Division Guideline 5: Boosting demand for labour

Member States should facilitate the creation of quality jobs, reduce the barriers business faces in hiring people, promote entrepreneurship and, in particular, support the creation and growth of small enterprises. Member States should actively promote the social economy and foster social innovation.

The tax burden should be shifted away from labour to other sources of taxation less detrimental to employment and growth, while protecting revenue for adequate social protection and growth-enhancing expenditure. Reductions in labour taxation should aim to remove barriers and disincentives in relation to participation in the labour market, in particular for those furthest away from the labour market.

Member States should, together with social partners and in line with national practices, encourage wage-setting mechanisms allowing for a responsiveness of wages to productivity developments. Differences in skills and divergences in economic performance across regions, sectors and companies should be taken into account. When setting minimum wages, Member States and social partners should consider their impact on in-work poverty, job creation and competitiveness.