Commission draft for the

JOINT EMPLOYMENT REPORT 1997

(Rev. 8)

European Union

3.2.3. Promoting equal opportunities in employment

Since the Essen Council, the promotion of equal opportunities for women and men and the fight against women’s unemployment are priorities of the Union.

Over the last decades, the employment rate of women has steadily increased in the European Union. It remains however, at a level of almost 50%, well below that of men, which is 70%.

The unemployment rate of women remains higher than that of men in almost all Member States. The unemployment rate of young women (younger than 25 years) varies considerably from one country to another. It is very high in Spain (46%), Greece (41%), Italy and Finland (both 39%). Other indicators (participation rate, wage gap, segregation indices) show that the objective of equal opportunities is far from achieved in the EU. Wide disparities are still found between Member States in the delivery of social services such as care for children and the elderly, which could facilitate the entry of women onto the labour market.

In line with the Council recommendations, all Member States are developing actions in favour of equal opportunities and to reduce women’s unemployment. However, they often appear to consist of (often several) isolated and dispersed actions, which aim to improve women’s training or to desegregate the labour market.

Mainstreaming equal opportunities in employment policy. While mainstreaming was totally lacking in the past, four countries now announce this approach in their employment strategy. (Belgium, Austria, Sweden and UK). It is recognised that specific unemployment measures will not be sufficient to bring about equal opportunities for women and men with regard to employment, and that general measures must be adopted to eliminate segregation of women in the labour market, to ensure that they receive equal pay and to upgrade women’s work in general. As a general principle, all activities with impact on employment must have an equality perspective.

Workshop Schools

In Spain, the Escuelas Taller carry out training and employment programmes aimed at integrating unemployed young people (less then 25 years old) with few or no qualifications. These programmes combine formal training and work experience in areas relating to preserving the environment, development of traditional crafts and restoring the cultural and historical heritage. The programme of Escuelas Taller is coordinated at national level, its implementation being assured by a myriad of different agencies acting at local level. In fact, the aim is that the objectives and the courses given in each school should be integrated in territorial employment plans and respond to real demand in the labour market.

Between 1994 and 1996, 44,500 trainees completed courses, and placement rates of around 50% have been reported for the whole of Spain. High satisfaction rates from local agencies were also registered regarding the quality of the worshops’ output. As regards the effects on participants, career advancement and wage increases have been reported in some regions for those who found a job. However, differences between men and women tend to subsist at this level. As regards progression to further studies, this has been reported for a relatively small number ranging between 5 and 25% depending on the regions.

Portugal launched recently a Workshop Schools programme within the framework of local development. This programme aims to offer young first-time job seekers and long-term unemployed adults vocational qualifications in traditional crafts or environmental activities, so that they can set up their own business or be eligible for a paid job. The training programme lasts 12 months and comprises theoretical and practical training. The trainees receive a training grant and a subsistance allowance

Trainees intending to become self-employed are eligible for a course on management training and for a non-refundable grant, as well as other types of financial aid.

The advantage of these schemes is to offer an immediate alternative to early school leavers, normally with serious economic and social difficulties, while at the same time contributing to the maintenance of traditional skills and to a regionally balanced distribution of job opportunities.

Furthermore, some countries have made efforts to assess the impact of labour market policies from an equal opportunities perspective (Belgium, Greece, France and Ireland). In Sweden, the job creation initiatives include the modernisation of labour law, which has been guided by the objective of strengthening the position of women.. In Portugal the adoption of a new law on equality opportunities is expected to strengthen the regulatory framework for effective equality.

Finally, in some cases, specific measures in favour of women take the form of legislative action, as in Belgium, where the regulations on job classification, night work and parental leave have been modified with the aim of improving women’s position on the labour market.

Specific measures in favour of working as well as unemployed women. Measures aimed at promoting training and life-long learning have a direct impact on equal opportunities for women and men in the economy. Only a few Member States retain women as a target group for training measures. In Luxembourg, several training programmes are set up which focus on women (including women returners). In the context of the European Year on life-long learning, a special project for (young) women was set up. In Ireland, "back-to-work skills" are provided for women who have been out of the labour force for a long period of time. The integration of women returners is also a priority in Austria, where more than 7000 women found a job through career guidance courses, skill training opportunities and employment projects.

In order to increase the proportion of women starting up their own business, special entrepreneur’s loans and training grants have been introduced in Finland and Sweden. Other measures to encourage women to start up their own business include courses for new entrepreneurs aimed solely at women. Women’s entrepreneurial activity is supported by a specific law in Italy and an innovative project to support entrepreneurial initiatives by women has been launched in Portugal.

• Member States’ reports on their Multiannual Programmes show that the search for equal opportunities in employment between women and men is receiving increased attention. However, in most countries the equal opportunities goal is not yet fully integrated in national employment and labour market policies. Therefore, mainstreaming the gender approach has not been translated into action in most Member States. It is worth noting that none of the selected examples of best practices refer to equal opportunities. A continuation of the benchmarking exercise is called for in this respect.

3.3. Adapting to change

3.3.1. Education, training and life-long learning

Successive European Councils have issued strong recommendations for increased investment in human resources and for embedding the concept of lifelong learning, in order to promote the development of competences and access to training for all workers.

Investment in human resources is a key factor in enabling Europe to keep pace with the new technologies, in particular in the field of information and communication, and to increase its competitiveness. Despite the expansion of lesser skilled jobs in services and sales, Europe is clearly on a high skill track and virtually all the net addition to employment in 1994-96 was accounted for by high skill jobs.

However, although participation levels in education and training have risen in all Member States, in 1996 for the EU as a whole, still more than half of the men aged 25 to 64 and just under half of the women had no educational attainment beyond basic schooling. The skill mismatch between supply and demand still appears to be an important reason for the difficulties encountered by young people and most of the unemployed in integrating the labour market.

The skill gap is bound to widen over the next decade with the ageing of the labour force. Relatively fewer young workers, more acquainted with the new technologies, will enter the work force, and in contrast, there will be more and more older workers, with experience, but with outdated qualifications.

Policies concerning training and life-long learning in Member States reflect the varying labour market conditions they face and the stages at which they are in the reform of their educational and training systems. The reports provide information both on the core system arrangements and on the specific measures for youth, the unemployed, equal opportunities and other groups at risk. While the latter are covered in section 3.2., this section covers the progress reported on the core arrangements for training and education in Member States.The following common concerns have been noted:

• improving the training provisions for young people and life-long learning;
• making more direct and improved links between education and training and becoming employed;
• system improvements to adapt to structural changes.

Expanding apprenticeship and other forms of high quality traineeship (dual-system). The predominance of the initiatives concerning apprenticeship and other forms of training based on work experience illustrates the increasing awareness in member states about the positive effects of this system in facilitating transition from school to working life and further training. In the UK since 1995, 100,000 young people have signed up for a Modern Apprenticeship and demand is growing fast. Finland has increased apprenticeship by 4,000 raising its apprenticeship level to 21,000 The Netherlands will increase their apprenticeship by 5,000. Sweden has initiated a new form of apprenticeship taking in 3,000 in 1997.

Some Member States have in addition implemented reforms aimed at improving the vocational training system, with the aim of increasing the levels of participation and attainment, and providing greater flexibility to students in shifting between levels and courses. The UK has launched the Target 2000 programme with the aim of ensuring that every 16-17 years old who is able to do so is actively engaged in the learning process. The maximum number possible are studying for basic educational qualifications and as many as possible are aiming for higher level qualifications. The increase in staying-on rates post 16 is expected to ensure that young people get a better start to working life and increase their skills and employability.

Improving links between training and re-integration into working life. Most Member States report about the growing number of partnerships with industry, enterprises and the social partners to combine training with job offers. Belgium is currently training 4500 in entreprises in schemes offering a job contract. Greece is about to run programmes in which groups of businesses can run vocational training for the unemployed on condition that they are employed by the firms after three-month training. Portugal launched a pilot scheme focusing on entrepreneurs, management and firms employing less than 50 in which trainees will be employed by the firms after completion of their training. Luxembourg is doing similar work with skilled trades.

In general efforts to develop the acquisition of skills through actual work experience tend to permeate the whole education and training system, including higher education. Some Member States seek to move away from an undifferentiated treatment of the unemployed and towards a better adaptation to the individual’s and companies’ situation and needs. These efforts are particularly well documented in the cases of the Netherlands, United Kingdom, Finland and Belgium.

The pathway approach, combining many of these elements has been intensively supported by the ESF which contributes to the dissemination and transposition of good practice through Member States.

Reforming accreditation of competence/qualification systems. Several countries (UK, Ireland, Greece, Netherlands, Austria) are in the process of generating new arrangements which address key or national certification issues while at the same time examining the need for new competences, curricula development, inidvidualisation of credits etc. In addition, some Member States have implemented reforms aiming at improving the internal coherence of the whole vocational system, providing new pathways between levels and courses.

The European Year of Life-long learning has contributed to raising political awareness of this key issue. Throughout Europe over 5000 projects were undertaken, 2500 events were organized and around 3500 press articles published. Several countries have now taken steps in the direction of Lifelong Learning. Initiatives such as the "Learning Boutiques in Denmark, the "Adult learning week" in the UK, or the "Train of knowledge" in Finland, are examples of the efforts to find innovative ways to tackle the question of "learning" throughout life, and move away from a "training delivery approach". Specific structures and instruments addressing both individuals and companies, with the required flexibility, are planned inGermany, the UK and France.

The Dual-training system

Training in the dual system provided both in the company and at vocational schools is a main feature of initial training in Austria, Germany and Luxembourg. The apprentices are trained, over a period of up to four years, in recognised occupations requiring formal training, which are defined in accordance with the requirements of the labour market, in close cooperation between official bodies and the social partners. On-the-job training is based on national curricula and given by master craftsmen. School training complements on-the-job training on a more theoretical basis, including acquisition of both general and job-related knowledge. In average, 2/3 of pupils leaving compulsory school in Germany and 40% in Austria enrol in the Dual System.

The legal basis for the apprenticeship relationship is a contract between the employer and the apprentice. Monetary compensation is set by collective agreement. The cost of on-the-job training is borne by the employers and school-based training is financed by the public authorities.

Close combination between specialized skills and training of a general nature has played an important facilitating role in the integration of youth into working life. Although the companies are not obliged to keep on the trainees after they pass the final examination, 2 out of 3 successful graduates of the Dual System in the old Länder, and 3 out of 4 in the new Länder, stay initially in their training company. Roughly 55% of those trained under the Dual System still work in the occupation in which they were trained after 5 years. Many young persons can also find jobs in occupations for which they are not formally trained.

The dual-training system has been also traditionally of great interest to enterprises, as it enables them to share the costs incurred in developing firm-specific skills.

The dual-training system has been associated with low youth unemployment. In all the countries that have developed dual-training systems, the unemployed represent less than 6% of the total population in the age group 20-24, whereas the EU average stands at 14%. The success of the system in these countries depends however to a certain extent of specific cultural and institutional features, and in particular the business structure, that are not common to other Member States.

Both in Austria and Germany the advantages and drawbacks of the system are being re-considered in the light of recent developments. There has been a sharp decline in the number of apprenticeship places in the two countries, as large companies in manufacturing in particular started to reduce their offers. A high degree of professional specialisation and the provision of know-how by initial rather than continuous training has been seen as contributing to limiting the flexibility and adaptability of the employment system. Moreover, dual training is costly for the enterprise as compared with the cheaper alternative of "free" public training. In addition, a growing number of students prefers higher educational tracks, which deteriorates the average learning capacities of the trainees in the Dual System. These critical considerations underline the need for a reform of the Dual System in the countries where it is further developed.

Job rotation schemes

The main feature of a job rotation project is to train and provide work experience to unemployed persons so that they can temporarily replace employees who are given paid leave to participate in further training. Job rotation has been an important and successful instrument of active labour market policy in Denmark, establishing a link between measures to enable life-long training and activation measures, and meeting the needs of several labour market actors.

Job-rotation is enterprise-based. The skills of the employees are up-graded and at the same time the work is carried out in the enterprises while the employees are away on training courses. This is an advantage for the enterprises because they get in contact with new potential employees.

The skills and qualifications of the employees are up-graded and this gives them a better chance of improving their attachment to the ordinary labour market.

From a labour market policy view, job rotation is an instrument for continuous training of the labour force.

The number of participants in job rotation projects may vary from two to several hundred persons. The duration of the training programme also varies very much. Projects have been implemented in a flexible way, providing for different sorts of financial support and subsidies.

The number of previously employed persons participating in job rotation has been increasing fast, from 12,200 in 1994 to 21,000 in 1995, and 30,600 in 1996. However, the number of previously unemployed persons participating in job rotation projects decreased in 1996 to 5,800 from 8,000 in 1995 and 5,600 in 1994.

The general trend is that a bigger number of employed than unemployed persons participate in job rotation projects. Although no comprehensive evaluation of the effects of job rotation is available, figures from 3 regions indicate that 67-75 % of the substitutes obtauin employment either in the job rotation enterprise or in other enterprises on completion of the job rotation project.

The ESF is supporting the job rotation scheme in Denmark. In addition, a project under the ADAPT Community Initiative is in place to disseminate this good practice in other Member States.

Promoting life-long learning through leave schemes and job rotation. In Denmark, but also increasingly in Finland, Belgium and Sweden, innovative steps have been given towards the promotion of life-long learning in the context of leave schemes for education purposes and job rotation projects (see Best Practice Example no. 7).. The interest of such schemes is that they provide an effective possibility for workers to upgrade their skills while offering an opportunity to unemployed people to get a replacement job. In Denmark, the leave schemes for educational purposes have proven to be very popular with 72,700 persons taking leave in 1996, which is more than the number of persons taking child-minding or sabbatical leaves. While labour shortages have been registered in specific cases as a consequence of leave schemes, both employers and employees have positive evaluation of the education leave because of its effects in upgrading skills and enabling job rotation: in 70% of the cases, a substitute has been hired and about 50% of the substitutes were unemployed.

The issue of long-life learning is increasingly connected with the issue of redistribution of available employment under new working time models.

Promoting access to continuing training. The first European survey on continuing training (CVTS) showed that the rate of access to continuing training varies strongly according to the size of the entreprise : 13% of entreprises with 10-49 employees provide continuing training compared to 43% of those with more than 1000 employees. This trend has not yet been reversed despite widespread efforts to provide support for SMEs in order to promote "taylor-made solutions" (such as "Prostart kunto" in Finland, the "Lernwerk" in Bavaria or the "Vrijmarkt" in Netherlands).

Reflecting increasing concern with the need to increase flexibility to adapt to rapidly changing requirements, some Member States have focused efforts to new skills related to information and communication technologies. An example is Sweden, where for some years a successful training programme has been in place to provide specific training in information technology-related skills (Datortrek) to young job-seekers.

Numerous actions have also been implemented in order to facilitate access to continuous training for SMEs with the support of ESF Objective 4. The mid-term evaluation of the ESF gives strong evidence of positive results, especially for Germany and Spain.

The national reports show that Member States are making widespread efforts to modernise education and training systems and the links between these systems and the workplace. The reforms in the core system appear to reflect dissemination of good practice across the Union, as well as the progressive incorporation in national policy of elements identified elsewhere as success factors. New initiatives have been developed which augur well for the improvement of employability particularly among the young. Apprenticeship schemes are being reviewed and expanded in a number of countries. However, weaknesses persist as regards the quality of training and the number of places made available to the unemployed. Also, long-life training should be integrated more consistently in national policies, and be reflected in the arrangements concerning work organisation and working time, as well as social insurance. The involvement of social partners in the search for solutions is key for the expansion of life-long learning.

3.3.2. Work organisation and working time

The 1996 Dublin European Council endorsed the recommendation that the social partners should be encouraged to negotiate agreements on flexible working arrangements and that all fiscal and social obstacles to a more flexible organisation of work and working time should be progressively removed.

At EU level, flexible working arrangements rather than reduced hours have been the main focus of action. Between 1983 and 1995, average weekly working time declined by a little more than 1 ½ hours in the EUR12 (see Chart 8), but this decline can largely be attributed to a structural shift from agriculture and industry to services (sectoral change), and to an increasing trend in part-time working (compositional change). The role played by other factors (the most important of which is collectively agreed reductions in working time) varies strongly between Member States. While it has been relatively minor in net terms for the whole Union, it has played a major role in Denmark, Greece, Belgium, Luxembourg and Germany

Chart no. 8 - Changes in average hours worked and effect of sectoral and compositional changes in employment - 1983-95

National programmes indicate that for Member States this is a period of transition, with most Member States simultaneously encouraging social dialogue and pursuing revisions in the statutory legal framework with the aim to reform, adapt to, and accommodate new ways of working. There is also in many Member States a renewed commitment to, or examination of, policies for reducing working time. The stated policy aims for a reduction in working time are twofold : to enhance job creation through redistribution and to allow for more welfare/better quality of life for the workforce.

New flexible working time arrangements. Working Time Acts in Germany (1994), Netherlands (1995), Finland (1996) and Austria (1997) have enabled the social partners to implement new flexible working time arrangements through collective agreements. In Germany, the new framework conditions have encouraged the social partners to make use of the possibility to introduce annual working time models. Besides, longer term agreements have already been concluded which provide for a flexible distribution of the working time within a reference period of up to three years under certain circumstances. Most prominent is the Volkswagen agreement of 1994 by which weekly working time was reduced to 28.8 hours in exchange of the continuation of job contracts of almost 100,000 workers. In the course of growing production in the following years, the working time arrangements provided Volkswagen with considerable scope for working time adjustments. Similar arrangements have been agreed in other manufacturing companies, in particular in the metal-processing and the chemical sectors, and in some cases it has been possible to go beyond mere job maintenance and to increase net creation of jobs.

Changes in labour regulation. In some countries, legal initiatives have been adopted recently to introduce more flexibility in labour contracts and increase security in employment for workers unprotected by collective agreements or existing legislation. The legislation has been revised in a few countries so as not to discriminate on the basis of working time and to give part-time workers parity with full-time employees.

In Spain, the employment stability agreement (Acuerdo para la Estabilidad del Empleo) negotiated by the social partners and subsequently transformed into law by the government, is expected to introduce significant changes in the functioning of the labour market. A new type of contract is introduced provisionally for a period of 4 years, under which the legal redundancy pay for "objective dismissals" is lowered from 45 days per year of service to 33 (and the ceiling from 42 months to 24) for open-ended contracts newly established with groups more affected by unemployment (young workers, older workers, long-term unemployed and disabled) as well as workers under fixed term employment. This change is expected to contribute towards reducing the excessive weight of temporary employment (presently at 34% of total wage employment in Spain) and the consequent high labour turnover, while improving the employment security for workers under fixed-term contracts.

Collective reduction of working time. France is engaged in a policy to promote the adjustment and negotiated reduction of working time in the interests of boosting employment and will bring together all the social partners this Autumn in a National Conference on Employment, Pay and Working Time. An outline law reducing the statutory working week to 35 hours will be proposed, and the continuation of the Law of 11 June 1996 on working time reduction, will be considered in this new context. Belgium has extended and enlarged the Employment Agreement Scheme for the 1997/1998 period (see Best Practice Example no. 8). The public sector has also been encouraged to adopt half-time pension or the four-day week on voluntary basis with provisions for partial compensation in both cases.

Statutory reductions in in working time are being considered in Italy, Sweden and Greece, and are being implemented in Portugal, following a tripartite agreement.

• Member States are adjusting labour market regulations and practices to the new ways of production and changing individual preferences as to the distribution of time between work, leisure and education. It remains the case, however, that social security systems and taxation policies are not yet fully geared to flexible forms of work, though progress has been made. Work redistribution is currently (re)appearing as an issue on Member States’ political agenda, but it is perceived and addressed differently throughout the EU. Some Member States associate it closely with a reduction of working hours in the full-time working week, while others tend to associate it more with working-life time policies. The involvement of social partners at all levels (local, sectoral, national and European) has an important role to play.

3.3.3. The Role of Social Partners at European level

The three cross-industry umbrella organisations adopted in November 1996 in Dublin a "declaration on employment". In their joint contribution the social partners stressed the need for an integrated approach to employment, encouraging improvements in the macroeconomic environment, exploiting the potential of the internal market to the full and implementing structural reforms in the labour market. They paid particular attention to lifelong learning. This, however, has yet to lead to practical follow-ups in terms of clear commitments and concrete actions.

In June 1997, the Social Partners signed a Framework agreement on part-time work. The scope of this agreement is significant, as part-time work has become one of the main features of the labour market and as it has a great potential with respect to job creation.

The sectoral social dialogue made progress in several areas. For example, the agricultural sector reached an agreement aimed at reducing working time, enhancing training and developing new poles of activity. This is the first agreement at European level on working conditions (reduction of working time, organisation of work and flexibility) with the aim to improve the possibilities of employment. In the cleaning industry the European deliberations on new sources of employment prompted the industry’s social partners to adopt a memorandum on new services to private individuals and on agreements covering the workers engaged in the new activities thus created.

The integration of the Agreement on Social Policy in the Amsterdam Treaty confirms that the social partners have a major role to play in the strengthening of the Community social policy, and the European Council acknowledged the importance of the contribution of the social partners to the process of European construction.

Greater flexibility in the management of working time

At the level of the enterprise or of a entire branch, collectively agreed reductions in working time and flexibilisation through annualised distribution, part-time work, leave schemes, etc. can provide an efficient joint solution to problems of adjusting capacity to demand, meeting individual preferences for specific working schedules and increasing total productivity by extending the economic life of capital. In addition, such agreements may effectively contribute to maintaining jobs that would otherwise be economically unfeasible or to creating new jobs for the unemployed.

In many Member States, the authorities have reformed the legal framework in order to offer a larger range of possibilities and eliminate unnecessary rigidities. In Belgium and France, the authorities went a step further by encouraging sectors and enterprises to conclude agreements producing a net growth in jobs along with work sharing and/or the reduction of working hours.

In Belgium, the Employment Agreements were proposed by the social partners under the 1995-96 cross-sectoral agreement and have been extended and enhanced for the period 1997-98. The social contributions payable by the employer are reduced by around 3,750 Ecus a year for each additional worker that an employer takes on for the period in which the agreement is valid. Applications were made in respect of 120,000 workers during the 4th quarter of 1996, which reveals an increasing trend in coverage.

Henceforth the agreements must comprise a minimum of two measures from a list including: career breaks, part-time work, collective reduction of working hours, flexible working hours, half-time pensions, and additional training during working hours. Under these agreements, enterprises can also opt for a subsidy for creating additional jobs reducing employers’ contributions by 20 % of average pay in the enterprise. Following the 1997-98 sectoral negotiations, 85 employment agreements were concluded at sectoral level, covering 70 % of workers in the private sector.

In France, the law on reduction of working time of 11 June 1996 provides for a reduction in social insurance contributions of 40% in the first year and 30 % in the subsequent 6 years, for firms that introduce collectively agreed working time reductions. These should have the effect of reducing working time by at least 10%, provided that it is associated with recruitment corresponding to at least 10% of the annual average workforce level in the company concerned. The extent of the reduction in contributions increases to 50% and 40% in the case of 15% reduction of working time and 15% recruitment.

A similar measure offering a reduction in social insurance contributions applies to firms reaching an agreement under which, by means of a 10% reduction in working time, mass redundancies are avoided. The first evaluation results of the 1996 Law are very encouraging, confirming the very positive response it has got from the social partners in France. Until July 1997, 920 agreements had been signed in a one-year period., of which 2/3 for the creation of new jobs and 1/3 for job maintenance. 90,000 employees are currently concerned by the agreements in place.

Concerns about the too high financial cost of this measure are not confirmed by the latest evaluation results. In comparison with more traditional job creating measures, this measure entails a substantially lower net cost per unemployed.

Probably more evaluation will be needed in order to assess fully the impact of this law. However, it is already clear that it has the merit of encouraging firms to rethink with employees the organisation of work and working time. In this respect, it leads to a more active response than for instance traditional cost cutting measures.

3.4. Strengthening the local dimension

3.4.1. Job creation initiatives and local involvement

The Essen Council advocated the promotion of initiatives, particularly at regional and local levels, that create jobs which take account of new requirements e.g. in the spheres of environment and household and social services. It was agreed that this required both an improvement of the legal, tax and financial environment affecting such jobs, and a mobilisation of all actors at the relevant level.

Enhancing the role of the local actors in job creation. In line with the Council recommendations, job creation initiatives in many Member States are becoming increasingly locally based. In some Member States local initiatives have been supported through the establishment of new and decentralised bodies at local level to implement new policies and measures for job creation. It is the Southern European countries (Italy, Greece, Portugal and Spain) who stress more the importance of such initiatives within their general employment strategies.

Employment initiatives at local level offer new opportunities for employment and enable emerging needs to be met by creating new occupations. In addition to their direct labour market function, such initiatives often provide social and economic benefits and services to the local community. They mobilise local partnerships and can contribute to local processes of economic, social and environmental renewal and development of rural and urban areas.

The Commission is examining the employment potential of the social economy (not-for-profit sector). The development of pilot projects, the dissemination of information and the promotion of networks in this sector is underway, with funding provided in the 1997 budget by the European Parliament. In response to the Dublin European Council’s request, a report on the potential of local development for stimulating employment growth is being prepared. The report will concentrate on best practice and experiences, and pay particular attention to the way co-operation between public authorities, private enterprises, social partners and local groups has led to initiatives matching the needs of the unemployed.

Territorial pacts. At the initiative of the Commission some 90 projects due to become Territorial Employment Pacts have been drawn up in partnership, at regional or local level, by representatives of public authorities, employers and employees, citizens’ associations, representatives of training and educational institutions and various other bodies. They will cover more than 10% of the EU population in areas registering an unemployment rate above national average, and the Community will co-finance them, by using the available resources of the Structural Funds and especially their margins of flexibility.There are three criteria for such pacts:

• a "bottom-up" approach, whereby initiatives should come from local level;
• the involvement of a broad public-private partnership made of all relevant actors with a significant influence on employment in the area, thus going beyond the normal partnership within the framework of the Community structural funds by actively including the private sector, the social partners and the relevant NGO’s;
• a plan of action based on an analysis of the local situation, to be used to develop an integrated strategy and innovative job-creation measures.

Improving the effectiveness of start-up grants. Most Member States provide financial incentives and assistance in order to help those wishing to start up a new business to do so. These are long standing schemes, whose success rates tend to be low when the new entrepreneurs are unemployed with low skills, and high when the beneficiaries are skilled, but in this case the deadweight cost is likely to be important. Some countries have developed innovative approaches combining financial aid with specific training and technical assistance often addressed to the unemployed in regions suffering from structural difficulties (see Best Practice example no. 10). In this connection, Germany has improved the conditions for financial support to the unemployed who set up their own business by activating the unemployment benefit, and wage subsidies are available when the newing self-employed recruit extra personnel.

Promoting the "intermediate" labour markets. The national reports indicate that there has been a further expansion of initiatives for the most hard-to-place, by unlocking the potential of the the social economy. This involves the creation of work in socially-useful activities, which do not generally compete with private businesses. Although these jobs are often temporary in nature, evaluation from earlier initiatives shows that they can have a more positive effect than traditional, mass government schemes (see Best practice example no. 9).

Such initiatives have been launched in Ireland (Community Employment), the UK (in the Glasgow area), in Germany (especially in Eastern Germany, where they account for 3% of employment), and in Austria (Gemeinnützige Eingliederungsbeihilfe - G.E.B. in the social care sector). Partly on the basis of earlier experience in the Glasgow area, the UK government will designate certain areas of high incidence of social exclusion as Employment Zones where local partnerships will be established to provide employment in the intermediate labour market or help those becoming self-employed with specific training.

"Intermediate labour markets"

Several programmes providing temporary work experience to the long term unemployed and other disadvantaged groups have been in place for years in many Member States, with mixed results. Much of the evaluation suggests that the programmes have high costs per capita, lead to displacement of other activities and have little or no effect on the participants’ long-term employment prospects in the real labour market. In addition, attendance of such programmes becomes a stigma for participants in the eyes of future employers.

More recently, small-scale "intermediate labour market" schemes combining work experience and training in socially useful activities have shown more positive results. Often such programmes are implemented in sectors responding to unfulfilled demand. According to evaluation, the initiatives of this type which improve participants’ job chances the most appear to be: those offering an environment as close as possible to "normal jobs"; those which include job-relevant training; and those which are locally organised around activities filling existing demand in the local community (e.g. household, environment, culture and social care).

Ireland launched Community Employment, a scheme providing part-time work in the social economy and personal and skill development for the long-term unemployed and other disadvantaged groups. The workforce engaged in the scheme gains invaluable work experience while providing community and enterprise support facilities, environmental improvements and important community-based services.

The scheme has enjoyed remarkable success, as shown by the growth in the number of participants from 15,000 to the present 40,000 annually, which is attributed to the attractive conditions of the programme: Participants are normally paid at a level equal to or greater than unemployment benefit and also retain secondary benefits. It is estimated that 36 % of participants have subsequently moved to full-time employment and a further 30% into education/training programmes. These are very significant results, far above the results of comparable measures elsewhere and in Ireland. This success can be partly attributed to the current upswing in the Irish labour market, but also reflects improvements in the range and quality of activities covered.

The scheme was modified in April 1996 to provide two distinct options which target better the needs of the long-term unemployed, in particular. The "Part-Time Integration Option" will be aimed at those unemployed over 12 months with reasonable prospects of finding employment and will last for one year. The "Part-Time Job Option" will offer the possibility of up to 3 years participation for those over 35 years old and registered unemployed for at least 3 years.

The ESF has been supporting the Community Employment Scheme from the beginning and it is planned to refocus ESF on the older long-term unemployed following the Mid-Term review.

Measures to promote enterprise creation by young entrepreneurs and the self-employment of unemployed persons

Start-up grants have enjoyed wide popularity in Europe, despite the evidence that the "mortality rate" of such businesses can be high, especially when they are addressed to the unemployed, and that only the best qualified candidates can take effective advantage of such shemes. A solution to improving their effectiveness can be found in the provision of specific training in combination with finance and an appropriate assessment of the feasibility of each business project.

Since 1986, Italy has been running quite successfully a Programme of Support to Youth Entrepreneurial Activity, with the aim of encouraging young entrepreneurs to start up a business (Law no. 44/86). The conditions for entitlement of benefits were recently revised. People under 36 years of age are eligible for the financial aid, which can amount to 90% of costs (in the Mezzogiorno) or 60% (in northern and central regions ), in addition to other supporting services (technical assistance, training, market orientation. Financial aid for investments may be in the form of non-refundable grants or loans at favourable interest rates. The management of the system is ensured by the IG SPA (Società per l’imprenditorialità da giovanile), a public development company.

In 1996 a new initiative called Prestito d’onore (Loan Based on Honour) was launched, with the aim of supporting unemployed persons who wish to enter self-employment in the crafts or manufacturing sector and demonstrate the ability to translate an idea into a profitable activity. Under this scheme, small-scale self-employment initiatives in the Mezzogiorno are funded partly by non-refundable grants and partly by loans on favourable terms. The projects are selected and their feasibility checked at the end of a self-employment training course organised by IG SPA. The ESF Objective 1 programme supports the training part of this activity.

An "activation" element is included in the scheme, to the extent that workers who have been made redundant may claim early payment of compensation when they propose to enter self-employment .

ITL 30 Billion for 1995 and ITL 50 Billion for 1996 have been earmarked for the implementation of this measure. However, more than 35,000 applications have been submitted so far, which led the Government to increase the financing of the programme.

Promoting new jobs in new household and social services. Some Member States seek to develop the employment potential of new service sectors in the economy, to match unfulfilled demand, through targeted labour cost reduction, administrative simplification and structuring of the supply of services. In France and Belgium, employment in household-related services has been promoted through a variety of methods including service vouchers and fiscal reductions. In addition, the "Maribel Social" programme in Belgium provides for a flat rate reduction of employers’ contribution in the field of health and social welfare, on the condition that new jobs are created (4,500 forecast for 1997).

• National reports indicate plenty of examples of job creation initiatives,mainly at the local level, with very different goals and under different institutional settings. This is the area where most experimentation seems to be undertaken. It is probably too early to draw conclusions about the effect of such initiatives. In some cases, it appears that the objectives of developing new services and of re-integrating the hard-to-place unemployed have been mixed up. This may have reduced the effectiveness of such measures, and reduced their credibility for potential employers and qualified workers, whereas the unemployed may not find permanent jobs in such services to the extent required. Job creation initiatives in new service areas will have to be seen in a broader perspective integrating changes in working time, working life and consumption patterns.
• These new sources of employment need to be exploited much more decisively, particularly as regards services to people and to local communities, and the not-for-profit sector. Local employment initiatives and territorial pacts bringing together all involved at local, regional and national levels, in a broad partnership approach have proved particularly effective. The lessons drawn from these successful experiences need to be promoted as part of a wider local development drive throughout Europe.

3.4.2. Increased role and decentralisation of employment services

Recommendations of the European Councils have also stressed the need to reform public employment services and enhance their role in job brokerage, informating job seekers and employers and assisting the active search for work.

Decentralising delivery of active policies. Decentralisation is designed to ensure improved accessibility and tailoring of measures and provisions to local labour market needs. It normally entails the devolution of responsibility for policy implementation and formulation to the local services. In addition it has often been accompanied by a closer involvement of the social partners and of local community groups in the search for concrete solutions at the local level. Decentralisation is expected to give a major boost to improving the effectiveness of public employment services in finding jobs for the most hard-to-place and to serve the needs of both employers and job seekers.

The European Social Fund (ESF) priorities clearly support and favour decentralisation at regional and local levels, and the ESF programmes are therefore acting as a significant stimulant to this tendency.

In many Member States, the Public Employment Service (PES) is being reorganised in a more decentralised way and local employment offices receive much more scope for gearing their resources to the requirements of the local labour market While decentralisation is well established in Sweden, Finland, Denmark and the Netherlands, it has been promoted more recently by initiatives in Germany, Austria, Ireland and Belgium. In France de-concentration is currently being piloted in six regions.

In Germany, the revised Labour Promotion Act, which came into force on 1st April 1997, enlarges the fields of action and decision-making, as well as the autonomy of local employment offices. On the basis of the budgetary resources at their disposal, they are free to choose amongst existing instruments of active labour market policy those which are most suited to local labour market requirements. In addition, the local offices have now the possibility of using up to 10% of their resources for active labour market policy to develop innovative measures which go beyond existing measures and which they deem necessary for promising insertion actions. In order to reveal the efficiency and effectiveness of their actions, the offices have to report annually on and account for their active labour market policies. This is also seen as an instrument for increasing competition between the various offices.

In the UK, since 1991 delivery of most active policies has been decentralised to local Training and Enterprise Councils (Local Enterprise Companies in Scotland). These bodies which are run by local partnerships (led by the private sector), act under contract to the central government to deliver training and other labour market measures according to performance targets laid down by the government. The evaluation results have been globally positive, and stressed the TEC’s worth in providing tailored solutions to local labour market problems.

Apart from TECs, there is no evaluation of the degree to which employment services’ efficiency can be explicitly attributed to different degrees of decentralisation. While the devolution of responsibility for measures to local interests clearly brings advantages, there is also a need for co-ordination in order to avoid overlapping and duplication. Furthermore, within such a "hands off" approach, it is desirable that the stated policy objectives are pursued, especially in relation to the targeting of the most hard-to-place unemployed.

Promoting Customer-Orientation. Together with decentralisation, PES reforms have increased the possibility of individualised service to the unemployed. Measures are selected in accordance with the duration of unemployment, motivations and characteristics of the unemployed, in the framework of individual contracts drawn up between the unemployed and the employment service - individual case management (see Best Practice examples 1 and 11). The national reports also stress the importance of interlinking the services in charge of employment, social welfare and the local authorities, in order to achieve a more efficient use of resources. In some cases these reforms have led to the establishment of just one reception office (guichet unique) for the unemployment, for dealing with re-integration and social protection.

New Role for Private Employment Services. In many countries, there has been a move towards ending the monopoly of public services; in others (Italy, Greece), a similar move is being considered. Although the development of private services following de-regulation has been quite uneven, with a relatively small market share so far for the private services, the present more competitive environment paves the way for new partnerships between private and public services.

Many countries are strengthening the capacity and role of the PES. This key development enables the PES to improve its market penetration, and to perform its multiple role in matching the supply with the demand of jobs, providing information on the labour market, and supporting the re-integration of the most hard to place unemployed . Full exploitation of the possibilities of new information and communication technologies should enhance the capacity of PES to ensure these tasks.

3.5. SUPPORT FOR EMPLOYMENT PROMOTION IN MEMBER STATES PROVIDED BY THE STRUCTURAL FUNDS

The Structural Funds, acting in support of economic and social cohesion, have an important role to play in promoting sustainable growth and employment. They contribute to improving the performance of the productive sector through the development of infrastructure, the support extended to productive investment, rural development activities and the adaptation of human resources. Programmes aim at increasing the employment content of growth, by taking employment into account and by exploiting local potentialities and new sources of employment. The interventions are also targeted at immaterial investment (research, services to enterprises, human capital) and technological innovation.

In the context of structural change within labour markets and in order to enhance employability as needed, the Funds, particularly the European Social Fund, underpin Member State efforts through: improving education and training systems within the less developed regions, as well as supporting lifelong learning across the EU as a whole; matching labour supply to the changing demands of the economy; promoting social inclusion and equal opportunities for all; acting as a catalyst for change within the Member States’ human resource development policies and labour market systems. As well as these medium- and long-term structural effects, the Funds also have a short term impact through extra demand for goods and services.

Despite the process of real convergence already achieved between the Member States, large disparities remain in terms of competitiveness, skill levels and unemployment. The Commission attaches great importance to ensuring consistency between the continuing effort of the Structural Funds and the European employment strategy.

Public employment services

Early identification and early action to prevent long-term unemployment require well-resourced and well-run employment services, and a fully developed range of active measures. Sweden runs a well-equipped employment service, which plays a fundamental role in underpinning active labour market policy. With 390 employment offices and 1,700 staff per million workers, Sweden has one of the the highest coverage in Europe. Almost 90 % of the unemployed are registered with the employment services. Individual case-management and early identification of the most difficult to place among the unemployed are actively promoted. Most unemployed having reached 6 months of unemployment are offered participation in an active measure (4 months for the young unemployed).

The 1996 Employment Bill gave a stronger role to municipalities in the use of labour market funds. Already before the decentralisation reforms, the individual employment offices already had a rather wide scope of decision in the choice of programmes for each beneficiary.

Two-thirds of the labour market policy budget goes to active measures. Around 5% of the labour force is involved is some kind of active programmes. A monthly average of between 40,000 and 50,000 unemployed participate in training, whereas the monthly average of those in work experience schemes (ALU) was 42,000 and 53,000 in 1995 and 1996 respectively.

Active labour market policies of this magnitude have certainly played a decisive role in maintaining relatively low rates of long-term unemployment in Sweden despite the deterioration in the employment situation since the early nineties. The long-term unemployed represent less than 2 % of the labour force in Sweden against a EU average of 5.2 %. However, evaluation results have pointed out to the "vicious circle" between either recurrent unemployment or transitions back and forth between open unemployment and labour market programme participation. Low integration rates have been observed in such schemes, in the present difficult employment situation, thereby transforming active schemes for many participants simply in a way to renew benefit elegibility. Recent evaluation has furthermore indicated undesirable substitution effects in the work experience schemes and suggested the need to increase the target-orientation of programmes and to design individual action plans that are flexible enough to adjust to individual needs.

This is in line with recent decisions to strengthen individual case-management Concrete individual plans of action should be drawn up between the employment office and the job-seeker, and participation in programmes should reflect individual characteristics and motivations.

Analysis of the Multi-Annual Programmes shows the coherence between the priorities set out in the employment strategy and the operation of the Structural Funds, and the European Social Fund in particular. The mid term evaluation and review of Objective 1, 3, 4, 5b and 6 programmes as well as the new programming period for Objective 2 regions provide the opportunity to sharpen the focus of Structural Funds support on employment.

Guidelines issued by the Commission to the Member States at the end of May 1997 provide a policy framework for programme adjustments. These guidelines emphasise a number of key priorities including: the need to shift from passive to active labour market measures, with the preventive approach lying at the heart of the latter; strengthening links between education systems and the labour market; the potential for job creation through local development and employment initiatives; maximising the spill-over effect on local employment from infrastructure work; increasing the employment impact of state-aid cofinancing in terms of sustainable jobs creation; the need to give high priority to start up SMEs and to improve their international competitiveness, especially in the services sector. Actions in support of the principle of equal opportunities would seek to facilitate access to employment and business services as well as to improve social infrastructure and the terms and conditions of employment.

The role of research, technological development and innovation as factors for competitiveness and jobs creation was highlighted. Guidelines have also been issued on how to achieve sustainable development and employment in Objective 2 regions.

In Agenda 2000 the Commission has set out the political and financial perspectives for the period 2000-2006. Within a streamlined structure of Objectives, the aim will be to achieve greater concentration on regions and target groups experiencing greatest disadvantage. Objective 1 support will place special emphasis on improving competitiveness as the fundamental condition for creating and maintaining employment. In order to facilitate economic diversification and dynamism in the Objective 2 regions, particular priority will be given to training and access to new technologies to unlock employment opportunities. The new Objective 3 will underpin Member State efforts to modernise their education, training and employment systems, with its main guidelines being defined within the framework of the European employment strategy.

Annex 1 : The Employment Indicators

The employment situation in the Union improved somewhat in 1995/96, after the deterioration registered in 1992/94 (cf. Macro-economic and employment indicators hereafter). The employment rate increased marginally to reach 60.4% in 1996 versus 60.1% in 1994. It picked up for women (50.3% Vs 49.6%) while stabilising for men (70.5% Vs 70.6%).

The improvement halted temporarily in 1996, in line with the deceleration of economic activity (GDP grew by 1.6% Vs 2.4% in 1995 and 2.9% in 1994). The employment rate increased by 0.1% only and the unemployment rate rose by 0.2%, to 10.9%, after having fallen by 0.4% in 1995. However, the data available for 1997 are encouraging. The monthly rate of unemployment for July, at 10.6%, was 0.3% below its level of 12 months before.

This improvement was largely due to the increase in the number of part-time jobs. The employment rate in full time equivalent hardly moved over the last two years (55.2% in 1996 Vs 55.1% in 1994). The improvement recorded for women was limited (42.2% Vs 41.8%) and the fall continued for men (68.4% Vs 68.8%).

The growth in employment registered for women (1.0% increase in 1995 and in 1996) was essentially due to their increased participation in the labour force and yielded therefore no significant reduction of unemployment. While the activity rate for women moved up from 56.8% in 1994 to 57.5% in 1996, their unemployment rate fell from 12.7% to 12.6% only. On the contrary for men, the activity rate continued to fall (from 78.5% in 1994 to 78.0% in 1996) so that the rate of unemployment decreased (from 10.0% in 1994 to 9.6% in 1996).

The percentage of long term unemployed, i.e. those who had been without a job for more than one year, fell in 1996 to 48.3% of all unemployed, after the sharp rise recorded between 1992 (40.6%) and 1995 (49.2%). Only men benefited from this change. For them, the share of long term unemployment decreased by 1.7 percentage point to 46.6% in 1996 while it increased by 0.1 percentage point to 50.1% for women.

The unemployment rate for youth moved in line with the overall unemployment rate over the last two years. It fell from 22.2% in 1994 to 21.6% in 1995 but rose to 21.8% in 1996. However, the unemployment rate kept increasing for young women (from 23.0% in 1994 to 23.3% in 1996)

In 1996, the employment rate increased significantly in 8 Member States: Luxembourg (+1.3%), The Netherlands (+1.2%), Spain (+0.8%), Ireland (+0.8%), Denmark (+0.5%), Greece (+0.5%), Portugal (+0.5%) and the United Kingdom (+0.5%). This has much to do with output growth as GDP grew, in 1996, by more than 2% in all these countries.

The employment rate grew only marginally in Italy (+0.2%). It did not change in Belgium and Finland. It decreased in France (-0.2%), Germany (-0.7%), Austria (-1.0%) and Sweden(-1.8%). These countries, except Finland, experienced GDP growth below 1.5% in 1996. In Finland, where GDP increased by 3.3% in 1996, the stagnation of the employment rate, despite a growth in employment of 1.4%, is essentially accounted for by a strong rise of the population of working age (+1.4%).

ANNEX 2

LIST OF EXAMPLES OF BEST PRACTICE SUGGESTED
BY MEMBER STATES

1. Network for the integration of hard-to-place young people F

2. Decentralisation of delivery of active measures F + D+ IRL+I

3. Promotion of new activities for youth employment F

4. Promotion of jobs in household services F

5. Reform and reduction of working time F

6. Reform of the financing of social protection F

7. Employment agreements on wage moderation and B

redistribution of work

8. Local Employment Agencies (ALE) B

9. First Work Experience (PEP) B

10. Guaranteed income Allowance for part-time workers B

11. Career breaks B

12. Reduction of labour cost through cuts in social insurance B

contributions

13. Community Employment Scheme IRL

14. Back to Work Allowance IRL

15. Welfare to work - the New Deal UK

16. Transition from School to Work (Target 2000) UK

17. Low non-wage labour costs UK

18 Liberalisation of product markets UK

19. Dual Training System D + A

20. Wage policy A

21. Labour Foundations A

22. Insertion grant for Social Employment (GEB) A

23. Adult Education and Higher Education for life-long learning S+ FIN

24. Active Labour Market Policies S + FIN

25. Agreements for Employment Stability in the framework of E

social dialogue

26. Workshop Schools E

27. System of Qualification and Certification E

28 Traineeship contracts E + L

29 Management of job vacancies by INEM through television E

30. Multi-Annual Employment Programme E

31. Temporary Auxiliaries Division (DAT) L

32. Reemployment Aid L

33. Tax Relief L

34. Made to measure training and re-training for unemployed

persons L

35. Solidarity agreements for reduction of working time I

36 Support to youth entrepreneurship in the Mezzogiorno I

37 Area contracts and Territorial Pacts I

38 Extensive tripartite cooperation FIN

39. Early identification and early action to prevent long-term

unemployment IN

40. Activation of unemployed young people FIN + DK

41. Integrated Programme of Intervention GR

42. Subsidised working posts for special groups of unemployed GR

43. Schools of Technical Apprenticeship GR

44. Measures on activation DK

45. Job rotation DK

46. Measures to prevent bottlenecks at the regional level DK