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15 juli 2014

Labour Market Reforms: Implementation Too Slow

In the wake of the European Commission's country-specific recommendations, Denis Pennel, the Managing Director of the European Confederation of Private Employment Agencies (Eurociett) has urged member states to be serious about implementing necessary reforms, reports

In its European Semester Country Specific recommendations, the European Commission admonished a number of Member States for failing to commit to labour market reforms in compliance with the Europe 2020 Strategy. The need to update labour market legislation features prominently in many of the recommendations this year, and will be essential if the Commission is to meets its Europe 2020 employment target and ensure that 75% of 20-64 year olds are in work.

The need for countries to implement reforms that create adaptable labour markets is highlighted as an essential step in successfully boosting growth and job creation for the future.

There is sound evidence to prove that those countries that have already reformed their labour markets proved more resilient in the recent recession. In addition, they recovered more quickly. Countries that still had in-place antiquated labour laws, when the downturn struck, suffered the greatest economic hardship. They have been slow to bounce back and in many cases still face stubborn levels of unemployment.

The role that private employment services can play in supporting job creation and growth is specifically mentioned in the recommendations for Spain. There, the Commission has called for greater cooperation between public and private employment services, since the sheer scale of the unemployment challenge is too great for public employment services to cope with on their own. They have neither the manpower, nor the dedicated services, to handle such a volume and complexity of cases. Private employment services by contrast, can offer tailored services and provide focused searches, particularly for vulnerable groups who often find it more difficult to secure employment.

In the Netherlands people who find themselves newly unemployed are immediately sent to the private employment services to find work. If after six months their job search continues, they will be transferred to the public services. In the UK, by contrast, the situation is reversed. Newly unemployed people are initially supported by the public employment service and if, after six months they are still looking, they will be transferred to the private employment services sector for a more dedicated approach. It goes without saying, of course, that working with private employment agencies has no cost implications for taxpayers, but can deliver a great deal of expertise and know-how.

The Commission's own PARES (Partnership between Employment Services) initiative has been successful in driving dialogue and understanding of PPPs (Public-Private Partnerships) and in exchanging best practice among the EU28 countries. The Commission's call to increase this kind of cooperation is only logical.

Although there is no formal recommendation on agency work in Germany, the European Commission does critically reference the German government's plan to tighten regulation on temporary agency work. Since private employment services can play an important role in increasing labour market participation and creating jobs, restricting the use of agency work is detrimental to labour markets. Agency work provides a stepping stone to the world of work and enables people to transition from unemployment to a job and from part-time work to full-time work. Research shows that after one year, 50% of agency workers have moved from a temporary contract to a permanent one.

The recommendations also focus on steps to foster greater youth employment and transitions from education to work. Some 40% of agency workers are under 25 years of age, and the industry assists them by identifying work opportunities, training them with the skills they need to do the jobs available, and then supporting them in transitioning between jobs and from slowing sectors to growth sectors.

Mr Pennel concluded: ''If we are to reach the Europe 2020 employment targets, we will need labour markets across Europe to operate as effectively as possible and to find the right balance between flexibility and security that will appeal to both business and workers. The Commission's country-specific recommendations underline the tangible steps that markets can take in driving forward reforms. It is a clear frustration to both the European Commission and those working in the field that despite clear direction from the EU, some member states have still to take action. Let's hope that the recommendations act as a wakeup call and that all countries will implement policies that will deliver sound economic benefits in terms of jobs and growth in the year ahead.'' 

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