EY ROMANIA

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CLAUDIA SOFIANU

  |  31.03.2013

Perspectives on labor market in European countries - Taxation, fiscal issues and ways of employment inducement

After 5 years of economic crisis and return of a recession in 2012, unemployment is hitting new peaks not seen for almost 20 years, household income has declined and the risk of poverty is on the rise, especially in Member States in Southern and Eastern Europe, according to the 2012 edition of the report issued by the European Commission on "Employment and social developments in Europeā€¯.

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As part of the renewed Lisbon Strategyfor growth and jobs, the Commission proposes an initiative aiming to improve workers' qualifications in accordance with the needs of European employers. It is based on a prospective analysis of labor market trends up to 2020.

 

As such, it seems there is still a great potential for creation of jobs in Europe in the medium and long term, particularly replacement jobs due to the ageing population. In addition, the market for ecological services and products should bring new types of jobs.Skills and qualification requirementswill increase for all types and levels of occupation. Employers are looking in particular for competencies such as communication skills or analytical and problem-solving skills.

 

The level of qualifications of European workforce should meet the new needs of the labor market. This can be achieved by introducing active policies and by improving the effectiveness of education and training systems. The modernization of labor markets also implies the implementation of the integrated strategies in the area of flexicurity*.

 

The Commission also encourages Member States to improve the assessment and anticipation of trends in the labor market and skills requirements. It proposes four strands of action:

  • the dissemination of information on the trends and new opportunities in the labor market, primarily by the setting up of a “European Labor Market Monitor”, but also via the Commission’s employment, training and mobility services;
  • the development of forecasting tools in order to produce accurate and regular data for each sector of activity. Employers will be involved in anticipating needs and developing partnerships with a view to meeting those needs;
  • deepening international cooperation, developing policy dialogue and the exchange of experience;
  • mobilizing the Community's political and financial instruments.

 

*Flexicurity: a combination between flexibility and security, is a welfare state model with a pro-active labor market policy. The term was first coined by the social democratic Prime Minister of Denmark Poul Nyrup Rasmussen in the 1990s.

 

Country-specific recommendations (including fiscal measures) have been issued by the Commission for the Member States with the view of taking action for stability, growth and job creation during 2012-2013.

At a national level, the amendments brought to tax and social security legislation for 2013 represent though the culmination of several public spending cuts during 2012, as a reaction to the economic crisis and the euro crisis.

 

As an example,in the Czech Republic, the so-called “stabilization package” enforced as of January 2013 includes amongst others a number of important changes brought to income tax calculation, health insurance contributions, lump-sum expense deductions for self-employed individuals instead of actual expenses deduction, etc. Most of the changes are temporary and expected to remain in force until the end of 2015. In more details:

  • a “solidarity tax” surcharge is now applying to individuals whose income from employment exceeds the threshold of approx. EUR 50,000 per year;
  • the tax reduction for working pensioners is withdrawn until 2015;
  • the caps of health insurance contributions (introduced back in 2008) were removed for both employees and employers;
  • as regards the pension system, it has been introduced the “Pillar 2” – “voluntary” retirement savings system; completely new, participation into this pillar is optional, although irrevocable once started. Basically, it should enable the individuals to opt out of their mandatory retirement insurance system (“Pillar 1”) and to divert funds instead into private pension structures that can be invested further on capital markets, for example.
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COMMENT ON THIS ARTICLE:

  • Brijesh
    17.06.13 ora 05:49
    hPfXkjJomvC

    The aiblity to think like that shows you're an expert





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