1. 1st EU-Brazil civil society Round Table 7-8 July 2009 Brussels
Egbert Holthuis
European Commission,
DG Employment, Social Affairs and Equal Opportunities

2. Economic crisis: Labour markets deteriorating
Sharp rise in EU unemployment since March 2008
UR ↑ 1.8 pps in
1 year to 8.6%
(i.e. by 4.7 million to ∼21 million overall)
Latest data covering the period up to May 2009 show that, in the wake of the economic downturn, EU labour markets continue to deteriorate.
Unemployment is rising, job vacancies are still falling and companies continue to announce substantial job reductions across several sectors. However, while the outlook for the coming months remains bleak, there are some tentative signs that the pace of deterioration may be moderating. The number of announced job losses observed in April-May has halved compared to the preceding months. Economic sentiment including firms' employment expectations and consumers' unemployment expectations, although it remains pessimistic, improved after deteriorating for more than two years.
Overall unemployment in the EU reached around 21 million, rising by a seasonally adjusted 0.6 million in April, an increase somewhat less marked than increases observed in the first months of the year. In the year to April 2009 unemployment increased by 4.7 million. The average EU unemployment rate has remained on an upward trend for a year, edging up to 8.6 % in April.

3. For all MS* UR is higher than a year ago
particular rise in Baltic states, Spain and Ireland ( pps)
Men are more effected, especially young ones
unemployment in the EU less affected than in US (↑ 1.8 vs. 3.9 pps)
+ Declining numbers of job vacancies
Firms’ employment expectations remain negative
*Where recent data is available
For the first time, in all Member States (for which recent data is available), unemployment rates are higher compared to a year earlier.
The economic downturn has affected men more severely than women, reflecting the fact that many of the sectors hit hardest employ a predominantly male workforce. This has reversed the historic gap between women and men, with the male unemployment rate starting to exceed the female rate for the first time. The downturn has also impacted on young people, especially young men, resulting in rising unemployment.
Unemployment is less effected in EU than in US (↑ 1.8 vs. 3.9 pps). As a consequence, the US rate has surpassed the EU's for two consecutive months. (The normal lag of 2 to 3 quarters for labour market responses to business cycle downturn may even be longer due to use of STWAs). Business confidence dropped sharper in EU than in US. The EU-BCI drop started earlier and is still going on.
And there are other negative signals:
Declining numbers of job vacancies
(Manpower, national surveys, temporary agency work)
Firms’ employment expectations remain negative
sectors worst hit: retail; automotive; financial services; construction

4. Outlook remains bleak Commission forecasts:
Chart 20: Forecast employment growth
Commission forecasts:
EU GDP ↓ 4% in 2009 to stabilise in 2010
Employment ↓ 2.6% in 09 and ↓ 1.4% in 2010
So 8½ ml jobs lost, vs. net job creation 9½ ml 06-08
UR ↑ to 9.4 (09), 10.9 (10)
Baltics, Ireland and Spain (more than 20%) hit hardest
In line with other international forecasts (IMF, OECD…)
Chart 21: Forecast unemployment rates
In Jan expectation for 2009 was a drop of 1,8%GDP….Now updated to minus 4%...!
Social Impact of the crisis:
Rising UR mainly affecting youth,… and Non-EU nationals
youth UR ↑ to 18.3 %
past improvements wiped out
Risks of longer unemployment spells, possibly with permanent effects on earnings and future careers

5. Policy response to the crisis
Stimulate public demand to avoid downward spiral
EU Economic Recovery Plan (December 2008): MS fiscal stimulus packages (target of 1.5% of Union's GDP) including automatic stabilisers/ income support estimated 3.3% GDP
Invest in future competitiveness - infrastructure, broadband, green jobs and upskilling of workers
Reinforced financial supervision
Focus on respecting internal market and state aid regulation

6. Measures taken by Member States (MS) to increase labour demand
Reduce non-wage labour costs/ soc. sec. contributions
Preserve existing jobs
Short time working arrangements
Support to badly hit sectors
Investments infrastructure
VAT cuts
Reduce non-wage labour costs/ soc. sec. contributions: BE, BG, CZ, DE, EL, ES, HU, RO, SE, FI, PT, FR
Short time working arrangements: BE, FR, NL, SI, SK, BG, AT, DE, LT, CZ, HU
Support to badly hit sectors: SE, UK, FR, DE, ES
Investments infrastructure: CZ, DE, DK, FI, IE, HU, LT, PT,RO, SK, SE, UK, SE, LT, IE
VAT cuts: UK

7. MS actions to support income
Expanding eligibility rules
Increase social benefit levels
Fiscal help for low earners
Support for education and vocational training
Targeting household over-indebtedness
Expanding eligibility rules: FR, FI, PT, LT, RO
Increase social benefit levels: BE, BG, FR, PT, DE, IT, EL
Fiscal help for low earners: DE, FR, LT, SE, BE, SI, PT
Support for education and vocational training: FR, LT, PT, SE, SI, UK
Targeting household over-indebtedness: HU, CZ, UK (mainly mortgage related)

8. Active labour market policies
Use integrated policy approach
Increase efficiency (better targeting): focus on matching and selected groups like the young
Support transitions education/work, inactivity/work, job/job
Avoid long term unempl, make work pay
Support mobility of workers and job seekers
Develop and monitor policies with stakeholders especially social partners
Increase ALMP funding: FI, FR, LT, SE, SI, AT, DE
Public employment service: UK (capacity increase), IT (including private employment services), DK (reorganisation)
Special focus on young workers: PT, SE, NL (proposed law)
Increase activating elements of ALMPs: ES and FI (increase frequency of guidance services), IT (increase non-cooperation sanctions), BG (monthly declining benefits), CZ (shorter benefit duration), DK and FI (more groups faster entitled to PES measures)
Regional mobility: ES, LT, SK (travel expenses), NL (mobility centres)
Focus on retaining older workers: CZ, HU, BG, SE, DE, PT, IT

9. Role of the EU EU economic recovery plan 12.08
Reinforce financial supervision (G20)
Respect state aid regulation + Internal market
Frontloading European social funds
Key role EU social partners
Focus on selected priority themes
Mutual learning with and between MS

10. Structural challenges
Importance knowledge and education gap with US
Dual labour markets in EU and (regional) inequalities
Crisis risks to increase segmentation and (permanent) exclusion
Mitigation climate change costly
Ageing: dependency rate, retirement provisions, health and long term care

11. Structural challenges
Importance knowledge and education gap with US
Dual labour markets in EU and (regional) inequalities
Crisis risks to increase segmentation and (permanent) exclusion
Mitigation climate change costly
Ageing: dependency rate, retirement provisions, health and long term care

12. Issues for the debate
How to best reinforce role civil society in designing recovery measures
How to best maintain people in employment while at the same time foster adaptation capacity of companies
How to combine activation and adequate income support (rights and duties)
How to maintain investing in training and skills upgrading despite reduction government budgets
How to maintain migration/free movement channels How to best tackle youth unemployment

13. Thank you very much for your attention
More information: