The European Court of Auditors recently released a report that highlights the limited impact of labour market reforms implemented by member states under the EU’s €650 billion post-pandemic recovery fund. The report indicates that most countries have failed to address key structural challenges in their labour markets despite receiving funding from the Recovery and Resilience Facility (RRF). While the EU had linked funding to economic and social reforms, the majority of the labour market reforms introduced did not meet expectations or align with the ambition set in the regulation. Only 40% of key national recommendations were substantially addressed, with 26% marginally addressed and 34% not addressed at all.
The audit found that some national reforms had the potential to address structural challenges in the labour market, such as the French reform of unemployment insurance, while others, like a 2021 German Social Guarantee, are unlikely to have a lasting impact. Four countries – Denmark, Hungary, Ireland, and Slovakia – did not include any reforms to tackle the EU’s recommendations. The audit also revealed that about half of the proposed reforms had not led to tangible results or impacted the member states’ labour markets. Specific targets related to gender equality, which are prominent in the RRF regulation, were only addressed by 10% of the introduced labour market reforms.
The European Court of Auditors has called on the Commission to create a framework for assessing the results of reforms and ensuring that national plans adequately address key challenges. The auditors emphasized the need for thorough checks on whether the targets and milestones set out in the reforms are being met. While the Commission accepted or partially accepted the recommendations, it mentioned a lack of legal basis to require member states to introduce new reforms and investments to address additional challenges. The Commission also noted that the proportion of challenges addressed in national recovery plans could be higher, as investments play a crucial role in addressing certain types of challenges relevant to the audit theme.
The auditor stressed the importance of measuring the results of reforms and ensuring that resources are used efficiently to achieve the best value for money. The report highlights the need for improvement in designing, implementing, and measuring the results of these reforms to ensure their effectiveness. While the shift towards performance-based assessments is supported, baseline figures and clear objectives are necessary to measure progress accurately. The auditor concluded that there is still significant room for improvement in the current approach to labour market reforms under the RRF.
In response to the audit findings, the Commission acknowledged the need for better assessment of reform results and the importance of addressing key challenges in national recovery plans. The Commission highlighted the role of investments in addressing labour market challenges and noted that measures not specifically dedicated to these areas could also contribute to improvement. Moving forward, a more robust framework for evaluating and monitoring the impact of labour market reforms will be crucial to ensure that the EU’s recovery fund effectively addresses structural challenges in member states’ labour markets.
