPSCO working groups;
Social Dialogue procedures should be better organised to leave enough room
for thematic discussion and monitoring of country recommendations;
Some revision is required in the timing of the European Semester, providing for
closer involvement of the social parties and civil society at the national and
European level.
Policy implications
The need for a better balance between the EU's social, economic and financial
objectives now appears to be acknowledged at both the EU and national level, but how
to reach it remains controversial.
The debate regards not only the role of social and employment indicators in the
European Semester, but also the improvements in the governance and coordination
mechanism necessary for effective implementation of a social dimension in the EMU.
Indicators
In chapter 4 (section 4.3) we propose a number of new indicators that could provide
additional insights into social and employment imbalances and which comply with two
important criteria:
• they are already computed by Eurostat (feasibility); and
• are sufficiently timely, reliable and robust.
In order to maintain a workable number of indicators in the scoreboard, we consider
the following additional criteria with the recommendation to:
• Add only a few employment and social indicators to the list of “key” headline
indicators with the identification of thresholds; selecting those useful to monitor
the emerging risks of social and labour market imbalances;
• Add more indicators to the existing list of auxiliary indicators;
• Consider some more dynamic indicators (flows in-out of un/employment; job
creation/job destruction, in-out of poverty).
On the basis of these criteria, two headline MIP and nine auxiliary additional
indicators are proposed in section 4.3:
a)
“Sentinel indicators” capable of anticipating social imbalances to be added
to the current headline MIP scoreboard indicators: the at-risk-of-poverty
after social transfers rate; and the long-term unemployment share
disaggregated by age and sex;
b) Indicators of “economic frailty” and resilience to economic shocks to
be added to the current auxiliary scoreboard indicators disaggregated by
age and sex whenever possible: employment rate; share of “working poor”
among the employed population; share of temporary employees in total
dependent employment; expenditure on benefits by function as a percentage of
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total expenditure on social benefits; unadjusted gender pay gap; full-time
equivalent female-male employment ratio; share of individuals with tertiary
education; share of individuals covered by NHS; old age dependency ratios.
These indicators should be used to anticipate and provide valuable indications
on emerging social and employment imbalances, rather than to impose sanctions
that would be beyond EU competence. Assessment of these indicators should be
owned by EU bodies in charge of employment and social policies, in close coordination
with those in charge of economic policies, strengthening the current move toward
closer coordination and balance between economic and social policy-making in the
European Semester.
Other indicators, even if important, are more difficult to calculate given the lack of
data and robust indicators. This is the case of some of the indicators proposed by the
stakeholders interviewed: e.g. access to social services (LTC, childcare), homelessness
rate, decent work index.
Whatever the choice of indicators, it is however necessary to provide data
disaggregated at least by gender, age, educational level and nationality, in
order to improve the monitoring of high risks groups. In addition, there is a need to
improve the reliability and robustness of social indicators, supporting Eurostat
with sufficient resources for data gathering and indicator improvements. In
particular, the main sources of longitudinal data for social and employment indicators,
the EU-SILC database, should be enhanced. Another data source that could be
useful to assess the performance of labour policies and which needs amplification is
the Labour Market Policy (LMP) database based on administrative data. The
European Parliament could have an important role to play in supporting these
developments.
Other dimensions to be tackled for effective implementation of a social
dimension in the EMU
In order to reinforce the balance between the Union’s social, economic and financial
objectives it is necessary to proceed in the direction started with the 2015
streamlining of the European Semester. In this respect, the results of this study bear
out the policy recommendations provided by Zeitlin and Vanhercke in their 2014
paper 155 to:
155
•
Restore the ultimate goals of the EU2020 strategy at the basis of the
overall aim of the European Semester coordination efforts and of the CSRs. The
(timid) recovery from the crisis calls for greater attention to those policy fields
that may have long-run positive effects, like education and employment and
social policies. The CSRs should thus extend their perspective over a longer
time-span and support those structural reforms and social investments at the
basis of a smart and inclusive growth.
•
Extend the use of ex-ante social impact assessments, at least for the
most relevant policy reforms.
Zeitlin J. and B. Vanhercke, Socializing the European Semester? Economic Governance and Social Policy
Coordination in Europe 2020, Report No. 7 December 2014, published by the Swedish Institute for
European Policy Studies (SIEPS).
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•
Proceed with ensuring equal participation of the EU social and
employment policy actors (EP and Council Committees, Commission’s DGs)
in the governance of the European Semester.
•
Improve the transparency of the process. This requires a simplified
procedure, with clear indication of the stakeholders involved and their role, so
as to make them accountable for the decisions taken, as well as a better
communication of the EU economic priorities and of the monitoring results.
•
Improve the flexibility of the Semester process to allow for alternative policies
to be developed at the national level as long as they meet the EU criteria, and
for greater attention to be paid to national specificities and experiences. The
CSRs would thus serve as reform suggestions, and contribute to finding better
socio-economic solutions at the national level, keeping track of the complexity
of national socio-economic conditions and institutional settings. Support from
mutual learning and peer review programmes, as well as from the European
Structural Funds 156, could enhance a learning process among Member States.
Improved flexibility would also allow for a greater involvement of social and
employment stakeholders in the Semester.
•
Ensure the participation of civil society organisations, the social
partners and parliaments at both the EU and national levels, in order to
enhance the democratic legitimacy of the Semester and the socio-economic
coordination mechanisms. This implies opening up appropriate spaces for
involvement of non-governmental organisations in the different phases of the
Semester process from priority setting to the adoption of CSRs and review of
NRPs and Member States budgetary plans at EU and national level. The EU
institutions could support this process at the national level by providing
guidelines and financial support, and by monitoring stakeholders’ engagement
in the definition of the NRPs.
Overall, the issues tackled in this study clearly indicate the need for revision of the
EU governance and coordination system in the direction of a more balanced
European Semester. This is a very complex issue which cannot be tackled in the
framework of this report. However, some indications emerging from the literature
review and the interviews suggest adopting an OMC-plus governance approach 157,
which would combine ample flexibility for Member States, while finding ways to get
them credibly committed to developing sound and effective policies (Schelke, 2007).
This approach would combine the Treaty norms on a social market economy (Art. 3
TEU) with careful weighing up of financial, economic and social concerns, as provided
for in Article 9 TFEU (Bekker and Klosse, 2013).
The European Parliament could have a very important role to play in supporting
these changes by
• supporting greater involvement of the relevant EU and national stakeholders in
the process;
• promoting open hearings and workshops on the European Semester and on the
balance between social and macroeconomic objectives;
156
157
In particular, the European Social Fund, which has earmarked 20% of funding for social inclusion and
poverty reduction strategies in the 2014-2020 programming period.
Bekker (2015 forthcoming).
PE 569.985
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Policy Department A: Economic and Scientific Policy
• providing political support for greater investments in developing social indicators
and for the use of SIAs for major policy reforms;
• supporting constant monitoring on how the Semester reform proposals are
implemented and heightening attention to the effects of CSRs on employment
and social conditions.
Operatively, the creation of a European Semester Working Group would support
fuller cooperation between the European Parliament’s EMPL and ECON Committees,
conveying a single clear message and exerting greater influence on the process.
134
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Mainstreaming Employment and Social Indicators into Macroeconomic Surveillance
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