Employment creation a key focus for EU talks during Irish Presidency

Paper outlines Irish priorities for next six months

Ireland's priorities for the Employment, Social Policy, Health and Consumer Affairs Council, during our six-month EU Presidency, are set out in a paper issued jointly today by the four Government Departments involved in the work of the Council.

The priorities paper is released just ahead of the informal meeting of the full ESPHAC Council in Galway on Friday next, January 16^th. It is available on the EU website at, http://www.eu2004.ie/templates/document_file.asp?id=2351. This meeting will be attended by Ministers from the 25 member states of the soon to be enlarged Union. The discussion at this meeting will centre on a document prepared by the Irish Presidency entitled "Making Work Pay: Exploring the Interaction between Social Protection and Work" and this document has also been published today.

The early focus of the Council's work will be on preparing its contribution to the Spring Summit which will be devoted to economic reform and the 10-year strategy to make Europe the most competitive economy in the world.

Employment creation, together with the provision of modern, efficient public services and a coordinated framework of social security, are all key elements of the strategy and will be central to the work of the Irish Presidency.

Making a success of enlargement, which takes formal effect on May 1^st, will also be a key priority. Ireland is committed achieving a smooth transition from 15 to 25 member States and to ensure that the Union's institutions continue to function effectively.

In the employment and social policy areas the focus will be on the recent report by the taskforce chaired by the former Dutch Prime Minister, Mr Wim Kok, and the review of the Organisation of Working Time Directive. Ireland will also seek to advance the `Making Work Pay' concept, which relates to the balance between taxation and social welfare benefits, and will prioritise completion of the regulations on the social security entitlements of citizens moving between Member States.

The brochure being issued today also includes a calendar of formal and informal Council and Ministerial meetings in Ireland and Brussels over the next six months, presentations to Committees of the European Parliament, and details of a range of technical and special interest conferences planned over the same period. Equality Ministers will meet in Limerick on May 7^th and Health Ministers will meet in Cork on May 12^th.

A Tripartite Social Summit with the EU level social partners will be convened in advance of the Spring European Council.

ENDS/LA 64

13^th January 2004

Notes to Editors

"Making Work Pay: Exploring the Interaction between Social Protection and Work."

Informal Council meeting of Employment and Social Policy Ministers: Framework Paper

Making work pay is a central policy issue

Making work pay is a key priority for the Member States of the European Union. The Lisbon European Council in 2000 sets targets of

an employment rate for the overall working age population of 70%

a female employment rate of 60%, and

an employment rate for older workers of 50%

to be achieved by 2010.

Achieving these targets will have a very positive impact on social protection both through the direct improvement of people's position as they take up work and through the improved ability to fund longer-term commitments such as pensions. Meeting the Lisbon targets will involve a wide range of policy actions and the interaction of social protection and employment policy has a central role to play. The theme is one which is of interest to all Member States and is already covered by Employment Guideline 8 and the Broad Economic Policy Guideline 4.

Reflecting the Lisbon Agenda, the European Employment Strategy seeks to have the employment policies of the Member States address the three overarching and inter-related objectives of full employment, quality and productivity at work and social cohesion and inclusion. In the recent report of the Employment Taskforce (chaired by Wim Kok), which was established at the request of the European Council, making work a real option for all is identified as an essential requirement in improving the EU's employment performance.

The European Commission, also at the invitation of the European Council, will soon adopt a Communication specifically on the issue of modernising social protection to achieve more and better jobs, drawing, inter alia, on the work of the Employment and Social Protection Committees. The Communication will analyse the strengths and weaknesses of the current social protection systems as they relate to labour market transitions and will set out the policy lessons to be drawn from its analysis. It will be presented by the Commissioner at her opening address to the Informal Council and is expected to provide an important input to the discussion

A high-level political contribution to this policy debate by both Employment and Social Policy Ministers is therefore timely and will help to inform the development of strategy in both domains. In order to focus the debate, this framework paper highlights a number of key policy questions on which the Presidency would welcome the views of Ministers.

A focus on all people of work age

One of the key innovations of the Lisbon strategy is the focus on the employmentrate of the entire working age population (rather than on the more traditional goal of achieving full employment for those in the labour force). This means that policy must focus, not only on the registered unemployed, but also on the non-employed in the broad sense (all those of working age not in employment) and also on supporting those on low incomes to ensure that they stay in work.

Much of the discussion on making work pay tends to focus on financial incentives. While financial incentives are central in relation to making work pay, non-financial incentives such as active labour market measures, family friendly/work life balance policies, childcare, and in-company benefits encompassing training and development are also important. When assessing the factors that make work pay, financial factors are the easiest to quantify. Issues such as access to childcare or the implementation of benefit eligibility criteria are more difficult to put a figure on but also have a significant impact on transitions to employment. These factors should be fully taken into account in our discussions.

Priorities for discussion

With the benefit of the report of the Employment Taskforce and the responses received from Member States, the Presidency has identified the following key priority areas for discussion:

Prevention andActivation

Despite the broader focus of the Lisbon strategy, the activation policies of many Member States (and indeed the current European Employment Guidelines) tend to focus primarily on the unemployed. Even here the Employment Taskforce has stated that the coverage and content of preventative and active measures are very unevenly developed across Member States.

Extending activation measures to groups such as claimants of disability benefits and lone parents raises a range of social policy issues. Nonetheless some Member States have developed comprehensive policies in these areas. It is considered important that action is taken in relation to people on sickness and disability benefits and, indeed, innovative measures have been taken in some Member States in this area. Education and training have a particularly important role in supporting transitions to work as many currently inactive people have low levels of educational attainment.

As highlighted in the Kok report "the impact of the tax and benefit systems in many Member States continues to provide serious disincentives for people to enter, remain and progress in work, or to move from undeclared to regular work". Nonetheless, a number of Member States have introduced wide ranging reforms in their tax/benefit systems aimed at strengthening incentives to work. These include various forms of in-work benefits and special tax credits.

The Council might discuss two key questions:

What more can be done to improve the implementation of the current European Employment Guideline on prevention and activation?

How can the activation approach be extended to the broader inactive population of working age?

Reconciling work and family life

The lesson from those Member States which have achieved high overall employment rates is clear. This can only be achieved for men and women where polices take account of the need to reconcile work and family responsibilities through measures such as access to childcare and eldercare, parental leave, carer's leave and flexible work arrangements. These issues can be of particular importance for groups such as lone parents who, in some Member States, have relatively low employment rates. The Employment Taskforce has highlighted the employment gender gap with female employment remaining much lower than for men despite recent progress. As the Taskforce has pointed out, few Member States come close to achieving the targets for childcare provision agreed at the Barcelona Council in 2002.

The Council might discuss

What cost-effective actions can be taken as part of a comprehensive strategy to reconcile work and family responsibilities?

Prolonging Working Life

The need to prolong working life has been a prominent theme in social policy debates in recent years. It has featured in a Joint Report in 2002 from the Commission and the Council ("Increasing labour force participation and promoting active ageing") and also in the Employment Taskforce report. Most Member States have now moved away from inappropriate policies which led to a fall in retirement age (such as supports for early retirement). However, there is now a need for more proactive policies to facilitate increased work activity amongst older workers. The Employment Taskforce highlights the fact that only four Member States currently exceed the Lisbon target for older people and that a number of Member Sates have employment rates of less than one third of older people (aged 55-64). Achieving the Lisbon target will require a significant change in the behaviour of older workers and in the policy direction of Member States. Amongst the measures necessary are removing any remaining incentives to early retirement and providing incentives to employers and workers to continue the employment relationship. These might include paying a higher pension if a worker decides to postpone retirement instead of taking up their pension at the minimum legal pension age.

The Council might discuss

What cost-effective measures can be taken to prolong working life and how can a comprehensive approach be developed combining social protection and labour market policies?

A cross-cutting approach

A comprehensive strategy rather than a piecemeal approach is important. Since this should combine social protection and labour market policies, the Presidency would invite Ministers to take a crosscutting approach to the discussion in each of the areas highlighted above.