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Explainer: the European Pillar of Social Rights Action Plan

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What is the European Pillar of Social Rights?

The European Parliament, the Council and the Commission proclaimed the European Pillar of Social Rights in 2017. It consists of twenty principles that have guided us ever since towards a strong Social Europe. They express principles and rights essential for fair and well-functioning labour markets and welfare systems.

The Pillar is structured around three chapters:

  1. Equal opportunities and access to the labour market;
  2. Fair working conditions;
  3. Social protection and inclusion.

Why do we need an Action Plan to implement the Pillar?

We need to update our ‘social rulebook’ both in light of long-term transformations of our labour markets and economies shaped by climate change, digitalisation, globalisation and demographic trends, as well as the more immediate and drastic changes the pandemic has brought to our jobs, education, economy, welfare systems and social life. The Pillar principles set the framework for the path ahead.

Many people are worried about their jobs and their future. This is why we need to put a strong focus on quality jobs and skills and give adequate protection to those in need to pave the way for a fair, inclusive and resilient recovery and prepare for a just transition to greener and more digital economies. To do so, the Action Plan proposes concrete actions to accelerate the implementation of the principles and further turn Europe’s social rights and principles into a reality. It also proposes employment, skills and social protection headline targets to be achieved by 2030. With the financial support of the Multi-Annual Financial Framework 2021-2027 and NextGenerationEU, and the monitoring under the European Semester, this will guide our joint efforts towards a strong Social Europe and reaching a sustainable impact.

With this Action Plan, we are also responding to calls from the European Parliament and Member States as well as social partners, other stakeholders and most importantly EU citizens. A special Eurobarometer survey has been conducted asking citizens for their views on social issues. In their ‘European Council Strategic Agenda 2019-2024′, Member States have noted that the European Pillar of Social Rights should be implemented at EU and Member State level, with due regard for respective competences. The European Parliament in its ‘Resolution on a Strong Social Europe for Just Transitions’ has also underlined the importance of pursuing the implementation of the Pillar’s rights and principles.

The Action Plan builds on a broad public consultation conducted between January and November 2020, which resulted in more than 1000 written contributions from Member States, EU institutions and bodies, regions, cities, social partners, civil society organisations, international organisations, think tanks and citizens. In addition, the Commission has held a series of dedicated webinars with over 1500 individual stakeholders across Europe.

Why does the Action Plan set EU level targets?

The Commission proposes three headline targets for the EU, to be reached by 2030, on employment, skills, and social protection, in line with the UN Sustainable Development Goals (SDGs):

  1. At least 78% of people aged 20 to 64 should be in employment.
  2. At least 60% of all adults should participate in training every year.
  3. The number of people at risk of poverty or social exclusion should be reduced by at least 15 million.

The headline targets are important to set a common ambition for a strong Social Europe. They will allow the Commission to monitor progress in turning the principles of the Pillar into action. Together with the EU’s political goals for the green and digital transitions, social targets will help to focus policy efforts on reaching results and offer an incentive for reforms and targeted investments in the Member States. The Commission invites the European Council to endorse these three targets and calls on Member States to define their own national targets to contribute to this collective effort.

How will the Commission monitor the implementation of the Pillar?

The Commission will monitor progress through the European Semester, the EU’s framework for coordinating social and economic policies across the European Union.

The Commission proposes to revise the Social Scoreboard, which feeds into the European Semester process, to better reflect the 20 principles of the Pillar, making it easier to monitor the progress of policy priorities and actions set out in the Action Plan. The Scoreboard will include new headline indicators on adult learning, child poverty, disability employment gap, and housing cost overburden.

The Commission will use the new EU 2030 employment, skills and social protection targets as part of its toolbox to monitor Member States’ progress towards the implementation of the rights and principles of the Pillar.

What remains to be done to implement the Pillar?

Since the start of its mandate, this Commission has already taken concrete initiatives for a strong Social Europe. Several principles of the Pillar require further legislative or non-legislative initiatives to become effective. The additional initiatives outlined in today’s Action Plan will further improve the social rights in the EU. The Commission will work to update, complement, and enforce existing EU law, wherever necessary.

Translating all of the Pillar principles into reality is a joint responsibility. It greatly depends on the commitment and action of Member States. They hold the main responsibility for employment and social policies and consequently also most of the tools to implement the Pillar. The Commission therefore calls on Member States, including regional and local authorities, social partners, civil society and other relevant actors, to join their forces. The Commission encourages Member States to organise a coordination mechanism to ensure engagement of all relevant stakeholders at national level in implementing the Pillar. Together they can advance the implementation of the Pillar within their respective spheres of competence.

What is the EU doing to safeguard jobs and social rights in the recovery from the current crisis?

The coronavirus pandemic tragically cost the lives of many people and had a drastic social and economic impact on our lives. For many people, their work routine has changed, some have lost their jobs or risk doing so.

The Commission has been mobilising all means at its disposal to help support Member States to keep people in their jobs. The Commission’s SURE scheme supports Member States by providing financial assistance of up to €100 billion in EU loans. The overall financial support proposed under SURE by the Commission is €90.6 billion and covers 19 Member States. The Commission’s package on youth employment support, skills and vocational education and training presented in July 2020 is specifically designed to help the next generation of Europeans to get on the jobs ladder.

The EU’s long-term budget, coupled with NextGenerationEU, the temporary instrument designed to boost Europe’s recovery, will be the largest stimulus package ever financed through the EU budget. A total of €1.8 trillion (in 2018 prices) will be available both for showing solidarity to overcome the crisis of today, and also for building the next generation EU.

Together with changes to the EU’s social and employment funding programmes like the European Social Fund (ESF+) and the Fund for European Aid to the Most Deprived (FEAD), the package will help tackle the main social and employment challenges that lie ahead, such as rising youth unemployment, the need to steer basic food and material aid to those most in need, as well as addressing child poverty. REACT-EU will bring €47.5 billion in fresh money from 2020-2022. The ESF and FEAD can top up its funding from this new resource to fund measures to counter the negative impact of the coronavirus on the labour market.

The Recovery and Resilience Facility with a total of €672.5 billion will provide large-scale financial support for a lasting and inclusive recovery. It will fund coherent packages of reforms and investments that respond to the challenges identified in the relevant country specific recommendations of the European Semester, many of which refer to labour, skills and social policies. It will therefore actively contribute to the implementation of the Pillar. The Commission Recommendation on Effective Active Support to Employment following the COVID-19 crisis (EASE) provides further guidance on how to use available funding opportunities, including from the Recovery and Resilience Facility, to support the recovery in labour markets.

The European Pillar of Social Rights Action Plan, together with its three EU 2030 headline targets on employment, skills, and social protection, will offer an additional incentive for Member States to invest in a strong Social Europe.

What has the Commission done so far to implement the European Pillar of Social Rights?

In her Political Guidelines, President von der Leyen has committed to putting forward an Action Plan to fully implement the European Pillar of Social Rights and reconcile the social and the market in a changing economy.

Since the start of its mandate at the end of 2019, this Commission has contributed to the implementation of the Social Pillar principles with the following initiatives, among others:

A full list of key Commission actions is available in Annex 1 of the European Pillar of Social Rights Action Plan.

What specific proposals will the Commission present in the future?

This week the European Commission presents three concrete deliverables of the European Pillar of Social Rights Action Plan:

  • A Commission Recommendation on Effective Active Support to Employment following the COVID-19 crisis will promote job creation and job-to-job transitions towards expanding sectors to boost the economic recovery.
  • A new Strategy for the Rights of Persons with Disabilities 2021-2030 aims at enforcing their right to take part in all areas of life, just like everyone else.
  • A proposal for a Directive on Pay Transparency will improve workers’ access to information on pay, raising awareness of discrimination and making it easier to enforce the right to equal pay.

Further key Commission initiatives for a strong Social Europe in 2021 will include, among others:

  • a proposal for the European Child Guarantee;
  • a new strategic framework for Occupational Safety and Health;
  • launching a platform of collaboration against homelessness;
  • a Communication on Decent Work Worldwide;
  • a legislative initiative to improve the working conditions for people working through digital labour platforms; and
  • an Action Plan for the Social Economy.

Further initiatives will be proposed until the end of the Commission mandate, such as a proposal for a Council Recommendation on minimum income in 2022 to effectively support and complement the policies of Member States, a review of the Quality Framework for Traineeships or an initiative on long-term care.

A full list of key Commission actions is available in Annex 1 of the European Pillar of Social Rights Action Plan.

What are the next steps?

The Action Plan presents the Commission’s contribution to the Porto Social Summit, organised by the Portuguese Presidency of the Council of the EU, in May 2021. The Summit will focus on strengthening Europe’s social dimension, and it will be an occasion to renew, at the highest political level, the commitment to implement the Social Pillar.

The Commission invites the European Council to endorse the new social and employment targets and calls on Member States to define their own national targets, as a contribution to this common endeavour.

Engagement of national, regional and local authorities, social partners and civil society is essential to ensure an effective implementation of the Pillar. The Commission therefore encourages coordination mechanisms at national level to ensure all relevant actors engage to implement the Pillar’s social rights and principles.

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Commission proposes draft mandate for negotiations on Gibraltar

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The European Commission has today adopted a Recommendation for a Council decision authorising the opening of negotiations for an EU-UK agreement on Gibraltar. The Commission also presented its proposal for negotiating guidelines.

It is now for the Council to adopt this draft mandate, after which the Commission can begin formal negotiations with the United Kingdom.

Vice-President Maroš Šefčovič, the EU’s co-chair of the Joint Committee and Partnership Council, said: “By putting forward this draft mandate, we are honouring the political commitment we made to Spain to start the negotiations of a separate agreement between the EU and the UK on Gibraltar. This is a detailed mandate, which aims to have a positive impact for those living and working on either side of the border between Spain and Gibraltar, while protecting the integrity of the Schengen Area and the Single Market.”

Gibraltar was not included in the scope of the EU-UK Trade and Cooperation Agreement agreed between the EU and UK at the end of 2020. The Commission committed to begin the negotiation of a separate agreement on Gibraltar, should Spain request so. That is why the Commission is now recommending that the Council authorises the launch of specific negotiations on Gibraltar.

Draft mandate

Today’s Recommendation builds upon the political understanding reached between Spain and the UK on 31 December last year. It is without prejudice to the issues of sovereignty and jurisdiction, and focuses on cooperation in the region.

The proposed negotiating directives put forward solutions to remove physical checks and controls on persons and goods at the land border between Spain and Gibraltar, while ensuring the integrity of the Schengen area and the Single Market. The proposals include rules establishing responsibility for asylum, returns, visas, residence permits, and operational police cooperation and information exchange.

Other measures are included in different areas, such as land and air transport, the rights of cross border workers, the environment, financial support, and establishing a level playing field. It envisages a robust governance mechanism, including a review of the implementation of the agreement after four years, the possibility for both parties to terminate the agreement at any time and the possibility of unilateral suspension of the application of the agreement under certain circumstances.

Spain, as the neighbouring Schengen Member State and as the Member State to be entrusted with the application and implementation of certain provisions of the future agreement, will be particularly affected by the agreement. The Commission will therefore maintain close contacts with the Spanish authorities throughout the negotiations and afterwards, taking their views duly into account.

With regard to external border control, in circumstances requiring increased technical and operational support, any Member State, including Spain, may request Frontex assistance in implementing its obligations. The Commission acknowledges that Spain has already expressed its full intention to ask Frontex for assistance.

Background

The UK-EU Trade and Cooperation Agreement excluded Gibraltar from its territorial scope (Article 774(3)). On 31 December 2020, the Commission received a note of the proposed framework for a UK-EU legal instrument setting out Gibraltar’s future relationship with the EU. The relevant services in the Commission have examined this in close consultation with Spain. Building upon the proposed framework and in line with Union rules and interests, the Commission has today adopted a Recommendation for a Council decision authorising the opening of negotiations for an EU-UK agreement on Gibraltar and presented its proposal for negotiating guidelines.

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Commission overhauls anti-money laundering and countering the financing of terrorism rules

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The European Commission has today presented an ambitious package of legislative proposals to strengthen the EU’s anti-money laundering and countering terrorism financing (AML/CFT) rules. The package also includes the proposal for the creation of a new EU authority to fight money laundering. This package is part of the Commission’s commitment to protect EU citizens and the EU’s financial system from money laundering and terrorist financing. The aim of this package is to improve the detection of suspicious transactions and activities, and to close loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system. As recalled in the EU’s Security Union Strategy for 2020-2025, enhancing the EU’s framework for anti-money laundering and countering terrorist financing will also help to protect Europeans from terrorism and organised crime.

Today’s measures greatly enhance the existing EU framework by taking into account new and emerging challenges linked to technological innovation. These include virtual currencies, more integrated financial flows in the Single Market and the global nature of terrorist organisations. These proposals will help to create a much more consistent framework to ease compliance for operators subject to AML/CFT rules, especially for those active cross-border.

Today’s package consists of four legislative proposals:

Members of the College said:

Valdis Dombrovskis, Executive Vice-President for an Economy that works for people, said: “Every fresh money laundering scandal is one scandal too many – and a wake-up call that our work to close the gaps in our financial system is not yet done. We have made huge strides in recent years and our EU AML rules are now among the toughest in the world. But they now need to be applied consistently and closely supervised to make sure they really bite. This is why we are today taking these bold steps to close the door on money laundering and stop criminals from lining their pockets with ill-gotten gains.”

Mairead McGuinness, Commissioner responsible for financial services, financial stability and Capital Markets Union said: “Money laundering poses aclear and present threat to citizens, democratic institutions, and the financial system. The scale of the problem cannot be underestimated and the loopholes that criminals can exploit need to be closed. Today’s package significantly ramps up our efforts to stop dirty money being washed through the financial system. We are increasing coordination and cooperation between authorities in member states, and creating a new EU AML authority. These measures will help us protect the integrity of the financial system and the single market.”

A new EU AML Authority (AMLA)

At the heart of today’s legislative package is the creation of a new EU Authority which will transform AML/CFT supervision in the EU and enhance cooperation among Financial Intelligence Units (FIUs). The new EU-level Anti-Money Laundering Authority (AMLA) will be the central authority coordinating national authorities to ensure the private sector correctly and consistently applies EU rules. AMLA will also support FIUs to improve their analytical capacity around illicit flows and make financial intelligence a key source for law enforcement agencies.

In particular, AMLA will:

  • establish a single integrated system of AML/CFT supervision across the EU, based on common supervisory methods and convergence of high supervisory standards;
  • directly supervise some of the riskiest financial institutions that operate in a large number of Member States or require immediate action to address imminent risks;
  • monitor and coordinate national supervisors responsible for other financial entities, as well as coordinate supervisors of non-financial entities;
  • support cooperation among national Financial Intelligence Units and facilitate coordination and joint analyses between them, to better detect illicit financial flows of a cross-border nature.

A Single EU Rulebook for AML/CFT

The Single EU Rulebook for AML/CFT will harmonise AML/CFT rules across the EU, including, for example, more detailed rules on Customer Due Diligence, Beneficial Ownership and the powers and task of supervisors and Financial Intelligence Units (FIUs). Existing national registers of bank accounts will be connected, providing faster access for FIUs to information on bank accounts and safe deposit boxes. The Commission will also provide law enforcement authorities with access to this system, speeding up financial investigations and the recovery of criminal assets in cross-border cases. Access to financial information will be subject to robust safeguards in Directive (EU) 2019/1153 on exchange of financial information.

Full application of the EU AML/CFT rules to the crypto sector

At present, only certain categories of crypto-asset service providers are included in the scope of EU AML/CFT rules. The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing. In addition, anonymous crypto asset wallets will be prohibited, fully applying EU AML/CFT rules to the crypto sector.

EU-wide limit of €10,000 on large cash payments

Large cash payments are an easy way for criminals to launder money, since it is very difficult to detect transactions. That is why the Commission has today proposed an EU-wide limit of €10,000 on large cash payments. This EU-wide limit is high enough not to put into question the euro as legal tender and recognises the vital role of cash. Limits already exist in about two-thirds of Member States, but amounts vary. National limits under €10,000 can remain in place. Limiting large cash payments makes it harder for criminals to launder dirty money. In addition, providing anonymous crypto-asset wallets will be prohibited, just as anonymous bank accounts are already prohibited by EU AML/CFT rules.

Third countries

Money laundering is a global phenomenon that requires strong international cooperation. The Commission already works closely with its international partners to combat the circulation of dirty money around the globe. The Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, issues recommendations to countries. A country that is listed by FATF will also be listed by the EU. There will be two EU lists, a “black-list” and a “grey-list, reflecting the FATF listing. Following the listing, the EU will apply measures proportionate to the risks posed by the country. The EU will also be able to list countries which are not listed by FATF, but which pose a threat to the EU’s financial system based on an autonomous assessment.

The diversity of the tools that the Commission and AMLA can use will allow the EU to keep pace with a fast-moving and complex international environment with rapidly evolving risks.

Next steps

The legislative package will now be discussed by the European Parliament and Council. The Commission looks forward to a speedy legislative process. The future AML Authority should be operational in 2024 and will start its work of direct supervision slightly later, once the Directive has been transposed and the new regulatory framework starts to apply.

Background

The complex issue of tackling dirty money flows is not new. The fight against money laundering and terrorist financing is vital for financial stability and security in Europe. Legislative gaps in one Member State have an impact on the EU as a whole. That is why EU rules must be implemented and supervised efficiently and consistently to combat crime and protect our financial system. Ensuring the efficiency and consistency of the EU AML framework is of the utmost importance. Today’s legislative package implements the commitments in our Action Plan for a comprehensive Union policy on preventing money laundering and terrorism financing which was adopted by the Commission on 7 May 2020.

The EU framework against money laundering also includes the regulation on the mutual recognition of freezing and confiscation orders, the directive on combating money laundering by criminal law, the directive laying down rules on the use of financial and other information to combat serious crimesthe European Public Prosecutor’s Office, and the European system of financial supervision.

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New EU guidance helps companies to combat forced labour in supply chains

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The Commission and the European External Action Service (EEAS) have published today a Guidance on due diligence to help EU companies to address the risk of forced labour in their operations and supply chains, in line with international standards. The Guidance will enhance companies’ capacity to eradicate forced labour from their value chains by providing concrete, practical advice on how to identify, prevent, mitigate and address its risk.

Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said: “There is no room in the world for forced labour. The Commission is committed to wiping this blight out as part of our broader work to defend human rights. This is why we put strengthening the resilience and sustainability of EU supply chains at the core of our recent trade strategy. Businesses are key to making this happen, because they can make all the difference by acting responsibly. With today’s Guidance, we are supporting EU companies in these efforts. We will ramp up our due diligence work with our upcoming legislation on Sustainable Corporate Governance.”

High Representative/Vice-President Josep Borrell said: “Forced labour is not only a serious violation of human rights but also a leading cause of poverty and an obstacle to economic development. The European Union is a global leader on responsible business conduct and business and human rights. The Guidance we publish today translates our commitment into concrete action. It will help EU companies to ensure their activities do not contribute to forced labour practices in any sector, region or country.”

The Guidance explains the practical aspects of due diligence and provides an overview of EU and international instruments on responsible business conduct that are relevant for combatting forced labour. The EU has already put in place mandatory standards in some sectors and actively promotes the effective implementation of international standards on responsible business conduct.

Promoting responsible and sustainable value chains is one of the pillars of the recent EU trade strategy. The Guidance delivers on the strategy by helping EU businesses already take the appropriate measures, bridging the time until legislation on Sustainable Corporate Governance is in place. This upcoming legislation should introduce a mandatory due diligence duty requiring EU companies to identify, prevent, mitigate and account for sustainability impacts in their operations and supply chains. Subject to the upcoming impact assessment, this will include effective action and enforcement mechanisms to ensure that forced labour does not find a place in the value chains of EU companies.

EU trade policy already contributes to the abolishment of forced labour through its various instruments. EU trade agreements are unique in including binding commitments to ratify and effectively implement all fundamental ILO Conventions, including those on forced labour. Those conventions include an obligation to suppress the use of forced or compulsory labour in all its forms. This commitment extends to the countries benefitting from the special incentive arrangement for sustainable development and good governance (GSP+) under the EU’s General Scheme of Preferences (GSP). All 71 beneficiary countries of the General Scheme of Preferences are obliged to not commit serious and systematic violations of the principles of the fundamental ILO Conventions.

The Guidance also delivers on a number of the priorities of the EU Action Plan on Human Rights and Democracy 2020-2024 in the area of business and human rights. Those priorities include the eradication of forced labour and the promotion of internationally recognised due diligence standards.

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