The way forward – exit strategies for crisis-related measures in the context of the Europe 2020 Strategy

On 29 June 2010, DG Employment, Social Affairs and Equal Opportunities (DG EMPL) of the European Commission hosted its spring seminar of the Mutual Learning Programme. The purpose of the seminar was to bring together Member State officials, social partners and other stakeholders to consider the important issue of exit strategies from the crisis and future labour market policy priorities in the context of EU 2020.

Better coherence between long term measures and structural reforms

Following a welcome by Robert Strauss, Head of Unit (European Employment Strategy, Corporate Social Responsibility, Local Development), DG EMPL, two keynote speakers, Professor Gerhard Bosch (Institute of Work and Qualifications, University of Duisburg-Essen) and Professor Iain Begg (European Institute, London School of Economics and Political Science) set out their views regarding the long-term impact and learning from crisis measures, as well as priorities for targeted labour market policy in a context of tightened public budgets. Professor Bosch argued that a new mix needed to be found between “work first”, “train first” and “retain first” approaches, with active labour market policy and vocational education and training playing an important role in bridging the present crisis and a future foreseeable period for slower growth. In his view, short-time working approaches had been successful in maintaining production potential and key skills and experience in the workplace, while reducing scar effects of unemployment and limiting additional pressures being placed on Public Employment Service intervention for the existing unemployed. At the same time, it was clear that the application of such schemes was not without costs for employers and employees. More generally, he saw no sense in permanently subsidising short-time work arrangements, with different countries having to judge on the basis of their specific economic and labour market indicators when it was sensible to phase out such arrangements. Professor Bosch underlined the importance of investing in initial and ongoing training and warned against drawing short-term conclusions regarding the effectiveness of training schemes, when longitudinal studies are increasingly showing the medium to long-term benefits with regard to employability and earnings potential. He also pointed to the fact that countries with strong apprenticeship based systems had seen significantly lower increases in youth unemployment during the crisis.

Professor Begg emphasised the need to create a closer link between labour market policy and macro-economic policies, taking due account of the need for fiscal consolidation. It currently remains unclear what shape the recovery will take, with a U- or indeed an L-shaped recovery likely to pose significant challenges for national economies and indeed labour markets. The most difficult decisions being faced by Member State governments focus around the timing of the withdrawal of stimulus measures. Professor Begg argued that although an early phasing out of stimulus measures could risk a double dip recession or delayed recovery, similar dangers were to be found in further increasing public deficits. He warned that it was precisely those countries most in need of further fiscal stimulus which were least able to afford it. What Member States needed to aim for was a job-rich recovery. This required the removal of labour market rigidities and the correct balance of incentives and sanctions for job seekers. He also advocated a move from Keynesian to targeted spending on proven labour market policies which demonstrated value for money. At the same time he emphasised the importance of not losing sight of the “decent work” agenda. Social partners engagement was seen to be particularly critical in this regard.

Learning from best practice in the national and local context

The next two sessions of the seminar were dedicated to the presentation and discussion of good practice approaches to tackling the crisis and its impact on particular target groups, in particular young people. Arthur Forstner (Vienna Employment Promotion Fund (WAFF) presented a range of measures offered by the fund which is supported by the City of Vienna, the social partners and the Public Employment Service of Vienna. These include a counselling centre for continued training, labour foundations and a youth package primarily targeted at ensuring access to apprenticeship places for all young people seeking such placements. The supported labour foundations are essentially outplacement foundations for workers hit by restructuring and allow them to access individualised services for vocational orientation, training and retraining and assistance with job search. A similar package of services is also being made available by the Swedish Job Security Foundation (Trygghetsrådet (TRR)). Stefan Eklund presented the services of TRR, which are targeted at redundant while collar workers in the private sector (with other job security councils responsible for other types of employees). He argued that TRR co-operated with the Public Employment Services, but was able to offer a more intensive and targeted package of support starting from the day redundancies are announced. The Swedish Job Security Councils are based on collective agreements and are funded by employer contributions. The intervention being offered by TRR benefited nearly 27,000 redundant white collar workers in 2009 of whom 84% found a job as a result, 8% started their own companies and 7% entered education.

Magda Zupančič and Mateja Rozman Amon jointly presented the Project Learning for Young Adults (PYLA), which was also subject of a Peer Review in the autumn of 2009. The project targets early school leavers facing multiple challenges in achieving re-integration into education and working life (e.g. difficult family situations, mental health issues, addictions etc.) and take a highly supported, interactive approach to helping them deal with their issues, raising their motivation and helping them to acquire coping and learning skills. The results of the programme are impressive with around 70% of participants being successfully integrated into formal education, 20% entering the labour market and a further 10% registering with the Public Employment Services to receive assistance.

Christine Charpail (Ministry of Finance, Industry and Employment, France) highlighted the difficult labour market situation of young people in France (particularly among those with low levels of educational qualifications and those from migrant backgrounds). She presented the wide range of measures adopted to support young people in their transition to the labour market. Many of these measures have revolved around subsidised employment, which means that around 25% of unemployed young people are now in a subsidised job. France also supports a range of apprenticeship contracts which have more recently become targeted at very low skilled young people to avoid deadweight effects. Steps have also been taken to increase the financial safety net for young people under the age of 25 to avoid youth poverty and further social exclusion. Although the focus in many Member States has been on youth measures, she emphasised that it was important to remember that, in France, the crisis had more recently also led to an increase in unemployment among older workers. The upcoming demographic challenges must not be forgotten in implementing policies favouring youth employment.

Overall conclusions and reactions

Pierre-Paul Maeter outlined how the Belgian presidency will seek to address some of these issues by setting out the priority themes to be addressed in the second half of 2010. These include many of the issues debated at the seminar, such as measures to exit from the crisis and ensure the sustainability of public finances; support for the creation of green and white jobs; extending working lives through active ageing and greater support for work-life balance; making transitions pay and focussing on the creation of quality employment; socially responsibility restructuring; the strengthening of social dialogue and the involvement of the social partners in EU governments and the improvement of gender equality.

From the perspective of the Employment Committee, its chair Bruno Coquet summarised the steps taken throughout 2009 to deal with the crisis and the importance of the preparation of a renewed analysis of labour market parameters and a better understanding of what works and why in this situation in relation to active labour market policies. He therefore encouraged better linkage between labour market policy evaluation and tools and the full use of mutual learning to exchange, focus and improve good practice. This message was also endorsed by Robert Strauss, speaking on behalf of the European Commission.