Transcript Anglo-Saxon Model

Employment challenges
in the future
By Nina Røhr Rimmer
Associate Professor, MSc Econ
University College Northern Denmark –
Technology & Business
March 2011
THE BACKGROUND for EU problems
• Long term situation
• Demographic change – ageing workforce
• Globalisation and competitive pressures
• New economy: knowledge; services
• Climate changes
• But how does the crisis influence this trend?
• Does it alter the labour market fundamentally?
• What sort of structural impacts?
LABOUR SUPPLY
• Emphasis on quantity and quality
• Moving beyond employability
• A necessity is long term supply
• Raising employment rates of specific groups
• Women
• Youths and older workers
• More contentiously: immigrants
• Enhancing human capital
• Life Long Learning
• Basic and transferable skills
LABOUR DEMAND
• Link to macro circumstances
• Seeking to maintain employment levels
• Possibilities for forms of job sharing
• Stimulating demand in ‘new’ sectors
• Such as ‘green’ jobs
• Demand for specific segments of Labour Force
• Mainstreaming atypical contracts
• Getting rid of the term “atypical”
• Labour cost considerations
• Including tax systems
INSTITUTIONS
• Matching supply and demand
• Delivering quality employment services
• The components of flexicurity
• Facilitating adaptability
• Making transitions pay
• Burden sharing
• Reviewing employment protection laws
• Diminishing insider-outsider conflicts
• Especially a problem with immigrants
• both EU and non-EU
QUALITY
• Focus on wider aspects of employment
• Fairness in the labour market
• Equality
• Gender
• Other dimensions
• Over the life-course
• Work-life balance
• Working conditions
• Avoidance of low wage traps etc.
The European Society – Can we agree on one model?
• Free-market capitalist society and a welfare
society inspired by the socialism project
• Social spending is high as a percentage of GDP
(education, health)
• A substantial part of income is redistributed
through taxation and social protection
• Eastern + Central Europe with no or little
strategies. They need to invent/adapt to the rest
of Europe
Can we agree on one model? Cont.
• There seems to be a large consensus among
European leaders in politics, trade-unions or social
partners on the point that there is a European Social
Model (ESM), and that it needs to be maintained and
developed. But what ESM?
• Can the ESM survive in a global world?
• The answer will be positive only if social protection is
not a handicap but also a factor of productivity and
competitiveness. Job stability must be an incentive for
companies to invest in workers and for workers to
invest in their company
• How do we overcome potential corruption?
EU = 4 models of „Welfare Capitalism“
• The Anglo-Saxon or Liberal Model
• The Continental or Social Insurance Model
• The Mediterranean or Family-oriented Model
• The Scandinavian or Universalistic Model
• The lack of model in Eastern + Central Europe
Anglo-Saxon Model
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Pre-dominant role of markets, minimal role of the State
Low degree of regulation
High competition, sophisticated regulation of utilities
Selective social transfers; i.e. means tested benefits
Private insurances
Welfare-to-work strategies
Public health system and publicly-financed schools
• Anglo-Saxon Europe: United Kingdom, Ireland
• Anglo-Saxon Model Overseas: USA, Canada,
Australia, New Zealand
EUROFRAME-EFN
Special Topic
Report, Autumn
2007
Continental Model
• Social protection organised on occupational basis
• Income-related transfers with low minimum standards
• High employment protection, generous unemployment
allowances
• Employment rates rather low
• Contribution-based social insurance system for pensions,
and unemployment
• Low re-distributive efforts, regressive tax structure (low wealth
taxation, high taxes on labour and consumption)
• Co-operative industrial relations and coordinated wage
bargaining
• Germany, France, Belgium, Netherlands, Austria,
Switzerland
EUROFRAME-EFN
Special Topic
Report, Autumn
2007
Mediterranean Model
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Important role of supportive family networks
Low transfers, but generous old-age benefits
High gender inequality, low female participation rate
High job protection but low replacement rate
Some traits of paternalistic society remained
• Italy, Spain, Portugal, Greece
EUROFRAME-EFN
Special Topic
Report, Autumn
2007
Scandinavian Model
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Based on equality, social inclusion, universality
Low job protection
High level of social services, affordable and of high quality
High employment rates and emphasis on gender equality
Tax financed health system and unemployment benefits (partly)
Progressive taxation, taxes on property and bequests
Low taxes for business
High minimum wages, high replacement rates, pensions
with high minimum standards & income-related elements
• Cooperation between social partners
• business, unions and government
• Trade unions operates unemployment insurance and training
• Sweden, Norway, Finland, Denmark
EUROFRAME-EFN
Special Topic
Report, Autumn
2007
The Danish flexicurity triangle
•Low employment
protection
•High job mobility
Flexible
labour
market
Income
security
Unemployment
benefits
•High degree of compensation
• Min. 2 years in the insurance system
Active
LMP
Educational
policy etc.
•Focus on better qualifications
•Right and duty to accept job offers
Flexicurity Model
• = a combination of easy hiring and firing
(flexibility for employers) and high benefits
(= security) for the unemployed
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High mobility in the labour market
Permanent employments
Rather high level of security
Equal opportunities (and high employment
rates for both men and women + elderly)
• Strong organisation on both sides of the labour
market – very few conflicts
• High level of unionisation (80 %)
Salary in Denmark
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Relatively high salaries
But high level of tax
•
marginal tax rate of 51,5%
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Ca. 35% for income up to £ 50,000
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Collective agreements:
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for example £16 per hour for unskilled work
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Private negotiation and employment contract
•
Other examples:
• Electrician
£ 20 per hour (£ 3,000 p.m.)
• Nurse
£ 3,000 per month
• Engineer
£ 5,000 per month
• Spec. Doctor
£ 8,000 per month
The Danish Labour Market
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37 hrs./week
Paid holidays – min. 5-6 weeks per year
+ 9 public holidays
High salaries
Flexibility concerning illness, child birth, family
benefits
• Work-scheme pension contributions
Working culture
• Informal atmosphere
• Flat hierarchy
• responsibility is delegated
• Team work
• Professional development – rewarding
• Working language - English or Danish
• Effectiveness and efficiency
• Wide use of technology
• Social events and activities
An example
Annual payment to Union
Annual payment to unemployment scheme
amounts are tax-deductable
80-90% of all employees are members
£ 500
£ 500
Should you get unemployed….
2 years of unemployment payment ca.
(previously 7 years then 4 years...)
Plus re-training programme
£ 20,000 per yr
Should you not get a job you may still receive social benefit,
although dependant on your assets and your spouses income,
you can still receive £ 12-15,000 per year, free childcare,
housing subsidy etc.
Job Satisfaction
Per cent of employed, 2006
100
100
90
90
80
80
70
70
60
60
50
50
DK NO UK CH AT BE DE NL IE LU SE PT FI FR ES IT EL
The lowest unemployment rate in 33 years
2008 = 1,8%
2011 = 4.2%
Source: Statistical Yearbook 2008, Statistics Denmark
Unemployment rate. Source: EUROSTAT
18
16
European Union (27 countries)
Euro area (EA11-2000, EA12-2006, EA132007,EA15-2008, EA16)
14
Denmark
12
Germany (including ex-GDR from 1991)
10
Greece
Spain
8
France
6
United Kingdom
United States
4
Japan
2
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Key elements of a New Welfare State Architecture
• Child-centred and women-friendly social investments
Thus fostering fertility rates
• Higher investment in human capital
The higher the qualification, the higher are activity rates
• Restructuring from transfers to social services
From passive to activation in case of unemployment, invalidity etc.
• “Flexicurity” or managed and balanced flexibility
Jobs with high security and flexible jobs with inadequate protection
• Active anti-cyclical macro-economic strategy
• Growth and best technologies are preconditions for welfare
EUROFRAME-EFN
Special Topic
Report, Autumn
2007
Eastern and central Europe challenges
regarding labourmarket policies
• Lack of trust in the public sector
• Have experienced significant changes in their financial
situation due to:
• Reduction of up to 40% in salaries in the public sector
• Severe losses in the property sector
• often combined with high risk loans in CHF or EURO
• Focus on keeping the society free of corruption and “black”
economy
• Wrong to treat “Eastern Europe” as one region with the
same cultural and economical situation
Video links and reports
Video links:
http://www.youtube.com/watch?v=U6n7jBY7-NA
http://www.youtube.com/watch?v=-NBULE-agZ8&feature=related
http://www.youtube.com/watch?v=z_EhS81E4kk&feature=related
Readings:
The Danish Flexicurity model:
http://www.sociology.ku.dk/faos/flexicurityska05.pdf
http://www.progressive-economics.ca/2008/01/23/the-danish-flexicurity-model/
http://www.employmentweek.com/cms.php?page=106
http://research.cbs.dk/da/publications/denmark(93ccbf24-09ed-4a45-b419c53ce1c1d6da).html
http://www.djoef-forlag.dk/vare/8757417083
Additional readings:
Master thesis from Aalborg University
http://projekter.aau.dk/projekter/da/studentthesis/how-can-active-labor-market-policy-contribute-todevelopment-of-flexicurity-in-central-eastern-european-countries(2ebfce7c-c4be-4391-984e4bbc51ac4f50).html
Flexicurity: a relevant approach in Eastern and Central Europe
http://www.ilo.org/global/publications/ilo-bookstore/order-online/books/WCMS_091425/lang-en/index.htm
Security in labour markets : combining flexibility with security for decent work
http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_elm/--analysis/documents/publication/wcms_113923.pdf