Transcript Stimulating Growth and Employment in the EU: What is the

Stimulating Employment and
Growth : Do we need an AngloSaxon or a Nordic Model?
Frank McDonald
Bradford University School of
Management
National Business Systems
Countries have different national business
systems determined by their institutional
systems and norms of behaviour
National business systems largely determine
the rules of the game for business
transactions
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Management
National Business Systems
These systems are path determined by
history and normally they change slowly.
They however can experience rapid change
in periods of crises eg the UK in the 1980s or
with radical change in the views of elities eg
China in the 1990s
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Management
Types of national business
systems in the EU
Anglo-Saxon
Nordic
Rhenish
Issue of the emerging national business systems
in new member states
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Management
Anglo-Saxon Model
National business systems geared towards
open economies (active participation in
globalisation process), emphasis on
extension of internal market of the EU based
on social protection at minimal level, and
flexible labour markets - UK and to a lesser
extent Ireland
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Management
Anglo-Saxon Model
Strong market
based reforms
Social model
conditions
largely
determined by
needs of
competitiveness
Business
friendly policies
Increased growth and
employment
Economic
stability
Open to globalisation
process
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Management
Anglo-Saxon Model - Benefits
High growth and low unemployment
relative to Rhenish model countries
Conducive to high levels of inward foreign
direct investment from outside of the EU
Fast adjustment to process of globalisation
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Management
Anglo-Saxon Model - Benefits
High proportion of population
economically active
Some internationally competitive sectors
eg financial & business services in London,
Pharmaceuticals
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Anglo-Saxon Model - Problems
Growth and unemployment not better
than Nordic model countries
Low level of labour productivity
compared to both Rhenish and Nordic
model countries
Large income inequalities - regionally
and across types of jobs
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Anglo-Saxon Model Challenges
Improve labour productivity
Reduce problems of low income for
labour with low or the wrong skills
Reduce regional inequality
Keeping up with fast pace of change
caused by technological change and
globalisation
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Nordic Model
National business systems geared towards
globalisation process and development of
high employment (with reformed social
benefits systems) founded on knowledgebased industries, labour markets geared
towards encouraging high productivity with
high wages – the Scandinavian countries and
the Netherlands
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Management
Nordic Model - Benefits
High growth and low unemployment
High labour productivity
High social welfare benefits
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Management
Nordic Model - Problems
High proportion of GDP is accounted for
by the state
Low proportion of population are
economically activity
Not as attractive as the UK and Ireland for
non EU based inward foreign direct
investment
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Management
Nordic Model - Challenges
Maintaining high proportion of GDP
accounted for by the state
Dealing with low proportion of population
that are economically activity
Creating enough high wage/high
productivity jobs in the face of increasing
international competition
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Management
Rhenish Model
National business systems concerned to
protect social benefits system (or to have
slow pace of reform of this system) and to
protect and encourage national (European)
champions in key industries, major concerns
about the globalisation process, and strong
emphasis on protecting employment
conditions – France and to a lesser extent
Germany, Italy and Spain
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Management
Rhenish Model
Slow market based
reforms
Social model
conditions
determined by
strong EU laws
and policies to
enhance social
cohesion
Business policies geared
towards European champions
Increased growth and
employment
Economic
Stability
Cautious approach to
globalisation process
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Management
Rhenish Model - Benefits
High labour productivity – especially
France and Germany
High social welfare benefits
Some leading international companies –
VW, EADS, Siemens, Thales
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Management
Rhenish Model - Problems
Low growth and high unemployment
compared to Nordic and Anglo-Saxon
models
High proportion of GDP is accounted
for by the state
Low proportion of population are
economically active
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Management
Rhenish Model - Problems
Not as attractive as the UK and Ireland
for non-EU based inward foreign direct
investment
Many of the large internationally
competitive companies in France are
strongly connected to the State
For advanced economies have a relatively
large share of GDP in basic
manufacturing
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Management
Rhenish Model - Challenges
Boosting growth and reducing
unemployment
Adjusting to the decline in manufacturing
jobs
Increasing proportion of the population
that are economically active
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Management
Rhenish Model - Challenges
Maintaining high proportion of GDP
accounted for by the state
Creating enough new jobs in high
wage/high productivity work in the
face of increasing international
competition and technological change
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Management
Emerging Models
Emerging national business systems with an
evolving orientation towards social benefits
systems and the globalisation process
Challenge what kind of national business
system will help them to catch up to the
labour productivity levels of the richer
members of the EU and to maintain
international competitiveness
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Nirvana Model
High
productivity
High growth and
low unemployment
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Management
High
welfare
benefits
Nirvana Model - requirements
Business system which can deliver high
productivity in the face of increasing
international competition and
technological change by overcoming
problems of inappropriate characteristics
in labour force, eg low economic activity,
low or the wrong skills, low adjustment
capacity, poor levels of education
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Realistic models
Countries with high degree of consensus
about social norms and highly educated
populations – versions of the Nordic model
Countries with diverse and conflicting
views on social norms and high proportion
of unskilled or wrong skilled labour with
high proportion of poorly educated labour
– versions of the Anglo-Saxon model
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Management
Realistic models
Countries with diverse and conflicting
views on social norms and highly
educated populations with appropriate
skills – versions of the Rhenish model
However, it is not clear if even France
and Germany have the conditions
necessary to sustain Rhenish models
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Management
Role of the EU
Flexible social and economic policies that
permit development of different national
business systems that can tackle the different
challenges that face the member states
A flexible EU with inner-core members in some
areas and peripheral members in many areas
Problems of labour migration within the EU
from low to high income countries
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Role of the EU
Creation of a nirvana model by strong and
uniform social and economic policies with large
scale transfer of income to help poorer member
states to compete with high social costs
Systems that generate sufficient high wage/high
productivity jobs to finance high social welfare
benefits
A very difficult project to create, implement
and sustain
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Management