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Reducing #Unemployment - EU policies explained

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A person is looking for an employment on a newspaper job ads page © AP Images/European Union - EPLooking for a job can be a challenge © AP Images/European Union - EP

The EU aims to have three quarters of people aged 20–64 with jobs by 2020. Find out how the EU works to reduce unemployment and fight poverty.

The economic and financial crisis of 2008 hit the global economy, leading to unemployment increasing in all EU countries.

Although EU labour market conditions and workers’ rights have significantly improved in recent years, the fight against unemployment remains one of the EU's key challenges on its way towards quality jobs and a socially inclusive Europe.

Efforts have been made in a number of areas, including helping young people enter the labour market, combating long-term unemployment, upgrading skills, and facilitating workers' mobility in the EU.

EU unemployment rate

Since mid-2013, the EU’s unemployment rate has continued to decline.

In April 2019, it fell to 6.4% (from 7.0% in April 2018), the lowest level since the start of the EU monthly publication of unemployment statistics in January 2000. In the eurozone, the unemployment rate was 7.6% in April 2019, down from 8.4% in April 2018.

EU vs member state competencies

EU countries are still primarily responsibe for employment and social policies. However, the EU complements and coordinates member state actions and promotes the sharing of best practices.

According to article nine of the Treaty on the Functioning of the European Union, the EU should consider the objective of a high level of employment when defining and implementing all of its policies and activities.

European employment strategy and targets

EU countries established a set of common objectives and targets for employment policy to fight unemployment and create more and better jobs in the EU. This policy is also known as the European employment strategy (EES).

Launched in 1997, this employment strategy forms part of the Europe 2020 growth strategy, which gives an overall view of where the EU should be on key parameters by 2020 in different areas such as education and the fight against climate change and is used as a reference framework for activities at EU, national and regional levels.

The goals set for 2020 are: 75% of people aged 20–64 to be in work, while the 116.1 million people (all EU countries apart from the UK) who had been at risk of poverty or social exclusion in 2008 should be cut to 96.2 million people.

In 2017, 72.2% of the EU population aged 20-64 were employed, just 2.8 percentage points below the 2020 target.

In 2016, 118.0 million people were at risk of poverty or social exclusion in the EU.

The European Commission monitors and implements the strategy through the European Semester, an annual cycle of coordination of economic and employment policies at EU level.

The social and employment situation in Europe is evaluated in the context of the EU Semester and based on the Employment Guidelines, common priorities and targets for national employment policies. In order to help EU countries move forward, the Commission issues country-specific recommendations, based on their progress towards each goal.

How it is funded

The European Social Fund (ESF) is Europe’s main instrument to ensure fairer job opportunities for everyone living in the EU: workers, young people and all those seeking a job.

The European Parliament proposes to increase funding in the next EU’s long-term budget for 2021-2027 with a primary focus on education, employment and social inclusion. The new version of the fund, known as the European Social Fund Plus (ESF+), would boost the quality of work, make it easier for people to find work in a different part of the EU, improve education, as well as promoting social inclusion and health.

The Employment and Social Innovation Programme (EaSI) aims to help modernise employment and social policies, improve access to finance for social enterprises or vulnerable people who wish to set up a micro-company and to promote labour mobility via the EURES network. The European Jobs Network facilitates mobility by providing information to employers and jobseekers and also features a database of job vacancies and applications across Europe.

The European Globalization Adjustment Fund (EGF) supports workers losing their jobs due to globalisation, as companies may shut down or move their production to non-EU countries, or the economic and financial crisis, in finding new work or setting up their own businesses.

The Fund for European Aid to the Most Deprived (FEAD) supports member state initiatives to provide food, basic material assistance and social inclusion activities to the most deprived.

The updated version of the ESF+ would merge a number of existing funds and programmes, such as the ESF, the EaSI, the FEAD, the Youth Employment Initiative and the EU health programme, pooling their resources and providing more integrated and targeted support to people.

Fighting youth unemployment

Among the EU measures to combat youth unemployment is the Youth Guarantee, a commitment by member states to ensure that all young people under the age of 25 years receive a good-quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed or leaving formal education. The implementation of the Youth Guarantee is supported by EU investment, through the Youth Employment Initiative.

The European Solidarity Corps allows young people to volunteer and work in solidarity-related projects across Europe. The Your first EURES job platform helps young people aged 18 to 35, and interested in gaining professional experience abroad, find a work placement, traineeship or apprenticeship.

Right skills, right job

By promoting and improving skills acquisition, making qualifications more comparable and providing information on the demands for skills and jobs, the EU supports people in finding good-quality jobs and making better career choices.

The New Skills Agenda for Europe, launched in 2016, consists of 10 measures to make the right training and support available to people and to revise a number of existing tools, such as the European CV format Europass).

Challenge of long-term unemployment

Long-term unemployment, when people are unemployed for more than 12 months, is one of the causes of persistent poverty. It remains very high in some EU countries and still accounts for almost 50% of total unemployment.

To better integrate the long-term unemployed in the labour market, EU countries adopted recommendations: they encourage the registration of long-term unemployed with an employment service, individual in-depth assessment to identify their needs, as well as a tailor-made plan to bring them back to work (a job integration agreement). It would be available to anyone unemployed for 18 months or more.

Long-term absence from work often leads to unemployment and to workers leaving the labour market permanently. To retain and reintegrate workers into the workplace who suffer from injuries or chronic health problems, in 2018, the European Parliament formulated a set of measures for member states to work on, such as making workplaces more adaptable through skills development programmes, ensuring flexible working conditions and providing support to workers (including coaching, access to a psychologist or therapist).

Promoting workers’ mobility

Making it easier for people to work in another country can help tackle unemployment. The EU has a set of common rules in place to protect people’s social rights related to unemployment, sickness, maternity/paternity, family benefits etc. when moving within Europe. Rules on the posting of workers establish the principle of same pay for same work at the same workplace.

Find out more about EU social policies

EU

Transport MEPs list main steps to make EU roads safer

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The goal of zero deaths on European roads by 2050 calls for more robust measures on road safety, such as, 30 km/h speed limit or zero-tolerance for drink-driving, Transport MEPs say, TRAN.

Speeding is a key factor in around 30% of fatal road crashes, Transport MEPs note. They call on the Commission to come up with a recommendation to apply safe speed limits, such as maximum speed of 30km/h in residential areas and areas where there are high numbers of cyclists and pedestrians. To further promote safe road use, they also urge to set a zero-tolerance drink-driving limit, highlighting that alcohol is involved in around 25% of all road fatalities.

The draft resolution also welcomes the recent revision of the General Safety Regulation, which will make new advanced safety features in vehicles such as intelligent speed assistance and emergency lane keeping systems mandatory in the EU as from 2022, with the potential to save around 7 300 lives and avoid 38 900 serious injuries by 2030. Moreover, MEPs ask the Commission to consider the incorporation of a “driving safe mode” for mobile and electronic devices of drivers in order to inhibit distractions while driving.

Tax incentives and attractive motor insurance schemes for the purchase and use of vehicles with the highest safety standards should be pursued, MEPs add.

European road transport agency

To properly implement the next steps in the EU road safety policy, new capacities are needed in the field of road safety, says the draft text. Therefore, Transport MEPs call on the Commission to establish a European road transport agency to support sustainable, safe and smart road transport.

EP Rapporteur Elena Kountoura (The Left, EL) said: “Strong political will by the national governments and the European Commission is essential to do what it takes to halve road fatalities by 2030 and move decisively towards Vision Zero by 2050. We must mobilise more investments towards safer road infrastructure, make sure that cars are equipped with the best life-saving technologies, establish speed limits of 30 km/h in cities across Europe, adopt zero tolerance on drink-driving and ensure strict enforcement of road traffic rules.”

Next steps

The resolution on EU Road Safety Policy Framework now needs to be voted by the full house of the Parliament, possibly during the September session.

Background

This report serves as Parliament’s formal response to the Commission’s new approach to EU road safety for the years 2021-2030, and its EU Road Safety Policy Framework 2021-2030.

More information

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Economy

NextGenerationEU €20 billion bond issuance seven times oversubscribed

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The European Commission reached a key milestone in the implementation of its recovery plan, by issuing €20 billion of debt to fund NextGenerationEU. The bonds were seven times oversubscribed despite the very modest level of interest at 0.1%. All in all, the EU will raise €800bn on the capital markets to fund what is hoped will be a transformative programme of investment across the continent. 

Commission President von der Leyen said: “This is the largest ever institutional bond issuance in Europe and I'm very pleased that it has  attracted very strong interest by a wide range of investors.”

Some have described Europe’s decision to issue bonds in this was as a ‘Hamiltonian moment’, Commissioner Hahns said: “I want to be a little bit more modest, concrete and self-confident by rather saying: this is a truly European moment, as it demonstrates the EU's innovation and transformative power.”

How green does your garden grow?

Commissioner Hahn said that the EU would be issuing green bonds in the autumn. The EU will launch them once it has settled on its EU Green Bond Standard, this will double the current volume of green bonds in the market. Hahn compared it to the way the SURE bonds have tripled the social bond market. Green bonds will account for around 30% of the EU’s overall borrowing amounting to around €270bn in current prices.  

Persona non grata

Asked about the decision of the European Commission to exclude certain banks from this round of issuance, Hahns said that though many of the banks had met the criteria to participate in the primary dealer network, there were outstanding legal issues that needed to be resolved. He said: “Banks have to demonstrate and to prove that they have taken all the necessary remedial action that has been demanded by the Commission,” but added: “We have a way interest to include all the key players and banks, which have qualified themselves for the primary dealer network but of course, the sort of the the legal aspects have to be respected.”

In May 2021, the European Commission found that several banks had breached EU antitrust rules through the participation of a group of traders in a cartel in the primary and secondary market for European Government Bonds (‘EGB'). Some of the banks involved were not fined because their infringement fell outside the limitation period for the imposition of fines. The fines on the others totalled €371 million.

Fund managers lead the table

The demand was dominated by fund managers (37%), and bank treasuries (25%) followed by central banks / official institutions (23%). In terms of region, 87% of the deal was distributed to European investors, including the UK (24%), 10% to Asian investors and 3% Investors from the Americas, the Middle East and Africa.

Background

NextGenerationEU will raise up to around €800bn between now and  the end of 2026. This translates as borrowing of roughly €150bn per year, which will be repaid by 2058.

With the SURE programme the Commission issued bonds and transferred the proceeds directly to the beneficiary country on the same terms that it received (in terms of interest rate and maturity). This worked for small funding needs, but the size and complexity of the NextGenerationEU programme requires a diversified funding strategy. 

Multiple funding instruments (EU bonds with different maturities, some of which will be issued as NextGenerationEU green bonds, and EU-Bills - securities with a shorter maturity) and techniques (synidcation - usually preferred by supranational issuers, and auctions - usually preferred by nation states) wil be used to maintain flexibility in terms of market access and to manage liquidity needs and the maturity profile. 

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Greece

Greek strike against labour reform bill disrupts Athens transport

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Public transport staff in Athens went on strike for the second time in a week on Wednesday (16 June) before a parliamentary vote on a law the government says will revamp outdated labour rules but which unions fear will bring longer hours and weaker rights, writes Angeliki Koutantou, Reuters.

Ships remained docked at ports, and many bus, subway and railway services were suspended as transport staff walked off the job. Workers from other sectors also held work stoppages and were expected to join several protest rallies in central Athens before the vote on the bill later on Wednesday.

Prime Minister Kyriakos Mitsotakis' conservative government, which took office in 2019, said the reform would modernise "antiquated" laws dating back decades to a pre-internet time when most workers clocked into offices and factories at the same set hours.

Trade unions have described the draft law as a "monstrosity". They want the government to withdraw the bill, which they say will reverse long-established workers' rights and allow companies to bring in longer hours through the back door.

The most disputed part of the bill allows employees to work up to 10 hours on one day and less time on another. Unions fear that will enable employers to force workers to accept longer hours.

The bill would also give workers the right to disconnect outside office hours and introduce a "digital work card" from next year to monitor employees working hours in real time, as well as increase legal overtime to 150 hours a year.

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