Employment challenges in the future

1. By Nina Røhr Rimmer MSc Econ, Associate Professor Employment challenges in the future May 2010

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 adapatability • 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, • 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, 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.

8. 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

9. 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

10. 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

11. 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

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

13. 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 • Four years in the insurance system • Focus on better qualifications • Right and duty to accept job offers

14. 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 %)

15. Salary in Denmark • Relatively high salaries • But high level of tax (marginal tax rate of 51,5%) • Collective agreements: • for example € 16 per hour for unskilled work • Private negotiation and employment contract • Other examples: • Electrician € 22 per hour • Nurse € 3.300 per month • Engineer € 5.000 per month • Spec. Doctor € 8.500 per month

16. 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

17. 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

18. Job Satisfaction • Per cent of employed, 2006

19. The lowest unemployment rate in 33 years 2008 = 1,8% - 2011 = 4.2% Source: Statistical Yearbook 2008, Statistics Denmark

20. 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

21. Video links • http://www.youtube.com/watch?v=U6n7jBY7-NA • http://www.youtube.com/watch?v=-NBULE-agZ8&feature=related