©The Work Foundation Structural and Macro-Policies in the Kok Report David Coats, Associate Director, The Work Foundation

©The Work Foundation Summary Summary of structural policies The Lisbon conclusions Jobs, Jobs, Jobs – Kok1 Facing the Challenge – Kok2 Commission mid-term review A word about the UK

©The Work Foundation Summary of structural policies OECD Jobs Strategy: - Sound macro policies - Creation and diffusion of technology - More working time flexibility - Nurture an entrepreneurial climate - Increase wage and labour cost flexibility - Reform employment security provisions - Expand and enhance active labour market policies - Improve labour force skills and competences - Reform unemployment benefit Macro and structural policies should be mutually reinforcing

©The Work Foundation The Lisbon Conclusions 1 “To become the most dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.” An information society for all European area for research and innovation Entrepreneurship Complete the internal market - liberalisation Integrate financial markets Co-ordinate macro policies – and ensure sustainable public finances

©The Work Foundation The Lisbon Conclusions 2 Education and training More and better jobs Modernising social protection Promoting social inclusion Improving implementation processes Neo-liberalism without the rough edges? A partial diagnosis and inadequate prescription?

©The Work Foundation Jobs, Jobs, Jobs Increasing the adaptability of workers and enterprises Increasing labour market participation Investing more and more effectively in human capital Ensuring effective implementation through better governance Not a neo-liberal agenda A new way of thinking about labour market flexibility? Successful member states:Sweden, Finland, Denmark, Netherlands

©The Work Foundation Facing the Challenge – Macro Policy Elements Terms of reference had a structural focus BUT Structural reform will not work “Against a background of stagnating or slowly rising demand”. “The wider macroeconomic framework must be as supportive of growth as possible” Reform the Stability and Growth Pact Governments should consolidate their fiscal position in the “current fragile upturn”…..to create….. More latitude to respond to downturn through increasing spending or cutting taxes

©The Work Foundation Facing the Challenge: Structural Policies Reflect the Lisbon conclusions But: “Flexibility” is not about weakening worker rights and protections Flexibility is about agility, adaptability and employability defined as: - skill acquisition - active labour market policies - social support - to make moving from job to job as easy as possible Flexibility must go hand in hand with security for workers

©The Work Foundation Commission Mid-Term Review Moving Kok2 recommendations in a more neo-liberal direction? Deregulation v. better regulation? Wage flexibility: “wage costs should not exceed productivity growth over the course of the cycle” No explicit linkage between macro and structural But….. Apparent objective is to sustain the European social model Focus on environment, R&D and innovation must be right

©The Work Foundation The UK as a “liberal” economy Lightly regulated labour and product markets Utilities markets open to competition Low benefits, tight conditionality, ease of hire and fire, weak collective bargaining But………… Reregulation has not affected employment performance: - Rising National Minimum Wage - Accession to Social Chapter measures - Tighter dismissal laws and more aggressive sanctions - Union recognition and Information and Consultation Regulations - “Fair wages” policies in the public sector “Jobs strategy” framework cannot explain UK “success”

©The Work Foundation Conclusion Macro and structural policies cannot be disentangled Identify those structural elements that deliver good employment performance Some member states need to reform their labour markets – but there is no “European problem” A crude approach to liberalisation of labour and product markets will in itself prove ineffective.