Member states too slow in implementing labour market reforms

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Denis Pennel

Denis Pennel

In the wake of the European Commission’s country-specific recommendations, the managing director of the European Confederation of private employment agencies (Eurociett) urges member states to be serious about implementing necessary reforms.

Denis Pennel is the managing director of Eurociett.

In its European Semester Country Specific recommendations, the European Commission administered a slap on the wrist to 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.

This makes sense. There is sound evidence to prove that those countries which already reformed their labour markets were more resilient in the recent recession. In addition, they generally recovered again more quickly and started to record growth and falling levels of unemployment. Those countries which 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. It is high time that they took action and introduced the reforms that are needed.

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 calls 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.

Indeed, PPP in the area of employment is already well-established in some markets. In the Netherlands for example, people who find themselves newly unemployed are immediately sent to the private employment services to find them 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 services 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 initiative has been successful in driving dialogue and understanding of PPPs 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.

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 wake up call and that all countries will implement policies that will deliver sound economic benefits in terms of jobs and growth in the years ahead.


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