Experts debate future of EU labour market

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Where should the priorities in EU labour policy be? Can the Danish flexicurity success be exported? How to reconcile flexibility and social security? Those questions and more were debated by a panel at Employment Week.

Ronald Janssen, an advisor with ETUC, the European Trade Union Confederation, took a closer look at Nordic labour market models, including the much-discussed Danish flexicurity model. He said: "Those models fly in the face of conventional wisdom that there is a contradiction between the targets of job creation and social cohesion." He underpinned his thesis that a low degree of inequality usually comes together with high employment rates with statistical evidence form OECD and World Bank studies, as well as the Deloitte competitiveness index, in which those Scandinavian countries with the highest income equality are constantly leading. 

Janssen praised the Nordic countries' choice of investing in a skilled workforce by giving maximum skills to as many workers as possible. He named the example of Denmark, the EU country presently doing best in providing employment, which is spending almost twice as high a percentage of its GDP on employment as Germany, with its notorious employment problems. 

Janssen said "bad karaoke", meaning copies of parts of the Nordic models, was not what Europe needed, but there were lessons to be learnt and to be applied in a "holistic and consistent approach": Labour market policy needs to be underpinned by effective macro economic policy. In that context, the Nordic countries' cyclical demand policies of high public surplus in upturns and massive demand injection in downturns seems to be especially promising. And 'flexicurity' facilitates the transition from one job to another, but it does not create new net jobs. 

John Philpott, chief economist with the Chartered Institute of Personnel and Development (CIPD), said the Nordic countries' particularities, namely their being relatively small and homogeneous and with an established work ethic grown since the early days of the 20th century, must be take into account. He also criticised a too Brussels-centric view on the job creation issue. He said terms such as the Lisbon strategy "would note stand the Dog and Duck test", meaning if you used them on someone you had just met in a pub, the person would most likely not understand what you are talking about. 

However, Philpott said, there was something like a European common good - including a holistic notion of economic and social well-being, as well as agreement that free markets were a means and not an end. Maximising this common good was not the same as maximising material well-being, which is to be measured in GDP growth and productivity. He said choices and trade-offs such as what he called the "wealth-happiness paradox" (in the UK, subjective happiness has hardly grown over the last century, although material wealth has done so considerably) must be understood. 

In the debating of Europe's future social model he recommended that more voice should be given to civil society in the Open method of Co-ordination; that winners and losers should be highlighted and support given to the latter, and finally, that ideology and myths clouding the discussion should be avoided. 

Göran Hultin, Corporate Affairs Advisor for Manpower, said that the Scandinavian models successfulness builds on the fact that the social dialogue in those countries is being carried on constructively, not in a confrontational manner. In his presentation, Hultin pointed out figures from the International Labour Organisation, according to which, in the EU-15 the Greek are most concerned about losing their job, even though job tenure is longest in Greece, whereas the Danish are least concerned, even though they have the shortest job tenure. ""Staying in a job does not give security," he said, "but ease of finding one does."

Hultin agreed with Janssen on the importance of workforce skills, which he stressed with some figures: Workplace technology is evolving at such a pace that today's workplace will be obsolete in a decade, and even quicker in high-growth sectors. 80% of the 2015 workforce is already in the labour market. And unemployment is 12% for unskilled workers, but only 4% for graduates. 

Hultin also pointed out some major differences between EU economies and the US, which, he said, explain America's higher growth and lower unemployment rates: According to the Commission's "Employment in Europe 2001" study, job creation starts in the US as soon as the GDP starts growing. In the EU, jobs are created only when the GDP grows by more than 2%, which, in the more sluggish economies, has not been the case in many years. 

European labour markets are generally seen as being too rigid. Making labour market rules more flexible while at the same time providing a good level of social protection, is one of the main challenges of the EU's strategy for economic, social and environmental reform (the "Lisbon agenda"). The March 2000 Lisbon Council and the Stockholm Council a year later defined a number of targets: 

  • an overall employment rate of 70% in 2010 (67% in 2005);
  • a female employment rate of 60% in 2010 (57% in 2005);
  • an older workers (55+) employment rate of 50% in 2010.

The 2003 Kok report underlined the need for more flexibility in the labour markets "while providing workers with appropriate levels of security". According to the report, flexibility is not only in the interest of employers but also of workers, as they can then more easily combine work with care, education or free-time preferences.
The report urges member states and social partners to:

  • review and adjust the level of flexibility in standard contracts (terms and conditions of contracts, work organisation and working time, wage setting mechanisms and mobility of workers);
  • introduce other forms of contracts to suit the needs of employers and workers;
  • remove obstacles for temporary work agencies,  esp. discrepancies between member states;
  • promote use of ICT and more flexible working times as tools to modernise work organisation;
  • remove attractiveness of part-time work;
  • adapt social protection systems to support workers' mobility

At the 2006 Employment Week, a panel of experts discussed this assessment of the situation, how far Europe has come to resolving problems and possible pitfalls. 

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