Since the eruption of the sovereign debt crisis in the Eurozone, substantial efforts have been made to create a new form of governance for the Eurozone that will make the monetary union more robust in absorbing future economic and financial shocks. Much of the drive to adapt the governance of the Eurozone has been influenced by the traditional theory of optimal currency areas (OCA), which stresses the need for flexibility in product and labour markets. As a result, the Eurozone countries have been pushed towards structural reforms that aim to reduce the structural rigidities in product and labour markets. In this paper we ask whether this movement towards structural reform as part of the push for new governance is really going in the right direction. We will argue that this is not the case. The main reason is that the nature of the shocks that have hit the Eurozone does not correspond to the pattern of asymmetric shocks that has been identified by the OCA theory to require more flexibility. We will argue that what is needed in the Eurozone is not more structural reforms but a better mechanism capable of dealing with the classical boom and bust dynamics that are inherent to capitalism.
Success in raising employment levels and living standards in Europe depends on effective support policies as well as positive macro-economic strategies. In this respect, this year’s Employment and Social Developments review addresses a range of issues.
It starts by looking at the contribution of entrepreneurship and self-employment to job creation and growth and the need to tackle the difficulties faced by the self-employed and notably micro and small companies. It then looks at the role of labour legislation in supporting more and better jobs and the need to strike the right balance between flexibility and protection. It then moves on to look at the best actions to avoid unemployment turning into long-term unemployment and inactivity. More broadly, given technology change, globalisation and population ageing, which translates into a reduction in the working-age population, the EU needs to increase employment and increase productivity. Mobility and migration can play an important role here. In relation to this, Europe needs to improve skills and better match skills with evolving demands. It also needs to promote labour market participation of older workers and women. Social policies, including pension policies and family policies (for example, child care and long-term care), can support longer working lives and increase employment of women. Promoting social dialogue and the involvement of social partners in the development of employment and social policies may help the implementation and effectiveness of such policies.
The review is available in printed and electronic format in English. All the graphs and tables can be downloaded both in gif and excel format by accessing the individual chapters.
The economic recovery is firming up and levels of employment and unemployment are gradually recovering but remain respectively lower and higher than they were in 2008. Long-term, very long-term and youth unemployment remain high in many Member States, notably in those hardest hit by the crisis. In some countries, inequalities and poverty have also increased significantly. The impact of the crisis has differed widely across Member States, and differences across countries are larger than in 2008. Such divergences reflect not only the uneven impact of the crisis, but also the uneven capacity of Member State economies and institutions to absorb the shocks and limit their impact. Improving the economic and employment situation and restoring convergence will depend on improving the resilience of the EU economies, notably the most vulnerable economies, through a combination of higher investment, the implementation of labour market and social policies and the strengthening of social dialogue to enable the social partners to make an essential contribution to the recovery.
Self-employment and entrepreneurship are important sources of job creation. One in six people in employment are self-employed and small and micro-enterprises provide a third of all jobs. Ongoing structural changes (e.g. technology change) create new ways of working in which flexibility and vision can provide new opportunities for smaller businesses. The challenge for Europe is to contribute to the development of the framework conditions that promote start-ups and their expansion and pay due regard to underrepresented groups such as women and youth. This includes investment in entrepreneurial education and financial literacy as well as conventional career guidance, skills development and access to finance.
This chapter looks at how labour law can support the creation of more and better jobs. Non-standard work contracts cover a wide range of situations that include part-time, fixed-term or seasonal work, as well as on-demand, on-call and agency work, project contracts, job-sharing, lending and pool arrangements, and crowdsourcing. This is associated with structural changes such as technological progress and globalisation which are changing the world of work. The increasing variety of contracts makes a case for re-evaluating existing labour legislation requirements to ensure a fair balance between flexibility and security. Indeed, while flexibility is needed, some contracts can bring about work uncertainty, spells of (uncovered) unemployment, fewer working hours, less social protection and less autonomy in work decisions. The chapter then focuses on two specific areas governed by labour law: employment protection legislation (EPL) and occupational safety and health (OSH). It analyses the relationship between the effectiveness of the civil justice system and EPL, and how these two combined may affect labour market outcomes. It concludes that labour market dynamics are significantly affected by the effectiveness of the justice system.
Levels of long-term and very long-term unemployment are at record highs, with the chances of finding a job being much lower (50% lower) than for the short-term unemployed. Nevertheless the labour market attachment of those without jobs has held up during the crisis, unlike in the US. The young, the low-skilled and third-country nationals have seen their long-term unemployment rates increase the most. However, the old and low-skilled, once in long-term unemployment, have the lowest chance of returning to work. An in-depth analysis shows that policy interventions are a key influence in helping the long-term unemployed back into work. Participating in training or education, being registered with the public employment services and receiving unemployment benefits are key positive factors even when controlling for macro-economic circumstances and personal characteristics.
Population ageing translates into a decline in the working-age population. To achieve higher growth, Europe needs to increase employment rates (including through mobility) and productivity growth and tap into migration. Mobile people in the EU tend to be young and highly educated and their employment rates are higher than those of the native population. Mobility has been increasing across the EU over the past two decades but remains low compared to other countries around the world. Moreover, mobile workers are under-represented in fast-growing sectors in the economy and work in jobs below their qualifications. Third-country migrant workers are a diverse pool but on average hold lower qualifications which can explain why on average they have lower employment rates. Highly qualified migrants instead have similar or higher chances than natives of being employed. This suggests that promoting skills can play an important role.
This chapter considers different dimensions of the functioning and effectiveness of social dialogue at national level, with a specific focus on membership of social partner organisations, collective bargaining, as well as trust, cooperation and conflict. Furthermore, the chapter considers the role of social partners in the design and implementation of policies and reforms, particularly in the framework of the European Semester. The chapter finds that in a challenging environment, social partners can play a key role in promoting a social market economy. More analysis on the critical success factors (including capacity building) would be useful.
Ensuring that adequate high-quality skills are available and well-employed in the labour market remains an ongoing challenge for European policymakers, particularly in the face of numerous demographic, economic and social pressures. This chapter examines the extent to which Europe experiences mismatches on both sides of the market. Improving outcomes requires effective forecasting, relevant training for young people, active support for older workers to retrain, and wider visibility and recognition of skills acquired informally or across borders. Employers, as well as government, have a role and responsibility in such measures.
This chapter looks at recent developments in relation to the effectiveness and efficiency of social protection systems in Europe over the life course. Its main focus is family policies and those that promote a longer working life. The first part of this chapter examines expenditure trends and the recent development of the effectiveness and efficiency of social protection systems. The second part looks at social protection in relation to childhood and late careers, which are two specific stages in the life cycle.
This note reviews the main drivers of inequality in the European Union and reflects on what can be done about it at EU level. It explains the distinction between inequalities of opportunities and inequalities of outcomes and discusses how inequality affects growth and the labour market.
This publications is available only in electronic version.
During the aftermath of the financial crisis, certain paradoxical trends have emerged in Europe. Firstly, despite the context of economic adjustment and restructuring, the employment rate of older workers has increased in most countries, and secondly, saving rates have remained remarkably resilient to the interest rate squeeze pursued by central banks as an economic stimulus. The question arises, whether lower interest rates effectively discourage or rather encourage saving among older workers, or even constitute an incentive to work longer, in case their saving strategy aims at maintaining a standard of living after retirement. The working paper adresses this issue through a model based approach.
The paper provides a comparative analysis on human resources trends and their implications for employment and economic growth at global scale. Taking stock of specific population characteristics, it focuses on the inescapable challenge of workforce shrinking and its policy implications. The analysis concludes that productivity growth will progressively become the only way to sustain economic growth not only in the EU and several other industrialised regions but also in some of the emerging economies. It also reveals a growing north-south imbalance in terms of labour reserves. While the 2013 publication looked at human resources constrains within the EU, this paper extends to the global context, comparing the EU to other global players.
This working paper analyses the impact of demographic ageing on future employment growth. The analysis shows that some of the economically strongest EU Member States will find themselves confronted with serious employment growth constraints due to labour supply bottlenecks already within the next 5 years, even under extremely optimistic activity assumptions. This paper is available online in English only.
The first working paper in the 2013 series reviews social protection expenditure developments in the crisis, focusing on expenditure trends in volumes following the peak of the crisis (2009), on changes in the distribution of incomes and, notably, on the distributional impact of austerity packages. The topics discussed relate to the March 2013 edition of the EU Employment and Social Situation Quarterly Review. This Working paper is available in electronic format in English.
According to the EU Employment and Social Situation Quarterly Review, divergence continues to increase across Member States, translating into persistently growing labour market and social challenges, marked by ever higher unemployment at EU level and a deterioration of the situation of many households, and of young people in particular. Employment has been trending down again since mid-2011, with positive developments only noticeable in part-time work. Unemployment rose further in January 2013, to 26.2 million in the EU, accounting for 10.8 % of the active population, and concerns nearly one in four economically active young people.
This edition highlights the effects recent government spending cuts have had on the employment and social situation in a number of Member States, the diversity in terms of labour market matching and recent trends in posting of workers across the EU. This edition also analyses the specific situation in Bulgaria and in the sectors of manufacture of basic metals and motor vehicles. It finally dedicates a Special Supplement to the analysis of recent demographic trends in the European Union.
This publication is available in electronic format in English.
A silent revolution is underway in the field of employment and social data collection and analysis, giving a much more vivid picture of what people are going through and how they are evolving over time. This issue of Social Agenda focuses on the methodology of data collection and its political consequences. For the EU to reach its objective of generating inclusive growth by 2020, social policy must be considered not so much in terms of expenditure but rather as an investment in Europe's most precious asset: its own people or, as economists would say, its "human capital". Social Agenda is available in English, French and German.