'New Governance' in employment policy

Index

I. Principles and targets of the European Employment Strategy……………………..p.3 II. Implementation of the EES in Spain and Portugal………………………………….p.7

1. Economic Background………………………………………………………...p.7

2. Recommendations and National Action Plans……………………………..p.9 2.1 Kingdom of Spain…………………………………………………………p.9 2.2 Portugal……………………………………………………………………p.11

3. Conjunction with the European Social Fund………………………………p.13

4. Involvement of the Social Partners…………………………………………p.14

5. NUTS 2- Regions and selected Structural Indicators…………………….p.16 III. Embedment of the Employment Guidelines in the Broad Economic Policy Guidelines…………………………………………………………………………………p.20

References………………………………………………………………………………..p.22

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I. Principles and targets of the European Employment Strategy

The European Employment Strategy (EES) has been established in 1997 by the Luxembourg Jobs Summit as a new instrument to coordinate the employment policies of the Member States of the European Union (MS). At the Lisbon European Council in March 2000, the European Union set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth

with more and better jobs and greater social cohesion. ¹ The Stockholm European Council in March 2001 added two intermediate and one additional target. The precise targets for employment have been defined as following:

· raise the overall EU employment rate to 67% by 2005 and 70% by 2010

· increase the number of women in employment to an average of 57% by 2005 and 60% by 2010

· raise the employment rate of older workers (55- 64 years) to 50% by 2010. The Barcelona Council in March 2002 confirmed that full employment was the overarching goal of the EU and called for a reinforced Employment Strategy to fortify the Lisbon Strategy. The EES was to be aligned more closely to the Lisbon goal of sustained economic growth, more and better jobs and greater social cohesion by 2010.

The EES initiated a new working method at EU level, which was to become known as the “Open Method of Coordination” (OMC). In contrast to binding legal norms, this method is based on the voluntary cooperation of the MS and the principles of mutual

learning and subsidiarity. ² Unlike the requirements of the Stability and Growth Pact (SGP) with elements of “hard governance”, the EES relies on “soft governance”. The competences of the MS in the range of employment and social affairs remain untouched. Following the theory of Fritz Scharpf, the effectiveness of policy measures on EU- level depends on the willingness and the ability of national governments to bring in their own resources of legitimacy for the implementation of

decisions on European level. ³ The EES itself depends largely on the readiness of the

^{1 Homepage of the European Commission, Employment and Social Affairs,} http://europa.eu.int/comm/employment_social/employment_strategy/index_en.htm

² Heidenreich, Martin/ Bischoff, Gabriele: “Die offene Methode der Koordinierung. Das ‚Soziale Europa’ zwischen Bürokratisierung und Irrelevanz“, p.1

³ Scharpf, Fritz W.: “Regieren in Europa“, Frankfurt/ New York, 1999, p.30

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MS to implement the policy measures proposed, as there are not envisioned any financial penalties when not reaching the targets.

The coordination of national employment policies at EU level was to be built around several components: a series of Employment Guidelines to set out common priorities for MS’ employment policies; National Action Plans (NAP) which every MS shall draw up annually to describe how the guidelines are put into practice on national level; a Joint Employment Report, which should be presented by the Commission and the Council after jointly examining each NAP to revise the Employment Guidelines for the following year; several recommendations, which should be issued country- specific upon the decision of the Council, following a proposal by the Commission. All these processes are marked by their iterative character. The strategy relies on instruments like periodical monitoring and benchmarking.

The ten Employment Guidelines which have been valid for the EES until 2004 (a new set of Guidelines has been designed in the framework of the new integrated strategy which is to be applied from 2005 on, see p.20 ff.) show an orientation to a more liberal shaped European labour market organisation. One of the keywords in this respect is “flexicurity” which shall describe the balance between the necessary flexibility for enterprises to stay competitive in the globalized market and the guarantee of the security of a modern welfare- state for the people. In this context, Guideline 3 advises the MS to “address change and promote adaptability and mobility in the labour market”. Guideline 8 contains the commitment to “make work pay through incentives to enhance work attractiveness” which shall include the development of policies to reduce the number of working poor. To reach its goal “to become the most competitive and dynamic knowledge-based economy in the world”, the European Union needs a well- trained and motivated active population. Guideline 4 aims at the “development of human capital and lifelong learning” in general, whilst the following Guidelines refer to definite target groups: Guideline 5 forces to “increase labour supply and promote active ageing”, so that the resources of the elder population will not leave the labour market. Guideline 6 is to guarantee gender equality and Guideline 7 in general advises to “promote the integration of and combat the discrimination against people at a disadvantage in the labour market”, which includes early school leavers, low- skilled workers, people with disabilities, immigrants and ethnic minorities. Guideline 1 instructs the MS to develop “active and

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preventative measures for the unemployed and inactive”. To encourage the creation of “more and better jobs”, Guideline 2 advises to foster “entrepreneurship and investment capacity in a favourable business environment”. Furthermore, undeclared work should be eliminated (Guideline 9) and regional employment disparities shall be reduced (Guideline 10). ⁴ These guidelines show that the EU persecutes the establishment of a model of the welfare state contrary to the American one with a scant social security system and unequally distributed incomes. This model became to be known under the buzzword “Social Europe”.

The OMC aims to institutionalizing systematic learning processes between the European MS by common supervision and comparison, regarding the achievement of the common targets and the implemented measures. The targets of the EES shall be arrived with further financial benefits of the European Social Funds (ESF). The linkage between the EES and the ESF has been analised by a research project accomplished by Govecor. The legal provisions of the ESF seem to function as an incentive for MS to adapt strategies. ⁵ Thus, the OMC deflects from a mere strategy of “naming, shaming and faming” and converges to coordination through incentive mechanisms.

Participating actors in this process should not only be the national governments but also the governments of the regions, the different national parties and the social partners. This aims to ensure the democratic legitimisation of the process in a whole and to improve the development of solutions for complex problems. ⁶ Though, the Govecor- project figured out that organisations of social partners at EU level have remained relatively weak actors in the EES. In some MS the social partners became more involved in the drawing up of NAPs. At least, they did not invest many resources or fundamentally shift their attention to EU coordination procedures, remaining largely national players. Without exception, national parliaments have no decisive say about the NAPs in the countries studied, and are informed about it mostly after it is already produced. 7

The study has also focused on the formal role and the actual working methods and informal and formal interaction of four relevant committees: the Employment

⁴ The wording of the single Guidelines was adopted from the NAP 2004 of Spain.

⁵ Govecor, “EU Governance by self coordination? Towards a collective ‘gouvernement économique’”, Final Report, 2004, p.12

⁶ Heidenreich/ Bischoff, p.9

⁷ Govecor, p.10

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Committee (EMCO), the Social Protection Committee (SPC), the Economic Policy Committee (EPC) and the Economic and Financial Committee (EFC). They are important since they are the only preparatory committees before the Council, and mostly the final Council decision does not differ from the committee decision. They are also important for network building among the national civil servants, which in turn facilitates future contact and policy learning. It has been noted that the SPC and the EMCO are most open to participants from outside the committee. The Commission officials working with EMCO and SPC are also more interested in contacts with the interest groups and social partners, and can see the value of these contacts, compared with EPC and EFC. Thus, “the OMC processes in general lack transparency, and this is even more true of the economic committees in the OMC.” ⁸ To ensure the effectiveness of the benchmarking process and the principle of “naming, shaming and faming”, the attention of the public is necessary. The Govecorproject indeed couldn’t register an increase of media attention in terms of EES, which would have been important to implement political discourses on national level on the EES. Regarding the key ideas of the strategy, there has even been noticed a decrease in the press’ attention. Thus, Govecor states a “low ability to impose reputational costs on national governments”. 9

All this gives reason for questioning the effectiveness of the OMC. Following the conclusions of Heidenreich’s and Bischoff’s composition, the effectiveness of the methods can not yet be proofed. ¹⁰ It is important to follow the development on European and national level during the coming years. It has to be researched, if and to what extent the national governments are poised to implement the EES on MSlevel.

Subsequent, I try to adumbrate the implementation of the EES in Spain and Portugal starting from a short survey of the economic background on the basis of the Council’s recommendations and the NAPs of 2004. I aim to expose the reaction of the national governments on the recommendations. Furthermore, I allude to the linkage between the ESF and the EES and the involvement of the social partners in Spain and Portugal. Closing, I compare the development on regional level in terms of three structural indicators, which are important regarding the targets defined by the

⁸ Govecor, p.17

⁹ Govecor, p.18

¹⁰ Heidenreich/ Bischoff, p.18

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