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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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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
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
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
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
quality
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.
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 2007Anglo-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 2007Continental 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 2007Mediterranean 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 2007Scandinavian 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
slide14

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:
    • Electrician 30 Euro/hour 4,500 p.m.)
    • Nurse 4,000 per month
    • Engineer 6,500 per month
    • Spec. Doctor 10,500 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 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.
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 2007Key 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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