Public Economics: Welfare states and inequalities University of Castellanza Session #1(b) Employment and Euroscelerosis 1 March 2012

Overview l Euroscelerosis »Europe’s low employment problem »Employment, unemployment and inactivity »Europe’s inflexible labour markets l Lisbon Declaration 2000 and Lisbon targets »Rising European employment »High employment societies »Germany and the advantages of inflexibility l Ways of getting to Lisbon »Different forms of flexibility and high employment

‘ Euroscelerosis’: Fewer Europeans than Americans at work During the last quarter of the 20 th century employment in the USA grew, but stagnated in Europe

Employment statuses 2006 Full-time or part- time work Home duties Studying without part time work Early retired Prison (Important in USA) Source: Employment in Europe 2007

Flexibility and Employment: 1990s EPL: Employment Protection Level (ranking) Countries where employment is most protected (high EPL ranking) tend to have low employment rates

Lisbon Declaration 2000 'A new strategic goal needs to be defined for the next ten years: to make the European Union the world's most dynamic and competitive area, based on innovation and knowledge, able to boost economic growth levels with more and better jobs and greater social cohesion.‘

Lisbon Employment Targets Outcomes 2007 AllWomenAll 55-64(Unemployment as % of labour force 15+) Lisbon target none France Germany Ireland Italy Sweden UK EU EU * Source: European Commission (2008), Employment in Europe *EU25

Employment rates Source: Employment in Europe 2009 Scandinavian states and the UK are high employment societies

High employment societies Who works l Women (full or part-time) l Older people (full or part-time) l Students (part-time) Requirements l Flexible labour markets Employers can offer part-time and/or temporary work l Non-domestic caring work Care for children and older people cared for outside the household unit By the market or by public systems l Individualised tax and benefit system (No advantages for staying at home) Two different versions l Social democratic (Scandinavian) – state services, best for ordinary women Liberal and market (UK, USA) – market services, best for elite women

Forms of women’s participation l Low employment countries (Italy) have little part-time work l Countries with high part-time rates have very different forms of participation l Deregulated labour markets = ‘bad’ jobs? Women part time as % all female employment Hours worked: difference- households with and without children Marginal part-time as % all dependent employees France29.49 Germany36.4* Italy Sweden UK EU **14** Women at work c2005

Benefits of inflexibility l German vocational training system »High quality apprenticeship for most school leavers ensures qualification ‘Lehre’ which recognised and valued »National ‘Berufsbilder’ define qualification »Dual system of employers and state »Organised by employers with trade union input l Trade off »Employers cannot easily dismiss employees (Numerical flexibility) »Employers have incentive to use employees flexibly (Functional flexibility) »So ‘beneficial constraints’ (Streeck) of inflexibility

Good and bad flexibility? l Both UK and Denmark appear highly flexible and have high employment – but in different ways l In the UK: »Flexibility on employers’ terms »Bad jobs and/or poverty? l In Denmark (also to some extent Sweden) »‘Flexicurity’ »Flexibility also for employees »Easy dismissal but high social protection »High spending on training and ‘activation’ (counselling etc) »‘Protect the worker not the job’