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Reducing unemployment: EU policies explained

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The EU aims to have three quarters of people aged 20–64 have jobs by 2020. Find out how the EU works to reduce unemployment and fight poverty.

The economic and financial crisis of 2008 hit the global economy, leading to unemployment increasing in all EU countries.

Although EU labour market conditions and workers’ rights have significantly improved in recent years, the fight against unemployment remains one of the EU’s key challenges on its way towards quality jobs and a socially inclusive Europe.

Efforts have been made in a number of areas, including helping young people enter the labour market, combating long-term unemployment, upgrading skills, and facilitating workers’ mobility in the EU.

EU unemployment rate

Since mid-2013, the EU’s unemployment rate has continued to decline.

In April 2019, it fell to 6.4% (from 7.0% in April 2018), the lowest level since the start of the EU monthly publication of unemployment statistics in January 2000. In the euro zone, the unemployment rate was 7.6% in April 2019, down from 8.4% in April 2018.

EU vs member state competencies

EU countries are still primarily responsibe for employment and social policies. However, the EU complements and coordinates member state actions and promotes the sharing of best practices.

According to article nine of the Treaty on the Functioning of the European Union, the EU should consider the objective of a high level of employment when defining and implementing all of its policies and activities.

European employment strategy and targets

EU countries established a set of common objectives and targets for employment policy to fight unemployment and create more and better jobs in the EU. This policy is also known as the European employment strategy (EES).

Launched in 1997, this employment strategy forms part of the Europe 2020 growth strategy, which gives an overall view of where the EU should be on key parameters by 2020 in different areas such as education and the fight against climate change and is used as a reference framework for activities at EU, national and regional levels.

The goals set for 2020 are: 75% of people aged 20–64 to be in work, while the 116.1 million people (all EU countries apart from the UK) who had been at risk of poverty or social exclusion in 2008 should be cut to 96.2 million people.

In 2017, 72.2% of the EU population aged 20-64 were employed, just 2.8 percentage points below the 2020 target.

In 2016, 118.0 million people were at risk of poverty or social exclusion in the EU.

The European Commission monitors and implements the strategy through the European Semester, an annual cycle of coordination of economic and employment policies at EU level.

The social and employment situation in Europe is evaluated in the context of the EU Semester and based on the Employment Guidelines, common priorities and targets for national employment policies. In order to help EU countries move forward, the Commission issues country-specific recommendations, based on their progress towards each goal.

How it is funded

The European Social Fund (ESF) is Europe’s main instrument to ensure fairer job opportunities for everyone living in the EU: workers, young people and all those seeking a job.

The European Parliament proposes to increase funding in the next EU’s long-term budget for 2021-2027 with a primary focus on education, employment and social inclusion. The new version of the fund, known as the European Social Fund Plus (ESF+), would boost the quality of work, make it easier for people to find work in a different part of the EU, improve education, as well as promoting social inclusion and health.

The Employment and Social Innovation Programme (EaSI) aims to help modernise employment and social policies, improve access to finance for social enterprises or vulnerable people who wish to set up a micro-company and to promote labour mobility via the EURES network. The European Jobs Network facilitates mobility by providing information to employers and jobseekers and also features a database of job vacancies and applications across Europe.

The European Globalisation Adjustment Fund (EGF) supports workers losing their jobs due to globalisation, as companies may shut down or move their production to non-EU countries, or the economic and financial crisis, in finding new work or setting up their own businesses.

The Fund for European Aid to the Most Deprived (FEAD) supports member state initiatives to provide food, basic material assistance and social inclusion activities to the most deprived.

The updated version of the ESF+ would merge a number of existing funds and programmes, such as the ESF, the EaSI, the FEAD, the Youth Employment Initiative and the EU health programme, pooling their resources and providing more integrated and targeted support to people.

Fighting youth unemployment

Among the EU measures to combat youth unemployment is the Youth Guarantee, a commitment by member states to ensure that all young people under the age of 25 years receive a good-quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed or leaving formal education. The implementation of the Youth Guarantee is supported by EU investment, through the Youth Employment Initiative.

The European Solidarity Corps allows young people to volunteer and work in solidarity-related projects across Europe. The Your first EURES job platform helps young people aged 18 to 35, and interested in gaining professional experience abroad, find a work placement, traineeship or apprenticeship.

Right skills, right job

By promoting and improving skills acquisition, making qualifications more comparable and providing information on the demands for skills and jobs, the EU supports people in finding good-quality jobs and making better career choices.

The New Skills Agenda for Europe, launched in 2016, consists of 10 measures to make the right training and support available to people and to revise a number of existing tools, such as the European CV format Europass).

Challenge of long-term unemployment

Long-term unemployment, when people are unemployed for more than 12 months, is one of the causes of persistent poverty. It remains very high in some EU countries and still accounts for almost 50% of total unemployment.

To better integrate the long-term unemployed in the labour market, EU countries adopted recommendations: they encourage the registration of long-term unemployed with an employment service, individual in-depth assessment to identify their needs, as well as a tailor-made plan to bring them back to work (a job integration agreement). It would be available to anyone unemployed for 18 months or more.

Long-term absence from work often leads to unemployment and to workers leaving the labour market permanently. To retain and reintegrate workers into the workplace who suffer from injuries or chronic health problems, in 2018, the European Parliament formulated a set of measures for member states to work on, such as making workplaces more adaptable through skills development programmes, ensuring flexible working conditions and providing support to workers (including coaching, access to a psychologist or therapist).

Promoting workers’ mobility

Making it easier for people to work in another country can help tackle unemployment. The EU has a set of common rules in place to protect people’s social rights related to unemployment, sickness, maternity/paternity, family benefits etc. when moving within Europe. Rules on the posting of workers establish the principle of same pay for same work at the same workplace.

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EU Politics

Von der Leyen Outlines Vision for Stronger Europe

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Ursula von der Leyen, President of the European Commission, outlined a vision for a stronger and more independent Europe based on trust and the values of liberal democracy in a special address on Thursday to business, government and civil society leaders taking part in the World Economic Forum’s virtual event, the Davos Agenda.

In the face of the COVID-19 crisis, she spoke of European democracies showing their strengths. “The pandemic has demonstrated that democracies are the more powerful, resilient and sustainable form of government,” she said.

Democracy means liberty of research, freedom of science and independent choices for investors, she added. Europe has delivered over 1.2 billion doses of vaccines to its citizens, with more than 80% of the European population double vaccinated.

She also pointed to Europe’s leadership in discovering the mRNA vaccine technology and exporting it to the world. “Europe is the only region in the world to export or donate vaccines to other countries throughout the crisis, with 1.6 billion vaccine doses made in Europe having been delivered to 150 countries.”

On the path to recovery, Europe’s most valuable asset is trust, said von der Leyen. “Trust in science, for our health. Trust among countries, for cooperation. Trust in functioning societies, for competitiveness. Trust will be essential to build the world of tomorrow.”

Trust will also be essential for European citizens to embrace the European Green Deal, a set of policy initiatives with the overarching aim of making the European Union climate-neutral by 2050. The EC has issued the first NextGenerationEU bond for green and sustainable investments in the EU. This represents, she said, the world’s largest green bond issuance, adding that it was heavily oversubscribed.

“These developments demonstrate a clear sign of international confidence and trust in Europe,” she said.

Although von der Leyen said Europe is well positioned, it must do more to build supply chains we can trust and avoid single points of failure. Issues range from dependence on non-renewable energy to lack of local manufacturing of microchips and semiconductors to Europe’s gas crisis.

“Europe’s global semiconductor market share is only 10%. And today, most of our supply comes from a handful of producers outside Europe. This is a dependency and uncertainty we simply cannot afford. We have no time to lose. And this is why I announce here today that we will propose our European Chips Act in early February,” she said.

She emphasized that trust is also essential in the international arena: “At this moment in time, the world needs trust in democracy as much as trust between democracies.” Referring to intense dialogue with Russia, she stressed that Europe will not go back to the old logic of competition and spheres of interest, where entire countries were treated as possessions or backyards.

“We want this dialogue. We want conflicts to be solved in the bodies that have been formed for this purpose. But if the situation deteriorates, if there are any further attacks on the territorial integrity of Ukraine, we will respond with massive economic and financial sanctions.”

“And what I want us never to forget is the following. Russia and Europe share geography, culture and history. We also want a common future,” she added.

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EU Politics

Commission approves 2022-2027 regional aid map for Greece

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The European Commission has approved under EU State aid rules Greece’s map for granting regional aid from 1 January 2022 to 31 December 2027 within the framework of the revised Regional aid Guidelines (‘RAG’).

The revised RAG, adopted by the Commission on 19 April 2021 and entering into force on 1 January 2022, enable Member States to support the least favoured European regions in catching up and to reduce disparities in terms of economic well-being, income and unemployment – cohesion objectives that are at the heart of the Union. They also provide increased possibilities for Member States to support regions facing transition or structural challenges such as depopulation, to contribute fully to the green and digital transitions.

At the same time, the revised RAG maintain strong safeguards to prevent Member States from using public money to trigger the relocation of jobs from one EU Member State to another, which is essential for fair competition in the Single Market.

Greece’s regional map defines the Greek regions eligible for regional investment aid. The map also establishes the maximum aid intensities in the eligible regions. The aid intensity is the maximum amount of State aid that can be granted per beneficiary, expressed as a percentage of eligible investment costs.

Under the revised RAG, regions covering 82.34% of the population of Greece will be eligible for regional investment aid:

Twelve regions (Βόρειο Αιγαίο / Voreio Aigaio, Νότιο Αιγαίο / Notio Aigaio, Κρήτη / Kriti, Aνατολική Μακεδονία, Θράκη / Anatoliki Makedonia, Thraki, Κεντρική Μακεδονία / Kentriki Makedonia, Δυτική Μακεδονία / Dytiki Makedonia, Ήπειρος / Ipeiros, Θεσσαλία / Thessalia, Ιόνια Νησιά / Ionia Nisia, Δυτική Ελλάδα / Dytiki Elláda, Στερεά Ελλάδα / Sterea Elláda and Πελοπόννησος / Peloponnisos) are among the most disadvantaged regions in the EU, with a GDP per capita below 75% of EU average. These regions are eligible for aid under Article 107(3)(a) TFEU (so-called ‘a’ areas), with maximum aid intensities for large enterprises between 30% and 50%, depending on the GDP per capita of the respective ‘a’ area. The region Ευρυτανία / Evrytania, which is part of Στερεά Ελλάδα / Sterea Elláda, also qualifies as a sparsely populated area having fewer than 12,5 inhabitants per km². In sparsely populated areas, Member States can use operating aid schemes to prevent or reduce depopulation.

In order to address regional disparities, Greece has designated as so-called non-predefined ‘c’ areas the regions of Δυτικός Τομέας Αθηνών / Dytikos Tomeas Athinon, Ανατολική Αττική / Anatoliki Attiki, Δυτική Αττική / Dytiki Attiki and Πειραιάς, Νήσοι / Peiraias, Nisoi. The maximum aid intensities for large enterprises in Δυτικός Τομέας Αθηνών / Dytikos Tomeas Athinon is 15%. The other ‘c’ areas mentioned above border with ‘a’ areas. For this reason, the aid intensity in these regions has been increased to 25%, so that the difference in aid intensity with the bordering ‘a’ areas is limited to 15 percentage points.

Greece has the possibility to designate further so-called non-predefined ‘c’ areas (up to a maximum of 1.16% of the national population). The specific designation of these areas can take place in the future and would result in one or more amendments to the regional aid map approved today.

In all the above areas, the maximum aid intensities can be increased by 10 percentage points for investments made by medium-sized enterprises and by 20 percentage points for investments made by small enterprises, for their initial investments with eligible costs up to €50 million.

Once a future territorial Just Transition plan in the context of the Just Transition Fund Regulation will be in place, Greece has the possibility to notify the Commission an amendment to the regional aid map approved today, in order to apply a potential increase of the maximum aid intensity in the future Just Transition areas, as specified in the revised RAG for ‘a’ areas.

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EU Politics

20 years of the euro in your pocket

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Twenty years ago, on 1 January 2002, twelve EU countries changed their national currency banknotes and coins for the euro in the largest currency changeover in history. In these two decades, the euro has contributed to the stability, competitiveness and prosperity of European economies. Most importantly, it has improved the lives of citizens and made it easier to do business across Europe and beyond. With the euro in your pocket, saving, investing, travelling and doing business became much easier.

The euro is a symbol of EU integration and identity. Today, more than 340 million people use it across 19 EU countries, with 27.6 billion euro banknotes in circulation for a value of about €1.5 trillion. The euro is currently the second most widely used currency in the world behind the US dollar.

As it celebrates this 20th anniversary, the EU continues the work to strengthen the international role of the euro and adapt it to new challenges, including the rapid digitalisation of the economy and the development of virtual currencies. As a complement to cash, a digital euro would support a well-integrated payments sector and would offer greater choice to consumers and businesses.

Ursula von der Leyen, President of the European Commission, said: “It is now twenty years that we, European people, can carry Europe in our pockets. The euro is not just one of the most powerful currencies in the world. It is, first and foremost, a symbol of European unity. Euro banknotes have bridges on one side and a door on the other – because this is what the euro stands for. The euro is also the currency of the future, and in the coming years it will become a digital currency too. The euro also reflects our values. The world we want to live in. It is the global currency for sustainable investments. We can all be proud of that.”

David Sassoli, President of the European Parliament, said: “The euro is the embodiment of an ambitious political project to promote peace and integration within the European Union. But the euro is also a condition for protecting and relaunching the European economic, social, and political model in the face of the transformations of our time. The euro is a symbol, the coming to fruition of a historic political vision, an ancient vision of a united continent with a single currency for a single market.”

Charles Michel, President of the European Council, said: “The euro has come a long way — it’s a true European achievement. I would even say the euro has become part of who we are. And how we see ourselves as Europeans. Part of our mind-set. And part of our European spirit. The euro belongs to all of us all European citizens. But it isn’t just a success within our EU borders. It has also anchored itself on the international stage. Despite the crises, the euro has proven to be resilient — a symbol of European unity and stability. And never has that been truer than during COVID-19. The euro has served as a bedrock of stability. A stable asset for the Union. The euro also fuels our recovery. Unlocking the full potential of sustainable development, quality jobs, and innovation.”

Christine Lagarde, President of the European Central Bank, said: “The euros we hold in our hands have become a beacon of stability and solidity around the world. Hundreds of millions of Europeans trust it and transact with it every day. It is the second most international currency in the world. As European Central Bank President, I commit we will continue to work hard to make sure that we maintain price stability. And I also pledge that we will renew the face of those banknotes and that we will give them the digital dimension as well.”

Paschal Donohoe, President of the Eurogroup, said: “The euro has proven its mettle in dealing with great economic challenges. In particular, our response to the COVID 19 pandemic demonstrated that by sharing the euro we can achieve more collectively than we can individually. The euro has strengthened its foundations over the last 20 years. Now, we need to build on those foundations to make the euro the global currency for transitioning to a lower carbon future.”

A long journey

The euro has come a long way from the early discussions on an Economic and Monetary Union in the late 1960s. Specific steps towards a single currency were first approached in 1988 by the Delors Committee. In 1992, the Maastricht Treaty marked a decisive moment in the move towards the euro, as political leaders signed on the criteria that Member States had to meet to adopt the single currency. Two years later, the European Monetary Institute (EMI) started its preparatory work in Frankfurt for the European Central Bank (ECB) to assume its responsibility for monetary policy in the euro area. As a result, on 1 June 1998, the ECB became operational.

In 1999, the euro was launched in 11 Member States as an accounting currency on financial markets and used for electronic payments. It was finally on 1 January 2002 when Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain swapped their national notes and coins for euros. Slovenia joined the euro area in 2007, followed by Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015). Currently, Croatia is taking the preparatory steps to join the euro area, which it plans to do on 1 January 2023, provided it fulfils all the convergence criteria.

Twenty years of benefits for citizens and businesses

The euro has brought many benefits to Europe, especially to its citizens and businesses. The single currency has helped to keep prices stable and protected the euro area economies from exchange rate volatility. This has made it easier for European home buyers, businesses and governments to borrow money and has encouraged trade within Europe and beyond. The euro has also eliminated the need for currency exchange and has lowered the costs of transferring money, making travelling and moving to another country to work, study or retire simpler.

A large majority of Europeans support the single currency. According to the latest Eurobarometer, 78% of citizens across the euro area believe the euro is good for the EU.

A strengthened international role

The euro is the second most important currency in the international monetary system. Its stability and credibility has made it an international invoicing currency, a store of value and a reserve currency, accounting for around 20% of foreign exchange reserves. Sixty other countries and territories around the world, home to some 175 million people, have chosen to use the euro as their currency or to peg their own currency to it. Today, the euro is used for almost 40% of global cross-border payments and for more than half the EU’s exports.

Since the global financial crisis of 2008 and the subsequent sovereign debt crisis, the EU has continued to strengthen and deepen the Economic and Monetary Union. The EU’s unprecedented recovery plan NextGenerationEU will further improve the euro-area’s economic resilience and enhance economic convergence. The issuance of high-quality-denominated bonds under NextGenerationEU will add significant depth and liquidity to the EU’s capital markets and make them and the euro more attractive for investors. The euro is also now the leading currency for green investment: half of the world’s green bonds are denominated in euros, and this figure is rising thanks to the new green bonds issued to finance NextGenerationEU.

To further develop the international role of the euro, the Commission has launched outreach initiatives to promote euro denominated investments, facilitate the use of the euro as an invoicing and denomination currency, and foster a better understanding of the obstacles for its wider use. This outreach will take the form of dialogues, workshops and surveys with the public and private sector, financial regulatory agencies, and institutional investors in regional and global partner countries of the EU.

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