European labour markets

1. European labour markets Shifts in policy and market trends

2. Why are labour and labour mobility crucial to Europe? • Free movement of labour = core EU principle • Article 39 entitles EU nationals: • to look for job in another EU country • to live and work there without work permit • to equal treatment with nationals in access to working conditions, employment, etc. • At heart of SEM – one of four freedoms

3. Free movement essential to single currency – instrument of economic adjustment • Importance to business • Major cost component • Need skilled and educated labour force • Flexibility – increasingly important

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

5. Flexible specialisation (Piore and Sabel) (Shift from Taylorism and Fordism to 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

6. Flexicurity • Has become a byword in European policy debates • Combines flexibility and security: • flexibility both in terms of hiring/firing and willingness of employees to perform a variety of roles • security of employment rather than a particular job – implies active labour market policies • Different historical and cultural context • e.g. contrast Dutch and Danish versions

7. The evolution of European labour market policy

8. Labour in the Treaty of Rome – operationalisation needed Equal pay for equal work European Social Fund Co-operation – employment law, working conditions, etc. • Freedom of movement • Right of establishment • Right to provide services • Improved working conditions • Common measures – social security migrant workers

9. Priorities of the 1960s and 1970s • 1960s – era of low unemployment • Policy emphasised labour mobility: mutual recognition of qualifications, social security rights, some health and safety • 1970s • employment law • equal opportunities • equal pay directive (equal value) • equal treatment directives (workplace and social security) • failed attempts – industrial democracy

10. 1980s to 1990s • Mid-80s policy examples: voluntary – 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

11. 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

12. Maastricht – 11 member states wished to bring Social Charter into Treaties to give it legal force … leading to … 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 in 1997

13. 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 • Subsequent treaty changes – minor for labour

14. 1990s onwards • Shift in emphasis toworkers’ 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 • Creating high value jobs and related skills • persistent labour market inflexibility

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

16. Unemployment below 3% the norm – pre-1970 70s onward – higher long term trends with cyclical variations Unemployment

17. Unemployment rates in member states, 2014 % Source: Eurostat

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

19. Unemployment rates, 15–24 years old, 2014 Unemployment rates decline significantly, the higher the Level of educational attainment % Source: Eurostat

20. Average hourly labour costs (wages and non-wages), 2014 € Source: Eurostat

21. Part-time and temporary work • Gradual increase in part-time and temporary work – long-term trend throughout Europe • Part-time ranges from 2.7% in Bulgaria to 50.8% in Netherlands • In EU–28, more women (32.7%) than men (9.8%) in part-time work • Temporary from 1.5 % in Romania to 28% in Poland

22. Part-time workers as % of total workforce, 2014 Share of part-time work varies across the EU but increasing virtually everywhere in recent years Source: Eurostat

23. Employees on temporary contracts as % of workforce, 2014 Share of temporary varies across the EU but increasing virtually everywhere in recent years Source: Eurostat

24. Ageing population • European age dependency will rise from 23.4% in 2000 to 53.8% in 2050 • i.e. fewer people of working age will be available to support pensions • Major challenges for businesses and welfare systems • Solutions • Work longer? • Increase immigration? • Others?

25. Projected age dependency ratios, EU–27

26. Median age of the population in the EU, Norway and Switzerland Ageing problems vary in severity but problems are increasing everywhere

27. Old age dependency ratios for EU member states, Norway and Switzerland

28. Labour market challenges

29. Challenges • Working population shrinking – compounded by ageing population • Emerging skill shortage in some areas is hitting performance of business • Mobility of EU workers low • Currently encourage migration of skilled workers (e.g. software workers from India) • Need to sort out asylum and immigration policy • EU education systems slow to adapt to changing need of European labour market

30. Challenges for Policy • Most EU states stopped ‘primary immigration’ – economic migration • Limited to skilled or seasonal workers • Result est. 0.5 million illegal immigrants p.a. • Fear enlargement could speed this flow • 2015 refugee crisis highlights problems of immigration and lack of a common approach

31. Labour mobility • Intra-EU vs. extra-EU • Many more migrant workers from outside EU • Migration – ways of looking at it • divisive and a drain on resources? • a contributor to economic growth – the solution to labour and skills shortages and ageing population?