The Lisbon targets are not achieved. A lot of countries were on their way to achieve the employment targets, but then they were hit by the financial crisis. The employment target is too ambitious: none of the 27 EU-members will achieve the 4 % in 2010. These fluctuations in short-term, however, are no sollution to the long-term challenge: a labor shortage due to aging. Solutions must be found for both quantitative and qualitative discrepancies between supply and demand of labor.

In 2050 there will be a ‘potential employment gap’ from about 15 % of the total demand for labour (35 billion people) ceteris paribus. The importance of labour migration in bridging this gap is underscored by the hypothetical scenario of no migration.

Increasing employment is a necessary but probably insufficient solution, particularly in countries where there is already an above average employment rate. In addition, increasing the (real) productivity is inevitable to reduce the labor demand.

When quantitative gaps are bridged, the qualitative lack of qualifications will also lead to friction. If low-skilled workers do not increase their employability, they will no longer meet the skill requirements in the future, as the demand for highly skilled labor will increase.

Many international organizations already support a policy on participation in the long run not only aimed at more work but also at better jobs. The changing sectoral structure of Western economies calls for welfare systems orientated on income rather than on job security. Greater participation is crucial to find the right balance between job flexibility and income security (the concept of ‘flexicurity’). Other key policy elements are promoting ‘decent work’, specific training programs and combat illegal employment.

The evaluations of active labor market policies aimed at increasing participation of women and the elderly are usually more convincing than policies aimed at increasing the employment of unemployed. For unemployed customization is generally more effective than general training programs and wage subsidies, given the heterogeneity of this group. The usefulness of policy programs will benefit from regular reviews of the effectiveness and efficiency.

Modern labour markets use a life cycle approach and meet the demand for various combinations of family, home and work. The empirical literature points out the importance of the availability of childcare and institutions that make participation remunerative.

Modern labor relations, such as part-time work, temporary contracts, agency work and self-employment are emerging. They are indispensable for high employment in a modern economy, with both men and women to combine work and family. In the Scandinavian and Anglo-Saxon countries there are many voluntary temporary workers. The high participation rate of these countries is partly due to the fact that their labor markets offer ‘quality’ temporary employment.

The past ten years part-time work, especially for women, was the main driver for participation. Temporary work plays an increasingly important role as an intermediate form of work. It can stimulate the mobilization of labor unemployed and inactive workers.

An important, but in many countries untapped, potential driving force behind participation is ‘flexibility’ of the standard employment relationship. Insertion of flexible elements in full-time permanent contracts could be a new element of what is known as ‘flexicurity’.