Transcript Session 4 – What can we see about the structure of the

WP7 – Public/Private mix
WP9 – Two scenarios for SET in EU
WP10 – Demagraphic changes and labour market
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Session schedule
 Presentation of NEUJOBS findings
 WP7 - Public/private mix and social innovation in service provision,
fiscal policy and employment

T. Sirovátka and B. Greve with contributions by O. Hora, M. Horáková and P.
Horák
 WP9 – Global scenarios for European socio-ecological transition
 B. Boitier, Lancesseur N. and Zagamé P.
 WP10 - The consequences of demographic change
on labour supply, wages and labour demand

H. Schneider, Dolls M., Lichter A. and Sommer E.
 Critical review by Thomas Hemmelgarn (DG Taxud)
 Questions/remarks from audience
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T. Sirovátka and B. Greve
with contributions by O. Hora, M. Horáková
and P. Horák
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Focus (Questions)
 Is social services development sustainable.
 Which potential for job creation?
 scope/level of employment
 quality of jobs
 and sustainability of jobs and employment
 How fiscal consolidation context matter?
 How governance is changing? (regulation, financing,
delivery)
 What kind of innovations in (governance) of social
services?
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Findings: employment in social services demand
drivers
 Changing women’s roles, their growing labour market participation
(women’s role revolution)
 Demand shift towards services - broadening purchasing power
throughout the population (role of income differentials?)
 Ageing of population
 New social risks (dynamic labour market, reconciliation work-family,
social exclusion)
 Path dependency of WS development
 Service dependency ?
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Findings: employment in social services
supply drivers
 Productivity lag (Baumol) should foster employment growth in sector of
services ?
 Possible responses:



to adjust labour cost (market cleaning),
to adjust earnings in services to overall economy earnings
to subsidize services
 Technical complexity of the provision of social services (Health Care)
 Vested/professional interests
 User profile of the clients (middle class interested)
 Political considerations – electoral gains, buffer against
uncertainty/unemployment
 Governance reforms (their own urgencies)
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Employment in SS 2000-2010
 Health and social services sector in 2010: in average 6% employment
rate in the EU
 Increased in last ten years by 0.7 percentage points
 Differences among EU countries are remarkable (from 14% in Denmark
to 2.7% in Romania)
 Crisis in 2008-2010 did not change much on the continuous growth
of employment in social services
 78% of employment in HSW are women
 Growing older: in 2010 overall 26.5 % workers older than 50 years
while in HSW it is 30.3 %
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Employment in SS 2000-2010
 First cluster: countries where employment rate is between
10.6% to 14.0% (Sweden, Finland, The Netherlands and
Denmark)
 Second cluster: countries where employment rate is
between 8.4% to 9.1% (Belgium, France, Germany and UK)
 Third (North-West) cluster: between 6.1% to 7.7%
(Luxembourg, Austria and Ireland)
 Large South-Central-East cluster employment rate in
social services is between 2.7% (Romania) and 4.8%
(Portugal)
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Employment rate HSS (+ GOV)
HSS +
GOV
2010
Change
20002010
HSS
2010
Change
20002010
Denmark
18,4 0.6
14,0 0,7
Netherlands
17,1 2.3
12,3 3,4
Finland
13,9 1.1
11,2 1,8
Sweden
15,6 -1.4
10,6 -2,7
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Employment rate HSS (+ GOV)
HSS +
GOV
2010
Change
20002010
HSS
2010
Change
20002010
Belgium
14,1 0.7
8,4 1,2
Germany
13,9 2.0
8,6 2,1
France
14,8 2.6
8,4 1,9
UK
13,8 1.6
9,1 1,3
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Employment rate HSS (+ GOV)
HSS +
GOV
2010
Luxembourg
Austria
Ireland
Change
20002010
HSS
2010
Change
20002010
13,7 1.7
6,1 1,0
11,9 2.2
7,0 1,6
11,2 2.9
7,7 2,5
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HSS + GOV
2010
Malta
Portugal
Czechia
Spain
Slovakia
Greece
Cyprus
Hungary
Slovenia
Estonia
Italy
Bulgaria
Lithuania
Poland
Latvia
Romania
9,5
9,2
8,9
8,8
8,8
8,5
8,4
8,2
8,0
7,9
7,7
7,5
7,5
7,4
6,9
5,8
Change 20002010
1.2
0.9
0.7
2.3
0.5
1.6
0.1
0.7
0.9
1.7
-0.3
1.0
0.4
0.8
-0.4
0.9
HSS
2010
4,6
4,8
4,5
4,3
4,0
3,3
3,0
3,7
3,9
3,5
4,1
3,1
3,9
3,5
2,9
2,7
Change 20002010
0,6
0,9
0,6
1,3
0
0,7
0,5
0,1
0,6
0,6
0,8
0,1
0
-0,1
0,1
0,6
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Jobs in social services
 Wages in HSW sector grew more slowly than in other parts of the
economy and are in most EU member states bellow average wage in
the economy
 Although skill levels are relatively high and working conditions are often
demanding
 Sufficient labour supply in future ??
 Above average job quality in cognitive demands on jobs, job
complexity, learning new things, monotony of the job + job security
 But lower level of job autonomy, higher psychical and physical
health risks
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Examination of the factors shaping employment
in SS, 2000-2010
 Financing of the welfare state (government receipts, tax on
labour, social protection expenditure, social protection expenditure in
kind)
 Demographic (ageing of population – old age dependency,
fertility rate)
 Political-economic cycle (proxy variables - GDP growth,
public deficit, unemployment rate total, men, women)
 Employment pattern/modernization (employment rate
total, men, women)
 Static (values) + dynamic (change in values) view
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Findings: factors of employment growth in SS
1.
Employment rate in social services is stably and
strongly correlated with three kinds of variables:
 financing of the welfare state (receipts, exp)
 overall employment rate
 and fertility rate
2.
Moderate correlation with the variables which
characterize labour market performance like
unemployment rates, empl rate women, men
3.
? GDP growth , O-A dependency
 The above pattern changed only little during time
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Factors – key findings
Correlation
coefficients PE
2010
with the variable Employment rate in social services
strong > 0.66
Moderate > 0.33
Weak,
insignificant
Social Protection Expenditure Employment rate women Public Deficit
in Kind (.840) **
(.637) **
Social Protection Expenditure Employment rate men
Total (.807) **
(.636) **
Total government receipts
from taxes and soc.contr.
(.798)**
Unemployment rate
women (- .502) *
Employment rate total
(.748) **
Tax on labour (.670) **
Unemployment rate total
(- .472) *
Unemployment rate men
(- .426) *
GDP growth (.391) *
Fertility rate (.674) **
Old Age
Dependency
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Current and future problems
a) The labour force in the HSW sector is rapidly ageing
b) The younger generations of workers in HSW less often
have a high level of education when compared to the
older generations
c) Workers with a medium level of education are usually
NOT specifically educated in health and welfare
d) Risk to lack of manpower despite high levels of
unemployment, due to demanding working
conditions and low job quality
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Current and future problems
 There may be two worlds of social services emerging:
1.
The world of formal, more standardized, high quality
services provided by a relatively highly qualified
workforce
2.
The world of hidden, semi-formal, unknown quality
services provided by less qualified people who are
often neighbours or immigrant workers.
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Financing
 Sustainable financing is a necessary condition for
employment in social services (stable revenue within a
decided tax-structure, ability to finance social services given the
changes in the global economy and over the business cycle)
 In the EU the tax systems have not become more
sustainable in the last 10 years – this implies a higher
level of pressure on the financing of the welfare states
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Social Innovations
 Social innovation plays an increasing role in
social services, especially when understood and
implemented as systematic change
 This includes several elements:
 focus on consumers needs and service quality standards;
 mobilising resources and combining different ways of
financing social services – public and private;
 participation of a broader range of actors and synergy of
their actions.
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Future scenario I: low road
 Uncertain public financing of social services due to
either increasing public debt and unsustainable public
finances (like in some South-European countries), or a
deliberate strategy to dismantle the welfare state
(like in some East European countries)
 Low public expenditure on social services and a
limited role of social services as a buffer against
unemployment or social investment measures
 Limited role of the state in regulating and
financing social services
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Future scenario I: low road
 Lack of social innovation in social services
 Limited quality standards in social services
 Slow growth of employment in social services
 Lower quality of employment in social services

 Lower employment rates of women, lower employment rates in general
(i.e. higher unemployment rates),
considerable child employment
penalty, e.g. the work family balance will not really be supported
 Dualisation of social services in terms of quality, access and
employment characteristics
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Future scenario II: high road
 Sound and sustainable public finance (balanced public
finances, with reasonable public expenditures), no strong
attacks on the welfare state
 Sufficient public expenditure on social services and the
active role of social services as social investment measures
 Strong role of the state in regulating and financing social
services
 Social innovations in social services embedded in broader
governance reforms
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Future scenario II: high road
 Important role of quality standards in social services
 rapid growth of employment in social services

 higher quality of employment in social services
 higher employment rates of women, higher employment
rates in general (i.e. lower unemployment rates), low child
employment penalty
 less diverse conditions and access to social services
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The driving forces summarized
 Strong path dependency in WS model – financing and
employment patterns matter
 Employment growth in SS: positive correlated with WS
finance, overall employment, fertility rate, GDP growth
 Maturation of the revolution of gender roles (gender order)
 Ageing of society will mater in future more
 Two (three) possible scenarios: low road, high road, mixed
strategy
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The driving forces summarized
 Sound, sustainable public finance necessary (expenditure +
revenues, tax structure)
 Private funding plays an increasing role
 State governance and regulation is essential (quality standards,
choice)
 Social innovations as systemic change (consumer focus, mix of
resources, actors)
 Politics matter – commitment to social investments
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Thank you for your attention
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SEURECO
B. Boitier, Lancesseur N. and Zagamé P.
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Outline
1.
Introduction
2.
Macroeconomic results
3.
Global results on Employment
4.
Employment in services
5.
High-skilled and Low-skilled employment
6.
Energy and environment
7.
Conclusion
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1. Introduction

To make a quantitative assessment of the “Friendly”
and the “Tough” scenario.

“Friendly” potential growth enhanced by labor force.
Natural and financial conditions allows to get near by
the potential

“Tough”: low potential growth and bad natural and
financial conditions
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2. Macroeconomic results
2.1 Friendly scenario: towards potential growth (1)
 Enhancement of potential growth by labour force and high-skilled
labour (+15 million and +35 million)
 Natural and financial conditions allow to approach potential
growth after a recovery period
 The engine of growth is mainly internal demand, private and public
(finance recovery)
 2% in average for Europe but, on the whole period (2010-2030) the
growth is dependant on initial debt for every country
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2. Macroeconomic results
2.1 Friendly scenario: towards potential growth (2)
Average annual real GDP growth rate between 2010
and 2030 (%)
4.5%
EE
4.0%
RO
LT
LV
3.5%
3.0%
CY
SK
BG
PL
LU
2.5%
MT
SE
CZ
FI
2.0%
SI
1.5%
ES
DK
NL
AT EU
UK
FR
IE
BE
DE
HU
PT
IT
GR
1.0%
0.5%
0.0%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Public Debt in 2010 (in GDP point)
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2. Macroeconomic results
2.1 Tough scenario: obstacle to growth
 Slowing down of potential growth by labour force shortage (-2
million) even with an increase of high-skilled labour (+15.5 million)
 After the “austerity” period the natural (price for oil) and financial
(interest rates) conditions do not allow to reach the weakened
potential growth
 The engine of growth is mainly private internal demand because
financial conditions get worse with slow growth
 1.2% growth rate in average for Europe but the financial constraint
reinforces inequalities among countries
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2. Global results on employment
2.1 Friendly scenario: toward services
 19.3 million jobs created and an unemployment rate of 7.5% in 2030
 Jobs destruction in Agriculture (-3 million) and Industries (-6
million)
 Jobs creation in Construction (+4.4 million), Private services (+13.7
million) and Non Market Services (+10 million)
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2. Global results on employment
2.2 Tough scenario
Friendly
Tough
 6.6 million jobs destruction and an unemployment rate of 12% in
1995-2005 2010-2020 2020-2030 2010-2020 2020-2030
2030
-3 979
-1 468
-1 641
-1 552
-2 197
 Jobs destruction
(-4 million)
(-7-21%
-22% in Agriculture
-12%
-16% and Industries
-13%
million) -4 084
-2 642
-3 120
-2 676
-4 681
Agriculture
Industry
-9%
-7%
-9%
-7%
 Stagnation+1
of533
employment
in Non Market
+3 040
1 350 Services
+3 034
Construction
+11%
+19%
+7%
+18.9%
-14%
-54
0%
Private
+16in
697
9 344 (+3 million),
4 331 Private
7 978
-4 717
 Jobs creation
Construction
services (+13
million) +23%
services
10%
4%
8%
-5%
Non-market
+16 697
-69
10 224
-3 165
1 334
services
+23%
0%
+16%
-5%
2%
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3. Employment in services
140%
Total Friendly
High-skilled Friendly
Low-skilled Tough
126%
Low-skilled Friendly
Total Tough
High-skilled Tough
Growth rate of the employment between 2010 and 2030
 Jobs
destruction in distribution (-0.8 million in the friendly case and
120%
-3 million in the tough case) transport services (respectively-0.4M
98%
and
100% -1M ) and communication (respectively -0.8M and -1M)
91%
76%
80%
 Jobs
creation
in Lodging and catering (+2M and +1M) Bank. Finance
66%
62%
and
Real
Estate
(+4M
and
+2M)
and Other Private services
(+9.5M
58%
60%
53%
and +5M)
40%
40%
37%
31%
31%
 High-skilled jobs
20% creation in all services sectors
20%
6%
18%
14%
11%
2%
34%
18%
0%
-2%
-20%
-4%
-9%
-16%
-17%
-9%
-13%
-8%
-8%
-14%
-19%
-20%
 Low-skilled destruction everywhere
except for Lodging and catering
-21%
-26%
-40%
Distribution
Lodging & Catering
Transport services
-36%
-36%
Communication
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Bank. Finance &
Insurance
Other Market
services
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4. High-skilled and Low-skilled employment
 Destruction of Low-skilled jobs on both scenarios (-12.7M and -
17.4M).
Employment
Unemployment rate
Friendly case and increase
Tough in the
Friendly
Tough
 Unemployment
reduction
in the “Friendly”
“Tough” case.
2030/2010
2030/2010
2010
2030
 Creation of High-skilled (+32M and +10.7M)
Total
+19.3M
-6.6M
9.7%
7.7%
2010
2030
9.7%
11.8%
 Increase
in High-skilled
unemployment
in 7.0%
all scenarios
5.6%
- High-skilled
+32M
+10.7M
5.6%
5.6% from10.5%
to 7% (“Friendly”) and 10% (“Tough”)
- Low-Skilled
-12.7M
-17.4M
11.2%
8.1%
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11.2%
12.4%
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4. High-skilled and Low-skilled employment
 Increase of High-skilled unemployment
 “Tough”: Financial and Natural conditions prevent to
reach potential growth
 “Friendly”:



Potential growth
Bottleneck and wages increase diffusion on other activities
R&D and Intangibles
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5. Energy and Environment
 None scenario reaches neither the objective of 20%
reduction for energy consumption in 2020 nor the 20% of
renewables
 Both scenarios are under the -20% GHG emissions in 2020.
None reaches the Roadmap -40% in 2030
 A weak decoupling (GDP vs Energy) is reached in the
“Friendly scenario”
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Conclusion
Where are we?
Friendly
Tough
2005
2010
"Europe 2020"
target
2020
2030
2020
2030
Employment rate*
68.0%
68.6%
75.0%
69.8%
73.8%
68.6%
68.2%
Gross domestic expenditures
on R&D(a)
1.82%
2.01%
3.00%
2.01%
2.01%
2.01%
2.01%
92
85
80
76
71
79
75
Share of renewable energy in
gross final energy consumption
8.5%
12.5%
20.0%
16.8%
21.0%
16.5%
20.5%
Primary energy consumption**
(Gtoe)
1.95
1.89
1.56
1.73
1.72
1.82
1.86
Greehouse gas emissions
(index 100 in 1990)
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Conclusion
Correcting policies
 Employment policies for both scenarios but mainly for the “Tough” one
 Energy and Environment Policies mainly for the “Tough” scenario : financial
constraints does not allow energy efficiency compatible with SET
 R&D policies or R&D based policies for potential growth, employment ,Energy
and Environment in particular in the “Tough” case that does not allow a
development of public services compatible with SET
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Conclusion
Policies implementation
 Economic instruments or market based policies
 Governance, education, regulation. Modification of behavioural
equations
 The challenges identified in the “Tough” scenario will need a
drastic modification of behaviours
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Contact:
Baptiste.boitier[at]erasme-team.eu
Nicolas.lancesseur[at]erasme-team.eu
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The consequences of demographic change
on labour supply, wages and labour demand
PD Dr. Hilmar Schneider, IZA Bonn
Dr. Mathias Dolls, IZA Bonn
Andreas Lichter, IZA Bonn
Eric Sommer, IZA Bonn
NEUJOBS Midterm Conference, Session „What can we say about the structure of the future
labour demand and supply?“
Brussels, February 18-19, 2013
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Outline
To what extent is population decline aggravated
by structural effects (age-specific labour supply;
skill-specific labour supply)?
How are wages affected by foreseeable changes
of relative shortages of labour supply?
How does labour demand react to increasing wages
induced by declining labour supply?
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Message 1
In the friendly scenario, labour supply in head counts is
declining by 6%
In the tough scenario, labour supply in head counts is
declining by 15%
The relative decline of labour supply in head counts is c.p.
aggravated by structural effects
Labour supply in hours worked is declining by 13% to 22%
due to the increasing share of older workers who tend to
work less
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Message 2
The relative decline of labour supply is likely to increase
average wages and also the skill-specific wage spread
Wages for high-skilled workers may increase
by up to 35% until 2030
Wages for medium-skilled workers will only moderately
increase until 2030
Wages for low-skilled workers are likely to decline
by up to 40% until 2030
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Increasing wage spread due to
demographic change
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Message 3
The increase of wages is likely to induce a decline of labour
demand in parallel to the decline of labour supply
Demographic change will not automatically eliminate
unemployment
Decline of labour demand may not be a problem for the
labour market as such, but may impose huge problems for
the stability of pension systems
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Labour supply and labour demand
by working hours categories – Friendly scenario
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Labour supply and labour demand
by working hours categories – Tough scenario
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IZA – Shaping the Future of Labor
http://www.iza.org
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