european labour markets trends and the search for flexibility
TRANSCRIPT
European labour markets
Trends and the search for flexibility
European business and labour
• Business requires a labour force that is:– Skilled– Flexible – Plentiful– Mobile– Healthy– Well-educated
Labour market trends
These trends pose challenges for businesses and policy
Unemployment
• Unemployment of 3% the norm - pre-1970
• cyclical and structural components
• 70s onward - higher long term trends
• 2005 – ranges from 4.3% (Ireland) to 17.7% (Poland)
Unemployment rate (%)
1970 1985 1998 2005
Fr 1.3 10.3 12.0 9.5
Ger 0.6 8.4 10.0 9.5
Ital 4.4 12.9 12.0 7.6
Sp 1.2 21.9 19.5 9.2
UK 2.5 12.0 6.5 4.6
Labour market structure
• Reflects changing economic structure – from manufacturing to services
• Higher % of women in services than men
Services employment Male as
% of male employment
Female as % of female
employment Fr 53 82
Ger 52 80
Ital 55 75
Sp 51 81
UK 62 88
Part-time and temporary work
• Gradual increase in part-time and temporary work– Trend throughout Europe– Part-time range from 2.4% in Slovakia to 46%
in Netherlands– More women (33%) than men (7.4%) in part-
time work
Ageing population
• 2000-2010:– Population between ages 20-39 will decline by 12
million in Europe– Population between ages 40-59 will increase by 13
million in Europe
• European age dependency will rise from 23.4% in 2000 to 53.8% in 2050
• Major challenges for businesses and welfare systems
• Lisbon targets – if met, would help
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Overall employment rates - 2004
Source: Eurostat – Labour Force Survey 2004
Lisbon employment target (2010): 70%
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Female activity rates (%) - 2004
Source: Eurostat: Labour Force Survey 2004
Lisbon female employment target (2010) – 60%
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Employment rates for the 55-64 age group
Source: Eurostat – Labour Force Survey 2004
Lisbon older workers employment target -50%
Labour market flexibility
What is labour market flexibility?
• Conflicting views
1. Neo-classical market forces approach
Competitive success based on lower costs from:
– minimal regulation– market clearing wages– freedom to hire and fire
2. Flexible specialisation (Piore and Sabel)
(Shift from Taylorism and Fordism → knowledge-based Information Society)
Competitive success based on:• multi-skilling (requires training)• flexible labour deployment• skilled work force• co-operative not adversarial IR• employee identification with organisation
Evolution of EU Labour Market Policy
• 1980s → 1990s: labour market issues about rights and integrity of SEM.
• 1990s → 2000s: demographic, competitiveness, emerging shortages.– creating high value jobs– Ageing population– Pension costs– immigration
Labour issues in Treaty of Rome - needs operationalising
• Freedom of movement
• Right of establishment• Right to provide
services• Improved working
conditions• Common measures -
social security migrant workers
• Equal pay for equal work
• European Social Fund
• Co-operation - employment law, working conditions, etc
Labour market policy
Evolution of policy• 1960s - low unemployment
– Policy emphasises labour mobility: mutual recognition of qualifications; social security rights, some health and safety
• 1970s - Social Action Programme– employment law– equal opportunities• equal pay directive (equal value)• equal treatment directives (workplace & social security)
– failed attempts - industrial democracy
• Mid 1980s - SEM and Single European Act - big boost to social/labour market policy
– SEM - not just for business
– Social dumping argument
– Qualified majority voting for health and safety
Social Charter - December 1989
• Not legally binding - declaration of rights• Signed by all members bar UK• UK:
– Social Charter increases costs - reduces competitiveness
– ‘Socialism through the back door’• Other member states:
– most Social Charter elements already in national law
• Social Charter debate about flexibility
• Maastricht - 11 member states wished to bring Social Charter into Treaties to give it legal force
→
Social protocol and UK opt-out
• Social dumping controversies - e.g. Hoover• Battles over policy (e.g. Working Time)• Only two directives adopted under Protocol
– Works Council Directive– Parental Leave Directive
• UK opt-out ended by Labour government
1990s - recession and unemployment
• Emphasis shifts from workers’ rights to job creation
• Concerns about:– competing with low cost countries– high burden of indirect costs– changing nature of labour market– demographic shifts and associated costs
Amsterdam Treaty
• Biggest changes in labour issues– Employment chapter - ‘high’ level of
employment– Social Protocol into Treaty– Non-discrimination - race, gender, ethnic
origin, religion, age or sexual orientation– Mainstreaming of equal opportunities - men
and women
EU Labour Market Position - 2000s
• EU economy growing - but unemployment above US
• No shortage of work - labour still inflexible• Since 1997, EU created 5.6 m jobs• Labour shortages are evident esp. IT• Increase in flexible employment – increase in
part-time/temporary work
Labour market challenges
Lisbon agenda
“to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesions”
Lisbon sets employment goals – see above
Challenges for Policy
• EU economies growing, working population shrinking – compounded by ageing population
• Immigration is key• Currently encourage migration of skilled workers
(e.g. software workers from India)• But political implications• Need to sort out asylum and immigration policy
Challenges for Policy
• Emerging skill shortage is hitting performance of business
• Red- tape hits recruitment of foreign workers
• Education systems slow to adapt to changing need of European labour market
• Mobility of EU citizens very low• Need foreign labour
Challenges for Policy
• Most EU states stopped `primary immigration’ – economic migration
• Limited to skilled or seasonal workers
• Result est. ½ million illegal immigrants p.a.
• Fear enlargement could speed this flow – make it legal
Post-2004 labour market mobility
• Fears about labour flows westwards• EU(15) retained right to impose restrictions for
transition periods– Only UK, Ireland and Sweden opened their markets
completely – 2006 Spain, Portugal and Finland open their markets– Commission argues – labour flows modest and
focussed on hard-to-fill jobs
• Countries with higher unemployment not so keen.
Conclusion
• Shift in debate since 1980s from rights → jobs
• No move to remove rights• Emphasis on flexible specialisation
version of labour market flexibility• Need for flexibility increases with
EMU• Ageing population/Immigration issue