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The aftermath of the economic crisis of 2008 has undone much of the progress on improving employment and growth in Europe over the last 20 years. Vulnerable groups in particular remain at risk of poverty and not being in employment and education, especially in light of trends that have shaped the labour market including changes in educational requirements and the changes in work.

The insights from our analysis and review form a useful input into developing European policy discussions. The review concludes that policy makers should focus more on enabling social policy that allows individuals to achieve their full productive potential and participate in the labour market as a complement to welfare approaches such as social insurance. Evidence from Nordic countries shows that the increased use of enabling social interventions can make an effective contribution to mitigating against social risks such as sustained poverty and long-term unemployment. Moreover, as the review highlights these targeted policies do not need to impact other macroeconomic outcomes or other groups.

European action is important. Improving labour force market participation and addressing income inequality across Europe requires a concerted strategy to define the principles in employment and social policy and values and mechanisms that can facilitate effective policy coordination and exchange. It is obvious that Member States could learn from each other given the differences in income inequality and labour force participation rates in Europe. Further improvements also require better information on which particular policy responses are effective.

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The research described in this report was conducted by RAND Europe.

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