Government’s Employment Challenge: 75 Percent Employment Rate Target Requires Both Structural Reforms and Better Competitiveness

In the 2019 electoral campaigns, basically all election platforms set a 75 percent employment rate target by the end of this electoral term. The target cannot be reached without marked labour market reforms and wage policies that support international competitiveness. According to forecasts, the employment rate will reach 73,8 percent by the end of the electoral term, if no additional labour market reforms are made. To reach the target, additional 40 000 jobs need to be created, on top of forecasted employment growth taking place even without reforms. The previous government was able to create 45 000 jobs with its own actions and with help from social partners. Therefore, the need this time equals the achievements of the previous government. This Policy Brief goes through options for reforms and gives estimates of the effects on job creation and public sector balances. We hope that it will make concrete the policy options the new government faces on labour market issues and reminds the social partners of the importance of international competitiveness on job creation. Achieving the employment rate target presupposes strong action both from the government and social partners.