Since the onset of the global downturn, policy makers across the European Union (EU) have been concerned with mitigating its adverse spill-over effects to labour markets. This is because previous crises have shown that sharp output declines usually take 2 to 3 quarters to be transmitted into noticeable rises in unemployment, reductions in demand for new workers, and overall contractions in employment.
This chapter assesses to what extent recent labour market recovery measures taken in the different Member States have helped to alleviate the adverse spill-over effects of the global downturn in output on labour markets in the EU. This assessment has been made with a view to reinforcing existing labour market measures, preparing an orderly phasing-out of labour market recovery measures, and strengthening employment policy’s capacity to deal with future crises.
The following section provides the framework for the analysis, while sections three to five provide cross-country comparisons and assessments of these measures. The measures cover policies aimed at maintaining employment, creating jobs, promoting mobility, upgrading skills, matching labour market needs, increasing access to employment and supporting households. The sixth section provides an overall assessment of the crisis-related measures using micro-model simulations. The subsequent section explores the modalities under which these measures have to be phased out and explores the policies to be phased in, while the last section draws some conclusions.
It should be noted that this analysis only focuses on the direct labour market effects of the crisis-related employment measures. It does not attempt to identify their indirect effects, such as on aggregate demand, the fiscal stance, and international competitiveness(1). Nor does the analysis examine the causes of the economic downturn, which are extensively addressed elsewhere(2).
As Chapter 1 of this Report has shown, the Member States face significantly different situations and constraints. Some, including Ireland, Spain, Latvia and Lithuania, have been particularly hard hit by the crisis and experienced substantial reductions in employment and increases in unemployment, while in others, including Belgium and Germany, the loss of jobs has been relatively limited. Nevertheless, an assessment of the crisis-related labour market policies of all Member States is of common interest given their commitment to the common EU goal of creating more and better jobs for all.
(1) | For instance, labour market measures may boost aggregate demand via their impact on consumer confidence. This increase in aggregate demand may then lead to an increase in labour demand. |
(2) | See for instance European Commission (2009a) for more details on this. |