1. Session #2(b) Labour market participation 8 March 2017
Public Economics: Welfare states and inequalities University of Castellanza
Session #2(b)
Labour market participation
8 March 2017

2. Overview Euroscelerosis Lisbon targets and high employment
Europe’s low employment problem
Key Concepts: Employment rate, Employment Protection Level
Europe’s inflexible labour markets
Lisbon targets and high employment
Rising European employment
High employment societies
Forms of flexibility
Germany and the advantages of inflexibility
Different forms of flexibility and high employment
Reading for today
Wickham, Unequal Europe, Chapter 3 (section 4)
Also Unequal Europe Chapter 9 (section 1)

3. ‘Euroscelerosis’: Fewer Europeans than Americans at work in 1990s
During the last quarter of the 20th century employment in the USA grew, but stagnated in Europe

4. Concept (1): Employment rate
Full-time or part-time work
Employment status 2006
Home duties
Studying without part time work
Prison (Important in USA)
Early retired
Source: Employment in Europe 2007

5. Concept (2): Employment Protection
Dismissals – expensive and/or difficult
Protection against unfair dismissal
Redundancy pay
Restrictions on dismissals
Privileging standard employment by restraints on:
Part-time work
Temporary work
Agency work

6. Flexibility and Employment: 1990s
EPL: Employment Protection Level. The higher the rank, the more employment is protected
Countries with high ELP had low employment and low part-time rates

7. 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.‘

8. Lisbon Employment Targets Outcomes 2007
All
Women
All 55-64
(Unemployment as % of labour force 15+)
Lisbon target
70.0
60.0
50.0
none
France
64.6
38.3
8.3
Germany
69.4
64.0
51.5
8.4
Ireland
69.1
60.6
53.8
4.6
Italy
58.7
46.6
33.8
6.1
Sweden
74.2
71.8 UK
71.3
65.5
57.4
5.3
EU15
66.9
59.7
7.0
EU27
65.4
58.3
44.7
7.2*
Source: European Commission (2008), Employment in Europe 2008.
*EU25

9. Employment rates 1997-2008 Source: Employment in Europe 2009
Scandinavian states and the UK are high employment societies
Source: Employment in Europe 2009

10. The end of euroscelerosis
Employment rates: EU15, Germany, Italy, Sweden, UK, USA

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

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

13. Labour force status 2012

14. High and low employment (1)

15. High and low employment (2)

16. Forms of women’s participation 1998, 2013
Part-time employment
% of all employment
(1998)
Hours worked: difference between households with/without children (1998)
Marginal part-time % of all dependent employees
(2013)
(1)
(2)
(3)
(4)
France
31.6 -1
9.0
30.6
Germany
36.4
-6.5
18.0
46.1
Ireland
30.0
-5.5
10.0
35.6
Italy
14.3
0.0
8.0
31.9
Sweden
33.1
+0.1
6.0
38.8 UK
44.4
-6.0
21.0
42.6
EU15
33.5
-3.4*
14.0*
38.5
Part-time was low in low employment countries
Impact of children on working hours varied
Good and bad part-time work?

17. Benefits of inflexibility
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
Trade off
Employers cannot easily dismiss employees (Numerical flexibility)
Employers have incentive to use employees flexibly (Functional flexibility)
So ‘beneficial constraints’ (Streeck) of inflexibility

18. Good and bad flexibility?
Both UK and Denmark appear highly flexible and have high employment – but in different ways
In the UK:
Flexibility on employers’ terms
Bad jobs and/or poverty?
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’

19. Exercise
Using the data in the ‘Labour Market Indicators’ in the Statistical Annex of the European Commission’s Employment and Social Developments in Europe 2016 (on the web) show the labour force status of men and women for the different age groups: 15-24, 25-54, for any one EU country as in slide 14. Comment on the your chart.
The ‘Labour Market Indicators’ of Employment...’ give the Employment rate and the Activity Rate for each age group. You will need to calculate the Unemployment Rate and the percentage unemployed.
Please print out your individual version of the exercise and bring it to the class on Thursday