The European Employment Strategy in an enlarged...

The European Employment Strategyin an enlarged EU

Georg Fischer and Luc Tholoniat*

This article reviews the origins, development and impact of the European EmploymentStrategy against the backdrop of the employment performances and policies of theEU, from the early 1990s up to the mid-term review of the Lisbon Strategy in 2005. Itrecalls how the issue of employment was put at the centre of the policy debate in the1990s and of the discussion about the right balance between economic and social policyintegration at EU level. While the EU-wide emphasis on employment initiated in themid-1990s is likely to have had some positive effects, in particular in terms of a returnto employment growth and an increase in participation and employment rates, manymajor challenges remain or have developed in the meantime. The experience of theEES shows that there is room for a European strategy to promote growth and jobs.

Contents 4 Has enlargement changed theEuropean picture?

Introduction4.1 Labour market characteristics and

challenges of the enlarged EU1 The issue of employment in theearly 1990s

4.2 The new Member States and theEES2 The Employment Title of the

Amsterdam Treaty and the5 Assessing the impact and develop-Luxembourg Process

ment of the EES over time

2.1 The Amsterdam Treaty and the 6 The relaunch of the Lisbonnew Title on Employment Agenda: a new venture for the

EES?2.2 Luxembourg agreement: the

launch of the European Employ- 7 Final thoughts on the EES inment Strategy retrospect

3 Improvement in employment per- 8 Conclusionsformance since the mid-1990s:a mere coincidence? References

* The views expressed in this article are those of the authors and do not necessarily reflect the opinions oftheir institution.

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The European Employment Strategy in an enlarged EU Georg Fischer and Luc Tholoniat

Introduction

As so often in the development of the EuropeanUnion, and this is the case for employment and so-cial policies, progress in integration is associatedwith the names of cities. In June 1997, the signing ofthe Amsterdam Treaty gave new tasks to the Unionin the field of social policies and introduced the Em-ployment Title Ð a new section in the Treaty dealingwith the coordination of employment policies. InNovember of the same year, the Luxembourg EUEmployment Summit launched the European Em-ployment Strategy (EES), a new form of employ-ment policy coordination, and in 2000, the LisbonSummit launched an agenda of economic reformsasking the EU to create conditions for a return tofull employment and to strengthen social cohesion.1

Lisbon and subsequent European Councils put for-ward ambitious objectives and targets on employ-ment, quality in work and the fight against poverty,and supplemented the more traditional Communitymethods with the open method of coordination as apolicy methodology to pursue these goals.

This article reviews the origins, development andimpact of the EES against the backdrop of the em-ployment performance and policies of the EU. It re-calls the political steps that led to the emergenceof the Strategy in the mid-1990s and discusses itsadaptation over time in the light of major economicand policy developments, in particular the impact ofenlargement. It reflects on its future in the contextof the relaunch of the Lisbon Strategy for growthand jobs in 2005.

Notwithstanding the importance of policy develop-ments since 1997, it would be wrong to believe thatthe policy process on employment started with theadoption of the Amsterdam Employment Title. Theprincipal policy issues of how to promote monetarystability, economic growth and high levels of em-ployment in a coherent manner and how to balanceeconomic and social objectives have accompaniedthe Community from its early days and are reflectedin the Maastricht Treaty and in particular in the“White Paper on Economic Growth, Competitive-ness and Employment” adopted by the Commissionin 1993.

The draft Constitutional Treaty has largely con-firmed these new policy elements and strengthened

1 The strategic goal set in Lisbon by EU leaders for the nextdecade is summarised as follows: “to become the most competitiveand dynamic knowledge-based economy in the world, capable ofsustainable economic growth with more and better jobs and greatersocial cohesion”.

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some aspects by integrating policy coordination inthe economic, employment and social areas in oneprovision, namely Article 14, and by highlightingfull employment as one of the key objectives of theUnion.

Indeed, the period since the adoption of the Am-sterdam Treaty has shown progress in actual labourmarket performance. By 2001, unemployment hadcome down from over 10% to 7.7% since Amster-dam and the employment rate had increased fromaround 60% to over 64%. These improvements inoverall labour market performance have come to ahalt in subsequent years, in a context of sluggish eco-nomic growth. Unemployment reached a new peakof 9.0% at the end of 2004. Prospects for 2006Ð2007may look brighter as economic growth is expectedto pick up.

Against this background, both the review of the Em-ployment Strategy in 2002 and the report of WimKok’s Employment Task Force in 2003 have high-lighted the role and significance of the EuropeanEmployment Strategy. In particular, they have em-phasised the need to move from words and commit-ments to action on policy implementation, and totackle areas where policy conflict is likely to emerge.The relaunch of the Lisbon Strategy in 2005 is meantto strengthen the momentum and consistency of ac-tion at national and EU level.

1 The issue of employmentin the early 1990s

The early and mid-1990s saw a rather dismal labourmarket performance in the EU as a whole and inmost Member States. Unemployment rates wereconsistently over 10%, youth unemploymentaround 20%, and 5% of the active population wasout of work for more than 12 months. Despite a re-turn to economic growth, employment rates stag-nated at the 60% level, well below the figures meas-ured in the 1970s and even further below those re-corded in the US and Japan. By 1996, only threeMember States were showing any improvements inperformance, the Netherlands, Ireland and Den-mark. This raised serious questions about the abilityof European societies to provide jobs for all citizensand provided ammunition to those who spoke of the“European disease”. Others presented persistenthigh unemployment as reflecting the concentrationof policy efforts to achieve EMU leaving little roomfor policies to combat unemployment. Althoughfrom very different perspectives, both strands of

Georg Fischer and Luc Tholoniat The European Employment Strategy in an enlarged EU

thinking question the balance between the economicand the social dimensions of European integrationin the post-Maastricht Union.

The President of the Commission at the time, Jac-ques Delors, felt that following the introduction ofthe single market and the agreement on EMU, ac-tion on employment was at the top of the agenda.In 1993, the Commission submitted its “White Paperon Economic Growth, Competitiveness and Em-ployment” to the European Council. The documentoutlines a strategy comprising research and develop-ment, tax policies, industrial policy, education andlabour market measures as well as direct action atEU level to finance major investment in transportand research. Much of the substance of EU policiesthat were agreed later can be traced back to pro-posals contained in this White Paper.

Jacques Delors insisted that responsibility for em-ployment policies should lie with the Prime Minis-ters and that the traditional division of Finance Min-isters being responsible for the economy and La-bour Ministers being responsible for the unem-ployed was part of the problem. Hence the practicewas established that Prime Ministers would monitorprogress in the meetings of the European Council.

As a response to the White Paper, the Essen Euro-pean Council agreed in December 1994 on five keyobjectives to be pursued by the Member States.

Box: Why European action on employment? have strong incentives for acting at EU level.Moreover, supporters of a social Europe have

From the mid-1990s onwards, European docu- traditionally fewer resources than their oppo-ments started to mention a common European nents, partly because they are relative newcom-concern for employment, justifying the need for ers in the EU arena compared with economicEuropean action, as was later reflected in the Am- actors, and partly because they have more diffi-sterdam Employment Title and in the develop- culty joining forces and acting consistently atment of the “Luxembourg Process”. This contrasts EU level. Almost everybody seems to be deter-with previous positions of many policy-makers in mined by the wish to preserve national sover-the EU, who did not see any role for the Union eignty.in the area of employment. Many policy analysts

Ð practical and technical constraints: the wide di-would have argued that four types of constraintsversity of economic performances and priori-would prevent the EU from being active in em-ties across the EU and the great heterogeneityployment issues:of social and labour market institutions make

Ð legal and institutional constraints: the principle any form of harmonisation hardly likely, if notof subsidiarity and the intergovernmental bias unrealistic, in practice.on employment matters Ð with few competen-

Ð financial constraints: the lack of major financialces attributed to the EU and the requirementresources beyond the European Social Fundof consensus Ð imply that no action is the mostfor economic policy management of the EU didlikely option, as agreement is only possible onnot permit the provision of major resources tothe basis of the lowest common denominator;parts of the Community with serious employ-

Ð political and ideological constraints: given the ment problems (comparable to a system of fis-lack of competences, national actors do not cal federalism) and led it to develop regulatory

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These included the development of human resour-ces, the promotion of investments through moderatewages policies, the improvement of the efficiency oflabour market institutions, the identification of newsources of jobs through local initiatives, and the pro-motion of access to the world of work for youngpeople, long-term unemployed people and women.The Essen European Council also called uponMember States to prepare multi-annual pro-grammes reflecting the policy recommendations andasked the ECOFIN and Labour and Social AffairsCouncils to monitor progress. The first “joint” re-port on employment was prepared by the two Coun-cils and the Commission and was presented to theEuropean Council in Madrid in 1995.

In response, the Madrid European Council stated:“For the Union and the Member States the fightagainst unemployment is the priority task”. It alsoprepared the ground for the crucial institutional pro-vision of the Employment Title: “Promoting em-ployment makes national economic and structuralpolicies a matter of common concern. Therefore ...the IGC should examine how the Union could pro-vide the basis for a better cooperation and coordina-tion in order to strengthen national policies.” Conse-quently, this led, at the end of 1996, to the establish-ment of a permanent Employment and LabourMarket Committee composed of government repre-sentatives and the Commission.


(“hard-law”) and policy coordination (“soft- ... underlying economic, social and political factorslaw”) instruments instead.

The political circumstances of 1997 do not give thefull picture. As was shown above, the foundationsof the EU action on employment had alreadyA market-making EU social policy?been partly laid in the early 1990s. The role of theEU had already been addressed in the intergov-Given these constraints, it is actually quite re-ernmental conference of 1996 leading to the Am-markable that the EU engaged in action in thesterdam Treaty. Several underlying political, eco-field of employment. For some authors, the Euro-nomic and social factors may account for these de-pean social policy emerged and gradually devel-velopments, in the context of increasing politicaloped as a corollary or as a complement to the pre-and economic integration throughout Europe.vailing process of economic integration, with spill-

over effects possibly leading to unanticipatedÐ Economic governance in the context of EMUbreakthroughs, for instance as a result of rulings

and the impact on employment: Throughout thefrom the European Court of Justice [Leibfried/1990s, there was a debate about the inclusionPierson 1995]. Others analyse the emergence ofof an employment dimension in the Maastrichtthe European social policy as a process of “nega-criteria for EMU participation. Many Ð welltive” integration within the Union [Majone 1998],beyond the trade unions and the traditionalwhereby EU legislation is meant to dismantle ob-left Ð felt that the Maastricht process with itsstacles to economic efficiency, without any socialemphasis on nominal convergence and finan-goals being pursued on their own.cial stability would damage economic and inparticular employment growth. The questionEuropean action in the social field was thereforeraised was whether a “rigorous” preparation oflong described as a market-making or market-EMU would not leave employment and espe-building social policy. Hence, for instance, the fo-cially the unemployed behind. And indeed,cus on the free movement of workers, on regulat-with the exception of a few countries, unem-ing health and safety conditions through EU di-ployment remained stubbornly high and em-rectives and on investment in human resourcesployment growth was weak despite economicthrough the European Social Fund so as to ensurerecovery and some progress towards the Maas-a sound functioning of the single market and atricht criteria. While none of the European ac-more adaptable workforce. Such explanationstors at the time proposed an additional Maas-may hold for describing the state-of-play prior totricht criterion dealing with unemployment, thethe Amsterdam Treaty.bleak employment performance created a po-litical demand for a strong European commit-ment to employment.EU activism on employment Ð political change in

major countries and ...Ð Mutual dependency of labour markets in the EU

(creating win-win environments, avoiding socialThe definition and launch of the EES result fromdumping). There are deeper economic and so-the combination of political circumstances and un-cial factors in place which may justify EU ac-derlying dynamics. To a large extent, 1997 pro-tion on employment. First, with the growth ofvided a window of opportunity for political activ-the single market and more so with EMU onism to materialise, with newly elected govern-the horizon, it would have been wrong to be-ments willing to raise the employment agenda tolieve that even the biggest Member StatesEU level. Early in 1997, the French electoral cam-could pursue employment policies totally inde-paign had been influenced by the “Vilvorde case”,pendently of developments in other countries.the sudden closure of a Renault plant near Brus-Trade creates such dependency as well as mi-sels, which led to the first “Euro-demonstrations”.gration (although actual intra-EU mobility isHaving threatened not to sign the Stability Pactlimited). There is also a socio-psychological/po-during the campaign, the newly elected Frenchlitical economy dependency: the impact of highgovernment made its approval conditional onunemployment in some Member States on thestronger EU action on employment. The Jobseconomic and social climate in the Union as aSummit of November 1997 was a response to thiswhole. Even an economy with low unemploy-call. At the same time, the change of governmentment and high employment will be deeply af-in the United Kingdom and the willingness to pro-fected by the confidence effects of high unem-mote New Labour’s “Third Way” led to renewedployment elsewhere if the countries are bigBritish activism at EU level, after years of dead-and/or deeply integrated in the EU economy.lock.

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A specific concern is that such dependency may practice exchange. This approach was based oncreate a race to the bottom in terms of working the realisation that major aspects of EU em-conditions and wages and a race to the top in ployment problems were not or not exclusivelyterms of subsidising activity. Actual evidence the result of macroeconomic management butwas anecdotal but as EMU came closer, such of structural features to be addressed nation-concerns became more pronounced Ð as was ally as part of an EU-wide policy effort.strongly expressed by the European SocialDemocrats at the time. Ð Putting flesh on the concept of European citi-

zenship: Since the Maastricht Treaty, the con-Ð Learning from each other to implement struc- cept of European citizenship has gained signifi-

tural reforms (same problems, same solutions?): cance and features prominently in the CharterAgainst this background, European policy of Fundamental Rights of the Constitutionalmakers felt that some commonality in the ap- Treaty. Activities in the field of social protec-proach to employment and unemployment tion, social inclusion and the fight against dis-would help to improve the state of affairs. The crimination, which have much to do with em-idea was to use the EU level to promote employment, have developed since the Amster-ployment policies at national level, be it to ar- dam Treaty came into force, with implicationsgue with the national Finance Minister or with in terms of EU legislation and policy coordina-the social partners Ð all of whom were critical tion. The application of the Charter of Funda-about action on employment, although for dif- mental Rights may lead to further synergies be-ferent reasons. Hence the two elements of EU tween EU legislation and policy coordinationpolicy coordination: peer pressure and best in future.

2 The Employment Title of theAmsterdam Treaty and theLuxembourg Process

2.1 The Amsterdam Treaty and the newTitle on Employment

The introduction of a new legal basis in the Amster-dam Treaty allowed a new political will to material-ise. As the political agreement on the Treaty coin-cided with the signing of the Stability and GrowthPact in June 1997, intense discussions arose on theneed to ensure that growth and employment wouldfigure as prominent goals of the new Europeanframework (see box). Heads of State and Govern-ment decided to hold their first Jobs Summit inLuxembourg City in November 1997 and decidedto launch the European Employment Strategy(EES) Ð also known as the Luxembourg Process Ðin anticipation of the Treaty coming into force.

While the Treaty does not change the principle ofthe Member States being responsible for employ-ment policy, it entrusts the European institutions,notably the Council and the Commission, with astronger role, new tasks and more forceful tools.Moreover, the European Parliament has a role inthe decision-making process. The AmsterdamTreaty also enhances the role of the European socialpartners through the inclusion of the Social Protocolinto the Treaty. The Title on Employment Policycontains the following elements:

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1. The importance of the employment objective isenhanced by the fact that the employment arti-cles are included in the Treaty as a title and notas a chapter (comparable to the title on economicpolicy).

2. It emphasises that employment is an issue of“common concern”. The Member States are toco-ordinate their employment policies at Com-munity level.

3. The Member States and the Community areasked to work towards developing a co-ordinatedstrategy for employment and particularly for pro-moting a skilled, trained and adaptable work-force and labour markets responsive to economicchange.

4. Article 127 also contains the principle of “main-streaming” employment policy: all Communitypolicies should take the employment objectiveinto account.

5. It creates the framework for a country surveil-lance procedure (Article 128): Member States’employment policies are examined by means ofa yearly Joint Employment Report established bythe Commission and the Council. Furthermore,the Commission proposes and the Council adoptsyearly Employment Guidelines for the MemberStates, which Member States should take into ac-count when drawing up their National ActionPlans for Employment. Finally the Commissionmay propose and the Council adopt recommen-dations for individual Member States.

6. It establishes a permanent, institutional structure(Article 130), the Employment Committee, to ad-


vise the Council and the Commission on employ-ment issues and thereby to enable an improvedpreparation of Council deliberations.

7. It creates a legal basis for analysis, research, ex-change of best practice and the promotion of in-centive measures for employment (Article 129).

8. Finally, it makes it possible for decisions to betaken by qualified majority, which prevents a sin-gle country from blocking decisions or recom-mendations.

2.2 Luxembourg agreement: the launchof the European EmploymentStrategy

When the Luxembourg Jobs Summit (November1997) launched the EES on the basis of the new pro-visions of the Amsterdam Treaty, the ambition wasto achieve decisive progress within five years. Headsof State and Government agreed on a frameworkfor action based on the commitment from MemberStates to establish a set of common objectives andtargets for employment policy. This co-ordination ofemployment policies at EU level was to follow theprinciples foreseen in the (draft) Treaty:

� Employment Guidelines set out priorities forMember States’ employment policies.

� Country-specific Employment Recommendations

� National Action Plans: every Member State is todraw up an annual National Action Plan whichtakes account of Guidelines and Recommenda-tions.

� Joint Employment Report: the Commission andthe Council are to examine jointly each NationalAction Plan and present a Joint Employment Re-port as a basis for revised Employment Guidelinesand Recommendations for individual countries.

In this way, the EES started to deliver a rolling pro-gramme of yearly planning, monitoring, examina-tion and re-adjustment of national employment poli-cies. The EES also initiated a new working methodat EU level, which was to become known as theopen method of co-ordination (OMC) following theconclusions of the Lisbon European Council in2000. Management by objectives (including throughtargets), country surveillance (“peer pressure”) andmutual learning are central features of the EES. Fol-lowing the Lisbon Council, the OMC was to be rep-licated in other areas, such as social inclusion andpensions.

The Luxembourg Council adopted the first set ofemployment guidelines centred on four areas of pol-icy action (“pillars”):

“Improving employability”, the first pillar, wasaimed at reintegrating into the labour market the

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large number of people who have been out of workfor a long period. Enhancing the job-related skillsand job-search capacities of the unemployed shouldallow them to return to employment rapidly. Tworeorientations in policy terms were advocated. First,the focus on the administration of unemploymentbenefits, should be replaced by a focus on gettingthe unemployed back into employment (“activa-tion”). Secondly, action should be initiated as earlyas possible when somebody becomes unemployedrather than holding back policy instruments forthose already unemployed for a long time (“preven-tion”). Early action is based on the view that thetraditional approach of concentrating measures onthe long-term unemployed had actually exacerbatedthe phenomenon it had wished to address.

Removing obstacles to job creation was the purposeof the second pillar, “developing entrepreneurship”.The policy measures advocated under this headingincluded the simplification of rules for setting up en-terprises and for employing people, as well as reduc-tions in the tax burden on labour, and were aimedat mobilising businesses for creating jobs.

Helping workers in jobs to adapt to structuralchange, thereby preventing unemployment from oc-curring, was the idea of the third pillar, “encourag-ing adaptability”. The social partners were seen asthe main addressees of this pillar. Lifelong learningby means of the joint action of the social partnersand the public authorities became one of the poli-cies advocated under this pillar.

“Strengthening equal opportunities between womenand men” was presented as the fourth pillar and wasdesigned to signal to women that they were nolonger seen as the “biggest” problem group and thatequal opportunities should become an importantdriver for making European labour markets moreefficient. Two policies were developed under thispillar. First, workers with responsibilities for caringfor family members, the vast majority of whom arewomen, should receive the support necessary for fullparticipation in employment. Secondly, the “main-streaming of equal opportunities” in all areas of em-ployment policies should be ensured, meaning thatthe specific situation of women and men should betaken into account when designing and implement-ing employment policies and labour market pro-grammes.

The creators of the strategy were well aware thatjob creation is at the heart of the EU employmentchallenge: “The objective of these measures, whichare to form part of the overall strategy for employ-ment, is to arrive at a significant increase in the em-


ployment rate on a lasting base” (Presidency Conclu-sions Luxembourg 1997, paragraph 22). However,they did not endorse the target of a 70% employ-ment rate as proposed by the Commission.2 Onlysome years later, following further political changeand against the backdrop of a favourable employ-ment trend, did the Lisbon and Stockholm Euro-pean Councils put forward the employment rate tar-gets: the EU should achieve an employment rate of70% by 2010, with at least 60% for women and50% for workers aged 55Ð64.

The first set of guidelines nevertheless developedthe idea of quantitative targets as part of the specificmethodology described above. Prime Minister Jun-cker, the chair of the Luxembourg European Coun-cil, attached quantitative targets as a basis forbenchmarking. Such targets were seen to have mul-tiple functions. The feeling was and still is that quan-titative targets can raise policy ambition as they,firstly, make policy progress measurable and, sec-ondly, make results comparable. Moreover, by de-fining common quantitative targets, the pressure to-wards the convergence of outcomes should increase.

The development of quantitative targets and ofcomparable EU-wide indicators based on harmo-nised statistics became a major preoccupation of theemployment coordination process.3 The annual jointreport on employment contains an annex reportingon indicators, including agreed quantitative targets.The most important quantitative targets at the timerelated to activation and prevention, requiring thatall unemployed people should be offered an alterna-tive to unemployment before being unemployed for12 months (before reaching 6 months of unemploy-ment for young people), and to the training of theunemployed. Later on, new targets were added, in-ter alia, on the proportion of the adult populationparticipating in lifelong learning activities and onthe availability of childcare.

3 Improvement in employment per-formance since the mid-1990s:a mere coincidence?

In the period between 1997 and 2002, the EU expe-rienced a relatively strong increase in employment

2 The detailed assessment of the Luxembourg strategy by the Eu-ropean Trade Union Confederation highlighted this refusal as aweakness (ETUC Memo on the 1998 Employment Guidelines,9.12.1997).3 Following the Lisbon Council, structural indicators were devel-oped (cf. Eurostat website) to reflect the Lisbon objectives includ-ing those on employment. The latter were also integrated into theEES.

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and employment rates. This was accompanied by adrop in unemployment and an even more pro-nounced one in long-term unemployment. Consider-ing that economic growth in the period was weakerthan in the upswing of the late 1980s while the reac-tion of labour market indicators was stronger, astructural change in the labour market may havetaken place. Several studies by the IMF and theOECD were published which highlighted that some-thing had changed in EU labour markets. The Com-mission analysed these changes in the annual Em-ployment in Europe reports and in its annual reporton the EU economy. The following points weremade.

Better functioning of EU labour markets:

Econometric estimates showed a drop in theNAIRU (as a proxy for structural unemployment)starting in the mid-1990s. It was quite pronounced,and accelerated in the 2000Ð2003 period. Of course,the drop in the NAIRU followed the overall unem-ployment trends but this situation is in contrast tothe late 1980s, when unemployment in the EU alsofell but the NAIRU estimates did not decrease. Thedrop in the NAIRU was accompanied by an in-crease in employment and in participation rates sug-gesting that Europe was capable of benefiting fromemployment increases to absorb existing unemploy-ment and to attract additional labour supply.

Increased job content of growth and higherparticipation leading to a drop in unemploy-ment:

A comparison of the labour market behaviour in the1980s and the 1990s4 shows that in the later period,the response of unemployment was more pro-nounced when resources were underutilised (meas-ured by the output gap), while this was not the casein the 1980s, indicating that the absorption of unem-ployment was weak in the 1980s. The analysis alsoshows that employment generally responded morestrongly to economic growth in the second periodand that this was made possible by a stronger in-crease in participation in periods when the economywas above its potential. This relates especially to thecontinued increase in female participation and alsoin a rising share of migrant workers in employment.5

These structural changes can not be explained bycompositional effects alone Ð neither demographicchanges nor the secular increase in educational lev-

4 See for instance, European Commission: Employment in Eu-rope 2002 (chapter 2).5 European Commission: Employment in Europe 2004.


els provide major explanatory factors for the in-crease in employment rates. While the wage moder-ation that started in the late 1980s has been identi-fied as one important explanatory factor for the ob-served increase in the employment content ofgrowth, other factors seem to have contributed aswell, including a better management of benefit re-gimes and more active labour market programmes.6

Convergence of employment in the EU15but huge differences still remain:

Labour market performances have converged in theperiod observed. Not only has the EU employmentrate increased relatively strongly but also differen-ces between the EU15 countries have declined. Ta-ble 1 below compares the relative situation of theMember States as against the 70% target, with theirpace of progress during the period 1997Ð2003, alsoincluding the new Member States that joined theEU in 2004. This convergence also applies to unem-ployment and long-term unemployment. Intuitively,one would expect the fall in long-term unemploy-ment to be a result of a policy change, particularlyas the EES focused so strongly on the preventionof long-term unemployment. Indeed, countries withvery high levels of long-term unemployment sawstrong decreases, most notably in Spain but also inBelgium and Italy.

It is necessary to add that the less favourable devel-opments in Germany also contributed to conver-gence as Germany’s labour market indicators stoodabove the EU average in the mid-1990s and haveimproved very little since then, thereby contributingto convergence. However, other countries, including

6 European Commission: Employment in Europe 2004 (chapter2).

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the Nordic countries and the Netherlands, havemanaged to improve their performance further. Onthe other hand, France and Italy first looked likelaggards in the process but saw major improvementsin the later years of the period under observation.The trend towards improved performance almosteverywhere seems to support the idea that the proc-ess of peer pressure and mutual learning is provingeffective.

Having said this, one should not overlook that at thesame time the labour market indicators were still farfrom the Lisbon targets. The speed of improvementwas too slow to bring the EU close to the targetsmainly because of the trends in some major coun-tries including Germany, France and Italy. The Com-mission’s report “Employment in Europe 2004” an-alysed the labour supply trends over the medium-term in the EU and especially in the major coun-tries. This showed a change in the trend but one thatwas insufficient to create enough supply potential toallow employment growth to reach a 70% employ-ment rate in 2010 for the working population as awhole and even less so for the 50% target for the55Ð64 age-group, a group more and more at thecentre of the concerns of policy makers confrontedalmost on a daily basis with new projections of risingold-age dependency.

Significance of new forms of contracts:

Several studies have related stronger employmentgrowth to a rise in fixed-term and, to a certain ex-tent, in part-time contracts. These forms of employ-ment seem to facilitate the hiring of workers as wellas the emergence of additional labour supply. Whilemost studies agree on this conclusion, others warnthat there is evidence in some countries of the possi-bilities of temporary contracts being overexploited


and signs that they are being used as substitutes forpermanent contracts.7 The risk of side-effects of anincrease in the use of temporary contracts is, how-ever, only one of the less favourable messages re-sulting from the above-mentioned studies. The morefundamental question raised by some analysts iswhether the fact that employment growth needed tobe facilitated by the use of less well protected formsof contracts is not itself a sign of remaining labourmarket problems. This seems to be particularly rele-vant in some Member States where policy debate onlabour market segmentation has sharpened.

Labour market segmentation and transi-tions:

As part of the analysis of labour market perform-ance, an important strand of the literature addressedthe issue of transitions, focusing on the longer-termoutcomes of people entering employment in jobs de-pending on their characteristics with regard to con-tractual forms, access to training and relative wages.Studies8 showed huge differences between countriesin longer-term outcomes for people entering the la-bour market under more restricted conditions. Thelabour markets in some Member States seem to besubstantially more unequal in terms of opportunitiesand access to more stable and better paid jobs. Insome countries, transitions from temporary con-tracts to permanent employment are twice as likelyas in others, while the probability to remain activein the labour market after some years in temporarycontracts also vary widely across countries.9 Over alonger period, this will not only impact employmentand participation in numerical terms but it may alterthe skill-productivity profile of the labour force.

Slowdown in productivity growth:

Another less reassuring outcome of recent researchrelates to productivity trends. Obviously, in statisti-cal terms, if growth becomes more job-rich, produc-tivity growth will decline. This decline has continuedsince the mid-1990s and was seen less negativelywhen the resilience of EU labour markets waspraised in the period of the prolonged slowdown be-tween 2002 and 2004. Nevertheless, poor productiv-ity trends seem to be an issue of concern especially ifcompared with the rapid increases in the EU’s maineconomic partners, such as the US and eastern Asia.While a discussion of the reasons for the relative

7 See European Commission: Employment in Europe 2002 (chap-ter 3) and Employment in Europe 2004 (chapter 4).8 See subsequent issues of Employment in Europe for literaturesurveys and analysis.9 See European Commission: Employment in Europe 2003 (chap-ter 4) and Employment in Europe 2004 (chapter 4).

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decline in productivity trends in the EU goes be-yond the scope of this paper, there are some factsworth mentioning when analysing job creation in re-lation to productivity.

A higher job content of growth in an economy withunderutilisation of its labour resources implies firstof all that the labour market adjusts to the differentscarcity of inputs (see above). As productivitygrowth associated with the increase in employmentwas never negative, rising employment should havea positive effect on economic growth and welfare.In this sense, an increasing job content of growthshould be regarded as positive under the given cir-cumstances of low employment rates and high un-employment in many EU countries. Secondly, sec-toral analysis10 showed that for major growth sec-tors such as business services and finance, as wellas for high-tech services and industries, the EU hasmanaged to catch up with the US in terms of em-ployment growth while the productivity gap has in-creased. The question therefore arises as to whetherthe obstacles to productivity growth are indeed re-lated mainly to the labour market or to other mar-kets or whether restrictions of demand are forcingthe economy to produce below capacity, which leadsto a situation in which better skilled people producebelow their productivity potential.

... and the nature of the new jobs created:

Increasing utilisation of labour resources could eas-ily go hand in hand with lower productivity growth ifthe additional labour resources are less productive,assuming that the economy first employs the mostefficient resources. Therefore the strong increases inemployment rates in some EU countries may havewell been accompanied by the entry of less produc-tive workers into employment and thereby by de-clining productivity growth. This would certainly betrue if additional labour resources wished to workfewer hours than the “main labour force” tradition-ally employed, and there is evidence that this wasthe case for the rising number of women, youngerand older people in employment. Indeed, the work-ing-time effect explains part of the relative declinein productivity growth compared with the US butnot the total.

On the other hand, there is little evidence in supportof the fact that the majority of additional workersdemonstrate lower productivity, especially in themajor countries where employment was and still is

10 See European Commission: Employment in Europe 2003(chapter 2).


low. In fact labour market entrants are typicallymuch better educated than those who leave the la-bour market. Changes in the educational composi-tion of the labour force are quite large if one com-pares for example 1997 and 2002, particularly insome countries with strong decreases in productivitygrowth, such as Spain. Moving to the demand sideof the labour market, the composition of net job cre-ation does not suggest that most net job creationwas of the low wage/low productivity type. Morethan 60% of net job creation in the EU since 199711

has been in knowledge-intensive services, which rep-resent one third of total employment. Similarly, netjob creation in high-tech industries and services sur-passes by a large margin the share in either totalemployment or GDP. These seemingly paradoxicaldevelopments suggest that at least in some EUcountries, educated workers are not in a position tofully use and develop their potential even if they arenot counted as being in low productivity employ-ment.

4 Has enlargement changed theEuropean picture?

4.1 Labour market characteristics andchallenges of the enlarged EU

The prospect of enlargement with ten new MemberStates had been anticipated and prepared for a num-ber of years prior to 1st May 2004. It may, however,still be too early to judge its real impact. What isclear is that both the performances and the policiesof the EU have not remained untouched as a result.The central and eastern European Member Stateshave undergone rapid restructuring of their econo-mies and everything suggests that this process willcontinue for years, leading to radical change also inemployment and labour market structures. In gen-eral terms, the overall picture of the EU labour mar-ket changes in statistical terms as a result of enlarge-ment and becomes more diverse, as the employmentstructure and employment-productivity patterns dif-fer significantly between the former EU15 countriesand the central and eastern European MemberStates.

The sheer fact of having 25 Member States affectsthe EU average from a statistical point of view andmakes it relatively worse off in economic and em-ployment terms (see table 2). The average employ-ment rate of the EU25 was 62.9% in 2003, whereas

11 Ibid.

132 ZAF 1/2006

it was 64.3% for the former EU15. In most newMember States, with the exception of Hungary, em-ployment rates have stagnated over the years, withthe employment rate in Poland actually decreasingand becoming the lowest in the EU (51.2% in 2003).The female employment rate of the new MemberStates, which used to be higher than in the EU15,has also declined over the years.

Although the issue was never addressed openly be-fore enlargement took place, it was implicitly ac-knowledged that the objectives and targets set forthe EU prior to enlargement would remain valid forthe enlarged Union. As a result, the gap that has tobe filled in order to meet the Lisbon employmentobjectives and targets has increased somewhat.

Enlargement also increases the diversity of situa-tions across the EU, at both national and regionallevel. The new Member States are characterised byrelatively lower employment rates and higher unem-ployment rates, with Poland and the Slovak Repub-lic as the poorest performers. Labour market partici-pation and employment rates have declined, as peo-ple leave the labour market and employment is de-stroyed in traditional parts of the economy, such asagriculture, without being fully compensated for byjob creation in services. Compared with the formerEU15, some new Member States, notably Polandand the Baltic countries, show a substantially largerproportion of employment in agriculture (12.4%versus 4%), most of them have a larger share ofemployment in industry (31.9% versus 27.6%) anda markedly smaller share of employment in services(55.6% versus 68.3%).12

Most interestingly, the pattern of economic and em-ployment growth in the new Member States in re-cent years also contrasts significantly with that ofthe EU15. Following a period of strong job creationin the late 1990s, the performance of the EU15 hassuffered as a result of the economic slowdown since2001, and employment growth has stagnated. In con-trast, the new Member States have achieved reason-ably strong economic growth in recent years, drivenby strong productivity increases, while employmenthas actually declined by 0.2%.

This pattern of productivity-driven “jobless” eco-nomic growth may continue for some years in thenew Member States as a result of intense economicrestructuring. Table 3 presents a cross-tabulation be-tween per capita income levels and their averagegrowth rates. The negative correlation between the

12 See European Commission: Employment in Europe 2004.


(per person employed)

levels and growth rates of per capita income (ppp)suggests a rapid catching-up of lower income coun-tries.

In short, the new Member States display specificemployment challenges and priorities, althoughtheir peculiarity may lie more in the magnitude ofthe problems than in their nature. Given their spe-cific labour market characteristics, one could see thefollowing policy issues emerging.

Firstly, these countries have had to undergo a mod-ernisation of their labour market institutions andemployment legislation. For instance, these coun-tries had comparatively low levels of active labourmarket policies and weak unemployment benefitsystems to cushion the effect of restructuring and tohelp people to remain active in the labour market.Policies were extensively used to promote the with-drawal from the labour market as a result. Employ-

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ment legislation was also characterised by strict em-ployment rules by international standards, with pro-tected employment in certain enterprises and sec-tors and very little use of more flexible forms of em-ployment such as part-time and fixed-term work.This situation has changed rapidly over the years,with important overhauls of employment legislationin several Member States. The share of fixed-termcontracts has increased very significantly in severalcountries: in Poland, it went up from about 5% in1998 to 20% in 2003, raising new, unprecedentedquestions about the risk of the labour market be-coming segmented.

Secondly, the new Member States display compara-tively favourable rates of completion of upper-sec-ondary education, but relatively low levels of highereducation and continuous training. Given the rapidchanges in the economy and the resulting pressuresfor job mobility, developing effective lifelong learn-


ing systems has been identified as a major challenge.Difficult questions have to be addressed includingwhether wages provide sufficient incentives for up-skilling and how to provide tax breaks and otherfinancial incentives for individuals and enterprisesto invest in skills.

A third challenge concerns the extent of undeclaredwork which, according to estimates, may concern upto 20% of the workforce in some Member States.This may be fuelled in part by the tax structure, witha tax burden on labour that is too high and too con-centrated. This is also partly a result of the restruc-turing process, with informal work, for instance inagriculture, playing a cushioning function for thesubstantial numbers of low-skilled workers. Weakadministrative capacities and inadequate law en-forcement may also explain why the phenomenon isnot being tackled adequately. The size of the in-formal economy distorts business competition andreduces the tax revenues necessary to finance publicinvestments and social protection schemes.

A fourth challenge concerns the integration of eth-nic minorities into mainstream society and the econ-omy. Some of the new Member States have largeshares of minorities from neighbouring countries orendogenous to the countries, such as the Roma po-pulation. Another related challenge is the need toprepare for future migratory flows. As these coun-tries have become the new external borders of theEuropean Union, they are likely to experience fu-ture migratory pressures. Moreover, they are af-fected by demographic decline, and are likely to ex-perience significant emigration.

4.2 The new Member States and theEES

In spite of the increased diversity of employmentsituations and priorities brought about by enlarge-ment, the integration of the new Member States inthe employment coordination process went rathersmoothly in political and institutional terms. Acces-sion was preceded by a preparatory joint policy re-view exercise between the (at the time) future Mem-ber States and the Commission. In 1999 the Com-mission initiated a co-operation process on employ-ment with the future central, eastern and mediterra-nean Member States. The future Member States andthe Commission produced together Joint Assess-ments Papers (JAPs) on employment.

The JAPs13 reviewed the employment trends, thecharacteristics of the labour market and the employ-

13 The first JAPs were signed with the Czech Republic, Slovenia,Poland and Estonia in 2000 and early 2001, followed by Malta,Hungary, Slovakia, Cyprus and Lithuania in late 2001/early 2002

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ment policy challenges of the acceding countries.The analysis of these papers was based on the as-sumption of continued structural change resultingfrom a further opening of the economies of the newMember States and identified resulting policy chal-lenges which national policies should anticipate.These challenges were also considered to be rele-vant for the preparations for the future use of theEuropean Social Fund as the main financial instru-ment at EU level to support structural change.

The new Member States have been participatingfully in the EES since the date of their accession andthey produced their first National Action Plans forEmployment in November 2004. The content of theemployment guidelines in 2003, and again in 2005,reflects the common view of what the employmentchallenges and priorities are for the EU as a whole.

While the challenges identified in the JAPs andNAPs of these countries are particularly pro-nounced and somehow specific to each of the coun-tries, they are by no means unknown to the EU15.In fact, policy measures taken in the new MemberStates (such as measures to address economic re-structuring, undeclared work and regional dispari-ties) have also influenced the former EU15, where anumber of Member States share similar challenges.

To some extent, the integration of the new MemberStates has also rejuvenated the EES and highlightedits added value. The quality and status of the firstNAPs produced by the new Member States werepraised by the Commission14, as they tended to beboth forward-looking and comprehensive docu-ments. Enlargement has also led to a growing de-mand for additional country expertise and renewedcross-country comparison at EU level, which hassteered analytical work and mutual learning activi-ties. Mutual learning may just be starting out in thisregard.

5 Assessing the impact and develop-ment of the EES over time

The evaluation of the first set of guidelines

The policy orientation of the first set of guidelinesoutlined above remained more or less valid for the

and by Romania, Bulgaria and Latvia in autumn 2002. The resultsare summarised by the European Commission in its progress re-ports COM(2003)37final and COM(2003)637 final.14 European Commission: Draft Joint Employment Report 2004/2005, COM(2005)13 of 27. 1. 2005.


first five years of the Strategy, although there was atendency to revise and add guidelines. The guide-lines were extended to many related areas and be-came more numerous themselves. After the first fiveyears, there was a general feeling that the policycontext should be reviewed and adapted to thechanging labour market challenges. An extensiveevaluation was carried out in 2002 which identifiedmajor challenges and issues for the future of theEES.

The Commission summarized the findings of theevaluation in its communication on the first fiveyears of the EES.15 While remaining cautious as tothe exact impact of the EES on national performan-ces, the communication highlighted a series of “sig-nificant changes in national employment policies,with signs of convergence towards the common EUobjectives”. In particular, the Commission high-lighted reforms in public employment services andin tax-benefit systems in line with the principles ofactivation/prevention, progress in reducing the taxburden on labour, attempts to modernise work or-ganisation, particularly in terms of working time ar-rangements and more flexible work contracts, anda renewed endeavour to modernise education andtraining systems, in line with the concept of lifelonglearning. The Commission also emphasised thatprogress had been made in generalising the ap-proach of gender mainstreaming, although gendergaps remained wide.

Beyond policy convergence, the Commission consid-ered that the Luxembourg process was particularlyinstrumental in developing a new approach to policyformulation away from managing unemploymentand towards promoting employment growth, as wellas new partnerships and working methods, both atnational and EU level, in particular in terms of mon-itoring and evaluation.

On the other hand, the communication also identi-fied a number of weak points and challenges for thefuture, mostly related to the governance of the Strat-egy and the need to move ahead with implementa-tion. In particular, it acknowledged that the profileof the EES remained far too limited in the MemberStates. The evaluation also emphasised the need torevamp the EES with a view to aligning it moreclosely to the Lisbon goal of sustained economicgrowth, more and better jobs and greater social co-hesion by 2010.

15 European Commission: Taking stock of five years of the Euro-pean Employment Strategy, COM(2002)416 of 17. 7. 2002.

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The revision of the guidelines and the reportof the Employment Taskforce in 2003

The integration of the EES into the Lisbon strategysince 2000 and upcoming enlargement made a revi-sion of the guidelines inevitable. Following the 2002evaluation, the Commission and the Council workedon new guidelines, which were eventually adoptedby the Council in March 2003. Following the integra-tion into the Lisbon strategy, the 2003 guidelinesdropped the four-pillar concept and presented a listof ten guidelines, including concrete input and out-put targets, broadly in line with the original Strategy.A new emphasis was given to issues such as humancapital, undeclared work and immigration. Greaterattention was also paid to improving the deliveryand governance of the EES in an enlarged EU,through greater use of the country-specific recom-mendations and a better linkage between EU spend-ing and employment priorities.

Despite the results from the evaluation and theadoption of a new set of employment guidelines, thepolitical perception prevailing at the time was thatnothing had actually changed in terms of employ-ment performance and policy progress, and that ac-tion was urgently needed in the face of economicslowdown and stagnating employment. At theSpring European Council in March 2003, EU lead-ers asked the Commission to establish an Employ-ment Taskforce headed by Wim Kok, the formerPrime Minister of the Netherlands, to further reflecton priorities for action. The Taskforce submitted itsreport16 in November 2003, which for the first timealso reviewed the situation of the new MemberStates alongside the old ones.

The Taskforce put the emphasis on a number of new,emerging policy themes:

Ð developing “job-to-job” insurance by stepping upactive labour market policies and supportingtransitions in the labour market, especially in thesituation of economic downturn;

Ð promoting flexibility combined with security;

Ð addressing the segmentation of the labour mar-ket;

Ð investing in human capital and making lifelonglearning a reality.

The Taskforce also picked up the concerns regardingthe employment of older people and insisted on ac-tive ageing as a means of increasing labour supply.

16 Report of the Employment Taskforce chaired by Wim Kok:Jobs, Jobs, Jobs Ð creating more employment in Europe, Novem-ber 2003.


Labour supply was overall a central preoccupationof the Taskforce which was the first EU exercise topay extensive attention to the predicted long-termdecline in the working-age population. The Taskfor-ce’s report strikes an interesting balance betweenthe contribution to raising labour supply by meansof a better utilisation of the domestic labour poten-tial and by means of economic migration, as well asbetween measures to raise employment and thoseto raise productivity growth, through expansion andbetter use of innovation and modern work organisa-tion. Despite the emphasis on labour supply, theTaskforce report pays less attention to promotingequal opportunities in the EU labour markets, espe-cially to mainstreaming the gender perspective inemployment policies.

On governance aspects, the Taskforce confirmed themain orientations of the EES, calling for a greateruse of the country-specific employment recommen-dations, a better linkage between EU spending andEU employment priorities, a more direct involve-ment of the social partners in the Strategy andgreater efforts to share experiences and reinforcemutual learning at EU level.

The report immediately inspired the Commissionand the Member States to adopt a new set of coun-try-specific recommendations in 200417 and tolaunch a new mutual learning programme at EUlevel. The report also played a role in the discussionon the future use of the Structural Funds, particu-larly the European Social Fund.

The work of the Taskforce was apparently consid-ered to be such a success that the European Councilasked Mr. Kok to chair a further High-Level Groupto prepare the mid-term review of the LisbonAgenda. This report, together with the Commis-sion’s Communication of February 200518, laid theground for the revision of the Lisbon Strategy ap-proved in March 2005 and the adoption of new inte-grated guidelines for growth and jobs.

6 The relaunch of the LisbonAgenda: a new venture for theEES?

The role of the EES as part of the LisbonAgendaAt the same time as the EES was developing, theEU engaged itself in 2000 in a wider strategy of eco-

17 Council Recommendation on the implementation of MemberStates’ employment policies (2004/741/EC) of 14 October 2004.18 European Commission: Working together for growth andjobs Ð a new start for the Lisbon Strategy COM(2005)24 of2. 2. 2005.

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nomic, employment and social modernisation,known as the Lisbon Agenda. This covered manylines of action, ranging from the completion of theinternal market to the promotion of innovation andR&D. Alongside economic and social reforms, em-ployment was presented as one of the three dimen-sions of the Strategy, with a return to full employ-ment as the central objective. Both the relative suc-cess and the remaining huge employment gaps inEurope and between the EU and the US clearlyconstituted two of the driving forces behind theadoption of the agenda.

It is to be noted that the EES actually preceded theLisbon Strategy and, to a large extent, it was usedas a source of inspiration for the extension of theopen method of coordination to other policy fields,such as social inclusion and social protection. As of2000, the EES was designed as the leading policyinstrument to give direction to and ensure coordina-tion of the employment policy priorities to whichMember States subscribed at EU level as part of theoverall Lisbon Strategy.

The issue of complementarities and synergies be-tween the Broad Economic Policy Guidelines(BEPGs) and the EES, however, was soon to beraised. Both coordination processes find their legiti-macy in the Treaty (under articles 99 and 128 respec-tively) and have tended to develop over the years,with possible overlaps and/or inconsistencies interms of content and reporting. This concern wasechoed by the Barcelona Council of March 2002,which called on the Commission to work towardsthe “streamlining” of the processes. The Commis-sion issued a communication later the same year,trying to address procedural concerns.

Mid-term review of the Lisbon Strategy

It is probably correct to say that, at the time of thereview of the Lisbon Agenda in 2004/2005, the feel-ing in Europe about progress on growth and em-ployment was somewhat mixed. While in the previ-ous period of economic growth, employment rateshad increased comparatively strongly and unem-ployment levels had come down, progress stoppedin 2001/2002 as economic growth became sluggish.Unemployment increased during 2002Ð2004, al-though this was much less marked than in previousslowdowns, reaching high levels in certain MemberStates. Long-term unemployment started to increaseagain, after years of decline.

At the same time, the quality of work of those em-ployed seemed to stay below its potential and therewere abundant signs that Europe seemed to be on


a low productivity growth trend. Cyclical develop-ments, such as the sluggish economic growth result-ing from low domestic demand and the global eco-nomic imbalances, played an important role in thediscussion on the mid-term review of the Strategy.At the same time, it was clear that cyclical improve-ments would not suffice for Europe to improve itsunderlying economic potential, even more so in thelight of demographic ageing. Hence the need for fur-ther structural reforms, not just in the labour mar-ket, but also in the services, product and financialmarkets.

Integrated guidelines for growth and jobsand national reform programmes

Following the report from the High-Level Group inNovember 2004, the Commission presented its ana-lysis and proposals for the review of the LisbonAgenda in February 2005. This was later discussedand endorsed by Heads of State and Government attheir Spring European Council in late March. Thiscoincided with a substantial revision of the Stabilityand Growth Pact.

As the 2005 Spring European Council put it: “Fiveyears after the launch of the Lisbon Strategy, theresults are mixed. Alongside undeniable progress,there are shortcomings and obvious delays (...). Ur-gent action is therefore called for. To this end, it isessential to relaunch the Lisbon Strategy withoutdelay and re-focus priorities on growth and employ-ment. Europe must renew the basis of its competi-tiveness, increase its growth potential and its pro-ductivity and strengthen social cohesion, placing themain emphasis on knowledge, innovation and theoptimisation of human capital”.

The main shift brought about by the review of theAgenda may not predominantly be in the reformsadvocated, but relate more to the governance of theprocess itself. While focusing more strongly ongrowth and jobs, the Council also wishes to improvethe sense of ownership of the Strategy at EU andnational level through a new reporting system basedon a single annual national reform programme sub-mitted by Member States, with a three-year time ho-rizon (2005Ð2008). At the same time, EU institu-tions would commit themselves to carrying out ac-tions pertaining to their areas of competences, forinstance those related to the single market, in theform of a Community Lisbon programme.

The direct implication of the review is to give astronger role to the two Treaty-based coordinationinstruments, the Broad Economic Policy Guidelinesand the Employment Guidelines, which would from

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now on be combined into an integrated set of guide-lines for growth and jobs. Following proposals fromthe Commission, these guidelines were approved bythe Council and endorsed by the European Councilin June 2005.19 They will serve as a basis for MemberStates to develop their national reform programmesfor the years to come, starting in autumn 2005.20 Itremains to be seen whether the changes initiatedearly in 2005 will result in a reinforced Strategy,building on the dynamics of the various EU coordi-nation processes gradually developed over the years,or whether it marks a radically new departure, withadjusted ambitions, for the Union as a whole. TheCommission provided its assessment of the first na-tional reform programmes in its 2006 annualprogress report.21

7 Final thoughts on the EES inretrospect

What lessons could be drawn from the experienceof the EES? Is there something to learn for the fu-ture of the Lisbon Strategy? Many scholars and re-searchers have studied the EES from a political sci-ence perspective. They often see the EES as a newmode of governance, illustrative of the open methodof coordination which has blossomed in several EUpolicy domains and is now at the core of the revisedLisbon Agenda. They have investigated the role andpower of the various actors involved at Europeanand national level. While the emergence of an EUstrategy for employment is widely regarded as a ma-jor novelty, discussion on its added value, signifi-cance and impact continues. Four lessons on theEES could be put forward for further reflection inthe context of this article.

The first lesson is that the EES is actually a movingframe: much has happened to the Strategy over thelast eight years. Since its launch in 1997, the EEShas experienced many reviews and reforms. This haseven accelerated since 2002. This feature certainlyhas a lot to do with the intrinsic tension of the EES,which needs to accommodate political pro-activismwhile securing its role as an administrative and insti-tutional tool. On the one hand, there is indeed aneed or a wish to build up a political momentum foremployment at the highest EU level, for instance on

19 See Council decision of 12 July 2005 on guidelines for the em-ployment policies of the Member States.20 See European Commission Staff Working Paper: Working to-gether for growth and jobs Ð next steps in the implementation ofthe Lisbon Strategy. SEC(2005)622/2 of 39. 4. 2005.21 European Commission: Annual Progress Report on Growthand Jobs Ð time to move up a gear. Com(2006)30 of 26. 1. 2006.


the occasion of a new Presidency or for a SpringSummit. Hence the tendency to renew the politicalagenda constantly. On the other hand, there is themore down-to-earth institutional and administrativereality of the EES, sometimes characterised as aroutine, which, like employment trends, functions ona different time horizon and requires time to bebuilt up and to develop. It also requires administra-tive and institutional actors to support it, with animportant role being played by the EmploymentCommittee.

Ironically, while it is meant to achieve the opposite,this combination of political activism and adminis-trative routine may be detrimental to the credibilityand transparency of the process. There is indeed therisk of combining the worst of both worlds, with po-litical pro-activism leading to changing priorities andendless multiplication of initiatives, while institu-tionalisation would turn into some form of bureau-cratised process run by an administrative elite. Thiscertainly would not make it easier for the actorsmost concerned at EU, national and regional levelto own and publicise the Strategy. Therefore, un-changed policy prescriptions for a certain periodhave the potential to stabilise the policy process andrender it more effective if it maintains the dynamismand avoids the bureaucratisation trap.

The second lesson, if one looks beyond the tip ofthe iceberg, is that the scope and content of the EEShave grown and deepened over time, partly as a re-sult of a learning process. The establishment of acommon language was a necessary first step in theearly years of the Strategy, which went hand-in-handwith the development of common indicators at EUlevel. Without such statistical and conceptual infra-structures in place, the Strategy would not have de-veloped. The second step was to use this commongrid to establish a shared diagnosis of employmentchallenges and priorities at EU and national level.It is only on this basis that common objectives andtargets could be developed, and that cross-countryassessment and exchange of experiences could ma-terialise. This highlights the fact that the EES hasbeen an incremental process, gradually building upits own dynamics over time.

The EES now covers 25 Member States instead of15. It encompasses subjects which were not promi-nent at EU level earlier on (such as wages, qualityand productivity of work, childcare, immigration,undeclared work) and which reflect the full scope ofemployment policies, not just labour market reformsin the narrow sense. The EES has also led to thedevelopment of new techniques and activities at EUlevel, such as the mainstreaming of employment

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concerns in other policy fields and the developmentof peer reviews to support mutual learning. At thesame time, the EES has been a catalyst to developand deepen employment analysis at EU level, bothin terms of the evaluation of performances (throughthe Employment in Europe reports) and in terms ofthe monitoring of policy performances (through theJoint Employment Reports). In this respect, the ex-istence and deepening of the EES has contributedto bridging the gap between research and policy-making at EU level.

There may, however, be a price to pay for such “suc-cess”: while the Strategy has been able to producemore sophisticated information and more articulatepolicy messages about employment over time, therehas always been a more or less explicit call to sim-plify ideas, policy messages and procedures, so as tofocus attention and trigger policy momentum at EUlevel. This call for a greater political, less bureau-cratic, profile is also to be seen in close conjunctionwith the wish to communicate and raise awarenessabout the EES and the Lisbon Strategy in general.22

The third lesson is that, although the EES remainsfragile, it can now be seen as a credible vehicle fordealing with employment at EU level. The EES pro-vides a legitimate and reasonably transparent policyframework. It complements other policy instru-ments in the employment field: legislation, socialdialogue and the European Social Fund. While ini-tially influenced by the OECD, it now interacts withthe work of this organisation and the on-going re-view of its Jobs Strategy.

The paradox is that while the vehicle seemed up andrunning after a few years, there may have been somereluctance to use it or fatigue in using it. This maypartly be a matter of resources invested in the Strat-egy at national level, as the ability to follow andbenefit fully from EU activities certainly varies fromone Member State to another. It may also partly bedeliberate. The EES is a strategy developed by theMember States collectively, with noticeable impacton domestic policies and debates. From a MemberState perspective, there is always a risk that the endresult of a collective discussion (as in the case ofcountry-specific recommendations) will not serve itsspecific interests. Although they are the key to thesuccess of the Strategy, transparency and peer pres-sure can bring about “undesirable” spill-over effects.

22 For an assessment of the perception of EU policies in publicopinion, see in particular the European Commission’s special Eu-robarometer 202 / wave 60.2 of March 2004 on the EU communi-cation on employment and social policies and special Eurobarom-eter 215/wave 62.1 on Lisbon of February 2005.


Nevertheless, the active participation of the newMember States in the Strategy when joining theUnion can be seen as a sign that this risk does notnecessarily outweigh the potential benefit in termsof support in the domestic policy debate. Since theLisbon European Council of 2000 and the revisionof 2005, the EES is now well established as the “em-ployment pillar” of the Lisbon Strategy. The successof one will depend on the success of the other.

The fourth and final lesson is that the analysis ofthe EES as an institutional phenomenon cannot bedisentangled from its political and economic con-text. The EES is a political object, built on an under-standing of what the EU economic, employment andsocial challenges and priorities are. By definition,the EES must accommodate the cultural, politicaland socio-economic differences which exist acrossthe EU: it is therefore partly a diplomatic exerciseto combine these differences into a single frame-work, as well as to review this process over timeto capture new political, economic and employmenttrends. Such reviews are all the more hazardous asthe EES, like most EU processes in the employmentand social areas, is fairly new at EU level. Despitesome recognition in the Treaty, the detailed contentand mechanisms of these processes are not cast instone and are still under development. While theEES may have developed a coherence of its own,with a (sufficient?) number of political entrepre-neurs behind it, circumstances matter and break-throughs and policy shifts are always possible.

8 Conclusions

The establishment of the European EmploymentStrategy represents a significant institutional andpolitical development at EU level. Its content andmechanisms are deeply rooted in the economic andpolicy context of the 1990s and have been reviewedand adapted over time.

While the EU-wide emphasis on employment hashad some tangible effects on policies and perform-ances, in particular in terms of a return to employ-ment growth and an increase in employment rates,many major challenges remain or have developedsince the mid-1990s, showing that there is ampleroom for a European strategy in support of growthand jobs. With deepening political, economic and so-cial integration in an enlarged Union, this is all themore a necessity.

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The authors owe credit to the many officials and research-ers met over the years. Their knowledge provides invalu-able first-hand inputs to this paper and, more importantly,to the pursuit of employment goals across Europe. The fol-lowing is a list of selected documents and publicationswhich were used as background references for this article.

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