The birth of the European Employment Strategy: the Luxembourg process

The birth of the European Employment Strategy: the Luxembourg process

Outline of the Community (European Union) legislation about The birth of the European Employment Strategy: the Luxembourg process


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Employment and social policy > Community employment policies

The birth of the European Employment Strategy: the Luxembourg process (November 1997)

After inclusion of the new title “Employment” in the Treaty on European Union (EU), the Heads of State and Government launched a European Employment Strategy (EES) at the Luxembourg Jobs Summit with a view to coordinating national employment policies. The EES aims to improve employability, entrepreneurship, adaptability and equal opportunities at the level of the European labour market.

Cooperation in the matter of employment before 1997

Full employment has always been one of the Community’s objectives, already enshrined in the Treaty of Rome. Since these beginnings, the European Social Fund (ESF) has been used an instrument to promote employment and worker mobility.

In the early 1990s, cooperation between Member States mainly took the form of traditional collaboration between governments within international organisations such as the Organisation for Economic and Cooperation and Development (OECD) and the International Labour Organisation (ILO) — multilateral European and international cooperation platforms — notably as regards the labour market.

The structural problems and the macroeconomic difficulties of the 1990s demonstrated the need for a coordinated response at European level. The Delors White Paper of 1993 on growth, competitiveness and employment was the first step towards genuine cooperation at European level. On the basis of this document the Essen European Council identified five key objectives to which the Member States were committed: the development of human resources through vocational training; the promotion of productive investments through moderate wage policies; the improvement of the efficiency of labour market institutions; the identification of new sources of jobs through local initiatives; and promotion of access to the world of work for some specific target groups such as young people, long-term unemployed and women. However, these objectives, which are at the heart of the Essen Strategy, were difficult to realise without a firm commitment on the part of the Member States.

Hence the Amsterdam Treaty of 1997 included a new chapter on employment which, while safeguarding the powers of the Member States in the field of employment policy, enshrines the Community approach in an overall manner for all Member States and focuses on a coordinated employment strategy. The promotion of a skilled labour force and a labour market which is more responsive to economic change becomes a “matter of common interest”. The Treaty also creates the legal basis for the establishment of an Employment Committee and introduces the qualified majority vote in areas relating to employment, which facilitates decision making.

The launching of the European Employment Strategy (EES)

The Luxembourg Jobs Summit in November 1997 anticipated the entry into force of the Amsterdam Treaty by launching the EES. The aim of the EES is to reduce unemployment significantly within five years at European level. The EES establishes a multilateral surveillance framework to encourage Member States to put into place effective policies, notably a joint annual report on employment and employment guidelines. These are the basis for the National Action Plans (NAPs) prepared by the Member States, and recommendations of the Council of Ministers to the different Member States (see the instruments of the EES).

The EES aims at strengthening the coordination of national employment policies. Its main objective is to involve Member States in a series of common objectives and targets, focused on four pillars, namely employability, entrepreneurship, adaptability and equal opportunities:

  • employability: combating long-term unemployment and youth unemployment, modernising education and training systems, active monitoring of the unemployed by offering them a new start in the field of training or employment (before reaching six months of unemployment for every unemployed young person and 12 months for every unemployed adult), reducing the numbers dropping out of the education system early by 50% and deciding on a framework agreement between employers and the social partners on how to open workplaces across Europe for training and work practice;
  • entrepreneurship: establishing clear, stable and predictable rules concerning the start-up and running of businesses and the simplification of administrative burdens on small and medium size enterprises (SMEs). The strategy proposes significantly reducing the overhead costs for enterprises of hiring an additional worker, facilitating easier transition to self-employment and the setting up of micro-enterprises, the development of the markets for venture capital in order to facilitate the financing of SMEs, and the reduction of tax burdens on employment before 2000;
  • adaptability: modernising work organisation and flexibility of working arrangements and putting in place of a framework for more adaptable forms of contracts, renewal of skill levels within enterprises by removing fiscal barriers and mobilisation of State aid policies on upgrading the labour force, creation of sustainable jobs and efficiently functioning labour markets;
  • equal opportunities: combating the gender gap and supporting the increased employment of women, by implementing policies on career breaks, parental leave, part-time work, and good quality care for children. The EES also proposes that Member States facilitate return to work, in particular for women.

The EES introduces a new working method, “the Open Method of Coordination (OMC)”. This system creates a balance between the responsibility of the Community and that of the Member States (the subsidiarity principle), establishes quantified common targets to be achieved at Community level, and puts into place Community-level surveillance encouraged by pooling experience. The OMC facilitates policy debates at different levels followed by an integrated approach: actions taken in the field of employment must be consistent with related fields such as social policy, education, the tax system, enterprise and regional development.

The objective laid down by the Lisbon Council of March 2000 was to make Europe “the most competitive and most dynamic knowledge-based economy in the world, capable of sustainable economic growth accompanied by quantitative and qualitative improvement of employment and greater social cohesion” within ten years. The EES is a key component of this global strategy. In March 2002 the Barcelona European Council also called for reinforcement of the EES as an instrument of the Lisbon strategy in an enlarged Europe.

For further details, consult the pages devoted to the Luxembourg Jobs Summit and the site of the Directorate-General for Employment, Social Affairs and Equal Opportunities concerning the EES, and the Lisbon Strategy site.

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