Labour market developments and reforms

Studying labour markets is important because they are vital to the competitiveness of the EU economy, today and in the future.

The Directorate General for Economic and Financial Affairs undertakes periodic, general reviews of the labour market across the EU. These focus on the main labour market indicators and also on other aspects according to specific requests/needs.

The focus is on:

  • labour-market issues including wages, labour taxation and financial incentives to work (tax and benefit systems)
  • labour-market reforms, particularly assessment of the overall impact of reforms on macroeconomic performance. For example, their impact on adjustment capacity, and their likely contribution to raising labour utilisation and improving economic resilience

In both areas, the work consists of regular surveillance/monitoring and assessment of developments in all Member States. The Directorate General also produces ad hoc studies and analyses specific themes to contribute to shaping EU policy discussions and recommendations on labour-market policies.

In order to develop an effective framework for the surveillance of labour markets, an extensive database (LABREF) has been established.

LABREF database

Tax and benefit systems

The functioning of labour markets, and taxation and benefit systems are major aspects of economic policy. Globalisation, the increasing mobility of factors such as capital and goods, ageing populations and the financing of welfare systems, set new challenges for these policies.

The European Commission analyses tax and benefit systems from the point of view of how they contribute to economic growth and higher employment, while safeguarding fair social protection. Particular interest is devoted to the issues of making work pay, how to finance welfare states, and how to implement tax and benefits systems that are conducive to growth and employment. 

The analyses and studies on tax and benefit systems cover several important areas, such as:

  • the effects of taxes and benefits on household incomes for different types of households at different earnings levels, as well as incentive structures in tax and benefit systems, including benefit duration, eligibility for benefits and availability for jobs
  • micro-simulation models to analyse the effects of fiscal and social policy instruments
  • recent trends in the levels and structure of tax revenues and benefit expenditures
  • main features and effects of Member State reforms in labour, capital and consumption taxation
  • challenges from an ageing population and globalisation

The tax and benefits indicators database presents results of an on-going joint European Commission/OECD project, aimed at monitoring the direct influence of tax and benefit instruments on household incomes and incentives to work.

Tax and benefits database