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EU Labour Market Reforms

Reforms are essential to ensure that labour markets fit the changing world of work. For any country, an efficient labour market is a prerequisite for economic growth and competitiveness. Countries with forward-thinking labour policies and effective labour markets are more resilient and more likely to prosper.

One way to improve the efficiency of labour markets is to allow the private employment sector to fully play its role in the creation of jobs and growth . Appropriate regulation of the private employment industry is thus also a key element in supporting a country’s competitiveness.

In Europe, employment policies remain mostly a national competence but the European Union aims to better coordinate these policies through the European Employment Strategy for Smart, Sustainable and Inclusive Growth. Its implementation is mostly achieved through the European Semester process, the EU’s annual cycle of economic and social policy coordination. Part of this process is the country-specific recommendations which provide policy guidance tailored to each EU country on how to boost jobs and growth, while maintaining sound public finances.

Several European countries have recently introduced new conditions and restrictions on temporary agency work. These include restrictions on the provision of services, restrictions on the range of labour contracts that can be offered, pricing and tax policies that discriminate against flexible forms of work and new regulation on equal treatment and equal pay.

The World Employment Confederation-Europe is concerned by these adverse regulations imposed on the private employment industry which eventually prevent the sector from delivering the benefits it can bring to individuals, businesses and society as a whole. As demonstrated by the Smart Regulation Index developed by the World Employment Confederation, there is a clear positive correlation between smart regulation of the private employment industry and the efficiency of labour markets and overall competitiveness.

In the context of the economic recovery after the Covid-19 pandemic, Europe should promote and foster diverse forms of work and labour contracts. Tele- and Remote working, part-time work and fixed-term contracts can play crucial role in meeting the changed economic and labour market demand. EU Member States should be, via the European Semester and the country-specific recommendations, be encouraged to reform their labour markets and promote diverse forms of work.

The World Employment Confederation-Europe joined the European Platform tackling undeclared work in 2019 as an Observer. The Platform was set up by the European Commission in 2016 in order to enhance cooperation between EU countries and help them fight undeclared work. It also includes social partners, enforcement authorities (such as labour inspectorates, tax and social security authorities) and other organisations.

The private employment services sector believes that the most effective way to stamp out undeclared work is to turn it into formal work. There is hard evidence showing that those countries with less restrictive agency work regulation also enjoy lower levels of undeclared work. Agency work offers to workers a way out of the black economy and into formal employment, with all the attendant rights, benefits and access to training that this brings; while supporting businesses to access flexible labour in a responsible manner.

In March 2020, the European Platform tackling undeclared work launched the #EU4FairWork campaign to raise awareness about the risks of undeclared work and promote good practices to eliminate it. The World Employment Confederation-Europe supports the campaign by promoting the role of private employment services in offering formal employment.

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