Although the Member States differ from each other in terms of the constraints and initial conditions they face, and although labour market policies are only part of a more comprehensive policy package that bolsters potential growth and employment, improves competitiveness and supports fiscal consolidation(48), some general principles can be formulated regarding the phasing out of the crisis-related labour market measures and the phasing in of structural labour market measures.
Firstly, a distinction can be made between labour market measures that have to be phased out gradually once the recovery is secured, such as short-time working arrangements, and measures that, due to their positive impact on the structural working of the labour market, should be maintained and reinforced, such as cuts in labour costs, increases in training, activation and other flexicurity policies that facilitate job reallocation and the re-skilling of workers(49).
Secondly, the risks associated with the timing of the phasing out of the labour market measures should not be under-estimated. Too early a withdrawal may undermine confidence and thus depress aggregate demand with consequent knock-on effects on companies. Too late a withdrawal on the other hand, may delay the necessary structural adjustments, cause significant hysteresis effects in the labour market, and contribute a significant additional burden to the public finances.
Thirdly, the phasing out should reflect the situation and constraints of the Member States, with the Member States that have advanced furthest in their recovery able to move faster than the Member States where the recovery is still to come and where unemployment is expected to continue to increase – provided, of course, the fiscal position allows it.
Fourthly, as the fiscal constraints intensified during the course of the crisis, it became ever more important to improve the cost-effectiveness of labour market measures by strengthening their targeting and timing.
Fifthly, due consideration also needs to be given to the social dimension of the exit strategy, including the central issue of gender equality as part of the foundation to strengthen growth, employment and social cohesion in the long term(50). In any case, particular attention needs to be paid to differences in employment patterns between women and men: sector and occupational segregation, the greater presence of women in part-time jobs and in the public sector, and the lower numbers of women in self-employment. In this respect it should be noted that, due to their high concentration in the public sector, women could be disproportionately affected by job losses when budgetary spending is cut as part of fiscal consolidation(51).
(48) | See European Commission (2009d). |
(49) | See Council of the European Union (2010). |
(50) | See for instance Smith and Bettio (2008) and Löfström (2009). |
(51) | See European Commission (2010b). |