3 1. Jobs Employment Unemployment Inactivity Structure of jobs Unemployment in different countries
4 Source: Peter Doyle, ONS Consistent Historical time series of labour market data http://www.statistics.gov.uk/articles/labour_market_trends/Experimental_LFS_LMTSep03.pdf UK Employment 1971-2002; Employment about 28m in 2002; hours more variable than employment
5 Source: Peter Doyle, ONS Consistent Historical time series of labour market data http://www.statistics.gov.uk/cci/nscl.asp?id=6584 Male employment rates falling; womens employment rate rising ER = employment/population of working age
6 Lindsay et al (2003) A Century of Labour Market Change, Labour Market Trends March 2003 UK Claimant Unemployment rate over long-run, 1900-2000 UR=unemployment/labour force(LF); LF =unemployed+employed
7 Unemployment rates 1971-2002; ILO vs. claimant count ILO unemployed = those actively seeking work and available to start
8 Source: Peter Doyle, ONS Consistent Historical time series of labour market data http://www.statistics.gov.uk/cci/nscl.asp?id=6584 UK Unemployment Rate 1971-2002, men
9 Source: Peter Doyle, ONS Consistent Historical time series of labour market data UK Numbers Inactive, 1971-2002 Inactive are neither in employment nor seeking paid work; (e.g. Students, housewives, long-term sick). Inactivity Rate = 1 – (Labour Force/Population of working age)
10 Source: Harwidge (2002), ONS Jobs in the public and private sector. http://www.statistics.gov.uk/cci/article.asp?id=130 Numbers and Structure of Employment, 1961-2001 Public sector employment shrinking Manufacturing to services Growing proportion of high skilled in labour force
11 International Comparisons Post WW2 OECD unemployment rates low and then rose since 1974 (like UK) Factors associated with lower structural unemployment: time limited/lower benefits; co-ordinated or weak unions; ALMP. UK and US relatively high unemployment until mid-1980s. Now lower than major EU countries
13 2. Pay Average Nominal pay – tracks RPI Average real earnings – rises with aggregate real productivity over the long-run Pay structure – dwarfs and giants Individual and workplace characteristics Inequality – big rises in UK post 1979 US also large increase – smaller in other EU countries
14 Growth Rate of average nominal earnings in UK, 1941-2000
15 Pay structure Individual characteristics – human capital, gender, race, marital status Workplace characteristics- union recognition, public-private sector, firm size, industry Explain about 40% of pay dispersion
16 Changes in inequality in UK Stability for most of C20 Compression in 1970s Rapid widening in 1980s Slight widening in 1990s Male manual: inequality at an all time post 1986 high
17 Increase in UK male wage inequality, 1966-1996 Source: Gosling, Machin and Meghir (1999)
18 Job upgrading: demand for skills? Employment share of men (women) with degree or more in 1975 = 5.8% (2.2%) ………………..in 1998 = 16.3% (12.5%) Wage premium for men(women) with degree or more (relative to no qualifications) in 1975 = 54.2%(70.2%) ……………....in 1998 = 71.7%(79.4%) Source: Machin (2003), State of Working Britain Still a lot of increase in inequality within groups
19 3. Labour Market Institutions Unions/collective bargaining – coverage, centralisation, power Minimum wages Inside the firm – growth of contingent pay Anti-discrimination legislation (e.g. Equal Pay Act) Incomes policies/corporatism
20 Institutions - Unions 7.3m employees in trade unions (29% density = TU members/labour force) 8.7m employees covered by a collective agreement (36%) Free riders (covered but not members about 14%) And losers (members but not covered – about 7%) Autumn 2002, LFS
21 Lindsay et al (2003) A Century of Labour Market Change, Labour Market Trends March 2003 UK Union density over the long-run, 1900-2000
22 Keith Brook Labour Market Trends (2002) Trade Union Membership Recent Decline in union Density, 1991-2001
24 Lindsay et al (2003) A Century of Labour Market Change, Labour Market Trends March 2003 Industrial Disputes
25 Other changes/factors in UK bargaining Decentralisation to the firm level of bargaining (i.e. not national or industry) Decline of multi-unionism Decline in bargaining over non-pay issues See WERS series for details
26 International Comparisons of unions Big variation in union coverage and density across countries (see Visser, 2003) Density has tended to decline over time in most countries (but coverage remains strong in EU: about 73%) Variation in effects of unions across countries (See Addison and Schnabel, 2003, HTU)
27 Source: Visser (2003) Differential Rates of coverage and density in different countries
28 Falling Rates of unionisation across countries
29 Other institutions Minimum Wages/Wages Councils (last 2 lectures). Wages Councils abolished in 1994 and NMW introduced in 1999 Growth of contingent pay – share options, profit related pay, bonuses, etc. Subject of 2 nd half of lectures on compensation policy Anti-discrimination (gender, race, disabilities, age..) Employment protection – much coming from EU (e.g. agency workers)
30 4. Productivity Fundamental cause of increasing prosperity – tracks wages in the long-run
31 What is productivity? Voluntary and involuntary. labour supply, unemployment, etc. Labour productivity *US has higher GDP/pop than EU, but more similar GDP/hours This has changed a lot over time via catch up
32 4. Productivity-cont Growth in GDP per hour depends on accumulation of capital (physical and human) and technological change UK Productivity growth (output per hour) c. 2-2.5% p.a. UK productivity lower than US, France, Germany Within OECD convergence to US levels over long-run OECD slowdown in productivity growth post 1974 Reversal since mid 1990s in US (from 1.5% to 2.5% p.a.) but not in EU, UK or Japan. Industrial relations related?
33 UK Productivity Gap, 1999 (UK=100) Source: OMahony and de Boer (2002)
34 The long run: Catching up with the frontier Source: Gordon, 2002.
35 Source: Stiroh (2002), AER US Productivity Miracle?
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