Public Economics: Welfare states and inequalities University of Castellanza Session #1(b) Employment and Euroscelerosis 26 March 2014

Overview l Euroscelerosis »Europe’s low employment problem »Employment, unemployment and inactivity »Europe’s inflexible labour markets l Lisbon Declaration 2000 and Lisbon targets »Rising European employment »High employment societies »Germany and the advantages of inflexibility l Ways of getting to Lisbon »Different forms of flexibility and high employment

‘ Euroscelerosis’: Fewer Europeans than Americans at work During the last quarter of the 20 th century employment in the USA grew, but stagnated in Europe

Employment statuses 2006 Full-time or part- time work Home duties Studying without part time work Early retired Prison (Important in USA) Source: Employment in Europe 2007

Flexibility and Employment: 1990s EPL: Employment Protection Level. The higher the rank, the more employment is protected Countries with high ELP have low employment and low part- time 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 AllWomenAll 55-64(Unemployment as % of labour force 15+) Lisbon target none France Germany Ireland Italy Sweden UK EU EU * Source: European Commission (2008), Employment in Europe *EU25

Employment rates Source: Employment in Europe 2009 Scandinavian states and the UK are high employment societies

High employment societies Who works l Women (full or part-time) l Older people (full or part-time) l Students (part-time) Requirements l Flexible labour markets Employers can offer part-time and/or temporary work l Non-domestic caring work Care for children and older people cared for outside the household unit By the market or by public systems l Individualised tax and benefit system (No advantages for staying at home) Two different versions l Social democratic (Scandinavian) – state services, best for ordinary women l Liberal and market (UK, USA) – market services, best for elite women

High employment societies Who works l Women (full or part-time) l Older people (full or part-time) l Students (part-time) Requirements l Flexible labour markets Employers can offer part-time and/or temporary work l Non-domestic caring work Care for children and older people cared for outside the household unit By the market or by public systems l Individualised tax and benefit system (No advantages for staying at home) Two different versions l Social democratic (Scandinavian) – state services, best for ordinary women l Liberal and market (UK, USA) – market services, best for elite women

Forms of women’s participation Women part time as % all female employment Women’s hours worked: difference- households with and without children Marginal part-time as % all dependent employees France29.49 Germany36.4* Italy Sweden UK EU **14** Women at work c2005 Part-time is low in low employment countries Impact of children on working hours varies Good and bad part-time work?

Benefits of inflexibility l 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 l 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? l Both UK and Denmark appear highly flexible and have high employment – but in different ways l In the UK: »Flexibility on employers’ terms »Bad jobs and/or poverty? l 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 Friday l Using the data in the ‘Statistical Annex: Labour market indicators’ of the European Commission’s Employment and Social Developments 2013 update slide 6 of this lecture for one EU country with data for Show three columns, one for Total (men & women), one for Men and one for Women. Comment on your findings. l =en&pubId=7684Member State.

Key indicators: Italy 2012 Age group 15-64% Employment rate56.8 Activity rate63.7 Unemployment rate10.7 (Youth unemployment rate) [as % labour force 15-64) 35.3