Full Employment in Europe

Full Employment in Europe

Managing Labour Market Transitions and Risks

Günther Schmid

Transitional Labour Markets (TLM) – defined as legitimate, negotiated and politically supported sets of various employment options in critical events over the life course – are an essential ingredient of modern full employment strategies. After assessing the European Employment Strategy, this book offers a detailed comparative analysis of employment performance for selected European member states and the United States. It suggests that successful employment systems arise from a new paradigm of flexibility and security (‘flexicurity’) the balance of which varies according to countries’ institutional paths. Whilst there is no ‘best practice’, TLM theory does provide normative and analytical principles that can be generalised for various institutional settings. The book also provides good practice examples for managing critical transitions over the life course – from education to employment, from one job to another, from unemployment to employment, from private activities to gainful work and from employment to retirement – and develops the contours for extending unemployment insurance to work–life insurance.

Chapter 1: The European Employment Objective: How ‘Full’ can Full Employment Be?

Günther Schmid

Subjects: economics and finance, labour economics, social policy and sociology, labour policy


Idleness even on an income corrupts; the feeling of not being wanted demoralises. (Lord Beveridge 1945, p. 19) The aim of this book is to review the conditions of full employment in Europe in the context of three megatrends: globalisation, individualisation and transnationalisation. At the Lisbon summit in March 2000, the chiefs of what were then the 15 member states of the European Union (EU) adopted the strategic goal for the next decade of becoming ‘the most competitive and dynamic knowledge-based economy . . . with more and better jobs and greater social cohesion’ (Council of the European Union 2000, p. 2). In the subsequent revision of the Employment Guidelines in 2003, ‘full employment’ – long considered either an empty catch word or an unrealistic utopia – was reinvented and included as one of the three overarching goals of the European Employment Strategy (EES), which was launched in 1997. The two other goals were the commitments to raise the level of quality and productivity at work and to strengthen social and territorial cohesion. However, neither the European Commission nor the European Council defined full employment explicitly. Implicitly, it was set as a target employment rate of 70 per cent on the average for all EU member states, including the ten countries that acceded to the EU in 2005 (often referred to as the new member states). It was understood that this figure was to be reached by 2010, but unemployment was even not mentioned as a target. In November 2004, a high-level group chaired...

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