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1st EU-Brazil civil society Round Table 7-8 July 2009 Brussels Egbert Holthuis European Commission, DG Employment, Social Affairs and Equal Opportunities Commission européenne -1- Economic crisis: Labour markets deteriorating Sharp rise in EU unemployment since March 2008 UR ↑ 1.8 pps in 1 year to 8.6% (i.e. by 4.7 million to ∼21 million overall) Commission européenne -2- • For all MS* UR is higher than a year ago • particular rise in Baltic states, Spain and Ireland (12.5 - 5.9 pps) • Men are more effected, especially young ones • unemployment in the EU less affected than in US (↑ 1.8 vs. 3.9 pps) + Declining numbers of job vacancies Firms’ employment expectations remain negative *Where recent data is available Commission européenne -3- Outlook remains bleak Chart 20: Forecast employment growth Commission forecasts: • • • • • • EU GDP ↓ 4% in 2009 to stabilise in 2010 Employment ↓ 2.6% in 09 and ↓ 1.4% in 2010 So 8½ ml jobs lost, vs. net job creation 9½ ml 06-08 UR ↑ to 9.4 (09), 10.9 (10) Baltics, Ireland and Spain (more than 20%) hit hardest In line with other international forecasts (IMF, OECD…) Chart 21: Forecast unemployment rates Commission européenne -4- Policy response to the crisis • Stimulate public demand to avoid downward spiral • EU Economic Recovery Plan (December 2008): MS fiscal stimulus packages (target of 1.5% of Union's GDP) including automatic stabilisers/ income support estimated 3.3% GDP • Invest in future competitiveness - infrastructure, broadband, green jobs and upskilling of workers • Reinforced financial supervision • Focus on respecting internal market and state aid regulation Commission européenne -5- Measures taken by Member States (MS) to increase labour demand • Reduce non-wage labour costs/ soc. sec. contributions • Preserve existing jobs – Short time working arrangements – Support to badly hit sectors • Investments infrastructure • VAT cuts Commission européenne -6- MS actions to support income • • • • Expanding eligibility rules Increase social benefit levels Fiscal help for low earners Support for education and vocational training • Targeting household over-indebtedness Commission européenne -7- Active labour market policies • Use integrated policy approach • Increase efficiency (better targeting): focus on matching and selected groups like the young • Support transitions education/work, inactivity/work, job/job • Avoid long term unempl, make work pay • Support mobility of workers and job seekers • Develop and monitor policies with stakeholders especially social partners Commission européenne -8- Role of the EU • EU economic recovery plan 12.08 • Reinforce financial supervision (G20) • Respect state aid regulation + Internal market • Frontloading European social funds • Key role EU social partners • Focus on selected priority themes • Mutual learning with and between MS Commission européenne -9- Structural challenges • Importance knowledge and education gap with US • Dual labour markets in EU and (regional) inequalities • Crisis risks to increase segmentation and (permanent) exclusion • Mitigation climate change costly • Ageing: dependency rate, retirement provisions, health and long term care Commission européenne -10- Structural challenges • Importance knowledge and education gap with US • Dual labour markets in EU and (regional) inequalities • Crisis risks to increase segmentation and (permanent) exclusion • Mitigation climate change costly • Ageing: dependency rate, retirement provisions, health and long term care Commission européenne -11- Issues for the debate • How to best reinforce role civil society in designing recovery measures • How to best maintain people in employment while at the same time foster adaptation capacity of companies • How to combine activation and adequate income support (rights and duties) • How to maintain investing in training and skills upgrading despite reduction government budgets • How to maintain migration/free movement channels How to best tackle youth unemployment Commission européenne -12- Thank you very much for your attention More information: http://ec.europa.eu/social/ Commission européenne -13-