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Transcript of the european union:econmic,socity and polity
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by
Andrs Rodrguez-Pose
London School of Economics
Oxford University PressISBN 0-19-874286-X
THE EUROPEAN UNION:
ECONOMY, SOCIETY, AND
POLITY
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Part I
ECONOMY
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Chapter 1
Competitiveness
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The stages of economic
integration Free trade areas:
Free trade between members, different external tariffs
Little or no institutional co-ordination
Customs union: Free trade between members and common external trade
restriction
Common regulatory bodies
Common (or single) markets: Removal of all barriers to free factor mobility
Free mobility of goods, capital, labour, and services
Greater level of regulation and strong institutions tomonitor decisions adopted by member states
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The stages of economic
integration (II) Economic union:
Harmonisation of economic policies (generallymonetary or fiscal policy)
Members give up powers. Strong central
institutions which dictate common economicpolicy
Complete economic integration: All economic policy areas are harmonised
The capacity of states to implement independentpolicies disappears
Central institutions become the centres ofeconomic decision-making
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The stages of economic
integration in the EU
Level of integration Main features Period
Free trade area Free trade among members From 1958 to the early
1960s
Customs union Free trade with a commonexternal tariff
In theory from 1958, inreality from the early 1960s
until 1993
Common market Free mobility of factors across
member states
1993-1999
Economic union Harmonization of economic
policy
Early stages in 1993.
Partial economic union in
1999
Economic integration Completely unified economic
policy
Not yet achieved
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Economic integration to
achieve competitiveness Why did a customs union (the EC) decide to
increase the pace of economic integrationduring the 1980s and 1990s?
Increasing globalisation of the world economy
(increased competition, especially from the US,Japan, and the NICs)
More sophisticated systems to dodge tradebarriers (multinational corporations)
Belief that market fragmentation (nationallydivided markets) was reducing economies ofscale
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GDP per capita (2000) in
Europe, the US and JapanCountry
Total GDP in2000 (billions
of )
% of the EUeconomy
Austria 205.5 2.42
Belgium 244.0 2.87
Denmark 174.2 2.05
Finland 131.2 1.54
France 1399.2 16.47
Germany 2036.0 23.97
Greece 120.7 1.42
Ireland 101.1 1.19
Italy 1152.3 13.57
Luxembourg 19.9 0.23
Netherlands 399.1 4.70Portugal 112.3 1.32
Spain 605.7 7.13
Sweden 248.8 2.93
United kingdom 1543.0 18.17
European Union 8493.0 100.00
United States 10738.7 126.44
Japan 5163.2 60.79
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The limits of European
competitiveness The costs of the non-Europe (Cecchini, 1991):
Physical barriers: Intra-European stoppages,
controls at border checkpoints, red-tape, different
currencies
Technical barriers: Different national productstandards and technical regulations across
Member States
Fiscal barriers: Lack of fiscal harmonisation
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Physical barriers
Custom related costs: Customs controls, border stoppages
Paperwork and red-tape
Exchange of low-value added perishable goods
suffered as a result
High administrative costs and regulatory
hassles: Higher cost of red-tape of SMEs (higher
proportion of their business volume, and lack ofexpertise and human resources)
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Physical barriers (II)
Protected markets (II): Fear of foreign dependence leads to protection of
national strategic sectors
Many sectors fall under this umbrella:
petrochemical industries, shipbuilding, iron andsteel, tobacco, car manufacturing,telecommunications, air transport,...
Formation of monopolies (BT, Deutsche Telekom,SIP, Air France, Iberia,...) or oligopolies
Cost of protection born by the consumer:
Lack of competition and underperforming industries
And companies:
Higher prices for services than their competitors
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Physical barriers (III)
Different currencies:
Transaction costs of changing currencies
Higher costs of holding higher international
reserves
Costs associated to exchange rate volatility
Higher interest rates in many countries
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Technical barriers
Different product standards and technicalregulations: Problems and additional costs for consumers
Cost for firms which had to adapt their products
to different national standards Cost premium for SMEs
Protected public-sector procurement: Government supply and construction contrast
restricted to national firms Or technical regulations discriminating against
foreign bidders
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Fiscal barriers
Different fiscal regimes: Different regimes for companies
Different VAT rates
Different national accounting standards:
Duplication or multiplication of accountingstandards for multinational companies
Fiscal suspicion by national authorities inorder to prevent tax evasion
Premium for SMEs
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The expected benefits of
economic integration Cecchini report (1988). Cost saving effects:
Static trade effect: benefits reaped from allowingpublic authorities to buy from the cheapest suppliers
Competitioneffect: Downward pressure on prices
as a result of greater competition Restructuringeffect: Reorganisation of industrial
sectors and individual companies as a result ofgreater competition
Other possible benefits: Benefits on investment, innovation (rationalisation
of R&D expenditure) and growth
Savings for the public sector (lower governmentsubsidies for inefficient firms
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The expected benefits of
economic integration (II) Combination of cost saving effects results
in two kinds of benefits: Direct benefits: from the eradication of
economic borders
Indirect benefits: from economic restructuring,increases in trade and competition and greatereconomies of scale
Result:
The emergence of virtuous cycles of innovationand competition
Lowering of prices for consumers
Greater job creation
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Estimation of benefits
Cecchini (1988): 4 to 7% ofEuropes GDP
Baldwin:
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The expected benefits of
monetary union For all Member States adopting the Euro:
Price transparency across borders, inducing a greatercompetitioneffect
Elimination of transaction costs of changing
currencies Savings through holding lower international reserves
Reduction of uncertainty caused by exchange ratevolatility
Specific benefits for peripheral economies: Image premium and credibility in international
markets
Monetary and macroeconomic stability (lower
inflation, deficit, debt, and interest rates)
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The possible impact of
monetary union Possible impact:
Large benefits expected
But Commission reluctant to issue estimates (as
was the case of with the Single Market)
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The impact of economic
integration Is European economic integration delivering
the benefits predicted by its supporters?
Has the EU experienced the increases intrade, the more efficient allocation of
resources, and the greater growth andwelfare gains expected?
Have European economies become morecompetitive?
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Trade
Sizeable increase in trade across the EU Greater expansion in absolute terms than in other
developed areas of the world
But not in relative terms, where the US has
expanded more (but not Japan) This means that in a world context the evolution
of European trade has been rather disappointing,especially in comparison with countries likeCanada or Mexico, which have undergone milder
processes of integration
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Exports of goods and
services as a share of GDP
1988 1991 1994 1997 Change
1988-97
% Change
EU 26.80 26.26 27.79 31.73 4.93 18.40
US 8.99 10.37 10.54 12.09 3.10 34.48
Japan 10.02 10.19 9.27 11.11 1.09 10.88
OECD 17.31 17.89 17.92 21.02 3.71 21.43
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Trade at a national level
Several countries have experiencedsignificant increases: Countries with relatively open economies:
Ireland
Countries which were relatively closed: Finland,Sweden, Spain, or Italy
The trend is far from universal: Germany, Greece, and Portugal have seen their
exports as a share of GDP decline Luxembourg, Greece, and Portugal have seen a
decline in their import share
The lack of a clear pattern in the evolution oftrade suggests that no greater territorial
specialization is evident
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Changes in trade patterns
Increase in intra-industry trade But, stability of inter-industry trade
This has prevented a further concentration ofcapital intensive industries in core countries to
the detriment of the periphery Former lagging countries such as Ireland and
Spain have profited from integration to expandtrade and attract capital intensive industries
Portugal and Greece have been less successful
The level of intra-industry trade suggeststhat the expected specialization may bestarting to happen
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Foreign direct investment
Early stages of integration seem to have had alower impact on FDI than on trade Net inflows of FDI oscillate with economic cycles
Flows of FDI reached their peak around 1990
After the implementation of the Single Market theyfollowed a downward trend
In international comparisons the EU does notscore favourably
When compared to the US, net inflows of FDI into theEU have declined with respect to the period before 1993.
FDI flows among the member states have lost someimportance...
But, outflows to the rest of the world have increased.
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FDI net inflowsCountry 1980 1985 1990 1994 1997
Austria 0.30 0.26 0.41 1.08 1.20Belgium - - - - -
Denmark - 0.19 0.85 3.31 1.70
Finland 0.05 0.21 0.60 1.53 1.78
France 0.49 0.50 1.10 1.19 1.65
Germany - - - 0.09 -0.02
Greece 1.38 1.10 1.21 0.99 0.86*Ireland 1.43 0.83 1.38 1.55 3.63
Italy 0.13 0.25 0.59 0.21 0.32
Luxembourg - - - - -
Netherlands 1.33 1.17 4.35 2.23 2.42
Portugal 0.55 1.16 3.78 1.44 1.68
Spain 0.70 1.19 2.84 1.94 1.04
Sweden 0.20 0.39 0.86 3.16 4.33
United Kingdom 1.88 1.20 3.33 0.90 2.96
EMU area 0.50 0.56 1.46 0.75 0.83
United States 0.62 0.49 0.86 0.66 1.19
Japan 0.03 0.05 0.06 0.02 0.08* Data from 1996.
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Economies of scale
Ex-ante reports highlighted that economicintegration was to bring about a moreefficient concentration of resources
And a restructuring of companies
Number of mergers and acquisitions hasincreased by more than two and a half timesbetween 1987 and 1998
The bulk of this happened in anticipation of theSingle Market
Transnational M&As have taken off after theSingle Market and in anticipation of EMU.
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Economies of scale (II)
Three stages in the process: National M&As: started to take place during the late1980s in anticipation of the Single Market
European M&As: the percentage of M&A involvingat least one foreign company almost doubled between
1990 and 1998.
Trans-national M&As: Increasingly M&As areglobal. In 1998 one third of all M&As involved atleast one non-EU partner.
During the 1990s there has been an importantincrease in the volume of the deals. The total volume of deals has been multiplied by six
between 1991 and 1998
Greater expansion in outward M&As
M d i iti
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Mergers and acquisitions
(1987-98)
1987 1990 1993 1996 1998
Number 2775 7003 5740 6327 7600
% National 71.6 60.7 63.4 55.7 50.1
% EU 9.6 21.5 15.9 17.4 16.5
% International 18.8 17.8 20.7 26.9 33.4
Source: AMDATA in European Economy (1999)
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Economies of scale (III)
European companies have become moreambitious and aggressive: Probably in connection to the launch of the Euro
But also as a result of the emergence of new TNCsin Europe resulting from previous mergers
New mergers increasingly involve companiesfrom two different European countries: Orange and Mannesman
Vodafone and Mannesman And also truly global M&As:
Daimler-Chriysler
Terra Lycos
Repsol-YPF
V l f b d
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Volume of cross-border
M&A's (Billion US$)Inward
1991 1994 1997 1998 Multiplier
1991-98
EU 38.7 58.4 133.6 223.4 5.8
Rest of Europe 4.1 7.4 14.6 17.6 4.3
North America 26.1 62.9 76.3 218.1 8.4
Rest of the World 16.4 67.7 116.5 98.9 6.0
Total 85.3 196.4 341.0 558.0 6.5
Outward
1991 1994 1997 1998 Multiplier
1991-98
EU 50.5 75.3 127.5 330.6 6.5Rest of Europe 3.4 18.2 42.1 14.4 4.2
North America 15.7 52.0 106.4 175.2 11.2
Rest of the World 15.7 50.9 65.0 37.8 2.4
Total 85.3 196.4 341.0 558.0 6.5
Source: KPMG Corporate Finance (1999).
V l f b d
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Volume of cross-border
M&A's (%)Inward
1991 1994 1997 1998 Change
1991-98
EU 45.4 29.7 39.2 40.4 -5.4
Rest of Europe 4.8 3.8 4.4 3.1 -1.7
North America 30.6 32.0 22.4 39.1 8.5
Rest of the World 19.2 24.5 34.0 17.8 -1.4
Total 100.0 100.0 100.0 100.0 0.0
Outward
1991 1994 1997 1998 Change
1991-98
EU 59.3 38.4 37.4 59.3 0.0Rest of Europe 3.9 9.3 12.4 2.5 -1.4
North America 18.4 26.5 31.9 31.4 13.0
Rest of the World 18.4 24.8 18.3 6.8 -11.6
Total 100.0 100.0 100.0 100.0 0.0
Source: KPMG Corporate Finance (1999).
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Economies of scale (IV)
But have EU companies become theleading actors in international M&As? Despite the increase in numbers and size, EU
companies have lagged behind the US...
And during much of the 1990s also behind Japanand the Asian Dragons
Only the Asian crisis of 1997/98 changed thetide
And a diminishing number of Europeancompanies can be found among the top 50in the world
L ti f th ld'
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Location of the world's
largest 50 corporations
United
States Europe Japan Other
1960 42 8 0 01970 32 14 4 0
1980 23 19 5 3
1990 17 21 10 2
2000 15 16 19 0
Source: Bergesen and Fernndez (1995) and Fortune Global 500.
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Productivity European labour productivity has been
reducing the gap with the US in the post-wardecades
Convergence came to an end in the second halfof the 1980s
Increasing technology gap between the US and the EU
Permanence of fragmented markets in Europe(monopolies which prevented access to new technologies)
Rigidity of European labour markets (which kept the
young out of work) Productivity has grown faster in the US in the
1990s Some encouraging signs for EU (advantage in mobiles)
L b P d ti it
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Labour Productivity
Growth
-4
-2
0
2
4
6
8
10
12
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
1967
1964
1961
%
EU
US
Japan
P d ti it i l t d EU
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Productivity in selected EU
countries
0
20
40
60
80
100
120
140
1960
1965
1970
1975
1980
1985
1990
1995
Changeinprod
uctivi
US=100
France
ItalySpain
UK
United States
Source:World Bank World Development Indicators (2000).
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Growth
On average, the EU has had slightly greatergrowth than the US and lower than Japanduring the post-war decades
Precisely at the time of European economic
integration, the roles have been reversed Greater growth in the US (double that of the EMU
area)
Lower in Japan
Strong internal divergence in growth patterns in theEU
Extremely high growth in Ireland and Luxembourg
Moderate in Austria, Denmark, the Netherlands andPortugal
Low elsewhere in the EU
Average growth in the EU
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Average growth in the EU,
US, and Japan (1960-2000)
-4
-2
0
2
4
6
8
10
12
14
1
960
1
963
1
966
1
969
1
972
1
975
1
978
1
981
1
984
1
987
1
990
1
993
1
996
1
999
%
EU
US
Japan
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Conclusion
The impact of economic integration on theeconomic performance of the EU has notbeen as spectacular and immediate aspredicted by ex-ante studies
The gap between the EU and the US hasincreased in many areas (growth,productivity, trade, M&As)
Different economic cycles may have a lot to
say about diverging economic performances However, economic integration may be
setting the bases for a quicker adaptation bythe EU in the future to new economic
challenges
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Chapter 2
Cohesion
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Introduction
Have the alleged benefits of economicintegration been evenly distributed?
How is uneven development within the
EU likely to affect the competitivenessand further economic and political
integration in the EU?
National disparities in the
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National disparities in the
EU
The EU is one of the most developedspaces in the World: GDP per capita below that of the USA and
Japan...
But well above any other large area of the world However, wealth is and has been unevenly
distributed across the EU: Until recently a core/periphery was visible
The core: Austria, Belgium, Denmark, Finland,France, Germany, Luxembourg, the Netherlands,Sweden, the UK, and Northern Italy
The periphery: Greece, Ireland, Portugal, Spain,and Southern Italy
National disparities in the
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National disparities in the
EU (II)
Recent changes have led to a blurring ofthe distinction between core and
periphery:
Poor economic performance of some of the
countries of the core (Finland, Sweden and the
UK)
High growth in the periphery (Ireland)
National disparities in GDP per
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National disparities in GDP per
capita and unemploymentGDP per capita 1985 Unemploymentrate 1985 GDP per capita 2000 Unemploymentrate 2000
EUR15=100
PPS
EUR15=100
%
EUR15=100
PPS
EUR15=100
%
European
Union
100.0 100.0 10.7 100.0 100.0 8.4
Austria 108.4 108.2 4.4 113.0 111.7 3.3
Belgium 102.3 105.5 8.9 106.2 110.7 8.6
Denmark 140.7 112.5 5.7 145.3 119.0 4.8
Finland 135.2 101.6 14.8 112.9 103.7 9.8
France 117.4 112.0 12.0 102.3 99.0 9.8
Germany 125.9 117.9 9.8 110.4 106.3 8.3
Greece 49.2 60.6 9.6 51.0 67.2 11.2
Ireland 65.9 60.9 10.1 118.9 118.8 4.2
Italy 91.9 101.5 12.3 89.0 98.7 10.5
Luxembourg 128.9 131.3 2.5 200.8 187.9 2.0
Netherlands 109.7 103.4 5.2 111.7 114.0 2.6
Portugal 29.1 55.1 6.7 50.0 75.7 4.0
Spain 53.8 70.5 21.1 68.4 83.0 14.2
Sweden 149.3 113.6 10.4 125.0 104.1 6.4
United
Kingdom
100.1 98.4 7.1 115.2 103.1 5.6
Regional disparities in the
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Regional disparities in the
EU
Strong national contrasts hide even greaterregional contrasts: In 1998, the GDP per capita of Luxembourg was 3.8
times greater than that of Portugal
Hamburgs GDP was 6.7 times higher than that ofIpeiros (Greece)
Andalusia and Extremadura had unemployment rates of32.4 and 30.2%, whereas Salzburg or Belluno had amere 2.2 and 2.3% respectively.
Internal economic disparities are evident inalmost every single country in the EU Italy (GDP Lombardy 132.5 .... Calabria 59.2)
(Unemployment Trentino 3.8% .... Campania 25%)
Regional disparities in the
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Regional disparities in the
EU (II)
Strong regional contrasts also in: Portugal (Lisbon and the North vs. the South and
Centre)
France (Paris vs. the rest)
Spain (Northeast and Madrid vs. South and West) UK (South vs. North)
Germany (South vs. North)
Sweden (South vs. North)
Belgium (North vs. South) No regional contrasts in:
The Netherlands
GDP per capita, 1998
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GDP per capita, 1998
EUR15=100
More than 130
115 to 130
100 to 115
85 to 100
70 to 85
less than 70
Factors behind the existence
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Factors behind the existence
of territorial disparities
Factor endowment: Inherited economic situation: GDP per capita
Quality and quantity of human capital:Skilled labour, matching skills with labour
demands Accessibility: Infrastructure endowment
Innovation: Generation and assimilation ofinnovation. Investment in R&D
Sectoral structure
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The need for intervention
Do territorial differences in factorendowment justify the implementation of
European development policies?
Is a development policy really necessary?
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The economic debate Endogenous growth theory and new economic
geography: Greater accessibility, higher skills, and greater capacity
to generate and assimilate innovation will lead to theconcentration of economic activity
A development policy is needed in order tocounterbalance this tendency
Classical Ricardian trade theory: Factor endowment is less important
Integration leads to a rearrangement of economic activity Investment and innovation will flow to low cost areas
Labour will flow to high cost areas
Disparities will even out and policies are not needed
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The economic debate (II)
Neoclassical growth theories: Decreasing returns to scale will lead to
convergence
Even without economic integration
No need for development policies
Economic theory is inconclusive about the
territorial impact of economic integration
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The political debate
Economic integration is likely to enhanceterritorial disparities
A development policy is needed in order toachieve greater economic and social cohesion
This has been the dominating view since theSingle European Act
Each additional step towards economicintegration has been accompanied by
cohesion policies: Single European Market Reform of Structural
Funds
EMU Cohesion Fund
The history of EU
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The history of EU
development policies
Disregard for supra-national developmentpolicies in the 1960s: High levels of economic growth (ca. 6% per
annum)
Regional convergence
Strong national development policies
Establishment of an early regional policyin the 1970s (ERDF):
Change of the political orientation of Europeangovernments
British membership
Power struggle between the Commission and thestates
The impact of the early
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The impact of the early
regional policy
The early European regional policy failed tocorrect economic disparities: Disparities did not shrink, they expanded during the
late 1970s and early 1980s
The reasons for the failure: Lack of financial resources: Modest amount of
funds
Lack of continuity of regional actions: Five
different stages between 1975 and 1989 Excessive extent of the range of operations and
investments: Projects funded in almost every region
Absence of a clearly defined structure and of asystem of priorities: 41,051 projects funded
The principles of the reform
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The principles of the reform
of the Structural Funds
The principle of concentration 3 objectives:
Objective 1: Promoting the development andstructural adjustment of regions whose
development is lagging behind (for regionsbelow the 75% threshold of the EU GDP percapita)
Objective 2: Supporting the economic and socialconversion of areas facing structural difficulties
(Industrial and rural areas with high-long termunemployment and or high poverty levels)
Objective 3: Adapting and modernizing policiesand systems of education, training, and
employment
The principles of the reform
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The principles of the reform
of the Structural Funds (II)
The principle of programming Individual projects should be included within adevelopment plan
Much greater emphasis of the design and implementationof coherent development strategies through multi-annual
programming
Stages: Regional development plans
Community Support Framework
Operations programmes The principle of partnership
Involving as many actors as possible in the process
Aim: to achieve close co-operation between the
Commission and national, regional, and local institutions
The principles of the reform
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The principles of the reform
of the Structural Funds (III)
The principle of additionality In order to prevent European development
policies from becoming mere substitutes of
national development efforts
The principle of efficiency To guarantee the correct management and to
monitor the efficiency of the implementation of
European development actions
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The Cohesion Fund
Political belief that EMU is likely to leadto a concentration of economic activity
Cohesion Fund established to providefinancial contribution to projects in the
fields of environment and trans-Europeannetworks
Four beneficiaries: countries whose GNPper capita is below 90% of the EU average
Ireland Greece
Portugal
Spain
The efficiency of EU
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The efficiency of EU
development policies
Development policies are, behind the CAP,the second most important set of policiesin the EU One third to 36% of the EU budget; 0.38 of EU
GDP Has this effort paid off?
Have the reform of the Structural Fundsand the introduction of a Cohesion Fund
led to greater territorial cohesion?
The efficiency of EU
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The efficiency of EU
development policies
Before the Reform, little or no catch-up inthe cohesion countries No convergence in Greece or Spain
Slow convergence in Ireland and Portugal
Since the Reform, the four Cohesioncountries have converged to the EU average Greatest convergence in Ireland
Lowest convergence in Spain
Convergence has also been fuelled by sloweconomic growth in the core Especially in Finland, Germany, Italy, and Sweden
Evolution of GDP per capita in
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Evolution of GDP per capita in
the Cohesion countries
50
60
70
80
90
100
110
120
1977
1980
1983
1986
1989
1992
1995
1998
EUR15=10
0EUR15
Greece
Spain
Ireland
Portugal
Before the Reform After the Reform
The efficiency of EU
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The efficiency of EU
development policies (II)
The catch-up since the Reform of the StructuralFunds has led some authors to claim thatregional intervention in the EU has been asuccess
The picture is, however, not as simple A closer look at development within the
Cohesion countries reveals a more complexpattern
The higher growth has taken place in some of the mostadvanced regions (Madrid, Catalonia, Dublin, Lisbon)
Large concentration of company headquarters, R&Dcentres, financial , insurance, and real estate
In contrast, many Objective 1 regions have lagged behind
European ButEU
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convergence divergence
within
states0
100
200
0 100 200
GDP per capita in 1977
Meanannualgrowth
between1977and1986
EU
0
100
200
0 100 200
GDP per capita in 1986
Meanannualgrowth
between1986and1993
EU
0
100
200
0 100 200
GDP per capita in 1993
Meanannualgrow
th
between1993and1998
Italy Spain
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50
100
150
50 100 150
GD per capita in 1980
Meanannualgrowth
between1980and1986
Italy
50
100
150
50 100 150
GDP per capita in 1986
Meanan
nualgrowth
between1
986and1993
Italy
50
100
150
50 100 150
GDP per capita in 1993
Meanannualgrow
th
between1993and1998
50
100
150
50 100 150
GDP per capita in 1980
Meanannualgrowth
between1980and1986
Spain
50
100
150
50 100 150
GDP per capita in 1986
Meanan
nualgrowth
between1
986and1993
Spain
50
100
150
50 100 150
GDP per capita en 1993
Meanannualgrow
th
between1993and1998
Greece
1508
6
UK
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50
100
50 100 150
GDP per capita in 1980
Meanannualgrowth
between1980and198
Greece
50
100
150
50 100 150
GDP per capita in 1986
Meanannualgrowth
between198
6and1993
Greece
50
100
150
50 100 150
GDP per capita in 1993
Meanannualgrowth
between1993and1998
50
100
150
50 100 150
GDP per capita in 1980
Meanannualgrowth
between1980and1986
UK
50
100
150
50 100 150
GDP per capita en 1986
Meanann
ualgrowth
between19
86and1993
UK
50
100
150
50 100 150
GDP per capita in 1993
Meanannualgrowth
between1993and1998
The efficiency of EU
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The efficiency of EU
development policies (III)
Many assisted regions have not performedparticularly well Growth in parts of Southern Italy has been
sluggish
Tendency towards greater polarization in manyEuropean countries
Since the implementation of the Reform,mixture of national convergence and
regional divergence Inequalities across States have fallen by 25%,but regional inequalities within states have risenby 10%
GDP growth, 1985-98
EUR15=100
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EUR15=100
more than 130115 to 130100 to 11585 to 10070 to 85
less than 70No data available
The efficiency of EU
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y U
development policies (IV)
Over time, there has been no change in theCohesion States
The number of regions qualifying forObjective 1 has remained stable
If anything, the number has increased Many regions of core countries (Merseyside, South
Yorkshire, Burgenland) have been incorporated..
But few peripheral regions (only Abruzzo, with
parts of Ireland and Lisbonamong othersbeingphased out)
The analysis of unemployment trendshighlights divergence
Greater polarization in unemployment rates
C l i
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Conclusion
European development policies haveevolved from a minor and ratherhaphazard policy in the 1980s to thesecond most important policy of the EU
Achieving economic cohesion is, however,proven more elusive than expected National convergence...
But regional divergence
There are voices starting to question thisdegree of intervention, since it may lead tothe formation of sheltered economies
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Chapter 3
Ageing
I t d ti
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Introduction
Western Europe is ageingAs a consequence of:
Higher life expectancy
Falling birth and fertility rates
Ageing is likely to become a seriouseconomic, social, and political problemonce the baby boomers start retiring Pressure on the already well-developed European
welfare systems Consequences for the economic potential of the
EU
Countries are setting policies in motion in
order to curb ageing
Demographic change in the
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g p g
EU (I)
The EU is still the most populous among themajor world economic powers.
375 million vs 278 in the US and 117 in Japan
But the US has been catching up rapidly with theEU (57% of the population in 1960, 74% in 2000)
Low rates of population growth during thesecond half of the 20th century
Since 1960 the population of Europe never roseby more than 1% in a single year
In contrast, this rate was achieved 18 times in theUS and 8 in Japan
Population growth in Europe has been decliningsteadily
Average annual population growth in
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0
0.5
1
1.5
2
2.5
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
EU15
Japan
USA
Average annual population growth in
the EU, Japan and the USA
Demographic change in the
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g p g
EU (II)
Prospects are bleak: According to the UN report on Replacement
Migration will peak in 2005
By 2050 the EU will have 44 million less than in
2000 (a loss of 12%) It will have 18 million less than the US
Twelve out of the fifteen current member stateswill lose population (exceptions: Ireland,Luxembourg, and France)
Population loss in Italy, Spain, and Greece willbe in excess of 20%
Th d li i bi th t (I)
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The decline in birth rates (I)
The second demographic transition: Fall in birth rates
Lower number of marriages and marriages later
in life
Unstable marriages and growing divorce rates
Increase in cohabitation
Increase in the number of children born out of
wedlock
The decline in birth rates
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(II)
Three types of demographic patterns: Population growth (France, the Netherlands,
Ireland, US):
Early decline in birth rates, but births have stabilizedand remain above the number of deaths
Still natural growth
Early zero growth (Austria, Denmark, Sweden,UK):
Early decline in birth rates without stabilization
Negative growth rates which caused a reaction and arebound of birth rates
Late zero growth (Italy, Greece, Spain,Portugal, Japan):
Late, but sharp decline in birth rates
Zero growth since the early 1990s
DENMARK ITALY
Evolution of birth and death
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FRANCE
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
NETHERLANDS
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
AUSTRIA
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
0
5
10
15
20
25
19
60
19
64
19
68
19
72
19
76
19
80
19
84
19
88
19
92
19
96
Birth r.
Death r.
SWEDEN
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
UK
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
GREECE
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
0
5
10
15
20
25
1
960
1
964
1
968
1
972
1
976
1
980
1
984
1
988
1
992
1
996
Birth r.
Death r.
USA
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
JAPAN
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
SPAIN
0
5
10
15
20
25
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
Birth r.
Death r.
rates in selected European
countries, the US, and Japan
1960-97
The decline in birth rates
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(III)
National demographic patterns hideimportant intranational differences:
Significant internal contrasts in birth rates
in:
Italy (North/South division)
Germany (East/West division)
and, to a lesser extent, in other EU countries
Regional crude birth rate in the EU, 1997
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Crude Birth Rate
1997
more than 13
12 to 13
11 to 1210 to 119 to 10
less than 9
g
The decline in fertility rates
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The decline in fertility rates
Women (and families) are deciding to have lesschildren than ever before:
Total fertility rates in the EU are the lowest inthe world, bar some countries in Eastern Europeand Japan
Fertility decline started in the mid 1960s Early declines in the North (Denmark, Finland,
Germany, Luxembourg and Sweden): Demographiccore/periphery divide
Subsequent and more dramatic decline in the
Mediterranean countries (Italy and Spain now withsome of the lowest TFR in the world)
Short-lived rebound of fertility rates in Sweden andother Scandinavian countries in the early 1990s
Evolution of fertility rates
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Evolution of fertility rates
Country Name 1970 1980 1990 1995 1997 Fertility in 1997
as a % of 1970
Austria 2.29 1.62 1.45 1.40 1.37 59.83Belgium 2.20 1.67 1.62 1.57 1.60 72.73
Denmark 1.95 1.55 1.67 1.79 1.75 89.74
Finland 1.83 1.63 1.78 1.81 1.85 101.20
France 2.48 1.95 1.78 1.66 1.71 68.84
Germany 2.03 1.44 1.45 1.25 1.35 66.50
Greece 2.34 2.23 1.40 1.32 1.30 55.63Ireland 3.93 3.23 2.12 1.87 1.91 48.60
Italy 2.42 1.64 1.26 1.17 1.20 49.48
Luxembourg 1.98 1.50 1.62 1.68 1.71 86.36
Netherlands 2.57 1.60 1.62 1.53 1.53 59.49
Portugal 2.76 2.19 1.43 1.45 1.44 52.19
Spain 2.84 2.22 1.33 1.19 1.15 40.55Sweden 1.94 1.68 2.13 1.74 1.74 89.74
United Kingdom 2.44 1.89 1.83 1.71 1.70 69.76
Japan 2.13 1.75 1.54 1.42 1.39 65.11
United States 2.48 1.84 2.08 2.06 1.99 80.24
Source: World Bank World
Development Indicators (2000)
Evolution of total fertility rates in selected
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1
1.5
2
2.5
3
3.5
4
4.5
1960
1966
1972
1978
1984
1990
1996
TotalFertilityR
ate
France
Germany
Spain
Sweden
Ireland
Evolution of total fertility rates in selected
European countries
The ageing of the EUs
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population (I)
The decline in birth and fertility rates isprofoundly altering Europes age structure
Younger population cohorts are becomingsmaller than older ones
The population cohort of those aged between 30 and
34 is 50% larger than those aged between 0 and 4 There are more 55 to 59 year olds than children
between 0 and 4
Life expectancy is increasing Women in most countries of the EU can now expect to
live until the age of 80 Male life expectancy in all countries bar Portugal
above 72
Life expectancy at birth, 1970-1997
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p y ,1970 1980 1990 1997 Change
1970-97(in %)
Austria 70.3 72.7 75.7 77.3 10.0Belgium 71.2 73.2 76.0 76.8 7.9
Denmark 73.3 74.3 74.7 75.3 2.8
Finland 70.3 73.2 75.1 76.9 9.4
France 72.0 74.3 76.8 78.1 8.4
Germany 70.5 72.6 75.1 76.7 8.8
Greece 71.8 74.4 76.9 77.7 8.2Ireland 71.1 72.7 74.6 75.9 6.8
Italy 71.9 73.9 77.1 78.2 8.8
Luxembourg 70.3 72.7 75.2 76.5 8.7
Netherlands 73.5 75.7 76.9 77.5 5.4
Portugal 67.4 71.4 73.7 75.0 11.2
Spain 72.3 75.5 76.7 77.9 7.7Sweden 74.5 75.9 77.5 79.1 6.2
United Kingdom 71.7 73.8 75.6 77.1 7.6
United States 70.8 73.7 75.2 76.1 7.5
Japan 71.9 76.0 78.8 80.0 11.2
Source: World Bank World Development Indicators (2000).
The ageing of the EUs
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population (II)
Europe is ageing There are now 41.5 people million more over 70
than in 1980 (an increase of 40%)
The percentage of the elderly has risenconsiderably everywhere, bar Ireland
In Greece, Finland and Portugal the percentageof the population aged 65 and above doubledbetween 1960 and 1997
Italy and Spain were not far behind
Population projections predict that the process ofageing is far from over
According to the UN the over 65 will rise to 95.6million in 2050 (29% of the population)
Population aged 65 and above (% of total)
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Source: World Bank World Development Indicators (2000).
1960 1970 1980 1997 Change
1960-97
(in %)
Change
1980-97
(in %)
Austria 12.0 14.1 15.4 14.8 23.3 -3.5Belgium 12.0 13.4 14.3 16.0 34.1 12.0
Denmark 10.6 12.3 14.4 14.7 39.2 2.2
Finland 7.2 9.2 12.0 14.4 99.2 20.0
France 11.6 12.9 14.0 15.4 31.9 10.0
Germany 11.5 13.7 15.6 15.5 34.5 -0.7
Greece 8.2 11.1 13.2 16.6 100.9 26.0
Ireland 11.2 11.3 10.7 11.3 1.0 5.2
Italy 9.3 10.9 13.2 16.6 78.2 26.1
Luxembourg 10.8 12.0 13.5 13.9 28.6 3.4
Netherlands 9.0 10.2 11.5 13.4 49.0 16.5
Portugal 8.0 9.2 10.5 16.1 101.2 53.6
Spain 8.2 9.8 10.7 15.9 93.9 49.1
Sweden 12.0 13.7 16.3 17.3 44.4 6.1
United Kingdom 11.7 12.9 15.1 15.8 35.0 4.7
United States 9.2 9.8 11.2 12.3 34.1 9.9
Japan 5.7 7.1 9.0 15.5 169.8 71.1
P di t d l ti f th t t l d ld l l ti
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Predicted evolution of the total and elderly population
in selected European countries, the EU and the US
2000-50
Total population Pop.
Change
Elderly population
(65+)
% Elderly Support ratio (15-
64/65+)
2000 2050 2000-05 2000 2050 2000 2050 2000 2050
France 59.08 59.88 1.35 9.41 15.26 15.93 25.48 4.10 2.26
Germany 82.22 73.30 -10.85 13.44 20.79 16.35 28.36 4.17 2.05
Italy 57.30 41.20 -28.10 10.41 14.37 18.17 34.88 3.72 1.52
UK 58.83 56.68 -3.65 9.43 14.11 16.03 24.89 4.06 2.37
EU 375.28 331.31 -11.72 61.60 95.60 16.41 28.86 4.08 1.96
USA 278.35 349.32 25.50 34.83 75.90 12.51 21.73 5.28 2.82
Population in millions
Source: Own elaboration with United Nations Population Division data. Medium variant.
Regional share of senior citizens, 1998
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Population 65 and ove
(% of total) 1998
more than 21 %
19 to 21 %
17 to 19 %15 to 17 %13 to 15 %
less than13 %
The factors behind the
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ageing process (I)
Causes for higher life expectancy Advancement of medicine and health:
Eradication of many infectious and contagious diseases
Advancement in the treatment of degenerative diseases
Nutritional and health improvements Social factors:
Relative wealth of European societies
Reduction in the number of hours worked during life
The factors behind the
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ageing process (II)
Causes behind the decline in fertility Advances and greater availability of
contraceptive methods (M. Murphy) (althoughfor some this is not a cause)
Economic factors:
Pecuniary and time cost of having children
Children cannot longer be regarded as sources forfuture family support
Opportunity costs of having children in societies with ahigh female participation in the labour market. This
has become more evident recently: Decline in job stability in Europe (relying on one salary
is not enough!)
The factors behind the
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ageing process (III)
Sociological factors: The gap in educational attainment between men and
women in western Europe has disappeared
Female employment has increased dramatically
Female employment is regarded as the main
determinant in the fall of fertility rates The opportunity cost of having a child increases
Especially, and despite some changes in male attitudes,since the burden of child-bearing still greatly falls onwomen
The opportunity cost of having a child increases as
womens wages rise However this argument is found wanting when we
notice that the countries with the lowest fertility ratesalso have the lowest female employment
Evolution of female employment, 1970-1997
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Female
emp. 1970
(%)
Female
emp. 1997
(%)
Male emp.
1997 (%)
Increase in
female emp.
1970-97
Female as a %
of male emp.
(1997)
Austria 38.4 46.2 65.6 20.3 70.4
Belgium 30.5 36.3 56.4 19.0 64.4
Denmark 36.1 55.2 68.8 52.9 80.2
Finland 43.7 46.6 56.1 6.6 83.1
France 36.2 41.2 56.3 13.8 73.2
Germany 38.6 43.1 61.5 11.7 70.1
Greece 25.7 30.8 59.0 19.8 52.2
Ireland 26.2 38.3 61.5 46.2 62.3
Italy 28.5 28.9 55.8 1.4 51.8
Luxembourg 26.7 36.8 63.5 37.8 58.0
Netherlands 25.9 46.8 68.4 80.7 68.4
Portugal 25.4 45.7 63.2 79.9 72.3Spain 24.4 26.4 52.1 8.2 50.7
Sweden 35.8 49.2 57.3 37.4 85.9
United Kingdom 35.6 50.0 64.9 40.4 77.0
EU - 39.9 59.5 - 67.1
Source: World Bank World Development Indicators (2000).
Family policies (I)
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Family policies (I)
European governments have adopteddifferent policies to tackle decliningfertility: Very high support in Sweden (and Denmark and
Finland): Generous child benefit package Generous public childcare provision
Lengthy maternity and paternity leaves
Austria and Germany
Generous policies Greatest support for mothers who stay at home to look
after children
Family policies (II)
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Family policies (II)
France (and Belgium and Luxembourg) Horizontal and vertical redistribution of resources to
families with children (especially for families withthree children)
UK
Means testing and tackling child policy Low-income mothers benefit the most from support
meassures
Lower support in the Netherlands, Ireland, andMediterranean countries
Family policies (III)
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Family policies (III)
Have family policies contributed toredress the decline in fertility? Some claim that the impact has been weak
(Gauthier; Hoem)
Others suggest that family policies have had animpact
The actual evidence is inconclusive
Lack of adequate family policies may have contributedto the decline in fertility in southern Europe
Some countries with more generous family policies(Sweden, Finland, Denmark, France, the UK) tend tohave slightly higher fertility rates
But countries with similar family policy regimes differin their fertility rates
Social policies for old age
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Social policies for old age
The process of ageing is putting Europeansocial services under considerable stress: Social policies for old age have become one of
the most important areas of public policy
Old age expenditure (as a % of GDP) has risensignificantly since the 1980s and remained stableduring much of the 1990s
Old age expenditure represents two fifths of allsocial expenditure (highest incidence in Italy,
Greece, and Spain)
Old age expenditure in the EU
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Source: EUROSTAT data.
Old age expenditure as apercentage of GDP
Old age expenditure as apercentage of social
expenditure
1997 1993 1980 1997 1993 1980EUR15 10.9 10.7 - 38.3 36.8 -
Austria 10.6 10.5 9.0 36.8 36.4 34.0
Belgium 8.5 8.5 6.8 30.1 29.0 -
Denmark 11.6 10.7 - 38.2 33.5 -
Finland 8.5 9.5 6.1 29.1 27.5 30.9
France 11.0 10.5 8.1 35.6 33.9 -
Germany 11.5 11.1 10.8 38.4 38.3 40.5
Greece 9.8 9.0 - 41.4 40.5 -
Ireland 3.2 4.3 4.7 18.1 20.8 -
Italy 13.4 12.8 8.3 51.6 49.0 -
Luxembourg 7.1 7.1 8.0 28.6 29.0 -Netherlands 9.3 10.2 7.5 30.8 30.3 -
Portugal 7.0 6.1 - 31.0 29.0 -
Spain 8.7 8.4 6.2 40.8 35.2 35.3
Sweden 12.3 13.0 - 36.6 33.8 -
United Kingdom 10.1 10.2 - 36.3 34.5 -
Conclusion
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Conclusion
Ageing poses a serious challenge for thefuture of European societies: Society may become more conservative and risk-
averse, less open to innovation and foreigninfluences, and less dynamic and able to compete
Ageing represents a challenge for public finances
More and better targeted policies may beneeded
Even if the perception of an aged society as a
less dynamic society may be rather reductionist.
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Chapter 4
Migration and
xenophobia
Introduction
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Introduction
While Europe ages, neighbouringcountries have young and dynamicpopulations who find few outlets in theirlocal labour markets:
Result: development of large migration flowstowards Europe Many see this trend as a solution for population ageing
and to ease social and economic pressure in thecountry of origin of migrants
Many others see migration as a threat, leading toxenophobia and the emergence of racist attitudes andparties
European legislation has been tightened in orderto restrict migration into Europe
Migration and its forms (I)
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Migration and its forms (I)
Definition of migration: The movement or displacement of a person or a
number of persons from one place to another.
Forms of migration:
Individual or group migration Regional, inter-regional, international or
intercontinental
Temporary or permanent
Legal and illegal
Migration and its forms (II)
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Migration and its forms (II)
Forms of migration (II): Economic migration: when people move in
search of jobs and/or a better life
Types of economic migration: Migrant or employer-initiated
Economic migration is closely linked to long-termeconomic cycles
Non-economic migration: Causes Natural disaster (the destruction of the island of
Montserrat by a volcanic eruption, floods, earthquakes,droughts)
War
Political and/or social persecution (political andreligious beliefs, race, ethnicity, gender)
Division between political refugees and asylum seekers
Mass migration in post-warE (I)
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Europe (I)
In modern times migration out of Europehas predominated: America, Australia and South Africa as the main
destinations
At the beginning of the 20th century more than amillion Europeans a year were leaving theContinent
The second half of the 20th century hasseen a reversal of this trend Outward migration has been replaced by
migration within and into Western Europe
First, 25 million refugees back to their places of origin(mainly flow east-west, including 12 million Germans)
Then migration from former Communist regimes to theWest 3.8 million East Germans until the erection of
Mass migration in post-warE (II)
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Europe (II)
Since the 1950s emergence of South/Northeconomic migration Basically in low-skilled and poorly paid sectors
(rejected by the local workforce)
Several waves and destination: 1950s: Italians moving to Germany, Switzerland, andFrance
Late 1950s and 1960s: Spaniards and Portuguese(same destinations)
1960s: Turks and Yugoslavs (to Germany) andworkers from the Maghreb (to France)
Irish to Britain and Finns to Sweden
Migration very often employer-initiated andstate-managed
Large volumes of migration:
Mass migration in post-warE (III)
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Europe (III)
Jobs for migrants varied: West Germany: Jobs in manufacturing (15% inconstruction)
France: 30% in construction. Smaller proportion ashealth workers and manufacturing
UK: West Indians as civil servants, South Asians intextiles
As did the formal rights of immigrants:
Germany, Austria and Switzerland: Gastarbeiters(high levels of job security but low protection withoutjob contract)
UK, France and the Netherlands: Rights of immigrantsto stay, generally more developed (possibility to applyfor citizenship after a period living in the country)
The crisis of the 1970s brought
South/North migration in Europe almost
The renewal of migration inth 1990
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the 1990s
Several factors have led to a renewal ofmigration in the 1990s: Economic and social factors:
The economic bonanza of the second half of the 1990s
The reduction of unemployment rates associated to the
introduction a labour market flexibility The higher level of qualification of local workers
The demographic boom in neighbouring areas of theworld
Political factors:
The fall of the Berlin Wall The implementation of the principle of free movement
of people after the Single Market.
Foreign or foreign-born populationForeign population
% f l l i
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Foreign population
in thousands% of total population
1987 1997 1987 1997
Austria 326 733 4.3 9.1
Belgium 863 903 8.7 8.9
Denmark 136 250 2.7 4.7
Finland 18 81 0.4 1.6
France 3714 3597 6.8 6.3
Germany 4241 7366 6.9 9.0
Ireland 77 114 2.2 3.1
Italy 572 1341 1.0 2.2Luxembourg 103 148 26.8 34.9
Netherlands 592 678 4.0 4.4
Portugal 95 175 1.0 1.8
Spain 335 610 0.9 1.5
Sweden 401 522 4.8 6.0
UK 1839 2066 3.2 3.6
EU 13312 18584 3.6 4.9
Australia* 3247 3908 20.8 21.1
Canada* 3908 4971 15.4 17.4
US* 14080 24600 6.2 9.3
*Data for Austalia, Canada, and the US refer to foreign-born populationin 1986 and 1996
Source: SOPEMI, 1999.
migration in the 1950s and
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g
1990s (I) The traditional North/South division has beencompletely slashed:
Finland, Greece, Ireland, Italy, Portugal andSpain are no longer sources of emigrants, buthave positive migration balances (in the case of
Italy since as early as 1972) Intra-EU migration is no longer South/North but
occurs in both directions (case of Ireland, Sun-belt phenomena)
The Mediterranean sea (and the former IronCurtain) are becoming the new Rio Grande ofEurope
migration in the 1950s and
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g
1990s (II) Employer initiated migration has almost becomea thing of the past:
In contrast to more common practices in the US,Canada, or Australia.
European employers and governments are more
reluctant to initiate migration. Some exceptions: Attempt by the German government
in 2000 to recruit IT experts in India
Migration has become almost exclusively
migrant-initiated
migration in the 1950s and
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g
1990s (III) Increase of clandestine and illegal immigration As a result of the tightening of national and
European immigration legislation
More migrants decide to come and stay inEurope illegally:
Flourishing of mafias, racketeers and organised crimesyndicates trying to smuggle immigrants into Europe
Diversification of immigrant groups
Highly qualified migrants
Low-skilled economic migrants and clandestines Refugees and asylum seekers
Migration of the highlylifi d (I)
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qualified (I)
Migration of the highly qualified has flourishedduring the 1990s:
Basically in sectors such as finance, banks,insurance, and business services
But increasingly also in fashion, design and R&D
The main beneficiaries has been the financialcentres and large urban areas of the Continent(London, Paris, Frankfurt, Berlin, Madrid, Milan,Amsterdam)
Increasing importance of airport hubs
Recruitment in many of these sectors isincreasingly happening at a European, if notglobal, level
Migration of the highlylifi d (II)
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qualified (II)
One of the triggers of the increased mobility hasbeen the implementation of the principle of freemobility of labour in the SEM.
No longer are work or residence permits neededfor EU nationals who live abroad
Cultural and linguistic barriers are now lessimportant for these groups
Better prepared and better travelled generations
Mutual recognition of qualifications
But also process of globalization
Migration of the highlylifi d (III)
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qualified (III)
Process of globalization: Restructuring of large companies (internationalM&As)
Radical change in the profile of the Europeanmigrant
In contrast to the low-skilled worker from SouthernEurope
We now have highly qualified young professionals
This migration is however tiny in numbers (5.5million EU nationals living outside their country,in comparison with 12 million in the early 1970s)
Migration of the low-skilledand clandestines (I)
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and clandestines (I)
Migration at the lower end of the scale has beentaken over by people from outside the EU
Immigrants escaping poverty to the East andSouth of the EU and hoping to find EldoradoEurope
In comparison, the migration of the Europeanlow skilled has been negligible
Main destination is low-value added service jobs
Pay in these sectors is often so low that European
workers cannot or do not compete for these jobswith immigrants from outside the EU
Migration of the low-skilledand clandestines (II)
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and clandestines (II)
Migration is becoming a truly globalphenomenon
Not only is western Europe receiving moreimmigrants from outside the EU than in the1980s
But the regions of origin of the migrants areincreasingly diversified
Several waves:
Fall of the Berlin Wall: Eastern Europeans
First wave: Poles, Czechs, and Hungarians intoGermany and other European destinations
Followed by former-Yugoslavs, Albanians, Romanians,Bulgarians, Ukranians, and Russians
Migration of the low-skilledand clandestines (III)
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and clandestines (III)
Several waves (II): South/North flows increasing since 1995: Northern and Sub-Saharan Africans
Latin Americans
Central and South East Asians
Chinese
Situation similar to that of the US
Although European borders are more difficult to police
Most migration is likely to be illegal
Overstaying visas
Entering the EU through its Eastern Border
Making perilous Mediterranean sea crossings
Illegal immigration increasingly in the hands of gangsand crime syndicates
Migration of the low-skilledand clandestines (IV)
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and clandestines (IV)
Sectors benefited by migration: Low-value added services: cleaners, waiters,hotel, and chamber maids
Construction
Labour-intensive agriculture
The frequent use of clandestines make them easy preyfor exploitation
Informal sector From working as street sellers
to criminal activities.
Refugees and asylumseekers (I)
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seekers (I)
Boom of refugees and asylum seekers since theend of the 1980s
As a result of increasing conflict and of politicalpersecution elsewhere in the world
But also, some claim, as a result of the increasing
differences in wealth Countries of destination:
Germany at first (more than 100,000 asylumapplications per year at the beginning of the
1990s) The UK since (more than 100,000 applications in
the year 2000)
Belgium, Ireland, and the Netherlands with thehighest relative weight
Refugees and asylumseekers (II)
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seekers (II)
The inclusion of restrictive legislation acrossEurope have contributed to stem the flow
Extension (and co-ordination) of visarequirement to a large number of countries(Schengen)
Restriction of asylum rights to national ofcountries which have not signed the UnitedNations Conventions on Refugees and on HumanRights
Co-ordination of asylum applications acrossEurope
Asylum applications inselected EU countries
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selected EU countries
1985 1988 1992 1996 1999
Belgium 5,387 4,510 17,675 12,433 35,778
France 28,925 34,352 28,872 17,405 30,830
Germany 73,832 103,076 438,191 117,333 95,113
Netherlands 5,644 7,486 20,346 22,857 39,286
Sweden 14,500 19,595 84,018 5,774 11,771
UK 6,200 5,740 32,300 29,640 70,410
EU 159,180 210,740 672,380 227,800 352,380Source : EUROSTAT data.
The European response tomigration (I)
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migration (I) Which has been the reaction of the EU to the
renewal of migration across Europe?
Two positions:
Free mobility of labour for EU nationals
Increasingly restrictive and co-ordinated policies for
non-EU citizens Free mobility of labour for EU nationals:
Abolition of red-tape
Equivalence of qualifications
Social security and welfare recognition Removal of physical border controls
Right of vote to non-nationals in local andEuropean elections
The European response tomigration (II)
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migration (II) Restrictive policies for non-EU citizens
Implementation of harsher national legislativeframeworks both on immigration and asylum
Greater co-ordination of European policies:
Several stages:
Ad hoc groups: Trevi, Ad Hoc Group on Immigration,the Police Working Group on Terrorism
Schengen Group
Treaty of the European Union: Introduction of theThird Pillar on Justice and Home Affairs
Treaty of Amsterdam: partial Europeanization of theThird Pillar
The European response tomigration (III)
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migration (III) Features of a co-ordinated migration policy
Asylum seekers are entitled to have their casesreviewed only by one country
Creation of EURODAC
Homogenization of the EU external borders:
Tougher controls
Common visa policy
Creation of databases containing information onimmigrants
Police co-ordination (Europol)
The emergence of a FortressEurope
Migration and xenophobiain the EU (I)
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in the EU (I) Why this tightening of European laws towards
migration?
Some claim is the result of increasing demandsby the population:
Increasing xenophobia and racist attitudes:
Negative perception of migration by the population insurveys and opinion polls
Immigrants as criminals
Immigrants responsible for unemployment
Immigrants as welfareclaimants
Immigrants as a threat to national culture Emergence of xenophobic and racist parties (France,
Belgium, Austria, Germany, Italy)
Increase in the acts of violence against immigrants(attacks on refugee hostels in Germany, razziasvirtually everywhere else)
Attitudes towards foreigners in the EU
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Number of foreigners living in your country
0%
20%
40%
60%
80%
100%
Gr BI DAF
DK
UK
NLS L P EIRS
FEU
Don't know
Not many
A lot
Too many
Source: Eurobarometer 48.
Migration and xenophobiain the EU (II)
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in the EU (II) Emergence of xenophobic and racist parties:
Front National in France
Freedom party in Austria
Vlaams Blok in Belgium
Neo-nazi groups in Germany
To a lesser extent, the Northern League in Italy Increase in the acts of violence against
immigrants or their descendants Attacks on refugee hostels in Germany (and what has
been considered a lenient attitude by the Courts on
those crimes until recently Racial riots in Northern England
Razzias against immigrants virtually everywhere else(eg.: El Ejido in Spain)
Migration and xenophobiain the EU (III)
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in the EU (III) But it my be also spurred by the securitization
of migration:
Negative portrayal of immigrants in Europeanlegislation.
Immigration as a security issue
Immigration as a cost for European societies Immigration as something to be restricted
Xenophobic discourses by fundamentally right-wing (but not only right-wing) politicians
General portrayal of immigration as a burden, ratherthan as an asset
Conclusion
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Renewal of mass migration in and towards theEU since the 1990s: Qualified migration within EU
Unskilled migration from outside the EU towards it.
Effects of the new migration wave
Western Europe becoming more diverse andcosmopolitan
But also generating rejection: Negative attitude towards migrants and their
descendants in most EU countries
Restrictive migration and asylum laws across the EU
Migration being driven underground
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Chapter 5
Unemployment and
social polarization
Introduction
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The post-war economic boom brought aboutnearly full employment across most ofWestern Europe
However the oil crisis, socio-economic
restructuring, and globalization haveprovoked a radical change in the panorama Greater participation of women in the labour market...
But a significant rise in the levels of structuralunemployment
In the 1990s measures have been adopted toflexibilize labour markets: Unemployment has decreased...
But social polarization has increased
The process of socio-economic restructuring
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economic restructuring
Collapse of the (Fordist) system of massproduction Demise of the three pillars of the post-war consensus:
full employment, prosperity, and social citizenship
Rise in unemployment levels From unemployment rates below 5% (bar Ireland and
Italy), before 1975
To 23% in Spain, 20% in Finland, and Ireland
By the mid-1990s the main economies in the EU (bar
the UK) had unemployment rates in excess of 10%
Unemployment rates as a Europeanphenomenon: Much lower unemployment rates in the US and Japan
UnemploymentFinland Spain
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0
5
10
15
20
25
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
Female
MaleTotal
France
0
5
10
15
20
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
Female
Male
Total
Italy
0
5
10
15
20
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
Female
Male
Total
0
5
10
15
20
25
30
35
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
Female
MaleTotal
Japan
0
1
2
3
4
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
Female
Male
Total
USA
0
2
4
6
8
10
12
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
Female
Male
Total
Unemployment (II)
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Regional unemployment differences areeven greater: Unemployment in excess of 20% in Southern
Italy, Southern and Western Spain, and theformer East Germany
High rates in many old industrial regions ofNorthern France, Belgium, and West Germany
Low unemployment in the peripheries of largeurban regions...
And in many intermediate regions
Regional unemployment1999
more than 2016 to 20
12 to 168 t 12
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8 to 124 to 8
less than 4
The problems of structuralunemployment
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unemployment
Having a large percentage of the populationwilling to work idle represents a waste forany economy Especially since often the unemployed tend to be
younger and better prepared than those employed
Social exclusion Large sections of the population are excluded from
the labour force
Increase in long-term unemployment rates
Serious financial problems for the state Expansion of unemployment benefits
Unemployment benefits disguised as other benefitsin certain countries (Italy and the Netherlands)
Long-term unemployment
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Long-term unemployment is positivelylinked to total unemployment Highest long-term unemployment in the poorest
regions of Spain, Greece, and the South of Italy...
But also in West Germany and Belgium
Lowest long-term unemployment in the UK andScandinavia
And negatively linked to totalemployment levels
Long term unemploy1998
more than 5550 to 55
45 to 5040 to 45
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40 to 45
35 to 40
less than 35
Employment shar
(in %) 1998
more than 6055 to 60
50 to 55
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45 to 5040 to 45
less than 40
Unemployment in socialexpenditure
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expenditure
Unemployment expenditure as a
percentage of total social expenditure
Evolution of unemployment
expenditure at constant prices.
1990=100
1997 1993 1980 1997 1993 1980
EU 12 7.2 9.1 - 135.8 158.1 -
Austria 5.3 5.4 2.0 149.1 140.2 34.7Finland 13.0 15.6 4.3 274.1 314.1 40.5
France 7.5 8.8 - 115.1 124.6 59.6
Germany 8.7 10.2 3.7 224.1 240.2 53.3
Ireland 15.0 16.2 - 157.4 141.9 47.0
Italy 1.8 2.2 - 127.2 149.2 79.0
Netherlands 10.5 8.8 - 140.7 117.3 58.0Spain 13.8 21.1 15.4 96.5 150.4 55.7
The roots of persistentlyhigh unemployment
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high unemployment The regulation of European labour
markets Taxation:
Overall marginal tax rate higher than 60 percentin most European countries
In contrast, 40% in the USA and 23% in Japan
It could thus be argued that the higher the levelof taxation the higher the level of unemployment
However the relationship is far from perfect:
Relatively low taxation in Spain highunemployment
High taxation in Scandinavia Lower unemploymentthan in other parts of Europe
The roots of persistentlyhigh unemployment (II)
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high unemployment (II) The power of European trade unions
Higher union membership than in the USA or Japan
Different evolution of trade union membershipacross the EU
Decline in France (more than 50%), the UK, and Spain
Moderate increases in Belgium or Scandinavia
Power of trade unions increased by having theirparticipation in centralized collective bargaining bylaw
Trade unions thus represent a much larger share ofthe workforce than their membership may suggest
Trade unions are much less powerful in the US orJapan
The roots of persistentlyhigh unemployment (III)
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high unemployment (III)
The existence of a minimum wage It has been argued that the existence of minimum
wages puts low skilled workers out of the market
This, however, does not always seem to be the case(i.e.: introduction of the minimum wage in Britain in
1998)
More important is the level of the minimumwage
Minimum wages in Europe tend to be much
higher than in the US Countries with the highest minimum wages haveendured high unemployment
The relationships is again far from perfect
The roots of persistentlyhigh unemployment (IV)
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high unemployment (IV) High social benefits:
High social benefits have been accused ofentrapping people in welfare assistance and, thusin unemployment (the povertytrap)
Workers rights Workers rights still reflect the situation of the
post-war social compromise
Mismatch between educational supplyand labour demand
Measures to combat highunemployment
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unemployment Main aim: to make European labour markets
more flexible
Meaning of flexibility: making employees moredisposable:
Easier and cheaper to dismiss Less covered by constraining agreements and regulationsover conditions
Less health, safety, and security offered to workers
Two interpretations of flexibility: Outright labour market deregulation: In the UK The reform of labour market laws and of the welfare
state: Netherlands, followed by Continental Europe Combination of restrictive measures with greater worker training
The impact of labourmarket reform
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a et e o Reduction of unemployment
Britain and the Netherlands (the early adopters) haveenjoyed lower unemployment rates
Spectacular effect in Spain. Between the introduction oflabour market flexibility in 1996/97 and 2000, Spain has
created half of all the new jobs in the EU.Unemployment came down from 22 to 14%
Reduction of unemployment in Germany and France
Reduction even in the countries more reluctant tointroduce flexibility measures: Belgium and Italy
But the timing of the reforms has coincided witha period of economic expansion And in the past economic growth has been associated
with job creation
The impact of labourmarket reform (II)
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( ) The jobs created as a result of flexibilization
are not the same as the previously existingemployment
Emergence of atypical employmenteverywhere in Europe Part time work:
Mainly women: the number of women in part-time jobstriples that of men
Very high in the Netherlands, low in Scandinavia
Temporary or limited contract work: Mainly the young and women Prevalent in new jobs being created in Spain and France
The impact of labourmarket reform (III)
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( ) Other forms of atypical employment:
Self-employment: Basically male, and fundamentally a middle age phenomenon.
Also among immigrant groups and minorities
No sign of the emergence of a new entrepreneurial class
Concentrated in low productive and marginal sectors(agriculture)
High in Greece, Spain, Portugal, and Ireland
Informal employment: Family work
The informal or underground economy: Difficult to calculate, but growing across Europe
Most important in Southern Europe and Scandinavia
The informal economy
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Average
1989/90
Average
1999/00
Increase
1990-2000
Austria 6.9 9.8 2.9
Belgium 19.3 22.2 2.9
Denmark 10.8 18.0 7.2
Germany 11.8 16.0 4.2
Greece 22.6 28.7 6.1
Finland 13.4 18.1 4.7France 9.0 15.2 6.2
Ireland 11.0 15.9 4.9
Italy 22.8 27.1 4.3
Netherlands 11.9 13.1 1.2
Portugal 15.9 22.7 6.8
Spain 16.1 22.7 6.6
Sweden 15.8 19.2 3.4
UK 9.6 12.7 3.1
US 6.7 8.7 2.0
Japan 8.8 11.2 2.4
Source: Schneider (2001)
The impact of labourmarket reform (IV)
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( ) The concentration of atypical employment forms
among women, the young, the elderly, ethnicminorities, and immigrants and the less skilled iscontributing to the segmentation of society: The A-team: Highly qualified stable wage-earners
The B-team: An underclass of unstable and precariousworkers (MacJobs)
According to some (Harvey, 2000) this representsa return to the period prior to the mid-century
compromise Proletarianization of the labour force
Employer having increasing control to the detriment ofworkers rights and stability
Conclusion
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Europe seems to be stuck between a rock
(unemployment) and a hard place(atypical work)
Unemployment has decreased as a resultof the flexibilization of labour markets...
But, inequalities have increased Managerial and executive wages have been
rising at a greater rate than those of stableemployees
And the gap between stable employees and thosein precarious employment has also beenwidening
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