EU Commission publishes its latest annual report

WN – 10/2020

Titled "Leave no one behind and strive for more: fairness and solidarity in the European social market economy", the European Commission published its latest annual report on employment and social change in Europe on 15th September 2020. The report provides annually updated economic analyses on the topic and examines corresponding policy instruments and strategies.

Marking the tenth anniversary, the focus this year will also be on the socio-economic crisis caused by COVID-19, with the Commission providing an initial outlook on its impact. At a conference on 6th October 2020, EU Commissioner, Nicolas Schmit also emphasised that the report provides important basic information on the social reality in the EU against the background of the action plan for the implementation of the European Pillar of Social Rights planned for next year.

Labour market, demography and pensions

In principle, it was as such apparent that the crisis had halted the previously positive development of the economy and labour market in the EU. In its forecast, the Commission expects the EU’s GDP to fall in 2020 by up to 8.3%. In particular for workers, who are, for example, self-employed or have special employment relationships such as platform work, the socio-economic risks could be intensified by the pandemic.

The Commission also simulates a target for reducing gender gaps and their impact: An adjustment in the three aspects of labour market participation, wage level and weekly working time could significantly cushion the projected decline in the pension level as a percentage of wages and salaries from 43.3% (today) to 29.9% instead of 26.7% (2070). This would correspond to a volume of EUR400 billion per year. A longer, real working life could also have a positive effect on this value.

In the report's focus on fairness, minimum wages, in particular are identified as a possible stepping stone to better paid jobs. However, the Commission recommends combining minimum income standards with stronger incentives to work in terms of labour market entry, so as to improve the impact of minimum income on poverty reduction.

Short-time work programmes

According to initial estimates, subsidising one job by means of short-time work programmes during an economic downturn could save more than this one job: For example, the possibility for entrepreneurs to reduce working hours for more employees, thus protecting employees from potential (long-term) unemployment. Against this background, EU-wide solidarity mechanisms such as the SURE programme are an important policy instrument in responding to the crisis.

The report was based on data collected until the first half of 2020. For the full Commission publication, click on the link here.