EU Labour Market David Bell.pdf

7/27/2019 EU Labour Market David Bell.pdf

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The European Labour Market 2013:

A Brief Appraisal

David Bell

University of Stirling(cosse)

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Recent EU Labour Market Performance Weak

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Rapid increase in unemployment /decline in

employment 2008q2 to 20010q2

Stability until 2011q1 then more deterioration in

labour market, though at a slower rate

Between 2008q2 and 2012q3 in EU as a whole Increase in unemployment 9million

Decrease in employment 5million Increase in economically active 4 million


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EU Labour Market Performance Weak

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Increase in both male and female unemployment, butdifferent trends underlie this

Almost all of the fall in employment is male

Almost all of the increase in activity is female

Small increase in working age population 4

-6,000,000 -2,000,000 2,000,000 6,000,000 10,000,000

Working age population, Aged 15-74

Active population, Aged 15-74

Employed population, Aged 15-74

Unemployed population, Aged 15-

74

Males

Females


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Self-employment has not fallen .

5

Is the relatively more robust

performance of self-

employment indicative of a

distressed labour market?

Between 2008 and 2011, part-

time employment increased as

a share of EU employment from

18.2 per cent to 19.5 per cent

In the UK, there has been a very

substantial increase in part-time self-employment.

Combined distress?

27,000

28,000

29,000

30,000

31,000

32,000

33,000

34,000

2005Q1

2005Q4

2006Q3

2007Q2

2008Q1

2008Q4

2009Q3

2010Q2

2011Q1

2011Q4

2012Q3

Self-employment(thousands)

Self-employment in the EU

2005Q1-2012Q3


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Long-term unemployment increasing ..

Share of long-term unemployed in totalunemployment (LTU). European Union 2005-2012

Increase in LTU delayedafter initial increase inunemployment

Drop in LTU from 2005 to

2009. Supply-side policyinterventions working?

LTU as share of totalunemployment only nowreturning to its 2005 level

Influence of activationpolicies on this share?

6

25

30

35

40

45

50

2

005Q1

2

005Q3

2

006Q1

2

006Q3

2

007Q1

2

007Q3

2

008Q1

2

008Q3

2

009Q1

2

009Q3

2

010Q1

2

010Q3

2

011Q1

2

011Q3

2

012Q1

2

012Q3

PercentofLong-TermUnem

ployed


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The young continue to suffer

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Jobs for the young disappearing faster than those for theworking age population as a whole

Youth unemployment rising faster


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EU unemployment performance compares badly with USA

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USA historically lower

unemployment rate than EU

US unemployment rate

increased faster than EU in

2008-09

Since 2010, US unemployment

rate has been falling rapidly,

while EU continues to rise

Eurozone performance slightly

worse than EU as a whole

US labour market not working

well long-durations, housing

market but government

stimulating demand


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Increased variability in EU unemployment ratesbegan at same time as recession

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Mirrors increase invariance of yieldspreads but hasnot declined in same

way since 2012

Quantities takemuch longer to

adjust than prices


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Unemployment differences across major economies

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01020304050

60

Q1-2003

Q1-2004

Q1-2005

Q1-2006

Q1-2007

Q1-2008

Q1-2009

Q1-2010

Q1-2011

Q1-2012

Spain

UnemploymentRate 15-24

UnemploymentRate 55-64 0

510152025

30

Q1-2003

Q1-2004

Q1-2005

Q1-2006

Q1-2007

Q1-2008

Q1-2009

Q1-2010

Q1-2011

Q1-2012

France



05

101520

Q1-2005

Q1-2006

Q1-2007

Q1-2008

Q1-2009

Q1-2010

Q1-2011

Q1-2012

Germany

Unemployment

Rate 15-24UnemploymentRate 55-64

Growing disparity in unemployment

rates. Young doing particularly badly

in labour market but higher youthunemployment rates started before

recession


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Different trends in unemployment, employment and economicactivity

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-2,000,000 - 2,000,000 4,000,000

GermanyLuxembourgEstonia

FinlandAustria

BelgiumSloveniaSweden

Slovak RepublicDenmarkHungaryCzech Republic

IrelandNetherlands

PortugalPolandFrance

United KingdomGreece

ItalySpain

Change in EU Unemployment 2008Q2-2012Q3 Much of the increase in

unemployment

concentrated in Spain.

Germany has made the

only significant

negative impact on

aggregate EUunemployment


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-4,000,000 -2,000,000 - 2,000,000

SpainGreece

PortugalItaly

IrelandDenmark

NetherlandsPolandFrance

Czech RepublicSlovak Republic

SloveniaFinlandEstonia

United KingdomLuxembourg

HungarySwedenAustria

BelgiumGermany

Change in EU Employment 2008Q2-2012Q3


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-200,000 200,000 600,000 1,000,000

PortugalIreland

DenmarkSlovenia

FinlandEstonia

Slovak RepublicLuxembourg

Czech RepublicGreece

NetherlandsAustria

SwedenHungaryBelgium

SpainPoland

ItalyFrance

United KingdomGermany

Change in EU Economically Active 2008Q2-2012Q3 NB Much smaller

numbers than the change

in employment or inunemployment


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Although output shocks different in nature, the labour marketresponse to these has varied

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Gi h h i i l b k h


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Given the change in output, some countries labour markets have

still performed poorly

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Hours have taken some of the strain

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

WeeklyHour

s(allworkers)

Ireland

Germany

UK

Spain


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Explanations/policies

Recession most severe if caused by financial

imbalance in private and/or public sectors Financial imbalance impacts on the construction

sector - disproportionately affects young males.

Failures in housing market then become anobstacle to labour market recovery

Part of recovery may involve policies to restore

construction sector/housing market closer to long-run equilibrium

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Labour Market Policy

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Labour market structure clearly affecting outcomes:

For example: Structure of contracts in Spanish labour market make it

sensitive to output fluctuations

Because market is highly regulated, risk averse employers

will avoid entering long-term employment contracts However, this is a long-run supply-side issue. Reform

unlikely to have an immediate effect on demand forlabour. Meanwhile those economies which have

suffered financial crises are suffering from a chronicshortage of domestic demand.


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German aspirations?

The (German) apprenticeship system is really one

gigantic microeconomic management exercise thatinvolves all the relevant stakeholders in society.The core lesson from Germany is that this is not a top-down approach, but really a bottom up one. Everycompany, every school principal, every mayor, every non-governmental organization, and every church can make adifference.It is the focus to detail and a keen interest in youngpeoples future path that counts the mostnot loftywhite papers or grandiose policy announcements issuedin the national capital.

Klaus Zimmerman, Jobs and Development Blog

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Prospects negative view?

Goods market still in difficulty. Weakening demand inpart resulting from fiscal austerity

Labour market reform will not bear fruit for some time

Limited collective will to fix imbalances

In these circumstances, labour market recovery likely tobe prolonged and imbalanced across Europe.

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Positive - Policy Responses?

If austerity policies weakened: Reduced payroll taxes

Infrastructure investment (aiding construction industry)

Fix financial institutions failure to liquidate zombie companies(and take debts onto balance sheets) may inhibit labour and capitalreallocation

Specific short-term assistance to young (e.g. job mentoring,subsidised travel) avoid scarring (Bell/Blanchflower)

Put in place institutional structures that support internal migration

Greater wage flexibility to restore competitiveness UK real wages falling depreciation against euro

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Thank you!

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EU Labour Market David Bell.pdf

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