Employment challenges in the future

By Nina Røhr RimmerMSc Econ, Associate Professor

May 2010

THE BACKGROUND for EU problems

• Long term situation • Demographic change – ageing workforce• Globalisation and competitive pressures• New economy: knowledge; services• Climate changes

• But how does the crisis influence this trend?• Does it alter the labour market fundamentally?• What sort of structural impacts?

LABOUR SUPPLY

• Emphasis on quantity and quality• Moving beyond employability

• A necessity is long term supply• Raising employment rates of specific groups

• Women• Youths and older workers• More contentiously: immigrants

• Enhancing human capital• Life Long Learning• Basic and transferable skills

LABOUR DEMAND

• Link to macro circumstances• Seeking to maintain employment levels

• Possibilities for forms of job sharing

• Stimulating demand in ‘new’ sectors• Such as ‘green’ jobs

• Demand for specific segments of Labour Force• Mainstreaming atypical contracts

• Getting rid of the term “atypical”

• Labour cost considerations• Including tax systems

INSTITUTIONS

• Matching supply and demand• Delivering quality employment services

• The components of flexicurity• Facilitating adapatability• Making transitions pay• Burden sharing

• Reviewing employment protection laws• Diminishing insider-outsider conflicts• Especially a problem with immigrants

• both EU and non-EU

QUALITY

• Focus on wider aspects of employment• Fairness in the labour market

• Equality• Gender• Other dimensions

• Over the life-course• Work-life balance

• Working conditions• Avoidance of low wage traps etc.

The European Society – Can we agree on one model?

• Free-market capitalist society and a welfare society inspired by the socialism project

• Social spending is high as a percentage of GDP (education, health),

• A substantial part of income is redistributed through taxation and social protection,

• There seems to be a large consensus among European leaders in politics, trade-unions or social partners on the point that there is a European Social Model, and that it needs to be maintained and developed. But what ESM ?

• Can the ESM survive in a global world?

• The answer will be positive only if social protection is not a handicap but also a factor of productivity and competitiveness. Job stability must be an incentive for companies to invest in workers and for workers to invest in their company.

EU = 4 models of „Welfare Capitalism“:

• The Anglo-Saxon or Liberal Model

• The Continental or Social Insurance Model

• The Mediterranean or Family-oriented Model

• The Scandinavian or Universalistic Model

EUROFRAME-EFN Special Topic Report, Autumn 2007

Anglo-Saxon Model

• Pre-dominant role of markets, minimal role of the State• Low degree of regulation• High competition, sophisticated regulation of utilities• Selective social transfers; i.e. means tested benefits• Private insurances• Welfare-to-work strategies• Public health system and publicly-financed schools

• Anglo-Saxon Europe: United Kingdom, Ireland

• Anglo-Saxon Model Overseas: USA, Canada, Australia, New Zealand

EUROFRAME-EFN Special Topic Report, Autumn 2007

Continental Model

• Social protection organised on occupational basis• Income-related transfers with low minimum standards• High employment protection, generous unemployment

allowances• Employment rates rather low • Contribution-based social insurance system for pensions,

and unemployment• Low re-distributive efforts, regressive tax structure (low wealth

taxation, high taxes on labour and consumption)• Co-operative industrial relations and coordinated wage

bargaining

• Germany, France, Belgium, Netherlands, Austria, Switzerland

EUROFRAME-EFN Special Topic Report, Autumn 2007

Mediterranean Model

• Important role of supportive family networks• Low transfers, but generous old-age benefits• High gender inequality, low female participation rate• High job protection but low replacement rate• Some traits of paternalistic society remained

• Italy, Spain, Portugal, Greece

EUROFRAME-EFN Special Topic Report, Autumn 2007

• Based on equality, social inclusion, universality• High level of social services, affordable and of high quality• High employment rates and emphasis on gender equality• Tax financed unemployment benefits and health system• Progressive taxation, taxes on property and bequests• Low taxes for business• High minimum wages, high replacement rates, pensions

with high minimum standards & income-related elements • Low job protection• Cooperation between social partners

• business, unions and government• Trade union operates unemployment insurance and training

• Sweden, Norway, Finland, Denmark

Scandinavian Model

Flexible labour market

Unem-ployment benefits

Active LMP

 

• Low employment protection

• High job mobility

Income security

Educational policy etc.

• Focus on better qualifications

• Right and duty to accept job offers

• High degree of compensation• Four years in the insurance

system

The Danish flexicurity triangle

Flexicurity Model

• = a combination of easy hiring and firing (flexibility for employers) and high benefits (= security) for the unemployed

• High mobility in the labour market• Permanent employments• Rather high level of security• Equal opportunities (and high employment

rates for both men and women + elderly)• Strong organisation on both sides of the labour

market – very few conflicts• High level of unionisation (80 %)

Salary in Denmark

• Relatively high salaries• But high level of tax (marginal tax rate of 51,5%)• Collective agreements:

• for example € 16 per hour for unskilled work• Private negotiation and employment contract• Other examples:

• Electrician € 22 per hour• Nurse € 3.300 per month• Engineer € 5.000 per month• Spec. Doctor € 8.500 per month

• 37 hrs./week • Paid holidays – min. 5-6 weeks per year • + 9 public holidays• High salaries • Flexibility concerning illness, child birth, family

benefits

The Danish Labour Market

Working culture

• Informal atmosphere• Flat hierarchy

• responsibility is delegated• Team work• Professional development – rewarding• Working language - English or Danish• Effectiveness and efficiency• Wide use of technology• Social events and activities

Job Satisfaction

Per cent of employed, 2006

50

60

70

80

90

100

DK NO UK CH AT BE DE NL IE LU SE PT FI FR ES IT EL

50

60

70

80

90

100

The lowest unemployment rate in 33 years

2008 = 1,8% - 2011 = 4.2%

Source: Statistical Yearbook 2008, Statistics Denmark

EUROFRAME-EFN Special Topic Report, Autumn 2007

Key elements of a New Welfare State Architecture

• Child-centred and women-friendly social investments Thus fostering fertility rates

• Higher investment in human capital The higher the qualification, the higher are activity rates

• Restructuring from transfers to social services From passive to activation in case of unemployment, invalidity etc.

• “Flexicurity” or managed and balanced flexibility Jobs with high security and flexible jobs with inadequate protection

• Active anti-cyclical macro-economic strategy

• Growth and best technologies are preconditions for welfare

Video linkshttp://www.youtube.com/watch?v=U6n7jBY7-NA

http://www.youtube.com/watch?v=-NBULE-agZ8&feature=related