Analytics, Education and Science, EU – Baltic States, Labour-market, Legislation, Markets and Companies, Round Table

The article was prepared for the Roundtable-Seminar «Labor market in the Baltic States and the EU: patterns and paradoxes» held in the Baltic International Academy (BIA) on 7 December  2011. Its organisers: BIA, online magazine The Baltic Course, Employers' Confederation of Latvia and the Diplomatic Economic Club (DEC).

The EU basic Treaty covers employment, social affair and inclusion issues, being included into the labour market issues, in strict policy guidelines. Initially, in categories and areas of Union competences: in shared competences there are such items as social policy issues, economic, social and territorial cohesion.

Second, in coordinating member states economic policies; here the Treaty stipulates that “the Union shall take measures to ensure coordination of the employment policies… by defining guidelines for these policies” (art. 5 TFEU). In the same article (part 3), it is said that the Union “may take initiatives to ensure coordination of member states social policies”. Extremely delicate and palliative language of the fundamental law is to be mentioned.

Third, the labour issues are included into the “Union policies and internal market” where they are part of both the internal market strategies and that of the free movement of persons and right of establishment.

Fourth, labour issues can be found in Treaty’s provisions concerning social policy (1) and economic, social and territorial cohesion (2).  

All what is not included into these issues envisaged by the Treaty is regarded to be within the competences of the member states.   

Specific Commission’s agenda

The EU policies concerning labour issues cover numerous activities elaborated by the Commissioner Laszlo Andor responsible for the Union’s employment, social affair and inclusion. Among these issues are:

- Employment, social affairs and equal opportunities

- European Globalisation Adjustment Fund

- European Social Fund

- Funding for employment and social solidarity

- Gender equality

- Health and safety at work

- Labour law

- More and better jobs

- Pensions

- Social and demographic trends

- Social dialogue

- Social inclusion

- Social protection

- Working abroad

The policy approaches towards these issues can be seen at the Commission’s website:  http://ec.europa.eu/policies/employment_social_rights_en.htm   

At the same time, one can see that so-called direct regulation of labour market in the member states is not a Union issue; this is still the prerogative of the national policy and decision-making. At the same time, it is quite clear that Union’s efforts to coordinate and optimize labour markets are extremely important. A couple of examples for this are the employment strategy and Working Time Directive, both of which are reviewed below.

European employment strategy

In line with the Europe 2020 strategy, the European Employment Strategy seeks to create more and better jobs throughout the EU. 

To reach these objectives, the EES encourages measures to meet three headline targets by 2020:

• 75% of people aged 20-64 in work
• school drop-out rates below 10%, and at least 40% of 30-34–year-olds completing third level education
• at least 20 million fewer people in or at risk of poverty and social exclusion.

The actions outlined in the flagship initiative "An Agenda for new skills and jobs" are essential to meet these targets.

The European employment strategy provides a framework (the "open method of coordination") for EU countries to share information, discuss and coordinate their employment policies.

Every year, these national governments (through the Employment Committee) and the European institutions produce the "employment package":

• the guidelines for national employment policies, proposed by the Commission and agreed by the national governments, set out common priorities and targets
• the national reports delivered by the national governments and describing their employment policies, which are analysed by the Commission for compliance with the Europe 2020 targets and flagship initiatives
• a Commission report, accompanied if appropriate by recommendations to national governments.
• In parallel to this procedure, there is an ongoing dialogue between the Commission, national governments, trade unions, employers' bodies and the other European institutions (European Parliament, European Economic and Social Committee, Committee of Regions, etc.). 

See: http://ec.europa.eu/social/main.jsp?langId=en&catId=101  

The number of Europeans still looking for work in the EU-27 has returned to the peak recorded since the start of the crisis. Europe's unemployment rate has been at the end of 2011 at the level of 10 % in fact, 9,7 % in September 2011). This is a little bit higher than in the Spring (by 0,3 pp) and is the same level as the peak recorded in the first half of 2010. Unemployment in the euro area also increased by the same proportion hitting 10,2%. 

The overall number of jobless has been growing since February 2011 by 585,000, reaching 23.3 million in September - only 75,000 short of the peak recorded in April 2010. The improvement seen in the months up to March 2011 has been progressively offset by the more Recent rise in unemployment has been registered in almost all EU members. Although Germany, Belgium, the Czech Republic, Sweden, Hungary and Ireland have seen unemployment fall slightly, the rest of the member states – 11 states- have seen the number of job-seekers grow further.

Even countries recording lower-than-average unemployment rates are now posting rises; e.g. including Austria, Italy, the Netherlands, Romania and Slovenia. Most of the countries recording already high unemployment rates have seen these grow even further, such as Spain, Bulgaria, Portugal, Slovakia and Greece.

Youth unemployment remains a key concern in the EU and has been growing again since February 2011 up by 98,000 overall to reach 5,3 million in September 2011, at a rate of 21.4%. This rate equals the peak level recorded in February 2010.

In the current economic context, most European countries expect unemployment to rise in the coming months; however, employers believe that employment will shrink in the tertiary sector and in construction.

Agenda for new skills and jobs

This Commission’s initiative is to help the EU reach its employment target for 2020: 75% of the working-age population (20-64 years) in work. Launched in 2010, it is part of the EU's overall strategy – Europe 2020 – promoting smart, sustainable and inclusive growth in the next 10 years and beyond. The Agenda also contributes to achieve the EU's targets to get the early school-leaving rate below 10% and more young people in higher education or equivalent vocational education (at least 40%), as well as to have at least 20 million fewer people in or at risk of poverty and social exclusion by 2020.

Jobs and Skills market in the EU: 2015 perspective

In the Commission’s Communication prepared in February 2008, by the EU special Center, Cedefop (the European Centre for the Development of Vocational Training) a prognosis study was published covering 25 member states of the European Union (without Bulgaria and Romania), plus Norway and Switzerland, in order to find out the prospects of European occupations and skills.

Long transition of European economies away from the primary and manufacturing sectors and towards the service sector is not yet completed. The new EU member states in particular are still going through the process. The transition is moved gradually: the traditional sectors still employ significant numbers of people and will continue to do so in the medium term. All presently existing alternative scenarios explored by the forecasting exercise (from 'optimistic' to 'pessimistic') have shown a drive for growing need of various skills. 

European Commissioner for Education, Training, Culture and Youth, presenting the prognosis’ outcome to the public said: “The world economy is constantly changing, and so are the skills that people will need to enter the job market. But the question people ask is, which skills will they need? Now we have a study that gives us a clearer idea of where skills deficits are likely to occur in the years to come. With this information, young and old alike can assess their learning objectives, which will help them decide their training and learning needs”.  

Perspectives by 2015

= In the primary sector:

The primary sector is expected to employ 10 million workers across Europe

            = down from 12 million in 2006

            = and 15 million in 1996, at the same time 

             = the loss of over 2 million jobs in the primary sector is expected

= In manufacturing sector about 34, 5 million people will be employed

            = down from 35 million in 2006

            = and 38 million in 1996, at the same time 

            = half a million new skills in manufacturing sector is expected

= In the service sector the real growth in occupations will take place:

            the EU economy will generate more than 13 million new jobs

In transport and distribution, including tourism:

            = 3.5 million additional jobs will be created

In business and various services connected to entrepreneurial activity

            The best employment prospects in the medium term will be offered, generating 9 million new jobs by 2015.

Another 3 million additional jobs will be created in education, health and social work.

Even more significant is the growing requirement of skills and qualifications at all levels. The demand for high skills has not yet peaked.

Presently, about 80 out of 210 million European workers are in highly-skilled, non-manual jobs; this high proportion is expected to rise further on.

Quality of skills

Up to 2015, Europe will gain 12.5 million additional jobs at the highest qualification level and 9.5 million at the medium level (especially vocational qualifications). But jobs for workers with low qualifications will decline by 8.5 million. Even jobs for unskilled manual workers are demanding more qualifications, while skilled manual workers will increasingly need medium-level qualifications.

All that has had serious implications for employment policies in the member states. A shrinking population implies a continuing need to replace workers, even in declining sectors and occupations. But with skill requirements increasing dramatically, the new workers will need higher qualifications to perform “the same job”.

Cedefop, with the contribution of Skillsnet (an international network of researchers and policy makers for the early identification of skill needs) covers new developments in skills and occupations, and looks into particular fields in detail. E.g. Cedefop has studied tourism, nanotechnology, agro-food and wood sectors; it is expected to launch reports on the health and environment sectors. 

Cedefop. The European Centre for the Development of Vocational Training (known as 'Cedefop' after its French acronym), is an agency of the European Union based in Thessaloniki, Greece. It was created in order to promote the development of vocational education and training (VET) in the European Union. It is to ensure that economic and social development goes in line with essential requirements for vocational education and training, the labour market and society. Building on a rich tradition of VET systems in Europe, governments and social partners Cedefop devise EU policies for modern and innovative VET, which is a key element for employment, social inclusion and the competitiveness of the EU. Cedefop is one of the oldest European agencies. It was founded in 1975 and it moved to Thessaloniki, Greece, in 1995.

More information on the Center see website: www.cedefop.europa.eu.  

Working Time Directive (WTD)

Working Time Directive (WTD) is probably the most vivid example of Union’s approach to “universal social rights” in the member states. WTD is to protect workers’ health and safety; minimum rules are needed on working time in all EU member states.

Under the EU’s Working Time Directive (2003/88/EC), each Member State must ensure that every worker is entitled to a limit to weekly working time, which must not exceed 48 hours on average, a minimum daily rest period, of 11 consecutive hours in every 24, a rest break during working time, if the worker is on duty for longer than six hours, a minimum weekly rest period of 24 uninterrupted hours for each seven-day period, paid annual leave, of at least four weeks per year, there should be a right to free health assessments, etc.

The Directive also sets out special rules for working time in a small range of sectors: doctors in training, offshore workers, sea fishing workers, workers in urban passenger transport... (There are separate directives on working time for certain workers in specific transport sectors)

The European Commission is currently reviewing Directive 2003/88/EC, by means of a two-stage consultation of the social partners at EU level and a detailed impact assessment. In December 2010, the Commission adopted a second-stage consultation paper asking workers' and employers' representatives for their views on possible changes to the Directive. The Commission also adopted a report on how the current working time rules are being implemented in the Member States and made available an independent study on the social and economic impact of the Directive.

The EU documentation is available on the Directive, its two forerunners, and the proposals to amend the Directive. See:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:299:0009:0019:EN:PDF 

Review of the Working Time Directive

The Working Time Directive (2003/88/EC) is an important part of the EU’s health and safety laws to protect workers. It aims to set common minimum protective standards against the health and safety risks to workers (short and long term) posed by overwork or inadequate rest periods, while also providing flexibility for the needs of different sectors and activities. The present Directive codifies earlier Directives, going back to 1993.

The Directive's main aim is to ensure that every worker is entitled to:

• a limit to weekly working time, which must not exceed 48 hours on average, including any overtime;
• a minimum daily rest period, of 11 consecutive hours in every 24;
• a minimum weekly rest period of 24 uninterrupted hours for each seven-day period, which is added to the 11 hours' daily rest;
• paid annual leave, of at least four weeks per year, and
• extra protection in the case of night work (e.g. average working hours should not exceed 8 hours per 24-hour period; night workers should not perform heavy or dangerous work for longer than 8 hours in any 24-hour period).

There are, of course, some exceptions to these rules, e.g. self-employed persons are excluded. The Directive also provides for some flexibility intended to cater for the needs of different sectors and activities:

• minimum daily and weekly rests can be delayed or postponed, in whole or in part, in a range of situations, on condition that the worker must receive 'equivalent compensatory rest' (i.e. the worker does ultimately receive all the minimum rest hours to which s/he is entitled, even if they are taken at a later time);
• the rules may be varied by national law for workers who are sufficiently autonomous to decide their own working time (e.g. senior managers);  
• if a Member State so chooses, a worker can work longer average hours than the 48-hour limit, if she or he freely consents to do so, the so-called 'opt-out';
• when calculating the 48-hour limit, weekly working time can be averaged over up to 4 months (default provision), 6 months (by law, in certain activities) or 12 months (only by collective bargaining).

The Directive does not govern pay rates for regular, overtime or on-call work, which remain entirely a matter for national law or collective bargaining.  

More details see: Commission's 2010 Report on the implementation by Member States of the Working Time Directive.

The review process starts with the Commission’s initiative; the new review would be based on a two-stage consultation of the social partners at European level and a detailed impact assessment paying attention to both social and economic aspects.

Thus, during 2010, the Commission:

• launched the two successive stages of consultation of the social partners (each based on a consultation paper published as a Communication);  
• launched and published a substantial impact assessment study by independent experts (the 'Deloitte study'), and  
• published a comprehensive legal Report of the Commission services on the current implementation of the Directive in all Member States.

Across the European Union, the longest working weeks, worked by full-time employees in their main jobs, are found in Romania (41.8 hours), the Czech Republic (41.7 hours) and Latvia (41.7 hours). The shortest are in France (38.4 hours), Belgium (38.6 hours) and Ireland (38.9 hours). Only three of the EU-15 countries have working weeks longer than the average for the entire EU-27; by contrast, workers in 10 of the 12 new Member States work longer weeks than the EU-27 average.

The EU Eurofund agency compares the average collectively agreed entitlements for paid annual leave in the EU. It finds that the average number of fully paid holidays in Europe is 25.2 days per year. The average in the EU-15 and Norway stands at 26.5 days, with a substantial difference between the average in Sweden (33 days) and in Greece (23 days). Among the new EU member states, the average is 21.4 days per year, with notable, though smaller, differences between the Czech Republic (25 days) and Estonia (20 days).

Information on the Eurofound reports can be found at: www.eurofound.europa.eu

Social partners in consultation

In the process for consulting the social partners at European level?

The Treaty on the Functioning of the EU (TFEU) sets out particular rules for social policy legislation, including Working Time, which specifically requires the Commission to consult with representative social partner organisations at EU level before making any legislative proposal in this area.

The procedure is provided for in art. 154(2) TFEU. Details are available on the Commission's social dialogue webpage. 

As the results of the consultation, could be mentioned:

• a large response from the European social partners in the first stage of consultation. Broadly speaking, there was overall consensus that EU working time rules needed review; but strongly differing viewpoints on what sort of changes were needed, with business calling for more flexibility, and unions for more effective levels of protection.
• 
  
• the main outcome of the second stage of consultation was the interest expressed by all the main cross-sectoral social partners in the option available to them of choosing to negotiate on the Working
  

Time review (under art. 155 TFEU). 

Perspectives

The social partners have jointly decided to launch talks under art. 155 TFEU; under the Treaty provisions, they enjoy autonomy as regards the content and structure of their discussions, and have nine months to reach agreement.

If they reach an agreement, they are entitled to ask for its implementation as a Directive. This has been done in many previous cases. The Commission would then present the social partners' agreement to the Council in the form of a Directive’s draft. According to the Treaty, the Council may either adopt it, or reject it, by qualified majority, but may not amend it. The Parliament in this case will be informed, but the EP is not a co-legislator.

Out of respect for the autonomy of the social partners, the Commission will not put forward a legislative proposal on the issues covered by their talks.

In the event that the social partners do not reach an agreement, the Commission would then come forward as promised with a legislative proposal, based on its consultation and impact assessment work.

Enforcement & infringement

Is the Commission taking legal action against Member States which do not comply with the Working Time Directive?

There is no moratorium on Working Time infringements during this review. The Commission has already been in contact with different Member States about a range of issues raised in our 2010 Report. In some cases, the MS concerned have now changed their law to come into conformity. In others, where there has been no satisfactory progress, the Commission is taking the appropriate action.

The Commission's main concern at present is with a range of situations in different Member States where workers are being obliged to work very excessive hours, without adequate rest. (For example, reasoned opinions were issued in September 2011 against two member states Ireland & Greece) for requiring doctors in public health services to work excessively long hours without adequate rest).

In Ireland's case, national law provides for limits to doctors’ working time, but in practice public hospitals often do not apply the rules to doctors in training or other non-consultant hospital doctors. There are still numerous cases where junior doctors are regularly obliged to work continuous 36-hour shifts, to work over 100 hour in a single week and 70-75 hours per week on average, and to continue working without adequate breaks for rest or sleep.

For Greece, doctors working in public hospitals and health centers often have to work a minimum average of 64 hours per week and over 90 hours in some cases, with no legal maximum limit. There is no legal ceiling to how many continuous hours they can be required to work at the workplace, and they often have to work without adequate intervals for rest or sleep.

For more information on infringement procedures:

http://ec.europa.eu/eu_law/infringements/infringements_en.htm

Derogations from the Directive

It is quite natural that several member states “opted-out” of the Directive’s recommendations. The “opt-out” is, in fact, a derogation from the Directive which allows a member state, if it so wishes, to allow an individual worker to contract out of the protection of the 48-hour average limit, by agreement with his or her employer. In this situation, there is no explicit ceiling to the number of hours that could be worked.

Several social partners strongly opposed such derogations; some see the opt-out as a threat to health and safety which exploits workers' unequal bargaining position, and want to see it ended or phased out. Others consider that employers need such flexibility while individual workers should have a choice on their maximum working hours, and do not want the opt-out changed in the review.  

Presently 16 member states have applied for various kinds of opt-outs. Of these, 5 states allow its use in any development sector, while 11 states only allow its use in connection with the use of on-call time (in some cases, only within public health services). Member States also differ widely in the conditions which they require for use of the opt-out.

Additional information – in the Commission's 2010 Report on the implementation by Member States of the Working Time Directive.

Further information on the Directive:

- Fresh round of consultation on review of EU working time Directive begins as new implementation report published, IP/10/1760;

- Information related to the Working time Directive:

http://ec.europa.eu/social/main.jsp?catId=706&langId=en&intPageId=205;  

- Communication COM (2010) 801: Reviewing the Working Time Directive (second-phase consultation) of the social partners at European level;  

- Eurofound (EFWL) studies: Comparative analysis of working time in the European Union (2010).

Supplement - Commission documents on application of Directive 2003/88/EC:

- External consultants' study (Executive Summaries) on the implementation of Directive 2003/88/EC in Bulgaria and in Romania (2009);

- Commission Report COM (2006) 371 - Operation of the provisions of Directive 2003/88/EC on the organisation of working time for workers concerned with the carriage of passengers on regular urban transport services; 

- Commission Report COM (2006) 853 - Operation of the provisions of Directive 2003/88/EC applicable to offshore workers;

- Study (2003): Business Impact Assessment Working Time Directive: Supplementary Report on Doctors in training, In:

http://ec.europa.eu/social/main.jsp?catId=706&langId=en&intPageId=205

- Second-stage consultation paper Communication COM (2010) 801: Reviewing the Working Time Directive (second-phase consultation) of the social partners at European level;  

- COM (2010) 802: Report on the implementation by Member States of the 'Working Time Directive' 

- SEC (2010) 1611: Detailed report on the implementation by Member States of the “Working Time Directive”;  

- SEC (2010) 1610: Overview of the replies received from the social partners at European Level to the first-phase consultation on Reviewing the Working Time Directive;  

- Reviewing the Working Time Directive: Accompanying letter from Robert Verrue to EU social partners (2010);

- Deloitte Study (December 2010) to support an Impact Assessment on Further action at European level regarding Directive 2003/88/EC and the evolution of working time organisation; 

- Eurofound (EFWL) studies: Comparative analysis of working time in the European Union (2010) / Fifth Working Conditions Survey (2010) / Revisions to the European working time directive: recent research (2008);

- European Commission research paper: Short time working arrangements as response to cyclical fluctuations (2010);

- Communication COM (2010) 106: Reviewing the Working Time Directive (first-phase consultation) of the social partners at European level.