World Economy

EU Witness Highest Job Level Ever, Rising Wages

Wages in euroland rose by 1.2% but wages of temporary workers are lower than those of permanent workers, especially in member states where the share of temporary employment is higher
More and more people in Europe are now able to find a job. More and more people in Europe are now able to find a job.

The European Commission published its yearly report on Labor Market and Wage Developments in Europe, which confirmed the positive labor market trends that have been witnessed in the European Union region.

According to the report, published Sunday, EU employment has surpassed pre-crisis levels with more than 235 million people at work. Unemployment which now stands at 7.6% is also approaching levels prior to the recession, Eurasia Review reported.

In addition, the report shows that it has become easier for unemployed people to find a job. On the other hand, more flexible working arrangements have brought advantages to both firms and individuals, but have led in some cases to a divide between workers holding different types of contracts, with people in temporary employment and self-employment being less well protected.

Marianne Thyssen, commissioner for EU Employment, Social Affairs, Skills and Labor Mobility, said, “More and more people in Europe are able to find a job and we witness the highest employment level ever recorded.

"Europe is reaping the benefits of targeted policy reforms. At the same time we need to address further challenges. We must ensure fair working conditions and protection for all workers, independent of their employment status.

"On the basis of the European Pillar of Social Rights, which we launched on April 26, we are working to modernize the rules on employment contracts and social protection to achieve better working and living conditions across the EU.”

Wage Rise

The 2017 Labor Market and Wage Development Report also shows that in 2016, wages in euroland rose by 1.2% and they increased in almost all member states. Member states with comparatively low wage levels (such as the Baltics, Hungary and Romania) recorded the highest increases.

This means wages are converging across Europe. However, in many countries, the growth rate of wages is still lower than expected based on the recent falls in unemployment. In addition, in almost all member states, wages of temporary workers are lower than those of permanent workers, especially in member states where the share of temporary employment is higher.

Delivering on the European Pillar of Social Rights, the Commission presented a legislative proposal to improve work-life balance of working parents and carers, and launched social partner consultations to modernize the rules on labor contracts and on access to social protection for all.

These initiatives could–once adopted–provide answers to the challenges highlighted in this year’s Labor Market and Wage Developments in Europe report, such as labor market segmentation and lack of protection of workers in non-standard forms of employment.

Tech Group Blasts Higher Taxes

The tech industry is pushing back against the European Union’s calls for higher taxes on their profits. In a letter to the Organization for Economic Cooperation and Development the Information Technology Industry Council outlined its concerns with potential tax reforms in Europe.

ITI is a trade association that lobbies on behalf of interests of major technology firms like Apple, Google and Microsoft in government, both domestically and abroad.

ITI Director Jennifer McCloskey focused her critiques less on higher rates and more on the impact of targeting tech companies. McCloskey criticized “ring-fencing” digital companies into their own tax categories.

“Attempts to isolate business models with a predominate digital component as a separate sector of the economy would "require arbitrary lines to be drawn between what is digital and what is not,’” she wrote. McCloskey floated instead a “simple, stable tax regime” for the entire economy.  

The trade group also criticized a unilateral approach to tax policy saying that changes should be the result of multination discussions, that didn't step on any individual country’s tax policies.

McCloskey also raised concerns that tax hikes could hurt startups that are not yet profitable and raise costs to tech companies for items such as cloud computing.

ITI’s letter comes on the heels of an EU proposal in September that aims to bring taxes of tech companies closer to traditional businesses. Tech companies pay roughly 10.1% in taxes in Europe, compared to 23.2% to traditional businesses.

The proposal suggests “a tax on all untaxed or insufficiently taxed income generated from all internet-based business activities,” as potential solution to bridging disparity between the two rates.

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