1. Heads of PES meeting – 23-24 June 2011, Budapest ITEM 4: The labour market situation in Europe, the PES adjustment, and situation in Member States as experienced by PES

2. Labour markets recovering slowly EU average UE rate decreased by 0,1%, is in 4/2011 at 9,4%, Sixth consecutive months of decline, peak was in 10/2010 with 9,7% First quarter 2011, stable at 9,5% despite pick–up in economic activity by 0,8% Estonia and Latvia have recorded a significant improvement, UE rates dropped by 5.0% and 2.9% over the year (Chart 1). But in general, countries with lower than average UE are benefiting most from recovery, over the year DE (- 480 000) UE rate for youth decreased to 20,3% in 4/11, down 0,9% over the year The youth UE rate stays higher than that for prime age group as UE for the 25-74 was 'only' 8.1 % in 4/2011. Across EU ranges from 2% in DE (5.9 % vs 7.9 %) to 25.9% in ES (18.5 % vs 44.4 %).

3. Expectations mixed across consumers and firms In 05/2011, unemployment expectations of consumers declined again According 05/2011 business survey, firms' employment expectations worsened slightly but remained on positive side overall. Employment expectations declined especially in construction and in financial sector. Services were only sector to register an increase This moderate slowdown could signal that labour market recovery is not completely robust yet. Agency work industry in EU grew by 21.6 % in the twelve months to 03/2011, in terms of number of hours worked. Marks a year of growth in that sector, considered as leading business indicator in recovery phase

4. PES adjustment to crisis Summary of questionnaire results  2011: Commission launched follow-up questionnaire focused entirely on the PES and their responses  13 questions on 6 topics re crisis impact and response  Issued via HoPES network to 32 PES in the EU Member states, Iceland, Norway and Switzerland  Twenty-four responses received  Questionnaire and analysis developed for the Commission by the European Job Mobility Laboratory  2009: the European Commission and OECD jointly issued a questionnaire asking countries about their employment and social policy responses to the crisis.  First issued January 2009 and updated twice mid- and end-year.  One section related to PES

5. Resources available to PES  15 of the 24 PES reported expenditure including amounts spent on unemployment benefits  UB expenditure reacts to short-term changes in the number of unemployed - > distorts underlying patterns of change in PES spending.  Analysis therefore based on PES expenditure excluding UB  2008: 15 out of 21 PES increased expenditure compared to 2007  2009 & 2010: 13/21 PES increased expenditure.  2011 (projected expenditure): 13/21 PES anticipate cutbacks. More than 10% reduction in the majority of cases (9 out of 13).

6. Resources available to PES Note: Data for 2011 are budget forecasts. Numbers of PES reporting increased/decreased expenditure (excluding unemployment benefits), 2008-2011

7. Resources available to PES Change in expenditure 2007- 2011 Number of PES PES Decrease >10%4CZ, LT, SI, UK Little change (<10% change)5BG, IE, ES, FI, CH Increase 10 to 50%6 BE:FOREM, BE:VDAB, DE, AT, SK, SE Increase >50%5EE, LV, MT, PL, RO  Although PES expenditure is now starting to fall, it is anticipated to remain significantly above pre-crisis levels in some cases  EE and LV 2011 figures respectively 4 and 3 times 2007 levels Table 1 – Change in PES expenditure (excluding unemployment benefits), 2007- 2011

8. Changing client bases and responses  Client bases expanded generally but at different times  2008: Increase numbers of registered jobseekers for 7 PES - EE, IE, ES, LV, LT, HU, UK.  2009: Increase for all 24 PES.  2010: Rise continued in 80% of cases (19 out of 24).  Number of registered jobseeker clients in 2010 higher than before the crisis (2007) in all cases  Proportionally more men amongst unemployed clients in 2010 than in 2007 (22 of 23 PES).  Notable changes in DK (from 42% men in 2007 to 59% men in 2010) and LT (39% to 57%).  Shifts of more than 5 percentage points for a further 11 PES.

9. Changing client bases and responses  PES noted increased prominence of particular client groups:  Both extremes of the job market spectrum - Highly skilled as well as most disadvantaged  Workers from certain industries and sectors (e.g. construction)  Redundancy workers  Specific responses to changing client groups  Highly skilled generally capable of looking after themselves.  Introduced new measures specifically targeting victims of the crisis - BG, EE, IE, LV, FI, NO.  Introduced new measures to support young people in response to the crisis - All PES except those in BG, CZ, SI, UK, CH.

10. Staff resources  Compared to the pre-crisis situation (2007), in 2010:  Total staff numbers higher in 11 PES but lower in 9 others.  Front-line staff increased in 9 PES but fell in 4 others.  On a year-on-year basis:  In 2009 - Total staff numbers rose in over 17 out of 22 PES.  In 2010 - Only 12 of 22 PES increased staff.  In 2011 - Just 2 of 18 PES anticipate any increase, half of PES expect to reduce staff numbers this year.  Staff numbers in the longer term:  Few expect to maintain the same – BE (FOREM), BG, MT, SK  Many plan to decrease them - IE, LT, HU, NL, AT, SI, FI, SE, UK

11. Vacancies  In 2008 17 of 22 responding PES reported a fall in the number of vacancies recorded in the year (average -15%)  In 2009 decline more widespread with all PES bar FOREM in BE (+18%) reporting fewer vacancies (average -30%)  Coupled with increasing numbers of unemployed this clearly put significant pressure on PES and increased demand for ALMPs  Some signs of improvement. In 2010 most PES (19 of 23) recorded more vacancies in compared to 2009 (average +28%)  Exceptions (fewer vacancies c.f. 2009): BG, CZ, DK and NO.  BUT, number of vacancies open at the end of 2010 remains lower than at the end of 2007 in two-thirds of PES (12 of 18). On average 55% fewer open vacancies.

12. Active Labour Market Policies  9 PES maintained ALMP provision throughout the crisis.  Through automatic budget adjustments – CZ (in 2009 and 2010), ES, NL, and CH  Through additional funding or special measures – DE (2009 only), MT, PL, FI, UK  Most PES, however, reported that activation budgets were increased but not by enough to satisfy demand.  13 PES continued to refer clients on the basis of need but found resources were insufficient to do this all of the time - BE (FOREM and VDAB), CZ (in 2011), EE, LT, LV, HU, AT, SI, SK, SE, NO.  IE reported reallocating resources and cost-cutting to accommodate the increase in clients.  BG prioritised clients based on need to stem the flow of clients.

13. Active Labour Market Policies  23 of the 24 PES made changes to the ALMPs in direct response to the crisis.  21 introduced new ALMPs.  16 adapted existing ALMPs.  Most introduced new ALMPs and extended existing ones.  Little evidence of financial restrictions causing LMP interventions to be cut back or terminated.  Most common changes:  New/strengthened pre-emptive/preventative interventions aimed at workers threatened by redundancy (rapid response units, training for workers on short-time working)  Interventions aimed at the unemployed

14. Active Labour Market Policies  Training measures:  New measures introduced by 13 PES - BE (FOREM), BG, CZ, DK, EE, IE, ES, LV, MT, AT, SI, CH, PL  Targeted employed - BE (FOREM), BG, CZ, LV, MT, AT, SI, CH, PL  Targeted those in STW or at risk of unemployment - BE (FOREM), BG, CZ, LV, AT, SI, CH  Existing measures modified by 7 PES - BE (VDAB), DE, IE, MT, SI, CH, NO  Rapid response services (redundancy action teams):  Introduced by 5 PES - CZ, EE, HU, MT, NL  Strengthened by 2 PES - BE (FOREM), UK

15. Working with the unemployed  To counteract the increased case-loads of advisors, basic procedural changes were made in more than half of the PES.  Frequency of routine interviews reduced – LV, CH  Interview duration reduced – BG, FI, SK, UK  Separation of clients into groups by needs – SI, EE  Interview system made more efficient – AT, NL, UK  IE organised group sessions to pass on information en masse.  MT new service unit for employers freed up client advisors.  No particular changes to capacity or operational guidelines fro employment advisors - CZ, DE, DK, RO, ES, NO and SE.  Focus on developing e-services – all PES except CZ and LV.

16. Working with the unemployed  Youth on the move initiative recommended youth guarantee to ensure all young people are in training/work within 4 months of leaving school.  Formal guarantees offered by 5 PES - DE, NL, AT, SE, and NO (UK had one in during 2010 but now withdrawn)  Internal performance targets, which act as informal guarantees in 4 PES - RO, BE (VDAB), PL, LT  ALMPs targeting young people including financial support and help with training among 6 PES – BE (FOREM), BG, EE, ES, HU, LV, and MT  Defined procedures for young clients among 2 PES – SI and SK  Remaining 4 PES reported no specific action in relation to youth guarantees (IE, CH and CZ) or the response was incomplete (FI).

17. Questions for discussion How do you see the labour market situation in your country now, what is the perspective for the second half 2011, what are your main concerns and where do you see the main fields of activity for your PES?