1

B44: Some Labour Market Statistics

John Van Reenen, 2004

2

Key facts: Structure

1. Jobs

2. Pay

3. Labour market institutions

4. Productivity

3

1. Jobs

• Employment

• Unemployment

• Inactivity

• Structure of jobs

• Unemployment in different countries

4

Source: Peter Doyle, ONS“Consistent Historical time series of labour market data”http://www.statistics.gov.uk/articles/labour_market_trends/Experimental_LFS_LMTSep03.pdf

UK Employment 1971-2002; Employment about 28m in 2002;

hours more variable than employment

5

Source: Peter Doyle, ONS“Consistent Historical time series of labour market data”http://www.statistics.gov.uk/cci/nscl.asp?id=6584

Male employment rates falling; women’s employment rate risingER = employment/population of working age

6

Lindsay et al (2003) “A Century of Labour Market Change”,Labour Market Trends March 2003

UK Claimant Unemployment rate over long-run, 1900-2000UR=unemployment/labour force(LF); LF =unemployed+employed

7

Unemployment rates 1971-2002; ILO vs. claimant countILO unemployed = those actively seeking work and available to start

8

Source: Peter Doyle, ONS“Consistent Historical time series of labour market data”http://www.statistics.gov.uk/cci/nscl.asp?id=6584

UK Unemployment Rate 1971-2002, men

9Source: Peter Doyle, ONS “Consistent Historical time series of labour market data”

UK Numbers Inactive, 1971-2002Inactive are neither in employment nor seeking paid work; (e.g. Students, housewives, long-term sick). Inactivity Rate =

1 – (Labour Force/Population of working age)

10

Source: Harwidge (2002), ONS “Jobs in the public and privatesector. http://www.statistics.gov.uk/cci/article.asp?id=130

Numbers and Structure of Employment, 1961-2001

•Public sector employment shrinking•Manufacturing to services•Growing proportion of high skilled in labour force

11

International Comparisons

• Post WW2 OECD unemployment rates low and then rose since 1974 (like UK)

• Factors associated with lower structural unemployment: time limited/lower benefits; co-ordinated or weak unions; ALMP.

• UK and US relatively high unemployment until mid-1980s. Now lower than major EU countries

12

Annex Table 15. Standardised unemployment ratesa

Per cent of civilian labour force

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Australia 10.0 9.0 8.3 7.9 7.9 7.0 6.0 6.7 9.3 10.5 10.6 9.5 8.2 8.2 8.3 7.7 7.0 6.3 6.7 Austria .. .. .. .. .. .. .. .. .. .. 4.0 3.8 3.9 4.4 4.4 4.5 4.0 3.7 3.6 Belgium 10.7 10.8 10.1 10.0 9.8 8.8 7.4 6.6 6.4 7.1 8.6 9.8 9.7 9.5 9.2 9.3 8.6 6.9 6.6 Canada 11.9 11.3 10.7 9.6 8.8 7.8 7.5 8.1 10.3 11.2 11.4 10.4 9.4 9.6 9.1 8.3 7.6 6.8 7.2 Czech Republic .. .. .. .. .. .. .. .. .. .. 4.4 4.4 4.1 3.9 4.8 6.5 8.8 8.9 8.2

Denmark 8.4 7.9 6.6 5.0 5.0 5.7 6.8 7.2 7.9 8.6 9.6 7.7 6.8 6.3 5.3 4.9 4.8 4.4 4.3 Finland .. 5.9 6.0 6.7 4.9 4.2 3.1 3.2 6.6 11.6 16.4 16.8 15.2 14.6 12.6 11.4 10.2 9.7 9.1 France 7.9 9.4 9.8 9.9 10.1 9.6 9.1 8.6 9.1 10.0 11.3 11.8 11.4 11.9 11.8 11.4 10.7 9.3 8.5 Germany 6.9 7.1 7.2 6.5 6.3 6.2 5.6 4.8 4.2 6.4 7.7 8.2 8.0 8.7 9.7 9.1 8.4 7.7 7.7 Hungary .. .. .. .. .. .. .. .. .. 9.9 12.1 11.0 10.4 10.1 8.9 7.9 7.1 6.5 5.8

Ireland 13.9 15.5 16.8 16.8 16.6 16.2 14.7 13.4 14.7 15.4 15.6 14.3 12.3 11.7 9.9 7.5 5.6 4.3 3.9 Italy 7.4 7.9 8.1 8.9 9.6 9.7 9.7 8.9 8.5 8.7 10.1 11.0 11.5 11.5 11.6 11.7 11.3 10.4 9.4 Japan 2.7 2.7 2.6 2.8 2.8 2.5 2.3 2.1 2.1 2.2 2.5 2.9 3.1 3.4 3.4 4.1 4.7 4.7 5.0 Luxembourg 3.4 3.0 2.9 2.5 2.5 2.0 1.8 1.6 1.6 2.1 2.6 3.2 2.9 2.9 2.7 2.7 2.4 2.3 2.0 Netherlands 9.2 8.9 7.9 7.8 7.7 7.2 6.6 5.9 5.5 5.3 6.2 6.8 6.6 6.0 4.9 3.8 3.2 2.9 2.5

New Zealand 5.7 5.7 4.2 4.0 4.1 5.6 7.1 7.8 10.3 10.3 9.5 8.1 6.3 6.1 6.6 7.5 6.8 6.0 5.3 Norway 3.5 3.2 2.6 2.0 2.1 3.3 5.4 5.7 6.0 6.5 6.5 5.9 5.4 4.8 4.0 3.2 3.2 3.4 3.6 Poland .. .. .. .. .. .. .. .. .. .. 14.0 14.4 13.3 12.3 11.2 10.6 .. 16.1 18.2 Portugal 8.2 8.9 9.2 8.8 7.2 5.8 5.2 4.8 4.2 4.3 5.6 6.9 7.3 7.3 6.8 5.2 4.5 4.1 4.1 Slovak Republic .. .. .. .. .. .. .. .. .. .. .. 13.6 13.1 11.3 11.9 12.6 16.4 18.8 19.3

Spain 14.1 16.5 17.7 17.4 16.7 15.8 13.9 13.1 13.2 14.9 18.6 19.8 18.8 18.1 17.0 15.2 12.8 11.3 10.6 Sweden 3.7 3.3 2.9 2.7 2.2 1.8 1.5 1.7 3.1 5.6 9.1 9.4 8.8 9.6 9.9 8.3 7.1 5.8 4.9 Switzerland .. .. .. .. .. .. .. .. 1.9 2.9 3.8 3.7 3.3 3.8 4.0 3.4 2.9 2.5 .. United Kingdom 10.8 10.9 11.2 11.2 10.3 8.5 7.1 6.9 8.6 9.7 9.9 9.2 8.5 8.0 6.9 6.2 5.9 5.4 5.0 United States 9.6 7.5 7.2 7.0 6.2 5.5 5.3 | 5.6 6.8 7.5 6.9 | 6.1 5.6 5.4 4.9 4.5 4.2 4.0 4.8

Euro area .. .. .. .. .. .. .. .. 7.9 8.6 10.2 10.8 10.6 10.8 10.8 10.2 9.4 8.5 8.0 European Union .. .. .. .. .. .. .. .. 7.9 8.8 10.1 10.5 10.1 10.2 10.0 9.4 8.7 7.8 7.4

Total OECD .. .. .. .. .. .. .. .. .. .. .. 7.7 7.3 7.2 7.0 6.9 6.7 6.3 6.5

b

Source: OECD Economic Outlook, 2003

13

2. Pay

• Average Nominal pay – tracks RPI• Average real earnings – rises with aggregate

real productivity over the long-run• Pay structure – “dwarfs and giants”• Individual and workplace characteristics• Inequality – big rises in UK post 1979• US also large increase – smaller in other EU

countries

14

Growth Rate of average nominal earnings in UK, 1941-2000

15

Pay structure

• Individual characteristics – human capital, gender, race, marital status

• Workplace characteristics- union recognition, public-private sector, firm size, industry

• Explain about 40% of pay dispersion

16

Changes in inequality in UK

• Stability for most of C20

• Compression in 1970s

• Rapid widening in 1980s

• Slight widening in 1990s

• Male manual: inequality at an all time post 1986 high

17

Increase in UK male wage inequality, 1966-1996

Source: Gosling, Machin and Meghir (1999)

18

Job upgrading: demand for skills?

• Employment share of men (women) with degree or more in 1975 = 5.8% (2.2%)

• ………………..in 1998 = 16.3% (12.5%)• Wage premium for men(women) with degree or

more (relative to no qualifications) in 1975 = 54.2%(70.2%)

• ……………....in 1998 = 71.7%(79.4%)• Source: Machin (2003), State of Working Britain• Still a lot of increase in inequality “within groups”

19

3. Labour Market Institutions

• Unions/collective bargaining – coverage, centralisation, power

• Minimum wages

• Inside the firm – growth of contingent pay

• Anti-discrimination legislation (e.g. Equal Pay Act)

• Incomes policies/corporatism

20

Institutions - Unions

• 7.3m employees in trade unions (29% density = TU members/labour force)

• 8.7m employees covered by a collective agreement (36%)

• “Free riders” (covered but not members about 14%)

• And “losers” (members but not covered – about 7%)

• Autumn 2002, LFS

21

Lindsay et al (2003) “A Century of Labour Market Change”,Labour Market Trends March 2003

UK Union density over the long-run, 1900-2000

22

Keith BrookLabour Market Trends (2002) “Trade Union Membership”

Recent Decline in union Density, 1991-2001

23

Union decline: Breakdown by type of work

24

Lindsay et al (2003) “A Century of Labour Market Change”,Labour Market Trends March 2003

Industrial Disputes

25

Other changes/factors in UK bargaining

• Decentralisation to the firm level of bargaining (i.e. not national or industry)

• Decline of multi-unionism

• Decline in bargaining over non-pay issues

• See WERS series for details

26

International Comparisons of unions

• Big variation in union coverage and density across countries (see Visser, 2003)

• Density has tended to decline over time in most countries (but coverage remains strong in EU: about 73%)

• Variation in effects of unions across countries (See Addison and Schnabel, 2003, HTU)

27Source: Visser (2003)

Differential Rates of coverage and density in different countries

28

Table 11.9 Union density, bargaining coverage and union centralization Country Period Union Density Rates Bargaining coverage rate Austria (85-99) 52 38 99 99 Finland (85-98) 69 76 95 95 France (85-98) 14 10 87 95 Belgium (85-95) 51 53 90 90 Sweden (85-98) 82 86 86 89 Netherlands (85-99) 29 24 80 85 Italy (85-98) 43 38 85 82 Spain (85-97) 9 16 70 78 Germany (West) (85) 34 78 Germany (98) 26 73 Portugal (86-95) 51 25 70 71 Norway (85-97) 58 56 70 70 Denmark (85-99) 78 75 74 69 Switzerland (85-99) 29 22 53 37 United Kingdom (85-97) 46 31 64 36 EU(15) (85-97) 37 29 78 73 Czech Republic (90-95) 79 43 55 Hungary (85-98) 74 33 51 Turkey (87-99) 28 32 25 Australia (85-96) 50 35 85 80 Canada (85-98) 38 34 39 34 New Zealand (85-99) 53 21 51 21 United States (85-00) 17 13 21 15 Japan (85-00) 29 22 23 20 South Korea (85-99) 12 12 14 Singapore (85-98) 21 17 19 Philippines (85-96) 24 30 4

Falling Rates of unionisation across countries

29

Other institutions

• Minimum Wages/Wages Councils (last 2 lectures). Wages Councils abolished in 1994 and NMW introduced in 1999

• Growth of contingent pay – share options, profit related pay, bonuses, etc. Subject of 2nd half of lectures on compensation policy

• Anti-discrimination (gender, race, disabilities, age..)

• Employment protection – much coming from EU (e.g. agency workers)

30

4. Productivity

• Fundamental cause of increasing prosperity – tracks wages in the long-run

31

What is productivity?

populationx

hoursx

hours

GDP

Population

GDP workers

workers

Voluntary and involuntary.labour supply, unemployment, etc.Labour

productivity

*US has higher GDP/pop than EU, but more similar GDP/hoursThis has changed a lot over time via catch up

32

4. Productivity-cont

• Growth in GDP per hour depends on accumulation of capital (physical and human) and technological change

• UK Productivity growth (output per hour) c. 2-2.5% p.a.• UK productivity lower than US, France, Germany• Within OECD “convergence” to US levels over long-run• OECD slowdown in productivity growth post 1974 • Reversal since mid 1990s in US (from 1.5% to 2.5% p.a.)

but not in EU, UK or Japan. Industrial relations related?

33

UK Productivity Gap, 1999 (UK=100)

0

20

40

60

80

100

120

140

France Germany US

output per hour(market sector)

TFP (capital andskills adjusted,market sector)

Source: O’Mahony and de Boer (2002)

34

The long run: Catching up with the frontier

Source: Gordon, 2002.

35Source: Stiroh (2002), AER

US Productivity “Miracle”?

36

Annex Table 13. Labour productivity in the business sectorPercentage change from previous period

Average Estimates and projections1975-85 2002 2003 2004

Australia 1.9 -2.6 3.2 0.8 -0.4 -0.1 1.5 3.6 4.0 1.5 -0.2 3.0 2.9 4.2 2.1 0.2 1.8 2.2 2.3 2.3 Austria 2.7 2.0 1.9 3.3 3.5 3.6 2.2 2.5 1.2 3.2 2.0 3.0 1.9 3.2 1.8 2.9 0.7 1.5 2.0 2.1 Belgium 2.9 1.5 2.0 3.4 2.3 2.2 1.3 1.6 -0.2 3.7 1.7 0.4 3.3 0.5 2.2 1.9 -1.0 1.3 1.5 2.1 Canada 1.0 -0.9 1.6 2.0 0.5 -0.4 -0.2 2.1 1.8 3.1 0.8 0.7 1.8 1.5 2.9 2.1 0.4 1.8 1.3 2.0 Czech Republic .. .. .. .. .. .. .. .. .. 1.5 5.4 4.4 -0.5 0.4 3.0 4.4 2.8 2.3 3.6 3.9

Denmark 2.3 0.1 0.7 -0.5 2.0 0.5 2.1 1.3 3.2 7.7 0.5 1.8 1.7 2.8 1.6 3.3 0.7 1.6 2.1 2.6 Finland 2.9 3.6 4.6 4.6 5.1 0.6 -0.3 5.5 6.6 6.5 2.6 3.0 3.4 3.2 1.2 4.3 -0.5 2.3 2.6 2.2 France 2.7 2.3 2.7 3.6 3.2 2.0 1.3 2.8 0.7 1.9 0.8 0.8 1.3 1.9 1.1 1.7 0.2 1.5 2.1 2.0 Germany 2.0 0.6 0.2 2.6 2.3 0.9 2.4 4.3 0.2 2.7 1.5 1.1 1.6 0.8 0.8 1.0 0.0 0.8 1.7 1.6 Greece 1.1 0.2 -2.4 2.9 3.9 -1.5 6.4 -0.9 -2.7 0.1 1.2 3.1 4.8 -0.9 4.0 4.9 4.9 3.7 3.3 3.1

Hungary .. .. .. .. .. .. .. .. .. .. 3.7 1.4 4.3 2.8 0.3 4.4 3.6 4.4 4.1 4.1 Iceland 2.3 3.6 3.1 3.8 2.3 1.4 -9.9 -3.8 0.9 3.9 -3.3 6.1 4.6 1.3 0.1 3.9 2.1 -0.1 0.9 2.3 Ireland 3.8 0.1 4.8 6.5 6.9 4.4 2.5 3.3 1.3 2.7 5.4 4.0 7.6 -1.8 4.7 6.9 3.2 3.1 2.6 2.9 Italy 2.4 1.9 2.9 3.3 3.0 1.1 0.7 1.6 2.5 3.8 3.3 0.8 1.7 0.7 0.8 1.2 0.1 -1.2 1.0 1.7 Japan 2.8 2.1 3.7 5.0 3.5 3.8 1.3 -0.2 0.2 0.9 1.4 3.0 0.8 -0.7 1.2 2.9 0.0 0.5 1.1 1.1

Korea 5.7 8.8 6.4 8.8 2.4 5.2 6.4 3.8 4.2 5.5 6.5 5.1 3.9 -1.5 10.2 5.6 1.6 3.5 4.3 4.2 Luxembourg .. .. .. .. .. .. 5.0 -0.9 2.7 1.4 -1.5 1.0 5.0 3.5 0.8 3.5 -4.8 -2.4 0.4 1.7 Mexico .. .. .. .. 1.3 2.3 1.5 -0.3 -2.0 1.2 -6.5 0.9 0.5 1.5 2.6 7.6 -0.8 -0.1 0.8 1.3 Netherlands 2.2 0.6 -0.5 0.9 2.9 1.8 0.8 0.8 0.7 3.9 0.9 0.4 0.5 1.5 1.9 1.5 -0.7 -0.3 1.8 2.2 New Zealand 0.7 2.0 0.1 3.4 4.2 -1.4 -0.9 -0.2 2.9 1.1 -1.5 0.2 1.5 0.4 2.7 2.4 -0.1 1.0 2.5 2.8

Norway 2.1 -1.3 -0.5 -0.6 1.5 2.6 3.5 3.1 5.6 2.6 0.2 0.0 1.0 1.9 0.9 1.7 1.5 1.4 1.3 2.0 Poland .. .. .. .. .. .. .. .. .. 8.8 7.1 5.5 6.1 4.0 9.3 6.4 3.8 4.8 4.0 2.6 Portugal 2.2 4.6 4.2 5.5 4.8 2.3 -0.5 1.4 -3.2 2.6 6.1 3.6 2.4 2.4 2.2 2.1 0.1 -0.4 1.0 1.1 Spain 3.3 1.2 0.8 1.7 1.4 0.0 1.7 2.8 2.3 3.3 1.0 1.5 0.9 0.3 0.6 0.9 0.4 0.6 1.0 1.0

Sweden 1.5 2.5 2.7 1.4 1.4 0.1 0.5 3.5 6.3 5.6 2.2 1.7 3.5 2.6 2.5 0.6 -0.9 2.3 2.8 2.8 Switzerland 0.9 -0.9 -1.7 0.7 2.6 -1.9 -3.6 1.0 0.1 2.3 0.1 -0.2 2.4 1.4 0.6 2.2 -0.9 0.4 1.5 1.6 United Kingdom 2.5 5.1 1.0 0.1 -1.0 0.3 1.5 2.8 2.2 3.2 1.0 0.8 0.7 1.6 0.5 1.9 1.4 0.9 2.1 2.0 United States 1.2 1.7 0.7 1.1 1.2 0.6 0.4 3.7 0.9 1.3 0.4 1.8 2.2 2.2 2.4 2.1 0.2 3.8 1.7 1.7

Euro area 2.5 1.6 1.6 3.0 2.9 1.8 .. 2.8 1.0 3.1 1.7 1.0 1.7 0.9 0.7 1.3 -0.1 0.4 1.5 1.7 European Union 2.4 2.0 1.5 2.4 2.2 1.1 1.6 2.7 1.3 3.1 1.7 1.1 1.6 1.2 1.1 1.6 0.4 0.7 1.7 1.8

Total OECD 2.0 1.9 1.8 2.4 1.8 1.4 1.1 2.6 1.3 1.9 1.1 1.9 1.9 1.3 1.9 2.6 0.2 2.0 1.7 1.8

Memorandum itemOECD less high inflation countries 2.0 1.9 1.7 2.4 1.9 1.3 1.1 2.7 1.2 2.1 1.2 1.8 1.8 1.3 2.0 2.1 0.3 2.0 1.7 1.8

1986 1987 1988 1989 1990 1991 1992 1993 1994 1999 2000 20011995 1996 1997 1998

c

c

cc

b

aa

37

Appendix: Union membership/coverage details

• Union membership by individual and workplace characteristic

38

Union membership by characteristics

39

Union membership by characteristics –cont.

40

Union membership by characteristics-cont.

41

Union membership by occupation

42

Union Membership by Industry

43

Union coverage

44

Union coverage – cont.