Europäischer Rechnungshof - European Court of Auditors
EU countries’ labour markets: key challenges unaddressed despite billions from Brussels
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Press release
Luxembourg, 26 March 2025
EU countries’ labour markets: key challenges unaddressed despite billions from Brussels
- The EU provides €650 billion to boost member states’ recovery and resilience
- Many Brussels recommendations are not addressed by EU countries’ recovery reforms
- Some important structural labour market issues remain unresolved
EU countries have only partially addressed their labour market challenges through the reforms they pledged in return for money from the bloc’s sizeable €650 billion Recovery and Resilience Facility (RRF) established after the COVID pandemic, according to a new report by the European Court of Auditors. The RRF reforms have achieved some results, but either did not tackle or have only marginally tackled half of the recommendations issued by the Council. In some countries, certain structural challenges that are particularly important for EU citizens have thus remained unaddressed, including labour market integration of vulnerable groups or shifting taxes away from labour.
With the RRF, the EU has for the first time linked funding for member states to implementation of economic and social reforms, including in the area of labour and employment policies. To receive the EU funds, member states had to commit to a set of investments and reforms. These should contribute to addressing “all or a significant subset” of challenges which the Council previously asked them to overcome by means of country-specific recommendations.
“Brussels uses RRF funds as an incentive for EU countries to undertake important structural reforms and make their economies more resilient,” said Ivana Maletić, the ECA Member in charge of the report. “However, in the area of labour market policies, the reforms bypassed some structural issues that are of particular importance for EU citizens. Moreover, there is so far no evidence that about half of the reforms have led to tangible results or impacted the member states’ labour markets.”
In their national recovery and resilience plans, member states included almost 100 labour market reforms of varied scope and ambition. Several reforms have the potential to tackle structural challenges, such as the reform of unemployment insurance in France. However, others – such as the temporary “Social Guarantee 2021” measure in Germany – are less likely to make impactful changes. The reforms substantially addressed only 40 % of the relevant country-specific recommendations, marginally addressed 26 %, and failed to address 34 %. Moreover, none of the member states fully addressed the labour market recommendations through their RRF reforms, four member states’ plans did not include any reforms to address the recommendations, while another four addressed them substantially.
RRF implementation is ongoing and many labour market reforms are yet to be completed, meaning that it may be too early for significant results of the reforms to emerge. However, the completed reforms have not been the key factor contributing to an upgrade of the European Commission’s assessment of the implementation of the recommendations so far.
The reforms generally delivered their expected outputs, which basically means that new laws were adopted. However, for about half of the reforms – e.g. in the areas of life-long learning, support for jobseekers and improvement of unemployment assistance – the respective member states were unable to provide any evidence of results. Also, it is difficult to assess the reforms’ impact on the ground, because there are often no suitable indicators in place.
The findings of the audit clearly point to a need for timely information and further assessment of the effectiveness of the RRF reforms. The auditors call on the EU’s executive to set out a framework to assess their results, ensure that member states cover key challenges properly, and check that milestones and targets comprise all essential parts of the reforms.
Background information
The RRF is an essential part of the EU’s objective to mitigate the economic fallout from the COVID-19 pandemic and foster sustainable economic recovery and resilience by supporting member states in implementing comprehensive reforms and investments. The RRF was established in 2021 as a temporary crisis-funding instrument, ending in 2026.
Labour and employment policies lie exclusively within the remit of EU member states. However, every year during the economic coordination cycle known as the European Semester, the Commission makes proposals for country-specific recommendations (CSRs) for each member state, which the Council then adopts and asks the countries to take specific measures to ensure their economic policies are sound. The CSRs also address structural issues in employment policies, and may also be addressed by other national or EU funds.
This is the first ECA audit of the effectiveness of RRF reforms. The auditors examined whether the labour market reforms included in the national plans contributed effectively to addressing the member states’ labour market challenges that were raised in particular in the 2019 and 2020 CSRs. For four member states (Belgium, Greece, Spain and Portugal), the auditors also checked whether the completed reforms achieved results and contributed to the implementation of their CSRs.
Special report 10/2025, “Labour market reforms in the national recovery and resilience plans: some results, but not sufficient to address structural challenges”, is available on the ECA website. The ECA’s previous related reports are available in this dedicated RRF section.
Contact:
ECA press office: press@eca.europa.eu
Damijan Fišer M: (+352) 621 552 224