Employment and labour markets
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Employment identifies the state of population engaged in productive activity, while unemployment is the state of population with working age and capabilities which is not absorbed by the labour market. Aspects that should be considered when assessing the impact of public policies are: the overall level and stability of employment, that is the share of total employees whom have a stable vs. precarious employment; and the amount and duration of unemployment as a socio-economic malaise. Favouring employment growth and combating unemployment is a primary economic goal, as it implies reducing the amount of production and income that could be generated in the economic system and is not; furthermore, it lowers the risk that skilled human capital deteriorates and is dispersed over time as a result of no use or misuse; finally with low unemployment levels the availability of workers themselves to move from one occupation to another increases, and the overall productivity may benefit from this. Apart from direct economic implications of increasing employment and lowering unemployment levels, one should also consider the likely social consequences. These may range from reducing crime levels and social malaise in given areas and industrial districts, to social conflicts for income distribution.
The objectives of full employment, quality of work and productivity and employment and cohesion are at the centre of EU policy. The European Council of March 2004,and again in February 2005 the Commission in its Communication on the Social Agenda, underlined the urgency for Europe to take effective action in creating more and better jobs. The European Employment Strategy (EES) has this role. In line with the Lisbon strategy , the European employment guidelines established by the Council in 2003 have set three overarching objectives: full employment; quality and productivity at work and strengthened social cohesion and inclusion. They include ten specific guidelines and guidance on improving governance of employment policies. Reforms carried out under the Employment Strategy in many Member States have proved their worth in improving labour market performance as confirmed by the employment growth of earlier years and by the resilience of employment in the recent economic slowdown. However, EU progress towards the Lisbon Strategy 2010 target of a 70% overall employment rate has come to a standstill and, at 64.3%, it is now clear that the EU will miss the intermediate employment rate target for 2005 of 67%. Without further action the 2010 target will also be missed. Labour productivity growth has continued to slow down and quality in work and inclusive labour markets remain important challenges in many Member States.
According to the Impact Assessment Guidelines of the European Commission, the following key questions are of particular importance when examining the impacts of policy initiatives on specific regions or sectors:
- Evaluating impact on new job creation
- Evaluating impact on loss of jobs
- Evaluating impact on particular professions
- Evaluating impact on demand of labour
- Evaluating impact on functioning of labour market
- JRC: IA TOOLS. Supporting inpact assessment in the European Commission. 
This text is for information only and is not designed to interpret or replace any reference documents.