Employment in Europe 2007

26 November 2007
by eub2 -- last modified 26 November 2007

The robust recovery of EU labour markets in 2006 brought an increase in employment of 4 million – the strongest since 2000, according to the 2007 'Employment in Europe' report, published on 26 November 2007. But rather than being an occasion for premature celebration, the improved economic climate presents a unique opportunity to push more strongly for badly needed structural reforms. Member States need, in particular, to develop more integrated employment and training policies to improve employment security for EU workers in the changing global economy.

Where does the EU stand with respect to its employment targets?

In 2006, labour markets in the EU made a robust recovery, thanks to economic upswing and labour market reforms in many EU Member States. After rather modest increases in previous years, average employment growth in the EU-27 picked up significantly in 2006 and, at 1.4%, was at its strongest since 2000. For the first time in at least a decade, employment expanded across the entire EU, with all 27 Member States showing a rise in employment.

Due to stronger employment growth, the EU has made its best progress since 2000 towards its overall employment rate target of 70%, as well as towards the targets for female (60%) and older persons (50%) employment rates. The overall, female and older workers employment rates reached 64.3%, 57.1% and 43.5%, respectively in 2006. Due to continued healthy employment growth, employment rates have been increasing further this year, with the overall employment rate at 65.3% in the second quarter of 2007, the female employment rate at 58.2% and the older workers employment rate at 44.8%.

Youth unemployment remains a challenge, despite some recent improvements. What has improved and what are the remaining problems?

On the positive side, average labour market performance of young people in the EU has improved somewhat compared to the beginning of the decade. Overall youth unemployment and the share of long-term unemployed youth have decreased compared to the beginning of the decade.

However, at 17.4%, the average youth unemployment rate in the EU was still at a high level in 2006 and it has not improved relative to the unemployment rate for prime-age adults (7.2%). Moreover, as a whole, the EU underperforms in the international context, with substantially more youth in unemployment and less of them working than in other industrialised countries, such as the United States, Canada or Japan. Furthermore, young people often face problems in making a smooth and quick transition from education to work. On average, around one third (and in some Member States more than half) of young people are still not in employment one year after finishing their education. A small, but significant part of youth remains trapped in precarious work arrangements from which they find it difficult to exit. Another relatively small but relevant group at risk of labour market and social exclusion are youth who experience longer spells of being neither in education, nor employment nor training.

A key factor in youth labour market performance is education. Young people with a low educational attainment tend to be much more affected by (long-term) unemployment, inactivity or difficult school-to-work transitions than their better educated peers.

The employment rise of older workers has been concentrated in knowledge-intensive sectors and occupations. Can you be more specific, and what are the causes of such positive development?

As for other age groups, the vast majority of the overall rise in employment for older workers has been in the services sector. The largest increases in their employment have occurred within the ‘health and social work’ sector (up 1 million) the ‘education’ and ‘real estate, renting and business services’ sectors (both up around 0.75 million), all relatively knowledge-intensive sectors. In terms of occupations, the expansion in employment of older workers has mainly been due to a substantial increase in their employment in the skilled non-manual occupations, which together account for over half of the rise in employment among older workers between 2000 and 2006. As a result the occupational employment structure for older workers has shifted away from the more manual occupations towards the non-manual and more knowledge-intensive occupations.

These changes reflect various developments, including the ongoing shift in European economies towards services sector employment and the knowledge-based economy (which will raise opportunities in the education sector), and population ageing itself as this leads to greater demand in the health and social work sector. The move towards non-manual as opposed to manual labour also explains the increasing employment of older workers.

What have been main drivers of recent marked rise in older workers' employment?

Much of the rise in employment rates for older workers is due to the increase in rates for older women, which is due in turn mainly to the knock-on effect of increasing participation over time of women in general. This is a result of changes in cultural attitudes and social norms regarding female participation, higher skill levels among women and greater possibilities to reconcile work and family responsibilities. In contrast, for men the rise in employment rates is a result of the rising delay in exiting the labour market, this being due more to such factors as policy measures and reforms enacted in the last 5-10 years to encourage later withdrawal, such as pension reforms and tightening or early retirement schemes and other recent measures associated with active ageing. Around a fifth of the overall rise is due specifically to the shift in the age structure within the population aged 55–64.

How common are new forms of work organization across the EU and what are their effects on workers' satisfaction, health and work-life balance?

Flexible work practices are quite widespread in the EU-27. In fact, figures from the European Foundation show that all such practices (except tasks rotation) concern more than half of workers both in the EU-15 and in new Member States. However, different Member States have adopted different work organization models reflecting different production structures and national traditions. Two "high performance" typologies can be identified.

Firstly, a discretionary learning model (more prevalent in Nordic countries and the Netherlands), which is characterized by work autonomy, tasks complexity, learning and problem-solving, together with a low level of team work and job rotation.

Secondly, a lean model (more prevalent in UK, Ireland and Spain), which is characterized by high levels of team work and tasks rotation, together with low autonomy and tight quantitative production norms. Taken together, these two models account for about two thirds of employees in the EU-15.

Both descriptive evidence and econometric analysis show that the impact of innovative forms of work organization on workers' well-being depends on the specific combination of practices chosen. Specifically, job rotation, team work, tasks complexity and job monotony/repetitiveness tend to lead to higher work intensity and to be detrimental for work-life balance, job-related health and (to a lesser extent) job satisfaction. On the other hand, autonomy and discretion at work tend to provide some relief from work intensity and to improve the other measures of workers' well-being.

What are the main issues regarding equal access to continuing vocational training in the EU?

Some groups of workers are less likely to participate in continuing vocational training than others in the European Union. These include older workers, the less educated, those with low professional experience, and the workers with the lowest income. Paradoxically, training needs are the highest precisely among these groups of workers, taking into account the drive toward knowledge-based economy and the challenges posed by demographic ageing.

Women, who often face inequalities in the labour market, participate in continuous vocational training as much or even slightly more than men.

Source: European Commission