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EUROPEAN COMMISSION
László ANDOR
European Commissioner responsible for Employment, Social Affairs and
Inclusion
Joint European Report confirms growing divergence
Press conference / Brussels
13 November 2013
SPEECH/13/916
The draft Joint Employment Report, that the Commission has just approved together
with the Annual Growth Survey, gives a specific assessment of employment and social
trends in Europe and of recent policy developments.
The Commission's assessment is that the employment and social situation continues to
worsen, with more than 26.8 million jobseekers unable to find a job, household incomes
falling in many countries and inequalities rising.
This social crisis represents a drag on growth in the short term by weakening demand.
But it also threatens to undermine our long-term competitiveness as people lose their
skills and many young people struggle to get a foothold in the labour market.
We can also observe a growing divergence between Member States' employment and
social situations, particularly in the euro zone. This divergence is highlighted in the new
scoreboard of key employment and social indicators which we proposed in the recent
communication on the social dimension of the EMU and which we are presenting in this
year's AGS package for the first time.
The five key indicators are: unemployment; youth unemployment and the numbers of
young people not in education, employment or training (so-called NEETs); household
disposable income; the percentage of the working age population at-risk-of-poverty and
income inequalities.
The scoreboard is a tool through which we aim to better identify major employment and
social problems that need to be tackled in the common interest of the EU, and
particularly to ensure the proper functioning of the Economic and Monetary Union.
Just as we are paying attention to macroeconomic imbalances in the EMU, we need to
pursue convergence of socio-economic fundamentals such as unemployment or
inequalities, and we need to ensure, through the European Semester, that timely and
effective policy action is taken to tackle key employment and social problems.
The draft Joint Employment Report, including the new scoreboard, will be discussed and
adopted by the Council of Ministers and will be further used by the Commission during
the European Semester.
Let me briefly take you through the main findings of the draft Joint Employment Report:
Since 2008, there is a persistent and growing divergence in the EU between South and
North, or between 'central' and 'peripheral' countries.
This divergence is clearly visible in the rates of unemployment, youth unemployment
and young NEETs.
As for household incomes, they kept increasing in the North and central euro area
countries, but declined by about 10% cumulatively in the peripheral countries from 2010
till 2012, affected among other things, by wage moderation, reduced social protection
expenditure and higher taxes.
Poverty rates have also grown in the 'periphery', an increase that came on top of already
high levels, while remaining steady in the 'core' countries.
The report shows that the working age population has been most affected, due to
unemployment or in-work poverty, and that the risk of poverty has also risen for
children, as the situation of their parents has got worse.
Income inequality is also increasing across and within Member States, in particular in the
Southern and peripheral countries, in other words those that have suffered the largest
increases in unemployment.
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In many countries, the crisis has also intensified the existing wage polarisation and
labour market segmentation. At the same time, tax and benefit systems have become
less redistributive, which has also contributed to rising inequalities.
These findings should be taken into account by all Member States, since their negative
consequences can affect the EU as a whole. Indeed, spill-over effects can affect even
more resilient Member States due to the decrease in aggregate demand, the loss of
confidence and contagion via the financial markets.
Therefore, it is in the interest of all Member States to make sure that employment and
social challenges are addressed on time and in an effective way. Sometimes an effective
response also requires solidarity between Member States. The action which the EU is
taking through the Youth Guarantee is one example of such a concerted response.
The draft Joint Employment Report also gives an overview of the main employment and
social reforms set out by Member States during last year and of the implementation of
Country Specific Recommendations in the field of employment and social policies.
However, the extent of progress with these reforms varies across policy areas and
between Member States and further efforts are needed.
Let me give just one example, namely the tax wedge on low-paid labour.
Since early stages of the crisis, it has been widely accepted that to maintain employment
and promote new job creation, it is important to lower income taxes and social security
contributions on low-paid labour, in order to make hiring easier and to strengthen the
demand for goods and services among lower-income households.
Yet the figures in the Joint Employment Report show that in most countries, the tax
wedge on people earning two-thirds of the average salary has actually risen, and there
are only a few cases where any notable reductions were undertaken.
The recovery we are seeing is still very fragile. The EU economy is still far from creating
enough job opportunities, and millions of people who want to work simply do not get the
chance. So it is crucial that governments step up their employment policies to support a
job-rich recovery.
More specifically, Member States need to further improve the resilience of their labour
markets to economic changes, notably by improving their public employment services
and stepping up investment in human capital.
Member States should implement the Youth Guarantee which is a key structural reform
for improving school to work transitions and fighting youth unemployment. Cooperation
between employment services, schools and companies must be upgraded to ensure that
young people receive appropriate advice on job, education and training opportunities
most relevant to their own situation.
Secondly, Member States should maximise job creation in fast growing sectors such as
the health sector information, information and communications technologies and the
greening of the economy. Member States must ensure people have the skills necessary
to work in these growth sectors.
Finally, as the risk of poverty, social exclusion and inequalities have grown significantly
in a number of Member States, they need to improve the performance of social
protection systems and target social investment to reduce inequalities and poverty over
time.
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