The European Labour Market

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The European Labour Market

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The European Labour Market

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October 2004 © The Confederation of Danish Employers, Copenhagen. The Confederation of Danish Employers (DA) consists of 13 employer federations representing more than 29.000 Danish private companies covering the manufacturing, retail, transport, services and construction sectors. These companies employ approximately 47 per cent of all full-time workers in Denmark. As the main employers’ organisation, DA co-ordinates collective bargaining negotiations and represents the member organisations’ interests in relation to the political system. Author: Dorthe Andersen Cover design: Brandt Design Layout: Pia Scheuer Published by: DA Forlag Printing: Schweitzer A/S First published: March 2004 Revised: June 2005

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Foreword Efficient and dynamic cooperation among the 25 EU Member States can help solve the problems of the Danish labour market and thereby boost the competitiveness of Danish businesses. In Denmark, EU co-operation is often viewed as a threat to the “Danish Model”; but this prejudice can blind us to the advantages of working together. When the European Heads of State and Government met in Lisbon in March 2000, they agreed on an ambitious plan to make Europe the most competitive knowledge-based economy in the world. This was seen as a necessary goal if the European welfare state was to be preserved. We in Denmark are dependent in many respects on Europe’s ability to unite in providing the necessary conditions for building a competitive knowledge-based economy. Growth and development in other European countries have a corresponding effect on Danish businesses, and serve as a solid foundation for employment in Denmark. Growth and positive development of the labour market are, however, dependent on the presence of sound labour markets throughout Europe; and this, sadly, is not the case today. The Confederation of Danish Employers urges European decision-makers to implement the necessary labour market reforms, and in doing so translate the words of the Lisbon Strategy into action at the local political level that will guarantee Europe’s future welfare and employment. October 2004 Jørgen Vorsholt, Chairman, Confederation of Danish Employers.

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Contens

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1. DA and its Commitment to Europe . . . . . . . . . . 7 1.1 The Social Dialogue . . . . . . . . . . . . . . . . . 9 2.The European Framework . . . . . . . . . 2.1 The EU Constitution . . . . . . . . . . 2.2. The Charter of Fundamental Rights . 2.3. The New Europe . . . . . . . . . . . .

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3. The European Labour Market . . . . . . . . . . 3.1. A Competitive Knowledge-based Society. 3.2 Social Policy . . . . . . . . . . . . . . . . . . 3.3 Industrial Relations . . . . . . . . . . . . . 3.4 Workforce Mobility and Immigration . . . 3.5 Occupational Health and Safety . . . . . . 3.6 Education and training . . . . . . . . . . .

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Contact: . . . . . . . . . . . . . . . . . . . . . . . . 24

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1. DA and its Commitment to Europe The Confederation of Danish Employers (DA) is working actively to ensure that EU decision-making is in line with DA’s stated aims. This implies strengthening the competitiveness of Danish businesses while securing employers’ access to an adequate and skilled labour force. DA stresses the importance of EU policy-making being relevant for the national and global challenges facing Danish businesses, equating politics at EU level with national policies and seeing European initiatives as going hand in hand with Danish initiatives and traditions. In the view of Danish employers, EU initiatives should contribute to:

† Strengthening competitiveness and removing the administrative as well as regulatory obstacles companies face

† Raise the supply of labour † Strengthening free movement † Ensuring high and uniform standards for occupational health and safety.

† Making work pay † Improving the level of knowledge and education In a global society, under pressure from US and Asian markets well endowed with knowledge and technology, it is vital that Europeans work together to solve shared problems such as an ageing population and globalisation. EU cooperation needs to focus more on supporting Member States’ efforts to reform the labour market and make it

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more dynamic and efficient. Thriving labour markets are a precondition for business competitiveness, and consequently for the continued development of the welfare state in Europe. DA is a member of the European industrial and employer organisation, UNICE. UNICE functions as the general representative for European industrial and employer organisations in relation to EU institutions. DA staff attend a number of working groups where UNICE’s official line on EU labour market policy is determined. DA also represents Danish employers in the ILO (the UN’s international labour organisation), and is a member of the IOE, the international employer organisation which coordinates employers’ participation there. European affairs are an integral part of DA’s work. DA’s Brussels office works closely with DA’s other departments in Denmark. Each individual department has a direct responsibility for European matters, so that every aspect both national and European can be taken into account when an issue is evaluated. DA’s Brussels office can be seen as a bridge between DA in Denmark and the European institutions and organisations. Its work involves, among other things, contact with EU politicians and officials, and membership of various councils and advisory committees serving EU institutions.

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1.1 The Social Dialogue DA represents Danish employers in the European Social Dialogue. The European Social Dialogue was established as part of the Maastricht Treaty: it means that the European Commission must consult the social partners at European level on the orientation and content of a draft proposal before proceeding with its adoption. The social partners can then choose to start negotiations on the proposed initiative, with a view to concluding an agreement at European level. As a result, the Social Dialogue partners can take on the role of EU institutions and make agreements that can be implemented at a national level according to the various national traditions. The European Social Dialogue has already led to several agreements.

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2.The European Framework 2.1 The EU Constitution DA supports the treaty establishing a constitution for the European Union. The EU Constitution will clarify, simplify and modernise the EU system, leading to a better understanding of European co-operation. In order to gain the confidence of EU citizens and businesses alike, it needs to be clear what the EU stands for, and how and why it operates as it does. It is therefore positive that the EU Constitution will:

† - Clarify the EU’s aims, and put forward the means and tools necessary for realising these aims

† - Clarify the demarcation of legislative competencies between the EU and its Member States

† - Simplify decision-making and make it more efficient † - Outline and enshrine the social partners’ respective roles and competencies.

The Danish labour market is characterised by the way in which the social partners (companies and workers) are empowered with various capabilities in areas which in other countries are often controlled by the state. DA sees it as paramount that the EU Constitution respects Danish labour market traditions by ensuring that:

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† - Legislation concerning the cancellation of employment contracts and rights of representation continues to be a matter for unanimous agreement in the Council of Ministers.

† - Regulations concerning wages, the right to strike and the right to organise remain a national responsibility.

2.2. The Charter of Fundamental Rights The Charter of Fundamental Rights has been incorporated in the Constitution, in this respect DA urges that the legally binding Charter shall:

† Only serve to clarify existing rights and principles. † Not crease the scope of the EU’s competencies † Guarantee that national collective agreements on wages and working conditions, as well as the authorised legal system of sanctions, remain the responsibility of the parties involved and cannot be undermined by the European Court of Justice. The Charter of Fundamental Rights contains a series of fundamental rights (such as freedom of speech and religion) as well as social rights and principles (such as, for instance, gender equality and the right to social benefits). These fundamental rights enshrined in the Charter are the result of community legislation, international conventions and case law; but they will be given a more binding legal effect as part of the Constitution.

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2.3. The New Europe The enlargement of the European Union to include Eastern and Central European countries is the biggest political event in Europe since the founding of the European Economic Community (EEC) in 1957. Its principal aim has been to secure lasting peace and economic growth in Europe through increased political, economic and social cooperation. If EU Member States together prove capable of grasping the opportunities offered by a population of over 450 million, the result will be a considerable strengthening of the economies of Member States, old and new. The most visible effect of the enlargement is increased geographical mobility. This could serve to reduce existing structural problems and ease current bottlenecks in the European labour market. For Europe, it is vital to encourage a positive development of the workforce, in order to boost private sector employment and create optimum conditions in which businesses can recruit qualified labour. For that, not only geographical but also occupational mobility between the 25 or more national European labour markets will play a beneficial role. The biggest challenge of any enlargement is to ensure that new Member States live up to EU standards and apply them correctly. This will mean the EU channelling substantial resources into education, information and the monitoring of Member States’ progress in applying EU rules. The further development of the social partners in the Eastern European countries, and their cooperation throughout Europe, will be key factors in the continued development of the European system of collective agreements.

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3. The European Labour Market The foundation for the European welfare state is to be found in national social systems and labour market traditions, which in Denmark’s case can be traced back to the September Compromise of 1899. The EU has influenced the development of the welfare state since the early 1970’s, through community legislation on social and industrial relations and through labour market policy. The current balance of power between the EU and national governments gives the EU considerable legislative powers over the Danish labour market, apart from core areas such as wages and the right to conduct industrial disputes. It is DA’s opinion that the social and labour market policies of the EU should continue to sustain welfare through common rules and goals that can be adapted to national conditions and traditions. DA believes that, where European solutions show no added value, decisions should be made as close as possible to home (i.e. a country’s citizens). Where European nations face common challenges, this of course requires common European solutions.

3.1. A Competitive Knowledge-based Society. The Lisbon Strategy states that Europe by 2010 should strive to become “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs”. (Lissabon Summit, March 2000)

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DA sees as the main priorities in this area:

† A focus on increasing the size of the labour force, as a prerequisite for growth in employment. To achieve this, we have to increase migration from outside countries by workers with the skills that are needed, to introduce incentives discouraging early retirement, and to make work pay.

† More flexible labour markets, by reforming rigid rules and regulations, for instance on recruitment and lay-offs.

† An intensified effort to raise the general quality of education - and training in particular - in the EU15, which does badly in international comparisons.

† Each specific goal and policy area has to be assessed, and its contribution to the overall Lisbon goal identified, as well as its consequences for other parts of the process. The European Employment Strategy (EES) dating from 1997, was designed to combat the labour market crisis of the 1980’s and the early 1990’s when more than 10 per cent of the population eligible for work was unemployed. With this strategy, themes such as job creation, employees’ ability to adapt to changing competition and lifelong learning appeared on the EU agenda. The vision of the Lisbon Summit in 2000 of making EU a strong world leader was based on the fact that the EU must compete not with low-wage regions but rather with its competitors in what are the leading knowledge centres. At the same time, European countries are facing a huge demographic challenge that will

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strike at the heart of the European welfare state, unless drastic changes are wrought. This scenario increases the pressure on member countries to implement the necessary structural changes and improve the efficiency of their respective labour markets, including modernising the social security system and reviewing the size of the workforce and existing retirement schemes. At the midterm review of the Lisbon strategy in 2005 the European Council refocused the strategy on growth and employment. This has implied that the European Employment Strategy is now an integrated part of the Broad Economic Policy Guidelines (BEPG). DA supports European labour market policy and the refocus of the Lisbon Strategy because Danish businesses have a vested interest in applying pressure on EU countries to implement the necessary reforms. At the same time, Danish employers see the growth and employment strategy as the political driving force behind European cooperation. However, a much higher degree of involvement from member countries will be needed if Europe is to achieve its own targets and effectively tackle global competition.

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EU (25) (2003)

USA (2003)

Danmark (2003)

Lissabon goals (2010)

Employment rate for persons aged 15-64

62,9 %

71,2 %

75,1 %

70 %

Employment rate, women

55,1 %

65,7 %

70,5 %

60 %

40,2år

59,9

60,2 år

50 %r

61,0 years

-

62,1 years

+5 years = 65 years

76,7 %

-

74,4 %

85 %

15,9 %

-

10,0 %

10 %

Employment rate, older workers aged 55-64 Average retirement age Persons aged 20-24 having completed at least upper secondary education Persons aged 18-24 with lower secondary education only

Source: European Commission (Eurostat) and US Bureau of Labor statistics

3.2 Social Policy DA sees the following as main priorities in this area:

† Ensuring that social security systems are structured in such a way as to make work pay, and to get people off passive benefit payments and back into the labour market, helping to generate more work in the process.

† Ensuring that pension systems are tailored in a sustainable way which encourages older workers to remain in the labour market longer and lengthens their working lives.

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† Ensuring that initiatives on corporate social responsibility respect the autonomy of companies and respect their flexibility - and that they are voluntary, and based on the real needs of businesses. Companies’ individual characteristics should be taken into account.

† Ensuring that the European Social Fund’s assets are used without excessive bureaucracy, and that its priorities are set in a focused national effort involving the social partners. The cost of the Social Fund should be curbed, and most of its resources invested in the new EU member countries. Social Policy has been a core issue since the Treaty of Rome, since social cohesion was an indirect tool in harmonising national economic policies and raising living standards. Efforts are being made as part of the growth and employment strategy to co-ordinate social security policy and benefit systems, pension systems, integration, and the fight against poverty. DA supports this process, because coordination and the sharing of good practice assist the reform process in individual countries. In Denmark’s case as well as that of other countries, efforts to turn Europe into the most competitive knowledge-based region in the world mean seeing a number of themes in the light of European goals and strategies, rather than a solely national context.

3.3 Industrial Relations DA sees the following as main priorities in this area:

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† Ensuring a dynamic, flexible and open labour market, which supports the principle of workforce mobility.

† Ensuring that EU initiatives respect the principle of subsidiarity, existing agreements and the role of the social partners at national and EU level.

† Ensuring that EU legislation and European agreements come into effect on the basis of “minimum implementation”. Industrial Relations came under the Community policy spotlight following the 1989 adoption of the Community Charter of the Fundamental Social Rights of Workers. In contrast to social policy, where EU initiatives are aimed at individuals or systems, the characteristics of industrial relations have a decisive influence on companies via employment law, labour legislation and collective agreements. EU regulation of industrial relations has often collided with Denmark’s characteristic high degree of self-regulation. In general, DA favours the European Social Dialogue and agreements between social partners at European level, as a more suitable alternative to EU legislation. Other methods may, however, help in solving other challenges faced by more than one country. The open method of coordination may, for example, prove a viable alternative to traditional regulation, and enable EU with 25 or more different industrial relations systems to function.

3.4 Workforce Mobility and Immigration DA sees the following as main priorities in this area:

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† Creating a unified and dynamic labour market in Europe

† Removing all legal and administrative burdens that hamper freedom of movement within Europe, so that cross-border mobility is increased.

† Coordinating and modernising social security systems to prevent these from hampering mobility.

† Improving the integration of immigrants into the labour market, thereby increasing the labour supply.

† Attracting skilled labour from Third World countries, without this causing undue pressure on benefit systems. The free movement of workers is the foundation of the internal market, and serves a dual purpose. As the Treaties declare, workers are entitled to move around freely within the EU, and to work or study wherever they choose. This mobility can help create a flexible, highly qualified workforce, and is the cornerstone of any future growth in employment and productivity levels. Mobility within Europe is, however, still limited. For companies sending workers abroad or employing labour from other EU countries, it is vital that social security systems and residency rules for migrant workers are simplified and adapted. At the same time, importing skilled labour from Third World countries is an important prerequisite for preventing employment bottlenecks and imbalances that weaken Europe’s competitive abilities. * * Having required an exemption from EU judicial cooperation, Denmark is not participating in the establishment of a common EU immigration policy.

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3.5 Occupational Health and Safety DA sees the following as priorities in this area:

† Ensuring that rules are correctly and consistently implemented and enforced.

† Simplifying and modernising rules in accordance with the principle of subsidiarity.

† Ensuring that the effective implementation of EU regulations is accompanied by practical instructions on how to implement the directives.

† Paying special attention to new Member States. † Ensuring that developments in occupational health and safety are monitored, and that existing or new initiatives are accompanied by harmonized European statistics on work-related injuries, as well as reliable benchmarking and surveillance systems.

† Ensuring the development of new, flexible and effective chemicals regulations (REACH) in keeping with legislation on health and safety at work. Legislation on occupational health and safety achieved a breakthrough with the establishment of the internal market, and covered general health protection together with the effective prevention of accidents or work-related illnesses. European employment strategy and the adoption of a community strategy for health and safety at work, (2002-06) have added a new dimension to health and safety policy. This involves a more unified and preventive approach to changes in working conditions and improvements in the quality of work.

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Globalisation and increasing international competition have created a need for a common set of European minimum standards that ensure a high level of health and safety in all EU Member States. Furthermore, the technical and scientific solutions involved in much of the problem-solving are heavy users of resources, making them highly suitable for cooperation at European level. While Denmark has generally favoured agreement in the case of industrial relations, DA often supports regulation when it comes to occupational health and safety, especially in its more traditional manifestations. In the view of Danish employers, it is important that technical trade barriers are removed by harmonising health and safety requirements for products within the internal market. At the same time there is an urgent need for common regulations on the identification of chemical products and information about them.

3.6 Education and training DA sees the following as main priorities in this area:

† Creating a synergy between the European and national agendas, so as to promote mobility and meet national labour markets’ demands for qualifications and skills.

† Ensuring that education and training policies allow transparency and mutual recognition of qualifications and degrees, and improving the quality and effectiveness of education systems.

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† Ensuring that the education policy goal of lifelong learning is based on continued renewal of qualifications and skills, either through the formal education system or through non-formal learning at work or at home - while recognising that lower secondary education alone is not a sufficient level of educational achievement. Education and training have become a vital part of European employment policy in the wake of the Lisbon Strategy. The EU has authority to support and supplement national education policies, but not to regulate their actual content or organisation. The overall agenda for EU education policy is “Lifelong Learning”. This involves not only formal qualifications obtained through a state education system, but also non-formal skills obtained through work or privately at home. It also encompasses education at every level. In 2002 the social partners agreed at EU level on a common framework for the lifelong development of skills and qualifications. The goal was development - for companies and employees - through individual workers’ strategic development plans (in officially regulated sectors only). DA supports a united European effort to develop human resources, in the process strengthening individual workers’ abilities to change and adapt, as a precondition for meeting the globalisation challange. Such a policy should not only focus on shorter vocational courses but also on traditional degree and diploma courses up to the highest level. DA also believes it is important that European education systems should be able to compete with countries outside the EU, and wishes to see

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student mobility improved through opportunities for studying in other EU countries. Agreements and the mutual recognition of course modules and whole educational courses will help to raise mobility in the job market.

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Contact:

Dansk Arbejdsgiverforening Vester Voldgade 113 DK-1790 Copenhagen V Confederation of Danish Employers Avenue de Cortenbergh 168 B-1000 Brussels www.da.dk Director, International Affairs, Jørgen Rønnest Tel.: +45 33 38 93 18 E-mail: [email protected] Executive Secretary Pia T. Flindt Tel.: +45 33 92 90 E-mail: [email protected] Director, EU Policy, Dorthe Andersen Tel.: +32 (0) 2 285 05 41 E-mail: [email protected] International Adviser, Karina Ransby Tel.: +32 (0) 2 285 05 46 E-mail: [email protected] Assistant Nanna Rosenfeldt Tel.: +32 (0) 2 285 05 40 E-mail: [email protected]

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