I. Economic facts of EU countries in a nutshell
To see this table please click the following link, eapmtable.pdf
II. Issues on the EU agenda (statement of Luxembourg’s presidency)
Budget is biggest challenge for Luxembourg's EU Presidency
The Grand Duchy of Luxembourg, with a population of 450,000, on 1 January 2005 took over the Presidency of the European Union - for the 11th time since the EU's founding treaties were signed. Its biggest challenge over the next six months is to secure a deal on funding for the enlarged EU for 2007 to 2013.
In a statement, it also states its intention to re-examine budgetary discipline within the EU's Economic and Monetary Union. The implementation of the Stability and Growth Pact, which limits government deficits within the reference value of 3 per cent of GDP, is to be clarified, the intention being to reach an agreement on the specific content of the pact in March.
A fundamental objective of the Grand Duchy's Presidency is to review the 'Lisbon process', whose aim is a knowledge-based society, with a "competitive economy able to meet the social and environmental expectations of its citizens". It will relaunch the strategy around the three pillars (economic, social and environmental) by identifying a limited number of priorities. Reinforcing the European Union also means providing it with the resources to become a knowledge-based society with a competitive economy that can also fulfil its citizens’ social and environmental ambitions. This is the objective of the Lisbon process and its mid-term review, which the Presidency is preparing to submit to the European Council in March, based on a Commission orientation report. This will mean relaunching the strategy, coordinated around its three pillars, while identifying a restricted number of priorities. Simplifying the governance of the process will make the issues involved more accessible to everyone.
The Presidency is committed to pushing ahead on completion of the internal market, which it says is "an essential driver of European economic growth". In particular, it promises to strengthen efforts to accelerate and improve the transposition of EU directives.
The process of enlargement of the EU is to continue under Luxembourg's Presidency. In a Union with 25 members, which is soon to become 27 and more, it is in the interests of everyone within the EU to forge their common and increasingly interlinked destiny on a continuous basis. The membership treaty with Bulgaria and Romania is to be finalised with a view to signature at a foreign ministers' council in April 2005. As the current accession cycle comes to an end, a new Balkan cycle is expected to begin with membership negotiations with Croatia on 17 March 2005. Preparations for membership talks with Turkey are not likely to begin before early summer 2005.
Finally, 2005 promises to be a pivotal year in the ratification of the treaty establishing a Constitution for Europe. Most of the 25 EU Member States aim to complete their national ratification procedures during 2005. The entry into force of this new founding pact is conditional upon its ratification by each of the 25 Member States, most of which plan to bring their national procedures to a successful conclusion in 2005. Throughout the year, the different national ratification procedures will be very closely monitored, both for the Member States that submit the text concerned to their Parliaments, and in Member States where popular consultation is used. The results in both cases will be analysed in detail.
The importance of the Presidency’s external relations dimension has grown considerably, as has the European Union’s standing on the world stage, and its resulting responsibilities. The European Union’s objectives are well known: a world which is safer, more prosperous and more respectful of human rights. These objectives underpin the European Union’s external action, and a range of instruments combine to carry it through.
The Presidency will be responsible for implementing the European security strategy, adopted a year ago, a framework that encompasses the European Union’s external action. This strategy raises a number of fundamental choices to which the Presidency will have to give concrete expression. One of the essential aspects of this strategy is the priority afforded to multilateralism, a system the European Union considers the best means of achieving its ambitious objectives.
The "Hague programme", which seeks to develop an area of freedom, security and justice, will act as a framework for the Luxembourg Presidency in Justice and Home Affairs (JHA) issues. This now means optimising operational cooperation among the 25 within a consolidating and continually developing legal framework. Work in the future will be organised with the support of the action programme to be formulated by the Commission, and which the Council should approve within the next six months.
Mid-term review of the Lisbon process
The strategic objective of the March 2000 Lisbon European Council was to ensure that the European Union became "the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion."
The March 2005 European Council will have to carry out the mid-term review of the Lisbon process based on a Commission orientation report due out in early February.
In particular, the Luxembourg Presidency will use this mid-term review in order to:
o take stock of the strategy;
o refocus priorities;
o improve the governance and implementation of the strategy;
o implement a specific communication strategy by target groups.
As highlighted by the Kok report, reforms to modernise the European socio-economic model are essential for achieving the aims of the Lisbon strategy: the sustainable well-being of citizens. This objective can be achieved only by developing synergies between the economic, social and environmental pillars, an original feature of the strategy which the Luxembourg Presidency wishes to preserve.
The Lisbon strategy is the most ambitious socio-economic reform package of recent years. The transformations that Member States seek under this strategy are such that they are unlikely to come to fruition by 2010. The Luxembourg Presidency proposes to confirm the target of 2010 as the date by which the Member States as a whole, in each area of the strategy, will have implemented the reforms in a self-sustaining manner demonstrating a notable change of trend.
A special place has been reserved for creating a European area of knowledge. Through its various dimensions, including the information society, innovation, research, education, training and lifelong learning, companies acquire new competitive factors. As consumers of services provided over the internet by the public and private sectors, citizens can take full advantage of the opportunities afforded by modern society throughout their lives, and can adapt to the requirements of the labour market.
In terms of the governance of the strategy and to rationalise existing processes, the Presidency wishes to further develop one of the main ideas in the Kok report in order to create national action programmes. These will add value by means of:
o a complete picture of government action in terms of implementing the Lisbon objectives;
o greater coherence due to the need for each government to reinforce interministerial cooperation between the areas covered by the strategy, which will also bring synergies into sharper focus;
o governments taking more responsibility by being committed before their European partners, as well as their national Parliaments, social partners, civil society and public opinion;
o differentiation between Member States by granting each government flexibility in terms of prioritising objectives.
This new instrument will be effective only if its monitoring is ensured and if existing procedures are rationalised. An agreement on reducing the number of reports Member States have to produce on a regular basis is also desirable.
Examination of the Stability and Growth Pact
The need to examine the rules of operation of the Stability and Growth Pact after five years of operation was underlined by the European Commission, which in its communication of 3 September 2004 showed possible ways to reinforce the economic governance of EMU and to clarify the implementation of the Stability and Growth Pact (SGP).
During the second half of 2004, the Dutch Presidency took steps to set out policy orientations based on the Commission communication.
On these foundations, the Luxembourg Presidency intends to successfully conclude the examination of the SGP by seeking to reach an agreement on the precise content of each chapter heading defined by the ECOFIN Council, i.e.:
o symmetrical implementation of the pact throughout the economic cycle as a whole, avoiding pro-cyclical policies;
o improved definition of medium-term national budget objectives;
o more effective application of the debt criterion;
o better implementation of the excessive deficit procedure;
o consideration of structural reforms;
o better governance of the pact.
According to the Presidency, the examination of the pact should be concluded in the form of a European Council resolution and adaptations arising in terms of regulations and rules of conduct governing its application.
Enlargement
In the area of enlargement, the Luxembourg Presidency will give priority to:
o finalising the drafting of the Treaty of Accession with Bulgaria and Romania. On concluding the institutional procedure that includes referral to the European Parliament, the organizationof an official signing ceremony during the GAERC in April 2005 will bring the protracted work of accession negotiations to a close. These two applicant countries will effectively join the EU on 1 January 2007, though monitoring the transposition of EU law will be continued resolutely. The 16 and 17 December European Council clearly indicated the priority chapters for such monitoring.
o initiating negotiations with Croatia on 17 March 2005, in accordance with the conclusions of the June 2004 European Council, which envisage opening talks in early 2005 with the recommendations expressed at the December 2004 European Council.
o beginning the preparatory work for negotiations with Turkey, following the conclusions of the December 2004 European Council. A detailed negotiating framework will probably be established during the second half of the year. It will then be a case of translating the concept of the three negotiating pillars advocated by the Commission into concrete terms and establishing the priorities of a working road map.
In parallel, existing agreements with Croatia and Turkey will have to be adjusted to the new circumstances of negotiations being opened with these two applicant countries. The Presidency will also bring the work on pre-accession instruments to a successful conclusion.
Economic and social affairs
a) Professional services and qualifications
The proposal for a directive on the internal market for services is a key initiative in terms of European economic growth, it has nevertheless caused a great deal of misunderstanding. The Luxembourg Presidency will endeavour to re-examine this proposal in a more objective light by delimiting the scope of the directive and specifying the range of the principle of the country of origin within this context.
The proposal for a directive on professional qualifications, which is currently in second reading at the European Parliament, could be adopted under the Luxembourg Presidency. This directive, which allows strict control of qualifications in the case of cross-border services, will apply in parallel to the directive on services.
b) Employment and social policy
The Presidency attaches particular importance to the new Social Agenda (2006-2010), which the Commission will submit in early 2005 and which will be closely linked to the mid-term review of the Lisbon strategy.
Within this context, it will adopt the joint Council and Commission Report on employment, and the guidelines for employment and the recommendations arising out of the latter, in parallel with the broad policy guidelines on employment.
The Luxembourg Presidency will have to continue the work of the Dutch Presidency in the area of working conditions by amending the "working time" directive. It will do its utmost to reach a political agreement in order to find, together with a response to the problems caused by the SIMAP and Jaeger case law , a compromise eventually making it possible to resolve the issue of maintaining the "opt out."
c) Education
The Kok report identified education as one of the principal vectors for relaunching the Lisbon strategy, whose objective is to ensure that the EU becomes the most competitive knowledge-based economy by 2010.
The Luxembourg Presidency will devote a great deal of attention to the proposal for an "integrated action programme in the area of education and lifelong learning" during the first half of 2005. Based on the work accomplished under the Dutch Presidency, the objective will be to move towards concluding the first reading. The Luxembourg Presidency will also lay particular stress on the issue of the integrated learning of a subject and a language.
III. HR trends in EU countries
Austria
New government initiatives
Working time flexibilty
Cyprus
New employment legislation
Major pieces of new employment legislation came into force during the last four years (2001-2004) in preparation for joining EU and important changes to existing legislation resulting from relevant European Directives. The new legislation falls under the following three main subject areas:
1. Conditions of Employment / Information – Consultation
2. Equality / Equal Treatment
3. Safety & Health at the Work Place
New government initiatives
Among the initiatives of the Government for the period 2004 – 2006 include measures and activities aiming at the promotion of employment , vocational education and training, utilization of new technologies in life – long learning, enhancement and modernisation of Public Employment Services, activities for adapting the necessary skills for new entrants satisfying the needs of the labour market as well.
Other priorities include the promotion of equal opportunities for access to the labour market for all with emphasis to women and to those threatened with social exclusion. Additional measures and activities include the improvement of safety and health at the places of work.
Trends to notice
Refer above
News
A social dialogue will be initiated early 2005 by the Government with the other Social Partners for the purpose of concluding an agreement for extending the retirement age of employees in Semi-Government Organisations from the age of 60 to 63. A provisional agreement on this issue was concluded with the Union of Civil Servants (PASIDY).
Czech Repulic
New employment legislation
o New labour code as of 2001 – deep social protection for employees (extended annual holiday, consultation with worker reps. before lay-offs, limits on overtime, right to information about the company, „golden handshakes“ ...)
o Further amendment in 2003 – to comply with EU norms (discrimination, sexual-harassment, equal treatment of EU nationals and Czechs, ban on repetition of time-limited contracts, ...)
o New amendment in autumn 2004
New government initiatives Subsidised computer courses for public and unemployed,
green cards for skilled workers from the east
Denmark
New employment legislation
E.g Ferielov, funktionærlov
New government initiatives
E.g. maternity leaves act, part-time jobs act
Estonia
New employment legislation
The new law on employment contracts regulating the labour relations applied from the 1st of May 2004. More several changes concerning provisions of the new law on employment contracts to comply with the directives of the European Union law have been made during the year 2004.
Trends to notice Moving towards EU working culture, analyzing workforce, HR strategic role in the organization, knowledge management, value and competence based leadership, talent-management and career management.
News Estonian Association for Personnel Development PARE is working out the HR specialist’s and HR manager professional standard. The work is done in cooperation with the managers, HR managers and specialist, training companies and institutions of higher education in order to make HR specialists and manager professional standard practical and at the same time responding to the current needs.
Finland
New employment legislation
Rising the benefits of part-time workers
New government initiatives
New law of annual holidays, new law of privacy in working life (health control, e-mail using etc)
Trends to notice
1. Competence management is still the most important focus area
o In the increasingly global world the Finns compete on competences
o Some successes and some failures
o New approaches are in search
2. Well-being of employees is “in”
o Big step forward on HR management’s agenda (from 8à2)
o Several reasons drive this issue (age structure, pension costs, smaller young generations and availability of young employees)
o Good leadership helps also here
3. How to link HR to business is still an issue?
o HR strategies are often not geared to business strategies
o The results of HRM are measured in only 50% of the organisations
o HR staff finds the role of Business Partner difficult
4. HR systems could deliver more
o System selection and implementation not adequately linked to support HR strategy
o Benefits to be achieved often inadequately defined (no business case)
o HR system projects not properly managed as projects
Germany
New employment legislation
From 1 January 2004 the current workplace threshold of five employees will rise to 10 employees for those whose employment begins after 31st December 2003; by this small establishments are excluded from the scope of legislation that protects employees from socially unwarranted dismissal
New government initiatives
Changes to state health system and state pension reform
Trends to notice
Restructuring, staff reduction, pension plans, deferred compensation models, innovative working-time models, demographic development
News
DGFP qualifies HR staff as HR experts, HR professionals and HR Executives in its qualifying programme “ProPer”
Greece
New employment legislation
Change in insurance.
Annual leaves.
Hungary
New employment legislation
There were no important changes during the last 12 months
New government initiatives New government – it’s the question of the near future
Trends to notice cafeteria systems, knowledge management, benchmarking in HR, HR controlling, ROI in the HR
Ireland
HR issues are primarily driven by the relatively low unemployment rate and competition for talent, such as reward and retention policies.
There are also issues around the need to adapt and change quickly enough to maintain global competitiveness.
Italy
New employment legislation
BIAGI LAW
New government initiatives
Actions for corporates competitiveness
Latvia
New employment legislation
From 1st. May 2004
New government initiatives
The further prospects of funding measures of the National Employment Plan are mostly linked with the European Social Fund (ESF), which is the main EU financial instrument for development of Human Resources and perfection of functioning of the labour market.
Trends to notice
The priorities in the area of Human Resources to ensure a more efficient use of the ESF intervention measures in Latvia in the programming period of 2004-2006 are:
o formation of the information society, involvement of all members of the society in efficient use of information and communication technologies;
o creation of a balanced and modern educational system, matching the demands of the labour market;
o support to integrated development of leading and most advanced branches and the related areas;
o assistance for diversification of employment and increase of competitiveness in rural areas;
o support to qualification upgrading, retraining and consulting of starting businesses and SME staff.
Malta
New employment legislation
Working time directive
New government initiatives
National Action Plan http://www.etc.org.mt/nap/ (full employment, quality and productivity at work; cohesion & an inclusive market)
Trends to notice
Re-structuring and downsizing sacrificing HR positions.
More young HR practitioners are being employed
News: More qualified HR and Training practitioners (MSc, MBA…)
Netherlands
New employment legislation
Primarily change in pension regulations and disablement insurance act (WAO)
New government initiatives
Lowering increase in salaries
Trends to notice
Rising unemployment rate
Poland
New employment legislation
Polish Labour Code harmonized to common EU rules
New government initiatives
European Social Fund: Sectoral Operational Programme - Human Resources Developement launched in September 2004
Trends to notice
Increasing number of flexible employment contracts (part time, job sharing, long-distance job performance)
- visible outsourcing of several HR functions
- HRM close to strategy but necessity to measure various human capital indexes
News
Polish skilled workers moving to EU countries (mostly UK, Ireland, Germany)
Portugal
New employment legislation -
New Labour legislation
New government initiatives
Law of Vocational Training
- Labour legislation
- Public Administration recast
Trends to notice
Difficulty in reconciling labour legislation reform with a weak performance in job creation and a high level of unemployment and precarious jobs
- Dualism in labour markets seems to be have been reinforced over the last years, regarding wage rates, stability and fringe benefits
- Low fertility rates will affect labour offer in the near future
- Strong immigration trends from PALOPs, Brazil and Eastern Europe (for low skilled, low paid jobs)
Sweden
New government initiatives
Labour market policy will focus on the major tasks of job placement and employment guidance, along with action to combat labour shortages and measures to help those who are most detached from the labour market.
· Special attention must be given to the situation of young people. One of the goals of the Swedish National Labour Market Administration is to halve long-term unemployment among young people in the course of this year.
· There will be a clearer focus on the role of unemployment insurance as adaptation insurance. The National Labour Market Board will be given the task of shortening periods of unemployment and promoting greater consistency in the way different county labour boards and employment offices apply regulations, by making systematic comparisons
Trends to notice Retain key employees, develop competence and profiles, develop the culture in the organization and mutual values. Increase the support to leaders in their responsibility, development and recruitment of leaders
Slovenia
New employment legislation
With the newly adopted Labour Relations Act, which entered into force in January 2003, an important step forward has been made in terms of flexibility of the labour market. The Act sets the legal framework for all kinds of flexible forms of employment, determines special arrangements for small enterprises, and enables working hours' flexibility according to EU standards. It also ensures equal treatment of women and men in employment, training, vocational training, pay, working conditions and other employment related issues.
New government initiatives
The state administration has undergone a number of changes. The introduction of 'public management' into the state administration is based on the recently adopted legislation on state administration and civil servants. It represents a new approach to management within the state administration, which is very similar to that used in the business environment.
Trends to notice
Unemployment has a favourable decreasing trend but is characterised by relatively high level of long-term unemployed, unskilled and older persons, and people with disabilities. Regional imbalances in unemployment are an evident problem as well, joined with limited mobility of labour force. Rigidity of labour market has been reduced by new legislation and recently labour flexibility has been increasing.
s Women’s participation in Slovenia has traditionally been high. In spite of the well-established legal provisions to create equal opportunities for both genders, disparities between women and men still exist, notably the gaps in the activity and employment rates, the female unemployment rate in relation to the one of men, an evident gender pay gap, particularly taking into account the higher educational achievement of women than men, persistent over-representation of women in some, and under-representation in other occupations and sectors and in the top and best paid jobs.
s Younger generations stay in education longer and exit the education system better qualified than previous generations. The educational achievement of youth has thus significantly improved. The share of tertiary students in Slovenia is comparable to the EU-15 countries, while the share of graduates in Slovenia aged over 30 is below the shares in old Member States. Participation of adults in education and training as well as investment by employers in human capital development are relatively low. The offer of tertiary programmes to support propulsive economic branches is still quite limited.
News
In May 2004, changes to the higher education act were passed by parliament, reforming Slovenia's higher education and bringing it into line with the Bologna process. According to the amended act, there will be three levels of tertiary education. The first, three-to-four-year level will lead to graduation; the second, one-to-two-year level will lead to a master's degree; and the highest, three-year level will lead to a doctor's degree. The changes are to be introduced gradually, until the 2008/09 academic year. As a result, the management boards of universities will see an increase in the number of students' representatives and will also include representatives of employers.
Slovakia
New employment legislation
New Labour Code since 1st July 2004,
New Social Insurance Law (incl. Pension System) since 1st January 2004
New government initiatives
Decreasing of Social Insurance Pay
United Kingdom
New employment legislation
2003 saw a variety of items of employment legislation come into force as well as some changes to some existing law.
The Employment Act 2002 was a major piece of legislation with many provisions being implemented during 2003, relating to maternity, paternity, and adoption, flexible working, fixed-term contracts, equal pay, and learning provisions for trade union representatives. There were also important changes to equality law and working time regulations resulting from European Directives.
New government initiatives
Many of the themes of 2003 are also reflected in legislative changes expected in 2004. Most of the remaining major sections of the Employment Act 2002 will come into force and European directives on equality, transfer of undertakings and working time will be implemented. Three legislative Bills, covering employment relations, disability and pensions, were announced at the start of the 2003-2004 Parliamentary session, and many government consultation exercises which were completed in 2003 may result in new regulations during 2004.
From October 2004 16 and 17-year-old workers not undergoing approved training will for the first time be entitled to the National Minimum Wage (at a rate of £3 per hour). At the same time, the adult minimum wage will rise by almost 8 per cent to £4.85 per hour, with the rate for 18- to 21-year-olds increasing by a similar percentage to £4.10 per hour.
As well as introducing new legislative measures the government also published a white paper 21st Century Skills: Realising our Potential. This sets out a skills strategy which aims to ensure that employers have the right skills to support the success of their businesses and that individuals have the skills they need to be both employable and personally fulfilled. A key objective is to move from a system focused on the supply of skills to one based on employer and individual needs. There is a clear intention to move away from a one-size-fits all approach to skills and a move to identify a number of key areas where government may be best placed to intervene.
Trends to notice
The pressures of a tight employment market and business upturn will challenge the increasing proportion of employers with a written HR strategy to clearly deliver on their strategic goals if they are to remain credible. Poor administrative processes and weak measurement of the added value of good people management, and costs of its neglect, will be key issues for HR professionals in 2004.
Employers that succeed in offering an attractive ‘deal’ to potential recruits and existing staff will be those that can translate their HR policy goals into practice so that employees experience the benefits and voluntarily commit themselves to raising performance.
Communication with employees about change, and involving them in change, are also issues likely to figure higher on the HR agenda in 2004 as the Government continues to consult on how best to implement the EU Information and Consultation directive. Despite evidence that high levels of employee communication and involvement are conducive to high performance, there continues to be a surprising lack of consultation and involvement in the development of HR policy and organizational strategy.
