Employment challenges in the future

1. By Nina Røhr Rimmer Associate Professor, MSc Econ University College Northern Denmark – Business Employment challenges in the future March 2013

2. THE BACKGROUND for EU problems • Long term situation • Demographic change – ageing workforce • Globalisation and competitive pressures • New economy: knowledge; services • Climate changes • But how does the crisis influence this trend? • Does it alter the labour market fundamentally? • What sort of structural impacts?

3. LABOUR SUPPLY • Emphasis on quantity and quality • Moving beyond employability • A necessity is long term supply • Raising employment rates of specific groups • Women • Youths and older workers • More contentiously: immigrants • Enhancing human capital • Life Long Learning • Basic and transferable skills

4. LABOUR DEMAND • Link to macro circumstances • Seeking to maintain employment levels • Possibilities for forms of job sharing • Stimulating demand in ‘new’ sectors • Such as ‘green’ jobs • Demand for specific segments of Labour Force • Mainstreaming atypical contracts • Getting rid of the term “atypical” • Labour cost considerations • Including tax systems

5. INSTITUTIONS • Matching supply and demand • Delivering quality employment services • The components of flexicurity • Facilitating adaptability • Making transitions pay • Burden sharing • Reviewing employment protection laws • Diminishing insider-outsider conflicts • Especially a problem with immigrants • both EU and non-EU

6. QUALITY • Focus on wider aspects of employment • Fairness in the labour market • Equality • Gender • Other dimensions • Over the life-course • Work-life balance • Working conditions • Avoidance of low wage traps etc.

7. The European Society – Can we agree on one model? • Free-market capitalist society and a welfare society inspired by the socialism project • Social spending is high as a percentage of GDP (education, health) • A substantial part of income is redistributed through taxation and social protection • Eastern + Central Europe with no or little strategies. They need to invent/adapt to the rest of Europe

8. Can we agree on one model? Cont. • There seems to be a large consensus among European leaders in politics, trade-unions or social partners on the point that there is a European Social Model (ESM), and that it needs to be maintained and developed. But what ESM? • Can the ESM survive in a global world? • The answer will be positive only if social protection is not a handicap but also a factor of productivity and competitiveness. Job stability must be an incentive for companies to invest in workers and for workers to invest in their company • How do we overcome potential corruption?

9. EU = 4 models of „Welfare Capitalism“ • The Anglo-Saxon or Liberal Model • The Continental or Social Insurance Model • The Mediterranean or Family-oriented Model • The Scandinavian or Universalistic Model • + • The lack of model in Eastern + Central Europe

10. EUROFRAME-EFN Special Topic Report, Autumn 2007 Anglo-Saxon Model • Pre-dominant role of markets, minimal role of the State • Low degree of regulation • High competition, sophisticated regulation of utilities • Selective social transfers; i.e. means tested benefits • Private insurances • Welfare-to-work strategies • Public health system and publicly-financed schools • Anglo-Saxon Europe:United Kingdom, Ireland • Anglo-Saxon Model Overseas: USA, Canada, Australia, New Zealand

11. EUROFRAME-EFN Special Topic Report, Autumn 2007 Continental Model • Social protection organised on occupational basis • Income-related transfers with low minimum standards • High employment protection, generous unemployment allowances • Employment rates rather low • Contribution-based social insurance system for pensions,and unemployment • Low re-distributive efforts, regressive tax structure (low wealthtaxation, high taxes on labour and consumption) • Co-operative industrial relations and coordinated wage bargaining • Germany, France, Belgium, Netherlands, Austria, Switzerland

12. EUROFRAME-EFN Special Topic Report, Autumn 2007 Mediterranean Model • Important role of supportive family networks • Low transfers, but generous old-age benefits • High gender inequality, low female participation rate • High job protection but low replacement rate • Some traits of paternalistic society remained • Italy,Spain, Portugal, Greece

13. EUROFRAME-EFN Special Topic Report, Autumn 2007 Scandinavian Model • Based on equality, social inclusion, universality • Low job protection • High level of social services, affordable and of high quality • High employment rates and emphasis on gender equality • Tax financed health system and unemployment benefits (partly) • Progressive taxation, taxes on property and bequests • Low taxes for business • High minimum wages, high replacement rates, pensionswith high minimum standards & income-related elements • Cooperation between social partners • business, unions and government • Trade unions operates unemployment insurance and training • Sweden, Norway, Finland, Denmark

14. The Danish flexicurity triangle • Low employment protection • High job mobility Flexible labour market Income security Unem-ployment benefits Active LMP Educational policy etc. • High degree of compensation • Min. 2 years in the insurance system • Focus on better qualifications • Right and duty to accept job offers

15. Flexicurity Model • = a combination of easy hiring and firing (flexibility for employers) and high benefits (= security) for the unemployed • High mobility in the labour market • Permanent employments • Rather high level of security • Equal opportunities (and high employment rates for both men and women + elderly) • Strong organisation on both sides of the labour market – very few conflicts • High level of unionisation (80 %)

16. Salary in Denmark • Relatively high salaries • But high level of tax • marginal tax rate of 51,5% • Ca. 35% for income up to 55,000 Euro • Collective agreements: • for example 15 euro per hour for unskilled work • Private negotiation and employment contract • Other examples: • Electrician 30 Euro/hour 4,500 p.m.) • Nurse 4,000 per month • Engineer 6,500 per month • Spec. Doctor 10,500 per month

17. The Danish Labour Market • 37 hrs./week • Paid holidays – min. 5-6 weeks per year • + 9 public holidays • High salaries • Flexibility concerning illness, child birth, family benefits • Work-scheme pension contributions

18. Working culture • Informal atmosphere • Flat hierarchy • responsibility is delegated • Team work • Professional development – rewarding • Working language - English or Danish • Effectiveness and efficiency • Wide use of technology • Social events and activities

19. An example • Annual payment to Union 400 euro • Annual payment to unemployment scheme 400 euro • amounts are tax-deductable • 80-90% of all employees are members • Should you get unemployed…. • 2 years of unemployment payment ca. 26,500/yr • (previously 7 years then 4 years...) • Plus re-training programme • Should you not get a job you may still receive social benefit, although dependant on your assets and your spouses income, you can still receive 20-24,000 euro per year, free childcare, housing subsidy etc.

20. Job Satisfaction • Per cent of employed, 2006

21. The lowest unemployment rate in 30 years 1985-2000 = approx. 10% 2008 = 1,7% 2013 = 4.7% Source: Statistical Yearbook 2008, Statistics Denmark

22. EUROFRAME-EFN Special Topic Report, Autumn 2007 Key elements of a New Welfare State Architecture • Child-centred and women-friendly social investments Thus fostering fertility rates • Higher investment in human capital The higher the qualification, the higher are activity rates • Restructuring from transfers to social services From passive to activation in case of unemployment, invalidity etc. • “Flexicurity” or managed and balanced flexibility Jobs with high security and flexible jobs with inadequate protection • Active anti-cyclical macro-economic strategy • Growth and best technologies are preconditions for welfare

23. Eastern and central Europe challenges regarding labourmarket policies • Lack of trust in the public sector • Have experienced significant changes in their financial situation due to: • Reduction of up to 40% in salaries in the public sector • Severe losses in the property sector • often combined with high risk loans in CHF or EURO • Focus on keeping the society free of corruption and “black” economy • Wrong to treat “Eastern Europe” as one region with the same cultural and economical situation

24. Video links and reports • Video links: • http://www.youtube.com/watch?v=U6n7jBY7-NA • http://www.youtube.com/watch?v=-NBULE-agZ8&feature=related • http://www.youtube.com/watch?v=z_EhS81E4kk&feature=related • Readings: • The Danish Flexicurity model: • http://www.sociology.ku.dk/faos/flexicurityska05.pdf • http://www.progressive-economics.ca/2008/01/23/the-danish-flexicurity-model/ • http://www.employmentweek.com/cms.php?page=106 • http://research.cbs.dk/da/publications/denmark(93ccbf24-09ed-4a45-b419-c53ce1c1d6da).html • http://www.djoef-forlag.dk/vare/8757417083 • Master thesis from Aalborg University • http://projekter.aau.dk/projekter/da/studentthesis/how-can-active-labor-market-policy-contribute-to-development-of-flexicurity-in-central-eastern-european-countries(2ebfce7c-c4be-4391-984e-4bbc51ac4f50).html • Flexicurity: a relevant approach in Eastern and Central Europe • http://www.ilo.org/global/publications/ilo-bookstore/order-online/books/WCMS_091425/lang--en/index.htm • Security in labour markets : combining flexibility with security for decent work • http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_elm/---analysis/documents/publication/wcms_113923.pdf