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- 2. Introduction • The post-war economic boom brought about nearly full employment across most of Western Europe • However the oil crisis, socio-economic restructuring, and globalization have provoked a radical change in the panorama – Greater participation of women in the labour market... – But a significant rise in the levels of structural unemployment • In the 1990s measures have been adopted to flexibilize labour markets: – Unemployment has decreased... – But social polarization has increased
- 3. The process of socio- economic restructuring • Collapse of the (Fordist) system of mass production – 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 European phenomenon: – Much lower unemployment rates in the US and Japan
- 5. Unemployment (II) • Regional unemployment differences are even greater: – Unemployment in excess of 20% in Southern Italy, Southern and Western Spain, and the former East Germany – High rates in many old industrial regions of Northern France, Belgium, and West Germany – Low unemployment in the peripheries of large urban regions... – And in many intermediate regions
- 6. Regional unemployment 1999 more than 20 16 to 20 12 to 16 8 to 12 4 to 8 less than 4
- 7. The problems of structural unemployment • Having a large percentage of the population willing to work idle represents a waste for any 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 benefits in certain countries (Italy and the Netherlands)
- 8. Long-term unemployment • Long-term unemployment is positively linked 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 and Scandinavia • And negatively linked to total employment levels
- 9. Long term unemployed 1998 more than 55 50 to 55 45 to 50 40 to 45 35 to 40 less than 35
- 10. Unemployment in social 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 34.7 Finland 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 58.0 Spain 13.8 21.1 15.4 96.5 150.4 55.7
- 11. Measures to combat high unemployment • Main aim: to make European labour markets more flexible • Meaning of flexibility: making employees more disposable: – Easier and cheaper to dismiss – Less covered by constraining agreements and regulations over 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
- 12. The impact of labour market reform • Reduction of unemployment – Britain and the Netherlands (the early adopters) have enjoyed lower unemployment rates – Spectacular effect in Spain. Between the introduction of labour 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 to introduce flexibility measures: Belgium and Italy • But the timing of the reforms has coincided with a period of economic expansion – And in the past economic growth has been associated with job creation
- 13. The informal economy 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 4.7 France 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)
- 14. The impact of labour market reform (ii) • The concentration of atypical employment forms among women, the young, the elderly, ethnic minorities, and immigrants and the less skilled is contributing to the segmentation of society: – The ‘A-team’: Highly qualified stable wage-earners – The ‘B-team’: An underclass of unstable and precarious workers (MacJobs) • According to some (Harvey, 2000) this represents a return to the period prior to the mid-century compromise – ‘Proletarianization’ of the labour force – Employer having increasing control to the detriment of workers rights and stability
- 15. Conclusion • Europe seems to be stuck between a rock (unemployment) and a hard place (atypical work) • Unemployment has decreased as a result of the flexibilization of labour markets... • But, inequalities have increased – Managerial and executive wages have been rising at a greater rate than those of stable employees – And the gap between stable employees and those in precarious employment has also been widening