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European labour markets

European labour markets. Trends and the search for flexibility. European business and labour. Business requires a labour force that is: Skilled Flexible Plentiful Mobile Healthy Well-educated. Labour market trends. These trends pose challenges for businesses and policy.

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European labour markets

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  1. European labour markets Trends and the search for flexibility

  2. European business and labour • Business requires a labour force that is: • Skilled • Flexible • Plentiful • Mobile • Healthy • Well-educated

  3. Labour market trends These trends pose challenges for businesses and policy

  4. Unemployment of 3% the norm - pre-1970 cyclical and structural components 70s onward - higher long term trends 2005 – ranges from 4.3% (Ireland) to 17.7% (Poland) Unemployment rate (%) Unemployment

  5. Reflects changing economic structure – from manufacturing to services Higher % of women in services than men Services employment Labour market structure

  6. Part-time and temporary work • Gradual increase in part-time and temporary work • Trend throughout Europe • Part-time range from 2.4% in Slovakia to 46% in Netherlands • More women (33%) than men (7.4%) in part-time work

  7. Ageing population • 2000-2010: • Population between ages 20-39 will decline by 12 million in Europe • Population between ages 40-59 will increase by 13 million in Europe • European age dependency will rise from 23.4% in 2000 to 53.8% in 2050 • Major challenges for businesses and welfare systems • Lisbon targets – if met, would help

  8. Overall employment rates - 2004 Lisbon employment target (2010): 70% Source: Eurostat – Labour Force Survey 2004

  9. Female activity rates (%) - 2004 Lisbon female employment target (2010) – 60% Source: Eurostat: Labour Force Survey 2004

  10. Employment rates for the 55-64 age group Lisbon older workers employment target -50% Source: Eurostat – Labour Force Survey 2004

  11. Labour market flexibility

  12. What is labour market flexibility? • Conflicting views • Neo-classical market forces approach Competitive success based on lower costs from: • minimal regulation • market clearing wages • freedom to hire and fire

  13. 2. Flexible specialisation (Piore and Sabel) (Shift from Taylorism and Fordism → knowledge-based Information Society) Competitive success based on: • multi-skilling (requires training) • flexible labour deployment • skilled work force • co-operative not adversarial IR • employee identification with organisation

  14. Evolution of EU Labour Market Policy • 1980s → 1990s: labour market issues about rights and integrity of SEM. • 1990s → 2000s: demographic, competitiveness, emerging shortages. • creating high value jobs • Ageing population • Pension costs • immigration

  15. Freedom of movement Right of establishment Right to provide services Improved working conditions Common measures - social security migrant workers Equal pay for equal work European Social Fund Co-operation - employment law, working conditions, etc Labour issues in Treaty of Rome - needs operationalising

  16. Labour market policy

  17. Evolution of policy • 1960s - low unemployment • Policy emphasises labour mobility: mutual recognition of qualifications; social security rights, some health and safety • 1970s - Social Action Programme • employment law • equal opportunities • equal pay directive (equal value) • equal treatment directives (workplace & social security) • failed attempts - industrial democracy

  18. Mid 1980s - SEM and Single European Act - big boost to social/labour market policy • SEM - not just for business • Social dumping argument • Qualified majority voting for health and safety

  19. Social Charter - December 1989 • Not legally binding - declaration of rights • Signed by all members bar UK • UK: • Social Charter increases costs - reduces competitiveness • ‘Socialism through the back door’ • Other member states: • most Social Charter elements already in national law • Social Charter debate about flexibility

  20. Maastricht - 11 member states wished to bring Social Charter into Treaties to give it legal force → Social protocol and UK opt-out • Social dumping controversies - e.g. Hoover • Battles over policy (e.g. Working Time) • Only two directives adopted under Protocol • Works Council Directive • Parental Leave Directive • UK opt-out ended by Labour government

  21. 1990s - recession and unemployment • Emphasis shifts from workers’ rights to job creation • Concerns about: • competing with low cost countries • high burden of indirect costs • changing nature of labour market • demographic shifts and associated costs

  22. Amsterdam Treaty • Biggest changes in labour issues • Employment chapter - ‘high’ level of employment • Social Protocol into Treaty • Non-discrimination - race, gender, ethnic origin, religion, age or sexual orientation • Mainstreaming of equal opportunities - men and women

  23. EU Labour Market Position - 2000s • EU economy growing - but unemployment above US • No shortage of work - labour still inflexible • Since 1997, EU created 5.6 m jobs • Labour shortages are evident esp. IT • Increase in flexible employment – increase in part-time/temporary work

  24. Labour market challenges

  25. Lisbon agenda “to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesions” Lisbon sets employment goals – see above

  26. Challenges for Policy • EU economies growing, working population shrinking – compounded by ageing population • Immigration is key • Currently encourage migration of skilled workers (e.g. software workers from India) • But political implications • Need to sort out asylum and immigration policy

  27. Challenges for Policy • Emerging skill shortage is hitting performance of business • Red- tape hits recruitment of foreign workers • Education systems slow to adapt to changing need of European labour market • Mobility of EU citizens very low • Need foreign labour

  28. Challenges for Policy • Most EU states stopped `primary immigration’ – economic migration • Limited to skilled or seasonal workers • Result est. ½ million illegal immigrants p.a. • Fear enlargement could speed this flow – make it legal

  29. Post-2004 labour market mobility • Fears about labour flows westwards • EU(15) retained right to impose restrictions for transition periods • Only UK, Ireland and Sweden opened their markets completely • 2006 Spain, Portugal and Finland open their markets • Commission argues – labour flows modest and focussed on hard-to-fill jobs • Countries with higher unemployment not so keen.

  30. Conclusion • Shift in debate since 1980s from rights → jobs • No move to remove rights • Emphasis on flexible specialisation version of labour market flexibility • Need for flexibility increases with EMU • Ageing population/Immigration issue

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