Labour market (LM) reforms

1
Introduction

• Labour market (LM) reforms the pillar of
  economic reforms (in EU and elsewhere)
• Renowned economists The manifest on
  unemployment Reforms Now! Courage to Reform!
• Unemployment (U) in EU and USA since the 1980s
  and how to explain the differences
• Do Americans prefer work and Europeans leisure
• The answer is in incentives for work. These are
  lower in EU higher taxes, income redistribution
  and generous welfare state which spoils people
  and artificially increase their expectations

2
LM and Slovenia in the EU

• The transition undo of the previous revolution
• Why to talk about the reforms after so big
  changes so quickly? The main paradox for many
• Youngsters with some not very much appreciated
  knowledge of the economics and their apology for
  reforms
• The response of the politicians from a
  negligence to the hesitation
• The legislation has been late with mild changes
  only or absent (the collective bargaining law)
• No respect for modern labour economics at all

3
LM and Slovenia in the EU, cont.

• Some characteristics of the LM in Slovenia in the
  last decade
• The normalization of the unemployment
• A large difference between registered and ILO
  unemployment declining recently
• Grey economy/LM
• Early retirement and buying of social peace
• Low employment of the elderly
• The chaotic LM of the young and the transition
  from school to work
• Student work and unemployment of the graduates
• Increasing number of foreign workers

4
LM and Slovenia in the EU, cont.

• Widespread illussion social partners can
  guarantee welfare, peace and harmony
• The reality the buying of social peace on the
  account of the future generations
• In the society which had been self-managed for
  decades almost no one has noticed that major
  trends in modern developed world are different
• The reform committee 3 LM measures to activate
  unemployed to ? efficiency of the active LMP to
  ? LM flexibility/to facilitate employment
• Right direction but partial and insufficient
  measures

5
THE LISBON STRATEGY AND LABOUR MARKET REFORMS IN
SLOVENIA

• Prof. Janez Malacic
• Faculty of Economics
• University of Ljubljana

6
The LM reform paths and good practices in EU

• There are large differences in U in EU member
  states despite the overall high U level
• Considerable U decline in Spain/Finland, GB/The
  Netherlands, Denmark/Sweden
• The decline has been the result of well designed
  and efficiently managed reforms of the employment
  legislation and the LMP
• The reforms should ? flexibility and adaptability
  with lower employment legislation protection,
  more efficient LMP and ? incentives for work
• Policy types Anglo-Saxon, Scandinavian, South
  European, Mixed, etc.

7
LM reforms

• The position of the labour economists their LM
  reform design is far more profound and wide than
  politicians and general public are able to accept
  and realize in the political process
• The agreement of the economists incentives for
  work are central. They speak about the
  alternatives between work and social transfers
  and also about compromising between incentives
  and equality
• The reforms should focus on LM regulation, active
  and passive LMP and ? welfare state
• The use of serious research work

8
IZA proposals for Germany

• 7 main proposals (divided in 30 detailed
  measures)
• Removing work disincentives
• Reforming the U insurance system
• Reorganizing active LMP
• Towards decentralized bargaining procedures
• Stepping towards LM flexibility
• Education as key to the LM
• Meeting demographic challenges

9
Some comments for Slovenia Unions and the
demographic situation

• IZA proposal for unions
• 1. Abolishing the general validity of wage
  agreements
• 2. Redefining the favourability principle
• 3. Giving priority to internal company agreements
• Slovenia IZA proposals more than needed
• Unions in the constitution and legislation
• Unions minister

10
Some comments for Slovenia Unions and the
demographic situation

• IZA addressing demographic challenges
• 1. Systematic funding of social insurance
• 2. Taking a pension reform a step further
• 3. Raising the legal retirement age
• 4. Creating competition in health and long-term
  care insurance
• 5. Introducing a point system for immigration

11
Some comments for Slovenia Unions and the
demographic situation

• Slovenia Do we have the demographic crysis?
• My answer is YES
• The lowest-low fertility
• Ageing of the population and the active
  population
• Changing nature of modern migration
• IZA proposals are more than needed. However, they
  are hardly sufficient

12
Conclusion

• Without LM reforms the goals of Lisbon strategy
  are out of reach
• LM reforms should manage the interdependence of
  LM legislation, LMP, education and training and
  the changes of the welfare state
• The LM reforms should be fine tuned with the
  findings of modern labour economics
• More research work and political and general
  public trust in this work are needed
• LM reform postponement would bitter the medicine
  and increase its intake