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The 14^thmeeting of the Stabilisation and Association Council between the former Yugoslav Republic of Macedonia and the European Union (SA Council) took place on 13 July 2018. The meeting was chaired by High Representative of the Union for Foreign Affairs and Security Policy/Vice President of the Commission, Federica Mogherini, while Commissioner Johannes Hahn represented the European Commission. The delegation of the former Yugoslav Republic of Macedonia was led by Mr. Nikola Dimitrov, Minister of Foreign Affairs. Deputy Prime Minister for European Affairs Mr.Bujar Osmani also participated.

The SA Council recalled that the Stabilisation and Association Agreement (SAA) remains at the core of the relationship between the EU and the former Yugoslav Republic of Macedonia until the country’s accession to the EU. The SA Council took note of the country’s primary objective to open accession negotiations and acknowledged the government’s strong commitment to this purpose. The SA Council welcomed the EU’s recent setting out of the path towards opening accession negotiations in June 2019 based on continued progress and tangible results, maintaining and deepening the current reform momentum. The SA Council took note of the intention of the Commission and government to begin the necessary preparatory work.

On good neighbourly relations, the SA Council strongly welcomed the signature of the agreement on the name issue and establishment of strategic partnership with Greece, as well as the entry into force of the Treaty on Friendship, Good-neighbourliness and Cooperation with Bulgaria, which set a strong example for others in the region to strengthen good neighbourly relations. The SA Council urges all leaders, political parties and citizens to recognise the benefits that the resolution of the long standing name dispute will bring and to engage constructively in the ratification and implementation of this agreement.

The SA Council reviewed the key developments over the previous period relating to the fulfilment of the political criteria, as well as the state of play concerning the economic criteria, financial cooperation and the implementation of the Stabilisation and Association Agreement, including institutional reforms. It noted the results of the Stabilisation and Association Committee held on 19-20 June 2018.

Concerning the political criteria, the SA Council discussed key political developments. It welcomed that the country has overcome its deep political crisis and the significant steps the government has taken to gradually restore a culture of compromise by reaching out to all stakeholders, including the opposition, to strengthen democracy and rule of law and the genuine desire to reform in an inclusive and transparent manner. The SA Council welcomed the first concrete progress towards restoring the independence of the judiciary, by implementing the Urgent Reform Priorities, and thereby starting to reverse the backsliding of previous years.  The SA Council noted positively the improvement of the work of the courts and the follow-up to the work of the Special Prosecutor’s Office. The SA Council acknowledged that concrete efforts have been made towards increasing transparency and accountability and involving external stakeholders in policy making, welcomed the improved climate for media freedom and noted that the environment in which civil society operates has substantially improved.

The SA Council welcomed the continuous implementation of the Pržino agreement and the substantial progress in the implementation of the Urgent Reform Priorities.The SA Council agreed on the importance of continuing and deepening current reform momentum, including through the “Plan 18”, and effective implementation of on-going and planned reforms, in particular as regards judicial reforms and the fight against corruption and organised crime, including at high level, as well as intelligence and security services reform. It also recalled the importance of a depoliticised and merit-based public administration. The SA Council welcomed the country’s participation as an observer in the Fundamental Rights Agency. The SA Council recalled the importance of long-term confidence-building measures and more pro-active policies to further increase trust and build bridges among communities and welcomed the steps taken in this regard by the government.

The SA Council welcomed the country’s continued active participation and constructive approach in regional cooperation initiatives, as well as the county’s inclusion in the Adriatic-Ionian Initiative and their organisation of the first Regional Digital Summit which contributed to strengthening the digital economy in the region.

The SA Council also acknowledged the country’s efforts to address the challenge of the European migration and refugee crisis and expects that mutually beneficial cooperation continues in the future.

Regarding economic developments, the SA Council recalled the targeted policy guidance agreed in May 2018 between the EU and Western Balkans and Turkey, on the Economic Reform Programmes, and encouraged the government to focus on their implementation and follow-up. It noted the good level of preparation in developing a functioning market economy and called on the country to address remaining key challenges.

The SA Council welcomed the commitment of the government to invest greater efforts into increasing the absorption of EU funds. It welcomed the adoption of long awaited Strategies on Public Finance Management and Public Administration Reform, which will permit EU budget support. It noted the importance of sound financial management and the need for full compliance with the sector approach criteria, as well as implementation of the European Court of Auditors’ recommendations.

The SA Council noted progress in various areas covered by the Stabilisation and Association Agreement and welcomed the high level of trade integration with the EU. It outlined the importance of continuing to align with the EU acquis, especially in relation to the internal market, and welcomed progress on other international commitments, including on energy and transport connectivity. In this regard, it welcomed the adoption of the new energy law.

The SA Council also welcomed the upcoming passage to the second stage of the Stabilisation and Association Agreement.

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Good afternoon and let me warmly welcome my good friend, Prime Minister Edi Rama, in Brussels.

I am happy that the context in which we are meeting is both positive and promising. It is only a few weeks ago that the Council decided to set out the path towards opening accession talks with Albania in June 2019. And the Commission has already started the preparatory work. A decision that has been unanimously endorsed by all EU heads of state and government.

This progress would not have been possible without your country’s delivering steady and irreversible progress in reforms. And without your personal engagement and positive energy, thank you very much Edi, great job. I have no doubt that if Albania keeps up the reform momentum, it will be able to deliver the necessary results by next June. Because Albania’s place is in the EU, and Albania will become a member of the EU. There is no doubt about this.

It is my hope and my wish that all pro-Western political forces in Albania will work towards the same goal.

Your efforts to settle remaining differences with Greece are the best proof of Albania’s commitment to the EU and good neighbourly relations.

Finally, let me recall that Albania remains a good partner and a friend of the European Union. On security and migration, we have a strong and well-established cooperation. Today, we also discussed and agreed the need to step up efforts to end the new route for illegal migration through Albania. Thank you.

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President Juncker travels to Beijing for EU-China Summit and to Tokyo to sign landmark EU-Japan trade and strategic partnership agreements

The President of the European Commission, Jean-Claude Juncker will, alongside the President of the European Council, Donald Tusk represent the European Union at the 20^th EU-China Summit and the 25^th EU-Japan Summit on Monday 16 July in Beijing and Tuesday 17 July in Tokyo respectively. The two Summits will allow EU Leaders, who will be accompanied throughout by Commission Vice-President Jyrki Katainen and in Beijing also by Commissioners Cecilia Malmström and Violeta Bulc, to assess with their counterparts – President Xi Jinping and Premier Li Keqiang of the People’s Republic of China and Prime Minister Shinzō Abe of Japan – developments in the respective bilateral relationships as well as regional and global challenges. In China, discussions are expected to focus on the expansion of the EU-China strategic relationship, on trade and investment, on their commitment to combating climate change and investing in clean energy, and on foreign and security issues, including the situation on the Korean Peninsula and the joint commitment to preserving the Joint Comprehensive Plan of Action – the Iran nuclear deal. In the margins of the Summit, President Juncker will also deliver the keynote speech at the EU-China business roundtable. While in Beijing, Commissioner Bulc will chair the EU-China Connectivity Platform, while Commissioner for Regional Policy, Corina Creţu, who will also be in China, will speak at the EU-China High Level Forum on sustainable urban development and, in the context of the EU’s International Urban Cooperation programme, witness the signature of a joint declaration between Chinese and European cities. In Japan, the Leaders will sign two landmark agreements. The Economic Partnership Agreement between the EU and Japan is the biggest ever negotiated by the European Union. It will create an open trade zone covering over 600 million people and nearly a third of global GDP, and bring vast benefits both to EU consumers and EU exporters. The Strategic Partnership Agreement will provide an overarching framework for the EU and Japan to reinforce and enhance their relationship, building on existing cooperation both bilaterally and in multilateral fora, for example the United Nations and the G7. Discussions at the EU-Japan Summit are also expected to cover investment protection, and regional and global challenges. More information on the EU-China and EU-Japan summits is available online. Press conferences following the Summits are foreseen and coverage will be available on EbS. (For more information: Margaritis Schinas – Tel.: +32 229 60524; Mina Andreeva – Tel.: +32 229 91382; Maja Kocijancic – Tel.: +32 229 86570; Daniel Rosario – Tel.: +32 229 56185; Adam Kaznowski – Tel.: +32 229 89359)

Employment and Social Developments in Europe: 2018 review confirms positive trends but highlights challenges, in particular linked to automation and digitalisation

Today, the Commission has published the 2018 edition of its yearly Employment and Social Developments in Europe (ESDE) review. This year’s edition confirms the ongoing positive labour market trends as well as an improving social situation. The numbers of people in employment reached new record levels. At the same time we witness rising disposable incomes and lower levels of poverty. Severe material deprivation has receded to an all-time low, with 16.1 million fewer people affected, compared with 2012. But looking at the impact of technological developments, there are uncertainties about the future effects of automation and digitalisation. This is why the 2018 ESDE review is dedicated to the changing world of work. Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, said: “The European economy is growing faster and more evenly than before. This favours employment, props up household incomes, and improves social conditions. Technological change has a high potential to boost growth and jobs, but only if we shape this change. The European Pillar of Social Rights provides a compass for getting everyone ready for this transformation. Our proposals turn the Pillar into practice, by equipping people in Europe with better education and skills throughout their life and by ensuring that all workers are covered by basic rights in this fast changing world of work, with our proposals on transparent and predictable working conditions and access to social protection.” The annual Employment and Social Developments in Europe review provides up-to-date economic analysis of employment and social trends in Europe. This year’s edition of the report aims to analyse opportunities and risks linked to technological innovation, demographic change and globalisation. The review shows what needs to happen so that everybody can benefit from these developments. More information on the outcome of the review can be found in this press release and memo. The following factsheet gives an overview of certain key figures. (For more information: Christian Wigand– Tel.: +32 229 62253; Sara Soumillion – Tel.: + 32 229 67094)

Better access to finance for Maltese small businesses thanks to the SME initiative

The Commission, the European Investment Bank Group and the Maltese government have agreed to increase the financing available under Malta’s SME initiative programme. The SME invests Cohesion Policy funds via financial instruments and provide SMEs with better access to financing, with advantageous conditions. New resources from Cohesion Policy funds will top-up the programme’s budget, bringing it from €15 million from Malta’s Cohesion Policy envelope to up to €22 million. Three years after its launch in 2015, the programme has already triggered €60 million of financing for Maltese businesses. With this increase in the budget, overall the programme is expected to deliver €90 million of SME financing in the country. Commissioner for Regional policy Corina Crețu said: “I welcome Malta’s decision to increase the available financing under its SME initiative programme. This is a smart move that will directly benefit Maltese small and medium-sized businesses and entrepreneurs. It will give them the financial boost they need to turn their ideas into concrete projects or expand beyond their local markets. (For more information see the EIB Group press release or contact Johannes Bahrke – Tel.: +32 229 58615; Sophie Dupin de Saint-Cyr – Tel.: +32 229 56169)

Mergers: Commission approves acquisition of LaudaMotion by Ryanair

The European Commission has approved unconditionally under the EU Merger Regulation the proposed acquisition of LaudaMotion by Ryanair. LaudaMotion is the company through which Mr Niki Lauda re-acquired in January 2018 the assets of NIKI, the leisure air carrier he founded in 2003 and was then later integrated into Air Berlin. The assets of NIKI were for sale because in December 2017 Lufthansa decided to withdraw from a deal to buy the company, leaving NIKI to enter into insolvency proceedings in Austria. The Commission investigated the impact of the proposed transaction on (i) the market for air transport of passengers on the routes where the activities of Ryanair and LaudaMotion overlap and (ii) examined whether LaudaMotion’s portfolio of airport slots to be acquired by Ryanair at different airports would allow Ryanair to prevent competitors from entering or expanding their presence at these airports. The Commission found that  Ryanair will continue to face strong competition from other carriers on the routes to and from airports where the activities of both airlines overlap and that the increase in the slot portfolio of Ryanair is unlikely to have a negative effect on passengers. The Commission therefore concluded that the proposed transaction would raise no competition concerns in any of the relevant markets. The full press release is available online in EN, FR, DE, GA. (For more information: Ricardo Cardoso – Tel.: +32 229 80100; Maria Tsoni – Tel.: +32 229 90526)

State aid: Commission approves Dutch support to compensate damage linked to gas extraction in the province of Groningen

The European Commission has found that the support put in place by the Netherlands to compensate damage to real estate caused by earthquakes induced by drilling in the Groningen gas field is in line with EU State aid rules. The Dutch authorities notified to the Commission a plan to set up a non-profit foundation to manage real estate activities related to the repair and sale of buildings in the area concerned. This is required because the province suffers from earthquakes caused by gas extraction in the Groningen gas field. Three quarters of the activities of the foundation will be financed by Nederlandse Aardolie Maatschapij, a company involved in gas extraction at the Groningen gas field, while the remaining quarter will be financed in part by the State through a €10 million grant. The Commission is satisfied that the repair activities are ultimately funded by Nederlandse Aardolie Maatschapij, in line with the polluter pays principle. The Commission found that the financing by the State ensures the continuity of real estate transactions in the area and does not confer an advantage to Nederlandse Aardolie Maatschapij. The Commission therefore concluded that the measure does not constitute State aid. More information will be available on the Commission’s competition website, in the State Aid register under the case numberSA.47866. (For more information: Ricardo Cardoso – Tel.: +32 229 80100; Maria Tsoni – Tel.: +32 229 90526)

STATEMENTS

European Aviation: No more delays, the time for action is now

Commissioner for Transport Violeta Bulc and Chair of the European Parliament’s Committee on Transport and Tourism Karima Delli todayissued a joint statement calling for action to tackle delays in air traffic in Europe. In it, they note that “2018 is expected to be the busiest year so far in terms of air traffic, with 11 million flights forecast. On top of that the summer holiday season is upon us, which is the busiest period for air travel. The bleak reality is that around 50,000 passengers will face delays – every day – of up to 2 hours in airports across Europe, leading to missed connections and unforeseen costs. Our current air traffic system is struggling to cope with the ever increasing volume of traffic, and other disruptions which contribute to these delays. The system needs an urgent upgrade. Now is the moment to be bold – we need a more genuine cooperation between national air navigation service providers, and we need to work with Eurocontrol to create a more effective management of the European network.” The full version can be found here.(For more information: Enrico Brivio – Tel.: +32 229 56172; Alexis Perier – Tel.: +32 229 6 91 43)

Calendar

The Commissioners’ weekly activities

Upcoming events of the European Commission (ex-Top News)

What is the focus of the 2018 Employment and Social Developments review?

This year’s Employment and Social Developments review focuses on the changing world of work, contributing to research and public debate on the topic  of academic research, public authorities and international institutions including the ILO, OECD and the World Bank.

Dedicated chapters in this report examine:

1. Main employment and social developments in the EU
2. A new labour market with new working conditions: future jobs, skills, and earnings
3. Equal opportunities: skills, education and overcoming the disadvantages of socio-economic background and gender
4. Inequality of outcomes
5. Access and sustainability of social protection in a changing world of work
6. Social dialogue for a changing world of work

The findings affirm the importance of the Commission’s commitment to strengthen the social dimension of Europe and the relevance of the European Pillar of Social Rights. They also underpin the priorities outlined in the European Commission’s proposal of 2 May 2018 for the EU’s post-2020 Multi-Annual Financial Framework.

Why does the 2018 Employment and Social Developments in Europe review focus on the changing world of work?

Globalisation, technological and demographic developments increasingly influence working, living and social conditions. The labour markets have become more dynamic. People work very differently than 15 years ago. Robots, artificial intelligence and digital technologies are revolutionizing the way products are fabricated and services provided. These technologies can make routine tasks in traditional jobs obsolete, raising concerns of job loss. These are key concerns of EU citizens that the Commission addresses through two strands by investing in people’s skills through lifelong learning and modernising labour market legislation and social protection systems to respond to the new world of work.

How is the labour market and social situation in the EU developing?

The improving macroeconomic environment has had a positive impact on the labour market. With almost 238 million people in jobs, employment reached new record levels. At the same time, while the number of hours worked per person employed has grown in recent years, they are still below 2008 levels. The unemployment rate stands at 7% in the EU, the lowest rate since August 2008. Long-term unemployment continued to decline, too, but still accounts for nearly half of overall unemployment. The number of unemployed young people (aged 15-24) decreased to 3.37 million, below the pre-crisis (2008) level of 4.2 million. If these positive trends continue, the EU is likely to reach the Europe 2020 target of a 75% employment rate.

Chart 1: EU unemployment rate keeps declining

Source: Eurostat & Commission Forecast

Economic growth also benefited the income situation. Disposable incomes of households in the EU and in a large majority of Member States increased. In 2016 (latest data available), there were 5.6 million fewer people at risk of poverty or social exclusion than at the peak of 2012. The figure has been decreasing year after year, but standing at 117 million people, it is still off the Europe 2020 targets.   Severe material deprivation declined in almost all Member States, falling to 33.4 million persons in 2017 (roughly 16.1 million fewer than the peak of 49.4 million in 2012).

Chart 2: Fewer people in severe material deprivation

Source: Eurostat, Commission calculations

What is the impact of automation on jobs?

While there is no definite conclusion regarding the possible extent of technology’s impact on jobs, studies show that repetitive routine tasks are the most prone to full or partial automatisation. This ongoing process is accompanied by job polarisation: the incidence of high- and low-paying jobs has increased, whereas the number of middle income jobs is declining.

Furthermore, certain technological developments have supported the increase in non-standard forms of employment[1], such as platform work and self-employment. This has brought gains for both businesses and workers, in terms of increased flexibility and a better work-life balance. It has also offered new opportunities to people, including people with disabilities and older people, to enter or remain in the labour market. However, non-standard work may affect working conditions and job quality. The emergence of non-standard work forms has the potential to amplify inequalities, including the gender gap.

In addition, some new forms of work blur the distinction between employment and self-employment, challenging the capacity of European social protection systems to provide adequate coverage to all workers. Distinctions made by the social protection systems need to be rethought in order to provide inclusive protection and ensure long-term sustainability of the social welfare systems. In this light, the Commission has presented in March 2018 a proposal to ensure access to social protection for all workers and the self-employed, including by promoting the transferability of social security rights between jobs and employment statuses.  

Technological changes bring about opportunities, too: innovative technologies increase productivity, create new jobs, facilitate inclusiveness on the labour market, and allow for more work-life balance. In light of these developments, education and skills upgrading play an increasingly important role in helping European workers and entrepreneurs to adapt. With the Skills Agenda for Europe, the Commission has prepared the ground to equip people in Europe with better skills at all levels throughout their lives, and in close cooperation with Member States, training providers and companies. The social partners are also adapting to the developments in the labour market and could play a positive role in adjusting the existing legal framework to the new forms of work.

Chart 3: State-of-the-art science and technology increases automation in production

Source: Lordan and Josten (2017)

What is the impact of automation on inequalities of income?

Both income level and income inequality depend on hours worked and hourly wages. Therefore the changing world of work can influence incomes to the extent that new forms of work influence either of these factors. Automation impacts the low-skill routine jobs and thereby also the low income-earners. New forms of work often favour non-standard work contracts over standard full-time open ended employment. Non-standard work may increase reliance on certain types of flexible work arrangements, such as solo self-employment and temporary work. This tends to lead to greater income volatility, which could, in turn, increase the vulnerability of workers in non-standard forms of employment. To address this situation, the Commission has proposed a Directive for more transparent and predictable working conditions, including new minimum standards for all workers, also those in non-standard forms of employment.

Chart 4: Risk of poverty by type of contract

Source: EU-SILC, Commission calculations

To what extent will labour be replaced by technology? And is it possible to avoid this?

Automation does not necessarily lead to job destruction. Member States where automation in production is most widespread, for example Germany and the Czech Republic, are also those that are registering the lowest unemployment rates in the EU right now. Germany for example has the highest share of robots in the EU, yet there is little evidence of robots having a negative impact on jobs.

Generally, the extent to which labour can be replaced by technology depends on the level of skills required by the tasks to be performed in each job. This explains the relatively high replacement rate of repetitive low-skill tasks. In contrast, skilled labour is needed to fully exploit the potential of modern technologies by operating, maintaining, repairing, and improving them. Whether or not labour is substituted by technology ultimately depends on the ability of education and training systems to adapt to the fast-changing technological opportunities. This is why it is so important to invest in people’s skills, so they remain employable, regardless of the technological evolution.

How do changes such as automation and non-standard forms of work affect the existing social protection systems?

Current social security systems are primarily developed for and geared towards persons working full-time in a long-term relationship with usually one employer. Other groups, such as the self-employed or casual and seasonal workers might be formally excluded from protection coverage. To the extent that the changing world of work increases the number of non-standard work contracts, many will not be covered by social security schemes. This implies growing pressure on the financing base of the social welfare systems, as the contribution base shrinks –an effect which is reinforced by demographic ageing. Future-proof, fit-for purpose social welfare systems would need to deliver life-long key social services, an individualised approach to professional development and employability support.

Do the social partners play a role in managing these changes in the organisation of work?

The social partners at European and national, at cross-industry and sectoral level can help to shape the future of work in a sustainable way. This being said, many new non-standard forms of work are more difficult to organise. The representation of workers’ interests in the current, more individualised labour market is increasingly problematic and trade union membership has declined. The representation of employers also stumbles on some new forms of work. In fact, in certain cases it is no longer clear who the employers are. The social partners are already making efforts to adapt to these challenges through:

• up-skilling and re-skilling strategies and actions, such as the set-up of funds to encourage enterprises to facilitate skills development of their employees;
• shaping the increased flexibility in terms of working time and methods made possible by new technology, for instance by supporting the ‘right to disconnect’;
• maintaining collective bargaining coverage, by finding ways to better include non-standard employment contracts into collective agreements; and
• organising more inclusively the representation of workers’ interests in the new labour markets, through targeted campaigns to approach younger workers and workers in the platform economy.

What is Commission doing in order to address the challenges emerging in the context of the changing world of work?

In the context of the European Pillar of Social Rights, the Commission launched several important initiatives, for example:

The Skills Agenda for Europe shows the high priority the Commission places on ensuring that education and training provide people with the knowledge and skills they need to thrive personally, socially and professionally. Each of the 10 actions of the Skills Agenda is now underway. Actions such as the Upskilling Pathways, the Digital Skills and Jobs Coalition and the Blueprint for Sectoral Cooperation on Skills, target up-skilling, cross-sectoral co-operation and identification of future skills needs as well as improving skills intelligence.

The Commission also supports skills development in Europe through EU funds (e.g. the European Structural and Investment Funds, Horizon 2020 and the forthcoming Horizon Europe, the Employment and Social Innovation programme and the “Erasmus+” programme).

The Multiannual Finanical Framework post-2020 will continue to provide financial support. The European Social Fund Plus (ESF+) will be the main EU financial instrument to invest in people, and a key vector to strengthen social cohesion, improve social fairness and increase competitiveness across Europe. The European Globalisation Adjustment Fund (EGF) will be revised so that it can intervene more effectively to support workers who have lost their jobs – focusing on improving the skills and employability of these workers and facilitating the general up-skilling of the European workforce.

For More Information

Press release: Employment and Social Developments in Europe: 2018 review confirms positive trends but highlights challenges linked to automation and digitalisation

[1]Standard employment refers to persons working full-time in a long-term relationship with usually one employer.