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EU – Employment Package aims to limit ‘non-standard’ employment

April 19 2012

The European Commission has just published a document detailing measures to spur a job-rich recovery. With EU unemployment hitting record levels and forecasts of a grim economic outlook for the months ahead, the Commission has come forward today with a set of concrete measures to boost jobs. Inherent within this plan, however, is the ambition to limit ‘non-standard’ contracts.

The proposal focuses on the demand-side of job creation, setting out ways for Member States to encourage hiring by reducing taxes on labour or supporting business start-ups more. It also identifies the areas with the biggest job potential for the future: the green economy, health services and ICT.

Presenting the new package in Strasbourg, László Andor, EU Commissioner for Employment, Social Affairs and Inclusion said: "current levels of unemployment in the EU are dramatic and unacceptable. Job creation must become a real European priority". He added: “If we are to restore growth and cope with major structural changes like the greening of the economy, an ageing population and technological change, the EU needs a dynamic and inclusive European labour market ".

The Employment Package urges Member States to strengthen their national employment policies. In particular it includes proposals for Member States to:

  • Create the right conditions for job creation and labour demand such as hiring subsidies that create new jobs, a (budget neutral) tax shift from labour to environmental taxes, or support for self-employment;
  • Drawing on the lessons learned from the crisis such as stimulating internal flexibility to reduce job insecurity and fiscal costs;
  • Establishing decent and sustainable wages and avoiding low-wage traps, implementing a legally binding minimum wage to help prevent in-work poverty;
  • Ensuring appropriate contractual arrangements (including lowering severance costs) to prevent the excessive use of non-standard ones.
  • Lowering barriers to Romanians and Bulgarians workers.  In total, there are nine EU countries where Romanians and Bulgarians need a work permit to work.

The commission claims that measures aimed at internal flexibility have saved jobs, by allowing firms leeway in their costs structures taking away some of the pressure to lay off workers during the economic crisis. The German Kurzarbeit scheme is probably the most well know example of this, but in one way or another 20 Member States used such arrangements. Job security has been at the centre in each of these schemes. Estimates range around 1 million jobs saved.

The EU suggests that, to ensure decent job quality and support aggregate demand, it is also important to reduce labour market segmentation by halting the excessive use of ‘non-standard’ contracts and the abuse of bogus self-employment. Who should decide what proportion of ‘non-standard’ contracts is excessive and how such excess can be calculated and controlled remains unclear. However, the EU believes that all types of contractual arrangements should give workers access to a core set of rights from the signature of the contract, including pension rights, access to lifelong learning, social protection, and monetary protection in the case of termination without fault.

With 4 million jobs still vacant across the EU, the Employment Package also calls for higher investment in skills to address the skills mismatches in Europe’s labour markets, as well as better anticipation of skills needs. It puts forward specific instruments to improve the recognition of skills and qualifications and bring the worlds of education and work closer together.

The "employment package" also aims to create a genuine EU labour market. In particular, the accent is put on improving labour mobility by matching  jobs with job-seekers, the package proposes to transform the EURES job seeker portal into a true European placement and recruitment tool and foresees (as of 2013) innovative online self-service applications  to provide users instantly with a clear geographical mapping of European job offers.

The Commission is keen to send a strong message to governments to lift restrictions on labour market access to workers from Bulgaria and Romania and to allow nationals from other Member States access to jobs in the public service.

To read the press release and access the full document in English, click here.

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