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Employment challenges in the future
By Nina Røhr RimmerAssociate Professor, MSc Econ
University College Northern Denmark – Business
March 2013
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 adaptability• 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
• Eastern + Central Europe with no or little strategies. They need to invent/adapt to the rest of Europe
Can we agree on one model? Cont.
• 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 (ESM), 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
• How do we overcome potential corruption?
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
• +
• The lack of model in Eastern + Central Europe
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• Low job protection• High level of social services, affordable and of high quality• High employment rates and emphasis on gender equality• Tax financed health system and unemployment benefits (partly)• 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 • Cooperation between social partners
• business, unions and government• Trade unions 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• Min. 2 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%• Ca. 35% for income up to 55,000 Euro
• Collective agreements: • for example 15 euro per hour for unskilled work
• Private negotiation and employment contract• Other examples:
• Electrician 30 Euro/hour 4,500 p.m.)• Nurse 4,000 per month• Engineer 6,500 per month• Spec. Doctor 10,500 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• Work-scheme pension contributions
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
An exampleAnnual payment to Union
400 euroAnnual payment to unemployment scheme 400
euroamounts are tax-deductable80-90% of all employees are members
Should you get unemployed….
2 years of unemployment payment ca. 26,500/yr
(previously 7 years then 4 years...)Plus re-training programme
Should you not get a job you may still receive social benefit, although dependant on your assets and your spouses income, you can still receive 20-24,000 euro per year, free childcare, housing subsidy etc.
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 30 years
1985-2000 = approx. 10%
2008 = 1,7% 2013 = 4.7%
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
Eastern and central Europe challenges regarding labourmarket policies
• Lack of trust in the public sector• Have experienced significant changes in their financial
situation due to:• Reduction of up to 40% in salaries in the public sector• Severe losses in the property sector
• often combined with high risk loans in CHF or EURO• Focus on keeping the society free of corruption and “black”
economy • Wrong to treat “Eastern Europe” as one region with the
same cultural and economical situation
Video links and reportsVideo links:
http://www.youtube.com/watch?v=U6n7jBY7-NA
http://www.youtube.com/watch?v=-NBULE-agZ8&feature=related
http://www.youtube.com/watch?v=z_EhS81E4kk&feature=related
Readings:
The Danish Flexicurity model:
http://www.sociology.ku.dk/faos/flexicurityska05.pdf
http://www.progressive-economics.ca/2008/01/23/the-danish-flexicurity-model/
http://www.employmentweek.com/cms.php?page=106
http://research.cbs.dk/da/publications/denmark(93ccbf24-09ed-4a45-b419-c53ce1c1d6da).html
http://www.djoef-forlag.dk/vare/8757417083
Master thesis from Aalborg University
http://projekter.aau.dk/projekter/da/studentthesis/how-can-active-labor-market-policy-contribute-to-development-of-flexicurity-in-central-eastern-european-countries(2ebfce7c-c4be-4391-984e-4bbc51ac4f50).html
Flexicurity: a relevant approach in Eastern and Central Europe
http://www.ilo.org/global/publications/ilo-bookstore/order-online/books/WCMS_091425/lang--en/index.htm
Security in labour markets : combining flexibility with security for decent work
http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_elm/---analysis/documents/publication/wcms_113923.pdf