Growth and Jobs European Semester 2013: May 29th Package Loris Di Pietrantonio Deputy Head of Unit, DG EMPL 14th June 2013

Unemployment impact is far-reaching in many countries Unemployment rates in % % Source: European Commission

This is a radically new situation in most countries Evolution of long-term unemployment rates* across the EU between 2007 and 2012 % active population * People unemployed for more than 12 months as a % of the active population Source: European Commission

Increasing divergence across MS Change in the number of jobs 2007-2013* (%) * Commission 2013 Spring Economic Forecasts Source: European Commission

120 million people are at risk of poverty or social exclusion Population at risk of poverty or social exclusion, EU-27 Various facets of poverty and social exclusion 19% Latvia Risk of poverty or Social exclusion 40% Italy Social exclusion 28% Ireland Social exclusion 30% Deprivation prevails Relative poverty Benefit dependancy issues 31% 13% 20% 11% 10% 16% 23% 8% At risk of poverty 84 Mio Jobless households 38 Mio Severely materially deprived 43 Mio Source: European Commission

Unemployment is twice as high for young people Evolution of the youth unemployment rate (%) Source: European Commission

Youth unemployment rates (March 2013) Source: European Commission

Labour mismatches are a sign of wider problems Evolution of unemployment rate and labour shortages in the EU-27 Unemployment rate Labour shortages Source: European Commission

Strengthened governance framework in 2013

Structure of the May 29th package 1 Chapeau communication 23 CSR for 23 MS + for Euro area 23 SWD for 23 MS + for the Euro area In April 2013, the Commission also published: 13 In-depth reviews of MIP (BE, BG, DK, FI, FR, HU, IT, MT, NL, SI, ES, SE, UK) The Alert Mechanism Report was published in November 2012 Background material: thematic fiches

2013 European Semester: Moving Europe beyond the crisis Chapeau communication issued on 29 May: rebalancing of the EU economy and fiscal consolidation on-going Product markets as well as labour markets very high levels of unemployment structural reforms needed to boost job creation. It gives the main strategic lines of the European Semester: pursuing differentiated, growth-friendly fiscal consolidation restoring normal lending to the economy promoting growth and competitiveness tackling unemployment and the social consequences of the crisis modernising public administration.

The EU2020 targets in the light of the European Semester Employment rate should be at 75% (now at 68,5%) Share of early school leavers should be under 10% (now at 12.8%) Goal of 40% of younger generation having tertiary degree or diploma not met (now at 35.8%) 20 million fewer people at risk of poverty or social exclusion (since 2010, the number of AROPE has risen by 4 million)

Employment relevant 2013 CSRs Extending working lives Labour taxes and shadow economy Employment protection and labour market segmentation ALMP and employment services Female labour market participation Protecting the vulnerable Wages, competitiveness and in-work-poverty Healthcare and long-term care Youth unemployment and skills

1. Extending working lifes Duration of working life (years, 2011) and employment rate of older workers (%, 2011) 2013 CSRs target mainly on: Keeping people longer in labour market: AT, BE, BG, (CY), CZ, (DK), ES, FI, FR, LT, LU, MT, NL, PL, RO, SI, SK Enhancing older workers' employment (AT, BE, BG, CZ, (ES), FI, (FR), LT, LU, (LV), MT, NL, PL, RO, (SI), (SK) Source: European Commission

2. Labour taxes and shadow economy Tax wedge for low-paid workers (2012) 2013 CSRs target mainly: Tax burden on low-wage earners: AT, DE, HU, LV, SK Tax burden and social security contributions of all workers: BE, CZ, FR, IT, NL Tax compliance and shadow economy: BE, BG, CZ, ES, HU, IT, LT, LV, PL, SK PIT: Personal Income Tax SSCee: Social security contributions employee SSCer: Social security contributions employer Source: European Commission

3. Employment protection and labour market segmentation Share of temporary contracts (2011) and transition from temporary to permanent (2010) 2013 CSRs target mainly: Labour market segmentation: DE, FR, PL, SI Employment protection legislation: IT, LT, NL 15-64 years 15-24 years % Source: European Commission 16

4. ALMP and employment services Long-term unemployment (%, left scale, 2012) and activation support (LMP participants per 100 persons wanting to work, right scale, 2010) 2013 CSRs target mainly: Enhance quality, coverage and effectiveness of ALMP: BG, EE, ES, FR, HU, IT, LT, LU, LV, RO, SI, SK, (SE) Increase performance of PES: BG, CZ, ES, FR, HU, IT, RO, SK Better targeting: BE, DE, DK, EE, ES, FI, FR, (HU), IT, LT, LU, LV, NL, (SE), SI, SK Strengthen activation elements and individualized services: BE, BG, DE, ES, FR, (HU), IT, RO, SI, SK Source: European Commission

5. Labour market participation of women Female employment (in 2012) 2013 CSRs target mainly: Provision of available and affordable, full-time, care facilities for dependents: (AT, CZ, DE, EE, ES, HU, IT, MT, PL, SK, UK Decreasing disincentives for second earners: DE, IT, NL Reducing high gender pay gap AT, (MT) Source: European Commission

6. Protecting the vulnerable 2013 CSRs mainly target: Adequacy and coverage of social protection benefits: (CY), (EE), ES, HU, IT, LT, LV, NL, RO, UK Access to quality social services: BG, UK Efficiency of social assistance: BG, DE, (EE), ES, LT, LV, PL, RO, UK Employability of vulnerable/disadvantaged groups: AT, DK, (ES), (FR), (HU), (LT), LU, (NL), SE, (UK) Childhood poverty: LV, RO, UK Migrants/Roma: AT, BE, BG, CZ, DK, HU, LU, RO, SE, SK People living in poverty or social exclusion (in %) Source: European Commission 19

7. Wages and competitiveness Real effective exchange rate (REER) and employment growth 2001-2011 2013 CSR-s target mainly: Aligning wages with productivity developments BE, DE, FI, LU through: Review wage indexation: BE, (CY), LU, (MT) Reform wage setting & wage flexibility: BE, IT, LU, (MT), (SI), (SE) Minimum wages not detrimental to jobs: FR, SI Source: European Commission, ESDE 2012

8. Healthcare and long-term care Public healthcare expenditure 2013 CSRs focus mainly on: Healthcare: AT, BG, CZ, DE, ES, FR, MT, RO, SK Long-term care: AT, BE, DE, FI, LU, NL, SI Source: European Commission

9. Youth, education and skills 2013 CSRs target mainly: Skills /participation in E&T: BE, DK, EE, ES, FI, FR, HU, IT, LT, LU, PL, RO Promotion of self-employment and start-ups: (CY, IT) Reducing school drop-out rates AT, DK, ES, HU, IT, (LV), MT, RO, (UK) Adapt E&T systems to labour market needs + foster apprenticeships + higher education: AT, BG, CZ, DK, (EE), ES, FR, HU, (IT), LT, LU, LV, MT, PL, SE, SI, SK, UK Access to E&T/school for vulnerable groups: BG, DE, EE, FI, FR, HU, LU, RO, SK Educational outcomes: AT, CZ, DE, IT, SK Youth Guarantee (ESF): BG, ES, FR, HU, IT, LT, LV, PL, RO, SE, SK, UK Youth unemployment rate (%, December 2012) < 10 10 - 20 20 - 30 30 - 50 > 50 Source: European Commission

What happens now? Coreper 1 and 2 19th June EPSCO Council 20th June ECOFIN Council 21st June Finalised / outstanding issues General Affairs Council 25th June European Council endorsement 27th-28th June Agreed at first Council after this Early July National semester beings – implementation of CSRs etc. AGS and Draft JER sets out priorities for the next semester – likely in November

The Cycle of the European Semester

Youth Employment Package Loris Di Pietrantonio Deputy Head of Unit, DG EMPL 14th June 2013

9. Youth, education and skills 2013 CSRs target mainly: Skills /participation in E&T: BE, DK, EE, ES, FI, FR, HU, IT, LT, LU, PL, RO Promotion of self-employment and start-ups: (CY, IT) Reducing school drop-out rates AT, DK, ES, HU, IT, (LV), MT, RO, (UK) Adapt E&T systems to labour market needs + foster apprenticeships + higher education: AT, BG, CZ, DK, (EE), ES, FR, HU, (IT), LT, LU, LV, MT, PL, SE, SI, SK, UK Access to E&T/school for vulnerable groups: BG, DE, EE, FI, FR, HU, LU, RO, SK Educational outcomes: AT, CZ, DE, IT, SK Youth Guarantee (ESF): BG, ES, FR, HU, IT, LT, LV, PL, RO, SE, SK, UK Youth unemployment rate (%, December 2012) < 10 10 - 20 20 - 30 30 - 50 > 50 Source: European Commission

Young people not in employment, education or training (NEET) for EU Member States, 2008, 2010 and 2011 27

Key problems and possible remedies Young people dropping out of education or work; low skilled youth most at risk of unemployment and exclusion in the longer Difficult school-to-work transitions Growing skills and geographical mismatches, 2 million vacancies across EU Transitions more difficult in countries with segmented labour markets Youth Guarantee schemes Traineeships and apprenticeships Labour mobility Reforms in labour market regulation 28

Youth Employment Package (YEP) Council recommendation on establishing a Youth Guarantee Quality framework for traineeships European Alliance for Apprenticeships Mobility of young workers Results of the Youth Opportunities Initiative

A Youth Guarantee Council Recommendation of 22 April: Member States ensure that all young people up to 25 receive a good-quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed or leaving formal education. Model: fully fledged Youth Guarantee Scheme in Finland

A Youth Guarantee When designing Youth Guarantee schemes Member States shall: Consider overarching issues (young people not homogenous; principles of mutual obligation; cycles of inactivity) Implement according to national, regional, local circumstances Pay attention to gender and diversity of young people.

How to deliver a Youth Guarantee? The Commissions recommended supporting measures based on guidelines in six areas (axes): strong partnerships between all stakeholders ; early intervention and activation; supportive measures enabling labour market integration; use of EU Funds; assessment and continuous improvement of the schemes; implementation. Details on rationale behind these axes can be found in the SWD (2012) 409

Youth Guarantee Schemes have a cost BUT represent a positive investment Youth Guarantee Schemes have a cost Cost of Youth Guarantees (ILO 2012) Economic costs of NEETs (Eurofound 2012) Eurozone, 15-24 years 26 Member States (all except Malta), 15-29 years About 0.22% of GDP EUR 21 billion 1.21% of GDP EUR 153 billion

Thank You!