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European labour markets - PowerPoint PPT Presentation

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European labour markets. Trends and the search for flexibility. European business and labour. Business requires a labour force that is: Skilled Flexible Plentiful Mobile Healthy Well-educated. Labour market trends. These trends pose challenges for businesses and policy.

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European labour markets

European labour markets

Trends and the search for flexibility

European business and labour
European business and labour

  • Business requires a labour force that is:

    • Skilled

    • Flexible

    • Plentiful

    • Mobile

    • Healthy

    • Well-educated

Labour market trends

Labour market trends

These trends pose challenges for businesses and policy


Unemployment of 3% the norm - pre-1970

cyclical and structural components

70s onward - higher long term trends

2005 – ranges from 4.3% (Ireland) to 17.7% (Poland)

Unemployment rate (%)


Labour market structure

Reflects changing economic structure – from manufacturing to services

Higher % of women in services than men

Services employment

Labour market structure

Part time and temporary work
Part-time and temporary work to services

  • Gradual increase in part-time and temporary work

    • Trend throughout Europe

    • Part-time range from 2.4% in Slovakia to 46% in Netherlands

    • More women (33%) than men (7.4%) in part-time work

Ageing population
Ageing population to services

  • 2000-2010:

    • Population between ages 20-39 will decline by 12 million in Europe

    • Population between ages 40-59 will increase by 13 million in Europe

  • European age dependency will rise from 23.4% in 2000 to 53.8% in 2050

  • Major challenges for businesses and welfare systems

  • Lisbon targets – if met, would help

Overall employment rates 2004
Overall employment rates - 2004 to services

Lisbon employment target (2010): 70%

Source: Eurostat – Labour Force Survey 2004

Female activity rates 2004
Female activity rates (%) - 2004 to services

Lisbon female employment target (2010) – 60%

Source: Eurostat: Labour Force Survey 2004

Employment rates for the 55 64 age group
Employment rates for the 55-64 age group to services

Lisbon older workers employment target -50%

Source: Eurostat – Labour Force Survey 2004

What is labour market flexibility
What is labour market flexibility? to services

  • Conflicting views

  • Neo-classical market forces approach

    Competitive success based on lower costs from:

    • minimal regulation

    • market clearing wages

    • freedom to hire and fire

2. Flexible specialisation (Piore and Sabel) to services

(Shift from Taylorism and Fordism → 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

Evolution of eu labour market policy
Evolution of EU Labour Market Policy to services

  • 1980s → 1990s: labour market issues about rights and integrity of SEM.

  • 1990s → 2000s: demographic, competitiveness, emerging shortages.

    • creating high value jobs

    • Ageing population

    • Pension costs

    • immigration

Labour issues in treaty of rome needs operationalising

Freedom of movement to services

Right of establishment

Right to provide services

Improved working conditions

Common measures - social security migrant workers

Equal pay for equal work

European Social Fund

Co-operation - employment law, working conditions, etc

Labour issues in Treaty of Rome - needs operationalising

Evolution of policy
Evolution of policy to services

  • 1960s - low unemployment

    • Policy emphasises labour mobility: mutual recognition of qualifications; social security rights, some health and safety

  • 1970s - Social Action Programme

    • employment law

    • equal opportunities

    • equal pay directive (equal value)

    • equal treatment directives (workplace & social security)

    • failed attempts - industrial democracy

Social charter december 1989
Social Charter - December 1989 social/labour market policy

  • 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

  • Maastricht - 11 member states wished to bring Social Charter into Treaties to give it legal force

    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

1990s recession and unemployment
1990s - recession and unemployment into Treaties to give it legal force

  • Emphasis shifts from workers’ 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

Amsterdam treaty
Amsterdam Treaty into Treaties to give it legal force

  • 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

Eu labour market position 2000s
EU Labour Market Position - 2000s into Treaties to give it legal force

  • EU economy growing - but unemployment above US

  • No shortage of work - labour still inflexible

  • Since 1997, EU created 5.6 m jobs

  • Labour shortages are evident esp. IT

  • Increase in flexible employment – increase in part-time/temporary work

Labour market challenges

Labour market challenges into Treaties to give it legal force

Lisbon agenda
Lisbon agenda into Treaties to give it legal force

“to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesions”

Lisbon sets employment goals – see above

Challenges for policy
Challenges for Policy into Treaties to give it legal force

  • EU economies growing, working population shrinking – compounded by ageing population

  • Immigration is key

  • Currently encourage migration of skilled workers (e.g. software workers from India)

  • But political implications

  • Need to sort out asylum and immigration policy

Challenges for policy1
Challenges for Policy into Treaties to give it legal force

  • Emerging skill shortage is hitting performance of business

  • Red- tape hits recruitment of foreign workers

  • Education systems slow to adapt to changing need of European labour market

  • Mobility of EU citizens very low

  • Need foreign labour

Challenges for policy2
Challenges for Policy into Treaties to give it legal force

  • Most EU states stopped `primary immigration’ – economic migration

  • Limited to skilled or seasonal workers

  • Result est. ½ million illegal immigrants p.a.

  • Fear enlargement could speed this flow – make it legal

Post 2004 labour market mobility
Post-2004 labour market mobility into Treaties to give it legal force

  • Fears about labour flows westwards

  • EU(15) retained right to impose restrictions for transition periods

    • Only UK, Ireland and Sweden opened their markets completely

    • 2006 Spain, Portugal and Finland open their markets

    • Commission argues – labour flows modest and focussed on hard-to-fill jobs

  • Countries with higher unemployment not so keen.

Conclusion into Treaties to give it legal force

  • Shift in debate since 1980s from rights → jobs

  • No move to remove rights

  • Emphasis on flexible specialisation version of labour market flexibility

  • Need for flexibility increases with EMU

  • Ageing population/Immigration issue