Public Economics:
Welfare states and inequalities
University of Castellanza
Session #2a
Employment and Euroscelerosis
21 April 2015
Overview

Euroscelerosis
» Europe’s low employment problem
» Concepts: Employment rate, Employment Protection
» Europe’s inflexible labour markets

Lisbon Declaration 2000 and Lisbon targets
» Rising European employment
» High employment societies
» Germany and the advantages of inflexibility

Ways of getting to Lisbon
» Different forms of flexibility and high employment
‘Euroscelerosis’: Fewer Europeans than
Americans at work in 1990s
During the
last quarter of
the 20th
century
employment
in the USA
grew, but
stagnated in
Europe
Concept (1):
Employment rate
Full-time
or parttime work
Employment status 2006
Home duties
Studying
without part
time work
100%
80%
60%
40%
Early retired
20%
0%
UK
Denmark
Italy
Employed Unemployed Inactive
Source: Employment in Europe 2007
France
Prison (Important
in USA)
Concept (2):
Employment Protection

Dismissals – expensive and/or difficult
» Protection against unfair dismissal
» Redundancy pay
» Restrictions on dismissals

Privileging standard employment by restraints on:
» Part-time work
» Temporary work
» Agency work
Flexibility and Employment: 1990s
Denmark
France
Germany
Ireland
Italy
Netherlands
Sweden
UK
USA
EU15
EPL
Ranking
1994
5
14
15
12
21
9
13
7
1
EPL: Employment
Protection Level. The
higher the rank, the
more employment is
protected
Employment
Rate 1993
Employment
Rate 2003
Part-time
rate 1993
Part-time
rate 2003
72.1
59.3
65.1
51.7
52.3
63.6
71.3
67.4
75.1
62.8
64.8
65.4
56.1
73.5
72.9
71.8
23.1
14.3
15.2
10.5
5.5
35.2
20.5
23.6
21.3
16.5
22.4
16.8
8.5
45.0
22.9
25.2
60.1
64.3
14.8
18.6
Countries with high ELP had
low employment and low parttime rates
Lisbon Declaration 2000
'A new strategic goal needs to be
defined for the next ten years: to
make the European Union the
world's most dynamic and
competitive area, based on
innovation and knowledge, able to
boost economic growth levels with
more and better jobs and greater
social cohesion.‘
Lisbon Employment Targets
Outcomes 2007
All
Women
All 55-64
(Unemployment as
% of labour force
15+)
Lisbon target
70.0
60.0
50.0
none
France
64.6
60.0
38.3
8.3
Germany
69.4
64.0
51.5
8.4
Ireland
69.1
60.6
53.8
4.6
Italy
58.7
46.6
33.8
6.1
Sweden
74.2
71.8
70.0
6.1
UK
71.3
65.5
57.4
5.3
EU15
66.9
59.7
46.6
7.0
EU27
65.4
58.3
44.7
7.2*
Source: European Commission (2008), Employment in Europe 2008.
*EU25
Employment rates 1997-2008
80.0
Scandinavian
states and the
UK are high
employment
societies
75.0
70.0
EU27
65.0
Germany
France
60.0
Sweden
Denmark
Italy
55.0
Greece
Ireland
UK
50.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Employment in Europe 2009
The end of euroscelerosis
Employment rates: EU15, Germany, Italy, Sweden, UK, USA
High employment societies
Who works



Women (full or part-time)
Older people (full or part-time)
Students (part-time)
Requirements

Flexible labour markets
Employers can offer part-time and/or temporary work

Non-domestic caring work
Care for children and older people cared for outside the household unit
By the market or by public systems

Individualised tax and benefit system
(No advantages for staying at home)
Two different versions

Social democratic (Scandinavian)
– state services, best for ordinary women

Liberal and market (UK, USA)
– market services, best for elite women
High employment societies
Who works



Women (full or part-time)
Older people (full or part-time)
Students (part-time)
Requirements

Flexible labour markets
Employers can offer part-time and/or temporary work

Non-domestic caring work
Care for children and older people cared for outside the household unit
By the market or by public systems

Individualised tax and benefit system
(No advantages for staying at home)
Two different versions

Social democratic (Scandinavian)
– state services, best for ordinary women

Liberal and market (UK, USA)
– market services, best for elite women
Forms of women’s
participation
Women at work c2005
Women part time as
% all female
employment
Women’s hours
worked: differencehouseholds with and
without children
Marginal part-time as
% all dependent
employees
France
29.4
-1
9
Germany
36.4*
-3.3
18
Italy
16.9
+2
8
Sweden
33.1
+0.1
6
UK
43.9
-6
21
EU15
33.5
-3.4**
14**
Part-time is
low in low
employment
countries
Impact of
children on
working
hours varies
Good and bad
part-time
work?
Labour force status 2012
Benefits of inflexibility

German vocational training system
» High quality apprenticeship for most school leavers
ensures qualification ‘Lehre’ which recognised and valued
» National ‘Berufsbilder’ define qualification
» Dual system of employers and state
» Organised by employers with trade union input

Trade off
» Employers cannot easily dismiss employees (Numerical
flexibility)
» Employers have incentive to use employees flexibly
(Functional flexibility)
» So ‘beneficial constraints’ (Streeck) of inflexibility
Good and bad flexibility?


Both UK and Denmark appear highly flexible and
have high employment – but in different ways
In the UK:
» Flexibility on employers’ terms
» Bad jobs and/or poverty?

In Denmark (also to some extent Sweden)
»
»
»
»
»
‘Flexicurity’
Flexibility also for employees
Easy dismissal but high social protection
High spending on training and ‘activation’ (counselling etc)
‘Protect the worker not the job’
Exercise for Wednesday
Using the data in the ‘Statistical Annex: Labour
market indicators’ of the European Commission’s
Employment and Social Developments in Europe
2014 show the labour force status of any one EU
country as in slide 14. Use three bars, one for Total
(men & women), one for Men and one for Women.
Comment on your findings.
http://ec.europa.eu/social/main.jsp?catId=738&langId=e
n&pubId=7736
