Select Committee on European Scrutiny Third Report


COM(01) 438

11839/01 ADD1

COM(01) 512

COM(01) 511

Draft joint employment report 2001.

Assessment of the implementation of the 2001 employment guidelines — supporting document to the joint employment report 2001 — Commission staff working paper.

Commission Recommendation for a Council Recommendation on the implementation of Member States' employment policies.

Commission Proposal for a Council Decision on guidelines for Member States' employment policies for the year 2002.

Legal base: (a) and (b) Article 128(5) EC
(c) Article 128(4) EC; qualified majority voting
(d) Article 128(2) EC; consultation; qualified majority voting
Documents originated: 12 September 2001
Forwarded to the Council: 14 September 2001
Deposited in Parliament: (a) (c) and (d) 28 September 2001
(b) 8 October 2001
Department: Work and Pensions
Basis of consideration: EMs of 17 October 2001
Previous Committee Report: None; but see (21640) 11190/00: HC 23-xxix (1999-2000), paragraph 34 (15 November 2000)
To be discussed in Council: 12 November 2001
Committee's assessment: Politically important
Committee's decision: (All) Cleared



15.1  These four documents together make up a package of guidance (sometimes known as the "Luxembourg process") for the development of Member States' employment policies, in accordance with Article 128 EC. (The employment policies are based on the four pillars of the European Employment Strategy — employability, entrepreneurship, adaptability and equal opportunities.)

15.2  The draft joint employment report (documents (a) and (b)) provides the analysis which informs both the recommendations on the implementation of Member States' employment policies (document (c)) and the 2002 employment guidelines (document (d)). Member States are required to take account of the guidelines in drawing up their own policies and to write National Action Plans each year reporting on their implementation. On the basis of these plans, the cycle then begins again, with the Commission preparing the next Joint Employment Report and recommendations to Member States. Once approved, the package is presented to the December European Council.

The documents

— The draft Joint Report and the supporting document (documents (a) and (b))

15.3  These two documents comprise the draft Joint Report. The main report, document (a), provides an overall analysis across the four pillars of the employment strategy and a brief country-by-country review. The supporting document contains a more detailed analysis of recent developments under each pillar, and more detailed comments on the performance of each Member State and their response to last year's recommendations.

15.4  The Executive Summary of the report states that reforms need to be pursued without complacency, given a less favourable economic outlook. It continues:

    "In particular, an appropriate policy mix based on all four Pillars of the strategy should be defined with a view to increasing employment rates. Actions should better take into account the objective of promoting quality in work as a factor of promoting participation on the labour market as well as increased competitiveness. More forceful policies are needed to address gender gaps in the labour market, and in particular the gender pay gap. The potential of older workers should be better exploited with more comprehensive approaches to prevent early withdrawal from the labour market.

    "Investing in human resources remains an utmost priority in the move to a knowledge-based economy and in particular to tackle the emerging labour and skills shortages. The contribution of the Employment Strategy to the fight against social exclusion need to be defined more clearly. Regional disparities need to be addressed and fuller use should be made of the Structural Funds, especially the European Social Fund, to support the Employment Strategy. Finally, the contribution of social partners, which is an essential condition for the success of the strategy, needs to be better integrated in the process and better evaluated. The work on developing and using precise and comparable indicators must continue. This concerns particularly indicators capable of catching the quality and effectiveness of policies."

15.5  Both parts of the report address the situation in the UK. They report a further year of employment growth, with employment rates exceeding all the targets set at Lisbon and Stockholm. On the question of balance within and among the pillars, there is comment that the UK emphasises flexible working practices rather than measures to increase security of workers. A section in the main report with the title Challenges ahead introduces the themes which run through the documents in relation to the UK, as follows:

    "To address workforce skill gaps and low labour productivity, the Government, Employers, and Unions have an important role in encouraging work based training within a comprehensive life long learning framework (particularly amongst small firms). Especially important are policies for those with poor basic skills (literacy and numeracy). Although more intensive support for the adult unemployed is now offered at 18 months through the New Deal for Adults, the UK could further reinforce earlier activation by intervention for more people at 12 months. With non-employment increasingly concentrated amongst disadvantaged groups, additional support would help to close the gap in employment between these groups and the rest of the workforce. The gender pay gap remains one of the largest in the EU. The Government and Social Partners both have important roles in addressing the issue. It is important to build upon the increasing role of the social partners in the delivery of policy at national level."

— Recommendation on the implementation of Member States' employment policies (document (c))

15.6  In his helpful Explanatory Memorandum on this document, the Minister of State for Work at the Department for Work and Pensions (Mr Nicholas Brown) sets the document in context, and outlines the recommendations to the UK. He says:

    "The Employment Chapter in the Treaty of Amsterdam gives the Commission the competence to make Recommendations to the Council for Recommendations on employment policies to individual Member States. These Recommendations are made in the light of how Member States have addressed the Employment Guidelines for 2001 in their national Employment Action Plans. They are used to encourage Member States to strengthen their implementation of the employment strategy and are not considered an instrument of reprimand.

    "This is the third year that the Commission has used this competence. This year the Commission has considered Member States' responses both to the Guidelines and to the previous Recommendations as reported in their National Action Plans. In doing this, they have taken into account the new priorities set out in the Stockholm European Council Conclusions.

    "The UK, as one of the best employment performers in the EU, receives four Recommendations. The recommendations are that the UK should:

      "(1)  Further foster social partnership at the national level to improve policy implementation and development. In particular, efforts should be aimed at improving productivity and skills, and the modernisation of working life;

      "(2)  Strengthen efforts to reduce the gender pay gap and improve the balance in representation between women and men across occupations and sectors, by involving all relevant actors including the social partners and enabling monitoring with appropriate verifiable indicators and targets; further implement and monitor the impact of actions taken to improve the provision of affordable childcare facilities;

      "(3)  Reinforce active labour market policies for the adult unemployed before the 12-month point to supplement the support provided by the Jobseeker's Allowance Benefit and schemes to improve job search effectiveness. Within this context, particular attention should be paid to groups facing particular problems in the labour market; and

      "(4)  Reinforce current efforts to encourage and develop work-based training to address increasing workforce skill gaps and low levels of basic skills."

— Guidelines for Member States' employment policies for the year 2002 (document (d))

15.7  This draft Decision builds on the Joint Employment Report to shape the future. The guidelines — 18 for 2002 — are set out under the four pillars. They are preceded by a number of 'horizontal' objectives on cross-cutting areas which were first identified under the Lisbon Conclusions in March 2000.

15.8  The guidelines have been revised in a number of minor ways this year, and incorporate changes directed by the Stockholm Council in March 2001. The horizontal objective which addresses moves towards full employment now includes employment rate targets for women and older people. A new horizontal objective on quality of work has been added, with consequential changes to some of the guidelines. The guidelines on mobility and on equal pay have been strengthened.

The Government's view

15.9  Overall, the Government supports the European Employment Strategy and the components of the package. In his three Explanatory Memoranda, the Minister addresses each separately.

15.10  Of the Joint Employment Report, (documents (a) and (b)), he says:

    "The Government is generally content with the report, which provides a fairly accurate reflection of the situation in the UK. Extensive discussions on working drafts of the supporting document and the Joint Employment Report have already been held at official level with the Commission. For the most part, we are content that our views have been taken into consideration. Inevitably some critical comments remain, which are intended to be constructive, because the main purpose of the document is to identify areas where Member States can do more to implement the Employment Guidelines ... The Government accepts that there is more to be done in order to deliver employment opportunity for all and to attain the goal of full employment."

15.11  In relation to the Recommendations to Member States, (document (c)), the Minister emphasises his support for the principles behind the recommendations and his belief in their value. He tells us that the UK will respond to the Recommendations in next year's action plan, and sets out the lines along which the response is likely to be structured, as follows:

    "(1)  On social partnership: Must build on what is already in place in the UK. Social partnership needs to take place at the level where it is most relevant in the national context. In the UK, that is often at local or workplace level. At national level, rather than operating rigid consultation structures, the Government and social partners work together on specific remits where both parties can bring useful points to the debate. This has developed and will continue to do so (Productivity Challenge, Partnership Fund, Skills Task Force etc).

    "(2)  On gender gap: Accept there is a gender gap and need to narrow it. Progress being made and determined to make further progress. But action by governments alone will not close gaps because reasons are many and complex. They include women's choices and they can also be subject to changes in the labour market and economic conditions, which produce perverse effects. Given these variables which are not controlled by governments the EU needs to focus attention on real, effective action.

    "(3)  On active labour market policies for adult unemployed before 12-months: UK policy based on a preventative approach from first day of unemployment. This embeds best international practice in labour market policy and programmes have proved to be amongst most effective preventative labour market policy regimes in the world. Commission do acknowledge in Joint Employment Report the UK's success in reducing long term unemployment. The UK can still improve and more help for the most disadvantaged is being introduced along with extension of same sort of principles to people on benefits other than unemployment.

    "(4)  On work-based training: The UK does have to address basic skills and isolated skill gaps, and is doing so through many elements of a comprehensive Lifelong Learning strategy. The Government approach is to encourage learning through partnership, choice and flexibility. The Government does not believe that compulsion is the best way to encourage good quality development for the workforce. The UK strategy has concentrated on improving the quality and relevance of training opportunities available to the workforce through initiatives like Investors in People, which has been enormously successful and is being adapted for application at European level."

15.12  The Minister welcomes the Guidelines (document (d)), which he considers mark a further step in achieving the objectives of the Employment Strategy. He tells us that the Government thinks that the new quality of work elements fall within the definition agreed at the Stockholm Council, and are uncontroversial. The Government is, however, aiming to clarify a few points in the document. In particular, it wishes to ensure that the setting of national employment rate targets (in the horizontal objective about moves to full employment) is optional.

15.13  On the timetable for the package, the Minister tells us that the Employment and Social Policy Council will consider the measures on 12 November, or 3 December. Once approved, they will be presented to the Laeken European Council on 14 December.


15.14  The employment package has now become an established part of the European Employment Strategy. Progress appears to be being made, if slowly in some areas; we detect a note of warning in the Joint Employment Report's comment about the less favourable economic outlook.

15.15  Once again, the UK comes quite well out of the documents, and the Government appears to have no serious quarrel with them. The points of disagreement — over the role of the social partners, for example, and some aspects of the New Deal — are well-rehearsed, and both sides seem content to differ, while performance remains good.

15.16  The Minister has provided helpful comment, particularly over the Recommendations. We thank him, and clear all the documents.

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Prepared 12 November 2001