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By nina r hr rimmer associate professor msc econ university college northern denmark business
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By Nina Røhr Rimmer Associate Professor, MSc Econ University College Northern Denmark – Business. Employment challenges in the future. March 2013. THE BACKGROUND for EU problems . Long term situation Demographic change – ageing workforce Globalisation and competitive pressures

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Employment challenges in the future

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By nina r hr rimmer associate professor msc econ university college northern denmark business

By Nina Røhr Rimmer

Associate Professor, MSc Econ

University College Northern Denmark – Business

Employment challenges in the future

March 2013

The background for eu problems

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?

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

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

  • 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



    • 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.

    The european society can we agree on one model

    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

    Can we agree on one model cont

    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?

    Eu 4 models of welfare capitalism

    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

    Anglo saxon model

    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

    Continental model

    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

    Mediterranean model

    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

    Scandinavian model

    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

    Employment challenges in the future

    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

    Flexicurity model

    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 %)

    Salary in denmark

    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:

      • Electrician30 Euro/hour 4,500 p.m.)

      • Nurse4,000 per month

      • Engineer6,500 per month

      • Spec. Doctor10,500 per month

    The danish labour market

    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

    Working culture

    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

    An example

    An example

    • Annual payment to Union400 euro

    • Annual payment to unemployment scheme400 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.

    Job satisfaction

    Job Satisfaction

    • Per cent of employed, 2006

    The lowest unemployment rate in 30 years 1985 2000 approx 10 2008 1 7 2013 4 7

    The lowest unemployment rate in 30 years 1985-2000 = approx. 10% 2008 = 1,7% 2013 = 4.7%

    Source: Statistical Yearbook 2008, Statistics Denmark

    Key elements of a new welfare state architecture

    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

    Eastern and central europe challenges regarding labourmarket policies

    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

    Video links and reports

    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

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