Boosting productivity and creating better jobs
Vladimír Špidla
Member of the European Commission responsible for Employment, Social Affairs and Equal Opportunities
Boosting productivity and creating better jobs
Finnish Presidency conference in cooperation with the European Commission "Boosting productivity and creating better jobs"
Espoo (Finland), 16 and 17 October 2006
SPEECH/06/598 Member of the European Commission responsible for Employment, Social Affairs and Equal Opportunities Finnish Presidency conference in cooperation with the European Commission "Boosting productivity and creating better jobs" Ladies and gentlemen, By opting to concentrate on a joined-up approach to productivity, job quality and increasing the employment rate, the Finnish Presidency has identified a key element in the Lisbon strategy, combining three aims which could clash if they were not addressed at the same time. Productivity can be stepped up at the expense of job quality or the employment rate. The employment rate can also be increased without regard for the quality of the jobs created or productivity. Finally, job quality can be enhanced without creating any new jobs and without increasing productivity. This is, moreover, what emerges from the excellent document that EMCO (the Economic Committee) has prepared specifically for this conference. The Lisbon strategy Last year marked the first mid-term assessment of the Lisbon strategy. It was not particularly encouraging and it was decided to refocus the strategy on growth and employment and to establish a better partnership between the Commission and the Member States. The European Union is still falling well short of its employment rate targets which are an overall rate of 70% with over 60% for women and 50% for older workers. At present the average rates in the Union are 64%, 56% and 43% respectively. There is obviously some way to go but the targets are not over-ambitious. Several Member States have already posted higher figures. Moreover, competitiveness must be increased in order to meet the challenge of economic globalisation which is stepping up the pace of technological progress and product and service cycles. Globalisation is also prompting a massive increase in the supply of labour. We all know that we cannot compete with the emerging economies on labour costs. Our main advantage, it cannot be said often enough, is our human capital with its know-how, flexibility and creativity. Too often globalisation is seen as a threat for our economies and for the European social model, but the new developed countries represent new markets for the European Union. Of course, in order to take best advantage of these new opportunities, the European Union clearly has to increase its ability to adapt. Companies and workers must adapt in order to anticipate, manage and direct change and must be given a framework in which they can exercise and develop these capacities. The qualities of all individuals must be put to best use, enabling them to develop and increase their potential. This is how I see a society with full employment where everyone contributes to the best of their ability to the European Union's prosperity. The European Union's fundamental values of solidarity, equal opportunities and inclusion are vital for European competitiveness. Social justice requires workers' fundamental rights, including safety and health at work and sufficient protection against discrimination or harassment, to be upheld. Globalisation is not the only challenge forcing us to modernise our economies. In the context of the ageing of the working population, increasing productivity becomes the main factor in growth. However, the rise in productivity has slowed considerably in the EU over the past few decades and we have lost ground on our global competitors. The average productivity per worker in the EU is well below that in the United States, mainly as a result of the fewer hours worked per year but also because hourly productivity is lower. This trend must be reversed. There are some signs that this might happen, mainly thanks to the sharp rise in productivity in the new Member States. We also need better-quality jobs. Too many jobs are of low quality. Job quality is a complex notion which subsumes pay and social advantages, relations between employers and workers, working conditions, access to training, career prospects, social security cover, health and safety standards, gender equality and non-discrimination. Enhancing the quality of work and, in particular, overcoming job insecurity is a natural complement to job creation and a condition for permanent employment and increased productivity. Decent work is a requirement the world over and the European Union plays a full part in advocating it at international level. At a time when the economic prospects seem to be brightening, the climate is all the more favourable for reform. The Commission envisages creating more than 3.7 million jobs net in the period 2005-2006. The pace of the reforms necessary to take advantage of these brighter prospects must therefore be stepped up in order to create sustainable growth in the long term. Flexicurity For the Commission, flexicurity is one of the keys to modernising the European social model which reconciles two apparently incompatible principles: job flexibility and security for workers, the idea being to combine the following four elements judiciously: The Commission would like to see the Member States agreeing on a set of flexicurity principles by the end of 2007. The Council meeting in spring endorsed this proposal as a way of exploiting the synergies between competitiveness, employment and social security. The Commission will therefore present a draft communication after the Council meeting in spring 2007 which will pave the way to adopting a set of common principles. The social partners will be involved in the discussion. Moreover, the tripartite social summit in Lahti which will be held in a few days' time will examine at this issue. Without wishing to anticipate the results of this protracted debate, certain aspects of flexicurity which can help to increase productivity and improve job quality can already be mentioned. New, more flexible methods of work organisation can, for example, increase productivity. A modern method of organising work which takes better account of everybody's needs, in particular in order to reconcile work and family life more effectively or to provide training, increases worker participation and hence productivity. This is internal flexibility within a company, which must also enable workers to acquire new skills and to progress in their careers. External flexibility, i.e. moving from one company or economic sector to another must enable corporate needs, in terms of skills and workforce levels, to be better met. This will boost competitiveness and therefore create more jobs. From the point of view of workers, external flexibility is a mobility factor enabling them to broaden and vary their experience and, in turn, enhance their employability and, in the longer term, productivity. In order to encourage such external flexibility, job security must be increased so that employees can get back into work again quickly by means of training and vocational guidance. Above all, proper financial support needs to be guaranteed. Some studies show that high benefits increase the feeling of security amongst workers and encourage mobility, including cross-border mobility. European labour market The Communication on the labour market, which the Commission is also set to adopt next month, ties in with the discussion on flexicurity. A proper European labour market is indispensable for reconciling social justice and competitiveness and constitutes genuine value added at European level. As regards the added value of the European Union, it is time to draw inspiration from the single market and to adopt a new approach to the labour market which recognises the diversity of Member States and regions. A consistent framework must be provided which really guarantees free movement of workers within the Union by giving everyone access to it, irrespective of nationality, status or origin. This would enable us to take better advantage of our main resource, namely our human capital, at European level. The draft communication has three major political strands. The first is to maximise the potential of mobility by tackling the obstacles to it, mainly through portable pensions, posting of workers and developing EURES. The second comprises developing an active flexicurity model at European level to promote the necessary market flexibility whilst increasing security, so as to enable workers to change jobs and careers, primarily by means of lifelong learning. The third comprises helping workers to cope with change. The social dialogue plays a particularly important part here. These three political strands could be supported by using the five main instruments at the disposal of the European Commission and the Member States, namely: On the same date, the Commission intends to adopt a Green Paper on Labour Law to enable all the parties involved to put their heads together and consider how labour law could usefully be adapted to accommodate flexicurity and a single labour market. The Green Paper on Labour Law The Green Paper on Labour Law should first of all take stock of the situation and identify the main political challenge as being the increasing diversity of forms of employment. The labour market must be flexible to cope with the rapid economic, technological and social changes set in motion by globalisation. The number of workers recruited on atypical contracts (such as part-time or temporary contracts) or who are self-employed is already estimated to be 47%. This contractual diversity, which enables companies to adapt quickly to the needs of the market, is a risk for workers, who find themselves trapped in vulnerable and insecure circumstances which may affect choices in their private lives (housing, family, etc.). This also ties in with certain demographic aspects mentioned previously. The aim of this Green Paper is to prompt an open debate between all the parties concerned in the European Union in order to strike a balance between flexibility and security for everyone. Ladies and gentlemen, This brings me to my conclusions. Conclusions Experience in the various countries shows that a political approach with generous unemployment benefits and considerable investment in active labour market policies combined with jobseeker activation and monitoring can have a positive impact on employment. An active labour market policy and lifelong learning create the conditions which enable workers to make the transition from a low- to a higher-productivity job. If an active job-search programme is implemented and sufficient protection against unemployment is guaranteed as soon as possible where a risk of unemployment occurs, employees feel more secure and are more able to adapt to the changes caused by restructuring. By security, we do not mean "job security" but security of employment and security during transitional periods. The aim is to ensure that individuals find new jobs and are protected from long-term unemployment. As for flexibility, this does not just mean "hiring and firing". Enterprises need a flexible and qualified workforce which is meticulous and responsive when the economic opportunity arises. This requires permanent investment in human resources and active support in periods of transition on the labour market. This is the reasoning behind flexicurity and is what makes it an important instrument for increasing productivity and enhancing employment. I am positive that this conference, followed by the meeting of the EMCO will enable us to look at these issues in more depth. Thank you for your attention.
Reference: SPEECH/06/598 Date: 16/10/2006
HTML: EN FR DE CS PDF: EN FR DE CS DOC: EN FR DE CS
Vladimír Špidla
Boosting productivity and creating better jobs
Espoo (Finland), 16 and 17 October 2006