Explanatory Memorandum to COM(2003)176 - Guidelines for the Employment Policies of the Member States

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A fundamental review based on an extensive evaluation and the European Council's orientation

Article 128.2 of the Treaty provides for the annual adoption of the Guidelines for the employment policies of the Member States on the basis of a proposal from the Commission.

The present proposal provides for a fundamental review of the guidelines based on a major evaluation, carried out jointly by the Commission and the Member States, of the experience of the first five years of the Employment Strategy. This led to a Communication of 14th January 2003 outlining the Commission's view on the future of the European Employment Strategy and on the priorities for the new Employment Guidelines  i. The proposals account for the extensive debate and consultation held throughout 2002, and so far in 2003, with all EU institutions and major stakeholders, including civil society. In particular they account for the important contributions from the European Parliament, including the Resolution of 25th September 2002 on the evaluation of the EES, the resolution on streamlining the annual economic and employment policy co-ordination cycles of 5th December 2002, and the Resolution of February 2003 on the preparation to the Spring European Summit.

At its meeting on 20th and 21st March 2003, the Spring Brussels European Council provided clear orientations for the future Employment Guidelines, reflecting in particular the key messages sent by the Council and the Commission in the framework of the Joint Employment Report adopted on 06/03/03.

A Medium Term Strategy to address the new labour market challenges

The Guidelines address the need to re-design the Employment Strategy to account for an enlarged European Union and to better deliver the Lisbon strategy. The evaluation of past experience has confirmed the positive role of the Employment Strategy in supporting the employment performance of recent years. However, the acceleration of economic, social and demographic change, globalisation and the demands of a modern economy, and the forthcoming EU enlargement, represent important employment challenges that must now be addressed by the guidelines.

In line with the request for a streamlined approach, the Employment Guidelines are intended to be more stable and orientated towards delivering the medium-term goals of the 2010 time-horizon set at Lisbon. To this end, whilst maintaining the annuality in line with the Treaty, changes to the guidelines should be kept to a minimum until the mid-term review in 2006. Such stability should be facilitated by fewer and simpler guidelines reflecting key common challenges. In line with the conclusions of the 2003 Brussels European Council, emphasis is placed on more result-oriented guidelines which allow Member States to design the appropriate mix of action. This requires that the guidelines be underpinned by appropriate targets.


Support for the Lisbon objectives

The successful implementation of the Lisbon agenda calls for the employment policies of Member States to foster, in a balanced manner, three complementary and mutually supportive objectives of full employment, quality and productivity at work, and social cohesion and inclusion. The achievement of these objectives requires further structural reforms concentrating on 10 key and equally important priorities, and special attention paid to the governance of the process. The Employment Guidelines are therefore presented in three parts, addressing respectively the three over-arching objectives for the strategy, the 10 key priorities for structural reform, and the need to improve the delivery and governance of the process. All three elements of the guidelines deserve to be reflected in National Employment Plans and monitored at EU level.

Priorities designed to tackle existing and new challenges

Within the priorities, continuity is assured by the fact that many of the previous generation of guidelines and priorities are also covered in the new guidelines. Important examples include activation and prevention, reform of tax and benefit systems, entrepreneurship, adaptability and balancing flexibility and security, and ensuring equal opportunities for all. Increased stress is placed on a number of areas such as lifelong learning, active ageing, the need to increase the supply of labour, and to tackle undeclared work.

Good governance requires building an effective partnership between major stakeholders and notably on the active involvement of European institutions, national governments and parliamentary bodies, regional and local authorities, social partners and civil society. The need to improve the delivery and governance of the process is given a higher profile in the Guidelines.

Consistency and complementarity with the Broad Economic Policy Guidelines

The Barcelona European Council requested that policy co-ordination processes be more streamlined, with synchronised calendars for the adoption of the Broad Economic Policy Guidelines and the Employment Guidelines. In its report on streamlining of 3 December 2002, the Council considered that streamlining should be guided by the objective of increased transparency and efficiency, avoidance of overlap and repetition in the formulation of the guidelines, and ensure consistency, complementarity and coherence. The Employment Guidelines are therefore presented as part of a package together with the Employment Recommendations and the Broad Economic Policy Guidelines. The package is intended to be adopted by the Council at the end of the first semester 2003.

Within a streamlined approach the Broad Economic Policy Guidelines provide the overarching economic policy co-ordination for the European Union, while the leading role on employment policy co-ordination lies with the Employment Guidelines and Recommendations to Member States. The 2003 Brussels European Council requested that the Employment Guidelines and the Broad Economic Policy Guidelines operate in a consistent way.