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Important points 1994-1999




Jobs now a top priority for the union


Ever since the beginning of its current term of office (1994-1999) European Parliament has performed a key role in putting job-creation on the European agenda. Amongst other things, it played an active part in defining the goals of the EU employment strategy first mooted at the Essen European Council in autumn 1994.

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When unemployment peaked in the EU, with more than 18 million jobless Europe-wide, Parliament made a European employment strategy one of its top priorities for the Intergovernmental Conference to revise the EU Treaties. Its efforts soon bore fruit: at the Amsterdam Summit in June 1997 the Member States agreed to insert a special chapter on jobs in the new Treaty and also to coordinate the Union's employment policies better. Reducing unemployment thus officially became one of the Union's key objectives.

A few months later in Luxembourg, the Heads of State and Government met at a special summit to flesh out the newly agreed coordinated employment strategy. In its report to the summit, Parliament stressed the importance of economic policy coordination, lower labour taxes, flexible working time and improved skills. The Member States, it said, should adopt more active employment policies, especially for the long-term unemployed and young people. The unemployed should be given the opportunity to follow vocational education or retraining courses and thereafter be guaranteed a job for at least a year. The main thrust of these ideas was incorporated in the summit conclusions and also in the 1998 employment guidelines, on the basis of which the Member States started to revamp their employment policies.


Towards convergence

Over the last few years, Parliament has repeatedly stressed that an "economic Europe" must be counterbalanced by a "social Europe". Guidelines for employment policies and those for economic policies must therefore be consistent and mutually reinforcing. The procedure endorsed in Luxembourg under pressure from Parliament is similar to the approach used for Economic and Monetary Union: Member States are required to adopt common targets and then work towards them. To ensure genuine policy convergence, indicators must be defined and a proper system set up for assessment and the exchange of information between all Member States. How far Member States have succeeded in their efforts is assessed annually by the Commission and the Heads of State and Government. National Action Plans on employment have been introduced, to serve as a form of benchmarking and give the Member States a strong incentive to succeed.

The EP has also spoken out in favour of active job-creation measures. For instance, it has fought doggedly for tax reforms, in particular for experimental cuts in VAT on labour-intensive services. After years of resistance, the Heads of State and Government finally gave the go-ahead to this idea at the Vienna Summit in December 1998. Member States which wish to experiment with reduced VAT rates on labour-intensive services will now be allowed to do so.

Parliament's views on the importance of investment were also taken on board by the Vienna Summit. Both Parliament and the European Council see investment in infrastructure and the promotion of innovative projects as important elements of the EU's job-creation strategy.


Jobs initiative focuses on small firms

As one arm of the budgetary authority, Parliament can ensure that support is provided for innovative experiments. For the Luxembourg special employment summit it drew up an "employment initiative" designed to make life easier for small- and medium-sized firms (SMEs), which are known for their job-creation potential. The main problem facing many small companies is how to raise capital. The employment initiative was Parliament's response to the Council's decision not to endorse a Commission proposal for a programme with a similar objective.

Parliament sees SME loan guarantee arrangements as crucial to helping create jobs. Under the 1997 budgetary procedure, therefore, it decided to earmark up to ECU 450 million over the period 1998-2000 to help SMEs secure risk capital and encourage cross-border joint ventures. Some of the funding is to be used to set up a guarantee fund in conjunction with the European Investment Fund to cushion the risks taken by banking institutions which provide loans for SMEs. Parliament wanted guarantees to be granted first and foremost to firms with fewer than 100 employees.


Job opportunities in the "social economy"

Parliament has great faith in the ability of the "social economy" or non-profit sector, i.e. NGOs, cooperatives, foundations and mutual societies, to create jobs by supplying services which the public sector or the market do not provide. At Parliament's prompting, a start was made on testing the job-creation potential of the "social economy" in 1997, when it entered ECU 20 million in the Union budget to fund a three-year pilot programme.

More than 50 pilot projects throughout the Union are currently exploring ways in which non-profit-making associations can create sustainable jobs and offer the public high-quality services at moderate prices. Many of them also seek to integrate disadvantaged social groups, such as the disabled or immigrants, into the labour market.

Projects range from the development of co-operative home services to the creation of social banking organisations. All are managed by transnational partnerships. Parliament supports the Commission's plans to continue backing third-system experiments with money from the European Social Fund.


Further information: Virpi KÖYKKÄ ( tel. 0032- 2- 284 62 22 or e-mail Vkoykka@europarl.eu.int)

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